Marketing Fundamentals:Segmentation and Marketing Strategies of Atlas Company - Case Study Example

 Marketing Fundamentals Report On Segmentation & Marketing Strategies Table of Contents Page 1 Abstract 3 2 Introduction 4 3 Segmentation 5 4 Five Force Analysis 7 5 Marketing Strategies 11 6 Recommendations 13 7 Bibliography 14 1 Abstract The case Of Atlas, A Small Business Of Fashion Retail In Brighton, has been examined and recommendations have been made for a turnaround of the company. Market strategies depend upon segmentation of the markets to determine the ideal group of customers demographically for best results. Segmentation is carried out on a variety of criteria and they have been examined. Being competitive in the market is of prime importance hence Five Force Analysis was discussed in detail. Various Marketing Strategies have been outlined for improved exposure and results. 2 Introduction Atlas, a small business having one fashion retail outlet in Brighton has been under pressure from larger retail establishments that have recently come up in its area. Over the last 12 month period it has lost sales to the extent of 30% and is worried about the future. The consultants have been engaged, with a mandate to suggest a strategy for revival and continuation. The Consultants have come up with a marketing strategy for Atlas but for its appreciation but wish to provide a background on facts as well as the Marketing Strategy Theories to enable the management to evaluate the recommendations. A Market is the demographic and/or geographic group or groups of buyers for products and services on offer. It may be limited to a small area or may be worldwide but that is dependant on the type of product or service on offer. Preceding the marketing exercise the organization needs to do market research to determine its marketing strategy. This is a three stage effort in which data is required about potential customers. With this data it is possible to segment the market and subsequently to determine the target customers for marketing the organization’s products. Once this data is available, the serious exercise of Segmentation begins. This data on consumers from various sources contains the following information. Demographics like age group (teens, retirees, young adults), gender, education level, ethnicity, income, occupation, social class and marital status Geographics like location (national, regional, urban/suburban/rural, international) and climate Purchasing habits by identifying brands used, purchase frequency, current suppliers Local Environment like cultural, political, legal framework. Benefits sought by buyers by price, overall value, specific feature, ease-of-use, service, etc. Knowledge of how the product is used, situation when used, etc. Purchase Conditions by studying time of day/month/year of purchase, credit terms, trade-in option, etc. Characteristics of Individual Buyer by observation of purchase experience, how purchase is made, influencers on purchase decision, importance of purchase etc. 3 Segmentation Markets are heterogeneous and are created by reasons of different values, needs wants, constraints, beliefs and incentives. Customers differ in their values and perceptions and want to purchase things that have value for them. Value is not just the monetary part, but also the usefulness and emotions that with go with it. The need and want play a great role in determining this value. The price actually determines the location from which this purchase will be made. Service and reliability are other important determining factors. Therefore a market segment is a set of customers that have a common approach to above questions and have a common desire to purchase a common set of goods and or services. They also respond to such offers in a common way. There are many variables of demography and geography that help to determine segmentation. The company needs to consider if the segment is large enough to support its intended sales by price and quantum. Then is there a growth possibility or is it restricted or even declining by nature. It consists of variables that can be easily identified through demographics (i.e., statistics that describe a population), geographics (i.e., location issues) and financial information Segmentation offers great advantages to a company. The obvious ones are: 1. Reduction in expenses – direct result of targeted customer strategies. 2. Improved cash flow – advertisements are segment oriented only. 3. Improved productivity – easier to produce for specified products. 4. Improved manufacturing quality – this is a result of standardization of products. 5. Improved service delivery – schedules for fewer goods are easy to achieve. 6. Improved employee working conditions/benefits – employees with skills will benefit from this. 7. Improvement in market share – result of customer loyalty. Segmentation improves the image of the company and customer recall is higher. This is the ultimate benefit the managers look for. This is also to the advantage of the stakeholders, both employees as well as shareholders. The company’s own skills and those of its workers are important too in being able to service the segment being carved out. Both knowledge and communications skills have to be developed and training must be carried out for improvements. Finally it must also be borne in mind that such segmentation must be within the scope of the company and stakeholders policy. Marketing success depends largely upon the ability to divide the segments of different class of customers and catering to their particular and peculiar requirements at the lowest cost. This is based on the perception of the competitiveness of the company. 4 Force Five Analysis An important method of finding the competitiveness is by using the Five Force Analysis devised by Porter M.E. (1985), often called the Porter’s five force analysis. This will help the management to devise appropriate marketing strategy to take care of vital issues. Porter divides the competitive environment into five forces of ‘powers’, these are Power of buyers, Power of suppliers, Threat of new entrants, Threat of substitutes, Intensity of rivalry between existing firms. (Porter, M. E.1985) In fact the Five Force Analysis is the answer to the problem questions posed earlier and therefore can be stated to be a critical constituent of any purposeful marketing strategy. The Power of Buyers Four different reasons influence a buyers’ decision. They are also known as 4Ps as explained by Phillips Kotler . This needs careful study to understand customer behaviour. (Kotler. P,.1986) i Product. The buyer is greatly influence if the product or service is perceived as useful for him. Sometimes it may not be of immediate use but its uniqueness is the attraction. Future valuation is also a decision making factor. ii Price. The price is not usually a stand-alone factor. It has to be comparable with other products or services but with weight given to factors like quality and after sale service. In case of tenders it has been seen that the highest and lowest bidders fail and the middle bidder is often successful. There is a play on the mind of the buyer that middle ground is best for him. He also considers price in context of the privileges attached to it. iii Promotion. Image plays a very important role. Whether it is the image of the product which enhances value or status or the image of the buyer when he acquires a product or service, both factors are extremely important for the buyer in arriving at a purchase decision. iv Place or Time of offer. It is of great value to the buyer if a product or service is offered to him at a place and time that suits him. The ambience of the store is important. This is more applicable both when individual customers are involved for either for high value items and services or for budget values In recent years the 4P concept has come under criticism and as a result different marketing mixes have been put forward by Kotler P,. (1986); Mindak and Fine (1981); and Nickels and Jonson (1976). But the one put forward by Booms and Bitner (1981) to include another 3Ps viz., Process, Physical Evidence and Participants has gained the most acceptability and popularity in marketing literature. 5 Process Marketing and Sales policies are important factors that attract a customer to a product. Warranties offered, after-sales service support and guarantees, quick response from employees are comfort levels that promote a product’s marketability. Some amount of mechanization and customer involvement such as try-outs and experimentation, feel of product or service is eases the point of sale. 6 Physical Evidence This is the defining of the environment where the marketing activity is to take place and is concerned with layout, Furnishings, Colour, and Facilities. It is argued that the general ambience makes for a good marketing strategy as the customer feels comfortable and is more inclined to conclude a deal in congenial atmosphere. 7 Participation Largely neglected earlier, but by far the most important aspect of marketing is the adequate training of the employees that are involved in the marketing process. Their knowledge and confidence builds up an image of robust product and enthuses the customer. The whole attitude and behaviour of involved personnel reflects the concern of the marketing organization in offering a quality product or service and the personal touch is perhaps the final point that concludes a deal successfully. A satisfied customer is the company’s best brand ambassador and word of mouth publicity is the most precious campaign that any company wish for and this 7th P is no doubt the most important of them all. It is thought that the 4Ps are relevant for introductory marketing purposes. However where depth is required the 7Ps have achieved greater respectability as it is considered more comprehensive and broad-based. B The Power of Suppliers When there a few suppliers of components or services, they offer better terms and service to the company but when they are few, they normally offer goods and services as per their own priorities. The external factor that affects quality of service depends largely on the cooperation and coordination of various suppliers. Their quality of service improves, or depreciates, the company’s own service to its customers. The power of the suppliers cannot be ignored. A good but firm relationship with suppliers with pre-determined quality parameters will ensure that down the line there will be no shortcomings and the customer will eventually get what has been promised. Supply chain management includes considering the suppliers as partners and therefore all requirements and deliveries are to be planned as if they were extensions of the company itself. A good supply chain management will ensure and engender customer loyalty which is the single biggest achievement the company can boast of. ` C Threat of New Entrants The Evolutionary Cycle of Competitive Behaviour advocates that change takes place only when one of the competitors come out with an innovation and others follow it and improve upon it until it becomes an industry standard, at which time the cycle ends. The two ends of the cycle are Innovation and Efficiency. Then, with the introduction of another innovation, the cycle recommences. The performance of all players is evaluated vis-à-vis the efficiencies they are able to achieve. This theory evolved by Strebel (1966) suggests that evolution is a continuous process, no product can expect to be acceptable to customers in its present form and functionality to be for all time to come. This aspect must also be borne in mind when devising any marketing strategy and the company must be ready, willing and able to innovate whenever the situation demands a change for survival. D Threat of Substitutes At any point in time there is always a possibility that, inspired by the popularity and acceptability of a product, a substitute is offered that will replace it due to its better features or innovative idea (J. Schumpeter 1934). There is a delicate difference between innovation and invention although one leads to the other. Innovation is the first happening or germination of an idea for a new product or a process while the first attempt to make it or practice it is what invention is all about. Innovation is therefore creation of a new value and invention is the creation of a new product or service that offers this value to the customer. E Intensity of Rivalry Finally the competition never gives up and is always finding newer and better ways and mean to make inroads into the market share of an existing product. This is an ongoing struggle and has to be met head on with innovative practices. A few of the marketing strategies in this direction are Product Strategies, Brand Management, Publicity and Promotional Strategies. 5 Marketing Strategies Product Strategies A product of service should be placed in a way that conveys value for money offers. It is extremely important for a company to place the product or service differently to different segment that it wants to cater. Each segment should be satisfied with what is in offer to them. The offers should also march or better those offered by competition in an equal playing field. There must also be flexibility to change strategies or to take advantage of prevailing circumstances to convince the customer of the genuineness of the offer. Brand Management The brand is about customer recall. Products or services must be remembered to enable the customer to make a decisive choice in their favour when he is inclined to accept or use them. This is created by adequately projecting the benefits and values attached to them through promotions, campaigns, advertisements, special offers and above all through after sales service. Sometimes it is important to use celebrities as brand ambassadors as this association recalls the brand of the product or service whenever the celebrity is involved in any public activity. There is a close relationship between developing brand values, building customer relationships, and satisfying corporate goals. (Aaker, 1991, 1992) Publicity Strategy Media advertising and other communications strategy by a company can change the perceptions of the customers. Exaggerated promises and absence of correct information effect the customers’ perception about the quality of service. It is important that the company and its staff are conscious of what they are telling the customer as any mismatch will boomerang with vehemence and will negate the expense and effort of such communications. Although there is a fine line of distinction between the two, publicity conveys the company image rather than image of the product or service Promotional Strategy a) Integrated Marketing Communications With focus on the customer it needs to be figured out how integrate the company’s marketing communication effort. It is important to define and prioritize objectives. A hard look at business strategies and customer-relationship goals and realignment of customer knowledge management is required here. b) Advertising, Sales Promotions, Public Relations Advertising is not publicity. It conveys the inherent qualities and benefits of the product and service. It also conveys the usefulness and attempts to either fuel the desire of the customer or to fulfil it. It must force or induce the customer or even excite him to buy or use the product or service. Sales Promotion on the other hand deal with offers like discounts or specials deals and are usually used in lean seasons or times when sales are sluggish. Public relations are company releases that are given through the print or electronic media about the company’s objectives or achievements. They serve as reminders to the customers of the company’s wish to serve them better or reports performances to enhance the company image. 6 Recommendations Keeping in view the demographics of Brighton we recommend that the fashion clothing range should be more suitable for youth and stress should be on labels of medium range but fashionable covering sport and casual wear. Accessories are a must these days and these should be included. The sales staff should be trained in house to be more attentive to customers. A little refurbishing will be enough in the showroom and can be done on a larger scale when sales pick up and the company can afford the same. The supply chain should be revamped with stress on suppliers who can provide quality within agreed time frames. Lastly, local media advertisements should be planned on a fortnightly basis to keep interest in the products live and updated information should be provided by quarterly issues of a well planned catalogue of products. 7 Bibliography Aaker, D.A. (1991), Managing Brand Equity, The Free Press, New York, NY. Aaker, D.A. (1992), “Managing the most important asset: brand equity”, Planning Review, Vol. 20. No. 5, pp. 56-8. Booms, B.H. and Bitner, M.J. (1981), “Marketing strategies and organization structures for service firms”, in Donnelly, J.H. and George, W.R. (Eds), Marketing of Services, American Marketing Association, Chicago, IL, pp. 47-51 Kotler, P., Armstrong, G,. Principles of Marketing, Prentice Hall & Pearson Education Mindak, W.A. and Fine, S. (1981), “A fifth ‘P’: public relations”, in Donnely, J.H. and George, W.R. (Eds), Marketing of Services, American Marketing Association, Chicago, IL,pp. 71-3. Nickels, W.G. and Jolson M.A. (1976), “Packaging – the fifth P in the marketing mix, Advanced Management Journal, Winter,pp. 13-21. Porter, M.E. (1985) "Competitive Advantage", The Free Press, New York, 1985. Strebel, P. (1996). Breakpoint; How to Stay in the Game. Mastering Management, Part 17, London; Financial Times. Schumpeter, J. (1934), The Theory of Economic Development, Harvard University Press, Cambridge, Massachusetts. . Read More