DIGITEK Company - Managing Markets - Assignment Example

Running Header: Managing Markets Student’s Name: Instructor’s Name: Course Code: Date of Submission: 1.0 Introduction Kim (2007:133) posits that a crucial approach for business companies to achieve global competitive advantage is to build layers of advantages. This means a company must continue to expand its competitiveness. The success factor in any business model depends on how atop level management are able to craft business and corporate strategy by analysing external environment, at macro & industry level and internal environment (Kristandl and Bontis, 2007:943). This will enable them to point exact areas of exploitation and areas of improvement through proper business practices like innovation, creation of switching cost, low operation and production cost/ cost leadership, total quality management, marketing research and mix, leadership, customer acquisition and retention, reward & performance management, just in time production & supplies management. The essence is to create value at low cost to the ultimate customer as compared to other competitors so as to lock them in. Before churning out marketing plan it is prudent for firms to do marketing research so as to establish market attractiveness. In order to satisfy the numerous customer needs, marketing managers are required to make informed and strategic wide array of information. These decisions are on the 7Ps of marketing, segmentation of market, opportunities, selection of target market, marketing performance, and implementation of marketing programs. These can only be attained by proper marketing plan. The principal aim of marketing plan is to pinpoint how marketing mix (7Ps) and its elements can be utilised in the context of macro environment, competitors, bargaining power of buyers, internal competencies, mission and vision of a company (Aaker, Kumar and Day, 2001:2, 3 & 4). This report presents operational marketing plan for DIGITEK Company which is launching a new tablet-style personal computer. 2.0 The Company and its Market DIGITEK Company was founded in 1990. After retirement, the founder Casper George invested in development of open software systems in Brisbane Australia. Presently, The Company operates across Europe, Canada, the Middle East, South East Asia and Australasia. The current market focus of DIGITEK Company is on electronic segment with both focus on low end and upmarket segments worldwide. Apart from income and social status, the company targets different segments of the population based on age parameters. They have wide range of products for all of their customers and engage in marketing mix. Currently, DIGITEK Company is involved in the designing, manufacture, as well as the marketing of electronics like computer hardware, fixed telecommunication products, software and mobile communication gadgets. Along with its subsidiaries, designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players. The company has adopted business to business approach whereby they have distribution channels and also they have adopted business to consumer market through online trading portal. The company has direct sales force, as well as third party resellers to help in distributing its products. 3.0 Company’s Mission and Vision Mission is the purpose that an organisation seeks to attain. This broad statement acts like a reminder to all on where they should direct their energies. All activities, ventures and formulations are done in line with the vision framework so that this aspiration is achieved. The company’s mission is “making life better through communication”. Vision can be seen as the ultimate goal of where an organisation wants to be in the future. It is futuristic dream that can only be realized with properly formulated strategic management plan. The vision is to “provide and be the preferred developer of communication gadgets and other accessories in the world”. 4.0 The Product Features and Rationale for Launching The proposed tablet computer has undergone intense research for 3 years. The tablet computer known as DIGITEK W 4 will have the standard feature of a tablet based on DIGITEK operating system that is able to synchronise with other operating systems. The product will come in numerous stylish designs and with over 70 operating languages. This programme is a Linux based operating system and can be used in Smartphone and tablets. This software is an open source and is released under DIGITEK license. This product can be downloaded by third parties, moreover, it has over 600, 000 applications. The product has undergone improvement and has approximately 8 versions. This system is designed to support many features like connectivity, messaging, multiple language support, web browser, streaming media support, tethering and screen capture among many. This product has standard security and guarantee’s privacy. 5.0 Macro Analysis – PESTEL The strategies crafted and implemented by business organization determines their strategic positions in the marketplace The strategic position of a business organization is also influenced by how business organization interact with the key external factors impacting on their operations and business activities. According to Kristandl and Bontis (2007:943), PEST analysis relies on an organization past events and experience but plays crucial roles in determining the future of a business organization. Enz (2009:53) notes that PESTLE analysis is an audit a business organization can undertake to determine environmental influences affecting the business and use the findings to develop strategic decision-making. These factors do affect an organisation either positively, negatively, directly or indirectly. 5.1 Political Factors Most of the countries that DIGITEK operates in are stable. The combined North America, EU, some parts of Asia and Africa business environment provides strict policies that ensure businesses are protected through a well setup legislative system. Political factors can be impacted through labour laws, tax policies trade restrictions and the environmental law. These legal frameworks offers level playing field. This is good for business development. Apart from few countries, in political view most countries are suitable for doing business. This enabling political environment has opened space and competitors are giving DIGITEK a run for their money. On the other hand, it has also allowed DIGITEK to have subsidiaries all over the world trading in various stock exchanges and selling their products. 5.2 Economic Factors The prevailing economic situations and trends both at the local and international levels impact on the performance of business organization in all industries. Developed nations like Europe and US, parts of Asia and other emerging economies provide market since their populations are able to afford DIGITEK’s products if they create value and are competitively priced. This stable economic situation is healthy for electronic industry. The only dent that has been which affected all players was the recession. This affected the industries and consumers’ purchasing power. With economic growth individuals and businesses are likely to demand telecommunication products to support their operations as they will be able to afford. 5.3 Social Factors People have become technologically savvy and would wish to leave a comfortable life and be at par with current social trends. Moreover, consumers are well informed about the products they want and are able to access lots of information from the media and the internet, which offers resourceful information. Customers are able to determine the type of products they want, the manufacturer and even the supplier as all the information is available to them (Barney, 2007, p.13). This makes it easier to convince customers as they know what they want and want to go with trends. Social dynamics has created a mass consumer population that keeps with trends. 5.4 Technological Factors Innovation is great factor as it allows firms to produce wonderful products that captivate imaginations of consumers in terms of functionality and aesthetics hence making them relevant to the market. Innovation can allow a firm to gain market leadership if well utilised with other marketing strategies. Innovation works in two ways and thus can be productive or hindrance especially if competitors technology is above the rival firm and hence reduction of brand value due to irrelevance. A case example is how LG and Samsung have overtaken others in the television sector especially the LCD ones or Apple and Smartphone. On the other hand, technological platforms allow firms to interact with clients directly and create new channels of distribution. The introduction of e-commerce in the mid 1990s has enabled DIGITEK to implement the internet technology in its online business. This has enhanced sales, sharing of information and advertisements. 5.5 Legal Factors The legal framework for conducting business activities in the most parts of the world is well structured and encourages the growth of the market, business security, as well as sustainable profitability of most business organization across many business industries. Business laws that govern electronic industry are well structured and defined, hence promoting both local and cross boarder business ventures. 6.0 Market Analysis With the ever expanding technology, this market is not yet saturated sincee the uptake of tablets is increasing. Appendix 1 shows the profitability level of firms which are manufacturing tablets. This means that there is great opportunity as based from the return indicator. In addition the same is reflected in the shipment volumes that are churned out by most competitors. This equally outlines the fact that there is demand for tablet computers (See appendix 1). 7.0 Competitors Analysis based on Porters Five Forces Model It is imperative that business organizations analyze their environment in order to be able to effectively take advantage of prevailing business opportunities and achieve competitiveness. With this regard, Porter’s five forces model is a significant analytical tool available for business organizations to understand where such business opportunities lie in their industry and business environment. Goymer (2004:209) notes that Porter’s five forces model is essential for business organizations such as DIGITEK in understanding both the business current competitive position and the strength of the position the business is perceived to move to. 7.1 Bargaining Power of Customers Customers are one of the most important players. The customer is the determinant in spending level. Multiple customers have a huge impact to the market. If many customers perceive that the prices are high, a company will have to reduce the prices to prevent mass shifting of customers to rivals as they search for lower prices (Shrader & Heselbein, 2008:503). With changing economic times, buyers are likely to resort to counterfeit products. Secondly, if consumers reduce their spending on electronics, then DIGITEK suffers. Thirdly, Consumers may choose to use previous versions of products rather than upgrade to new releases. The strategy is for firm to create switching cost to lock them in and also be low cost producer which can then be transferred to customers. 7.2 Bargaining power of Suppliers Supplier Power enables a business to assess the capacity the suppliers have to adjust prices. This is driven by the number of supplier in each key product, considering the uniqueness of each products of service they supply, their strength and control over the market and the cost that can be incurred in case the business decides to move to other suppliers (Henry, 2008:435). DIGITEK main suppliers have limited control over the market as there are numerous suppliers. The ultimate goal of the firm is to streamline their supplies management so that it is based on collaboration rather than competition. 7.3 Threat of New Entrant to the Industry Technology has meant that other companies can also enter a market occupied by DIGITEK. An example is Samsung and LG that have been able to do everything done by Sony or how Google has ventured on developing Android Operating system thus, undercutting Microsoft, RIM Blackberry and Ovi of Nokia. To overcome this, DIGITEK has to create barrier to entry and be low cost producer so as to lock in customers. Threats also come from bigger enterprises in the industry that probably have more market base than DIGITEK and may want to venture outside their traditional geographical regions. 7.4 Threat of Substitute Products or Services There are various substitute products like Smartphone and laptops. These can considerably eat on DIGITEK market share of tablet computers. To overcome this, at given percentage, DIGITEK will sell the same products at the shop. Moreover, firm will be low cost producer, diversify and innovate so as to lock in customers. 7.5 Rivalry among Existing Competitors There are many competitors in this sector. They include Samsung, Apple, Motorola, Blackberry, LG and IBM. To curtail threats from existing competitors, the firm will be innovative and ensure total quality management so that the tablet is of high quality. The second is to be low cost producer through lean production. This will make the production and operational cost low. Consequently this is transferred to consumer. Moreover, this will make switching cost low in our advantage. To counter threat from new entrants, the firm will create barrier to new entrants by raising standards, locking in customers by creating high witching cost. Lastly is to drive internal efficiency through innovation, leadership and reward based management, management accounting, proper supply chain management and massive marketing to ensure customer loyalty 8.0 SWOT Analysis Every organisation needs to thrive and grow in its business operations. This is realized through its ability to meet the demands and expectations of the customers by doing things better than its rivals (Thompson & Martin, 2010). SWOT analysis of an organization involves evaluating internal factors which have either beneficial or detrimental impact on the ability of an organization to effectively compete in the market place. Organizations strengths are internal resources and capabilities and regarded as an organization’s core competencies. It is these strengths that will enable DIGITEK Company to create and maintain competitive advantage against competitors in the market place (Sadler, 2003). Weaknesses on the other hand are those factors internal to an organization that jeopardize business performance and competitiveness in the market place (Ireland & Hitt, 2005:68). 8.1 Strengths Factor Issue Extensive research and development DIGITEK has invested heavily in research and development activities in order to have the best products on the market. The company has innovation as its driving strategy enabling it to make unique products. Creativity and Innovation DIGITEK employs some of the highly talented and knowledgeable personnel in the industry. These people have brought in a lot of creativity and innovation when it comes to the products and services offered by the company. Differentiation and Advertising The company has a wide array of products. The company engages in personalised advertising to market its products and reach its target market. Over years, there have been various advertising campaigns by the company. Brand Loyalty The company has engaged in production of high quality and unique products. These help in maintaining customer loyalty. More so, through advertising, DIGITEK has been made a household name world over. There is brand and customer satisfaction that comes with using DIGITEK products. To people, it is prestigious to use unique DIGITEK products Distribution channels DIGITEK uses different distribution channels in selling its products. There is physical retail stores located in different countries worldwide. Customers can access DIGITEK products from these stores. Customer centred marketing DIGITEK has initiated customer centred policies. These policies ensure that products are geared towards meeting the unmet needs of the consumers. To ensure good service provision to the customers, there is a database that shows the customer preferences, as well as their buying patterns and behaviours. Weaknesses One of the weaknesses of DIGITEK presently is the inability to respond to the massive undercut is has experienced from competitors like Samsung, Apple and LG who have really eaten into their market share. This means that the firm should churn out products which are demand driven and not doing innovation for the sake of it. Tung (2001:41) notes that organisation that survives is the one that is able to adapt to change and not the strongest one. The emergence of new entrants and upping of operations by existing competitors has eaten into the market share of DIGITEK. Opportunities The growing demand for electronics especially personal entertainment gadgets is an opportunity. People are buying and using electronics more than ever and as such, the market continues to expand. Another opportunity is that the Buyers of computers are increasingly becoming more educated in terms of what they really want. DIGITEK due to its ability to customize personal entertainment gadgets and other electronics is in a position to cater for the need of this group of buyers. The expansion of communication and technological integration also provides an important avenue to expand its business operations (Pinegar, 2002:6). Threats Porter’s model as analysed in chapter seven explains threats DIGITEK faces. 9.0 Segmentation, Targeting and Positioning One are area in marketing research is market segmentation (Aaker, Kumar and Day, 2001: 4). Segmentation is the division of market according to attributes like demographic attributes, geographic attributes, psychographic and behavioural attributes. The firm approach will be to target all prospective customers so long as they are able to pay for the services. However, apart from that general perspective, the product will be launched in two designs. The first is for business executives who need to do business on the move. The next is the lighter version for those who want to enjoy beauty of tablet at a lowered price. Apart from the above, the designs will be produced in different colours.The aim is to rely of numbers rather than few to penetrate the market. Based on the porter’s model, the layers of advantage and that the firm has over the existing competitors is ability to combine value and price. This means the firm will rely on creating barriers to entry into the industry and also exploit its strengths/ core competencies as its key success factors. The key strengths here will be differentiation and cost advantage. 10.0 Marketing Objectives Marketing plays a chief role of connecting the firm and the product/service to customer. It is the proper marketing that allows any firm to gain market leadership through higher sales return and customer satisfaction. Proper marketing deals with the question of what do customers want, where the market is, who will buy and why they will buy the product (Ehmke, Fulton & Lusk, 2005:2 & 3). DIGITEK will have broader market by having differentiated services for different calibre of clients. 11.0 Marketing Mix Product The tablet computer known as DIGITEK W 4 will have the standard feature of a tablet based on DIGITEK operating system that is able to synchronise with other operating systems. The product will come in numerous stylish designs and with over 70 operating languages. This programme is a Linux based operating system and can be used in Smartphone and tablets. This software is an open source and is released under DIGITEK license. This product can be downloaded by third parties, moreover, it has over 600, 000 applications. The product has undergone improvement and has approximately 8 versions. This system is designed to support many features like connectivity, messaging, multiple language support, web browser, streaming media support, tethering and screen capture among many. This product has standard security and guarantee’s privacy. The essence is to have quality products that add value at affordable rates and as means of public relations so as to have good public image that can be used to attract customers. To achieve the above, the key success factors will be to offer high value product as offered in upmarket shops at a lower price. Price The first approach is to standardise the price in relation to existing trends, cost of production and inflation factors. This means that to have affordable pricing the firm will have to streamline its internal operations to reduce production and operation costs which can then be transferred to customers. The firm will adopt pricing system of what customers are willing to pay for a product under certain conditions by having different pricing approaches and varied models of the tablet computer. This should also be achieved by employing multiple units pricing that allows for those who buy more than one product of the services to receive discount. Lastly the firm will employ the use of price skimming for most of their services. The essence is to undercut competitors by making it easy for clients to switch to DIGITEK while creating a barrier to counter switching so that they can be locked in. Place The other critical factor is about spatial distribution of products. Distribution is an important mechanism of getting products to the intended clients. To cater for all based on competitive pricing; the firm will be located strategically in Brisbane Australia. It will have proximity to transport hub and offices so that who come out of these places can directly access it conveniently. Apart from, that the firm will operate subsidiaries and regional offices in all continents and sub-continents. This will allow the firm to link with distributors who can then reach the ultimate customers. Moreover, with shift in trends, the company will be found in virtual environment where people can order products online through e-commerce platform. Promotion The firm will engage in aggressive promotion through advertisement, word of mouth reference, and offering of discount, customer loyalty management. In addition, the firm will ensure there is strong communication link with clients and prospective ones so as to get feedback on the desired level of services and areas for improvement. Apart from that, the firm will try to brand the premises of authorised dealers with company colours so that they can offer free consultation and after sale services.. People The core aim of any organization is to be a market leader in their respective field of operation through delivery of high quality product and services. This desire for market leadership can only be achieved through investment in human resource by selecting and developing them. The organizations/sectors strength, success and failure rely on the staff recruited. The firm will strive to recruit staff and management who display proficiency not only in technical qualification but also with proven ability in interpersonal skills. Process Process remains one of any organizations’ core concerns. In order to improve on service delivery, customer intimacy and loyalty, DIGITEK will ensure that their services have a wide collection of options. The process of Just in Time production will be adopted. The idea behind this principle is to create the most value for the end customer by focusing on elimination of waste. It connects with marketing paradigm, as production is linked to the philosophy of value creation for the client who is willing to consume the product or service that offers the highest value. Thus, Lean production is centred with the idea of creating value with less amount of effort and fewer resources attached to it (Jackson & Jones, 1996:12). 12.0 Conclusion Every business organization is unique with regard to how they craft and execute business strategies, as well as how they operate their business activities. Every business organization has a specific and unique value chain which is the potential sources of their competitive advantage. This will determine their market leadership or not (Ireland & Hitt, 2005:68). Proper marketing deals with the question of what do customers want, where the market is, who will buy and why they will buy the product. This is achieved through planning, executing the plan, pricing, promotion and distribution of ideas, goods and services that meets the needs of customers which are dynamic while ensuring increased income. On the other hand, a product developed should aid in value creation for the end customer while giving the manufacturer an avenue to gaining market leadership. For a successful market leadership, a firm has to be innovative, low cost producer, creator of value and products that create a sticking memory through differentiation, lock in customers through high switching cost while at the same time creating a barrier to entry (Kotler & Keller, 2009). References Aaker. D.A., Kumar, V. & Day, G 2001, Marketing research. New York, John Wiley and Sons. Apple Insider 2012, Apple's iPhone believed to account for record 8% of global mobile phone market. [Online] Available at: . Accessed on August 17, 2012. Barney, J 2007, Gaining and sustaining competitive advantage, 3rd edition. 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Kim, R 2007, Samsung’s Competitive Innovation and Strategic Intent for Kotler, P & Keller, K 2009, Marketing management 13th edn, Upper Saddle River, New Jersey, prentice hall. Kristandl, G. & Bontis, N 2007, Constructing a definition for intangibles using the resource based view of the firm. Management Decision, Vol. 4, No. 9, pp. 1510-1524. Pinegar 2002, Dell Computer Corporation: Market Trends and SWOT Analysis. Retrieved from: http://www.pinegars.com/PDF_Files/Paper%202a.pdf. Sadler, P 2003, Strategic Management, London, Kogan Page Publishers. Thomson, A., Strickland A. J. and Gamble, J 2007, Crafting & Executing Strategy. NY: McGraw-Hill/Irwin. Tung, R 2001, Learning from world class companies, London, Cengage Learning. Appendix 1 Source: Hill & Jones, 2007 Figure 4: Tablet Shipments (Millions of Units) Q4 2010 2010 Q4 2011 2011 Nokia 123.7 453.0 113.5 417.1 Samsung 80.7 280.2 95.0 327.4 Apple 16.2 47.5 37.0 93.0 Others 179.5 579.3 199.5 713.9 Total 400.1 1,360.0 445.0 1,551.4 Source: Apple Insider, 2012 Read More