Strategic Management and Business: Analysis - Term Paper Example

? Managing Plan assignment Executive Summary The mobile apps run on mobile devices and perform certain tasks. The history of the mobile applications goes back to the earlier days when the smart phones were introduced in the market. In 2002, Blackberry launched the first smart phone and it happened to the point when the mobile application started to grow. In 2006, Yahoo launched the two mobile applications YMail and Yahoo Messenger. In 2007, Facebook launched the application development program that was followed by the launch of Apple smart phone i.e. I-phone. The launch of Apple App-store changed the application business forever. Then in 2009, Nokia and Blackberry launched new online application stores. Presently, the mobile application spaces are available across all the platforms through a global basis. As per industry research done by Getjar the whole number of application downloads grew at 92%, CAGR to an approximate 50 billion downloads per year by 2012. This is mainly due to the growing number of users being engaged and becoming active application users. In this study marketing strategy of an mobile apps has been developed considering different environmental factors, extent market competitiveness and company’s internal and external factors. Product analysis The mobile Application market is a rapidly growing market. These applications are simple programs that can be downloaded easily. Now the usage of mobile applications on smart phone devices is enhanced. Different mobile applications are also used by the renowned restaurant chains for their integrated services and promotional purpose. It helps them to stay ahead in the competitive market. The new APP product is “Easy Food”. It is going to launch in the U.S. market. Mobile marketing includes the process of using mobile medium to communicate marketing information with the customers. That means it will provide easier access to get information about the location, menus, and promotional deals of the restaurant. Customers can order their food with this application directly or by using the Facebook pages or other online sites of “Easy food”. It is a user-friendly application. It offers the details of past orders, location and timing of restaurant, and also individual information about the restaurant. Best dish of the restaurant with feedback from other customers are also mentioned here. The competitors of this product are Chow Now, Tabbed Out, Dinner Connection, Uncorked, Go Pago and Belly. However, the product is now in an introductory stage, but its user-friendly application and innovative ideas will help it to capture the market in near future. External environmental Analysis External environmental analysis of the product will be done through Porter’s five force analysis and PESTEL analysis. Porters five force analysis Industry rivalry: There are several applications for restaurant can be found in the industry. Chow Now, Tabbed out, Dinner connection, Uncorked, Go Pago and Belly have already good presence and popularity in the market. As a result a good the customer base has also been created by these brands. However the users of these applications are mainly the youths who always had an urge to try something new. So in the starting it may go slow, but with the help of the unique applications, it can easily grab the market. Bargaining power of consumers: Most of the customers are the smart phone users. Eventually they can consider as tech savvy and financially well sound. The numbers of smart phone users are increasing as different mobile companies are started launching their own product. It will help “Easy food” to grab the customers. Bargaining power of suppliers: Here, the suppliers are considered as the software engineers. Uniqueness of the application will make it more appealing to the consumers. Deep knowledge over the subject and the enthusiasm to innovate something new will make the application stand among the competitors. Moreover it is not about onetime expenses the site needs continuous up gradation. Threats of substitutes: There are numbers of application developers who have been highly raised price of all type of applications. Like Android, Symbian, I-phone etc. Some of these charging high for a particular application, whereas the others are offering in free of cost. So, it has been a threat to the company if other applications have better features than “Easy food” Threats of new entrants: As it is an emerging market, it always has threats from new entrants. New application developer can any time come up with better features and better user friendly. So the application need regular up gradation, to keep it position in the market. PESTEL PESTEL analysis helps to understand the influence of external environmental factors like political, economic, social, technological, environmental and legislative forces of a country on a business (Williamson, Cooke and Jenkins, 2004). Political Forces: As the application is launching in the U.S. market, so the political factors relating to U.S.A. is very crucial. As the Democratic Party is ruling the country, the political scenario will be stabilized in the upcoming years. Economic Forces: U.S. is now recovering from the recession period. The country is generating employment as well as GDP and per capita income is also increasing. Inflation rate and the interest rate are in control now. Disposable income of people has been increasing and it stimulates peoples to use smart phones as well as smart apps. Social Forces: Most the employees are from the age group of 20-40. So it considered as a youth group, who are technologically upgraded. Using of smart phone with various applications will increase the demand for “Easy Food”. For the busy people it will be the best way to spend quality time. Technological forces: U.S. is one of the most technologically advanced countries in terms of developing and using of technology. Most of the smart phones are invented here. So it will be a best option to use this market to launch “Esay Food”. Environmental forces: There is temperate weather in most of the places in US in terms of temperature with tropical and polar climate in Hawaii and Alaska. The generous climate helps the country to grow in every sector. For launching the product the climate will be an added advantage as hot and tropical climate may make it difficult to operate the smart phone. Legislative forces: Legislative forces of US help to generate a competitive market to launch the product (Porter, 1980). Internal environmental analysis Internal environmental analysis of the application software can be done through SWOT analysis. SWOT Analysis By SWOT analysis the strength, weakness, opportunity and threat of a product can be segregated. Here SWOT analysis is made on the application “Easy food”. This will help to develop the marketing strategies. Strengths Due to the rise in technology, the lead-time to launch new applications has decreased. The development of applications has become much easier due to launch of new smart phones. Availability of user-friendly applications, which are really loved and appreciated by the customers. Consumers can reach the restaurants quickly and easily by the help of the applications. Availability of highly skilled developers increased. It will help to save time. Weaknesses Users are still concerned about certain secure issues. Such as the I-Phone, 3Gs encryption is believed to be weak and vulnerable. Users are particularly concerned about the security while using banking applications. Application Market has become highly fragmented. Due to propagation of large number of players, the platforms sometimes lack focus on a single particular platform. The application is mainly smart phone depended. Opportunities The demand for new applications is increasing in each day. As time became a very crucial aspect for everyone, this application will be highly in demand. Restaurant owners are also looking to promote coupons through this application. There is also scope for the sale of virtual goods and services. In spite of the existing one, new companies are making smartphone. Threats Fierce competition in the market may lead to price war. Due to the dip in prices, the players are looking to fight to gain volumes. Same application may provide by other developers in free of cost. Other new applications may have better features. Customer analysis Customer analysis is a method for grouping customers based on their similarities. This group can be done according to age, sex, culture or any type of attitude that differentiate them from others. The main objectives of customer segmentation is to develop new products, creating advertisement, and for developing marketingstrategies. For “Easy food” application the customers can be segregated in the following ways- Smart phone users- As the application is mainly for smart phone users so the smart phone users will be the prime and main target. The application developer can make contract with different smart phone companies to launch this application as aim built application in their phone. Passionate fans- The youth generation who are highly tech savvy, will for something new. As they are up to buy different version of smart phone, they will also like to use this application. Social media influencer- Advertisement through the social media site will attract large group of customers. Before launching the application, it will be one of the best marketing strategies to inform the customers about their product. It will help to build up the sales in the initial stage. High spenders- There are segmentations for the high spenders. These customers are always going for high priced things. As the application is smart phone oriented, so this type of customers will be highly targeted. Youth generation- The young generation is more technologically developed than the older one. They want anything and everything with a touch of a button. Therefore, for them, the application will be the best option for advanced dining experience. Segmentation, Targeting and Positioning Strategy Target Market Segment Description Identifying the target market segment is going to be the most important strategies for the restaurants. The very general idea could be to target each and every smart phone users. However, this would be one of the biggest mistakes that could be made by the marketers. Hence, the key to success would be to indentify and define people that are most likely to buy the products and target the defined market. While defining the target market segment one needs to be logically correct. While defining the target market segment one needs to analyze age, religion income, prejudices, background, geographic, etc. The restaurant in discussion operates on a local basis. It can be tagged as a small local business. It gets reasonable amount of traffic on day to day basis. However, the store traffics tend to increase on weekends. During Festivals and occasions also the restaurant witnesses increased foot fall. There ideally the target market segment would be the people belonging to the middle to high income group using smart phones. Although, it is highly unlikely that people belonging to the upper income group would visit the diner. Therefore to be more specific the main target market segment would be the middle income group people. Age wise the main target market segment would be people belonging to the age of 18-40. The main reason of such choice is due to two major factors. Now days, due to the vast availability of smart phones the prices have gone down and hence even the youth are able to afford smart phones. The second reason would be the ambience and the design of the store has been developed keeping the youth in mind and hence it may not appeal to the seniors. However, the seniors may visit the diner along with other younger members of the family and hence this would make them a secondary target market segment. Age wise both male and female would be targeted. Characteristics of the market segment Demographic Segmentation Age wise the target market segment would be the people belonging to the age group of 18-40. Sex wise both male and female could be targeted. As far as Martial status is concerned both single and married people could be targeted. Income wise the people belonging to the middle income group earning $20,000-$40000 could be targeted. It is needless to say that the people to be targeted should have a Smartphone and (or) tablet. Geographic Segmentation People belonging to the local areas should be the primary target market segment. People belonging in the initial one to three mile radius should be considered. Of course, the people living in that radius should satisfy the criteria mentioned above. Psychographic Segmentation Mainly the out-door enthusiasts should be considered. Status seekers may not be the best option to target because despite of having a smart-phone or a tab they may decide to visit a very Porsche restaurant rather than a local diner. Segmentation based on usage rate Light Users: People who visit the restaurant once in a blue moon. This may include senior citizens who do not belong to the primary target market segment. Medium Users: This would many include people who visit the restaurant on weekly basis or may on every alternate week along with the family members. It may include the youth also who visit the place to hang-out with friends on monthly basis. Heavy Users: This may include people who are mainly working professionals. Most likely they would be bachelors living alone in the nearby areas and do not have the time to cook at home. Segmentation Based on Benefits sought Segmentation based on benefits sought can be done based on the various benefits that can be provided by the different levels of the product. In this case some users may decide to visit the diner when a special offer is going on i.e. based in augmentation. Some may look for additional services like home delivery. For the single working professional home delivery could be of great importance. Basis of Target Market Selection To say that all the smart phone users would be a probable target audience would not only be too general but also may lead to a potential failure. An example could be helpful to explain things further. Because a smart phone user belonging to a higher income group who also happen to be a status seeker may not decide to visit a local restaurant or a diner. Hence the more specified and appropriate description of a target market segment could be an individual belonging to the middle income group residing in an one to 3 mile radius of the restaurant having a smart phone or tablet. Potential Size of the target market segment While explaining the size of the potential size of the target market segment only the prime criteria of market segmentation would be considered, because providing the potential size of the target market segment considering all the in-depth parameters would be quite challenging and as a matter of fact could be literally impossible. According to a report by comScore in 2012, United States witnessed a 55% growth in the smart phone users making it 98 million which actually represents 42% of the all the mobile users in the country. Also according to a report by emarketer when it come s to the choice of accessing media platforms smart phones user segment has witnessed the highest growth by 9%. Positioning Strategy While positioning the mobile application it is suggested that the company should use a ‘positioning by attribute approach’. The product should be positioned as an application which is easy to find by the customers and customers can easily use the application to get various information such as the menu items, daily special menus, etc. The customers can also use the apps to place orders, provide feedback, obtain coupons, and participate in loyalty programs. As one can see that the focus is not on price or brand, but in the product attributes and hence it is known as the ‘positioning by attribute approach’. Pricing Strategy The pricing strategy of the product needs to be designed carefully. Today the customers on average are willing to pay $.99 for a simple app and $4.99 for advanced app. There are various pricing options available in the from price penetration where the prices are set a lower price through out to penetrate the market; price skimming strategy can also be used in which initially the price can be premium and then gradually the prices could be lowered. There also lies the option of sealed bid pricing where the prices are set a lower price than the competitors. May app marketers are using the freemium model also in which the basic model is for free; but to download the advanced models the users have to pay a few bucks. Gaming apps mainly follow this strategy. (Henry, 2008). But for restaurant it may not be the most suitable option. One of the most popular pricing strategies for food chain apps is the In-app Advertising. According to a research by Forrester Consulting firm 70% of the restaurant marketer’s use in app model. Here the apps are provided for free and the revenue is gained through in app ads. Major companies such as Starbucks, Pizza hut, McDonald’s use this strategy. Such companies have different apps though for different purposes such as ordering, payment. But the pricing strategy is the same. Hence it is proposed that the proposed food chain also uses the in app advertising strategy only. In the initial stage it is most likely that the company would have one application only. Promotional Strategy Promotional Objectives The main objective of the promotional campaign would be to make the customers feel that there is no better way to place orders for quality food than by using the new ‘ease to order app’. Use of Promotional Mix Although there are five different elements of promotional mix such as advertisement, sales promotion, public relations, direct marketing and personal selling. Ideally a marketer would look to use all the elements to promote the product but due to the nature of the product it would be highly unlikely to use all the modes of communication. In this case mainly advertisement, direct marketing and public relations should be used (Wenderoth, 2009). Mediums for advertisement The digital or the online platform should be mainly used for the promotional activities. Ads would be posted on app markets like Google play store. Also the users should have the facility to download the apps from website. The restaurants website should also be used to promote the application. A part from this the restaurant itself can be used to promote the product by putting up an ad about the newly launched application. Direct Marketing Direct Mailers of or messages can also be quite useful. But the users may not actually enjoy getting direct mailers or push messages. Public Relations One of the most effective ways to build awareness about the mobile application would be the use of social media; Facebook and Twitter primarily. This can be used as an effective user relations and engagement technique. Sending out tweets or making posts on Facebook about the download link of the app on could be really helpful keeping in mind that the existing customers are most likely to be a follower or on social media. Direct Marketing in the form of direct mailers can be used but, users may not be impressed by it. The marketers must encourage social sharing. If a user downloads an application from a Google play store then the user should be encouraged to share the app link on social media. One of the easiest ways to motivate the user to do so would be providing a free dessert or other types of meal. Social media contest can be also be used to create engagement and awareness. Contests can also be used in way where the highest number of retweets by a user can awarded a free meal at the restaurant along with the family. (Kolb, 2008). Also press release or blogging can be used to promote the new apps. Simple engagement activities like contests can also be used. Also the restaurant can ask the internal customers i.e. the staffs to participate in the promotional activities. The staffs can actually provide demonstration of the application to the incoming customers. Integrated Approach As discussed the ads of the mobile application would be placed on websites such as Google Play Store. The user may get to know about the application from a direct mailer. The user downloads the application and then re-tweet the ad link or the download link on Tweeter or posts the link on Facebook. In this way each of the platforms can be used in a cost effective integrated fashion. Difference in approach Due to the type of the product there would be very little difference in the promotional strategy adopted by the restaurants from that of the competitors. Placement Strategy Due to the nature of the product the distribution stagey of the product would be little different from other products. The digital medium would be mostly used as a part of the channel and distribution strategy. Among the digital medium two main platforms would be used. One of the mediums to be used would be Nokia's Ovi Store, Android Market, Microsoft's Windows or independent pp stores like Getjar. Among these the Google play store would probably given preference due to the large amount of traffic the site gets. The distribution strategy is most likely to selective in nature. And also due the nature of the product there would be very little difference in the distribution strategy adopted from that of the competitors. Conclusion and Future Strategy Since majority of the marketing activities would be carried out on the digital platform the marketing research techniques to be used would be different from that of the conventional marketing process. A lot of emphasis has to be given to the product feedbacks. One of the best ways to look for it is through the product reviews. Also the different factors that are influencing the users to post certain types of review has to analyzed which could come real handy in further product development process (Brown, 2009). Product effectiveness as mentioned before could be analyzed based on the product reviews. If the product performance has been up to the mark then the company may look for further product diversification. Apart from the customer reviews the restaurant customer feedback form can also be used to analyze the customer feedback. As far as pricing is concerned it would be highly unlikely that the company would look to change the existing pricing model. For Distribution the most important factor to be analyzed would be number of downloads from different platforms. For promotion main the factor to be analyzed for the company would be the different sources that are contributing to download. All these factors can be analyzed through Google Analytics. References Brown, L. (2009). Marketing and Distribution Research. US: Ronald Press Company. Henry, A. (2008). Understanding Strategic Management. UK: Oxford University Press. Kolb, B.(2008). Marketing Research: A Practical Approach. UK: Sage. Porter, M.E. (1980). Competitive Strategy, USA: Free Press. Wenderoth, M. (2009). Particularities in the Marketing Mix for Service Operations. DE: GRIN Verlag. Williamson, D., Cooke, P., & Jenkins, W. (2004). Strategic Management and Business Analysis. London: Routledge. Read More