Strategic Marketing Management Issues - Term Paper Example

Strategic Marketing Management Strategic Marketing Management Q2. Why Corporate Culture Is So Hard To ChangeChanging corporate culture is usually difficult because it involve changing people. The problem arises from the fact that people are habitual. Consequently, every proposed change will often be counter by resistance by employees. Shifting the culture of an organization demands that employees unlearn old values, routines as well as assumptions and embrace new values, which they are not familiar with. It requires all employees to adopt new behavior, which is usually met with resistance making the change process difficult. Another reason is that people often have shallow meaning of corporate culture. The culture of an organization may prove so hard to change when change facilitators think of a unitary culture for an organization. In real world, no company operates as a uniform whole, but various units of a company may display different culture, which make subcultures of an entire organization. Changing organizational culture demands a deep understanding of the existing culture and clear knowledge about what culture the management intends to inculcate in the company to replace the old culture. Therefore, planning should always be done based on existing corporate culture because employees are already familiar with what is expected of them and know what values the company embrace. For example, Google gives its employees the freedom to explore new ideas and staff members have easy access to co-founders as well as executives. If the company wanted to implement a culture that takes away the autonomy of employees in the way they work and create a barrier to founders and executive access, it is most likely that employees will rebel against the proposed change. Q4. Pricing Strategies Penetration pricing: under this pricing strategy the company decides to set artificially low prices for its products in order to attract more customers and establish loyalty among existing customers, thus expanding market share. For example, Apple can decide to set prices for it Smartphone lower than its competitors such as Samsung in order to regain its market share. The approach was utilized by France Telecom as well as Sky TV to widen their market share. Skimming pricing: Using this strategy, a company can set high initial price for its product and then gradually lowers the price of the product to gain more market share. For example, Apple Company may have set high price for its Smartphone then later reduced the price amidst competition so that it can make it available to low market end and increase the company’s market share. Competition pricing: In this case, a firm will set prices either at the same level or lower than those of competitors so as to attract customers to purchase the product and increase its market share. Q5. The Concept of Franchising Franchising is a business strategy for expanding into new markets in which a successful company with successful product (franchiser) grants another business enterprise (franchisee) the right to do business under it’s (franchiser’s) trademark and also to adopt some of its business processes to manufacture and sell goods under the guidance of the franchiser. Usually, the franchisee pays a one-time fee as well as a given percentage of revenues generated from sales. Upon paying these fees, the franchisee obtains immediate right to use the trademark, receive tried and tested products, employee training , standard building design, continuous product promotions and upgrade as well as procedures on how to run and promote business. Using franchising as a strategy to increase market coverage has both advantages and disadvantages to the franchiser. Advantages of Franchising To the Franchiser a) Capitalized Expansion: Expansion into other markets usually requires huge investment of capital, which is often difficult to raise. Franchising provides a cheaper strategy for business expansion by providing capitalized expansion because franchisees expand franchiser’s business using their own funds thus relieving the franchiser from borrowing funds to finance growth. b) Economies of Scale: The multi-unit expansion that comes with franchising results into higher volume of purchases and boost leverage with suppliers and venders. However, this calls for proper management of the resultant entire business system. c) Continuing Revenue Streams: Royalties paid every month as a percentage of sales revenue guarantees the franchiser of continuous inflow of revenues. d) Brand Development: Franchising expands brand popularity because franchisees contribute to local and regional advertising of the brand, thus expanding the value of the franchiser’s brand. e) Managerial talent: Franchisees have vested interest in franchises, thus offer better management than would be provided by employed workers of the franchiser. Disadvantages of franchising to the franchiser a) Legal regulation: Franchising is highly regulated business activity that demands high compliance with both federal and state laws on franchising. b) Investment: Creating a franchise system demands capital investment for covering legal fees as well as setting up franchise infrastructure. Q6. Assumption of BCG Matrix The basic assumptions of BCG Matrix include: a) High relative market share implies high profitability and vice versa. b) Positioning in a growing market requires liquid funds for financing the growth, while positioning in markets with no growth demands less liquid funds. Importance of BCG Matrix to a Marketing Manager BCG matrix is a crucial tool for marketing manager as it assists in analyzing product lines. A marketing manager can use BCG matrix as an analytical tool in marketing and evaluate product portfolio. BCG will enable marketing manager to allocate resources of the company efficiently, for instance more resources will be allocated towards the production of a high-growth product. Limitations of BCG Matrix Even though BCG matrix is a useful strategic tool for marketing managers, it is not without limitations. The limitations of BCG matrix include: a) Critics of BCG matrix argue that the data used in the model are difficult to quantify and verify. b) The model emphasizes on high market share and ignores other success factors. Other factors like social and political changes impact a company’s strategic planning and thus highly impact portfolio analysis. c) BCG matrix inherent assumption about the link between market share and profitability limits the use of the model to volume industries, that is, where experience effect can be observed. d) The model only focuses on internal competitive advantages such as cost, while ignoring the external competitive advantage. e) BCG matrix ignores the impact of synergy between various units of the business. f) Dogs can often earn as much or even more cash than Cows. g) Market growth on which BCG is built around is not the sole pointer to the attractiveness of a market. h) There is usually a problem with obtaining market share data. i) Unavailability of clear definition of what makes up a market. j) The model ignores small competitors with fast expanding market shares. k) The model is only two dimensional, that is, it focuses mainly on market share and growth rate. 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