Marketing Plan for LumiCore - Assignment Example

Business To Business Marketing Executive Summary LumiCore is considered to be a subsidiary of the Brazilian chemical company named as LumiChem. It tends to produce a wide range of paints, pigments as well as coatings. The objective of the project is to assist LumiChem in order to diversify its business in the United Kingdom market. Hence, looking at the growth potential, it has been suggested that the company must diversify its business into car paints manufacturing segment in the UK. The company is required to make significant improvement in its product features in order to maintain competitive advantage. Furthermore, it is essential for the company to maintain low price to lure the customers. To attain high sales growth, greater efforts need to be made in promotional strategies. There are numerous competitors of the company which tends to be one of the biggest threats for it. Hence, it is imperative for the company to focus its attention towards the development of innovative strategies so that it can maintain its position in the market of the UK. It needs to work hard in order to minimise its weaknesses to strengthen its position in the market. LumiCore can monitor the activities of the rivals in order to identify their moves and hence take proper steps to remain competitive in the market. Table of Contents Executive Summary 1 Introduction 3 Goals 4 Paint Market Statistics 4 PESTEL Analysis 6 4P’s of Marketing 9 Competitor Analysis 11 Customer Analysis 13 Market Entry Strategy 14 SWOT Analysis 16 Short-Term and Long-Term Projection 17 Conclusion 18 References 20 Appendix 24 Introduction The United Kingdom is considered to possess one of the biggest established paint industries internationally. Since 1980s, the UK has been capable of boasting a leading paint manufacturing industry. There are several kinds of paint which are manufactured and marketed in the UK. Most of the paint production falls under four major categories which are decorative painting, industrial painting, automotive painting and specialist coating products (Vatsa, 2012). This report is particularly concerned with developing a marketing plan for LumiCore, a subsidiary company of LumiChem to diversify into one segment of the paint market of the UK. LumiChem is a Brazilian chemical organisation which deals in a range of paints, pigments and coatings. The report intends to analyse the automobile painting segment of the UK in order to explore the business opportunities for LumiCore. The demand for automobile is increasing day-by-day and this increasing demand is fuelling paint manufacturers to produce and market quality paint products. Similar to other industries, automobile paint industry has significant importance for car manufacturers. The increased demands of automobile customers regarding corrosion protection and for making distinction in vehicle colour design dictate the significance for flexible organisations which can effectively react to the market changes (Aessealplc, 2002). Hence, the report aims at analysing the business environment of the UK as well as to recommend market entry strategy for LumiCore to conduct business-to-business marketing activities. Goals The goals of LumiCore can be categorised in three ways which are marketing goals, strategic goals and tactical goals. The marketing goals of LumiCore are to accomplish adequate revenue and to expand the business in the market of the UK. The strategic goal of LumiCore is to become one of the top automotive paint manufacturers in the UK within next five years, and the tactical goal of LumiCore is to enhance the brand awareness. Paint Market Statistics Painting generally includes several polishes, glosses and varnishes which are used to shield and to decorate the surfaces such as internal and external walls, doors and frames among others. Painting is vital if automobiles are to be repaired and given a new life. The international painting market was worth US$85.7 billion in the year 2005. The paint market had demonstrated healthy increase in growth in the global context. The average annual growth rate of international paint market was almost 2.7% from 2001 to 2005. With respect to volume, the annual growth rate of global paint market was almost 4.2% in the same period. This growth was mostly driven by rising demand of paints in several developing markets especially in Asia and Eastern Europe. The rising demand of paint was due to combination of several aspects such as increase in the disposable income of people and higher level of spending on painting homes and vehicles. In developed markets such as in Western Europe and in North America, growth in painting is driven by improvement of more sophisticated products which can fulfil the demands for inexpensive, environmental friendly and effective coating. The competition is quite high among paint manufactures in developed markets. With increasing cost of raw materials, the paint manufactures also face stiff challenge to maintain the cost (Akzo Nobel, 2006). In past five years, the paint market of the UK has been relatively stable (GfK Retail and Technology UK, 2010). Major changes that have taken place in painting industry in developed nations include implementation of new coating technologies. The new coating technologies include thermosetting suspension, colloidal diffusion, waterborne coating, powder coatings and radiation remediable coating (IHS, 2012). Automotive coating has also recorded good growth due to increase in car ownership. Although Asia Pacific holds strong position in the international painting market, Western Europe and North America also retain strong positions within global arena. In the year 2005, Western Europe had a market share of about 27% (about US$23.5 billion) in the global paint market (Akzo Nobel, 2006). The painting industries in the United States, Western Europe and Japan are considered as mature markets. It had been expected that the overall demand of painting from 2011 to 2016 would increase at an average annual rate of 1.5% to 2.5% in Western Europe (IHS, 2012). The painting industry of the UK is expected to generate revenue of £4.2 billion in the year 2012 to 2013. In the UK painting segment, the entry barriers are quite low, however, new entrants can initially find it challenging to gain a foothold in the market against existing contractors of the UK that have already established strong business network and have gained local market approval (IBISWorld, 2012). PESTEL Analysis Political Factors The UK is a founding member of European Union (EU) and thus the UK needs to implement the directives and principles created by EU. The rules and the regulations of EU have become a part of the UK constitution In the UK there are three levels of government which can impact the business of LumiCore. The levels comprise local government, central government and European government. The local government makes decisions regarding council taxes. On the other hand, central government creates laws and takes major decisions regarding the economy. Finally, European government plays a crucial role for central government (Business Studies Online, n.d.). Economic Factors The UK is considered as the seventh biggest economy globally. In entire EU, the UK is considered as the second biggest economy and is a major global trading power. The economy of the UK had gone through numerous fluctuations which are related with economic boom and economic decline. The economy of the UK had entered in a recessionary phase in 2008 and recovered in 2009. The economic growth of the UK since 2009 has been quite irregular in nature with poor credit growth and reduction in real income among others. Furthermore, the UK had also faced a series of economic changes such as in interest rates, wage rates and inflation rates among others. These economic aspects can have an impact on the business of LumiCore in the UK (U.S. State Department, 2012). Social Factors The increased dependence of people on vehicle has increased the level of car ownership in the UK. Furthermore, the level of car ownership has also increased as more individuals desire to own vehicles from an early age and people who belong to older age group want to retain personal use of vehicles in order to ensure complete mobility (Barker, 2002). This social aspect can enhance the requirement for automotive painting in the UK as well as can enhance the business opportunities for LumiCore. Technological Factors The changes in technology have become crucial in paint segment. Technology can effectively reduce the level of emissions in painting. Furthermore, utilisation of advanced technologies result in improvement of eco-friendly paints as well as it can strengthen the trend towards utilisation of more waterborne coating. Moreover, the increasing awareness of people regarding quality painting also triggers more implementation of technology in painting segment. However, a major constraint of implementation of technology in LumiCore is the probability of sharp increase in prices of the paint products which can be harmful for the business at the initial phase (IRL, 2012). Environmental Factors There are several environmental aspects which can affect the performance of LumiCore in the UK. In order to conduct business in the UK, LumiCore needs to address the environmental aspects such as present EU criteria for environmental protection, ISO 9000 and ISO 14000 criteria, low emission and low consumption of energy among others. Furthermore, LumiCore will also require identifying issues regarding utilisation of materials which can negatively impact on environment (Kougoulis & et. al., 2012). Legal Factors The aspect of environmental protection can also influence the legal aspects of the UK which indirectly create an impact on the business of LumiCore. In the UK, the ‘Environmental Protection Act’ was passed in the year 1990 in order to diminish the level of Volatile Organic Compounds (VOC) emission from coating activities. On the other hand, it is the responsibility of Federal government to provide assistance to local regulators in order to minimise the emission while coating. The ‘Environmental Protection Act’ also provides guidance to paint manufacturers regarding environmental issues of automobile coating (Yosemite, 2012). 4P’s of Marketing Products LumiCore needs to provide exclusive automobile painting products which can be used easily. Furthermore, the products must be environment friendly and competitive in terms of costs and quality. LumiCore must aim to provide a variety of products comprising basecoats, clearcoats, single stage top coats, primers, putties, hardeners, thinners and cleaning materials among others. Basecoat provides excellent paint coverage along with metallic and pearl colour effects. Clearcoats products help to repair vehicles from different kinds of scratches by spraying colour. It will provide high glossy colour to vehicles. With respect to clearcoat, LumiCore will need to implement pertinent technology which can help to protect vehicles from heat activation scratches. As nowadays car manufacturers are concentrating more on environment friendly solutions for their products, the paint products of LumiCore must ensure avoiding the use of unstable organic materials to ensure sustainable performance. The primers will help to provide a finishing touch in vehicle coating along with providing an excellent adhesion to rust resistance (Akzo Nobel, 2010). Price There are several pricing strategies which an organisation can take while performing in foreign markets such as penetration pricing, price skimming, price leadership, absorption pricing and value based pricing among others. However, with respect to LumiCore, value based pricing should be followed. In this strategy, the price of the paint products will be based on effective value to the customers in relation to other substitute products. In this pricing strategy, the optimum price can be identified by determining how highly the customers value the products offered by the organisation. In this context, it can be stated that as the offered products of LumiCore are not unique than other competitors, the price will be set at lower level. It will help LumiCore to enter the market of the UK. Lowering the prices will help LumiCore to gain competitive advantage over other competitors. LumiCore can also provide discounts as a part of value based pricing. However, the discount must be based on level and frequency of purchasing. The value based pricing strategy not only will help to strengthen the market position, but also can assist in maintaining profitability. Place Place is a vital marketing strategy for any organisation to perform effectively in any foreign market. Thus, it is recommended that LumiCore should maintain extensive distribution network through strong supply chain. LumiCore needs to develop adequate number of manufacturing units, regional distribution centres and warehouses for ensuring smooth business operations. LumiCore also needs to maintain good relationship with its dealers and suppliers of raw materials to distribute its products in major markets of the UK. Furthermore, there is a requirement for opening and expanding paint and colour stores for supplying the products to the business consumers effectively. Promotion Promotion is the other crucial marketing strategy for an organisation. There are several promotional strategies which should be used by LumiCore while entering in the market of the UK. The major promotional strategies used by an organisation are advertisements, public relations, sales promotions and trade shows & exhibitions among others. In this context, it can be stated that advertisement can be used by LumiCore in order to promote the products to a large business-to-business customer segment. LumiCore can also use esteemed brand ambassadors in order to advertise the products. Furthermore, the company can also use public relation strategies as a part of promotional strategy. Different public relation strategies that can be used by LumiCore are corporate assembly, merchandising and sponsorship events among others. These marketing strategies will assist LumiCore to perform effectively in the automotive painting segment of the UK. Competitor Analysis Competitor analysis in the context of marketing is considered as an evaluation of the strengths as well as the weaknesses related to the current and the potential competitors. This analysis tends to offer offensive as well as defensive strategic contexts in order to determine the opportunities as well as threats. It can be revealed that competitor analysis is considered to be one of the most significant aspects of corporate strategy. There are many competitors of automobile car paints in the UK market. Paint industry in most parts of the world can be considered as matured industry whose growth generally depends upon different factors. European markets are also expected to mature in the coming few years. The UK manufacturers tend to sell the decorative paints either directly to the large retail chains or via distributors. Autopaints Brighton, an established manufacturer in the UK, was established in the year 1988 and since its establishment the company is considered as a highly respected organisation for offering a wide range of quality products in the professional market (Autopaints Brighton, 2012). Autopaints tend to possess long-term relationship with the UK as well as European suppliers which tend to permit the company to remain competitive and thus offer quality products and services to the various car manufacturing companies. Carpaint UK Ltd is considered to be a family run business that places greater emphasis upon the supply of car paints as well as automotive products. The main unique selling proposition (USP) of the company is that it has skilled workers, which helps the company to explore its business in various parts of the world (Carpaint UK Ltd, 2012). Jawel Paints Ltd was established in the year 1975 and is considered to be one of the biggest independent mail order suppliers. The company specialises in car paint business and also tends to offer other numerous products. The company has been capable of attaining success because of its attempt at offering the customers with the right kind of goods at the right time (Jawel Paints, 2012). Leonard Brooks Paints tends to supply car paint as well as refinishing products related to car, motorcycle as well as commercial vehicle markets. It was founded in the year 1981 and has been functioning since a long time as a UK company. Since last 20 years, the company has been successful at creating a world class image in the paint industry (Leonard Brook Paints, 2012). Since last 25 years, Automotive Paint Supplies are considered to be the leaders in the supply of paints as well as other related products in the UK market. The owners of the company namely Tim Mahoney as well as Andy Slater operated the business with the goal of offering the customers with world class service offerings whether it is for regular, major trade consumers or it is for the trade consumers looking for making their car classic (Automotive Paint Supplies, 2012). It can therefore be stated that there are various competitors of LumiCore paints in the UK which tends to compel the company to prepare innovative strategies that shall assist them at remaining competitive. It is imperative for the company to make its entry in the UK market with certain new features and strategies in order to compete effectively. Customer Analysis Customer analysis can be determined as a method of identifying the customer segmentation, value, buying method as well as motivation for targeting the market and improving the sales. The core facet of customer analysis is that since all the customers are not created equal it becomes the responsibility of the companies to determine the customers’ behaviour. It can be mentioned that LumiCore will initially target the various automobile companies of the UK. LumiCore will sell the paints directly to the various car manufacturing companies. At the outset, only 20 car manufacturers of the UK shall be targeted. The customers shall be easily capable of recognising the brand because of extensive and focused promotion strategies employed by the company. Key focus will be upon satisfying the customers to a greater extent. The decision processes of the customers tend to impact their selection and buying method by a greater extent. The customers will require determining their needs and identifying their problems. Furthermore, they would be required to search for information regarding the product that they want. Contextually, it becomes imperative for LumiCore to make its presence in various ways such as via social media sites or by the use of other promotional tools. Since there are numerous companies that tend to sell car paints, it becomes imperative for LumiCore to make the product quite innovative in order to lure the potential customers. LumiCore needs to determine the potential buyers in advance and hence design their strategies accordingly. Customer satisfaction must be the first priority for the company. Hence, it needs to make all the attempts in order to satisfy them. In order to determine if the customers are satisfied with the products or services or not, it is essential to conduct feedback surveys. By conducting feedback surveys, they would be capable of identifying if the products offered by the company have been capable of satisfying the needs and the demands of the customers or not. With the help of the feedback surveys the company will get an opportunity to enhance the products and the services through which they would be further capable of increasing the sales of paint. In the context of car painting business, LumiCore needs to offer the customers with customised service offerings in order to establish itself in the UK market. In order to lure the customers, LumiCore needs to offer the customers with low price products and needs to focus upon the promotional strategies (Portland State University, 2012). Market Entry Strategy In case an organisation makes a decision to enter into the overseas markets, there is a variety of options available to it. These options alter with the cost, risk as well as level of control that can be practiced over them. The various entry modes are exporting, licensing, full ownership and joint venture. In the context of this study, it can be mentioned that joint venture would be considered as one of the most feasible options for the company. A joint venture is considered to be an arrangement whereby the company needs to share equity of the new venture with the partner from the host country. A joint venture is considered to be a legal term which determines the association between two or more firms entering into consent to work towards the attainment of the similar goals thereby remaining different entities. Joint venture tends to take place across numerous industries where the companies tend to combine their resources for a specific project. It is a contractual agreement between two firms in order to operate a particular business operation. The parties entering into joint venture tend to attain significant benefits. One of them is that it offers the companies with a scope to attain new competence as well as expertise. It also permits the companies to enter into related businesses or new geographic markets. The company will also be capable of having access to huge resources along with specialised staff and technology. Joint venture tends to be quite flexible. Both the partners are capable of sharing the risks related to the business with the venture partner. The most significant feature of joint venture is that LumiCore will be capable of gradually separating the business from the rest of the organisation and therefore sell it to certain other parent company (Ekeledo & Sivakumar, 1998). Not only LumiCore shall be capable of attaining access to bigger and new markets but joint venture can also help in gaining new resources. It needs to be remembered that the managers also need to have a proper knowledge regarding the cultural differences when taking into consideration the joint venture partners. It is quite imperative for the managers of the company to be highly committed when deciding to operate the firm in international market. The businesses need to be aware of the opportunities that prevail in the foreign market. It needs to be considered that foreign market penetration requires four important factors to be assessed such as market development, sensitivity, research and innovation (Madhok, 1997). LumiCore will take into account research and innovation strategy in order to sustain in the market. The top level management needs to make its active presence in the joint venture in order to enhance its effectiveness. Not only the benefits need to be considered by the firm but the constraints related to the choice of entry strategy need to be considered as well in order to determine if the chosen mode is effective or not. In case the drawbacks outdo the advantages possessed by the chosen entry strategy then the firm can choose other entry strategies. In making use of joint venture, the company shall be capable of attaining greater benefits. SWOT Analysis The main strength of LumiCore is that it has a wide range of products, shades, and pack sizes. The company’s proficient employees who work towards the attainment of the objectives of the organisation are also considered to be one of the biggest strengths for the company. Furthermore, involvement of the top management in the decision making process helps the company to improve the business by a considerable extent. The company is considered to be strong in terms of inventory control. The pricing strategy that the company follows has been geared towards the middle as well as lower end consumers, which further helps the company in acquiring greater number of consumers. The company also has highly reliable suppliers who tend to offer them with high quality raw materials. Hence, the products manufactured by the company are quite superior in comparison to its competitors. The corporate image of the company is considered to be another crucial strength of the company. The broadening product mix tends to put greater pressure upon accounting as well as distribution. The company does not possess adequate advanced technologies which is most likely to hinder the progress of the company. Furthermore, the company does not possess sufficient funds in order to purchase advanced technologies. The opportunities for the company are that it can acquire the market share in the industrial paint sector. The automobile industry tends to account for a substantial amount of the industrial paint market. Competition is considered to be the biggest threat for the company as there are numerous rivals selling automobile paints. The company is most likely to face difficulty in gaining market share because of already existing players in the market. The political as well as the legal barriers in the country might also possess greater threats for successful operation of the company. Short-Term and Long-Term Projection Short-term as well as long-term marketing is required to generate sales. For the purpose of creating consistent sales cycle as well as a favourable growth trend businesses usually involve in both short-term and long-term marketing efforts. With the help of short-term marketing efforts the company is most likely to attain sharp sales increase that might last for a very short period of time. Hence, efforts need to be made by the company in order to focus upon long-term marketing efforts in order to sustain sales. It can be mentioned that within the first phase of operations, the company will target a sales of £50,000. It has been estimated that there will be growth in the sales figure by 20% in next five years of operations. In order to attain the following objective, it is imperative for the company to make greater efforts in its promotional strategies and make improvement in its product features. The short-term plan shall keep the company on track towards the profitability. The long-term plan will help the company in preparing strategies so that it can remain competitive in the market place and it will further help in maintaining the revenue growth in the near future. The appendix section demonstrates long-term projection of sales in the next five years. Conclusion From the above report, it can be stated that the paint market of the UK is quite attractive in terms of business opportunities. However, there are several challenges which can be faced by LumiCore while diversifying the business and entering in the market of the UK. The major constraints for entering in the market of the UK are cost, competition and environmental aspects. On the other hand, a lack of advanced technologies and a lack of funds can also pose difficulties for LumiCore to diversify in automotive paint business. However, in order to conduct business effectively, LumiCore must need to carefully select the marketing mix strategies considering the desires of customers and competitors’ offerings. There are abundant business prospects for LumiCore in the market of the UK, but in order to exploit the prevailing opportunities in the market, LumiCore should consider the appropriate market segments where it desires to operate and the appropriate market entry strategy which can help to minimise the risk of the business. Furthermore, LumiCore must also work in order to reduce the weaknesses and utilise its strengths to achieve desired success in the market of UK. References Akzo Nobel, 2006. The Global Coatings Report. System. 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[Online] Available at: http://www.scribd.com/doc/38939877/UK-Paint-Industry-Case-1[Accessed December 03, 2012]. Yosemite, 2012. The Paints and Coatings Industry. U.S. Environmental Protection Agency. [Online] Available at: http://yosemite.epa.gov/ee/epa/eerm.nsf/vwan/ee-0045-03.pdf/$file/ee-0045-03.pdf [Accessed December 03, 2012]. Appendix Read More