Creation and Distribution of Goods and Services in Aldus Corporation - Case Study Example

Aldus Corporation Introduction Aldus co. was started in 1984 by Aldus Bernard. They started off by developing software packages that worked on micro-computers. The software could perform many functions like page layout and designing. Their main product was PageMaker, which allowed people, to design, edit, and produce printed communications electronically, thereby reducing the time and expense associated with traditional publishing techniques. This new microcomputer-based publishing 'soon became known as "desktop publishing,". Aldus Corporation had four different markets which they targeted and made products for. However they had not segmented them differently. They had launched a unanimous marketing campaign for all their products. There were four broad markets that they were catering to and they were divided on the basis of business and professional markets. PC and Apple-based micro-processors made four different segments for them. In the beginning Aldus had just one portfolio through which all four markets were catered too. Their ad campaigns were done together too. Previously, Aldus Corporation hadn’t catered to their two main markets separately, that is the business market and professionals market. It had positioned itself to serve the two markets and together bridge the gap between them. However, as the market and demand grew, it became difficult to handle the two markets together. Aldus was already, by then in the process of, launching new products to serve the two markets and their product range was also increasing. Thus, to make things easier and to make distinct positions for their products, they decided to opt for multi branding. The idea was given by Richard Strong, marketing manager for Aldus Europe. Richard Strong, the manager of Aldus Cooperation proposed the idea of breaking its chain of products into two distinctive product lines; Aldus Executives and Aldus Professional Series. By doing this, the company could focus, on fulfilling the specific requirements for both segments. The products therefore would be divided for two market types. Aldus is now keen positioning both products separately. Consumer and Organizational Markets Consumer market is the market for products and services for individuals who would opt for Aldus Series Professionals. It includes products like Aldus Free Hand and Aldus Snap shot, designed specifically for the creative heads. It features advance graphical tools .They cover a potentially huge market of massive buyers. Organizational market is a market that caters to selling of products like Aldus Executives between businesses. It has less advanced tools for technically amateur people. (David L. Kurtz, 2009) Organizational markets are business markets. They are very different from consumer markets as the buying behavior for both markets varies immensely. Organizations make purchases under different circumstances. The three conditions under which organizations usually make a purchase are new task, modified rebuy, straight rebuy. In each of these, the buying procedure is different. Organizations purchase advance, expensive and complex products. They make a purchase on daily basis (whether it is modified rebuy, straight rebuy). If the investment is big they might purchase something big in one go (new task). The buying decision is taken after a very deep and thorough analysis of the product. Differences between Business Markets and Consumer Markets: 1. Business markets contain fewer but larger buyers, where as consumer market is vast and has many buyers. 2. Business customers are more geographically concentrated, that is, their industries are located on specific industrial zones where as consumers are scattered country wide. 3. Business buyer demand is driven from the final consumer demand. If the final consumer demand drops business demand will also drop. 4. Demand in many business markets is inelastic- not affected by price changes in the short run. Consumer market on the other hand, is affected by price changes. 5. Demand in business markets fluctuates more rapidly. 6. Business purchases involve more buyers. As the purchase is huge and requires heavy investment, everyone, all the way from the managers to technical staff are involved. 7. Business buying involves a more professional purchasing effort, where as consumer buying doesn’t need any professional purchasing effort 8. Business buyers usually face more complex buying decisions, as many things have to be kept in mind and analyzed. Consumers, however, have an easy decision to make. 9. The business buying process is more formal. It written on paper and there are contracts for it. 10. In business buying, buyers and sellers work closely together and build long term relationships. Consumers on the other hand, are less loyal and such strong relationships are not fended for in consumer markets. A product is positioned on the basis of its target market. For different target markets, different type of positioning strategy is needed. The differences illustrated above contribute significantly, in zeroing down on the correct positioning strategy for the company. A business market is different from professional market in many ways. The product for business market has to be more reliable and durable because they are purchased on a larger scale. A professional user, on the other hand, fends for easy to use and high quality products. Thus, they are positioned differently. More marketing advertisement needs to be done for consumer buyers while for business buyer long lasting relationships need to be fostered. Segmenting Markets Through market segmentation companies divide large markets into smaller segments. These segments can be reached more effectively and efficiently with products and services that match their segment type. There are different criteria on the basis of which companies segment their market. 1. Geographical segments: market is divided into different segments based on its location for example regions, countries etc. 2. Demographic segmentation: dividing market based on demographic factors such as age gender, education, religion, industry, company size etc. 3. Psychographic segmentation: dividing market into different groups based on social class, lifestyle or personality characteristics. 4. Behavioral segmentation: dividing markets into groups based on consumer knowledge, attitude, use or response to a product Market segmentation, targeting and positioning are the three major approaches which are applied by the marketing departments in their endeavors to achieve organizational goals. Of the three steps mentioned above segmentation is the first one to take on. In market segmentation, segment variables are identified and the market is segmented accordingly. The segmentation allows the company to focus on the demands of the targeted market and fulfill its demands. It seeks to differentiate between various segments of a market and addresses the needs and requirements of each market. In this way they make products and introduce services which are specifically meant for that particular segment of the market only. There are various approaches that can be applied in market segmentation. Company would thus, be able to create its identity in all its major market segments. Different marketing and communication strategies could be applied for each segment keeping in mind, the respective consumers in the segments. The proposed segmentation scheme for Aldus Co. is to do segmentation on the basis of behavioral segmentation. They have divided their market into two groups based on the type of behavior, the consumers of that market represent. There are different benefits that consumers seek from a product. Benefits segmentation is a type of behavioral segmentation and it is segmented on the basis of the major benefits people look for in the product class, the type of people who look for each benefit and the major brands that deliver each benefit. The market is then segmented accordingly. Business buyers seek different benefits from the product they purchase. They are in need of a reliable, long term useable product, where as professional buyers need a product that delivers them best value. Target Markets In the given segmentation scheme, Aldus Co faces stiff competition from Quarks Express. They have sharp pricing, an advertising strategy and distribution that resembles that of Aldus Co. However, the pricing of products was one area where Aldus Co had a slight edge. They were keeping their own prices and hence, maximizing profits. However during summer 1988, Strong smelled danger when the company was unable to meet the demands of its consumers. Current product, Page Maker, turned out to be technical and advanced. As a result it did not appeal to the business segment and lack of support from the distributer’s end led to loss of high tech users. Thus he decided to divide its market segment in 2: 1. Aldus Executives targeting the business users with easy access features. 2. Aldus Series Professional targeting the advanced sophisticated users of the product. Product Life Cycle Every product has it own life cycle. A product life cycle comprises of the stages of development through which the product goes through during its life. There are five phases through which the products passes during the course of its life. The five stages of the product life cycle are: 1. The product development period in which the company finds an idea of a new product and it is built upon that idea. Research, building marketing strategies, and developing the whole concept of the product are done during this period. 2. The second stage is the introductory period, during which the product is introduced to the market; the sales are recognized during this period. Owing to launch and early promotions, marketing expenses run high in this period. 3. The growth period, is when the product is accepted in the market. Sales increase rapidly during this period; the brand also faces competition from other products in the same category. 4. The maturity period follows next. This is when the product becomes sustainable in market but with decreasing rate, prices tend to drop and strategies are adopted to gain sustainability. Without careful brand management, the maturity period can lead to decline and result in the product withdrawal. 5. Finally the decline period comes. Decline is the stage when the product loses its appeal. Sales decrease and so do the profits. The cost of production inventory and overheads keep increasing which lead to the product’s downfall. (Sahaf, 2008) All products do not follow the same life cycle. It is possible for a product to never enter a particular stage for example; Pepsi has been in the market for more than a decade and still hasn’t entered the decline stage. The onus is on the product manager to keep the product living forever. In this case, the professional version of the page maker is at its maturity stage wherein, Aldus Co. is trying to reintroduce the product with new tools of graphics and other advanced software’s to gain sustainability in market. Marketing Mix Marketing decisions generally fall into four categories: Product: These are the services and goods the company has to offer to its consumers Price: The amount of money the customers have to pay to obtain the product Place: How the product reaches its consumers Promotion: The activities that communicate the merits of the product and persuade target customer to buy it. For effective sales of the modified page maker, the most appropriate market mix would be placement of the product, and correct distribution strategies. They need to distribute the product via new and broad distributing network alongside better sale service in order to keep the customers satisfied. Modifications in the product could also be made and new features can also be added to the product belonging to this stage to differentiate it from other competing products in the market. Price can also be reduced to simulate the market. However the price reduction shouldn’t lower the product perception and start a price war in the market. New incentives could also be given to resellers in order to avoid shelf space in the market of professional PageMaker. For better promotion, emphasis should be on differentiation and building brand loyalty. Incentives should also be given so that competitors’ customers switch to PageMaker. Perceived Value It is important to know how the consumers perceive the product and why it is valuable to him/her. There are different reasons why customers associate high value with some products and low value with the others. One very common analysis is the pricing of the product. Low priced goods are usually thought to be of low value and higher priced good are thought to be of better value. Often when products are endorsed by celebrities, consumers become confident about the product and the perceived value of the product also increases for them. Branded products are also thought to be of deliver better quality; that is, if the product is branded, it will increase customer perception about the product. Satisfaction is a person’s feeling of pleasure or disappointment that he gets, from comparing a product’s perceived performance in relation to his or her expectations (Kotler, 2008) Thus while marketers see themselves as selling products, customers see themselves as buying value or solution to their problems, and are interested in getting the right value at the right price; they are interested in what value does the product bring to them. Perceived value influencing is a marketing strategy is one in which, marketers should first know what the products perceived value is. After knowing the perceived value, it should be marketed accordingly to increase the product’s value in the eyes of the customer. A marketing strategy is developed such that it leads to customers associating their highest perceived value with it. The price should be set such that it is neither too low nor too high. Too low a price makes the customer feel that the product isn’t valuable enough and that’s why it has such a low price. It would be wiser to go for a location which has other valued products within the same vicinity. This will make the company’s product more accessible to the customer and ensures that it is within his reach. The most important part is the product itself, which is a combination of goods and services that the company offers to the customer. It is important that the quality of the product be maintained. Problems: Despite all his research, Strong faced stiff barrier with regards to the financial and human resources to be invested on the split. This was especially, when the Co. was already undergoing the process of releasing a new version of Page Maker. Apart from this, the marketing mix and communication strategies to be adopted for the two segments for the consumers and the resellers and press respectively were a challenge in their own right. However by overcoming the hurdles and differentiating the two segments the right way successfully, will help Aldus Co. reach new heights with satisfied consumers. Conclusion The decision of Strong to break their products into two different market segments and make different portfolios for them, according to me, is a good one. It would broaden their horizons, help them in handling the markets properly and cater to the different needs of the two markets. However, initially Aldus will face some serious challenges. This is because they have been handling all their products together till now and won’t exactly know how to separate but once they define their goals and understand the markets they will be able to achieve better profits and build customer loyalty too. Bibliography David L. Kurtz, H. F. (2009). Contemporary Marketing . In H. F. David L. Kurtz, Contemporary Marketing (p. 639). Kotler. (2008). Principles of Marketing. pearson. Sahaf, M. A. (2008). Strategic Marketing. In M. A. Sahaf, Strategic Marketing (p. 506). India: Asoke K.Ghosh. Read More