Marketing Strategies to Maritime Industry - Essay Example

?Maritime Marketing Table of Contents Overview 3 Marketing Mix 3 Evaluation of Marketing Strategy 5 Niche Marketing 9 Report 11 Overview 11 Alternative Strategies 16 References 21 Appendix 24 Overview The study is based on the analysis of marketing strategies related to maritime industry. Maritime industry is a service oriented industry. The service of the industry can be categorised into three types i.e. container terminal, cruise terminal and vehicle terminal. The distribution channel also affects the pricing policies of the product. It impacts on the crucial decisions of the organisations. Drivers in favour of monetary impact are generated by SWOT analysis in order to prepare the strategies for port industry. Therefore, the use of SWOT analysis upon strategic planning process will be highlighted for maritime industry. Marketing Mix The elements of marketing mix can be grouped into four primary variables i.e. ‘Price’, ‘Product’, ‘Promotion’ and ‘Place’. The number of P’s can be extended i.e. ‘People’, ‘Process’ and ‘Physical Evidence’ to describe the service sector as well. Each element of marketing mix is inter-related with another. Promotion depends on the nature of products or services. Through the process, it reaches the customer and it influences the pricing of the product. Marketing mix helps to attain organisational objectives. Marketing mix has to be prepared in such as way that it fulfils the customer satisfaction. Place is a key factor affecting port industry. From the site of the port authority offering locations to transport companies and industries, the supply characteristics require to be hand in hand with the demand needs i.e. to be competitive with other ports. The product once manufactured, packed, priced and promoted is ready for customers. It consists of distribution channel. Number of channels directly influences the price of the product. Source: (NOS, n.d.). There are number of features that are to be taken into consideration in order to select the distribution channel. The factors are likewise nature of product, marketing environment, company policy and others. Every company should have good storage facilities because production and consumption do not match usually. If the order processing is carried out effectively both the company and customers will be benefited (NOS, n.d.). ‘People’ is the other key factor of marketing mix of port industry. The appropriate use of people can have an affect on the achievement of the company. Employees of the particular company represent the company in the market domestically as well as internationally. The liaison between price and demand should be scrutinized. Pricing is influenced by the process. Price fixation can be described in two approaches i.e. cost-based approach and competition-based approach. The total cost of the product is considered after adding certain percentages of profit. Companies that have direct selling facilities have the privilege to fix lower cost than existing market price. Source: (NOS, n.d.). Evaluation of Marketing Strategy To set strategy for port industry internal and external environment should be taken into concern. Competitive advantage can be determined after analysing the strengths and weaknesses. To plan strategies for port, vision should be clear. In order to have effective strategies, the vision should be oriented towards employees. There should be enthusiastic environment for working, building employees’ self-confidence. The strategy should be market oriented similar to other industries. The strategy should be ecologically sustainable and internationally competitive. Drivers for economic impact are generated by SWOT analysis to prepare the strategies for port industry. Business traffic forecast is considered to be a long-term strategic analysis (Policy Research Corporation, 2009; Australian Government, 1997) For public or private port authorities pricing is most significant element of marketing mix. Competitor analysis is another key factor of strategic planning for port industry alike to other industries. The term ‘benchmarking’ is a tool of competitor analysis. Benchmarking shows the possibilities of mergers and acquisitions. Through benchmarking, an organisation can analyse its competitive advantages. Stakeholder analysis is a distinctive step in strategy development. Stakeholder analysis is quite important to understand the impact of stakeholders upon a particular port. Strategy should be flexible enough so that organisation is ready to adapt rapid changing conditions by developing suitable strategies (MTBS, n.d.) Source: (Policy Research Corporation, 2009). Tourist attractiveness can be considered as strength of maritime industry. The level of facilities and accessibility of destination can be classified as strengths as well as weaknesses of port industry. The efficiency in these two aspects can provide a port with added competitive advantage over its competitions, while inefficiency in providing appropriate facilities and accessibility of destination can create obstruction in the progress of a company in the port industry. The level of port facilities can be developed in short span of time at lower cost. The change in port facilities can be transformed from weaknesses to strengths. Ports have separate entity within a region. There is lack of assistance and synchronisation between coastal regions and government. Thus, there at times limited chance of expansion. Water depth of coastal area is another weakness for maritime industry. At times, there is lack of coordination between port authority and cruise operators which can create difficulties in smooth functioning of the port. Enhancing the cooperative operation can be beneficial for industry (Brinckerhoff, 2006) Source: (Policy Research Corporation, 2009). The average age of passengers are declining. Young tourists generally look for attractive tour packages. Young tourists’ friendly packaged tour in ports and surrounding areas can be considered as an opportunity for the industry. At present context, the travellers are more experienced; they look for unexplored regions to travel. Therefore, by exploring unknown destinations, tourists can be attracted. Larger cruises have a lesser amount of occupancy. Thus, operators are bound to provide discounts to attract tourists during several occasions. It can be identified as a threat for the companies as the income gets hampered. There are several conflicts between port authority and cruise operators. It is an exposed threat for the industry. The threat of overcrowding hampers the industry. In present context, though the global maritime market is emerging but there is shortage of land for expansion. Niche Marketing The concept of niche marketing comes from competitiveness in the market. Niche marketing focuses generally on specialised markets. Niche Marketing = Market segmentation + Market positioning (Loureiro & Hine, 2001) Organisations use niche marketing to concentrate on sub-segment of market. The customers are generally eager to pay premium prices to avail the product. Niche marketing is used in e-commerce as well. For instance, a business executive who desires to learn further and he needs a mentor to guide him, he can search ‘mentor’ in search engine (McGaffin, 2008; Longenecker, 2008). Niche marketing always focuses for specialised sectors of marketing. In the niche marketing, customers are ready to buy from the personnel whom they trust. Personnel can earn credibility by selling a product or a service to a particular niche. It enhances skill and confidence among the person. The main advantage of niche marketing is reduced cost. The customers get attracted with lower prices. They prefer affordable price of the product with quality. If the product bears the best quality, the price is not a matter of concern for buyers. The steps for niche marketing are as follows: identifying the target market, identifying the needs of the customers and implementing product differentiation strategy which meets the demand. Niche marketing strategy should be product or process specific. Through niche marketing marketers can get the lifetime customer loyalty (Curtis & Nakamoto, n.d.). Niche marketing is more dynamic for the instant customers. In the target segment, 75% of buyers consume a product because of their need. It can save money from the product launching on internet. The limited customer of niche marketing can hamper the rise of business. Another disadvantage is niche marketing may isolate diversification of product line (nichemarketingstrategy, n.d.). Report Overview The objective of the report is to generate an appropriate marketing plan to support the marketing strategy of port of Southampton. Southampton port is the second major container terminal in the UK. The existing strategies of Southampton port is continuous investment for improving port facilities, empowering the local economic growth and others. It has an influence in national as well as regional economy of the UK. It is sited in south coast of the UK, thus it gets the competitive advantage to run the business in the UK. Southampton port has various cargo facilities such as bulk, cruise, container and others. Southampton port conducts 50% trade with China and Far East. The focus of future development should be on the sustainable growth with existing docks. The infrastructures have to be developed. The Southampton port is operated by Associated British Ports Holdings Limited (ABPH). The group is helping all the ports registered under ABPH by cost reduction schemes to gain competitive advantage in its major trades. The revenue collected by the group was approximately ?196.4m in the year 2010. Revenue from Southampton increased by 9.1% by providing improved import/export vehicles and cruise capacity. ABPH recently announced to invest ?2.4m in craneage tools on the back of a 20-year agreement with Solent Stevedores Ltd (Associated British Ports, 2010). Source: (Young, 2007). Figure: Economic Activities Dependent On Southampton Port Strategies Implemented Southampton port recently developed double-lifted crane to speed up the loading and discharging of the boxes. They have tactically located their station on southern coast of the UK. They continued further investment to develop port operations. They have natural deep water harbour that can be considered as strength of Southampton port. The working environment is employee friendly. They recruit almost 12000 people per year. Southampton has three cruise terminals across the UK. 27% of terminal container is shifted by railways and 5% is transhipped by waterways. They developed staking crane technology to improve delivery style. There is lack of cooperation between the port authority and government that at times hampers the normal activities of the port. Southampton passed 7% of UK trades through tonnage in the year 2006. They have developed ‘lock-free access’ for ship maintenance. The advantage of ‘lock free access’ is that it ensures free maintenance of the terminals. However, it may charge extra cost. Southampton port is the busiest independent marine oil terminal in Europe. Southampton port occupied 62% market share in cruise terminal in the UK market. Their strategy is to enhance working efficiency on a continuous basis (Young, 2007). The Challenge Southampton port has separate entity in the UK business scenario. However, there is lack of coordination between port authority and government. The UK Government refused their proposal of Dibden terminal. Southampton does not have overcrowding problem similar to other ports because they have natural deep water harbour. They have to prepare sustainable strategies. There are inadequate railway facilities in Southampton. The railway facilities need to be upgraded so that the customers can get products at cheap rate. Coastal shipping is environment friendly and they can implement their strategy to attain CSR (Corporate Social Responsibility). It has been observed that coastal shipping generally produces less carbon dioxide. Situation Analysis Every organisation’s objective is to exploit opportunities and minimise the weaknesses. Southampton port has opportunities to enlarge their business because they have well built infrastructure. In 2006, in the UK, Southampton port passed 23% of ‘non-EU sea-borne trade’. Southampton port invested ?4 million for new cargo managing amenities with Solent Stevedores Ltd. They grabbed 62% market share as cruise capital in the UK (Young, 2007). Every port wants to become leaders in cruise terminal. Southampton is UK’s premier cruise port. Recently, it has invested over ?21 million in cruise terminal. It had estimated that 738,000 passengers passed through Southampton port in the year 2006. The strategy should be likewise to increase the proportion of container moved by railways and waterways. Southampton had set a target of increasing the container transhipment to 25%. They have recently launched latest feeder berth (Young, 2007). Internal & External Environment Southampton should analyse internal as well as external environmental factors which affect business. There are political, economical, socio-cultural and technological factors affecting business. There are several strengths for Southampton port. They contribute ?2.0 billion per annum to the UK economy. There are opportunities for expansion of Southampton port. They have already implemented a number of advanced technologies to reduce cost. Recently, port authority has developed a strategy for coastal shipping (Young, 2007). Market segmentation Southampton port is considered as a link between the UK and global trade market. Southampton port is owned as well as managed by Associated British Ports. They operate around 90% of exports across the globe. At present, they provide best solutions for customers. They organise International Boat Show to attract the people of maritime industry every year. There are inadequate railway facilities in south coast of the UK, so they may invest in upgrading the railway facilities. The cost will be reduced if the transhipment can be organised by railways. They have infrastructure to expand their business to diversified segment. Southampton port is the leading port for car transhipment in the UK (Young, 2007). Alternative Strategies They should implement sustainable development strategy. The port should continuously contribute to domestic as well as global economy. Southampton port should focus on the development in port facilities and they should continue with existing docks. For sustainable development they have to support local and national policies. Regulatory obligations should be crystal clear. They should have the approach to discuss with stakeholders regarding the development strategies. Implementation of Coastal Shipping may be cost-effective strategy for Southampton. To reduce road obstruction and CO2 emission the eco-friendly strategies should be implemented. Most of the UK ports are connected by the railways. This enables to facilitate in alleviating the UK’s rising traffic congestion. If the transhipment is administered by lorry, then it can help reducing freight facility. They can recruit marine engineers to solve technological faults such as radar problem, mobile communication and wireless technology. They can charge cheap cost per box capacity enhancement than creating a new site. Southampton should persuade the workers participation. The strategies should be in place for continuous development not only to provide requisite return to stakeholders but also for further development of supporting ports. The strategy should be based on long-term relationships with stakeholders so that they are interested to invest constantly to the industry for development. Port plays a vital role in the maritime business scenario of the UK (refer to appendix 1.1). The demand for container terminals and cruise terminals are also growing rapidly (refer to appendix 1.2) (Associated British Ports, 2010). The strategies should be to invest in durable projects with quality customers that can produce higher internal rate of return. Southampton’s infrastructure is required to be upgraded for deep sea container capacity. The improved capacity is required to support the expected growth. The port management should have a continuous association with customers to ensure for the service they get and to gain new innovative ideas for development. The UK economy had slowed down during recession, so there is a risk for further downturn. Southampton port has to invest strategically so that they can prevail over from any unforeseen circumstances in near future. Southampton port should enhance the navigational safety. Varying foreign exchange rate can be a major financial risk for Southampton port. The management should opt for the appropriate financial as well as other policies and apply those constantly. The estimates should be dependable and realistic. They should communicate with every stakeholder based on mutual trust properly so that they can run businesses suitably. They have to endow with pilotage services as it is counted as their legal duty. They should have contingency plans for urgent situations such as oil spill out (Associated British Ports, 2009). Selective Marketing Strategy Though the global economy is fighting with the effects of recession, many small companies came up to serve the global customers. Thus, Southampton has to implement strategies selectively. Recently, they have opted for restructuring of feeder berth. They should implement ‘Coastal Shipping’ for cost reducing strategy. Southampton already developed advanced technology i.e. double lift crane, automatic stack crane and others. Southampton already promotes attractive offers for marine industry people i.e. International Boat Show. They have explored unknown tourist destinations at surrounding of the UK for the betterment of their cruise services. Southampton port already invested ?4 million in cargo maintenance in mutual collaboration with Solent Stevedores Ltd. Therefore, they can accelerate their market performance to be the first port in all aspects. Southampton’s cruise terminal is also unbolting for business recently. They have continued container berth development in order to manage large vessels. Limitations of Marketing Strategy The limitation of alternative marketing plan is that to implement all the strategies massive resource would be required. The research is based on maritime industry but Southampton port organises other industries as well. The study dealt with container terminal and other terminals operated by Southampton port. The analysis is prepared only with Southampton port by considering all parameters related with maritime industry. The degree of development is difficult to forecast. Another complexity in assessing the maritime industry is that organised financial data is difficult to be collected for the supporting infrastructure i.e. marine research. Another factor influencing the development of maritime industry is transparency of governmental policies. Summery Of Marketing Strategy Southampton port should focus on one market segment at a time to be re-developed. They have ‘lock free access’ but that might influence the cost. By implementing lock free access they experienced the maintenance of cargo organised in all destinations. However, if the cargo is container terminal and the destination is cruise terminal, it may call for extra charge for maintenance of the container cargo. This may hamper the pricing of the product. If governmental policies are not suitable for Southampton then that may affect the pricing. Every government has own policies for taxation and all that may vary the costing of transhipment. The stakeholders are the assets of the organisation. They should get a chance to develop innovative strategies to attain organisation’s objectives. This will provide an opportunity for the stakeholders to know about the strategies of the organisation and they may feel to invest further. Southampton port should invest further to strengthen their positions in various terminals. In the year 2006, 40.5 million tonnes cargo was handled by Southampton port and that is a record in maritime industry. Southampton is the leading port in the UK which tranships vehicles. In cruise terminal they have recently made an investment of ?21 million. Government refused their proposal of Dibden process. They should learn from mistakes and emphasise on restructuring of the existing docks. The strategy planning should be simple as per port applications. The proposed strategy has certain restrictions because it is done by highlighting on one sector. Though Southampton port has limited weaknesses, they need to emphasize on the opportunities so that they can sustain in competitive market of the UK. There are several threats but they have to analyse the threats and set the strategies. Southampton port is one of major hubs of trade in the UK market. At present context, Southampton is second prime port of container terminal business and largest in the context of export-import of vehicles. Tourist attractiveness can be considered as strength of maritime industry. Southampton port is the largest premier port in cruise tourism. It can be stated that there is lack of coordination between port authority and cruise operators. Enhancing the cooperative operation can be beneficial for industry as Southampton is the economic hub of south coast in the UK. References Associated British Ports, 2010. ABP Subholdings UK Limited Interim Report 2010. Files. [Online] Available at: http://www.abports.co.uk/files/abp%20subholdings%202010%20interim%20report%20commentary.pdf [Accessed June, 2011]. Associated British Ports, 2010. Corporate Responsibility. Managing Our Responsibilities. [Online] Available at: http://csr.abports.co.uk/management/management.htm [Accessed June, 2011]. Australian Government, 1997. Marine Industry Development Strategy. Department of Industry, Science and Tourism. [Online] Available at: http://www.environment.gov.au/coasts/oceans-policy/publications/marine-ind-dev.html [Accessed June, 2011]. Brinckerhoff, P., 2006. Port of New Haven Strategic Land Use Plan. Swot Analysis. [Online] Available at: http://www.cityofnewhaven.com/PortAuthority/pdfs/LandUsePresentation.pdf [Accessed June, 2011]. Curtis, K. R. & Nakamoto, S. T., No Date. Niche Marketing and the Importance of Product Differentiation. Strategies. [Online] Available at: http://diverseag.org/files/uploads/marketing/ProdDiff-VAT-1%203.pdf [Accessed June, 2011]. Longenecker, J. G., 2008. Small Business Management: Launching and Managing New Ventures. Cengage Learning. Loureiro, M. L. & Hine, S., 2001. Discovering niche marketing. Selected Paper. [Online] Available at: http://ageconsearch.umn.edu/bitstream/20630/1/sp01lo03.pdf [Accessed June, 2011]. McGaffin, K. 2008. Niche Marketing with Keyword Research. Semj.Org. Vol. 1, Supplemental Issue. MTBS, No Date. Maritime and Transport Industry. Swot Analysis. [Online] Available at: http://www.mtbs.nl/our_services/strategies_policies [Accessed June, 2011]. nichemarketingstrategy, No Date. Niche Marketing. The Secrets Behind Niche Marketing. [Online] Available at: http://nichemarketingstrategy.org/niche-marketing-101/pros-and-cons-of-niche-marketing-vs-mass-marketing [Accessed June, 2011]. NOS, No Date. Marketing Mix. Business Studies. [Online] Available at: http://www.nos.org/srsec319/319-22.pdf [Accessed June, 2011]. Policy Research Corporation, 2009. Tourist Facilities in Ports. The Economic Factor. Young, S., 2007. The Port of Southampton A Global Gateway. APHA. [Online] Available at: http://www.apha.org.uk/pdfs/Stephen%20Young.pdf [Accessed June, 2011]. Appendix 1.1 Profit Earned By Each Segment in Maritime Industry: 2010 Source: (Associated British Ports, 2010). 1.2 Demands for Container and Cruise Terminals: 2010 Source: (Associated British Ports, 2010). Read More