Marketing Strategy - Research Paper Example

INTRODUCTION The London Stock Exchange market share price of one Sage stock is only ₤ 231. This August 18, 2006 (www.sage.com) Sage has been a leader in the supply of software used by business management to automate its business environment. It has been serving the information system needs of over five million companies worldwide which include small, medium and large business organizations. The Sage software increases speed of information transfer in all its offices. This fast data gathering, thus, helps management make decisions when the problem or predicament arises and not later in order to lessen losses and increase revenues. Sage is one of the leaders in the field of supplying companies with software that will lessen the time needed to record, group, tabulate, analyze and communicate all business and MONEY transactions. Its major product is a business software that is fitted to every need of Sage clients. Sage helps its clients make business operations run smoothly and harmoniously by giving them software technology with lasting benefits by automating monetary transactions. Sage also offers after sales maintenance services to clients that have purchased their products. The Sage organization chart is concentrated on encouraging entrepreneurship, innovation, spirit of working as a team and using local software United Kingdom experts to make state of the art business programs. Resource Based Strategy. The strategy (Campbell, 1998) that the company must focus on is based its marketing (Churchill, 1995) actions on the available resources of the company. This simply means that the company will sell only what it can produce. The environmental factors such as competitors, and the clients are ranked in priority second and third after the available resources of the business. The business analyzes its where it stands based on the competitive advantage, capabilities and profitability and resources in making its marketing strategy. According to Porter “ Competitive advantage grows out of value a firm is able to create for its buyers that exceeds the firms cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price. There are two basic types of competitive advantage: cost leadership and differentiation.” -- Michael Porter, Competitive Advantage, 1985, p.3 The above quote simply means that the customer’s priority is not the price of the goods they are buying but rather the QUALITY of the goods purchased by them. One way to lure new clients from competitors is to offer low prices for HIGH quality goods. http://www.sage.com/downloads/2005_report.pdf ANALYSIS OF GRAPH, Based on the above graph, it shows that even though Sage has been doing a fine job of generating income for the past five years, but still the income the have earned is still far below the FTSE 100 index. Therefore, the graph above is a wake up call to the management of Sage that they must double their efforts to make reach the benchmark above. The above graph is actual proof that its competitors(Weston, 1993) are doing BETTER than what the Sage company is doing. Therefore this shows that Sage company does not have the biggest share because of its below par sales performance. The graph states clearly that the most appropriate index against which the TSR of the Company should be measure is the FTSE 100 index because of the size comparison of the company. Present Marketing Strategy. Small and medium scale enterprises have shown strong needs to purchase business (specifically accounting ) software in order hasten and make more accurate current manual accounting business transactions. Such companies have back offices where accounting and bookkeeping (Larson, 1995) services are being processed. The medium and larger companies do need software that can make their tasks easier. When the accounting system is accurate and is updated constantly by the computer, then the customers and suppliers will know, as soon as possible (ASAP), what the daily business problems are so that remedies that will lessen the damage done will be put in place earlier. This is where Sage comes to the rescue. Sage will help, in a big way, the small and medium rate industries with their bookkeeping needs and accounting functions. The software, however, are being purchased by some the small companies. Based on the above, the company has been very successful with the present marketing strategy (Thompson, 1999). The income statement clearly shows that there is its present income has been on the rise. Because the present strategy is on the right track, then we will now be implementing a new strategy will be discussed below. This strategy is called Resource based marketing (Kinnear, 1996) strategy. OUTLOOK. According to Sage Chairman Michael Jackson, Individuals in Sage are being treated very highly and respected as a person. Sage company is constantly invented new products and new processes for its large customers’ activities. Revenue has grown for Sage company because Sage manages to offer new products to its biggest resource(Samuelson, 1973) which is the CUSTOMER(Irwin,2000). Sage produces for its four million clients software solutions that takes good care its network. Sage has a network of over 22,000 reselling business partners. Based on the above Chairman Michael Jackson statement, invention is the name of the game. Many companies have put up a research( Dilworth, 1993) and development department in order to find new products to sell. These new discoveries will spell the difference between success and failure. By continually inventing new products where the competitors have no similar goods or services, the Sage company will have the edge in terms of market share. Another type of research and development strategy is to improve the quality or quantity output of something that has no competition because it is new discovery. For example, if the accounting software created by Sage can work harmoniously with adobe pdf files, and word files and excel files, as well as other competing accounting software, then there will a deluge of buyers of the sunshine product. An accounting software that can worked other softwares like SPSS statistics and thesis and dissertation writing software, the engineering software, Autocad drawing software and other highly technical softwares like engineering Mathcad, engineering Matlab and other softwares. The harmonious relationship and exchange of important information between the different softwares above will definitely give Sage the big advantage it needs to prop itself so it could reach the FTSE 100 index mark. Sage plans to grow by continuing it investments in lcally engineered business software solution that will meet head on the continually changing information needs of small and medium scale enterprises. It also plans to expand its business by entering into new markets. One good acquisition by Sage is the hiring of Tamara Ingram who was formerly the Senior executive of WPP ( which belongs to the top 4 largest companies in the field of advertising and media services. Financial highlights. For the year 2005, turnover had increased by fourteen percent or ₤ 776.6 million as compared with only ₤682.6 million in the year 2004. Another highlight is that organic revenue had increased by six percent and earnings per share had also increased by thirteen percent to ₤11.18 for the year 2005 from the former ₤9.90 for the year 2004. Based on the balance sheet, the profit and loss account had increased from the prior 2004 amount of ₤211,975 to the current year 2005 ₤332,721. The profit for the financial year 2005 was ₤143,504 which is higher than the ₤126,736 for the prior year 2004. Based on the performance graph on table 4 below, The performance chart shows that Sage average sales is lower than the FTSE 100 index average sales. Dividend had increased by twenty three percent when it posted a ₤2.875 per share for the year 2005 as compared to only ₤2.330 for the prior year 2004. The customer base has also increased to a BIG 4,700,000 companies in the year 2005 which is higher than the 4,400,000 companies it had done business with in the prior year 2004. Revenue had also increased from the prior year. Sage company has also acquired some businesses including ACCPAC, SP, Softline and many more. Sage company has also invested in ₤100 million in new and existing companies. Sage has also acquired another big company called Adonix. The Operating profit has remained at twenty seven percent. SEGMENT INFORMATION. Marketing Strategy PRODUCT. The product is accounting software The accounting software has been selling like hotcakes because the prices offered by Sage is very very reasonable and affordable as evidence by the income statement and the balance sheet, the Sage company has been doing good. SEGMENT. The sage market segments are classified as United Kingdom, Mainland Europe, North America and Real world. The Sage company has opened many branches or segments in the United Kingdom, Mainland, Europe, North America & United Kingdom. or offer its business software packaging services like. The financial statements below are being shown as CONSOLIDATED or COMBINED net income, operating expenses, and the like. DELIVERY SYSTEM. The products will be delivered through whichever mode the clients wants which could be by air or sea or land. His deliveries could even be brought to by the sales representative. COMMUNICATION STRATEGY. Sales representatives visit prospects in the hope that they will buy the Sage products. The sales representative gives a demonstration of how the product works. After the sale is completed by the signing of contracts and the payments are made or invoices are signed, then the technical people will deliver after sales services to keep the products going and to remove bugs and viruses that have crept into the system. Advertisements will be shown on television, newspapers, and radio so that many sectors of United Kingdom society will get to hear about the benefits of buying accounting software where they will lessen the time used for inputting important financial records. The sales representatives will also follow up on Sage prospects in order to increase the likelihood of the prospects to buy what they really want. Since our marketing strategy is fit to solve current problems, then the marketing strategy will have to adopt to new challenges. Economics tells us that when prices of goods go up, then the demand for such goods do down due to financial difficulty. The customers, during times of rising prices, will be tempted to look for alternative products to the Sage accounting softwares that are being sold to them. But on the contrary, if the company reduces its selling prices too much, then the customers will now become suspicious because it is common knowledge that when the produced are sold at low prices then they are termed CHEAP. In order to make an income on products that are sold at very low prices the company must now buy raw materials or inventory items that are really low priced or cheap. Since the raw materials are cheap, then the accounting softwares you will sell will lack quality and it will be easily damaged or destroyed. Therefore, when the customers will see that the quality is poor, the customers will not look for competitors’ products such as the accounting software above in order to buy their higher priced but quality products. SELLING PRICE. The price will remain competitive. The price is based on the prevailing market prices of the competing products clients want to buy. The selling prices of goods is one of the best ways to generate sales. If the selling price is very much higher than the selling prices of Sage competitors who also sell accounting and other business softwares to business, then there is a possibility that some clients will transfer to the competitors. But if the price of Sage is also too low as compared with the selling prices of the competitors, then the customers may think that the Sage company is producing CHEAP products. Cheap products are easily damaged because their quality has been sacrificed due to the reason that since the selling price is very low then the company must also use low cost materials in order to generate profits. CONCLUSION: The financial statements have shown that Sage company has been generating income for the past year 2005 and the year 2004. The marketing strategy chosen here is resource based meaning that the company has to concentrate on looking for clients to buy the present products on sale. This is the opposite of the customer based strategy where the customers are asked what their current and future needs are and then the company will produce goods that the customer wants. This will result to sales on a made to order basis. The advantage of this type of marketing strategy is that there is a big possibility that there will be lesser inventory end or inventory spoilage because there is a waiting market. This means that marketing will be very vigorous when there is plenty of inventory for sale and marketing will decrease its advertising and selling efforts when the inventory that is ready for sale is lesser in quantity. But as the above strategies have been approved, this does not mean that the marketing strategies to be implemented will remain the same forever. On the contrary, the marketing strategy for today is only capable of solving the marketing problems of today. As the world of business grows and metamorphoses, as the saying goes, there is nothing permanent in this world except change itself, therefore, the marketing strategy must be dynamic enough so that the steps are already in place. If Sage could invent accounting software that would put up a research and development department in order to find new products to sell. These new discoveries will spell the difference between success and failure. By continually inventing new products where the competitors have no similar goods or services, the Sage company will have the edge in terms of market share. Another type of research and development strategy is to improve the quality or quantity output of something that has no competition because it is new discovery. If the accounting software created by Sage can work harmoniously with many files like adobe pdf files, and word files and excel files, as well as other competing accounting software, then there will a deluge of buyers of the sunshine product. An accounting software that can worked other softwares like SPSS statistics and thesis and dissertation writing software, the engineering software, Autocad drawing software and other highly technical softwares like engineering Mathcad, engineering Matlab and other softwares. The harmonious relationship and exchange of important information between the different softwares above will definitely give Sage the big advantage it needs to prop itself so it could reach the FTSE 100 index mark. Therefore the above software idea is another wake up call to the Sage research and development team to push through with this concept of making one accounting software that will allow the user to work on excel files, word files, pdf files, picture files. This will increase the company sales five fold or more. Another accounting software innovation would be to incorporate programming languages in the accounting software such as HTML or PHP or MySQL so that the accountant or accounting staff can make beautiful and professional looking accounting forms and reports. APPENDIX Sage has been a leader in the supply of software used by business management to automate its business environment. It has been serving the information system needs of over five million companies worldwide which include small, medium and large business organizations. The Sage software increases speed of information transfer in all its offices. Sage helps its clients make business operations run smoothly and harmoniously by giving them software technology with lasting benefits by automating monetary transactions. Sage also offers after sales maintenance services to clients that have purchased their products. Resource Based Strategy. The strategy that the company must focus on is based its marketing actions on the available resources of the company. This simply means that the company will sell only what it can produce. The above quote simply means that the customer’s priority is not the price of the goods they are buying but rather the QUALITY of the goods purchased by them. One way to lure new clients from competitors is to offer low prices for HIGH quality goods. Present Marketing Strategy. The present marketing strategy is to offer its software packages to companies. The companies use the accounting software to hasten their jobs. Chairman Michael Jackson is very optimistic with his outlook that Sage will continue in its present path of generating income from operations. Sage hs over 4 million clients and 22,000,000 reselling business partners. Financial highlights. For the year 2005, turnover had increased by fourteen percent or ₤ 776.6 million as compared with only ₤682.6 million in the year 2004. Another highlight is that organic revenue had increased by six percent and earnings per share had also increased by thirteen percent to ₤11.18 for the year 2005 from the former ₤9.90 for the year 2004. Based on the balance sheet, the profit and loss account had increased from the prior 2004 amount of ₤211,975 to the current year 2005 ₤332,721. Based on the performance graph on table 4 below, The performance chart shows that Sage average sales is lower than the FTSE 100 index average sales. The company has been generating income for the years 2004 and 2005. Marketing Strategy PRODUCT. The product is accounting software The accounting software has been selling like hotcakes because the prices offered by Sage is very very reasonable and affordable. SEGMENT. The sage market segments are classified as United Kingdom, Mainland Europe, North America and Real world. The Sage company has opened many branches or segments in the United Kingdom, Mainland, Europe, North America & United Kingodm. or offer its business software packaging services like DELIVERY SYSTEM. The products will be delivered through whichever mode the clients wants which could be by air, sea or land. COMMUNICATION STRATEGY. Sales representatives visit prospects in the hope that they will buy the Sage products. Advertisements will be shown on television, newspapers, and radio in UK. SELLING PRICE. The price will remain competitive. The price is based on the prevailing market prices of the competing products clients want to buy. References: Porter, Michael, Competitive Advantage, The Free Press, NY, 1985. Campbell, A., Luchs, K., Strategic Synergy, Thompson, London, 1998 Churchill, G., Peter, J., Marketing, Irwin Press, London, 1995 Thompson A., Strickland A., Strategic Management, London, 1999 Irwin, D., On Target –Achieving Best Business Performance, London, 2000 Dilworth, J., Production & Operations Management, McGrawHill, London, 1993 Weston, J., Brigham, E., Essentials of Managerial Finance, Dryden, London, 1993 LarsonK., Miller P., Financial Accounting, Irwin Press, London, 1995 Kinnear T., Taylor, J., Marketing Research, McGrawHill, 1996 Samuelson, P., Economics, McGrawHill, London, 1973 Sage.Com (http://www.sage.com/downloads/2005_report.pdf) http://www.sage.com/downloads/2005_report.pdf http://www.sage.com/downloads/2005_report.pdf http://www.sage.com/downloads/2005_report.pdf Read More