Analysis of Daktronics - Case Study Example

DACTRONICS CASE ANALYSIS Introduction Every industry has a certain historical background from which furtherimprovements towards its effectiveness are based. The U.S signage industry, just as any other, can be described as being as old as any other business system of the world. The concept of advertisements and general product promotion is not something that started in recent times, many of the earliest entrepreneurs knew how to produce goods and make communicational strategies that would increased people’s awareness of their products to influence their purchase patterns. In the United States, taverns and coffeehouses often characterized the earlier signs, here, tradesmen and other entrepreneurs would paint their shops and business infrastructure creatively with pictorials that symbolized the products they made or the services they offered (Kelsen 2010). There were names of certain entrepreneurs painted on boards and posts, however, most of these signs would only be found on the entrepreneur’s premises. There were cases where certain events were to take place in certain places, in this case, the means of advertising and inviting people to the function was often facilitated by creatively designed and printed handbills that would announce the events (Kelsen 2010). In addition, they also came in handy when announcing business auctions, stagecoach timetables as well as travelling theater groups that moved from one place to another. Gradual Growth Later on, the growth of the business systems as well as economic infrastructure welcomed a new century that came along with new ways of signing and business advertising. In this new business approaches, the outdoor advertising industry achieved major milestones, it moved from the colorful and neat pictures of Phineas Taylor, who was the first to have used them while advertising his circus events, this was in the 1980s. Later, there were huge improvements that were witnessed in the U.S highways and transport industry, the signage industry developed significantly, moving away from the old approaches of shop and business premise signage to roadside signage. This was done with new objectives of targeting the needs of travelers as well as promoting upcoming events, goods and services among other things (Frawley 2011). The lighting technology Following improvements in technology, the signs on the highways and other strategic locations were lighted, giving way for the first major segmentations to be ushered into the signage industry. The main segments in this industry became two, there was the electrified system versus the other different form of print signage, in this case, it was upon the need and preference of the consumer to choose which method would effectively attend to his business needs. For the electrified signage, various options were available for one to choose from, there were different kinds of luminous tubes, incandescent bulbs as well as the fluorescent tubes among others (Wertime and Ian 2008). All these were designed to cater for the marketing needs of various business and marketing agencies according to the nature of their respective markets and the nature of their products. Digital signage Following further advancements in technology, there was development of microprocessors, different softwares in graphics, communication as well as LCDs among others. All this developments moved the signage industry a notch higher, paving way for the current digital signage that is now widely used not only in the United States, but also in other countries in different industries. Digital signage can be said to have emerged in order to address the emerging needs in commercial and communication dimensions of businesses. This development is said to have created the dynamic messaging system, here, people are able to get information about company products and other features in different ways and impressions. At the same time, they are able to access this information at their convenience, which is not restricted to geographical borders among others things. The development of digital signage is said to have led into a nexus between two key industries; the equipment manufacturers and those who created the content. The collaboration between these two industries has led to tremendous creativity such that they can provide instantaneous messaging that can be equated to the speed at which light travels Overview of the U.S Digital Signage industry According to the structure of the digital signage industry in the United States, each manufactures is said to have been confronted with two important choices to make. These choices related to the process of getting into the market, as well as the specific application segments available in the market to target (Schaeffler 2008). In this case, projects that were deemed to be larger, were sold directly to the final users, alternatively, they were sold out to partners as well as national accounts that often comprised of franchises and companies that had multiple locations. On the other hand, those applications that appeared small were simply sold via reselling and delivering turnkey installations at the convenience of their clients. In this approach, the resellers were made up of marketing as well as advertisement agencies, conversely, architects, project managers as well as engineers among other group of people made up the integrators. The market of end users included retailers, transporters different kinds of sports and entertainment centers as shown. Adapted from: Kavanaugh, warne and Cumbeer (2010, 43) Daktronics Company Daktronics has established itself as the world’s leader in the process of designing, manufacturing as well as installing of digital signage brands for various businesses and organizations. Some of the digital signage products that the company is credited for include billboards, various types of scoreboards for different sports as well as different large format displays in LED (Connelly 2005). The company provides employment to more than 2500 people in its branches that are located in several countries across Europe, Australia and Asian countries. The company’s network reaches many countries globally; it has at least 26 remote offices as well as more than 7500 endpoints. The company’s manager has been instrumental in helping design systems that have placed the company at the forefront in its industry. The manager has been credited for having helped the company establish effective and efficient systems that can easily tell what is happening in its networks across the world and produce excellent outcomes. Company Background According to information that was retrieved from the company, it began operations in 1968, having had close ties with the State University of South Dakota. The company is said to have created itself a niche in signage industry, designing and manufacturing electronic scoreboards that were used in various sports venues, they also made display systems that were programmable as well as large video screens that were made using the LED technology. The company is aid to have grown fast, taking advantage of the exploits that existed in the largely unexploited signage industry, creating many branches and sales offices in many parts of the world. At the same time, the company is said to have managed to establish several installed bases in over 100 countries globally. In total, the company provided employment to nearly 3,400 people, out of these, 1500 are said to have been in the sales, where those who operated in the largest market that had the sports venue totaled to 34. Adapted from; Kavanaugh, warne and Cumbeer (2010, 44) According to the company’s audit report, its revenue is said to have recorded nearly $581 million in its 2009 financial year, however, the returns dropped significantly, reaching $393 million in its financial year that came to an end at the start of the 2010 in May as shown. Reasons for poor performance According to the interview that was carried out with the company’s sales manager, Mr. Jay Parker, the company was hard hit by the economic crisis of 2008-2009, the time when the sales from the billboards reduced significantly (Cecil 2007), This was attributed to the decline in the sales of billboards in the market. During this time, the sports industry, was also facing challenging times, it was actually going gangbusters. Mr. Parker attributed the slump in company revenue due to intense competition that had characterized the industry they had dominated for a long time. In fact, a fierce rival had entered the stage and was charging have the price that Daktronics was offering. In his analysis, the industry is highly competitive and challenging in equal measure, one has to entice sponsors to commit their advertising brands and at the same time, sporting teams have to fans to the seats so that there can be positive outcomes. In this case, a challenging external business environment that is characteristic of this industry requires a certain skill in order to remain relevant and competitive at the same time. The company’s marketing structure is in such a way that it focuses on sustaining its customers by addressing their needs in a more effective and efficient manners. Different clients have different preferences for their advertisements, which have to be attended to. The needs of institutions like universities and other non-academic based organizations are not the same, the company aims at working with a particular client for more than seven times to ensure that customer gets confidence in the company. Approach to new channel dynamics When the company is executing its projects, it uses several sales people; this follows the fact that there can be different kinds of technology that are needed in making a particular project excellent. The company has based most of its strengths in its sales force; in this case, it is common to see different sales people managing different projects, something that may not be the case with other companies. According to the sales manager, the complexity that comes with various technologies plays a big advantage to Daktronics. In this regard, the company boosts of a completely new design of signage products that are able to compete effectively with the changing prices that are characteristic of the rivals entering the market. The company operates on a philosophy that is does not have to be the low bidder; instead, it has to close enough to get a good chance of making a successful negotiation. In this understanding, the company has to focus on making products that are fair in terms of pricing, while at the same time, they are unbeatable with respect to quality. Current developments in sporting venues The buying process in sports venues has changed significantly, currently, the process has moved on to incorporate technical consultants as key players. There were several issues that needed careful consideration in order to bring fans to the seats and improve the whole experience (Rosenthal 2012). These issues have also had an effect on the signage industry since it is an important stakeholder as well, they include, multimedia interactions, economic conditions, technical requirements that are increasingly becoming complex among other issues. A good comparison of all these factors and others related was essential and still remains the same so that running costs can be brought down as low as possible and returns maximized. Technical consultants were usually brought in on the basis of projects, the agreed terms and conditions among other important considerations. According to Parker, some of the major consultants in the industry are probably two or there Nature and market characteristics The nature of the market that Daktronics is very dynamics, with each passing day, customers have different preferences that are consistent with their ever-changing needs. For instance, the LED world has been experiencing various changes, so far it has been fairly level. The company has so been consistent in buying its LED components from its four manufacturers. One of the things that perhaps particular rmanufacturers can do to beat their competitors is to package their products in absolutely new configurations. Conversely, they may decide to do something that is technologically advanced on the head or end of the particular equipment. Customers will be convinced to go for the products just because they are rational and could want to have something that is completely unique and addresses the needs. SWOT Analysis Strengths Resourceful sales force that articulates the needs of the market effectively The company boosts of the best technology that is used in its products There a good good public image that the company has establissed Weaknesses The company has not had a strong strategic plan to take care of the unfopreseeable business future The company does not have solid strucutres that to aid it in the change process as it is the nature of the industry Opportunities Entry of consultants in the business tends to increase costs thus reducing profits The changing sports industry requires different facilities that keep changing Threats New competitors entering the industry are charging significantly reduced prrices Changing technology in the industry can be sometimes a challenge Sumary and Recommendations The business environment has ever been dynamic from its inception, business have to keep on changing their management structures, product development and marketing systems among others. Daktronics needs to establish a strong reliable system upon which it can effectively predict changes in the busines environment and prepare adequately to deal with them, for instance economic depressions. In order to the leader in the industry, the company needs to invest heavily in information and technology infrastructure. This way, it can tacle emerging changes in products design, development as well as marketing strategies that are essential in creating a market niche and general market position. Besides making tools and equipment for large corporations, the company needs to develop other ways of tackling medium sized and small business. These are the businesses that make a great percentage of the industry, by creating technologies that can address the product promotional needs, the company will be better-placed to enjoy economies of scale Conclusion Business can be described as an art, where excellence in performance is depended on individual ability to be innovative and creative as well as articulate on customer needs. Daktronics has tested and passed this test of time and stood unshaken in the competitive digital signage. Advancements in infomaton and technology have been essential in enhancing the quality of business practices. In this respect, companies like Daktronics have to position themselves strategically in the business environment to create themselves competitive advantages. Notes Cecil, Chuck. 2007. Daktronics and the Man Who Lit It up. Sioux Falls, SD: Pine Hill. Connelly, Vincent. 2005. Survey of Information Systems at Daktronics, Inc. Cambridge: Cambridge University Press. Frawley, William. 2011. Landside Freight Access to Airports: Findings and Case Studies. College Station, Tex.: Texas Transportation Institute, Texas A & M U System. Kavanaugh Joseph, warne Joshua and Cumbeer Carol. 2010. Daktronics (A): The U.S Digital Signage Industry in 2020. Case Research Journal. 32 (4): 41-66. Kelsen, Keith. 2010. Unleashing the Power of Digital Signage Content Strategies for the 5th Screen. Amsterdam: Focal. Rosenthal David. 2012. Daktronics (B): The Large Sports Venue Sales channel. Case Research journal. 32 (4): 61-85. Schaeffler, Jimmy. 2008. Digital Signage Software, Networks, Advertising and Displays: A Primer for Understanding the Business. Amsterdam: Focal. Wertime, Kent, and Ian Fenwick. 2008. DigiMarketing: The Essential Guide to New Media & Digital Marketing. (Singapore: John Wiley & Sons (Asia). Read More