Strategic Marketing Plan for the Smartphone in the Developing Countries Markets - Case Study Example

SMART MACHINES INCORPORATED STRATEGIC MARKETING PLAN FOR THE SMARTFONE IN THE DEVELOPING COUNTRIES’ MARKETS 2,168 words Table of Contents Executive Summary 2 Introduction 3 Smart Objectives 4 Competitive Environment 4 Product, Price, Placement and Promotion Policies 6 Market Segmentation and Targeting 7 Product Differentiation and Positioning 9 Market Research 10 Conclusion 11 References 11 Executive Summary The purpose of this report is to provide a strategic plan for the Smartfone – a smartphone mobile product developed and marketed by Smart Machines Inc. Details about the following topics are contained in this report; first, the competitive environment for the Smartfone in the target market. This includes an analysis of the influence of the environment under Porter’s five factors model that includes factors such as competition, suppliers, buyers, new entrants and substitutes. Second, the plan provides information about the product (including the pricing and placement policies). Third are the targeting and differentiation strategies for the Smartfone and fourth is information on market research for the product. Lastly, the analysis includes marketing objectives for the Smartfone. From the plan, it can be deduced that the overriding objective of marketing the Smartfone in the target market is the need to meet the high demand for an affordable smartphone experience in these markets. This underlies the statistical evidence that indicates rapid growth in the demand for mobile devices in the world in general and for smartphones in the developing markets as well. Introduction The world smartphone market is highly dynamic (Gens 2011, p. 3; Ilyas & Ahson 2006, p. 153). Prospects indicate that in the next years, the global market is set to experience rapid growth resulting from the high pace of innovation on one hand and constant changes in consumer tastes and preferences on the other. Smart Machines inc. is entering the smartphone market by releasing this product which is tailored to suit the special needs of the growing demand for the smartphones in countries in the developing regions of the world: predominantly Africa, Latin America and parts of Asia. This plan presents the strategic marketing plan for the Smartfone by focusing on six main areas: the smart objectives, hierarchy of strategies, the competitive environment, market research, segmentation and targeting, differentiation and positioning, product promotion policies and lastly, micro and macro level analyses. Smart Objectives According to Williams and Curtis (2008, p. 244), smart objectives fit into the overall corporate objectives of an organization. By setting objectives that cover areas to do with the overall organisation, the marketing, distribution, promotion and strategy, a company is able to evaluate the performance of its strategy in the market (Williams & Curtis 2008, p. 245). Smart Machines will have the following objectives which cover all the areas identified before. 1. To attain a 5% market shares in the target market within the first two years. 2. To increase the percentage of awareness for the Smartfone brand in the market segments by 20% in the next two years after entry into the market. 3. To increase the sales of the Smartfone in the target market by the first two years. In essence, the overall objective for Smart Machines will be to increase its sales and market share after gaining entry into the target market. Competitive Environment Market competition refers to the competitive structure of a particular market in an industry (Boone 2012, p. 89; Hitt, Ireland & Hoskisson 2008, p. 50). This is reflected in the amount of influence a single player can have on the market structure. Porter’s Five Forces model provides a framework that can be used to evaluate the influence of the market environment on the present and future operations of a company operating within such an environment. According to Boone (2012, p. 92), the general competitive environment in an industry is a strong indicator of how attractive the market is for new entrants. In indicates whether the company should have high prospects when entering a particular market, basing on the performance of the players who are already established in the industry. The five competitive forces described in the model (competitors, suppliers, buyers, new entrants and substitute products) are relevant to the core business of Smart Machines. This is described in the sections that follow. 1. The threat of entry: This is determined in terms of barriers to entry on one hand (economies of scale, product differentiation, capital requirements, government policy, distribution, cost disadvantages and size) as well as the potential reaction of established industry players towards new entrants (Williams & Curtis 2008, p. 245). In general, there is a high threat of entry into the smartphone market (Hsiao 2013, p. 223). The major driver of this trend lies in the fact that the industry is in the growth stage of the industrial cycle which is characterised by differentiated products, increasing competition and fair margins (Boone 2012, p. 92). 2. Substitutes: In general, the threat of substitute products in the smartphone market is low. This is because of the core function of voice and short text messaging that is yet to find a substitute device to what smartphones offer. Whereas the tablet gives a considerable threat to the smartphone, the fact that it does not provide voice and short text messaging services means that it is unlikely to pose a serious threat to the smartphone as a viable substitute. 3. Buyers: The bargaining power of buyers in the smartphone market is most likely to remain average. This is because the Smartfone will target individuals as opposed to corporate buyers. Individual buyers are less likely to influence the price of the smartphone in the market. The only way they can gain bargaining power in the market is by opting to buy different brands from the Smartfone. 4. Suppliers: According to Hitt, Ireland and Hoskisson (2008, p. 132), the ability of suppliers to influence the market is dependent on several factors: their number, switching costs, importance of their products and the level of differentiation of the products. Product, Price, Placement and Promotion Policies The pricing strategy entails a course of actions whose aim is to achieve specific marketing and pricing strategies (Shah & D’Souza 2009, p. 112). Unlike in other markets where other smartphone manufacturers have predominantly employed psychological pricing and price skimming in their pricing strategies, Smart Machines will employ penetration pricing for its Smartfone in the target market. Concerning placement, the essence of a placing and distribution strategy is to obtain the most extensive distribution for the product (Shah & D’Souza 2009, p. 115). Smart Machines will use two basic strategies for placing and distributing the Smartfone in the market: use a third party logistics company for distribution and use the network of telecommunication companies for distribution. These strategies will be augmented by online shopping functions which are fast gaining penetration in the developing countries. The promotion policies for the Smartfone will be similar to what had been employed before by other smartphone manufacturers in the early days of the product. These will include online marketing, advertising, business development and public relations. Primarily, the focus will be in mass media advertising where advertisements shall be placed in the mainstream electronic and print media channels. The Smartfone by Smart Machines will include all the features that are regarded as the standard features of smartphones. These include the following: standard voice call and short messaging services; connectivity features such as Java ME, GPS, Wi-Fi and mobile broadband; MMS; email services; office document editing features; qwerty keyboard as well as operating systems and compatibility with abundant applications (Hsiao 2013, p. 217). Once the market penetration for the Smartfone has been established, research and development for the next generation of smartphones will be incorporated in the strategic plan of Smart Machines. Market Segmentation and Targeting Market segmentation refers to the process by which a market is divided into distinct subsets of customers with similar needs and characteristics which lead them to respond in similar ways to particular products and marketing programmes (Mohr, Sengupta & Slater 2010, p. 249). On the other hand, target marketing refers to the process in which each and every marketing segment is evaluated for its attractiveness in terms of the mission and capabilities of a firm in order to decide which segment the company will serve (Mohr, Sengupta & Slater 2010, p. 250). Predominantly, the market is composed of the middle income earning populations in the developing countries of Africa, Latin America and parts of Asia who, by virtue of rapid economic growth and an increase in income levels in these countries, have the financial ability and the desire to have the smartphone experience as a status symbol for their professional and personal lives. Since the Smartfone is developed predominantly as a smartphone for the market in the developing countries, the company will adopt a global market segmentation strategy. This will assume the existence of homogeneity within the country segment in each of the regions that are targeted by the company. This will assume an inter-country segmentation that will identify consumers with similar needs and wants in the marketplace in a range of countries. In general, the global demand for smart phones has been growing rapidly since their introduction in the market (Ilyas & Ahson 2006, p. 179). Currently, there is a general trend where consumers are shifting from the traditional feature phone to the use of smartphones. In spite of the rapid growth, the rate of penetration of smartphones still remains at 10%. Another distinguishing feature of the global smartphone market is the fact that although there are already many brands in the market, the number of operating systems remains minimal (Osman et al. 2011, p. 389). With the introduction of the Android operating system, the percentage of smartphones that are using Symbian operating system has been falling. Product Differentiation and Positioning According to Ferrell and Hartline (2010, p. 209), differentiation presents a very vital tool in tactical marketing by presenting the key reason why a particular brand is preferred and bought by consumers at the expense of the others. According to Porter (cited by Ferrell & Hartline 2010, p. 212), companies, and by extension products, can attain a leading position in the market by employing any of the three basic strategies: cost leadership, differentiation and focus. These strategies are based on two general needs that are common across markets: the need for low cost and the need for differentiation in terms of quality, design, style and originality (Osman et al. 2011, p. 392). The basic differentiating characteristic of the Smartfone will be the cost. This smartphone will meet the need for an affordable and standard smartphone in the markets within the developing countries. This will be augmented by a strong positioning strategy that will seek to utilise the physical attributes of the smartphone in terms of quality, usefulness and other attributes desired in a smartphone. The positioning of the Smartfone will take several factors into consideration. By operating in a rapidly growing smartphone industry with a level of competition that can be described as medium and by targeting the market segment with top brand awareness and brand equity, the Smartfone by Smart Machines will offer affordable and innovative smartphone usage experience to the customers, particularly in the developing world. The Smartfone has been positioned at providing a unique and affordable smartphone experience to users; which is different from what is being offered by existing competitors. Market Research In essence, Smart Machines will employ growth and consolidation strategies in offering its smartphone to the developing world market. Market penetration shall be attained by use of penetrating strategies which will predominantly entail increasing the number of outlets and dealers in the developing countries. Also, Smart Machines will employ a consolidation strategy in marketing the Smartfone in the developing countries market. This will entail having the major target of selling the product in order to expand the customer base in developing countries and provide the smartphone experience to as many clients as possible in these markets. It is projected that with rapid economic growth in the economies of developing countries, many individuals will have the financial ability to purchase smartphones (Boyes & Melvin 2012, p. 72). This means that there is need for Smart Machines to build a good brand reputation for its product in the market. The demand for smartphones is driven by a number of factors which are highlighted as follows. One, consumers value the software and hardware aspects of the devices; which entails convenience of the interface, perceived content, perceived infrastructure and design aesthetics (Hsiao 2013, p. 218). Two, consumers are influenced by the perceived value of the devices (emotional, social, price and performance). Lastly, consumers are influenced by the general attitude towards using a smartphone. Conclusion In summary, Smart Machines incorporated will employ a number of strategies in order to ensure that its premier smartphone product, the Smartfone, gains market penetration within the market in the developing regions of the world. By combining smart objectives with a marketing strategy that targets the growing middle class segment of populations in the developing countries, the company seeks to gain a foothold in these regions and rapidly expand its distribution networks. The Smartfone, being similar to the other traditional smartphones that have already been offered in other regions of the world, but coming with a cost advantage, will satisfy the growing demand for smartphones within these market segments. References Boone, L. E. (2012). Contemporary marketing. Burlington: Butterworth-Heinemann. Boyes, W. J., & Melvin, M. (2012). Macroeconomics. Mason: South-Western Cengage Learning. 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