Marketing Audit of Software Understanding - Report Example

Executive Summary The purpose of the report is to attempt to explore the strategically important issues for Software Understanding that can be used in a bid to reinvigorate its operations following challenges such as competition in the market. The report will try to evaluate the current competitive strategies that can be implemented in the software industry using Porter’s generic matrix. The paper starts by highlighting the core business of the organisation and is followed by industry analysis which has led it to transform its operations to incorporate all the changing patterns in the markets. The report also attempts to suggest the best possible ways of reinvigorating the brand without compromising the integrity of the organisation as a whole. In order to assess the potential of SU, it is imperative to analyse the organisation’s environment in which it operates through conducting a SWOT analysis of the factors that affect its operations. There is also need to outline the company’s historical background in detail and its current operating strategies should also be examined. This includes identifying the sources of competitive advantage as well as its potential for better performance in the future and recommendations would be given in the study. Introduction Founded by Susan Irwin, a software writer about twenty years ago when she left the multinational database company Oracle to establish her own business, Software Understanding (SU) is an organisation which specifically deals with developing an invoicing and debt management software system. The firm appears to have many positive features such as; it uses Oracle database which is generally recognized as the most secure and ideal database for corporate applications and this has historically been a very important consideration. The firm also has a number of significant shares of the market. SU has three main lines of business namely; the Manufacturing Systems Groups, The Local Government Systems Group and the Education Automation which all use the invoicing and debt management software as well as the sector specific software. The company has done very well over the years and has grown to be the market leader for the product categories in each of the various sectors that it serves. However, since the onset of the credit crunch, Susan recognized that the clients are becoming sophisticated and that technical excellence is no longer a source of sustainable competitive advantage hence the need to transform the company to become market oriented. External analysis A critical analysis of the case study shows that SU does not operate in isolation from other companies but also faces challenges such as competition from other competitors. SU’s main competitor is a company called Financial Software, which also produces invoicing and debt management software. In addition to Financial Software, SU has a number of smaller competitors, each of whom tends to specialize in only one of its markets. Thus, there is need for SU to put into place measures that would give it a competitive advantage. Competitive advantage There are many successful business organizations in the market that are strategically so viable to such an extent that rival competitors can hardly exceed their performance. Such stable status can be achieved only when they apply certain strategies that can hardly be imitated by the competitors for long-term survival and stability, which is known as competitive advantage. Thus, Porter (1980) suggests a framework for competitive advantage through his generic strategies shown in Fig 1 below. Fig 1. Porter’s Generic matrix Competitive Advantage Source: http://www.ifm.eng.cam.ac.uk/dstools/paradigm/genstrat.html University of Cambridge- Institute of Manufacturing, Accessed on 15 February 2010. 1. A firm chooses to become the low cost producer in the industry in cost leadership. 2. In differentiation strategy a firm chooses to be unique from others. 3. In cost focus, a firm seeks a cost advantage in its target segment. 4. In differentiation target, a firm seeks to be different in its target segment. In order to survive in the long term, Porter (1985) has argued that a firm needs to have sustainable competitive advantages. The cost advantage is seen as a strategy that brings goods of an acceptable quality to the market with comparatively lower production costs than its competitors (Robinson 1997). If any organisation is able to maintain that cost gap, then the benefits in form of higher profits would be witnessed. This is achieved through careful and effective management of the cost drivers for the business (Robinson, 2007). Some of the competitive advantages are mainly differentiation which is one strategy that should be used by SU. According to Porter (1985:120), differentiation is “the process when the company provides something unique that is valuable to buyers beyond simply offering a low price.” Thus, differentiation strategy usually involves choosing either one or preferably a few key features or characteristics which have a broad perceived value in the market or segment the company operates within (Robinson 1997). Differentiated products are always seen as advantageous to SU as it would be capable of remaining profitable in the event of operating in other markets as a result of the uniqueness of its products. Marketing communication New information and communication technology has revolutionised the marketing communication landscape during the contemporary period hence, it is recommended that an integrated marketing communication plan is more ideal during the current period and this strategy can positively work for SU. According to Cant (2000 p.285), an integrated marketing communication can be defined as, “a concept of marketing communication planning that recognises the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines such as advertising, personal selling, sales promotion, direct marketing, public relations, sponsorship.” These often are combined to provide consistency, clarity and effective communication. Compared to other forms of communication media, the internet offers a variety of benefits to both the organisation and the customer. It is convenient, lots of information can easily be accessible without many hassles hence it is a useful tool which is recommendable for SU in conducting its daily business Public relations is another effective marketing communication method that can be used by SU whose ultimate objective is to attempt to make loyal customers through the provision of relevant information and knowledge to the customers. In actual fact, all communication efforts are meant to create brand awareness through providing relevant information to the clients which is the main purpose of PR. A successful PR plan is also determined by the ability to identify the targeted audience and their interests. This is commonly known as market segmentation. Smith (1991) summarises market segmentation as the process of identifying and grouping customers who share common characteristics and interests that make them different from others into a similar category. This is aimed at giving the customers relevant information that is likely to impact positively on them. Careful selection of product positioning will also enable the company to implement an effective PR strategy as the customers will have all the necessary product information at hand. In view of the argument outlined above, the most effective marketing strategy for SU involves the identification of the target markets. This is then followed by the selection of communication channel that can be used to convey the message to the customers. The message is then tailored in such a way that will make a distinction between the company and other rival competitors in the market in line with the company’s vision of becoming a unique brand name. Internal Analysis SU’s software applications make use of Oracle database which is generally recognized as the most secure and proficient database for corporate applications and this has historically been a very important consideration. Although other databases have been catching up and these features are now becoming common in the market, Oracle has managed to maintain the perception that its approach remains superior to that of its competitors. US’s highly experienced technical staff gives it an advantage over the rival competitors. The internal strengths are highlighted below. SWOT Analysis A SWOT analysis defines the relationship between the internal and external environmental factors in the appraisals in strategic analysis (Robinson 1997). Basically, SWOT stands for strengths, weaknesses which represent the internal environment of the firm while opportunities and threats are external environmental factors. It is primarily concerned with analysing the key factors of the environment and the fundamental internal strengths and weaknesses of the organisation which will help dictate the strategies appropriate to the firm. This must be based on a realistic appraisal of the organisation’s past and present performance. The organisation’s strategy must take into account its resources and competitiveness. Therefore, the objective of this analysis is to use the strategic pointers in order to use the existing business strengths to exploit the opportunities, create new opportunities, to counteract threats and repair the weaknesses (Robinson 1997). The main strength of SU is that its present performance is quite handsome compared to other competitors. It has unique products that are preferred in the market and has competent technical staff. However, the major weakness is that technical excellence is not always key to success. The major opportunity is that its products are preferred in the market compared to the other products hence there are likely chances to penetrate the other markets. Competition in the market is the major threat which needs to be carefully countered in order for the firm to maintain its status quo in terms of high sales. Conclusion Over and above, it can be noted SU is a leading software company but has been of late affected by mainly external factors in its operations hence the need to become market oriented. A close analysis of the case study shows that Porter’s generic matrix is very useful in modelling the premises upon which a business can operate as it would give all the information about the market especially with regards to other competitors in the industry. SWOT analysis is also a viable tool in establishing the organisation’s position with regards to its performance in comparison to other competitors. An integrated marketing communication plan is ideal in transforming the operations of SU into market oriented. Bibliography Cant M.C. (2000), Marketing Management, 4th Edition Juta and Co Ltd, SA. Kotler P. (1999), Kotler on Marketing: How to create, win and dominate Markets, Free Press, London. Lamb, C.W. et al (2000), Marketing, Oxford University Press, SA McCarthy J.E & Perreault W.D (1990), Basic Marketing, International student Edition, 10th Edition, Irwin, Boston Porter M.E. (1985), Competitive Advantage; Creating and Sustaining Superior Performance. New York: The Free Press. Randall G. (1994), Trade Marketing Strategies: The Partnership between manufacturers, brands and retailers, Butterworth-Heinemann, UK. Robinson W (1997), Strategic Management and Information Systems, 2nd Edition, Prentice Hall, UK Smith P.R. (1999), Great Answers to Tough Marketing Questions, Kogan Page, UK. Strydom J. (2004), Marketing, 3rd Edition, Juta & Co Ltd, SA University of Cambridge- Institute of Manufacturing (N.D.) http://www.ifm.eng.cam.ac.uk/dstools/paradigm/genstrat.html, Accessed on 15 February 2010. Appendix 1: SWOT Analysis Strengths -The main strength of SU is that its present performance is quite handsome compared to other competitors. -It has unique products that are preferred in the market and has competent technical staff. Opportunities -The major opportunity is that its products are preferred in the market compared to the other products hence there are likely chances to penetrate the other markets. -Can harness the use of new ICT to reach and attract new customers. Weaknesses -technical excellence is not always key to success. -Over reliance on the use of simple promotional tactics. Threat -Competition in the market is the major threat which needs to be carefully countered in order for the firm to maintain its status quo in terms of high sales. Read More