Audit of Rip Curl - Assignment Example

Name Tutor Course Date Audit Report of Rip Curl Rip Curl is one of the greatest manufacturers of boardwear in Australia which was founded in 1969 by the ingenuity of the one Dough Warbrick with his long time friend Brian Singer (Ham 1). The company was first founded in Torquay, Victoria in Australia which was its headquarter at the time of its initiation into the Australian Market. In the early 1970s when it was first initiated into the market, Rip Curl was involved in the production of surfboards and towards the end of that fiscal year, the company began producing wetsuits and this production was informed by the company’s vision of transforming the technology involved in diving to incorporate elements of having the wetsuits that are used in diving to be equally suitable for surfing (Ham 1). As of now, the company commands a considerable market share in foreign markets in the production of boardwear and these markets are in Europe, South America, North America, UK, USA, Canada, Israel and Peru (Aprhys 1). This paper is a research paper as an audit report for Rip Curl where it is going to analyze the company’s SWOT situation in the market, analyze consumer behavior in the market, its pricing strategies, positioning strategy and promotional strategy in the effort of having a summary of the audit report. SWOT Analysis and Positioning on the GE Grid As indicated in the introduction, Rip Curl is one of the largest world producers of boardwear and its operations are stationed in major world economies as indicated above. The company’s brand is among the things that have given it this market prominence over time and the fact that it has remained a private company under the chairmanship of François Payot who is also the Chief Executive Officer of the company (Ham 1). There are additional elements that the company has in its marketing and management structure that explains this prominence and the following SWOT analysis places these elements in their proper perspective. Strengths that the company has in its market is diversity in the products that its trades in. The company has established itself as a major producer of a variety of products from general surfing equipment to swimming suits as well as services and technologies in the diving and swimming. This gives it an upper hand in among its competitors as it has more options of products with which to trade (Aprhys 1). Its brand name has also acquired world-wide acknowledgement and therefore has been come almost an epitome of grandeur when it comes boardwears. The weaknesses that the company has, firstly is a general lack of understanding of consumer preferences. There have been times when the company has followed it culture of producing products that are specifically designed by its engineers with complete disregard of consumer needs which has cost it substantially in the past. The company also lacks user centered designs and in most of its foreign markets, there is less awareness of its brand name and superiority (Aprhys 1). As regards opportunities, Rip Curl has great opportunities in an expanding diving and boardwears market with this crazily expanding technological dispensation. There is high percentage of young market craving for newer models of diving paraphernalia which translates to a strong customer demand for new innovative products. In addition to this, there is a high disposable income in these emerging markets which means that expansion for the company in these markets is favourable now than it has ever been (Al-Khatib, Mohammed & Scot 211). The greatest threats that the company faces are stiff competition from other providers and bargaining power of consumers. With high competition, and high bargaining power, the company will always be at pains to revert to higher sophistication and conveniently cut on its costs for consumers to remain afloat in the market which is a considerable threat for a profit making organization like Rip Curl International (Al-Khatib, Mohammed & Scot 132). The GE grid for Rip Curl shows the standard market elements of the company to be in positions that are admirable for any business endavours. These market elements are about its market attractiveness (which details issues regarding market size, its growth and competition Rip Curl encounters in the market); and business strength for the company which is indicated by its 38 percent relative market share, its astute knowledge of its clients and their needs and market forces as well as the quality of their products that the company trades in (Bitner & Booms 90). Consumer Behaviour The consumer behavior that is relevant for this paper regards consumers’ consumption and use of products and services that are produced by Rip Curl International. To help discuss this, the Business-to-business marketing strategies and elements are discussed satisfactorily. (Bitner & Booms 82) define business-to-business marketing as encompassing all commerce transactions between businesses in such regards as between a wholesaler and a manufacturer; between a retailer and a wholesaler et cetera. They further add that “the volume of B2B transactions is far much greater than the volume of business-to-consumer (B2C) and business-to-government (B2G) transactions” (Borden 2 – 3). The reason given for this apparent observation is that in a typical supply chain, B2B transactions are many as they involve business subcomponents and/or raw materials but for B2C there is only one transaction which involves the selling of the finished product to the end user (Borden 6). To further illustrate the point, Gioia & Sims (37) give the example of a automobile manufacture where he postulates that such an investor, makes a number of B2B transactions such as buying repairs, glass for making windscreens and tires for its manufactured vehicles but as regards B2C transactions, there is only one; the sale of the vehicle to the final consumer (Gioia & Sims 37). In a word, B2B marketing strategy involves the conveyance of information and consultation among and within business chains for profitability. This concept is also used in the context of collaboration and communication where businesses now have employed the social media to communicate with their employees and within the company’s departments (Keller & Kotler 36). Business-to-Business Marketing Strategies There are a number of B2B marketing strategies that are imperative for Rip Curl International which can be of great importance for the company when it considers consumer behavior with respect with the use of the company’s products and services. Keller & Kotler give six B2B marketing strategies that help the understanding of these consumer behaviours and these are (Keller & Kotler 112 – 113): B2B Branding – this strategy requires that corporate brands, products/services brands and divisional brands are aligned properly to business objectives. It then requires that these brands are applied to materials that in some sense may be considered ‘informal’ such as electronic correspondence which has been done well by Rip Curl to support the large consumer base that the company enjoys (Kotler & Keller 112). Product or Service – this strategy is concerned with the cost-saving benefits of products and services traded in so as to enhance product development, create shareholder value and improve marketing cycles. When it is appropriately done, consumer behavior is in favour of the company products and services (Kotler & Keller 78). People or Target Market – it is appreciable that target markets are highly specialized entities that have specific needs depending on the industry and the market niche in which the business operates. As regards B2B marketing strategy, the market segment is usually described in terms of what is called firmographics and this requires that the marketer involved possesses good business skills and marketing intelligence so as to ensure that there is increased response rates (Keller & Kotler 112). It is also known that the size of the target market does not deter the consumer from making crucial purchasing decisions and these decisions are independent of each market segment to a large extent. This means that this strategy sets out to determine the main influencers of the decision making process by the consumer so as to maximize profitability by encouraging consumers to make purchasing decisions that favour the company’s products and services (Keller & Kotler 113). Pricing – pricing matrix is a complex concept that determines what is charged for company products and services. The elements that inform this matrix are numerous and complicatedly interlinked together requiring delicate balancing and assessment. For instance, it may be convenient to pay premium prices more often that the consumer market offers which is achievable when supported with a strong brand (Orville & Mullins 220). Promotion – this strategy is particularly easy to follow when core competences regarding it are known such as the media to be used, the information intended to be conveyed, decision making preferences by the consumers, the specific terminologies relevant to the market segment among others (Orville & Mullins 112). There are basic elements that are common to all industries which are trade shows, blogs, publications, analysts and retail and wholesale outlets which means that with proper understanding of the industry or product of interest to trade it, promotional plan as a strategy becomes easy to prepare depending on the kind of budget that is planned for (Orville & Mullins 98). Place or Sales and Distribution – these strategies considers the all importance of knowledge of the niche market, experience and expertise in business marketing and effective direct sales forces all of which are crucially important to business marketing (Orville & Mullins 21). Positioning Strategy The target segment in the market for Rip Curl International is the middle and high class professionals given the company’s fine quality of fine produced. This target market is sustainable only in developed towns and cities where luxurious malls and marketing stores can be built and stocked. With this target market, the company stands to make over 150 percent or more from the sale of its diving products to the market (Abratt & Sacks 32). The following figure is a cluster representation of the perceptual map of Rip Curl’s products and their quality, individuality, special appeal and status in its niche market. Fig. 1: Perceptual Map of Ideal Points and Clusters Pricing Strategy The main product that Rip Curl International uses as its core merchandize in its market is boardwear among other diving technologies and products. The company has left the opportunity of further expansion of its product to the Australian and overseas market open to determine whether it is economically viable to venture into its investment from assessing the markets trends and characteristics (Orville & Mullins 32). The information to be included on the website will include prices of the various wine brands supplied by the company, available promotions and company policies towards encouraging consumer loyalty and company objectives and mission in its service delivery to its target market. With these considerations, the pricing strategy that will be used will be one that ensures profitability for the company as well as being mindful of the convenience and affordability of the products to their customers. This is a very astute pricing strategy which is not easy to realize and whose complexity goes beyond the mere need for market sustenance. It will require that the company applies premium pricing where it sells some of its products at premium prices for its well-off customers and employ price-cuts for its lower-earning consumers. Employment of promotional activities pegged on pricing of the products such as encourage voluminous purchase of products with the promise of additional insensitive as is the case is such strategies like ‘buy-two boardsuits-get-one-free’ is a good strategic approach to the pricing mix used by Rip Curl International (Aprhys 1). New entrants in the market will help diversify the market and improve quality of services offered. To the business though, it requires a strategy to counter any significant threat they may pose. Proper response to new competitors therefore will be such that to defuse any level of threat they may pose to my business by offering highly differentiated products and services within the market. In the Rip Curl diving products industry, first degree price discrimination can be applied to the customers who appear likely to have a low elasticity of demand. Since surfing and swimming among other related activities is a luxury, it is anticipated that it is easy to note such kinds of customers to whom similar services are offered to them at a premium (Warshaw 112). The form that second-degree price discrimination takes in the business is twofold: when customers can be noted to be regular in their coming to the company to purchase products and services and when such customers (or new ones) persuade their friends to come to the company’s stores in their subsequent visits. When these two categories are noted in any one customer, then the second-degree price discrimination will be applied to them so as services are rendered to them at discount dependent on their regularity of coming to the stores or the number of further customers they bring (Warshaw 231). To derive the most from all segmented group of customers, third-degree price discrimination can take the form of having such groups as students pay less to receive services in the stores which will increase their loyalty and numbers that visit our salon. The basis of mark up prices differs from profit maximization in the way it appeals to the consumer market. Mark up pricing more often than not appears a blanket increase of prices to realize profits without careful consideration of all pricing determinants where as profit maximization keeps in mind prevailing market forces. Rip Curl International predominantly follows price maximization when competition in the market is stiff and only uses mark up pricing in the event the market for some reason skews towards oligopoly (Warshaw 121). Promotional Strategy Promotional activities come in different variations and shape with each type and approach striving to provide the easiest means that will create maximum consumer satisfaction with maximum value return for the company (Aprhys 1). Marketing approach may therefore include some sort of trial that enables the consumer to purchase the product for the first time (Promotion: Integrated Marketing Communication 1). For Rip Curl, Push and Pull strategies are the two approaches that are mainly used in promotional concepts. Push strategy is concerned with the selling concept which includes two main areas: selling commodities insisting on price promotions and selling commodities focusing on precise purchase occasion. Pull strategy on the contrary emphasizes the creation of demand for a product or brand causing the consumer to come to the stores with the intention of buying the product (Promotion: Integrated Marketing Communication 1). There are other approaches that are used as promotional concepts that are not entirely conventional. Fear appeals may be used in an attempt to motivate consumers narrating the consequences of not choosing and using the product. In certain situations classical conditioning has been employed where a product is paired to a liked idea or object within the society drawing target consumers’ interest to it. Celebrity endorsement greatly helps to increase the fame of a product and therefore increases chances of selling the product to the intended consumers and all these approaches have been used by Rip Curl in its promotion of its products. Conclusion In summary, the foregoing analysis of Rip Curl International gives a clear indication of the prominence of the company in its niche market and the areas that it prospers in as well as areas that it needs to put if further improvement to maintain that status of high ranking market share possession. This in a word is a summarized audit report for Rip Curl International of Australia. Works Cited Abratt, Randy and Daniels Sacks. The Marketing Challenge: Towards Being Profitable and Socially Responsible. Journal of Business Ethics. 36.2 (2008): 12 – 33. Al-Khatib, Jamal A., Rawwas A. Mohammed and Vitell, J. Scot. Organizational Ethics in Developing Countries: A Comparative Analysis. Journal of Business Ethics 54.4 (2004): 49 – 66. Aprhys, Alison. Rip Curl Executives Happy to be Wet Behind the Ears. 1 March. 2009. Web.10 April 2011. < http://business.theage.com.au/business/rip-curl-executives-happy-to-be- wet-behind-the-ears-20080323-213x.html>. Bitner, James and Burney Booms. Marketing Strategies and Organizational Structures for Service Firms. Chicago: America Marketing Association, 1999. Print. Borden, Nelly, H. The Concept of the Marketing Mix. Journal of Advertising Research 4.1 (2006): 2 – 7. Gioia, Daniels, and Harvey Sims. Perceptions of Managerial Power as a Consequence of Managerial Behavior and Reputation. New York Press, New York, 2006. Print. Ham, Paul. Aussie Who has Board Meetings on the Beach. Sunday Times. 1 March. 2009. 11 April 2011. < http://business.timesonline.co.uk/tol/business/article671305.ece>. Keller, Lane and Phillip Kotler. Marketing Management. New York: Prentice Hall, 2005. Print. Kotler, Philip and Kevin Keller. Marketing Management. 12th edn. New Jersey: Prentice Hall, 2006. Print. Orville, Christine W. and Julius Mullins. Marketing Strategy: A Decision Focused Approach. 6th ed. New York: McGraw Hill, 2007. Print. “Promotion: Integrated Marketing Communication.” USC Marshall. 13 Sept. 2010.Web. 11 April. 2011 . Warshaw, Matt. The Encyclopedia of Surfing. Houghton: Mifflin Harcourt, 2005. Print. Read More