Great Answers to Tough Marketing Questions - Case Study Example

Running Head: MARKETING CAMPAIGN FOR MICROSOFT, AUSTRALIA Program Name: Course Name: Marketing Campaign for Microsoft, Australia Student Name: Student ID: Instructor Name: Due Date: Word Count Executive Summary This report seeks to analyse the marketing campaign by Microsoft, Australia. In doing so, the appropriate tools that will be used include an environment scan through use of tools such as PESLE. A further examination of the marketing mix will be done by use of the 4 “P” analyses. Also in this report, a brief scan of the environment in which Microsoft Australia operates will be done, including analysis of the organization, its competitors, and a primary research done on its consumers to establish their habits. The new product concept is also addressed and target market studied in terms of segmentation, target and product positioning in the industry. A general marketing goal will be looked at after which a final section will address recommendations which Microsoft Australia needs to take into consideration. Executive Summary……………………………………………………………...............2 Table of Contents 1.0 Introduction………………………………………………………………………….4 2.0 Environmental Scan…………………………………………………………………4 2.1 The Organisation……………………………………………………………..5 2.2 Competitors/Industry………………………………………………………...6 2.3 P.E.S.T.L………………………………………………………………………7 2.4 Primary Research……………………………………………………………..9 3.0 New Product Concept…………………………………………………………………9 4.0 Target Marketing……………………………………………………………………...9 4.1 Segmentation…………………………………………..………………………9 4.2 Targeting………………………………………………………………………10 4.3 Positioning……………………………………………………………………..11 5.0 Marketing Goal………………………………………………………………………..11 6.0 The Marketing Mix……………………………………………………………………12 6.1 Product 6.2 Place 6.3 Promotion 6.4 Price 7.0 Recommendation……………………………………………………………………14 Reference List………………………………………………………………………………15 Appendices………………………………………………………………………………….16 1.0 Introduction The software and hardware market for products in the IT industry have merged to include those in the telecommunication, and specifically, mobile telephony. An extra sector of this particular industry would be that which directly deals with the internet. In this regard, Microsoft Australia has had to increase its marketing campaign so as to boost its share of the market segments that are particularly in need of the improved products. Microsoft Australia is currently enjoying an increasing market share in the Windows 8 tablet market. In addition to its traditional software products, it also plans to buy into an agency media planner company, Adtech, which currently has a hold of 76% market share in this industry. Finally, in the Windows phone based handsets, Microsoft’s market stands at less than ten percentage points, though is showing signs of increasing popularity. The PESTL analysis will be used as a guide in developing steps necessary for Microsoft Australia in trying to gain a chokehold on the various sectors. A market mix will be done through the 4 “P” analyses to further show how market segmentation can be done. At the end of this report, recommendations will provide a guideline as to how Microsoft Australia may need to act so as to gain bigger market shares. This report’s time-frame is one year (Edwards, 2013). 2.0 Environmental Scan An environmental scan of the current market situation in the Australian IT industry in which Microsoft Australia does business is critical in order to develop a set of strategies which may be employed by the company in trying to garner a bigger market share in the immediate future. In doing so, current and future issues will be looked into so as to establish precise actions that may be taken to ensure that safer strategies are employed. First off, a study of the organization is meant to give a general condition of its various operations. Secondly, a look at its competitors or industry mirrors the factors they effect on Microsoft. A PESTL analysis further shows an array of internal and external factors affecting business. 2.1 The Organization As indicated by the SWOT analysis (see Appendix A), the strengths that Microsoft Australia exudes includes very high product differentiation, provision of various services with particular focus on multiple-pronged approach towards IT-based solutions, a high frequency in providing technologically improved software and gadgets like the Windows 8 tablet and operating systems for phones, and finally, catering for the needs of most users of Microsoft Windows products in the personal computer range. The market in the PC users is the largest single share in any product offered by Microsoft. The weaknesses lie in Microsoft’s the high prices attached to their products, a high number of upcoming competitors who provide equally good IT solutions and the piracy of software by hawkers. For instance, the streets of Melbourne are littered with relatively cheap and pirated copies of Windows 8 OS. Opportunities have presented themselves in the form of various mobile phone manufacturing companies, which use Windows 8 as their preferred mobile phone OS. And finally, the threats arise from a plethora of factors. First off, the high prices associated with Microsoft Australia products does not match those found elsewhere in the global market. Suffice to say Microsoft products are most expensive in Australia. Having this in mind, the second threat is that most of Microsoft’s competitors e.g. Apple and Adobe produce relatively cheaper products like software. Lastly, the IT-solutions industry is far too differentiated to have a good grip on the whole market (SC Australia Staff, 2013). 2.2 Competitors/ Industry 2.2.1 Industry The IT industry is a very large one worldwide. In Australia alone, its total worth in the digital sector alone was approximated to be around $18 billion in 2008. This makes it one of the broadest and most valued with the whole ICT industry’s worth pegged at over A$100 billion. Most of the market in Australia is dominated by product-specific consumers. In this respect, it is noteworthy that most PCs use Microsoft OS, effectively making Microsoft the single largest distributor of software. Other companies whose products are equally used include Google and Apple Inc. As an industry whose players strive to provide the best in their line of products, the issue of price is gradually working against Microsoft as the market segmentation is fragmenting more and seemingly favouring companies like Apple Inc and Adobe, whose products come at a cheaper cost in comparison to Microsoft’s (Australian Trade Commission, 2013). 2.2.2 Competition It is worth noting that most of the large-scale players include Microsoft Australia, Google, NEC, Canon, IBM, EDS, Citrix and Fujistu. While Google and Microsoft hog nearly 50% of the market share, the others scramble for what remains of it (see Appendix B). It is equally prudent to note that while the above is true, small and medium enterprises equally play a huge part in the industry, only that if their interests are not looked at keenly, the bigger players end up making it difficult for them to develop and make any profits. It is in this situation that policies to have the bigger players help the SMEs out in various fields was mooted. For instance, small players like independent software vendors and others who particularly deal in the line of products from Microsoft (Fellows, 2007). 2.3 P.E.S.T.L. 2.3.1 Political Currently, the Australian ICT industry is laden with several policies that are specifically tailored to ensure that SMEs do not get the shorter end of the stick due to operations of the big players. In this respect, some of them end up pushing the cost of production to a high that may not allow Microsoft to realize profits if they do not pass the costs to customers. High labour costs also play a critical role in further pushing the product costs up. Currently, Adobe and Apple have instituted a case at the industrial court that is likely to see Microsoft reduce its product costs to acceptable industrial prices that indicate fair competition (Connolly, 2013). 2.3.2 Economic Environment Approximations done in a survey that was carried out by Innovation and Business Skills Australia (IBSA) indicates that nearly $82billion revenue is generated by the ICT industry. As a major player in this industry, Microsoft is likely responsible for a great percentage of this revenue. In this respect, Microsoft is an excellent generator of employment as it employs a good number of specially trained ICT professionals. Consequently, a large market share in the industry is attained. While noting that Microsoft Australia operates alongside SMEs in various endeavours, the market share that accrues as a result of this is likely to be bigger than even that which is envisaged in its direct interactions from its traditional products (IBSA, 2013). 2.3.3 Socio-Cultural The resurgence of companies that produce mobile and tech-savvy equipment for internet use e.g. tablets and mobile phones have induced a so-called “class” divide, which is specific on brands of the products they consume. For instance, more people are wont to identify with certain brands. In the respect, the tablet brands Surface, from Microsoft, is yet to register as much success in comparison to its competitor’s products like Apple’s iPad and Samsung’s S-series phablets. Hardware tailored to use specific software has also brought about the class dimension in the market, further fragmenting the market segments to include those who prefer mobile devices that use say, Windows OS, or iOS. In this respect too, the Windows-based mobile devices are yet to gain a good footing in the market. 2.3.4 Technology As earlier noted, new technology continue to crop up with every waking day. As it stands, more companies are edging towards developing hardware which is software-specific. For instance, it is impossible to use iOS on any device; same goes for many other products. Also, technologies like the manufacture of smart phones that can still be used as tablets has not only surprised many in the market, but has also increased the industry players’ urge to come up with more technologically advanced products. In this respect, Microsoft stands tall as it has manufactured many products that are technologically advanced. For instance, the first tablet in the industry, the Surface, is considered as an original idea from Microsoft. However, due to ineffective and low-key marketing strategies, it was never noticed until other companies took the idea and made it more feasible through aggressive marketing strategies. 2.3.5 Legal Structures The legal framework stipulated by the Australian government has so far set centre-stage for fair business practises and in accordance with the laid-down procedures for the running of business, Microsoft Australia is yet to come upon any issues as concerns its running. However, its pricing strategies have caused uproar from other players, who have within their rights, instituted court proceedings to ensure that Microsoft applies fair competition strategies that do not make them die out slowly. 2.4 Primary Research In regards to the dynamic ICT industry, a questionnaire that will establish customer views on the pricing and availability of Microsoft products is developed (see Appendix C). This is critical in establishing customer needs and preferences so as to stay within a well-defined line as needed by them. a seven question questionnaire is created so as to keep in touch with the customer. 3.0 New Product Concept Windows 8, the latest OS from Microsoft, has hit the market running despite hitches that were announced earlier. The user interface as envisaged in Windows 8 is completely new and includes icons, which one would click in order to access whatever resource they’d like to. As opposed to the previous versions of Microsoft OSs, Windows 8 works best in devices with touch-screens. This does not imply that it does not work at all in the remaining devices, no. the other devices may as well use it, though the mouse would come in handy when navigating through the resources. Other new products from Microsoft include games, Window for phones and the above-mentioned Surface tablet (Microsoft, 2013). 4.0 Target Marketing This is a very instrumental technique in trying to separate the market available for products into classes so as to know exactly how to carry out sufficient product differentiation. In target marketing, segmentation, targeting and positioning are looked at to provide a favourable prospective market. 4.1 Segmentation The ICT industry is laden with several points at which markets are available. For instance, from the software products, several specialists handle the product. From developer to consumer, there are several levels of markets. For instance, while Microsoft produces business solution software, there are two levels of consumers: first off, the company that will utilize the software, and secondly the consumers who’ll use the end-product. Therefore, segmentation is done according to both of these consumers. An example is that of a bank that buys banking system software. While the bank uses it to run its internal system, the customers interact with it while using ATMs and so on. Business solution software like the .NET products are examples of such software. 4.1.1 Segmentation Variables In looking at these variables, the ICT industry mostly provides for two kinds of users: the large-scale users, who are mostly institutions like schools and organizations. 4.1.2 Profile Market Segments The profiles now differ, and are mostly divided into industry-specific definitions. For instance, software may be developed and tailored towards the needs of an accounting institution. Other times, it may be developed for research needs (see Appendix D). 4.2 Targeting 4.2.1 Evaluate Potential Segments Particular segments may be looked at as ones which may be prospective for particular products. There are several levels of consumers of products. For instance, companies may be regarded as buyers of mostly software, while random individual consumers provide potential market for both software and hardware (see Appendix E). It would be great to note that small organizations equally provide for prospective markets for hardware. Products like the Surface come in handy when organizations are using social networks in marketing of their products. 4.2.2 Target market for first year In the software category, Microsoft chooses big organizations like banks and schools as they need more database software that is tailored towards their specific needs. This means that they have more urgent needs for this particular product. In the hardware category, SMEs which are starting up and would need the social network platforms to market themselves are potential buyers of items like the Surface and Windows-based mobile phones. 4.2.3 Potential market Potential markets for the surface and OSs are the individual consumers and SMEs. These are the single most important of these products as big organizations prefer simpler marketing methods that may not have their platforms in social networks alone. In short, their needs are much more than what Microsoft may provide in the meantime. 4.3 Positioning When seeking to find a good product, prospective customers always engage in what may be termed as comparison. They are wont to compare products from different manufacturers to establish which ones are better. When not comparing against competitors, consumers compare against unique qualities a product offers. This gives them a chance to select what suits their kind of use perfectly. In this regard, when looked at using all the criteria, Microsoft performs as one of the best software providers not only in Australia, but also worldwide. Its line of products suited or tailored to the needs of PC users is still unrivalled (Tronsad, 2005). 5.0 Marketing Goal While it is great to have exponential sales of products in the formative stage of production, Microsoft recognizes the roles of the dominant players like Google and Apple Inc, who hold over 50% of the current smart phone market. In this respect, Microsoft would first like to provide Windows-based smart phones with products that are expected to take up to 15% of the market in the first year alone. 6.0 Marketing Mix 6.1 Product A product is basically the result of a company’s effort in bringing out a consumable item or service that can satisfy the needs of a given market. More often than not, the product is always given in exchange for some form of legal tender, mostly money. There are situations when the same can be exchanged for gold and other forms or units of legal tender. The core product at Microsoft is two-pronged. Microsoft produces software as well as hardware that can be consumed as augmented products. For instance, with the production of Surface as a core product, its OS, which is software, is consumed as an augmented product. The reverse is true; software may be a core product with the hardware, which may range from a phone to a tablet, be the augmenting product (see Appendix F). The above-posed situation happens to replicate itself with most of the big ICT companies like Google and Apple. They happen to produce both hard ware and software, which complement each other when in use. However, in this case, one goes with the other, unlike in several cases where an augmenting product may not necessarily be consumed alongside a core product. For instance, when one buys a tablet, it comes complete with an OS (see Appendix G. 6.2 Place Place matters most with the launch of a product. It provides a strategy to the firm and may actually dictate the reception of a product in the market. First off, there are numerous locations from which products may be marketed. Some of them include workshops for ICT companies, strategic cities and online. In the first case, workshops provide a very suitable point for the marketing of product. For instance, when marketing ICT products in workshops where organizations are likely to take immediate notice of a product boosts chances of its selling more units faster. Strategic towns and cities built specifically as industrial points may prove very pivotal in turning up sales. Most ICT companies in the US market their products from industrial town like the Silicon Valley. In the third case, which is universal for most products, is online. Companies should utilize technology such as web 2.0 in accessing markets. In this respect, Microsoft Australia uses its official portal, http://www.microsoft.com/en-au/default.aspx, when marketing its products. This suffices just fine for individual users who would like to get more information about products as they may be able to contact Microsoft directly from contacts given in the website (Smith, 2003). 6.3 Price Microsoft identifies Australia as one of the countries with very strict labour laws. It would also like to abide by the stipulated laws that govern various issues that affect labourers. In this respect, it is forced to follow the regulations offered by industry policies. The labour laws of Australia stipulate that employees shall be paid a certain minimum in salaries. In this regard, salaries are high, and end up piling up on the costs of running an organization. Therefore, the capital needed to run a company are high. To add onto this, extra costs incurred in conforming to registration policies pile onto an already high overhead. Registration of various patents and copyrights may also need a company to follow procedures that lead to extra costs. All the above-mentioned factors lead to a company passing on production costs alongside other extra costs to the consumer. Most business solution software is tailored towards satisfying specific needs of the institutions that require them. in this regard, the cost for such software is high as they need to be made according to the specific needs that an organization lists. In addition, Microsoft does not use any universal methods in pricing its products. Therefore, prices vary with locations (Viardot, 2004). 6.4 Promotion Promotion is the attempt made by a business to make its prospective market aware of a new product that is in circulation (see Appendix I). Various techniques may be appropriately employed in trying to do this. While most companies that deal in conventional products like household goods find mass media as appropriate points for advertising their goods, ICT firms may need to exploit various technical methods of advertising their products. When not using the mainstream media in promoting its products, Microsoft uses other means like sponsoring of community projects, technically known as social responsibility, to further its interests and promote some of its products. For instance, since 2004, it has trained over 100000 Australian teachers and helped students learn through applications that are downloaded free of charge from its portal. 7.0 Recommendations The fact that several industry stakeholders have expressed disappointment at the high prices associated with Microsoft’s products specifically in Australia implies that something needs to be done. The company needs to start producing software and hardware in accordance to demand so that it may minimize production costs. For instance, more accurate estimation through stochastic processes may be used to decide the appropriate number of products that may be availed to the Australian market so that there is no excess left. Secondly, Microsoft needs to start working in synergy with responsible authorities to ensure that its software is not pirated. This will be a pragmatic step towards ensuring that sales of legitimate products are increased. References Australian Trade Commission. 2013. Information Communication Technology (ICT): A Proven Testing-Ground for Global Projects. Retrieved at http://www.austrade.gov.au/Buy/Australian-Industry-Capability/ICT/default.aspx Connolly, B. (22nd March, 2013). Microsoft Blames Costs and Competition for Higher Pricing. CIO. Retrieved at http://www.cio.com.au/article/457044/microsoft_blames_costs_competition_higher_pricing/ Edwards, J. (23rd April, 2013). How Microsoft Won a 76% Market Share in Adtech. Business Insider Australia. Retrieved at http://au.businessinsider.com/how-microsoft-won-a-76-market-share-in-adtech-2013-4 Fellows, T. 2007. Local Software Economy Initiative. Annual Report 2007. Microsoft, Australia. IBSA. 2011. Information and Communications technology Industries. IBSA Environment Scan 2011. Microsoft. 2013. Products. Retrieved at http://www.microsoft.com/en-au/default.aspx SC Australia Staff. (27th March, 2013). Microsoft Cracks Down on Windows 8 Piracy in Melbourne. IT News. Retrieved at http://www.itnews.com.au/News/337916,microsoft-cracks-down-on-windows-8-piracy-in-melbourne.aspx Smith, P.R. 2003. Great Answers to Tough Marketing Questions. Kogan Page. Tronsad, R. 2005. Product Position. University of Arizona. On The Mark. Viardot, E. 2004. Successful Marketing Strategy for High-Tech Firms, Volume 5. Artech House. Appendix Appendix A Favourable Unfavourable Internal Strength High product differentiation Various points for IT-based solutions Up to scratch on matters technology Only dealer of the widely used Windows OS Weaknesses High product prices Piracy of software IT solutions of great competencies are offered at lower cost External Opportunities More mobile phone manufacturers are producing Windows based handsets Tablet market is growing exponentially More people opt for Microsoft OS-based gadgets Threats Customer apathy as a result of high prices Competitors like Apple and Adobe produce relatively cheaper software Market segmentation is too dispersed in the IT industry Appendix B Appendix C ICT Software Questionnaire This questionnaire is aimed at developing the market needs, thus segmentation. While it provides for an option of establishing the use of Microsoft software, it also examines which products may be developed and marketed further so as to gain a bigger use of already-existing products e.g. operating systems and software tailored specifically to offer business solutions. 1. What operating system does your computer use? MS Windows Mac OS Other 2. What OS does your mobile device (phone/ tablet) use? Windows iOS Others 3. Which software company provides your best business and ICT solutions? Apple Inc. Microsoft Australia Others 4. Do most Microsoft software provide for all your needs when installed in your PC? Yes Not entirely No If not, what improvements would you like? _____________________________________________________ 5. Does Microsoft provide all your business solutions sufficiently? Yes Not entirely No 6. What auxiliary software (products) would you like us to provide in addition to the already-existing ones? Name them. a. ______________ b. ______________ c. ______________ Appendix D Potential Segment Name Segment Profile Organizations Large-scale consumer SMEs Medium scale consumer Schools Large-scale consumer Small-scale consumers(individuals) Small-scale consumer Appendix E Ranking Potential Segment Name Justification 1 Organizations Large customer base which needs fast services only provided by software 2 Schools Registry and inventory 3 SME Running of social network platforms 4 Individuals Small-scale use Appendix F Appendix G Appendix H Read More