Meeting the New Marketing Challenges: Case Study Of an Upcoming UK Firm - Essay Example

 Meeting the New Marketing Challenges: Case Study Of an Upcoming UK Firm Executive Summary Brand Agility Ltd. was put up in 2004 to provide urban essentials in the form of wallets, bags and watches in exciting styles. It started as exclusive distributor in UK of the US-made Ducti wallets and Urban Access bags from the Netherlands. In no time the company began manufacturing these brands in UK, introducing new styles of wallets and bags designed for both the local and the worldwide market. The product line now includes Ducti and Urban Access bags and wallets which sport such trendy names as British Postie, Pizza Courier bags, Oee bags, and Major League Baseball bags. The firm sells these products wholesale to upscale retail outlets and through its online stores. The whole idea behind Brand Agility was inspired by the US surf and street-smart culture. Ducti tape, the primary raw material for the bags and wallets carrying the brand name, is the industrial strength tape that plumbers, drummers and props men use to glue things in place. Like the Urban Access lines, the Ducti brand of accessories has established itself as good quality, often-unusual products for the fashion-conscious youth aged 18 to 25. A continuing PR and advertising blitz has ensconced Ducti as a reputable brand name in UK, the same way it has swept the American market. Sustaining the company’s initial success poses some problem because competition has tightened and the marketplace keeps pulling new surprises and challenges. This resulted in a situation where there are “too many companies, too many products, too much marketing noise (Ries & Trout, 2000).“ Thus, in mounting a reinvigorated marketing campaign, Brand Agility must consider not only its strengths and weaknesses but also those of its competitors. I. Introduction The marketplace is in a state of continuous flux. Everyday, the business environment changes its complexion with new and harder challenges posed by such factors as globalization, new technologies, increased competition, different market behavior, stricter regulations, higher costs of labor and materials, pickier and more fastidious consumers, even social and economic upheavals. Any of these factors is capable of limiting a company’s option to generate growth, let alone maintain its profitability. Despite the difficulties, the market for consumer goods and services continue to expand along with people’s buying power. Two of the major reasons are the rapid decline in birth rates and the changes in gender relations. With fewer children to support, families can splurge on consumer goods, while the greater number of women entering the workforce gives rise to households with two wage-earning spouses holding more spending money (Performance in People). The market with the richest potential is composed of young people in the 18-25 age bracket, most of whom are new entrants to the workforce, better educated and earn more than their predecessors. They are also highly susceptible to peer pressures, whose influence in purchasing decisions will be discussed below. II. Evaluation and Review In its textbook definition, marketing is described as “the entire process of storing, shipping, advertising and selling to promote and actualize a sales transaction.” The basic concept remains the same but the process has undergone drastic changes because of the rapid pace of business and consumer trends. As a result of greater economic competition, marketing has lost its product orientation to become a consumer-driven affair. In the context of today’s marketplace, marketing thus needs to consider areas previously taken for granted (see Table 1). Table 1 – Areas of Marketing Coverage Tactics for initial market entry and development. Specific marketing, selling, promotion and advertising methods to sell the product or service. Product presentation to customers involving such aspects as packaging, physical distribution, sales support and costs. Pricing and credit policies. Methods on dealing with competitors. Contingency plans in case the sales target is not achieved. (Alreck & Settle, 1999) Increasing attention is given to such trends as how consumers buy, what they buy, where they buy and how much they buy. For this reason, a growth-oriented company must always keep its trend-spotting skills razor-sharp. When hemlines go down today, in the case of garments products, it does not mean that it will stay that way for long. The hemlines of girls’ skirts may go up again tomorrow to throw the less perceptive marketer off balance. There is also the matter of brand differentiation, which has been found as the primary reason for the failure of as much as 80 percent of products launched in the market. The marketing textbook says that brands need to be relevant to come across as different from their competitors. However, marketing today has lost its capability to create and manage differentiated brands, joining the competition solely on the basis of price. This undermines the reason why brands exist in the first place (Tait, B., 2004). Consumer culture used to distinguish between those with resources and those without, but post-modernity has completely blurred this line. Thus, goods like cars, telephones, TV sets, refrigerators, dishwashers and microwaves, which were previously exclusive to the rich, are now within everybody’s reach (Gordon, J. 2002). In UK, for example, unemployment and inflation are down to the same minimal rate of 5 percent, while real wages keep growing by 8 percent yearly, making for a rich consumer market (Nickell & Quintin, 2001). The net result is that people are buying more for leisure than for necessity, which makes the marketing task even harder (Gordon, J., 2002). To overcome these challenges, marketing scholars espouse the extensive use of the “pestel and swot” method, which analyzes all factors likely to affect business. Table 2 – Pestel and Swot Analysis Pestel Swot Political situation Company’s strengths Economic situation Weaknesses Socio-cultural factors Opportunities Technology Threats Environment Legal matters In this method, the pestel concerns on the political aspects relate to legislations and government policies. The economic factors that need to be addressed are those having to do with interest rates, taxes, employment, inflation, etc. As for socio-cultural analysis, it involves the age and diversity of the target consumers, while technology is considered because new processes might leave a company behind. The company has to keep in step with technological advancements in communication and online service development, and must also express environmental concern in its operations as well as abide by laws to keep business in line. On the swot areas of concern, a company’s strengths may lie in a viable name it has established for itself, the quality of its workforce, availability of products and satisfaction levels. Weaknesses may show in a less competitive pay rates and under-investment in certain aspects of the business, among others. The opportunities may come by modernizing the business and marketing operations, expanding the market or introducing new services, while threats may be in terms of the growth of competitors. In marketing, the principal goal is to build a longer-lasting relationship with buyers instead of the single-sale fling. The essence of this relationship is a strong bond that must be established between buyer and brand. Alreck, P. & Settle, R. (2002) recommend six strategies for building just that relationship: Table 3 – 6 Strategies to Build Buyer-Brand Relationship 1) Link brand to a particular need. 2) Associate it with a pleasant mood. 3) Appeal to subconscious motives. 4) Condition buyers to prefer the brand through rewards. 5) Penetrate perceptual and cognitive barriers to create preference. 6) Provide attractive models for buyers to emulate. The choice of a strategy or combination of strategies depends mainly on the nature of the brand product or service, since the success of any marketing strategy relies on the marketer’s understanding of the preference building and bonding process (Alreck & Settle, 2002). III. Market Segmentation, Targeting and Positioning For an effective segmentation and targeting of a firm’s target market, as well as positioning of its products, the marketing strategy needs to answer these questions: How did you get here? Where do you want to go from here? What do you need to do to get there? In this task, positioning plays a key role, which requires that the firm communicate its message in an “over-communicated” society. This refers to the din of marketing and advertising noise that assails the mind of modern-day consumers. In the US alone, the growth of per capita consumption of advertising is placed at $200 yearly. With too many products vying for consumers’ attention, the best way for companies to make their products connect with customers is to first identify a particular audience or market, then choose the medium that fits the message. This message must be based on such attributes of the target market as age, gender, income, civil status, number of family members, housing types, car ownership, hobbies, holiday preferences, and attitudes to the company’s product and its competitors (Bedbury and Fenichell, 2002). The easiest way to get into a consumer’s mind, Bedbury & Fenichell emphasize, is for the company’s product to be there first. “If you cannot be there first, then you must find a way to position yourself against the product, the politician and the person that got there first.’ The best marketing strategy is one that is singularly focused on the target markets, the primary products and the sales methods (Maven Management). For the company’s primary products, the sales efforts must concentrate on the AB market. The CD market is the chief target for the marketing methods on the secondary products. Maven Management also sets 6 types of marketing strategies: Table 4 – 6 Types of Marketing Strategies Market positioning – the company should decide if it wants to establish itself as market leader and challenger or follower to the current market leader. Then it positions its products accordingly. Porter generic – this determines if the company wants to present its product as something different or unusual. Studies show that consumers take to products with unique characteristics. Innovation – like the Porter generic strategy, a company also uses this method to present its product as new and innovative. Growth strategy – the company needs to select the exact route to its growth. Does it want to grow by diversifying its products or intensifying its sales effort? Does it want to grow horizontally or vertically? Aggressiveness – the company has to adopt methods that would accelerate its growth. Warfare-based strategy – the marketing strategy may be offensive or defensive in character. It may also use the flanking maneuver by launching several products to outflank the competition. IV. Consumer Decision Making Economic competition, as noted earlier, has changed the marketing approach from one product and market-driven to one consumer-driven. Thus, material goods are increasingly taken as a reflection of people’s tastes and lifestyles. In this view, the mass media and market dynamics have led to a constant search for new fashion, new styles, new sensations and experience. The status symbol acquired by some products makes consumers feel unique and special. The higher the price, the more it is associated with status, luxury and quality (Featherstone, M., 2002). In effect, the luxuries of consumer culture have become more than simply goods; they appear as markets of social status. Purchasing decisions these days are based less on economic value or reason than on images created by mass media (Chen-yu & Seock, 2002). With people’s motivations to buy changing, this exerts new pressures on companies to find ways to market their products effectively. In fact, finding out what motivates people to buy has been integrated into the marketing field. This is where the psychological concept of conformity comes in. In marketing, conformity has acquired a meaning different from its dictionary definition to mean a tendency to comply with the purchasing preferences of a group. People conform in this manner because they want to be liked and accepted by their social group, or they just do not like to stand out and call attention to themselves (Derussy, C., 2006). This blending in and following the majority now plays a large part in consumer behavior and decision-making. The tendency is influenced by different factors and situations, one of which is age. For example, teenagers usually do not know yet who they are and what they want to be so they look for outside influences to help them in decision-making. As potential customers, people aged 8 to 12 are important because at this age, they start thinking about and noticing products (Meyer & Anderson, 2000). As they grow older, however, their parents’ influence diminishes and they turn to peers for possible guidance. From peers, the influencing factors on consumer decisions shift to media and other sources. This is the age bracket ideal as target market for marketers of products like those carried by Brand Agility. Other than age, the other factors that influence people’s decision to buy include personality traits. From a marketing perspective, consumers who suffer from self-consciousness are sensitive about how others form opinions of them based on the products they choose (Bearden, et al., 1990). They then conform to the group to avoid feelings of embarrassment or alienation. Psychology is thus used in marketing to address such concerns as age, group pressure, social relevance and brand differentiation. Branding has become a key marketing strategy that influences customers’ perspectives and purchasing behavior. Emotions or how people feel about companies and the corporate world at large is an increasingly important part of the buying routine at a time when products offer the same quality and in danger of becoming mere commodities in an overcrowded marketplace. Thus, companies should preserve and polish their image and make sure it remains unsullied by incidents similar to recent accusations that Nike used sweatshop labor in its factories. Remember how Coca-Cola suffered in 1999 when a batch of spoiled Coke products made people sick in Belgium? Studies show that consumer purchasing is also influenced by products that exhibit the two personality templates called “sincere” and “exciting.” Sincere products are those that exude the qualities of nurturance, warmth, family and traditionalism, while “exciting” products are characterized by energy and youthfulness (Aaker, et al., 2004). Examples of sincere products are Hallmark and Coke, while Yahoo and MTV are some of the exciting products that use atypical logos and hip language for the benefit of the youth market. V. Conclusion and Recommendations Modern-day marketing is described as a management process to identify, anticipate and satisfy customer’ requirements in a way that would yield profit to the company. The customer thus needs to be placed at the center of all marketing activities. Brand Agility at present identifies with the vast youth market within the 18-25 age range through Porter generic products that appeal as unique or unusual. If it wants its growth strategy concentrated in this market, all it needs to do is intensify its marketing efforts toward that direction. However, if it intends to grow across all age markets, it may expand its marketing strategy by engaging in brand differentiation. The British Postie, Pizza Courier, Oee and MLB bags, as well as the Ducti wallets are projected as “exciting” products ideal for young people on the go. Brand Agility can redesign or repackage them to tone down their uniqueness and give them appeal to consumers who prefer the “sincere” brands. Branding, according to the literature, is a firm’s strategy to make its products different from those of the competitors in a way that convinces customers of its superior qualities. In the literature, a marketing strategy is customer-oriented when it abides by the following rules: Take care of your customers, or someone else will. Win an argument with a customer, and lose him. Always deliver what you promise. Treat your customers the same way you like to be treated. Your company’s reputation is in the hands of every individual in it. In this effort, Brand Agility would do well to employ the pestel and swot analysis in planning a new marketing strategy, taking into account all factors that could affect sales now and into the future. The advice of experts is to draw a worst-case scenario in the event the marketing strategy falls short of expectations. For example, if the marketing strategy targets a 10 percent share of the market but manages to grab only 2 percent. Also, the company needs to draw a profile of the target markets as to demographics, size, and buying patterns. For each target market, there should be an estimate of the projected sales volumes for at least four years into the future. These projections have to be based on the quality of your offerings, marketing strategies, sales plans and expenditures. For expert assistance, Brand Agility can turn to such online services as the Excel financial plan and Plant Write Market Plan, which both forecast sales and related budget costs of up to seven years; the Quick Insight software package, which evaluates business proposals relating to the competition; and Business Insight, which analyzes your market position and competition in detail (Sorce, P., 2002). VI. Referencing and Presentation Most of the data presented herein are culled from concepts and theories selected because of the particular attention they give to UK situations and market trends. This preference is dictated by the fact that Brand Agility is a UK-based company seeking to increase its presence in that market. The pestel and swot analysis, for example, is a uniquely British way of business and marketing management. Maven Management, which set forth the 6 types of marketing strategies in Chapter III, is also a British consultancy firm that presumably expresses its ideas based on market realities in that country. All told, it is believed that the paper succeeds in setting a road map for Brand Agility to follow in getting to where it intends to place its products in the UK market. References: Aaker J., et al. (2003). When Good Brands do Bad. Paper presented at the Marketing Institute Board of Trustees meeting, Washington DC, March 6, 2003. Alreck, P. & Settle, R. (1999). Strategies for Building Consumer Brand Preference. Journal pf Product and Brand Management: 08 2 1999. Bearden, W., et al. (1990). Measurements of Consumer Susceptibility to Interpersonal Influences. Journal of Consumer Research, 5 (14). Bedbury, S. & Fenichell, S. (2002). A New Brand World: 8 Principles for Achieving Brand Leadership in the 21st Century. Viking Books. Chen-yu, J. & Seock, Y. (2002). Adolescents’ Clothing Purchase Motivations, Information Sources and Store Selection Criteria. Family and Consumer Sciences Research Journal, 31 (1). Derussy, C. (2006). The Relationship Between Conformity and Consumer Purchasing Decisions. Department of Psychology, Loyola University, New Orleans. Featherstone, M. (2002). Consumer Culture and Post-Modernism. Nottingham Trent University. Gobe, M. (2001). Emotional Branding: The New Paradigm for Connecting Brands to People. New York: Allworth Press. Gordon, J. (2002). Global Capitalism has Developed a Planetary Consumer Culture. Webpage (online). Available at @www.jakeg.co.uk. Maven Management. Strategic Marketing: Priority Matrix. GIF, Part 1. Meyer & Anderson (2000). Pre-adolescents’ Apparel Purchasing: Conformity to Parents And Peer in the Consumer Socialization Process. Journal of Social Behavior and Personality, 15 (2). Nickell, S. & Quintin, G. (2001). The Recent Performance of the US Labor Market. Bank of England, August 2001. Performance in People. 7 Steps to Customer Service Excellence. Webpage (online) Available at http://www.performance in people. co.uk. Ries, A. (2001). Positioning: The Battle for Your Mind. McGraw-Hill Education. Sorce, P. (20020. Relationship Marketing Strategy. Rochester Institute of Technology: New York, September 2002. Tait, B. (2004). How Marketing Science Undermines Brands. Falton Brand Consulting; October 2004, issue 454. Read More