Strategic Marketing Planning of S&W and Makatume - Assignment Example

1. Take the perspective of S&W's Director of Strategic Planning to develop a full SWOT analysis of S&W, identifying and explaining at least five factors for each category (strengths, weaknesses, opportunities and threats) and propose a complete strategy (implementation, ramification and evaluation) which addresses one of S&W's weaknesses and what you do about it. Strengths = S&W has a large product portfolio that can cover a wide range of professional and individual needs. It is a leader in markets of a lot of countries. Its marketing strategy is unified and its basic component is the heavy national media advertising. It has managed to establish a strong brand equity which enables it to "push" merchandise to retailers since its products are highly demanded by the consumers. The high consumer demand gives the opportunity to the company to charge higher prices, be better placed in retailers' shelf space and have co-op advertising. Weaknesses = its costs are high since its old production plants are in urban areas whereas labor costs are high. Another weakness is that there is a market confusion between its professional and consumer tools. The distributors, on the other hand, feel that the company has abused its market position. A further weakness is that S&W is not present in the fast growing cordless segment. S&W is a big company, so it does not have the flexibility required in order to respond fast to market changes. Opportunities = Makatume is locked into lower voltages so there is enough space for S&W to enter the high voltage space. There is also space for the lower voltage market since apart from Makatume, the other players are small companies (domestic and foreign niche competitors). Makatume's position was also due to the favorable exchange rates but the exchange rate forecast for the next years is not that favorable. Threats = Makatume has good reputation in tradesmen for its professional tools. Makatume follows an aggressive strategy and its aim is to become the No2 player in the US market. It has also a dominant market share in the growing cordless segment. In the consumer tools division, China has become a relevant strong player due to its low prices and good value. The proposed strategy will be based on improving weaknesses. The primary step will be cost reduction so as S&W can become more competitive and survive competition from cheaper producers such as Makatume and the Chinese. The production plants through off shoring should move to countries where labor costs are lower. However, S&W should take care that the quality of products manufactured in foreign plants should be equivalent to the ones produced locally. The old production plants, on the other hand, could be used for other business purposes (e.g. premises) or at least they could be rent. Another weakness is the market confusion for consumer and professional tools. Since S&W advertises heavily then it can make a clear positioning of the above tools in its advertisements. There should be market researches done prior and post the advertising campaigns which will check the degree of confusion in the minds of consumers. The distributors feeling of abuse can be examined through a series of discussions with them in order to find out the exact causes of these feelings. Finally, regarding the growing cordless segment, this is a segment that S&W has to enter. This can be done by focusing on its R&D capabilities and skills and the production costs of these products. If the cost restructuring (by moving its plants abroad) allows and R&D skills are available, S&W could move on and produce high voltage cordless products since this is an area whereas Makatume has not entered yet. This way S&W can enjoy the benefits of first entrant and obtain a dominant market share. 2. Take the perspective of Makatume's Director of Strategic Planning to develop a full SWOT analysis of Makatume, identifying and explaining at least five factors for each category (strengths, weaknesses, opportunities and threats) and propose a complete strategy (implementation, ramification and evaluation) which addresses one of Makatume's weaknesses and what you would do about it. Strengths= highly regarded professional tools. Dominant position in the Japanese market (over 50%) and aims to be the second player in the U.S. market. It has a strong cost position since its manufacturing plants are new and they are in Japan. Makatume is the leader in the professional cordless market which is also a proof for its R&D capabilities. Competitors in this market are weak and they are mostly domestic and foreign niche competitors. Weaknesses= It is locked in the lower voltages segment of the market whereas it occupies the leader position but it is not present in the higher voltage segment. Foreign exchange rates may change and this will affect the price of its products. A further weakness is that the company is known for its professional tools rather than the consumer tools. Opportunities= The high voltage market is not occupied by any large competitor so this facilitates Makatume's possible decision to enter this market. Makatume can also take advantage of its good reputation in professional tools and enter the consumer tools market. Threats = China is becoming a strong player in the consumer tools market. There is a possibility that S&W will enter the lower voltage market segment. S&W can possibly change its advertising policy and invest heavily in advertising professional tools which are the strong point of Makatume. Makatume's Director of Strategic Planning should focus on exploring the possibilities of entering the higher voltage segment before any body else moves into this market. Since the company is a leader in lower voltages then this shows that it possesses the necessary R&D and production skills for entering this segment first and enjoy the benefits of the first entrant. At the same time and regarding the lower voltage segment, Makatume should maintain its leader position by probably adding new characteristics to the product. The other issues should not also be overlooked. Makatume has to strength its position in consumer tools since this is a market segment where it is weak. This movement is imperative since it aims to become No2 player in the US market. This can also be done by strengthening its relationships with the distribution network since the dealers are not satisfied and feel abused by S&W's position. The cost factor is becoming increasingly important since this is one of the weak points of S&W but at the same time it is the strong point of Chinese. 3. If you were Makatume, propose a complete strategy explaining what would you do about the higher voltages issue A leader in order to maintain his/her leadership position must continuously innovate i.e. launch new products and so be the pioneer. The time of entry chosen by the company determines the various skills needed for the product to become successful. The market share that a company captures is directly linked to the time of its entrance in this market. According to marketing theory, the pioneers have (Kotler & Keller, 2006): 1. Strong R & D competencies 2. Good analysis & continuous monitoring of competitors 3. Efficient cooperation among marketing, production and design The leadership in the market is related to (Vasconcellos 2005): Reduce the uncertainty and the risk of the buyers Influence the creation and evolution of consumer preferences. Recognize the firms that will enter the market later. Create favourable conditions for competition. The pioneers have 3 alternative marketing strategies: Mass Market Penetration Penetrating a market niche Skim the market and withdraw fast If we compare the advantages of the Pioneer and the Follower then we have the following (Mc Donald 1996): PIONEER FOLLOWER Economies of scale and experience Possibility to take advantage of pioneer's positioning mistakes High switching costs for the early adopters of the product Possibility to take advantage of pioneer's product mistakes The pioneer can determine the "rules of the game" Possibility to take advantage of pioneer's marketing mistakes Advantage in distribution Possibility to take advantage of pioneer's limited resources Influence consumers' selection criteria and attitudes. Possibility to take advantage of the latest technology Possibility to pre-buy rare resources and pre-agree with the distributors so the competitors that will enter the market later will not be able to buy the resources and distribute in good terms their products. Successful pioneers enter the market at a large scale, they offer a wide product range, the product is highly qualitative and promotion expenses are high. Makatume should be the pioneer and enter first the high voltage market. The advantages for the company are many. Since Makatume is already in the cordless market (low voltages) then it is easier for the company to enter the high voltage market since by doing so it can fully utilize its existing production capacity. It is also an opportunity to enter new foreign markets especially the US market where it plans to be second. Entering the high voltage market has other advantages as well. In case there is seasonality in low voltages then the high voltage segment may cover the seasonal gap of the low voltage. It is also a good opportunity for the company to expand its product portfolio and replace its old products into new ones. So, in case low voltage becomes obsolete then Makatume would have already established its position in the particular market. In addition, it can prevent any movements of the competition done to this segment. Furthermore, Makatume can improve its presents in the points of sale since by having an expanded portfolio, it can satisfy the dealers'needs in a better way. Dealers as mentioned above, is a very crucial factor and they represent an opportunity for Makatume since they feel abused by S&W's position. Prior to launching a new product for the high voltage market segment, then it should pay attention to the following reasons that lead a new product into failure (Kotler & Keller, 2006): First of all, Makatume has to find out the size of the high voltage potential market because if it is too small then it will not be profitable and the R&D and production expenses for the product will not be covered and this would result to losses for the company. Another reason for the failure of a new product is when the product has little synergy with the skills and experience of the company. This is definitely not the case for Makatume since the company is experienced and low and high voltage can use the same production and distribution lines. A further reason for failure is when the product is not unique which also is not the case of the particular one. Makatume has to pay extra attention to the product quality since products that are not characterized by excellent quality are doomed to fail. Makatume must also check the benefit the product offers to the customers and if it provides important functional advantages in comparison to alternative products that are available to the customers. It should also pay extreme attention to the positioning of the product since "poor" positioning is a typical reason for the new products' failure. Makatume's marketing strategy should also estimate carefully sales forecasting since mistakes in sales forecasting lead to mistakes in production and hence losses for the company. The company should also be well prepared since competition will soon copy or improve the product so Makatume should have an efficient and effective strategy in place or sufficient resources in order to face a possible battle. Any changes in the environment, especially the technological environment, should be closely monitored because if a company does not follow the technological changes then the product would soon be outdated and it will be surpassed by other products. Finally, Makatume should know if the product is going to be profitable and if any organizational problems are arisen since these two also consist crucial factors for a new product's success. . Reference List Kotler, P., Keller, K. (2006) Marketing Management, 12th edition, Chapter 11, pp. 356-358, Pearson Prentice Hall. Kotler, P., Wong, V., Saunders, J., Armstrong, G. (2005) Principles of Marketing, 4th European edition, Chapter 12, pp. 516-518, Pearson Education Limited. Lysonski, S. and Pecotich, A. (1992) Strategic Marketing Planning, Environment Uncertainty and Performance', International Journal of Research in Marketing, 9, pp 247-255. Markides, C. (1998) Strategic Innovation in Established Companies', MIT Sloan Management Review, Vol. 39, No. 3, Spring pp. 31-42. Mattsson, J., Ramaaseshan R. and Carson D. (2006) Marketers Reclaim Corporate Strategy', Journal of Strategic Marketing, Vol. 14 (June), pp. 165-173. McDonald, M. (1996) 'Strategic Marketing Planning: Theory, Practice and Research Agendas', Journal of Marketing Management, Vol. 12, pp. 5-27. Porter, M.E.(1985), "How to Attack the Industry Leader", Fortune, Vol.111, 29 April, pp.97-9,102-104. Sanderson, S. M. and G. A. Luffman (1988) 'Strategic Planning And Environmental Analysis', European Journal of Marketing, Vol. 22, No. 2, pp. 14 - 27. Vasconcellos, S. (2005) Strategy Moves, pp. 39-59, Pearson Education Limited. Read More