Marketing Planning Assessment: Midland Cycles - Business Plan Example

MARKETING PLAN Midland Cycles BY YOU YOUR ACADEMIC ORGANISATION HERE HERE OTHER RELEVANT INFO HERE MARKETING PLAN: Midland Cycles 0 Introduction The cycle industry has experienced relatively explosive sales growth both in Europe and North America since 1998 (Financial Times, 1998). Recent statistics indicate that a majority of competitors manufacturing motorcycles and other two-wheeled scooter machines have recently set all-time high records in terms of creating higher sales revenues (JCN Newswire, 2008). Much of this growth can be attributed to changing social attitudes regarding cycle recreation as well as clever and innovative marketing efforts which focus not only on the product and its attributes, but is used to relate to lifestyle preferences of the cycle industry’s intended market segments. This marketing plan describes the current cycle industry and offers the 12 month total marketing plan and strategies available to Midland Cycles, a producer of a wide variety of two-wheeled cycles for the consumer marketplace. 2.0 Situation analysis In order to fully understand the environment in which Midland Cycle must thrive, it is highly crucial to recognise whether the company maintains any significant strengths or weaknesses in terms of operations and marketing. In addition, understanding internal and external threats in conjunction with identifying opportunities will allow Midland Cycles to react appropriately to a variety of competitor activities and secure its position as a market leader in cycle sales. This section identifies full SWOT and PEST analyses data regarding the internal and external sales environment. STRENGTHS: One of the most important strengths for Midland Cycles falls in its currently stable balance sheet and cash flow. The company has maintained profitability for the last decade and has managed to create a sizeable cash position, offering the firm flexibility in terms of opening new retail facilities or ensuring international sales expansion. Because the business maintains a strong financial portfolio, should the firm ever decide to trade publicly, it will likely drive up the market value of the company’s stock, thus providing investor funds to further develop the company. WEAKNESSES: Currently, Midland Cycles has too narrow of a product line in comparison to other competitors, focusing on motorcycle and scooter sales as the primary revenue builder for the firm. Diversification of product offerings is a necessary forward step toward profitability for the company, however this must be managed from the executive level to assess issues of internal manufacturing capacity and labour availability for broader product line offerings. Additionally, the company currently sustains a weak market image in terms of customer’s recognising brand names over that of competition. This would suggest a more aggressive marketing campaign is necessary in order to build consumer confidence and loyalty, thus establishing future brand equity for Midland Cycles. OPPORTUNITIES: New market opportunities are opening all across the world (as well as domestically) to provide new sales opportunities for a different consumer audience. Though countries such as India and China are saturated with competition, the current Westernised developments in the Mid East will likely provide ample sales revenues should the company decide to expand into this market where transportation options are quite limited. THREATS: In any business, the largest threat is changing consumer behaviours and attitudes regarding cycle usage and the pricing structure attached to these types of recreational machines. Changing consumer values and preferences can greatly hinder marketing efforts in terms of promotion, thus the business must maintain an ongoing market research division to ensure that the company’s promotional strategies are in-line with consumer beliefs in the current sales marketplace. All of the aforementioned SWOT elements indicate areas of improvement and current successes for Midland Cycles. If the company can recognise potential opportunities for growth and sustained sales volumes, whilst also understanding the internal operating environment (such as the financial position of the firm), Midland Cycles can be a market leader in cycle sales domestically and abroad. The following section briefly outlines the PEST analysis conducted for the firm. POLITICAL FORCES Positive for Midland Cycles is its current operating environment outside of regions of the globe which sustain unstable political regimes. Boone & Kurtz (2006) identify that political instability can disrupt business in many ways, including boycotting of foreign-made products or simply creating an operating environment in which consumers fear to visit the bricks-and-mortar sales facilities in fear of meeting with governmental protestors. However, because the company currently only operates domestically, in a stable and Westernised culture, there are no substantial issues with current business strategy in terms of political influences. ECONOMIC ANALYSIS: The current unemployment rate is on the rise domestically and is offered to be currently at 4.9 percent (Harson, 2007). This is one of the highest unemployment rates in this region for over two decades, which suggests that many consumers are not sustaining incomes that can be considered largely disposable. Sales of motorcycle and other two-wheeled scooters, in a region where automobiles flood the roadways, is often considered less of a buyers’ necessity but a luxury purchase for personal indulgence. Unstable, environmental economic conditions can serve to greatly diminish domestic sales volumes. SOCIAL ANALYSIS: Social attitudes regarding scooters and motorcycles have evolved more positively over the last decade, with most consumers maintaining a somewhat neutral stand on cycling (MCI, 2007). This is a change from a relatively negative view of lack of safety and cost from just 10 years prior. This gives Midland Cycles a significant advantage in terms of guaranteeing higher sales volumes as customers no longer sustain the notion that cycling is unsafe and dangerous. This will allow the firm to appeal to a broader target market, thus driving higher sales revenues. TECHNOLOGICAL ANALYSIS: The invention of software packages such as SAP, designed to incorporate all elements of the business into a single package (including purchasing, supply chain, sales, invoicing, etc). Having a software package installed which allows the company to eliminate excess labour and streamline all internal functions will save the company ample financial resources, thus the technological opportunities provided by new software companies can serve to greatly improve the longevity of Midland Cycles as a leader in competitive advantage and sustained, low-cost business operations. All of the elements of the PEST analysis are vital to the operating future of the business and must be monitored consistently to ensure that no external forces can serve to undermine future business strategies. Midland Cycles is well aware that external threats can hinder forward growth, thus the company must establish an internal staff pioneer to measure external opportunities and threats to the business. 3.0 Mission Statement The mission of Midland Cycles is to provide the highest quality two-wheeled machines at a price that is affordable and attractive to customers. Through creative marketing and sales incentives, the business intends to provide unparalleled customer service as part of a relationship marketing campaign to create long-standing client relationships with the active recreational buyer. Having a customer-focused mission is what will make Midland Cycles stand alone in terms of providing excellence on the sales floor and build life-long consumer relationships by providing a more personalised element of service. Adapting sales activities to meet changing consumer lifestyle preferences will be the heart of long-term business success, far more than competitors which rely on promotion alone to ensure sales volumes. 4.0 Strategic Options Gaining market share is one of the primary objectives of Midland Cycles as part of Ansoff’s matrix involving product-market growth. To achieve this, the company must penetrate the domestic market (and international markets when applicable to forward strategy) by using clever advertising and promotional efforts to build brand loyalty and brand awareness with the desired target markets. Additionally, product development for new offerings must be a primary goal of Midland Cycles, which is one of the more costly elements of sustaining new product lines and offerings (Boone & Kurtz, 2007). As competition develops new products with new features and attributes, Midland Cycles must assess whether competitive efforts will erode market share and develop better or more streamlined offerings to secure continued sales volumes. Market development is another consideration for Midland Cycles which must, essentially, create demand where none exists. For instance, consumer lifestyle preferences shift in a proportion that is difficult to measure and predict, thus through rebranding efforts and new positioning strategies, the company can develop its own markets according to its internal manufacturing and budgetary capabilities for increasing sales volumes. Diversifying the company is another vital strategic element to improving growth and continuing sales for Midland Cycles products. For instance, assessing whether cycle accessories can be sold at a price that is attractive and relevant for consumers will be an important element of creating a broader market presence with the Midland brand name. Outside of accessories, the company can consider buying various real estate as a means to improve investment strategies and assist in drawing non-sales incomes for the company. 5.0 New product idea Because of the nature of the product (cycles), new ideas are not easy to create from a developmental standpoint. Most machines maintain similar attributes, such as better user-friendly controls and computerised display panels, which customers are becoming accustomed to (and expecting) on their cycle buying options (Davison, 2005). Most competitors in this industry work continuously to promote new and innovative ideas for enhancing or improving existing product without being forced to redesign internal manufacturing capabilities. Midland Cycles must be more ingenious in new product developments. The company may consider, as a strategic option for new product development, to partner with various tire manufacturers with strong safety records, thus inter-linking safety with ingenuity in the minds of the consumers as part of a cobranding strategy. Though this is not necessarily a new product from a definitive viewpoint, it is still a method by which to make customers believe they are buying a differentiated product, thus driving forward sales growth. Because the business must invest a considerable amount of time and labour for new product developments, it is important to identify how to make the product appear better than competition without having to incur huge costs of manufacturing redesign on the production floor. 6.0 Segmentation, targeting & brand positioning Griffiths (2001) suggests that customers are currently largely disenchanted by the public transportation system and the delays which come during traffic issues in the daily commute. This would suggest a consumer trend toward abandoning automobiles and public transportation as options, thus creating a market segment that is frustrated and willing to explore alternative transportation options. As part of segmentation strategy, the company will be using creative marketing efforts (in terms of advertisement and promotion) to capture the attention of this somewhat broad, demographic target audience. Additionally, Griffiths (2000) offers that rising fuel prices have brought higher sales revenues for companies which market two-wheeled cycle machines. Midland Cycles do not consume high volumes of fuel, thus as another strategy for luring a broader consumer audience, the business must focus on the product’s attributes for low-cost fuel consumption as a means to build higher sales. Offering the strategic differences between the gas mileage of a standard automobile in comparison to the functionality and low cost consumption of the two-wheeled machine will indicate the monthly/yearly cost savings on fuel for the customer to appeal to this particular group. International sales of scooters and other two-wheeled vehicles are down this year, according to Mitra (2008) who suggests an 18.6 percent drop in sales, largely due to changing foreign infrastructures and higher international fuel prices. This has allowed many competitors to remove their focus on the international markets and market heavier in more stable regions such as the United States and the UK. As higher volumes of competition due to lessened international sales can hurt forward sales by Midland Cycles, the firm must take a broad targeting strategy to lure as many potential consumers as possible, regardless of demographics, simply to remain competitive in the marketplace for cycles. The company must, further, develop an additional positioning strategy designed to appeal to the end user’s self-perceptions in terms of how the customer view’s themselves as a cycle rider. Davison again offers that many motorcycle riders consider cycling to be more than merely a method of transportation, but as an entire lifestyle built on cycling camaraderie and the cohesiveness provided by group cycling activities. This suggests that the company must, when targeting this segment of the buying population, develop a connection between buyer attributes and the cycle, focusing less on product attributes but more on establishing relationships with an entire cycling lifestyle. This can be accomplished by assessing a series of quantitative and qualitative research studies aimed at hard-core cycling advocates to determine how they view themselves. This would suggest a multi-positioning strategy is necessary for Midland Cycles to experience longevity in the cycle marketplaces. 7.0 Mix options for 12-month plan Elements of distribution, pricing and promotion are the largest considerations for Midland Cycles in terms of the marketing mix options. Because the differentiation strategies and various positioning campaigns will be designed with the product and user in mind, product strategy, other than establishing a reputable brand name, is not vital to long-term sales growth. Distribution must be established as low-cost and also allowing potential markets to find their desired product at the right place and at the right time. The company will be working with MLC Warehousing, a third-party vendor, who will house all of the company’s product as a networking and distribution hub, thus avoiding the necessity to store inventories on-site at Midland Cycles. This will save the company considerable financial resources in terms of inventory taxation and the costs of maintaining an in-house fleet of trucks. Pricing will be established in a way that is congruent to competitor pricing whilst also creating pricing that fits budgetary guidelines for manufacture. As an incentive structure, all new model cycle purchases will meet with a 10 percent discount for new buyers, thus luring incentive-minded customers into Midland Cycles sales stores. Promotion will be the cornerstone of future profitability for the firm, as having a broad segmentation strategy requires the firm to connect with a wide variety of potential buyers. Television and print advertisement will be utilised as the most appropriate venue for reaching targeted customers. Even though these forms of promotion are rather costly, Midland Cycles will be able to reach a much larger audience, thus securing revenues over the promotional costs of marketing. Promotional strategies, much to the positive accolade of the company, can be adjusted according to sales data gathered by tracking databases to determine whether the company is getting the full return on promotional investment. If statistics indicate a decline in sales trends, promotions can be adjusted to better suit the target audiences and meet with short-term positioning strategies at Midland Cycles. 8.0 Implementation issues Other than budgetary restraints, there are no significant hindrances to the current marketing plan as proposed by this research. The company maintains a strong balance sheet and cash position, as previously identified in this plan, which will allow the company to temporarily undertake the costs of print and television promotional campaigns. Management issues, however, will be a potential drawback to implementation which will require ample training at all of Midland’s sales facilities. There is not a strong senior management presence in any of the operating regions, thus each region must maintain a district leader to oversee internal and external operations as related to management intervention with customers. This will require a small cash investment on behalf of Midland to create an appropriate training seminar for management, however the small investment will be worth the increased aspects of customer service provided by such training initiatives. Additionally, the establishment of the aforementioned marketing research division will be a costly endeavour in the first year of new Midland Cycles operations. It has been determined that two full-time shifts must operate in order to fully assess new product opportunities, which will add strain to the payroll budget at the firm. Senior managers must work directly with research and development teams as part of an internal cooperative attitude and ensure that all aspects of new product development are meeting with expected strategic results and are in-line with budget restraints. Any other potential hindrance to forward strategy, such as changing consumer demographics or preferences (as two relevant examples), can only be dealt with as they occur, however the business must maintain an internal culture that is ready to adapt to change and work toward new or fluctuating strategic intentions. This will require internal training on teamworking and other aspects of operating the business. 9.0 Evaluation, monitor & control A new position must be created within the firm labeled the Quality Assurance Champion who will be responsible for extracting consumer information from the electronic sales database in order to determine demographic (or wide consumer) trends in purchasing. Having an individual responsible for measuring marketing by tracking success ratios and changing buying trends will allow the company instant access in the event that new positioning strategies are required or an entirely new segmentation strategy is necessary. This newly created position should work directly with senior managers to assess marketing effectiveness and propose new solutions in the event of sales slowdowns. Further, Midland Cycles must consider whether the full benefits of its marketing strategies are being received and further expand the brand’s presence into other promotional activities such as the International Cycle Show or other hot exhibitions. Television and print is not the only strategy for promotion that is viable to gain consumer attention. Trade shows and exhibitions which spotlight product attributes and allow customers to meet salespersons and create selling relationships will be vital to continued growth in the cycle industry. Thus, individuals from each sales region must attend these shows to report back on consumer testimonials and generic consumer perceptions of product quality. Essentially, the business must capitalise on any event in which to promote the company, thus a team of professionals must work to identify new opportunities for expanding brand presence both domestically and internationally when appropriate. Bibliography Boone, L. & Kurtz, D. (2006). Contemporary Marketing. 12th ed. Thomson South-Western. Boone, L. & Kurtz, D. (2007). Contemporary Marketing. 13th ed. Thomson South-Western. Davison, Ann L. (2005). Product Attributes and Consumer Behaviours: Lessons from the Current Marketing Environment. Hamish Hamilton Publishers, p.99-101. Financial Times. (1998). ‘Motorcycles: Sales soar 20% this year’. London, UK. 18 May 1998, p.8. Griffiths, John. (2000). ‘Two-wheelers back in fashion’. Financial Times. 10 Oct 2000, p.6. Griffiths, John. (2001). ‘Now scooters are the leaders of the pack’. Financial Times. 23 Feb 2001, p.7. Harson, E. L. (2007). ‘Unemployment’. Demographic and Economic Analysis Institue. Retrieved 15 Mar 2008 from http://www.sintel.org/2007_unemployment_stats.pdf. JCN Newswire. (2008). ‘Honda Sets All-Time Record for Auto Production in the Month of February for Regions Outside Japan and Worldwide’. Japan Corporate News Network. 28 Mar 2008. MCI. (2007). ‘Citizenship and Young People in Schools – Motorcycle Industry Launches New Educational Resources’. Motorcycle Industry Association. Retrieved 17 Mar 2008 from www.maguk.org/content/news/articles/2006/february/13.html Mitra, Kushan. (2008). ‘On the skids; Motorcycle sales are down, and the focus is shifting to the higher end of the market’. Business Today. New Delhi. 9 Mar 2008. Appendices A: New Product Development Life Cycle Chart Source: Tyner Blaine. (2007). ‘Product Life Cycle and the ROI of Agile Development’. Retrieved 4 Mar 2008 from http://tynerblain.com/blog/2007/02/27/agile-development-roi-1/ Differentiation strategies can increase the life cycle of the product simply by appealing to a consumer desire that did not previously exist. Clever promotion and advertising, as a strategic option for Midland Cycles, can make the maturity stage of products much longer as new positioning options are exercised. Appendices B: SWOT and PEST Analyses for Midland Cycles SWOT Analysis Framework Environmental Scan           / \            Internal Analysis       External Analysis / \                  / \ Strengths   Weaknesses       Opportunities   Threats | SWOT Matrix Source: http://www.dolphinventures.com/swot_analysis.htm Strengths: 1. Stable balance sheet and cash flow position 2. Modern production facilities 3. Many existing patents on product lines Weaknesses: 1. Narrow product line 2. Weak market image 3. Lack of management focus and depth Opportunities: 1. New interntional markets opening and developing 2. Ability to acquire firms struggling in this industry Threats: 1. Changing buyer preferences and lifestyle tastes 2. Changing governmental policies such as higher tariffs or regulatory agencies 3. New competition market entries PEST ANALYSIS Political: 1. Currently operating in stable governments 2. Fair employment laws and labour expectations 3. No trade or tariffs currently Economic: 1. Increasing unemployment rates 2. No measurable issues currently with exchange rates on foreign currencies 3. Lower interest rates allowing the firm to borrow without high interest costs Social: 1. Positive attitudes toward cycling in society 2. No contemporary limits on demographics for cycling – all ages 3. Positive social attitudes regarding cycle safety Technological: 1. Excellent operational software programme developments 2. Strong R & D focus 3. Technological changes in the broader marketplace offering opportunities for Internet and Web-based business changes such as an interactive sales website or product info site. Read More