The North Face Strategic Marketing Report - Case Study Example

The North Face Strategic Marketing Report Name of Student: Name of Course: Name of Instructor: Date of Submission Executive Summary The following report will give an insight into marketing strategies with a special focus to North Face Company which seeks to venture in manufacture and retail of skiwear. The company has to come up with a strategic marketing strategy so as to ensure that its current business interties are not interfered with negatively. The introduction sections give a clue as to what will be covered in the report. The analysis section will give a situational analysis of the company, then give its SWOT analysis, then give an analysis of the industry with respect to Porter’s Five Forces and lastly analyse the critical success factors for the company. The report will also give the marketing objectives of the proposed marketing strategy then outline several marketing strategies which the company should consider. The report will also give justified recommendations to the company after which the conclusion section will highlight the main points covered in the report. The references section will indicate the resources used in the report. Table of Contents Executive Summary 1 Table of Contents 2 1.0Introduction 3 2.0Analysis 4 2.1 Situational Analysis 4 2.2 SWOT Analysis 5 Strengths 5 Opportunities 6 Threats 6 2.3 Michael Porters Five Forces 6 2.4 Critical Success Factors 7 3.0Marketing Objectives 8 4.0Marketing Strategies 9 4.1Marketing Mix 9 4.2Segmentation 10 5.0Recommendations 10 5.1Justification of the Recommendations 11 6.0 Conclusion 11 References 12 The North Face Strategic Marketing Report 1.0 Introduction North Face is one of the key manufacturers and distributors of backpacks in the United States and in the world. The company controls a substantial market share and is a force to reckon with in the backpacking industry. Over the recent years, the company has been faced with a problem of introducing a new product line (Skiwear) in the market in a bid to complement its backpacking product line which has reached maturity (Mezzatesta & Cook 1983, p. 751). As a result of this, the future growth of the backpacks is uncertain since the company is way above the industry standards; which explains its position above its competitors. Venturing into the skiwear industry is seen as possible growth route since the company had not focussed on tapping this industry in the previous years. The company is faced with a problem of introducing the new product line in the market without affecting its current backpack business negatively. As a result of this, the company needs to establish a marketing strategy which would enable the company to introduce the company successfully in the market. The following report gives an analysis if the company, gives its marketing objectives and marketing strategies. Lastly, the report will give justified recommendations to the company. 2.0 Analysis In order to be able to make appropriate recommendations to North Face, it is important to analyze the company itself and the market which it operates in. The following section will give a situational analysis of the company, then do a strength weakness opportunities threats analysis of the company, then analyze the industry with respect to Michael Porters Five forces which shape strategy and then evaluate the critical success factors of the company. 2.1 Situational Analysis North Face Company manufactures and sells outdoor equipment. The company emphasizes on high quality products hence its associated success in the market. The company initially started as a mountain specialty store but later venture into manufacturing in its bid to ensure that it provided high quality products to its customers. The company manufactures and sells four main types of products namely sleeping bags backpacks, tents and outdoor clothing (Mezzatesta & Cook 1983, p. 743). The company has invested highly in research and development so as to ensure that its products are always a step above those of its competitors. The company has been able to manufacture products which exhibit varying characteristics, hence being able to satisfy the individual needs of specific target markets. Key to the developments is the productions of high designed products which are specifically meant to provide the customers with great user abilities. In addition to this, the company focuses on material development so as to produce high characteristic materials which have great user abilities for instance the low weight high strength abilities of the company’s tents. Currently, the backpacking business is approaching maturity if the current less than 5% growth rates realised by North Face are something to go by. This has necessitated the need for the company to venture into other product lines or businesses. The company has identified that there is a growth potential in Skiwear. However, the company is faced with the problem of introducing the new product line in the market without affecting the current backpack business negatively. The aim of this report is to identify appropriate recommendations for the company to use as it ventures into the skiwear business. 2.2 SWOT Analysis The following section will give a SWOT analysis of North Face Company. This analysis is important to assess the situation of the company in the market. Strengths North Face Company has a good reputation in the market. The company has reputable brands both in the backpacking and other outdoor equipment industry (Mezzatesta & Cook 1983, p.741). The good reputation will be very instrumental in enabling the company to introduce its products in the market successfully. The good reputation will catapult the skiwear product line into success. Secondly, the company controls some section of skiwear product line indirectly. The company’s vests and some other products are currently in the market and enjoy substantial success although North Face has not given it substantial attention. Lastly, the company boasts of a great distribution network in addition to great human resources which will enable the company to increase the efficiency of its operations in the market. Opportunities There is an opportunity for the company to venture in the skiwear products (Mezzatesta & Cook 1983, p.752). The company’s products enjoy substantial success in the skiing market although this was not the initial target market for the company. If the company focuses on producing products for this market, it is guaranteed to achieve success. There is still a large section of untapped markets which North Face can tap by increasing its target market. Threats The main threat to the company is competition from other companies in the market. The other main threat is the threat of a decline in the backpack business if the skiwear product line is not marketed strategically such that it does not influence the previous business negatively. 2.3 Michael Porters Five Forces Michael Porter proposed five forces which shape strategy for any business. The following section will analyse the five forces with respect to North Face Company. The company should evaluate the five forces and come up with an appropriate marketing strategy. The forces includes the bargaining power of the suppliers, bargaining power of the buyers, the ease of entry into the market, the availability of substitute products in the market and the level of competition in the market (McGowan & Mahon 2007, p.190). Firstly, the bargaining power of the suppliers in the skiwear and backpack industry is low. This is a favourable characteristic in the market since it encourages business. The low bargaining power is due to the many suppliers who are available in the market; hence the competition among the suppliers lowers their bargaining power. Secondly, the bargaining power of the buyers is substantially high. This is owing to the large product range which is available in the market, hence increasing their bargain power. In addition to this, there are various levels of customers each of which have varying user requirements which makes it hard for the company to satisfy all the user needs; hence having to focus on high quality products targeted at professional mountaineers and skiers. However, this bargaining power is not so high as to lead to unfavourable business. Thirdly, there are various substitute products in the market. This is unfavourable for North Face. As a result of this, it will have to proliferate its products so as to reach out to the individual customers in the market. Fourthly, the threat of entry of new competitors in the market is fairly low. This is favourable for business since it shields the company from a flooded market in the future. Lastly, there skiwear manufacturing and retail industry is associated with high competition owing to the various companies and brands which are in the market currently. 2.4 Critical Success Factors Critical success factors are elements which enable a company to have a competitive advantage over its competitors in the industry. They are factors which are unique to an industry and organisation and normally have a great influence on the success of an organisation (Grunert 1992, p.2). The critical success factors of the North Face company are the following: Technology The company has invested highly in research and development so as to come up with the state of art technologies and designs for use in the product development in the company. This has influenced the success of the company in the backpack industry and will be beneficial to it in the proposed skiwear industry. Innovation The company embraces innovation both in its operations and its product development. This has enabled the company to come up with high quality products. Quality The company boast of high quality products. Infant, the North Face company offer lifelong warranty for its products. Introducing the same concept to the skiwear business will enable the company to be able to market its products effectively. Management The company also has a strategic management in position. The organisational design is such that it has placed key men at key responsibility positions so as to synchronise the organisation’s activities so as to achieve the maximum benefits possible. Marketing In its backpack business, North Face has a strategic marketing procedure which streams from the product design to the actual sale in the market. The great marketing ability of the company is a critical factor in its success. 3.0 Marketing Objectives As indicated earlier, the objectives of the organisation is to ensure that it ventures into the skiwear manufacturing and sale business without influencing its current business line negatively. The following section will outline the key marketing objectives of the company. The first marketing objective of the company is related to the finances. On this point, the company should acknowledge the fact that making profits should be one of its key objectives and hence the company should place substantial emphasis on attracting the numbers so as to hit financial positions way above the break even analysis. The second marketing objective which the company should strive at achieving is creating brand awareness in the market. Owing to the fact that the North Face skiwear product line is new in the market, the company should make it its priority to make sure that its products are known in the market which would ultimately lead to success. The third marketing objective of the company should be to communicate to the target market that the organisations backpack business is still intact and that their customer should expect the high quality standards associated with its previous product lines to continue. This will ensure that the new product line do not act as a cannibal to the previous product line. In addition to this, the marketing department should synchronise its activities with the rest of the organisation so as to enhance harmony in the organisation’s activities. 4.0 Marketing Strategies The company should integrate the use of strategic marketing strategies so as to be able to manage in the old and new market segments. The company should make use of the following strategies. 4.1 Marketing Mix The marketing mix is an integration of several key factors which are of high influence in any business (Thorne 1997, p.207). The marketing mix has been changing over years from the previous 4ps to the current 7Ps. This section will analyse the 4Ps of the marketing mix. Product The company should manufacture high quality product which have the ability to satisfy the needs of the target market. The company proposes to use its strategy in the backpack business of using the hierarchy in targeting its customers. However, the management should acknowledge that the skiwear market is different from the previous market. In addition to this, the company does not enjoy the same strength as it enjoyed in the backpack industry in the new market. Price The price at which the company sells its products will be a key determinant of their success in the new market. In addition to the prices being standardised with the current prices in the market, they should give value for money to the target customers. Promotion The company should make use of appropriate product promotion strategies so as to ensure that there is brand awareness in the market. The company should ride on its good reputation in the market. Place The company should establish a good distribution network so as to ensure that the products are available to the customers at the desired locations. On this point, the company should take care so as not to affect its current distribution network negatively. The important factors to consider in this point are wholesale and retail outlets which are critical in the distribution system. 4.2 Segmentation Market segmentation is a very effective strategy in market penetration. North Face should divide its market into market segments; each of which has specific needs. The product development after this should then focus on developing products which have the ability to satisfy the individual needs of the various market segments (Beane & Ennis 2007, p. 22). The company should then target the specific market segments by providing special products which are fit for the specific needs (Bennet 1997, p.152).To start with, the company can make use of the marketing hierarchy which it uses currently. 5.0 Recommendations The company should start by developing a good marketing mix. The marketing mix should be focused on enabling the company to venture into the skiwear manufacture and retail industry successfully. The organisation should take ample consideration of the 4Ps of marketing namely product, promotion, place and price since they are the key factors which influence the ability of a brand to stand out in the market. The company should also segment the market so as to be able to attend to the special product needs of specific segments. Market segmentation will enable the company to be able to develop its products in line with the current market demands; hence being able to create brand awareness and royalty which will be critical to its sustainability. The company should also consider the use of focus and differentiation strategies, all of which will have a bearing on aligning the product and the price of the company’s products to success in the market (Powers & Hahn 2004,p.44). 5.1 Justification of the Recommendations The marketing mix is an effective marketing strategy which empowers the product to be able to compete with other products in the market and at the same time give value to the customers. Therefore, it is a recommended strategy in the marketing of skiwear in the market. Market segmentation enables an organisation to focus on specific user needs of individual customers hence being able to develop products which suit them. Therefore, market segmentation will be instrumental in the company’s marketing strategy. The focus and differentiation strategies take care of the price and product; aligning them strategically so as to meet specific needs in the market and in the process gaining competitive advantage. This makes the two strategies very important in the marketing process hence their inclusion in the marketing strategy (Powers & Hahn 2004, p.46). 6.0 Conclusion Concluding, this report has been able to give an insight into North Face Company and give recommendations on its future plans to venture in the skiwear product line. From the report, it has come out closely that it is important for an organisation to have a strategic marketing strategy which takes into consideration all the operating factors and consequently comes up with an appropriate approach which ensures that various business interest are not in conflict with each other. The development of such a strategy starts by a situational analysis of an organisation which seeks to evaluate the current situation of an organisation. The report gives a situational analysis of North Face Company under the headings SWOT analysis, Porter’s five forces which shape strategy and critical success factors. The report then identified the marketing objectives of the proposed marketing strategy. This enables an organisation to identify appropriate procedures to follow in order to achieve its goals. The report then gives the marketing strategies which are then recommended and justified to the company. References Bennet, A.,1997. The Five Vs – A Buyer’s Perspective of the Marketing Mix, Marketing Intelligence & Planning, Vol.15, no. 3 ;pp.151–156 Beane, T., & Ennis, D., 2007. Market Segmentation: A review, European Journal of Marketing, Vol. 21, No. 5; pp. 20-43 Grunert, K., 1992. The Concept of Key Success Factors: Theory and Method, pp.1-32 McGowan, R., & Mahon, J., 2007. Corporate Political Competitive Analysis, Handbook of Business Strategy, pp. 189 - 204 Mezzatesta, G., & Cook, V., 1983. The North Face, Case 19, pp. 743 – 755 Powers,T., &Hahn, W., 2004. Critical Competitive Methods, Generic Strategies, And Firm Performance, The International Journal of Bank Marketing, Vol. 22, No. 1, pp. 43-64 Thorne,A., 1997. The Marketing Mix – A Problem Analysis, European Journal Of Marketing. Vol. 5, No. 4, pp. 207 - 217 Read More