Marketing Audit: Motorola Company - Case Study Example

Marketing Audit Table of Contents Introduction 3 Marketing Audit 4 Industry analysis 5 2.Target Audience 7 3.Market Needs 7 4.SWOT Analysis 8 5.Competitive analysis 9 6.Market Mix 9 Conclusion 10 Reference 12 Appendix 14 STOT Analysis 14 Introduction An organisation is comprised of several functional departments each having a unique role in the overall system. Among them, the role of marketing function is significant as well as prominent. Companies develop specific marketing strategy to gain competitive position in the market and hence it becomes imperative for the management to evaluate the effectiveness of the prevailing marketing strategy with the help of marketing audit. Marketing Audit is defined as a “systematic examination of every aspect of sales, marketing, customer service, and every operation that affects sales and marketing in orders to determine how well and cost-effectively each element helps the firm meets its overall goals” (Ching Hua University, 2004, p.280). The concept of marketing audit is similar to that of financial or operational audit conducted by the company to evaluate the efficiency of its internal and external environment. In the given report, marketing audit will be conducted for Nokorola, the third largest international mobile/cell phone manufacturer. This auditing process will not only evaluate the strategy followed by the company but will also help to identify the target audience, the market needs and the degree of competition prevailing in the market. SWOT analysis will be conducted to determine the internal strengths and weaknesses possessed by the company and the threats as well as opportunities existing in the external environment. Finally, the marketing mix of the company will be evaluated to verify how well the marketing strategy followed by Nokorola has assisted it to achieve its corporate goal. Marketing Audit According to Philip’s Kotler, the result obtained from marketing audit is of great use for the company. The information revealed can be used by the marketing department to re-structure its marketing strategy, they can re-allocate the resources to enhance marketing efforts and if required they can re-examine the marketing opportunities existing in the given market (Dibb & Simkin, 2004, p.203). These above examples reinstate the importance of marketing audit in retaining the competitive edge of a company in the market. Figure 1: Steps used for marketing strategy planning (Source: McDonald & Keegan, 2002, p.22) The given diagram illustrates the importance of marketing audit as an essential tool in developing and reviving the marketing strategy followed by the company. To examine the effectiveness of the marketing strategy followed by Nokorola, marketing audit was conducted. The results derived from this audit are being presented below: 1. Industry analysis Nokorola has a strong market position, it the third largest mobile/cell phone manufacturing company in the international market. In the global market, Nokorola has 23 percent share. The past few years had seen a manifold increase in the degree of competition. Companies are thereby trying to incorporate aggressive strategies to increase their market shares. The mobile/cell phone industry can be broadly segregated into two categories; the first one is the traditional one that offers added features like camera, navigation facilities, MR3, easy access to internet etc. The other category belongs to the smart-phones where the products are manufactured by renowned companies like Google and Apple. They offer multiple services to the customers. The products manufactured by Nokorola belong to the traditional product segment. According to the market experts, the year 2010 will experience a marginal growth in the number of shipment for wireless handsets. The global market is also expected to expand with a compounded annual growth rate of 6.8% in 2009-2014 (Cellular News, 2010). Figure 2: Global Shipment Forecast for the Top 10 Cell Phone Contract Manufacturers (Source: Cellular News, 2010) However, as the western markets are almost saturated, the growth is expected to be more in the Asian markets. Figure 3: Number of Mobile Phone Subscribers and Mobile Payment Users in China, 2002-2009 (Source: Research in China, 2010) 2. Target Audience At present, Nokorola is mainly focusing on that segment of customers who are interested in voice and text features. Hence its target customers include mainly the children. The company is less concerned with those customers who prefer to have internet or requires other sophisticated features. Market trends reveal that demand for smart-phone is increasing at a faster rate and this trend is expected to continue in next few years. Therefore, the company should shift its focus on the mature users who prefer to have internet in their mobiles. However, care should be taken to satisfy the present target customers as they are quite loyal to the company. For expanding its existent market, Nokorola is trying to penetrate the markets of different developing companies. As the purchasing power of the potential customers is not that high in these countries, the company can offer its preferred product portfolio to attract and retain the customers. 3. Market Needs Mobile/cell phones are no longer just communication devices for the present customers. Like cars and watches, the customers are getting emotionally attached to their mobile/cell phones. For some users, mobile phone is a status symbol whereas for others it is a vital component of their basic requirement. The prevailing customers of Nokorola prefer the products offered by the company for its text and sound quality. However, the requirements of customers are changing at a faster rate. They want a single handset that can offer them the pleasure of multiple functions. The company has revived its collaboration with Carl Zeiss to incorporate their lenses in the new phones produced by Nokorola. The concept of developing designer phones in collaboration with Giorgio Armani is also a good step taken by the company. However, the company should understand that customers’ demands are growing day by day. They want a handset that can be used as an audio and video player, has a long lasting battery, has good navigation features and other value added functions. Almost all the customers prefer to get connected to the cyber world through their phones and hence the phones are required to be technologically advanced. Some of the latest technology used by different mobile handset manufactures are- Blue tooth 3.0, which speeds up the rate at which files are transferred from one phone to another. Mobile user interfaces and mobile web/widgets that assist in better interface for browsing. Location awareness, powered by GPS and WiFi, for improved connectivity to local networks. This can also be used to send local awareness signals. Near Field Communication (NFC) can also be used by the customers in return of payments to ensure higher level of security. 802.11n & Cellular Broadband are wireless local area networks (WLANs) that are presently used in laptops and note books. Display technologies will also gain much appeal in years to come with the introduction of active pixel displays and pico projectors (Perez, 2009). After the introduction of ‘3G technology’, the demand of customers is expected to grow further. So Nokorola should start developing phones that will be compatible with this technology. 4. SWOT Analysis The SWOT analysis of the company (given in the appendix), has revealed that the market position of Nokorola is under considerable threat from the competitors. However, the company has the opportunity of entering the developing markets were customers are less keen towards costly high-tech mobile sets. 5. Competitive analysis The numbers of competitors is less in this industry, but the degree of competition is high among the major players. Till the end of November, Nokia has remained as the market leader among the other smart-phones, although its market share has dropped to 35 percent from the last year’s 50 percent. Market share of other mobile manufacturing companies have also declined due to the dismal economic condition and declined purchasing power of customers throughout the world. Figure 4: Leading WiFi handsets Vendors Shipments, 1Q 2008-2Q2009 (Units in Thousands) (Source: Whitney, 2009) Last year Nokia had introduced N900, one of the best smart phones in the market, Sony Ericsson’s Satio (with 12 megapixels) was the one that possessed the features to compete with digital cameras (Kelsey, n.d.). However, no new products was launched by Nokorola is the last year. 6. Market Mix Product: The company’s portfolio mainly comprises of products that heavily emphasis on voice and text feature. This makes the portfolio more concentrated on products that fail to offer diversity to the customers. Till date the marketing head of the company relies on ‘Crazrs’ which was once famous among the international users. Price: The company is compelled to reduce prices and thus its profit margins are declining at a fast rate. If this situation continues, Nokorola may have to shut-down some of it production units. Due to economies of scales, Chinese mobiles are much cheaper, but they offer more or less the same features as offered by Nokorola’s products. The company is under tremendous pressure to reduce the prices as it wants to enter the markets of China and India. Place: Nokorola failed to make foreword integration with the distributers; hence the company has a poor delivery facility. This is hampering the sales of the company in developing markets where the company does not have much knowledge about the market conditions and demand pattern. Promotion: Nokorola uses more traditional forms of promotional strategies. Due to reduced profitability, the company may have to cut down its promotional budget. Till date, the concept of integrated marketing is missing in Nokorola. Conclusion Market analysts predict a strong growth in the mobile/cell phone manufacturing industry. This growth is expected to be mainly in the developing markets were the customers density is high but the purchasing power is low. Such forecast is pressuring the company to lower the price as far as possible as a result of which the operating margins are reducing day by day. Till date, Nokorola has been targeting the customers who are only interested in voice and text features of the phone. The sales figure of the last quarter reflects that customers are getting more attracted towards smart-phones that offer high-tech features and multi tasking facility. The product portfolio as well as marketing strategies used by Nokorola thus needs to be revived to provide it with the required competitive edge. Reference Cellular News. 2010. Top 10 Cell-Phone Manufacturers Face Challenging 2010. [Online]. Available at: http://www.cellular-news.com/story/42843.php [Accessed on August 05, 2010]. Ching Hua University. 2004. International Marketing. Ministry of education of the Miocene JI online course construction project business English courses teaching materials/Shaw Yunnan Chief Editor. Dibb, S & Simkin, L. 2004. Marketing briefs: a revision and study guide. Butterworth-Heinemann. Kelsey R. No date. New Mobile Phones 2010 - Taking Technology Ahead. [Online]. Available at: http://ezinearticles.com/?New-Mobile-Phones-2010---Taking-Technology-Ahead&id=3253344 [Accessed on August 05, 2010]. McDonald, M & Keegan, W. J. 2002. Marketing plans that work. Butterworth-Heinemann. Perez, S. January 29, 2009. 8 Mobile Technologies to Watch in 2009, 2010. [Online]. Available at: http://www.readwriteweb.com/archives/eight_mobile_technologies_to_watch.php [Accessed on August 05, 2010]. Research in China. May 2010. China Mobile Payment Industry Report, 2009-2010. China Business Intelligence. [Online]. Available at: http://www.researchinchina.com/htmls/report/2010/5885.html [Accessed on August 05, 2010]. Whitney, L. November 4, 2009. Apple, RIM grab market share from Nokia. Cnet news. [Online]. Available at: http://news.cnet.com/8301-17938_105-10390525-1.html [Accessed on August 05, 2010]. Bibliography Gilligan, C. & Wilson, R. M. S. 2009. Strategic Marketing Planning. Butterworth-Heinemann. Mercer, D. 1998. Marketing strategy: the challenge of the external environment. SAGE. Appendix STOT Analysis Strengths: 1. The company has a strong market image. 2. It possesses long term experience in this industry. 3. The company mainly focused on less costly phone sets that have good market in third world countries. 4. Crazrs is one of the most popular handset of the company and till date many people prefer to purchase it. 5. The company is developing collaborations with different companies to introduce better lenses and designer sets. Opportunities: 1. The developing countries offer good opportunity to the mobile handset manufactures. 2. The degree of competition is quite less in these developing markets. 3. The concept of designer phone will be able to attract customers who possess money to invest in luxurious products. 4. In developing markets, the number of children is expected to grow in the years to come; hence the demand for prevailing products offered by Nokorola will continue to increase in these markets. Weaknesses 1. The top management of the company relies heavily on the success of a single product. 2. The products lack innovation, it’s been long since the company had introduced any new feature 3. The marketing department is over emphasising on children who prefer voice and text features. They are neglecting the advanced users who require fast connectivity to internet and easy browsing facilities. 4. The profitability of the company is declining. Threats 1. Popularity of Crazrs is declining. 2. The degree of competition is increasing. 3. Chinese phones are strong competitors of Nokorola in Asia Pacific region. 4. More and more customers in developed markets are shifting in favour of smart-phones. 5. The technology is changing at a fast rate and the introduction of 3G will pose as a major threat to the prevailing technology used by the company. 6. The purchasing power of the customers is increasing due to strong economic growth; hence they are shifting to high-tech mobile phones. Read More