Strategic Simulation - Development of the Marketing and Operation Strategy - Business Plan Example

Strategic Simulation Reflection Introduction With the advent of technology, people across the globe have actively started using digital products. In the similar way, digital applications have also found high levels of acceptance among the mass (Kim, 2005). One of the most common forms is simulation applications/games. Nowadays, simulation games are available in mobiles, tablets as well as other portable devices. Hence, it gives enormous business opportunities and effectively managing the firm can do wonders (Wilson and Gilligan, 2005). However, the company needs to devise proper business strategy in order to get success. The role of strategic management in this context is significant (Ranchhod, 2007). The increasing rapidity of the changes in the external business environment greatly influences the way a business houses functions in the marketplace. Hence, adapting the most relevant business strategy is important. The principal aim of devising a strategy for business is to ensure smoother flow of operation and achieve competitive advantage (West, 2010). In addition, business strategies also enable a company to company comply with the changing business environment. In our context, Team Beta has ensured development of the marketing and operation strategy in a coherent manner. Aims, Objectives and Strategies We were a group of 4 people and have been involved in the simulation game. Owing to the significance of the aims and objectives, Team Beta has developed the following aims, objectives and strategies for the game. Aim: - The aim of this group was to offer unique products to the customers at an affordable price and use cost leadership strategy to capture high market share. In addition, our aim is also to continue the research and development works and periodically launch quality products. The objectives are detailed below: - Objective 1 To make sure that the market research activities is being carried out effectively. The aim of the market research is to get insights into the consumer behavior and competitors of the market. Objective 2 To create awareness of the brand among the customers through advertisements, PR activities and event sponsorship. Furthermore, observing the level to which the requirement of the customers are getting fulfilled or satisfied. Objective 3 To achieve 3-5% market share by the end of 1st year. Objective 4 To position the company as a company offering value for money and consciously bring new and innovative products to ensure that the company is moving according to the market trends and satisfying the dynamic needs of the customers. Objective 5 To create a set of loyal customers by initiating various loyalty programs. The strategies are as follows: - Strategy 1 To initiate PR campaigns after 3 months of operation and simultaneously host events to enhance the brand value and awareness. Strategy 2 To offer loyalty discounts to the existing customers so as to ensure repeat purchase. Strategy 3 Release new products and additional services at periodic time intervals. Strategy 4 There will be addition of new distribution channels in order to ensure the products get delivered on time and at the right place. The aforementioned strategies are general business strategies but when it comes to a strategy framework, our business will be pursuing cost leadership strategy of porter’s generic strategies so that customers can be offered products with an affordable price. The diagram below will illustrate the situation in a detailed manner: - Figure 1 – Porter’s Generic Strategies (Source: Porter, 2001) Research & Development The research and development function of a product plays imperative roles in the process of firm progression and development (Paul, 2008). The aim of research and development function is to ensure that the firm meets and satisfies the changing needs of the customers. Figure 2 – Innovation Process (Source: Pavitt, 2005) In our context also research and development activities were given special importance for ensuring continuous development. Since, the product we are dealing with is accelerometer, continuous research and development is necessary. In addition, the market research activities also help a firm to mitigate various types of market risks such as the risks arising due to changing external environment. In this segment, we have invested significant amount of money and it allowed us to get deep insights into the market. We have invested around $300 in this context. The screenshot below will illustrate the R&D spending in details. Market Positioning Positioning is relatively a new business concept and within few days of conception, it has gained enormous popularity among the marketers (Paley, 2002). In addition, it has been also observed that customers also use the positioning statement of a company while evaluating the business (Scharff, 2002). A number of studies have shown that effective positioning of a product or a service provides a firm with competitive advantage (Shapiro, 2002). In our context, we positioned our business as a provider of high quality products at a low price. It is therefore important to define and specify the products in else competitors will label it. The primary elements that reflect a company’s position in the market place are product quality, price, service quality, packaging and network of distribution. Likewise positioning, the significance of segmentation cannot be measured. However, before segmenting a market it is essential to get in-depth idea about the factors on the basis of which, the market will be segregated. Apart from that it is also essential to ensure that the company has the ability to differentiate the products as per the need of each group. Market Segmentation The process of market segmentation emerges after the market research activity. Our market research reflected that the product has a huge scope and have less number of providers in the market (Smith and Munn, 2006). However, the size of the market is small as the product is being used by niche segment. The product with which we are dealing with is accelerometer, which is a technology based product. The providers of such products are usually less in numbers in the market as a result of that the growth potentials are high. Since, accelerometers are used in mobiles, tablets as well as other electronics devices, the target market is large (Mukherji and Albon, 2009). We have segmented the market on the basis of the usability of the product and accordingly the characteristics and features will be developed. Our aim was to cover the entire market and make continuous development of the product in order to ensure customers remain loyal to the firm. In order to segment the market for accelerometer we have generally considered the sectors in which bit is being used. For example, the b2b client such as telecommunication and electronic companies, academic client who uses it for institutional purpose are the two most promising segments. Target 1 B2B client such as telecommunication and mobile companies. Target 2 Academic client The product has been differentiated on the basis of the features as well as quality. It has been found that the corporate customers always look for a product that has extensive features whereas the academic clients are satisfied with limited features. The description of the product and the target customer is detailed below: - Target Features B2B client such as telecommunication and mobile companies. High Sensitivity, Compatible with various circuits, data communication through USB, Multiple axis measurement, digital platform Academic client Low-mid sensitivity, single axis measurement, analog platform and compatible with few circuits. The detailed analysis of the market clearly revealed the ideal requirements of each group and the products have been designed as per the needs. Use of Market Research and Competitive Information Market research is an important function of a business as it makes the firm aware of the current trends, the tastes and preferences of the consumers, the changes taking place in the external business environment and also the characteristics of the target market (Love, Bullen and Lewis, 2011). Apart from that it makes the company aware of the activities of the competitors. We have viewed market research as a function that amalgamates the customer needs, products of the company and the activities undertaken by the company to distribute the products to the customers (Afuah, 1998). Our team, Team Beta especially carried out market research activities for the purpose of studying the opportunities of the market and monitors the performance of the firm in the market place. The market research activity carried out was extremely beneficial for us. One of the biggest benefits of the market research was that it helped us to identify the market gaps and devise strategies accordingly. Studies have suggested that background research plays a crucial role in the success of any venture (Christensen and Raynor, 2003). In the similar way, irrespective of size and nature of business we have carried out extensive research works before venturing into this industry. The market research was carried out with the help of both primary and secondary research. The secondary data was collected from the authentic electronic sources as well as our previously collected data. On the other hand, the primary data was collected directly from the market. We have used small questionnaire survey to identify the consumer trend and industry potentiality. Apart from that competitive information was used to frame the strategy of our company. Product Portfolio The product portfolio of a company is probably the most vital element and is responsible for the growth and development of a firm (Dlabay and Scott, 2010). Irrespective of high end marketing and promotional activities, robust distribution and low priced product, customers ultimately purchases the product from the firm. Thus the existing product portfolio of a firm is one of the most crucial assets of the firm. Team Beta has always wanted to maintain diversity in product portfolio but due to less opportunity in this sector, there were two variants of the product (Hage, 1999). Our team has tried to maintain as well as monitor the portfolio of the product in great detail, so as to ensure the products are performing to the highest standards and is moving at par with the competitors. The product portfolio was diverse in order to ensure effective and mass targeting. There are various versions of the product and have been differentiated in the form of product features. The pricing was also done accordingly. A brief description of the product is presented below: - Name of the Product Features Product Design Pricing Professional Accelerometer High Sensitivity, Compatible with various circuits, data communication through USB, Multiple axis measurement, digital platform The product was designed keeping in mind about the technological development and issues pertaining to compatibility. In order to price this product cost plus pricing method was used. Test Accelerometer Low-mid sensitivity, single axis measurement, analog platform and compatible with few circuits. Basic design has been followed to design this product. In order to price this product cost plus pricing method was used The possible reasons that can lead to the failure of the product in the future are emergence of new and innovative products. In addition, other companies offering additional features keeping the basic design can adversely affect the business of the firm. Hence, in order to surmount this issue, our company has continued to carry out research and development activities. On the basis of the current performance of the two products since the launch the following is the situation of the products. It has been described below with the help of BCG matrix. Stars (Characterized by high market growth and high market share) Professional Accelerometer (targeted to B2B client such as telecommunication and mobile companies). Question Mark (Characterized by high market growth and low market share) Cash Cow (Characterized by low market growth and high market share) Test Accelerometer (Targeted to academic client) Dogs (Characterized by low market growth and low market share) Product Life Cycle (PLC) The product portfolio described in the last section needs to be amalgamated with the product life cycle for better understanding of the product character and prospect of the product. Figure 3 – Product Life Cycle (Source: Notedesk, 2012) According to the theory of product life cycle, a product passes through 4 different stages in its entire lifetime i.e. introduction phase, growth phase, maturity phase and decline phase (Slater and Narver, 1995). Depending on the particular stage of the product, a company decides the relevant strategies. Similarly, we have also assessed the current situation/stage of our products and ultimately developed strategies. The analysis of the company’s position was carried by considering data of sales, market share and consumer feedback. The results have shown that both the companies are currently residing in growth stage and therefore it is obvious that strong advertisement support is needed. Marketing Mix The marketing mix (4p’s) for the products is detailed below: - Product Our company has two products namely Professional Accelerometer and Test Accelerometer. The product features are high – low Sensitivity, Compatible with various circuits, data communication through USB, Multiple axis measurement, digital and analog platform Price The pricing has been done by following cost plus pricing method. The professional version was sold at $ 80 and test version at $ 60 Place The products were physically distributed to the retailers and from retailers to the end consumers. Apart from that direct selling was also undertaken promotion The promotional activities was carried out through advertisements, PR campaign and event sponsorship. Finance and Budgeting The following are the budgeting for the company: - Particulars Amount (in $) Advertisement Expenses 6000 Recruitment cost 1000 Research and development Cost 3000 Training and Development Cost 1500   11500 Conclusion In conclusion, it can be stated that there are few areas where Team Beta could have stressed more on the development of operations strategy. In addition, direct selling was hardly given importance, hence the company is recommended to actively pursue direct selling for better results. References Afuah, A. 1998. Innovation management: strategies, implementation & profits. Oxford: Oxford University Press. Christensen, C. M. and Raynor, M. E. 2003. The Innovators Solution. Harvard: Harvard Business Press. Dlabay, L. R. and Scott, J. C. 2010. International Business 4th ed.. Connecticut: Cengage Learning. Hage, J. 1999. Organizational innovation & organizational change. Annual Review of Sociology, 25, 597-622. Kim, W. C., 2005. Blue ocean Strategy : how to create uncontested market space and make the competition irrelevant. Boston: Harvard Business School Press. Lewis, L. K. 2011. Organizational Change: Creating Change through Strategic Communication. New Jersey: John Wiley & Sons. Love, P. and Bullen, A. 2009. Toward the sustainable adaptation of existing facilities. Facilities, 27 9/10, 357-67. Mukherji, P. and Albon, D. 2009. 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Smith, C. and Munn, G. 2006. How to maintain a competitive edge. PPI, 4212, 19-28. West, D. C., 2010. Strategic marketing: creating competitive advantage. 2nd ed. Oxford: Oxford University Pres. Wilson, R. M. S. and Gilligan, C., 2005. Strategic marketing management: Planning, implementation and control. 3rd ed. Oxford: Elsevier Butterworth-Heinemann. Appendix Read More