Issues Faced in Development of Product Category - Case Study Example

Strategic Management Submitted by: XXXXXXX Number: XXXXXXX of XXXXXXX XXXXXXXX XXXXXXXX XXXXXXX Date of Submission: XX – XX – 2010 Number of Words: 2055 (Excluding Bibliography) Introduction: The wireless devise markets are one of the most upcoming markets in the current times and there is a wide range of products that are available in this sector across the world. This paper aims at discussing the key strategic issues that companies face with regards to the wireless devices and the evolution of the product category. Also a focus has been made on the issues faced while implementing and formulating the competitive strategies and the issues faced by the company to be able to earn higher market shares. The paper will also discuss in brief the possible strategies that can be used by companies to earn a strategic competitive advantage in the markets in the future. Issues Faced in Development of Product Category: Development of product category involves a number of issues both internal and external. The main issues that companies face while developing a product category includes factors like which goods will be offered to the customers and the manufacturing process and also how the goods need to be distributed. In the case of the wireless devices, companies have a number of other factors that also need to be considered, which includes finding the right and most up to date technology for the devise (Evans, et.al., 2000). Companies also need to check for the compatibility of the devise with the various products and to also keep in mind an important element i.e., the possibility of upgrading the devise easily. Hence it is clear that companies need to consider a number of elements in terms of the technological aspect of the product category development. Apart from this another important element that needs to be considered are the customers that they plan to target. Customers form a major part of every business level strategy and hence the most essential and first question that needs to be answered is the main targeted market for the company. Having a clear idea of the customers and the target markets helps the company save a lot on costs and also permits the company to develop the products very effectively. It is very clear in today’s competitive scenario that customers are the most important part of the business. Hence it is crucial that the businesses understand the ways in which customers have an interaction with the company. Every single interaction with the customer holds equal importance and a careful note of it can help boost the revenue. There are three pillars of effective customer satisfaction leading to customer loyalty resulting in the return of the customer. These are mentioned as below. A) Customer Insight: “Who are my [the] most valuable customers and how do I [service provider] build relationships with them?” b) Customer Experience: “How do I [service provider] create interactions that maximise the profitability of each relationship?” and c) Customer Alignment: “How do I [service provider] structure the organization to deliver on the promise of customer-centricity?” (Peppers & Rogers, 2005). Another important aspect that needs to be considered is training the employees to provide a specific kind of service, empowering them to take decisions to some extent at their own level, letting them know, even at lower levels, the importance as well as the results of having higher loyalty through examples lets employee relate more to the organization and in turn with the customer too (Fisk, Grove & John, 2000). They are to be shown the benefits of a better service environment. It is a right way to increase customer loyalty through excellence in service (Srinivasan, et al, 2002). The main factors that the companies need to concentrate include the four P’s, i.e. product, place, promotion and price. All these factors together along with the technological aspects are the main areas that cause issues for the companies and can cause hurdles in the development of strategies and also new product development. Companies like Microsoft and Google need to also focus on another important aspect i.e. the competition that they face from other companies. This is essential as it allows the companies to use technology to the best extent and to develop new products in sync with what is available from competitors to improved versions. Market Share and Strategic Management: Formulating and implementing a strategy for this sector of the industry can be hard and is also very competitive. Companies like Sony, Google, Microsoft, and Nokia, are world leaders and these companies focus on improving their products every day. The main aim of all the companies is to gain the highest market share and to be able to attain the highest number of customers across the world. It is a known fact that it is extremely difficult and costly to acquire a new customer. Marketers have to be abreast of all technological advancements happening in the market and make way for their own selves. Gronroos (1994) says that better service delivery clubbed with competitive pricing and features with a sharply focused marketing strategy can help the customer acquisition process the best. Hence, the companies have to be constantly aware of the expectations of the customers and not leave any customer segment untapped (Gronroos, 1994). The best acquisition strategy is to know the weakest points of the competitors so as to effectively grab a major chunk of the market (Evans, et al, 2004). As is seen in this industry where customers have a wide range of options, the costs of acquisition of a customer as well as the churn rate are on a rise. The challenge hence is to build churn models, which help the companies to identify valuable customers who have a higher propensity to churn (Hakansson & Waluszewski, 2005). Retention proves to be a difficult task though not impossible. If care is taken for customer satisfaction with each transaction, retention of a customer in an ideal way is possible. The primary need for finding out customers at risk of churn is to first create an individual client level view, as against the summed up view of the customer base. It is necessary to club the data, payment information, and demographics of the customer as well as the service record information to be incorporated in a single electronic file, which is centrally stored (Eagle & Kitchen, 2000). This is to facilitate the entry and updating of any customer contact data from all touch/contact points. There can be numerous challenges in the integration and aggregation of the data. Moreover, any software solution or data warehouse used for this has to be scalable enough to fit in the changing requirements of the business from time to time. An integration of certain advanced techniques can give accurate results related to the churn propensity of a particular customer much before time, when an action can be taken. According to Aksel (2007), the model should be able to take into consideration the regulatory changes as well as the market changes, in order to enable a long lasting optimum utilization. Data mining, ‘what if’ analyses, can be carried out to come up with a number of pricing schemes that are attractive to the cluster of customers likely to churn and also profitable to the service provider, i.e., to meet the double condition where customers can save money and also increase the margin of the service provider (Hakansson & Waluszewski, 2005). All this analyses are based on the infrastructure costs prevailing at that period of time. The churn model can also be combined with the Customer relationship marketing metrics like profitability per customer, longevity of each customer, so as to design a tailor made retention strategy whenever a churn probability appears. All these aspects together help provide the customers with excellent products and services and in turn allow the company to gain a better market position in the markets as well. Recommended Strategies For Competitive Advantage: Based on the above research and after having studied the various companies, the most effective strategies that the companies can use in the markets include customer relationship management. Customer relationship Management, which is widely known as CRM holds an enormous importance in today’s competitive world. Various changes have taken place since the evolution of CRM and various definitions of CRM have come over a period of time. Of these some of the most useful ones include: a) CRM means actively deepening one’s knowledge about the customers so as to meet individual customer needs (Beynon-Davies, 2004), b) CRM is a business strategy that has been built around the notion of being customer-centric. The main aims are to have optimum revenue by better customer satisfaction through improved contacts at each client touch point. This is possible by an improved understanding of customers, on the basis of their demographics and purchasing patterns and a better interface with the customer at all touch / contact points (Learn that, 2007) and c) “Making the Customer king is one way of improving sales. But a better one is making the right customer king. This discipline is called customer relationship management” (McCabe & Wolfe, 2000). CRM deals with a combination of technology as well as efforts of the human resource of the company to enable the understanding of behaviour of the customer and accepting their value. The key focus lies on the components of CRM that include the “customer”, “relationship” and “management” of relationship with the customer (Gray & Byun, 2001). CRM aims at achieving several objectives attached to its chief objective of better customer approach and acceptance from the customers, few of which are mentioned below a) Simplification of process for sales and marketing, b) Having an effectiveness and efficiency in the processes designed, c) Providing better customer services, and d) Discovering the actual need of the customer and catering to it in order to increase customer satisfaction and thereby increase revenues through customer loyalty and retention. Using this technique for the formulation and marketing strategies of the companies will be very helpful as the use of CRM has led to an inside-out perspective where in organizations are first able to have an inside out approach and see what is to be delivered to the customer and try to link their operations so as to have a predetermined impact (Trepper, 2000). Organizations first understand the customer and try to deliver them as per relevance fitting in their requirement. A lot of technology integration has also rendered the companies with better revenues (Beynon-Davies, 2004). The use of CRM will also permit the company to increase the cross functional integration. CRM involves the integration of various services and emphasizes on building strong bonds with the customer. Hence the companies should adopt a cross functional approach to CRM by integrating sales, marketing and customer service in CRM initiatives (Raaen, 2000). These CRM initiatives have proved to be more successful when compared to those which target just one or two of these functionalities. This will help the companies approach the issue in a well rounded manner and will permit all the areas to be covered equally and effectively. Conclusions: Considering the current trends in the markets there is a high need for companies to be more focused on the customer and their needs. Hence companies that are more customers oriented will prove to be more effective in terms of the competitive advantage as well and will also help the company gain a high level of customer retention and customer loyalty. This will in turn help the companies gain higher level of market share and become more profitable. In the current world where all markets and companies run on information this will prove to be most effective manner of improving the competitive advantage. Companies that use the above mentioned recommendations will certainly see improvements. The development of cross-functional integration along with support of data warehousing as well as sharing of roles and responsibilities has given a customized view of the organization and its services to the customer. This integration has been able to solve several support issues, sales calls queries and marketing inquiries and helped in building a better understanding of each consumer (Wood, 2003). With integration, superior customer relationships have been built and customer satisfaction has become the responsibility of organization as a whole (Beynon-Davies, 2004). With one single view of the customer’s account history, it has become convenient for anyone to act in response to sales opportunities or handling support issues, and take suitable actions (Fisk, et al, 2000). 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