Interaction between Oligopoly Firms - Assignment Example

Interaction between Oligopoly Firms Executive Summary We have recently developed a new line of Voice Recognition device (VRD) products. A team of four professionals have been dedicated to the marketing strategy for the product line. The industry is highly competitive. Regular innovation in product has to match with the right marketing to make an entry into the market. Marketing mix has been used to have direct influence on the profits. Our team aims at maximizing profits, with market segmentation and competitive positioning. Since there are several companies marketing VRD, our team decided to select a unique name for our product. A brain storming session led us to come with a unique name for our product. This gave us a competitive edge. While market has been segmented, competition is always stronger. As such, our team has developed a marketing strategy focusing on competitive positioning, dual pricing, channel management, sales force management, and advertising plans. Marketing mix has also been considered although most companies offering VRD have opted for marketing mix as part of their strategy. Market segmentation: to market our VRD, our team identified five segments – the students, professionals, corporate executives, home users, and the foreigners. Very often people are at a loss and unable to decide what to purchase. At such times, marketing mix becomes very useful in reaching the target customers -. the product should be available at right place at the right time. The marketing mix of any product would include the right product at the right time in the right place with the right sales and promotion strategy and at the right price. To have competitive positioning, these are the four P’s (Product, Price, Place and Promotion) very essential for marketing any product. To ensure good sales of our product and services, it is essential to understand the product, its need and importance, the price should be reasonable, if necessary dual pricing, the product should be easily available hence distribution has to be right and finally the right awareness of the product. The promotional strategies have to be taken into account depending on competitive factors. Three essential features of the product namely, protection against user errors, variety of special commands and ease of learning coupled with effective customer service, helped us to give a unique name to the product. Having identified the advantages of our product, our team moved on with pricing. The pricing strategy is normally influenced by the net income required and the objectives for long term marketing control. We opted for dual pricing strategy as we could command a higher price from the foreigners. State subsidies on local sales would help us to make up for the lower costs charged from the citizens. However, for local sales, dual pricing becomes necessary when corporate bulk orders are received. Discounts and incentives offered to the dealers also lower the effective price that a company ultimately gets in hand. Besides, when our VRD would be bundled with allied products, prices would be lower. Channel management for any product is very essential. The choice of the distribution channel depends on the product and place. Our team realized that choosing multiple channels could result in increased costs and diminished revenues, as per the Mckinsey analysts report on selecting the right channel. Companies should guide the customers to the right channel to take advantage of the incentives offered. Value-added services like increased product guarantee, free maintenance for two years helps differentiate a product from competitors. These are difficult to imitate and leave a lasting impression on the customer’s mind. The customer would definitely consider these points before making the final purchase decision. After careful analysis, our team opted for two channels of distribution – through authorized dealers and the internet marketing. The latter would help us to reach those customers who have to travel long distances to buy the product. At the same time, we offered our dealer financial incentives so that he would keep pushing our product. This also builds faith in the dealer about the product and the company and he is willing to give his best. We even encouraged him to send his sales force if necessary to give a demo of the product and close deals and for which we were willing to reimburse the expenses. Sales force management plays a vital role in marketing and research by Accenture confirms that it is invariably an under functioning sector. Leads are generated and collected but the sales force is unable to analyze and taken immediate action upon it. Our team first decided to make the sales force understand the targets very clearly. Performance objectives were laid out. We eliminated mundane and labor related activities from their daily routine. When they get attention, the sales force wakes up. We have even decided to invest in training the sales force. Competition knowledge is equally important. The sales force does not only need to know the goals to be achieved but the method to achieve these goals and the motivation to attain them. This is part of the training and we expect this would give us competitive positioning. Advertising budget and strategy again has to be very clearly defined and our team came out with exceptional ideas. We decided to go in for media advertising through television, magazines, and the internet. Personal selling for such a product would be very expensive and unwanted. It can easily be bundled with devices and sold. There are several television channels which carry advertisements of competitor products offered at low prices. Hence, we had to be very careful in selection of our advertising plans. Different strategies for different market segments would be more effective. Hence, we decided to target the students through the educational institutions, offering incentives to the institution for sales generated through them. To capture the corporate market, advertising through magazines helped while television advertising should fetch us the home users. Advertising costs are a part of the advertising budget and our investment would grow as we see leads generated. Dynamic interaction between oligopoly firms takes place freely. There is exchange of information and communication between the companies engaged in the marketing of VRD. Contact between the companies and customer helps plan out future strategies and spot profit oppurtunities effectively. Hence, overall, we focused on our strengths that is the unique name and the three essential features of our product which allowed us to formulate our marketing strategy. We know competition should never be taken as weak, and hence we decided to step sales through dealer incentives and offering value-added to the customer. Competing aggressively would only lower profits for each unit and thereby of the industry as a whole. Allowing space to each other keeps competition healthy and individual profit margin levels comfortable. It also enables each firm to develop satisfied customers, which is the key to the success of any business. The Marketing Game made us realize the benefits of process of strategy formation and the effectiveness of marketing management team. According to Henry Mintzberg, strategic thinking is a particular way of thinking with specific characteristics. Strategic programming on the other hand is the systematic programming of pre-identified strategies from which an action plan is devised. Strategic thinking utilizes intuition. Our team did not stick to the traditional approach of marketing, which in the words of Mintzberg, undermines strategic thinking. While we did plan out the basics, we encountered situations which set us thinking and we developed more strategies as we moved along. For instance, while providing dealers’ incentives, we realized that customer’s offered their suggestions. This prompted us to formulate questionnaires to get a feed back, which is essential for regular upgradation of not merely the technology and the product but in giving service too. Mintzberg’s approach suggests that an organization should be flexible. Planning can be done but as the situation emerges, managers should be able to adopt and incorporate the changes. Market orientation leads to a better understanding of the customers, competitors and the environment. The strength of the relationship between market orientation and firm performance is not influenced by the environment, according to Kohli & Jaworski (1993). They define market orientation as the organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination of intelligence across departments and organization-wide responsiveness to it. Different members of our team contributed to the strategy formulation. We came to the conclusion that one satisfied customer means several new customers. So, we decided to focus on customer satisfaction. Marketing does not end with advertising and sales. Market orientation helped us to understand the diverse customer needs in terms of VRD and this prompted us to add unique features to our product. We realized that human error cannot be overlooked and hence, we incorporated protection against errors. This means customer does not have to wait for our service staff to manually configure the system again. An in-built device would restore it to default status. We incorporated marketing channels to get the best out of it by appointing dealers/distributors who had prior experience in the line and dealt in allied products. Overall, all members of our team contributed effectively. All of us did some groundwork and input ideas. Brainstorming sessions brought the best in us and as a team, we learnt to motivate each other. Knowledge of marketing did help us to hone up our skills and each one made an effective contribution. The end result bears testimony to our marketing knowledge and efforts. Read More