Pinnacle Pictures Technology - Case Study Example

Pinnacle Pictures Part-I 0 Introduction Photography and imaging technologies has undergone a sea change during the last decade or so. Trendsettingchanges brought about by the information technology have added newer dimensions to the techniques of photography. Captain Sean (2007) states that economies of scale are now making sophisticated lens systems even more affordable. Now even the super-zoomed pictures can be made free from granules and the image can be made crisper with the help of better digital processing and mechanical image stabilization. Though Pinnacle Pictures has been in business for just over 10 years, the company has seen lot of changes in the industry. Pinnacle Pictures has been able to dominate the regional market on the basis of its job quality and 'value for money' services. With a staff of about fifty people, the company has been able to break even and earn profits with a respectable turnover of 5,000,000. Now that the digital photography, personal computer printing, instant photography and transmission picture/ video transmission on the net has taken over the traditional photography, Pinnacle Pictures also feels the need for going digital and an upgrade in technology to retain its customer base as well as to gain more customers. Though there are still patrons of the traditional rolling film type photography and the technique is still very much in use, digital photography is steadily been gaining more ground and acceptability. Increasing use of smaller versions of digital cameras with personal computers and advanced ways of printing technology has almost necessitated the requisite changes in the marketing strategies of the company. In this paper an effort is being made to suggest appropriate strategies and steps that Pinnacle can adopt to take on the competitors and increase its market share. A marketing plan for Pinnacle forms an integral part of its broader business plan implying in words and numbers how, where and to whom Pinnacle proposes to roll the film and photography, outlining the company's approach in attracting potential customers to its printing and development. 2.0 Situation Analysis 2.1 Macro environment: Film photography appears to be fighting for survival amongst the range of digital technologies that are available as a formidable alternative. So far the company has been able to maintain its profitability with its customer oriented 'value for money' approach. To venture into the digital field with field in such a manner that Pinnacle can take the course gradually without totally abandoning its existing operations. To analyze the factors influencing this decision, PEST analysis proves to be a very helpful tool. PEST analysis: This type of analysis is done analyze the new venture, new location, new country or new business. It gives a fair idea about the favorable and unfavorable factors of the business venture that the company intends to go into. Accordingly the company can plan out strategies, take a review of its decision or may prepare itself vigorously to jump into the fray. PEST analysis involves four main factors. Political: Under the globalization and liberalization scheme of things, the political factors in general have been quite supportive of business ventures. Governments are opening up newer avenues for growth within the country. Therefore the political environment on the macro level appears very much conducive towards growth in the photographic market. Since the management and top bosses of the company too appear to convinced about the change in attitude and business strategies, therefore the inner politics too is favorable towards the business. Economic: Since the economic prosperity of a nation or state is one the prime concerns of the respective governments. These governments prefer more business activities, so that governments can get more taxes for development of infrastructure and other social welfare schemes. The import duties, customs duties, excise and other forms of taxes are being put at bare minimum for the latest digital age gadgets and services, as these types of services appear to be the imminent future. The economic condition of the company too appears to be all set for the change, with enough cash profits to experiment with the new venture. Social: The society at large loves hip and trendy equipment, as such equipment can be easily personalized. The latest gadgets come in various sizes with user friendly features. Therefore photography, which earlier used to be the forte of film rolls and big SLR cameras has now been replaced by small, sleek, more user friendly and far more superior featured digital cameras. Therefore society is in for a change. Technological: Technology is the real force behind all these changes that are appearing in our society today. Technological changes have made the camera a very handy gadget to be carried in our pockets. Technology has revolutionized the printing techniques. Sharing and storing photographs in digital version is another fundamental change that IT has brought about. Therefore technological factors require Pinnacle to upgrade itself, lest it be left behind. Now photographs can be printed within couple of minutes to an hour or so, thus reducing the waiting time for the customer. 2.2 Microenvironment: At the business and company level, though Pinnacle has been able to retain its profitability in the business, with the availability of many ardent fans of older version of the art and some tech-shy people, yet the market demand is certainly increasing for the digital photography and printing techniques. Now instead of waiting for the whole or part of the film to be exposed before developing and printing can be taken up, digital technique allows immediate printing and even allows preview of the photo before printing. Hundreds of photographs can be stored within a small memory stick/ chip. One single memory stick in turn can be used/ reused thousands of time, instead of using thousands of film rolls. Therefore, the photography business very much calls for going digital. The cost of printing has also come down with digital machines while improvement in picture quality. Some of the micro-environmental factors can be summarized as; 2.2.1 Competition: The photography business has a multi-pronged competition at hand. While the digital labs and higher end professional photographic companies are there to threaten Pinnacle. The availability of reasonably priced inkjet/ laser printers/ scanners in the market and low cost photography service providers are also a competition to the company. 2.2.2 Market Demographics: Market has patrons of photography in all shades. Some film personalities, fashion professionals still prefer the traditional form of photography, as the higher end digital cameras prove much costlier. But the youth segment now prefer to flaunt the digital devices. Unlike earlier times, when families used to have one camera as a prized possession with limited number of people knowing to operate it, the digital camera is more user-friendly and every member of the family wants to take it along on his tour or 'the day out' with friends. Functions like Birthday parties, 'get together' no longer require the presence of professional photographers, an amateur also can do the job as well. 2.2.3 Market Needs: On the other extreme is the i-Pod and MP-3 music generation, who prefer the latest. The youth segment in particular is very much attracted towards the trendy and digital. In today's fast paced society, availability of time is another factor which determines the printing and developing techniques. Therefore to cater to all such segments Pinnacle has to bring about the strategic change in business processing. 2.2.4 Market Trends: The market dynamics are certainly changing. It is not only in the photography or film production but in general as well the market is becoming more competitive, consumer friendly and quality conscious. Be it the gadgets like camera, music devices to cars or other consumer durables, consumer is now becoming more demanding. Forces of globalization and economic liberalization have further added fuel to the fire. Now internet/ e-commerce has taken the market to the consumer and companies consider value addition as the key to take on the competition. 2.3 Internal Audit: Pinnacle plans included upgrading the technology, continue to cater to its existing market, widen the market base to include more number of digital enthusiasts and provide specialty services to some of its existing loyal customers. Considering such a scenario, the company requires to determine the priorities it should accord to certain products, so that better profit margins and long-term value creation can be ensured. BCG Matrix i.e. Boston Consultancy Group matrix1 is a very useful tool for identifying the products which contains both high-growth products in need of cash inputs and certain low-growth products which generate lot of cash. It's a two-dimensional matrix, depicting market share and market growth. It divides the product portfolio in four categories; Star: The category which has a potential for high growth and high market share Cash Cows: This segment represents high market share but low growth products, implying that the cash potential of the market be tapped as soon as possible. Dogs: Representing the low growth low market share products Question Marks: This segment promises high growth in future but with low market share at the moment. BCG Matrix for Pinnacle can be made as follows; High Business Growth Rate Low High Low Relative Position (Market Share) 2.4 SWOT Analysis Strengths Committed customer base Offering value for money services Committed workforce Earning profits even under challenging circumstances Good infrastructure support Weaknesses Still lacking the digital edge Not much increase in customer base Opportunities Offers like the one received from capital city international art gallery Restoration services Many of the young enthusiasts prefer to do photography with digital camera. Cine conversion (movie to video, DVD etc) Threats Increasing online activity, which lures the customers towards well established production houses. Decreasing profit margins in the business Improvement in home-based lower end printing technology 3.0 Marketing Strategies 3.1 Mission: To provide quality service in quickest possible time at the convenience of the customer. 3.2 Marketing Objectives: Strategic marketing objectives for Pinnacle include; Making a headway in the digital world Widen its market base while retaining the existing customers Make its presence online with an interactive website to allow customers to place orders on the net Customer satisfaction is the key as a satisfied customer often takes pride in becoming a goodwill ambassador for the company. 3.3 Financial Objectives: Going digital certainly involves some costs. Therefore immediate financial objective for the company would be to minimize the impact of mobilizing additional financial resources. The e-commerce operations too involve costs in the form of salaries to the website administrator and support staff, website maintenance costs, marketing communication costs etc. Therefore Pinnacle would like to start off the e-commerce initiative with minimum costs and try to attract maximum number of customers in the early days itself by attractively pricing its services. The price tags can subsequently be revised as more customers flock to it. 3.4 Target Marketing: Modern marketing concepts require use of marketing communication to different segments/ targets in different measure. Marketing Communication has evolved as the modern technique of approaching the customers (both existing as well as prospective). It involved strategies and activities involved in getting the desired marketing messages to target markets/ customers. This further requires a channel/ media to carry the message effectively. For Pinnacle the target groups could be the young photo enthusiasts, middle level professionals, home requirements, normal business requirements, tourists, archives/ libraries. All these segments require convincing in different measure. 3.5 Positioning: Pinnacle group can continue to strategically position itself at the middle level of higher end professionals and lower end normal users. This provides an alternative to the top-end professionals also to have a glimpse of the services of Pinnacle. The lower end customers can also go for a better quality at little more prices. This certainly helps the company in widening its market base in future. 3.6 Marketing Mix: There was a time when branding, advertising, sales promotions, trade shows etc. must've been quite unknown in the marketing parlance, but in the 21st century, amidst a cut-throat competitive environ, these terms have become an integral part of the marketing mix and overall corporate strategy of a company. The main ingredients of marketing mix include; 3.6.1 Product: This includes development and printing, supplying of memory sticks, photo films, photo frames etc. 3.6.2 Price: Appropriate pricing for the target markets, quality considerations depending upon the pricing and an attacking pricing (e.g. penetration) or a defensive pricing. 3.6.3 Place: Customer's approach to the company depends upon the location of company, its branch or franchise. If it happens to be at a convenience place more customers will use the services. Thus the company will be able to serve its target customers in a better way. 3.6.4 Promotion: Today we are living in a media-savvy world. The power of being seen in print or TV or being heard on radio can make or break a brand. Integrating the promotion publicity campaign with the marketing mix therefore becomes very crucial for gaining loyal customers. 3.6.5 Channels of Distribution: For reaching out to the customer a number of distribution channels like; Direct marketing: i.e. over the counter activities Through authorized franchise: Pinnacle can authorize some smaller shops, offices to collect the films/ orders for printing or developing. On the internet: Setting up an interactive website must be one of the priority areas of the company. The site must have a secure payment gateway for customers to pay online. The site must maintain a database of all types of works done by it, so that if a customer wants to place a repeat order, he/she can easily trace his/ her job id and place the order accordingly. The website must be quite interactive, but not heavily loaded with photographs of videos which creates problems in accessing the site. The website must also have a proper rate card for its services and frequent users must be suitably rewarded with discounts. Taking orders on the net must be encouraged as it saves the time and manpower for the company as well. Photo frames must also be available on the net, so that if someone wants to frame a photo, then he/she must be able to actually preview it on the net. Online download of films on the internet can also be considered in due course so that film enthusiasts can download there film on their system and then upload the desired shots for printing. If someone wants to gift a 'precious moments' photograph to someone else the company must have adequate tie up with gift wrapping/ packing/ courier agencies to deliver the 'gift pack'. 4.0 Controls: For the elaborate plans to bear desired fruits, the plan must be executed well. This can be ascertained by monitoring and controlling the progress of implementation and comparing the actual results with the desired one's, so that if required corrective action can be initiated in time. 4.1 Implementation Milestones: Whether the company has been able to meet the preset targets or not, can be ascertained by periodic review of the progress. 4.2 Marketing Organization: Company must be able to organize and mobilize its marketing team in a coordinated manner. 4.3 Contingency Planning: Just in case some unforeseen circumstances prevent the company from gainfully implementing the new initiative or the new steps fail to deliver the desired results, there must be a contingency plan to fall back on. Pinnacle, while initiating the new steps towards digitization, must not dismantle its existing analogue film development facilities. Such facilities form part of the contingency plan and can be phased out gradually when the company feels confident enough. Part-II By analyzing the case study we've been able to learn How a traditional business can be transformed into a modern one. The importance of marketing techniques in furthering the business goals How information technology is transforming the world around us. The extent of competition existing in the sector How crucial it is for the business units to remain in touch with the technology. Digitalization has brought about a sea change in the photography industry It was Marshall McLuhan who visualized way back in 1964, the concept of Global village (Branston and Stafford, 2004). This global village has transformed the photography business as well, with competing companies coming out with interesting discounts and packaged deals. Strategic management functions are very important for planning the moves for expansion and upgradation. There's a fundamental distinction between strategy and operational effectiveness. Operational effectiveness is marked by the returns on investments and other financial details, but Strategy is about taking a long term perspective, making strategic moves, and trade-offs. Part-III It is worth appreciating here that Pinnacle Pictures has realized the need for upgrading to digital technologies and agreed to appoint a Marketing manager. But to make an enterprise work in an effective manner, due attention must be paid to all the stakeholders in the business. The businesses operate within a complex system of interests and influences. While identifying the stakeholders the company must look beyond the formal structure of the organization. No doubt customers are the key stakeholders in the business, but at the same time employee's contribution cannot be ignored. Johnson & Scholes (1999) define stakeholder as, "Stakeholders are groups or individuals who have a stake in, or expectation of, the organization's performance." It appears Pinnacle has not given due attention to the training and development of its workforce, for adapting the digital domain functions. Recruiting a website administrator is of course a step in right direction, but there might be instances when the administrator is not around and someone else is requisitioned to manage the website. Similarly, the staff has to be friendly with photograph developing software like Photoshop etc. for them to work efficiently. Therefore the existing staff is also required to be trained in IT and digital techniques. Pinnacle appears to have missed this very important aspect. Moreover, it is the existing workforce which needs to be motivated towards taking up the change, because change in general is resisted if management doesn't take into confidence the people who are to work on it. It appears Pinnacle is waiting for the marketing manager to submit its report before the company moves any further. In fact the company is already quite late in adopting the technology which it should have adopted couple of years back. Therefore, there's no time to waste, the marketing manager will tell how to go ahead with the implementation plan, but going in for digital is a foregone conclusion as that is the technology for the future. Therefore the company must at least start looking to do some initial recce to see how its customers react to the news. The company must start collecting relevant information from different sources, which will also help it in deciding the pricing strategy. With such inputs, once the report from marketing manager is on the table the company management can quickly take a studied view on it. Moreover since the Marketing manager is a new man to the company, it'll take some time for him to study the organization, its functioning, its HR pattern and the financial position which is going to have an influence on the final report. Therefore Pinnacle must've appointed someone to liaise with the new Marketing manager. He cannot go to each department and start putting up questions. Instead the person appointed to facilitate the information gathering can approach the concerned department and also take the new marketing manager on a familiarization trip to the job floor. References: 1. Captain, Sen (2007). 'Small cameras with big zooms'. Popular Science, May2007, Vol. 270, Issue 5. 2. BCG Matrix. Available online at http://www.valuebasedmanagement.net/methods_bcgmatrix.html (Apr 29, 2007) 3. Branston G. and R Stafford, 2004. "The Media Student's Book", London: Routledge 4. Beckett-Camarata, E. J., Camarata, R. C. and Barker, R. T. (1998), "Integrating Internal and External Customer Relationships through Relationship Management: A Strategic Response to a Changing Global Environment", Journal of Business Research, 41. 5. Johnson, G., Scholes, K. 1999. Exploring Corporate Strategy. Hemel Hempstead: Prentice Hall Europe Read More