SWOT Analysis as a Basis for Regional Strategies - Case Study Example

Marketing Management Table of Contents Introduction A typical organization producing and selling fertilizers is assumed to be the company under consideration for these exercises. In order to evaluate and identify the best marketing strategy, it is critical that all the essential factors are verified. In this case, a SWOT analysis is carried out to identify the inner strengths of the company and also to identify the external strengths and weaknesses. Based on this analysis and on the following marketing strategy studies the recommendations are made: 1. Product Mix choice is made based on the 4P's model 2. The Roger's Innovators Theory and the Moore's Chasm Theory were applied for fixing the Segmentation of the product, targeting and positioning of the products. 3. The Porter's five forces theory has been used to position the product so that there is no intense competition. However, the market share is maximised. This would help the marketers to plan in such a way that they are able to capitalise on the strengths of the company both internally and externally. Similarly, consumer decision is core in the case of mass marketed product like fertilisers particularly for creating the right kind of segmentation strategy. Theoretical principles behind the consumer buying decision is matched with the existing reasons based on which the marketing strategy could be fine tuned to suit the market needs. In addition to this, segmentation of the market to clearly target specific products from the company's stable would help in augmenting sales targets and to produce the desired results. This could help in evaluating the business and the marketing strategy of the company. Finally, the consumer perception in terms of the three levels of product / service is visualised and studied to finally close in on the best strategy for marketing the product. Organisational SWOT Analysis The following table provides the organisational SWOT analysis (Kotler et al 2005; LearnMarketing 2006) of the company selected for trial purpose. Strengths Weaknesses Technically skilled staff that could ensure that the production of the right quality of fertilisers is taking place and the capacity production is fully used up. The process adopted by the company to manufacture has become obsolete and the new process produces the same fertiliser at a lower price. Competing is a problem. Financially strong management with a clear commitment to see the company through and keep making profits for the shareholders. Though, when the company started it was the largest facility but soon with the new process, much larger world scale facilities have come up, dwarfing this factory. The company has built a good rapport with the customer which produces the required market capitalisation for the company. Since the market for fertilisers is pretty large there was no dearth of market at any point in time. Opportunities Threats The company is at the threshold of a major change in the agricultural production process because of the continuing increase in the population. It would be wise for the company to capture this market. The market is varying and depends on the success of agriculture across the country. This could become quite seasonal and would cause huge losses of accrued stock if there is no off-take. New types of fertilisers are coming in and the customers are expecting new products from the company. Competition is becoming more and more vibrant and is producing competing products that is hard to match. The new communication systems and the internet have changed the way business is done across the world. It is easy now to ensure that supplies of the material reaches the customers at the right time in the right quantity. The agricultural land in the country is dwindling and is being converted in industrial land. This means there is less land to produce and hence limited fertiliser use. However, there is also the possibility that the smaller land might be using larger quantity of fertilisers in order to bring in the same result in terms of production. Table 1: SWOT analysis table. Based on the SWOT analysis done, it is clear that the company should capitalise on the strengths of the company and ensure that the company's weak points are not brought out too much, exposing the company to risks. Therefore, the effective marketing strategy should underplay the weaknesses and enhance the use of the strengths of the company. Based on this concept, the following marketing strategy is prepared. The 4Ps analysis of the situation would provide us the following results: 1. The product in this case is a standard product however, if there is a deviation in the chemical composition of the product it will be tolerated neither by the farmer nor by the concerned statutory control systems. The products of all competitors therefore, will be comparable and will be in line with the expectations of most of the farmers. However, if a niche product could be identified then the same could attract better margins for the company. 2. Price is also similar and very much in line with what the competitors also has. Also the prices are decided by the association of fertiliser manufacturers. Therefore, there is no difference in the products due to price difference. 3. Analysing the Place of happening for the market, it is clear that there are certain locations which are bound to produce a better result. It is these locations that manufacturers who would like to have a better result are concentrating. The marketing strategy needs to emphasise on the locations that are prominent and would produce better results. 4. Appropriate promotion of the product either by educating the usefulness of the product and the sales promotions would result in better performance of the company. The promotional strategy needs to be in line with the requirements of the customer which in this case is for educating them and providing them with the right kind of information. Effective Marketing Strategy based on SWOT and 4P Analysis The following marketing strategy is suggested for the company under consideration (Ilari Karppi, et al 2001): 1. A niche product is to be identified and a value addition to the product is to be obtained. This would enable the company to sell better and at a higher price. This is needed since the company employs older technology which produces costly products. This would also capitalise on the strengths of the company primarily the technological capability. 2. The market should be wide spread and use latest marketing methods including internet wherever possible. This would ensure lean marketing cost and would not enhance the total cost of the product before it reaches the market. 3. With dwindling agricultural land, high yield from the limited land will be expected. This would require better fertilisers. Technological superiority of the company in this sphere should be used to ensure market leadership. 4. Marketing mix can be reached based on the product, price, place and promotion analysis (McCarthy 25Jan2007). Consumer Buying Decision process Studies hitherto conducted on buying processes of customers reveals that most of the customers follow the pattern shown below: 1. Problem recognition 2. Information Search 3. Evaluate Alternatives 4. Decide to Buy 5. Buy 6. Evaluate the purchase Six steps are normally used by the buyers to make their buying decisions however small the requirements might be. The length of every stage could vary depending on the requirements size and the nature of the problem. The steps followed would also depend on the buying type. For a routine purchase, frequently bought item and at reasonably low cost, the buyer does not go through the process rigorously. Once decided, the person continues to buy the same and have a specific loyalty to the product. There are others where there is a limited amount of decision making, on certain others larger and more extensive decision making might be involved. There are also a few where the decisions are made intuitively and instantly without giving the process much thought. Same product might elicit different types of responses from the same customer at different points in time. The customer is generally found to display three important factors while making his decisions: 1. Personal factors 2. Psychological factors 3. Social Factors These factors do not appear by themselves. But they are subtle and remain behind the scene and impact the decision making process of the person. Personal factors that influence decision making include sex, race, age, demographic spread etc., These are persona and are influenced by the person's own background (Roger Kerin et al. Feb 2006). Psychological factors are the motivators, the perception, the ability and knowledge, Personality and the lifestyle. Motivators are primarily the ones that follow Maslow's hierarchy of needs. Whereas, the perception is the one that the person has on the product or on the problem and how he plans to resolve the issue; the ability and the knowledge will be the ones that help him to resolve the issue under question. Individuals personality and lifestyle will also affect the decision making process. Some may not like a product associated with the rich and pompous whereas certain others will only go for it. Another major contributor to the decision making process would be the social factors that depend on the opinion leaders in the social structure, Roles and family influences, Reference Groups, Social class and Cultures. In any society the opinion leaders create preferential products that are more sought after. Similar influences are had by the family, the reference groups, social class and the culture differences. Cultures could be Asian-American, European, Hispanic and so on. Every one of them espouses a different preference in terms of products bought. All these factors influence the buying decision of the customer and it is only wise to ensure that these factors are considered in the target market before planning the marketing strategy. Marketing Strategy based on Consumer Decision and on Porter's Five Forces Consumer decision process will affect the marketing strategy to a great extent. The consumers are mostly agricultural people in the middle class society. The influence of the family is generally very high and the knowledge factors are not very high. Consumer decision is one of the five forces. The other forces include the threat of entry, the power of the suppliers, threat of substitutes and competitive rivalry. The threat of entry and competitive rivalry is limited for seeded products; the threat of substitutes is very real. It is always good if the company could bring in its own substitutes. This being a technical possibility, it could be quite some time before the hold of fertilisers is broken by an alternate product (Porter 1980). However, the company needs to plan for a possible chemical and biological alternate. The competition would also try to provide alternate products and niche products in the market. The competition is certainly high and it is important that the company plans for such an eventuality. The planned strategy can be altered as below based on the five forces theory: 1. In addition to the above indicated methods, it is important that an educative approach is taken to inform the people on the methodologies and skills that are needed to administer the right kind of fertilisers. 2. This will be inline with the segmentation theory that views the customers as different groups. In this case, the customers could be divided into the group that is informed and the one that is not informed of the right choices. This segmentation will create a loyalty factor that could go for a long standing relationship. Segmentation Process Segmentation is the process of grouping customers based on their needs. This is particularly useful in those cases where market niches have to be created. Following this segmentation, it is important to strategise and position the relevant product for that segment. Market segmentation is the opposite of Mass Marketing where one product is produced for the entire market; whereas in the case of Market Segmentation the needs of specific customers are grouped together and is addressed fully in the products that are marketed for them (McDonald & Dunbar 2004). Segmentation is generally of three stages: segmentation, targeting and positioning. The segmentation can be done by identifying specific variables that form the basis for the segmentation process. These variables, also called the base variables, are used either individually or along with other variables to create a specific segment. Once specific segments are identified based on the strengths of the company and the product features, the segments that can be addressed are identified. These segments are then filled with specific products that would address the customers' requirements by suitably positioning it. Mostly targeting is done using any of the three strategies: undifferentiated, concentrated and differentiated targeting. All these methods do adopt and ensure that there is a clear balance of the products and the skills of the company to support the segment that is to be addressed. Positioning is done based on the segmentation and the targeting methods adopted. This also includes the right kind of pricing for the segment and ensuring that the right distributors / retailers or the market reach methodologies are adopted. For instance, if the segment addressed is the middle class segment and would like to reach the consumers in the cities then it has to go to specific super markets that have the reach. It should also be priced right for the target customers to pick up the product. All these factors need to be considered while segmenting. Case Study Cargill Inc., USA, has operations in more than 120 countries. The company does fertilisers in addition to various other chemical products. The company on realising the decreasing agricultural land in most of the countries and rapid industrialisation in US and Europe, decided to be more segmented. They wanted to rename their approach to agriculture not as a fertiliser person, but as a plant nutrient specialist. This was required because the expectations of the farmers have changed from expecting just a chemical for their fields to providing a solution after studying the standing requirements at the fields. This could involve fertilisers, organic fertilisers and may be provide bio nutrients that would help the farmers to realise a better outcome from the limited resources. In addition to this, segmenting of the market identified farmers who are in need of financing at the time nutrient sale (Cargill 2006). The company brought out the farm financing sector to enhance lending to the farmers. This would help the farmers to realise better results by employing better techniques. The company identified clearly a segment that wanted specific needs and by positioning the needs the company get a lead over and above their competitors. Levels of Products / Service The three levels of products that make up the final end user product would be the core, the actual and the augmented. These three could be analysed based on the company taken in for the case study, the Cargill Inc. The core product is the one that provides the core value addition to the product to enable the user to realise the best advantage out of it. This would be the core value for which the customer will be willing to pay for. The actual product is the tangible product that the user can see and possibly test it as well to see if it fits into his requirements. It is quite possible that the product might not meet the requirements of the customer and he might require additional augmentation or add-ons that need to be done (Marketing Teacher 2000). This would provide the augmented product meeting the requirements of the customer fully. The augmented product will come with the warranty, installation, delivery, finance and customer care; whereas, the actual product will be produced to meet the quality specifications, colour, style, branding, etc., These are internal to the product and would be done up during the production process. The augmented product will be augmented at the marketing level and at the customer support level. In the core product, the basic benefit of the product is met. Marketing Strategy and Service Levels The marketing strategy can be worked out based on the core value that the product meets in addition to the quality norms that it has already met. In the case of products like fertilisers, the company should be meeting the base requirements of the customer which is to augment the nutrients in the soil to the degree expected. In line with this requirement, most of the fertilisers are made and they are also expected to meet the needed quality levels at the factory. Additional augmented product would be the support that is provided to the customer in the form of educating them to meet the needs of the industry. The company should bring to the fields the research outcomes and educate them. Unless this is done, it will be not possible for them to sell the new products. It only reinforces the strategy that is already in place and would recommend having a warranty for the product in terms of additional nutrients obtained for the plants and therefore, the increase in production that can be realised by the farmer by using the said fertilisers and nutrients. Conclusion From the study done earlier and by working out a suitable strategy for the company to push its products to the best levels in the market would mean that they adopt the following strategy: 1. The company should identify a niche segment that would require specific varieties of nutrients. This is possible to make since the company is technically savvy and is highly skilled. 2. The company should augment the product by providing training and education to the farmers in addition to providing possibly a warranty on the production outcome once the specific nutrients are made use of. These strategies would help the company to stabilise on the requirements and the product in the specific segment and meet all the requirements of the customers in the segment as well. References 1. Cargill (2006) Crop Production. Available at: http://www.cargill.com/products/crop/ps_crop.htm 2. Ilari Karppi, M Kokkonen, K Lhteenmki-Smith (2001) SWOT Analysis as a basis for Regional Strategies. Nordregio - the Nordic Centre for Spatial Development, working paper at. 3. Learning Marketing (2006) SWOT Analysis available at: http://www.learnmarketing.net/swot.htm 4. Roger A Kerin, Steven W Hartley, William Rudelius (Feb 2006) Marketing: The Core. Irwin-McGrawHill . 5. Marketing Teacher (2000) Three Levels of a product available at: http://marketingteacher.com/Lessons/lesson_three_levels_of_a_product.htm 6. McCarthy J E (25 Jan 2007) Marketing Mix (4Ps) available at: http://www.12manage.com/methods_marketing_mix.html 7. McDonald & Dunbar (2004) Market Segmentation: How to do it, how to profit from it. Elsevier-Butterworth-Hienemann, Chapters 6-8. 8. Philip Kotler, John A Saunders & Gary Armstrong (2005) Principle of Marketing 4th European Edition Pearson Prentice Hall. 9. Porter A E (1980) Competitive Strategy Free Press. Read More