Market Profile of PAMAY and Its Competitors - Essay Example

Marketing Game Report Introduction: The Marketing Game is a kind of marketing simulation exercise which seeks to draw forth a real life marketing scenario that is complete with product lines rivals and competitors, vying for gaining market shares and product consolidation and positioning. In this exercise the main idea is to create marketing situations by which the exposure to different market situations and scenarios necessitates the need to draw up appropriate marketing strategies as well as take strategic decisions based on prevailing circumstances from gleaning of competitions’ marketing operations. The product lines that are considered are “Voice Recognition Device.” (Voice recognition device, 2005). Through the use of voice recognition, it is possible to direct and control computer applications without having to use one’s hands to do the job. This is widely used by managers, artists, students, parents, home and office usage etc. “The firm we now work for is currently developing a new type of voice recognition device (VRD) with advanced capabilities for controlling computer applications using spoken commands. It was our job to move the product to the top of the market and earn profit for our firm by understanding the market, competitors and other trends in the external environment.” (The marketing game, 2009). The two constraining factors in this Marketing game are the Sales Budget that offers the scope for funding various activities that are needed for a game of this kind. Secondly, the marketplace needs to take the competitive moves taken by three competing firms in their bid to create value and revenue chains for their respective businesses. There are also aspects in terms of whether advertising expenditures are paying off and also whether this is influencing the final outcome of business. Another aspect that needs to be considered is, paying close attention to what the competitors are up to. “In a dynamic market it is rare that a manager can succeed without paying close attention to competitors and what they are doing, and without thinking through what they are likely to do.  Success in The Marketing Game! Is much more likely for those managers who take some time to think carefully about the competitive effects in the market.” (Otjen n.d.). Market Profile of PAMAY and its Competitors: There are only four makers of this VRD in the market. One is the product line which we are responsible for developing; that is, PAMAY and the competitors are Synnergy, Speak, you’re your voice. Synnergy is now in the number one position with 41% market share, You’re has 14% share and Speak and Your Voice have 29% and 16% market share respectively. Our aim is to reach the top slot which Synnergy now holds in order to gain larger market share and dominance. Surprisingly, the price of Synnergy is also higher at $440 as against $188 of PAMAY (43%). Thus, an option of this company needs is to increase prices to bring it within length of their nearest rival, PAMAY. It is believed that a three pronged strategy would need to be used for gaining strategic advantages and benefits for PAMAY as compared to its rival and competitive firms. 1. Level 1 strategies- Involving Strategies that would use increase in budgets through heavy, large scale advertising for product promotion and capturing markets. This also involves increase in present pricing of products from $100 to $125 per product. 1. Level 2 strategies – Focus on competitive performances and look at as to what competitors are doing regarding their marketing. At this level, it is necessary to cut costs, gain productivity through enhancing number of products. If necessary, costs are tapered in order to gain competitive profitable advantages, controlling, monitoring of costs. 2. Level 3 strategies would involve the entry of one more product line by PAMAY. This would not only maintain the enhanced revenue stream that is necessary for the growth of this product but could also help in putting pressures on established products that could be given more leeway. Besides, the addition of a new product line could also generate new revenue streams, help consolidate the prevailing market share balance and even increase the market share of PAMAY’s market share through innovative policies, acceptability, and state-of-the art technologically advanced VRD. "We have witnessed an amazing reception of the AccuSpeech Mobile Voice Platform into the commercial, retail and logistics sectors as people witness the increased accuracy and speed with which they can perform daily functions," (Irvine 2010). Financial Budget for Next Period 1. Units Sold 2. Wholesale price 3. Unit cost Gross Sales Cost of goods sold Gross Margins (A) Expenses Advertisement Sales force : Salaries Commission Customer service Marketing research Total Expenses (B) Net contribution (profits ) (A-B) TABLE 1 : Financial Budget Channel 1 Channel 2 Total 14,969 $125 $50 1871125 748,450 250,000 90,000 For next Year 12,731 $125 $50 1591375 636,550 170,000 60,000 27,700 3462,500 1385,500 2077,000 300,000 420,000 150,000 40,000 70,000 980,000 1097,000 From the above table, it is clear that the strategic decisions that need to be taken are to increase the unit price to $ 125 and also increase the units produced to 27,700. This could help remove the loss elements in business and help the business to attain profits. It is seen that one of the major reasons why the competitive business like Synnergy, Speak and Your Voice have achieved major cost advantages along with lowering of costs. “As databases become larger, they become more complicated to manage.” (Lowering your IT Costs with Oracle Database 11g Release 2, 2009, p. 8). Financial Budget for Next Period 4. Units Sold 5. Wholesale price 6. Unit cost Gross Sales Cost of goods sold Gross Margins (A) Expenses Advertisement Sales force : Salaries Commission Customer service Marketing research Total Expenses (B) Net contribution (profits ) (A-B) TABLE 2 : Cost controlled Channel 1 Channel 2 Total 14,969 $125 $50 1871125 748,450 250,000 90,000 For next Year 12,731 $125 $50 1591375 636,550 150,000 60,000 27,700 3462,500 1385,500 2077,000 250,000 400,000 150,000 35,000 50,000 885,000 1192,000 Keeping a Watch over Activities of Competitors and Rival Firms: Coming to the next level, it is about watching the activities of competitors and rival firms. Since this VRD Company is not in the first position, it is natural that they would try to acquire the leadership position through hard work, dedication and efforts to enhance sales, revenues and control costs through effective cost monitoring strategies. Besides, it is also necessary that “marketing managers are encouraged to eschew the dogma of marketing warfare to assume a co-competitor mind-set and consider the potential benefits of not only competing with their rivals but also building effective alliances with them.” (Luo et al 2007). At present, there are only three major competitors for this VRD Company, PAMAY. While Synnergy assumes market leadership with higher market share per unit costs, it is necessary to overcome this situation by entering into strategic deals with the other players like Speak and Your Voice. At present, the positions of the three companies are as follows – Speak -41% market share and Your Voice- 21%. If this company could come up with strategic alliances and partnerships with both these existing companies, Speak and/or Your Voice; it could be seen that a sizeable market share could also accrue to them. Even if Synnergy were to acquire 100% of the share of Speak that is 29% and 30% of Your voice = 30% of 16% = 5% the revised market share of PAMAY would be 14 % + 29% + 5% = 48%. Thus, it could surpass the market share of Synnergy that is at present 41%. This is one of the strategic scale that could be used in this Marketing Game through the clever and judicious use of mergers, acquisitions and takeover, the entire marketing dynamics of business could be changed and this “also bring separate companies together to form larger ones.” (McClure 2010). Marketing Game Needs to Ensure Greater Revenues through Brand Building and Repositioning: Besides the aspect of merger of two competitive companies, it is also possible that the Marketing Game also envisages greater scope for increase in revenues through better brand building and repositioning. For instance, now it is evidenced that the major revenue stream is from the corporate sector that is business and industry. It is now necessary to concentrate on the household and personal segments like students, housewives and businessmen who are operating from non-business locations. Thus, chunk of business also needs to be mopped up by this company if it to improve in later years. Again, there are reasons why the non-business community is not actively associated. It is due to the lack of knowledge and experience in handling this kind of software or they have not been properly trained for these kinds of VRD, or Voice Recognition Devices. In short, it could be said that there needs to be proper and structured training courses for non-business sectors for voice recognition software. “Ability of a computer, computer software program, or hardware device to decode the human voice into digitized speech that can be interpreted by the computer or hardware device. Voice recognition is commonly used to operate a device, perform commands, or write without having to operate a keyboard, mouse, or press any buttons. For example, a user could say "open Internet" and the computer would open an Internet browser and allow that user to browse the Internet.” (Voice recognition, 2010). In the years to come, it is quite possible that there may be newer technology that could improve open or even obviates the VRD technology and this company needs to safeguard itself against three kind of occurrences and technical obsolescence. In such cases, what this company can do is to enter into global markets or set up shop or franchisees outlets in countries which do not have access to such high technology like Third World Countries. Thus, partnerships could also prove profitable in the long run. “NATO says the grant provides assistance to partner country institutions for purchasing equipment that will improve the level and the quality of telecommunication facilities.” (Engelking 2000). It could be seen that these products would not only find good markets in such places but also it is possible that this could maintain and upgrade the revenue and profit streams that are necessary to satisfy shareholders and stakeholders and also to neutralize the negative impacts of saturated and competitive domestic markets. Since international trade increases market competition as foreign firms start to compete on the domestic market and vice versa. International trade improves economic efficiency (by diminishing the deviation between MRS and MRT), the so-called pro-competitive gains from trade. (Competitive advantage, 2009). It is now necessary to consider the aspects of new entrants into this lucrative field, which holds great promise in future mainly since it makes software compatibility more robust and convenient and also ensures a higher degree of accuracy and precision in software operations. Here, there are only four players; our company PAMAY and three other competitors. It is quite possible that lured with the prospects of greater returns and profits, there may be a large number of competitors in the next decade or so. Thus, it is also possible that in the process, this company may lose its market significance and be overtaken by many rivals. This must be restricted and this marketing game needs to seek ways and means by which this could be achieved. Thus, it could be done by making initial investment costs very high by dissuading many potential players. Next, the gestation period (that is the period during which the company does not make profits but perhaps only recovers its costs) could be high. Most software investors and promoters wish to earn instant or even quick returns and a higher gestation period could ensure that this is not so. This could, in effect, reduce the number of players and new entrants who would now seek out greener pastures for software investment purposes. “In todays business environment, the need of the hour is sustainable technological development, especially in the fields in which the pace of change is very high. Computer software is one such area. It can take you places. The entrepreneur must have basic knowledge of the subject." (Kapoor 1998). Competitive Threats to be Countered: Again the threats of competitors could be held back through diversification, business acquisition and mergers and a strong business presence. It is not necessary that business should acquire cutting edge technology and not necessarily having to be monopolistic or oligopolistic in their outlook. Another technique that this Marketing Game could consider is the lowering of prices to such an extent which the new entrants cannot compete thereby evicting from the market. “Competition in innovative industries displays features not encountered in traditional sectors of the economy - sectors that have shaped accepted wisdom in regard to antitrust enforcement procedures.” (Competition policy and innovation, 2002, p.2). Powers of Innovative Thinking: The next level strategies would also need to consider new product lines; mainly innovative ones, introduced by the business in order to sustain itself in the market despite the onslaught of many other players. There could be innovations and advanced versions of the existing product liens in vogue, like HD VRD, multiple uses VRD, or some new varieties which cater exclusively for disabled or blind people or people with “sensory impairment.” (Evreinova 2005, p.1). Just as there are computers for the disabled and people with hampered vision, it is also possible to have software of VRD which could deal with physically challenged persons. These aspects could not only maintain the enhanced revenue stream that is necessary for the growth of this product but could also help in dissuading competition in this field for some time to come. Again, for getting a good and strong foothold in the market and being able to retain it well into the future would require a good, efficient and robust marketing team who could be entrusted with any kind of challenging work and the team need to be able to rise to the occasion and perform the work diligently and sincerely with full commitment and efforts. In this way, it is possible to achieve formidable targets and also attain the goals and objectives of the firm through team effort. Conclusions: It is also possible for the team to be able to take the company to many levels of business growth and prosperity in future years. “The most successful organizations combine sales and marketing into one department, with everyone knowing their role within the team. Marketing supports sales, and sales supports marketing. The next logical extension is to include customer service. Customers drive the process and marketing, sales and customer service answer to the customer.” (Brandt 1999). Reference List Brandt, MT., 1999. Make marketing a team effort. [Online] Inc. Available at: http://www.inc.com/articles/1999/07/18632.html [Accessed 17 May 2010]. Competitive advantage, 2009. [Online]. Available at: http://www.oup.com/uk/orc/bin/9780199280988/marrewijk_chap09.pdf [Accessed 17 May 2010]. Competition policy and innovation, 2002. [Online]. 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