Marketing is the way in which a business promotes and sells their products or services, and the way it communicates with their customer. This can take on many forms from advertising and events, to cold calling and customer service. During this module I have gained a more insightful view into Strategic Marketing and the ways it can be used in developing a product. Before this module I understood design to be an organic process and have never designed a product with marketing in mind. Although I have no formal qualifications or previous academic understanding of the subject, I have worked within marketing for a number of years. I had felt my knowledge of the field was reasonable; however I have only learnt on the job, through experience. My main focus had always been online marketing and social media promotion.
In terms of my design work, marketing was only an afterthought. Only when a final product was created would I consider the ways in which I could promote or sell it in various markets and this meant finding a suitable target audience could often prove difficult. Having never developed a product via market led development, my products often became concept pieces with no real target audience. Within my career I have always dealt with products someone else has created, I would always look for ways I could match features with people or target audiences specified by the supplier.
My general experience in marketing has always been sales oriented. According to Lamb (2008) a sales-orientated organisation will strive to sell high volumes of product by persuading potential customers to buy, despite the fact an item may not suit their specific needs. Their bulk sales will in theory result in profit. This was usually achieved through active face to face selling, promoting best sellers and competitive pricing. Whilst working for music and pop-culture clothing retailer PULP, the primary sales tactic was to ‘pile it high and sell it cheap’. They operated under the large conglomerate Sports Direct. Creating a promotional strategy was not held with great importance and the techniques adopted were usually free, or had very limited budget. They relied heavily on promotional pricing and a large social media following. I found campaigns were chosen because they were cheap and not necessarily because offered the best sale of return. In addition any product development was focused on driving down overheads rather than quality. Luckily in a music inspired store, the typical customer was very easily identifiable as their interests were intrinsically linked to the product. Following the Sports Direct investment PULP struggled to maintain a credible reputation, tarnished by the budget retailer image. They neglected to forge long lasting relationships with their consumer and although prices were low it didn’t necessarily inspire value or customer satisfaction. In addition assertive sales techniques could came across as pushy, leaving customers hesitant to return.
Product orientated organisations however, consider the quality of the product but not the need of the consumer. Product promotion lies heavily in what the merchandise offers with assumption if a product is built well then consumers will want to buy it. The advantage is the products are built to a high standard and are usually innovative. However, the development of product is only internal and it is important to recognise changes within the market. Jobber (2013) explains Kodak failed to adapt to a changing photography market when cameras transitioned from analogue to digital. Although they released the first digital camera they were unable to cope with the influx of competitors. They lost large areas of their market to smartphones as the boundaries between mobile devices, photography and film become blurred.
In a similar way the focus is internal with production orientated companies. Berndt (2006) states that these businesses achieve high levels of efficient production, which enables a vast distribution of products and services. A strong emphasis is put into the research and development of product, and generally organisations are looking to find ways to increase production and drive down costs. Their customers are looking for cutting edge products, technology and innovation. Again these products are generally sold using aggressive sales techniques, using sales reps, cold calling and advertising campaigns.
This type of product development has been used by Dyson who pride themselves on their innovative engineering. According to Entis (2016), the company has built their legacy through designing better versions of ever day objects. Although the vacuum cleaners have seen huge success within their market, other products such as the washing machine did not fit consumer needs. When Dyson released the more energy efficient machine they claimed it worked better than a traditional washer, mimicking the handwashing process which is more effective at removing dirt. However, at £1000 it was seen as too expensive, and as the company lost money the product was discontinued.
Without a huge financial backing it seems these techniques can’t be utilised by a small business such as my own. I am lacking the capabilities of mass production to drive prices down and I wouldn’t be able to sell high enough quantities of product. In a similar way without the funds to establish mass distribution and cutting edge technology my product would not be able to compete in an aggressive innovation led market. However by adapting a market orientated position I hope to create a successful business plan. This customer orientated approach seems the most effective way for me to gain sales, raise brand awareness and offer my customers value. By assessing the lighting industry and adapting my product to meet the requirements of my target audience I should be able to gain a competitive advantage over my competitors, along with identifying potential opportunities within the market.
A market orientated business is one which assesses external factors such as customers and competitors to develop a strategy which fulfills customer’s hidden or stated needs. All departments work together and share information to deliver a product which can exceed expectation. Companies such as Apple utilise this strategy to adjust their product, price and customer service to suit their customers and provide good value. They create innovative products and inspire loyalty by listening to their customers’ requirements. Their stores allow for demonstrations and education on products, the genius bar provides ongoing customer support and each model has variable specifications available to suit your needs. Every new release sees new features which customers have requested. This has allowed Apple to achieve market dominance over rival technology developers such as Windows.
With this in mind I have used the SOSTAC process to assess the external factors, along with my internal capabilities to provide a strategic business plan. To begin this process, situation analysis is key. I firstly evaluated the macro-environment which will directly or indirectly affect the sales and production of my product. Analoui (2003) explains a good place to begin analysis is with a PEST report, as it will assist you in understanding what level of impact a situation could have on a business’s performance. By identifying the worst and best case scenario for each environmental variable we can hope to prepare for situations such as changes in consumer spending habits, changes to the population, the costs of production and the ease of import and export. These factors could all have detrimental effect on the decisions I make.
The next step I took was to investigate the competitive strengths that face me within the lighting industry. I adopted Porters 5 forces, considering potential entrants, substitutes, buyers, suppliers and competitive rivalry. Porter argues “The stronger each of these forces is, the more limited the availability of established companies to raise prices and earn greater profits” (Hill 2008:45). The competitive forces which are considered strong could pose a threat to me, such as suppliers with high prices driving up my production costs. However forces considered as weak could open up opportunities to increase profit, such as a few substitutes, which makes my product more desirable. This process allowed me to understand my competition and where my strengths lie within industry. It also highlighted changes I could make to my business model to increase my power.
Once I understood my strengths within the industry I mapped out my product’s lifecycle. Each product goes through a period of introduction, growth, maturity and decline, with varying sales during each stage. By preparing for each phase I hope to create a plan which will avoid declining sales. Designer Lee Broom expanded his product ranges from solely furniture into a diverse array of interior products in order to grow his business. When speaking in Curbed he stated “I try to change the collections every season with new materials, and keep an overarching look, which is not as synonymous with product design…If you’ve mastered something as a product designer you can keep working in that medium for years to come, but I like to change.”(Hucal, 2016: Online). This may have attributed to his thriving business. This strategic management of the lifecycle can be used to prolong stages such as maturity through advertising campaigns, developing new products and expanding marketplaces.
I next assessed the marketplace to identify where my product sits alongside my competitors. I did this through both generic strategy and perceptual mapping. Porter (1980) explains when using the generic strategy the first two strategies may pose a threat, whereas the third should be seen as an opportunity. Within the lighting industry I have identified focus companies (niche companies supplying bespoke products), cost leaders (dominated by budget retailers) and those who use differentiation (design and innovation led companies). My range sits within the differentiations group which has helped me identify which companies are my closest competitors.
Perceptual mapping enabled me to recognise how potential customers perceive me and my competitors within the market. In this instance I felt it best to look at the correlation between price and product quality to examine if there is a desire for high quality pieces at a lower cost. Through this technique I could easily visualise gaps in the market and appropriately improve my product in response. This method could be adopted to ensure my product sits in line with other successful business models I want to emulate.
To further understand my market I chose to identify and track the sales of related companies over the past 10 years. This allowed me to observe trends in the market and see how issues identified in the PEST report have had an effect on sales. It also allowed me to estimate the rate of growth I could potentially achieve. I cross analysed this data with business reports to show the ways investment, new products and promotional campaigns have had an effect on sales. This, along with the Marketing Mix, highlights the marketing opportunities which are most beneficial to me. Jain (2010) describes the marketing mix as a mixture of elements which, when combined, establish the marketing system of a business. All four components are interdependent, equal and essential in achieving a successful marketing mix. I evaluated product, promotion, price and place. On this occasion I also included profits so I am able to evaluate the success of these efforts. I also looked at the branding techniques my competitors have used including logos, packaging and mission statements. These elements all combine to create the aesthetics of a brand, which greatly affect public perception of quality and value. However, when assessing external data I have found information is sometimes limited and comparing numerous pieces of evidence is necessary in order to gain a clearer insight into the market. As most companies I identify with are small, full company data is not available to me.
In order to discover my target audience I chose to assess the current housing market, socio-economic groups and competitor’s customer demographics. Blythe explains “Customer research provides information on the market and market segment size, trends in the market, brand shares, customer characteristics and motivation, and competitor brand shares. It also provides information on the positioning of brands in the customers’ minds.” (Blythe, 2014:157). These various elements helped me to establish my customer base, 35-65 year old home owners. In addition, creating a customer spending cycle has also helped me understand the decision making process consumers go through. When selling products at a higher price I feel I need to provide relevant information at strategic points in the journey, as these not usually impulse purchases. This is discussed by Blythe (2014) who explained customers don’t only make purchases for a particular need, but also due to a number of influences in their lives. These include social, cultural and physiological influences. This information was used in conjunction with the promotional mix to select a number of marketing activities I can utilise in order to grow my business.
I presented my key findings in a SWOT analysis, this framework allowed me to investigate my company’s internal strengths and weaknesses as well as its external opportunities and threats. Ferrell (2012) explains this method is one of the most effective approaches used in analysis, and provides a concise view into the information collected, as well as revealing your competitive advantage.
In order to manage this process I outlined my key objectives by creating a mission statement. I summarised my overall aims and highlighted my key skills. Lamb says “By correctly stating the business mission in terms of the benefits that customers seek, the foundations for the marketing plan is set.” (Lamb, 2008:38). This statement is an outline which will move the business’ focus in the right direction. In a similar way my SMART objectives have been used to outline both my corporate and marketing objectives and have provided more specific framework I will work towards in order to achieve growth.
After outlining my objectives I began to make strategic choices based on my investigation. I have chosen to use the Ansoff product/market matrix which outlined the different ways I will grow my business and achieve a competitive advantage. Botton (1999) explains this model gives companies a number of strategic options they can use to grow their business by either modifying their firm or modifying the environment they operate in. Not only will they enable me to make informed choices for the development of my product, it will also help me avoid decline as a business. I have a number of strategies in place which should cater to various scenarios.
Similarly forming tactics has allowed me to transform my strategic plan into a set of specific activities which work through my strategy. I found the best way to create a consistent plan was to again use the Marketing Mix scheme, however in this case I used all 7 P’s, including physical evidence, process and people. Although these additional elements are usually used when assessing the service industry, I feel they will allow me to further open up my marketing strategy to include excellent customer service, in store promotion and product development. Also by providing these additional services I hope to nurture customer loyalty and value.
A Gantt chart was created in order to produce a clear and concise timeline to follow, with achievable goals. This will monitor the scheduled and actual progress of my business. This visual process is very easy to follow and highlights the relationship between actions. It will allow me to track everything from social media campaigns to product development. Finally I generated a set of statements which I will follow to assess the results of my implemented plans and adapt my objectives accordingly. By creating a business and marketing plan I have found it’s important to assess data in an objective manner and remain flexible. Elements of my strategy may develop or change over time as I see the results of my efforts.
Overall the SOSTAC marketing process has been a vital tool in developing my product and planning my marketing activities. During this process I have estimated the starting funds of £10,000 I would need and planned a realistic growth figure. I also was able to price my current product at £150 in line with my competitors and developed a plan to create promotional material. Also I am now aware of my need to develop addition products and variations of my product which will help me reach a wider audience without compromising my current target market. The research has led me to understand that my target audience was older than I initially anticipated. It has also highlighted the importance of both technology and design, and the attributes in homewares which are considered vital to my consumers.
In conclusion this research has emphasised the significance of knowing my audience and creating a product to suit them rather, than pushing a product onto an unwilling customer. I will promote my range to 35-65 year old home owners, rather than the 25-45 year old customers I thought I would have. It’s also helped me to be more specific when outlining my customer profile. I feel a market orientated business model can have a greater success than adopting aggressive sales tactics. Knowing my companies strengths along with identifying my competitors and their tactics, will enable me to create a strategic plan with an achievable and realistic goals. This should result in an increased profit. I now see marketing is a tool which can be used to deliver a product which meets or even succeeds customer needs, providing value and satisfaction. Going forward I will use the tools outlined above to allow me to create a superior product, which benefits both my business and my customers.
- Analoui, F; Karami, A (2003) Strategic Management In Small and Medium Enterprises. London, Thomson.
- Berndt, A; Chipp, K; Klopper, H; Hern; Ismail, Z; Petzer, D; Roberts-Lombard, M; Wakeham & M; Subramani, D (2006) Marketing: Fresh Perspectives. South Africa, Pearson Education.
- Blythe, J. (2014) Principles and Practice of Marketing. Third Edition. London: Sage.
- Chesney (2003) Competitive Information in Small Businesses. New York Springer.
- Ensor,J; Drummond, G; Ashford, R. (2008) Strategic Marketing. Planning and Control. Third Edition. Oxford: Elsever.
- Ferell, OC; Hartline, D. (2012) Marketing Strategy. Sixth Edition. Mason, USA: South Western Educational Publishing.
- Hill, C; Jones, G. (2008) Strategic Management, An Integrated Approach. Eighth Edition. Boston, Houghton Mifflin Company.
- Jain, A (2010) Principles of Marketing. Dehli, V.K (India) Enterprises.
- Jobber, D; Ellis-Chadwich, F. (2013) Principles and Practice of Marketing. Seventh Edition. Berkshire: McGraw-Hill Higher Education.
- Lamb, C.W; Hair, J.F; McDaniel, C. (2008) Essentials of Marketing. Boston: Cengage Learning.
- Porter, M. (1980) Competitive Strategy: Techniques for Analyzing Industries and Competitor. .New York, The Free Press.
- Caines, R. (2010) Lighting – UK – October 2010. Mintel [Online][Date accessed 28/03/16] http://academic.mintel.com.ezproxy.mmu.ac.uk/display/479937/
- Entis, L (2016) The $400 Hair Dryer Proves James Dyson Is the Master of Making Boring Products Cool. Fortune [Online][Date accessed 02/02/16] http://fortune.com/2016/04/28/dyson-master-of-cool-products/
- Hucal, S (2016) British Designer Lee Broom Takes a Theatrical Approach to Lighting. Curbed [Online] [Date accessed 18/05/16] http://www.curbed.com/2016/4/18/11451220/lee-broom-milan-design-week-salone