Clippermac Ltd Marketing Strategy - Case Study Example

Supervisor Semester 2008-2009 - Individual Assignment B2B Marketing A consultancy Report developed in accordance to the clients requirements Clippermac Ltd By: November, 2008 TABLE OF CONTENTS 0.00 Executive Summary 1.0 Introduction 1.1.1 Overview of Clippermac Ltd Case 2.0 Business to Business Marketing Strategies 2.1.1 Marketing Information 2.1.1.1 Geographical Segmentation 2.1.1.2Behavioralistic Segmentation 2.1.1.3 Psychological Segmentation 3.0 Market Segmentation for Clippermac Ltd 3.1 Alpha market segmentation 3.2 Delta Plus Market SEGMENTATION 4.0 Marketing Strategy 4.0.1 Marketing plan 4.1 Conclusion Executive Summary Strategies of an organization should well be able to detail themselves as per the needs of the environment while planning for the future. Today, business environment has increasingly become more turbulent, chaotic and challenging than ever before. To survive, it is vital that a firm can do something better than its competitors. Globalisation has not only altered the nature and the intensity of competition but has had to dictate and shape organisations in terms of what consumers wants, how and when they want it and what they are prepared to pay for it. This study was initiated to carry out a marketing analysis of Clippermac Ltd. Using certain analytical models such as Porters, generic strategy and competitive advantage, the company was diagnosed. There after the report examined the methods of market segmentation open to the management. Two methods were presented through which the divisions could be segmented. I suggested segmenting the market into geographical, demographical and time segment. This is because through these methods, the company is better placed to meet up with its objectives. The paper calls for, a value adding and marketing strategy for increasing yields to the company for the benefits of the entire European Community. It will take approximately five years for projected sales to reach about 1billion pounds per annum. The company expects to target not only high yielding niche market but low income household as well with the introduction of the new products. Key success factors within the market will be Clippermac Ltd brand of innovative quality furniture and promotional gifts. Individualised customer services - tailor made custom design providing customers with what they want, when and how they want it. One of the market leading full service fashion distribution company in the UK. 1.0 Introduction Today's business environment is increasingly becoming more turbulent, chaotic and challenging than ever before and to survive, it is vital that a firm can do something better than its competitors ( Wonglimpiyarat 2004:1). Globalisation has not only altered the nature and the intensity of competition but has had to dictate and shape organisations in terms of what consumers wants, how and when they want it and what they are prepared to pay for it (Hagan 1996:1). Kanter (1995:71) on his work on "Mastering Change" argues that success in the present day business is not for those companies that re-engineer the way they do things, or for those fixing the past. According to Kanter (1995) such an action will not constitute an adequate response. This is so because success is based on an organisation's ability to create, rather than predict the future by developing those products that will literally transform the way the world thinks and view it self and the needs (Kanter 1995:71). Within the context of today's global competition, businesses and firms no-longer compete as individual companies but try to corporate with other businesses in their activities (Wu & Chien 2007:2). These researchers went further to argue that, this strategy has become quite common in many businesses including the retail clothing chain stores. The conventional vertical integrated company based business model is gradually being replaced by collaborative relationship between many fragmented, but complementary and specialized value stars and constellation (Wu & Chien:1). An alternative approach towards organisational success, one which is becoming increasing prominent and has attracted the sustained attention of both domestic and international business scholars are core competences, capabilities and resources (e.g. Madhok 1998, Prahalad & Hamel1990, Hamel & Prahalad1994 ). In today's global business environment it is no longer sufficient simply to meet customers demand as time quality and cost have become increasingly important in the phase of increasing competition (Petts 1997:551). Having said this, the purpose of this study is to carry out a marketing and management report of the organisation Clippermac Ltd so as to enable senior management make appropriate decision as to the launch of a new product. In the subsequent sections that follow, I will provide an overview of the organisation under review in section one, section two presents the proposed business to business marketing information while section three looks at the various ways through which the market can be segmented. In the last section, the various strategies through which senior management can use to achieve Clippermac Ltd objectives are detailed out. 1.1.1 Overview of Clippermac Ltd Case Clippermac Ltd Company was established in 1993 owned by Mike Clipper, William Bill and Alice Mace. Today, the company consists of four rather diverse divisions, each of which is regarded as a separate profit centre but which co-operate where appropriate. It has a turnover of about 75millions pounds. The company has a turnover of about 75million pounds with two of its present divisions Delta Plus and Alpha accounting for more than 49million pounds. Management is presently, in a position of introducing new product line such as other promotional items, bespoke, standard promotional gifts and Christmas luxury food hampers etc. Thus, management needs justification as to the feasibility of these new items as new personnel need to be recruited in the area of marketing and logistic. 1.1.2 Diagnoses Clippermac Ltd in relation to the five forces Competition and the present market situation of Clippermac Ltd business can be diagnosed in relation to the five forces. Having for divisions, each of this division is affected differently by the market forces. Porters Five Forces Approach Application to the Clippermac Ltd Business Relationship with suppliers The suppliers constitute independent artist, cotton farmers, designers, customers and employees Bargaining power of buyers Low switching cost due to numerous options available to buyers. Ikea, is a global market player with cost focus Threats of new entrants Low threats of new entrants because of the human, time, material and financial resources necessary to set up a promotional and contract furniture company. However, an entry of a new entrant from other continent like Asia remains a big threat. With individual designers and niche players increasing everyday. Threats of substitutes products or services The industry is characterized with many niche players. Increasing number of brand imitating. it appears similar to the original brand, consumers will then transfer attributes of the original brand to the brand imitator, thereby affecting evaluations and purchase decisions Rivalry amongst established firms Fierce competition with flat cost. No major player able to dominate the market. How ever with continuous innovation and design of new products, Ikea has taken over the lead in the furniture divisions. Figure:1 Porter (1985:4) contends that the Five Forces define the rules of competition in any industry and at the same time marks the bases for understanding a company's success. Porter (1985) went further and argues that, competitive strategy must grow out of a sophisticated understanding of the rules of competition that determine an industry's attractiveness. The researcher further claims that, "The ultimate aim of competitive strategy is to cope with and, ideally, to change those rules in the firm's behaviour." (1985: 4) and through their own strategy a firm can take hold of these five forces. 1.1.3 Clippermac Ltd in relation to Porter's Competitive Advantage Competencies provide a means of looking at those behaviours that differentiate the "best from the rest" and a common language for talking about critical on-the-job behaviours (Johnson et al 2005). From preliminary investigation, the soft sides Clippermac Ltd business consider here to be the organisational culture represents the main core competence of the organisation. There is little or no close supervision, as individual workers are given the responsibilities and resources to take care of their individual needs and the by develop manage their various activities, existing divisions operate independently but cooperate in some areas. The is a very high level of trust, and understanding amongst the entire work team. Organizational capabilities usually mean the skills embedded in a company's people, processes, and institutional knowledge. Distinctive competencies allow growth companies not only to make more money from existing businesses but also to extract greater value from new opportunities (Johnson et al 2005). Privilege Assets Growth enabling skills Clippermac Ltd existing knowledge and information of customers can be critical in managing sales. Their strong brand name and corporate reputation can be extended to launch new product, quickly gain market share without threatening the credibility of the current business 2.0 Business to Business Marketing Strategies The purpose of this section is to discuss the various ways through which the new markets for each of the two new divisions of Clippermac Ltd could be segmented. The section first of all discusses the strategies of business to business marketing and there after the three methods through which each of the three new departments could be segmented is presented. For the greatest communication impact, Kotler (2003) argued that the entire marketing mix (promotion, product, price, and place) must be carefully coordinated for greatest success. This is so because, the product designs, the price, the shape and colour of its package and others within the chain communicate something to buyers. Thus, for consistency and uniformity all these aspects of marketing should be integrated. Integration of marketing communication activities can avoid confusion and disaffection in the minds of consumers and buyers, offering a comfortable identity to customers and staff. Agencies who support the marketing communication process can take a more holistic and thus strategic stance to their client's business, concentrating on strategic development rather than separate agendas to get a strategic fit (Kitchen, 1993).This is the primary function of e-marketing communication in integrated marketing communication. According to Peter (2007), a market segment consists of individuals, groups or organizations with one or more characteristics that cause them to have relatively similar product needs (Sommers & Barnes 2004). Markets are partitioned with respect to potential customers. The management of Clippermac Ltd can segment it market in any of the following ways; Geographic, Demographic, psychographic and behavioralistic. 2.1.1.1 Geographic Segmentation at Clippermac Ltd Here the management of Clippermac Ltd has to choose the countries where it plans to market it products. It will have to segment the European market, by countries, such as the Danish segment, being catered for in Copenhagen, the French market segment being catered for in Paris, while the United Kingdom segment having the head office catering for the English population. Management will also need information such as population size. Because of regional differences in consumer's preferences, this kind of segmentation will provide the basis for geographic specialization (Sommers & Barnes 2004). The market could also be segmented into north, south, west and East Europe, with others taking care of the rest of the world. 2.1.2 Demographic segmentation Sommers & Barnes (2004) stated that, some variables needed for demographic segmentation include, age, income, lifestyle, education, occupation, family size and family lifestyle etc. Sommers & Barnes (2004) further show how, family lifecycle often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids), full-nest, empty-nest, or solitary survivor. At Clippermac Ltd, this will mean classifying it products into different category, for example, furniture's for DINKS, bachelors etc. Management can also, fit in this into several categories. 2.1.3 Behavioralistic Segmentation Sommers & Barnes (2004) stipulated that, behavioral segmentation is focused on actual customer behavior toward products. Behavioralistic variables include; usage rate, benefits sought, brand loyalty, user status, readiness to buy. This method of market segmentation has been largely applauded because of its advantage of using variables that are closely related to the product itself. In addition, it is a fairly direct starting point for market segmentation. Thus, within each of the existing divisions customers and would be customers could be classified within these characteristics. 3.0 Market Segmentation for Clippermac Ltd In the current phase of fierce competition, managers are constantly seeking for various ways to classify their customers and get their products easily to them. Today, cultures have moved together due to increase travel, better communication and more efficient transportation opportunities. Clippermac Ltd should try and anticipate these changes through the offering standardized products to a global audience. From, information collected about the company, I will present the various ways through which each of the two divisions could be segmented. 3.1 Alpha Division Segmentation Peter (2007) states that, even within a single country, there are many different types of consumers, who need to be treated differently. Through Market segmentation all marketing activities are carefully designed and directed within particular segments. Alpha division products could be segmented using two of the marketing segmentation strategies discussed above. Alpha has access to superior design and manufacturing facilities; the company has gained several design awards they can compete on both style and functional design, product quality and price. Besides in-house sources they use external subcontractors and suppliers. These attributes call for the division to be segmented using behavioralistic and Psychographic Segmentation. Segmenting customers into behavioralistic market will require classifying customers in terms of the benefit sought, brand loyalty and lifestyle. This will give enough room for the division to take advantage of its many design awards and compete effectively on style and fashion. By using this method, variables closely related to the division brand will be emphasize, and customers classified into benefits sought, style, firs time buyers, regular, brand loyalty. Spill over of this segmentation method can be consequently extended through distribution segmentation. In addition to behavioralistic market segmentation, the Alpha division could also be segmented through geographical segmentation. The United Kingdom market could be segmented in to various regions. Here because of regional differences within the entire European and UK market, consumer preferences exist, and this provides a basis for geographic specialization. Here, a brand could be sold only in one market and not in another. The London segment, can focus on contract furniture for hotels, fitted kitchen cupboards and guest room furniture, while at the Manchester segment, contract furniture for houses are sought out. While the Danish and French segments. Under geographical segmentation, the market could further be segmented into, warm and cold areas, urban versus rural etc. 3.2 Delta Plus Market Segmentation DeltaPlus provides work-wear for a whole range of organisations. Customers range from large and small commercial businesses to charities and not-for-profit organisations. Some of its products are only for particular markets, e.g., clothing for various publicity events , standard promotional gifts, then will suggest for the market to first of all being segmented within a time frame. Here, through an identification of the proper segmentation variables (or lifestyle statements, words, pictures). With time segmentation, fitted within Geographical segmentation, the Delta Plus division can sell its standard promotional gifts only within certain periods of the year. That is, some products are sold only at certain times of the year. In addition, the division can further segment this market into demographics variables. These variables are the most common basis for segmenting consumer markets. They are frequently used because they are often strongly related to demand and relatively easy to measure. The most popular characteristics for demographic segmentation are age, gender, family. Here, it various clothing for various publicity, or promotional items could be defined within, age, gender, income and lifestyle, channeled to consumers through a distributive channel as TESCO, Sainsbury, ASDA. This should be so because, personal incomes in its area of operations range from low to high, and thus, the division should offer some cheap products, some medium priced ones, and some expensive ones. Bespoke standard promotional gift could be defined within these variables. 4.0 Marketing Strategy Clippermac Ltd needs a strict and contingent marketing plan in order to compete in the industry which can well be adjudicated with the help of three interrelated tasks which are-marketing objectives, selection of the target market, and developing the market mix (Peter et. al, 2007). Recognition of an opportunity marks the advent of planning of an appropriate strategic approach by the marketing executive in order to efficiently benefit the advantage of the opportunity. For an efficient marketing plan, the company needs to define the market potential and opportunities should be prioritized. It is preferable to analyze the risks and problems associated with it and then operate according to the management growth by considering each and every facet of the market. Marketing planning is not as intricate as it seems to be. One should well be able to critically think about the strategy to be enforced while clarifying every target and goals to be achieved (Marketing Plan Software, 2008). Implementation and control of the marketing plan is again a significant task of the marketing management. It involves the counterfeiting of the plan into action and further performing the marketing tasks according to the construed schedule. Controlling can well be deciphered by the involvement of three major steps which are (1) measurement of the results of the implemented marketing plan, (2) comparison of the results with objectives, and (3) illustration of the decision making of the plan and its achievement of the objectives. The above discussion will help Clippermac Ltd to compete with high spirits in the market, all with effective thinking and control over the field. Marketing Analysis and Plan According to Oceanz (2001) the promotion and furniture industry is continuously growing, with suppliers coming up with new models everyday. Presently the demand in this sector exceeds the supply and the situation is expected to continue in the near future. Customers continue to increase their demand for new models while supply often takes time to adjust. This represents a profitable niche for any serious company. The company intends to capitalise on this opportunity by providing customers with high quality promotional clothing for publicity events wears, with some of its leading brand supplemented by value-adding activities such as attractive packaging and the development of new products. It will strive at having partners not customers. The value of the furniture and standard promotional gifts industry is currently estimated at billions of dollars. It is estimated that the average price for a lady's fashion promotional clothing cost about $30. A value adding and marketing strategy is proposed for increasing yields to the company for the benefits of the entire European Community. It will take approximately five years for projected sales to reach about $2billion per annum. The company expects to target not only high yielding niche market but low income household as well. It will also identify suppliers of leading fashions to form a partnership with the indigenous industry, be environmentally-friendly, practice sustainable production. These factors are considered market advantages to the company. Building long-term relationship and remaining competitive, requires being active in implementing and maintaining new technologies. This has the effect of establishing along term contract with the customers which is a big advantage. Key success factors within the market will be Clippermac Ltd brand of innovative quality furniture and promotional gifts. Individualised customer services - tailor made custom design providing customers with what they want, when and how they want it. One of the market leading full service fashion distribution company in the UK Fully integrated programs to help customers increase sales through menu development, creative promotions, advertising, and custom marketing material Exclusive distribution rights to ground-breaking suppliers fashion in our market. The combined experience of the principal owners brings upper office management skills, high levels of customer service, and years in distribution and sales management. Conclusion Strategic advantages are not always achieved by competition alone. Collaboration between potential buyers and sellers and some other dealers turn to be very beneficial and advantageous when negotiation and contracting costs reduces (JSW: 2005:261). I believe by developing and capitalising on its service minded employees and reliable service, the company stands a better chance to sail through the five forces framework. GLBE-UK will be owned and operated by its founders, initially working with a small employee base that will cover sales and delivery. The company should increasing used partners worldwide to benefit from generic focus and cost leadership strategy. By working with partners in different locations, Clippermac can gain lasting competitive advantage over its competitors. Because of synergistic gains resulting from such partnership, the company as a whole is greater than the sum of its parts. References Hagan, M. C., (1996).The core competence organisation. Implication for Human Resource Practices. Human Resource Management Review Vol.6, No 2. 1996, Pp. 147-164 Hamel, G. and Prahalad, C. K. (1994). Competing for the Future. Boston, MA: Harvard Business School Press. Johnson, G., Scholes, K., & Whittington (2005). 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International Journal of Production Economics special issue on ''Building Core-competence through Operational Excellence'. Read More