Review the marketing management philsophies and explain which philosophy the entrepreneurs should adopt if they intend to successfully market the FIT-U concept in New Zealand?
Explain strategic planning to the entrepreneurs nd outline the role that marketing should play in their new company?
Describe to the entrepreneurs how applying the correct marketing management process can help them achieve success for the FIT-U concept.
Identify and discuss the strengths and weaknesses of the FIT-U concept.
Kotler ( et al.p16-22) depict there are five marketing management philosophies which are production, product, selling, marketing and societal concepts.
The production concept details that consumers will buy products which are available and affordable, and management attention is directed towards improving production efficiency ( in a situation of demand exceeding supply ) and distribution efficiency ( where product costs are high and improvements in this area are needed to reduce costs ). Therefore if either of these prior situations occurred then the entreprenuers would be wise in adopting such a marketing management philosophy, but the risk of becoming too focused on these aspects is dangerous to the company’s survival short and long term due to the narrow focus.
The production concept beholds that consumers will buy products that offer the most quality, performance and innovative features and management attention is focused therefore on product improvements.This approach can be seen in some of the industry’s membersas they believe each new design will create it’s own demand. There is an underlying assumption here that the product sells without or little marketing effort. Again this philosophy would be unsuitable for the entrepreneurs to adopt as its focus is too narrow (especially in relation to customer wants) and such an approach would become quite redundant when the tariff protecting the local market is removed, potentialy decimating non-customer focused philosophies.
The selling concept depicts that consumers won’t buy enough of the product unless large scale selling , placing and promotion is practised ( along with hard selling). This philosophy has its uses in the selling of unsought goods or where an organisation has overcapacity, therefore relying on short term transactions . This concept would be inappropriate for the entrepreneurs as they need to focus on building long term relationships rather than one off sales. Additionally the overcapacity scenario wouldn’t be likely to occur as the product is made to order rather than mass produced.
The marketing concept is based on achievement of organisational goals that are based on satisfying the target markets’ needs and delivering it more efficiently and effectively than the competitior does. Management focuses on a defined market and identify customer needs and creates profit from creating long term customer relationships by delivering on these needs. The focus here is on marketing rather than selling . The entrepreneurs would be moderately successful in adopting this philosophy as the consumer is at the centre as the organisation which enables them to react quickly to changing customer wants. But with the increasing speed of changes in technology and the focus of being more evironmentally friendly the entrepreneurs would be most successful in adopting the following philosophy.
The societal concept balances company profits, consumer wants and societal interests by determining the needs of target markets and delivering superior value in a fashion that improves or maintains consumer and societys’ wellbeing , therefore obtaining and promoting long run welfare of the consumer,company and society.( Kotler et al 1998),(Duan et al 2000,1:2-1:4),(Stanton et al 1991,p14-16).
Strategic planning are long term plans that are set by senoir management, are organisation wide and they establish the comany’s overall objectives and positions the organisation in terms of its environment ( Robbins et al p.250 ).Brown defines it as the process of developing and maintaining a strategic fit between the organisation’s goals, capabilities and its changing market opportunities (Brown p.35).The new company should be engaging and have an awareness of strategic planning as it gives direction, co-ordinates the organisation, reduces uncertainty by trying to anticipate change and sets up objectives that can be used in assessing and controlling the company ( Robbins et al.p247 ).
There are 4 steps strategic planning;
1. define the company mission which then acts as a statement of the organisation’s purpose, which is as specific ans realistic as possible , fit the environment an dbe based on the organisation’s core competancies
2. mission then turned into specific objectives and goals
3. design a portfolio in which the products that make up the company and best fit its strengths and weaknesses
4.planning, marketing and other functional strategies. (Kotler et al.p.37)
The role of marketing is therefore to set goals and strategies for the marketing effort within the overall strategic planing framework to ensure consistency and allignment of interests to achieve overall organisational objectives. There is alot of overlap between company planning and marketing planning and strategy as marketing looks at the consumers wants and the company’s ability to satisfy these and these elements guide company mission, therefore the term strategic marketing planning has developed due to the sometimes indistinguishable nature of company and marketing planning ( Kotler et al p.51).This is the role that the marketing effort should play in the entrepreneurs’new company.
The strategic marketing planning process is comprised of 4 steps;
This is where market goals are set and are operational, as specific as possible, fit the targeted market and company mission.
A market strategy is then selected which is made up of a general competitve strategy ( upper tier strategy ) and four specific sets of strategy related to each of the marketing mix variables and the importance of these variables ( lower tier strategy).
Within the general competive strategy there are three to choose from;
a.product differentiation- where a market segment is targeted and the company’s approach is to make consumers aware that the product is better than the competitiors
b.overall cost leadership- in which costs are kept lower than the competitors in short and long term. The market isn’t segmented due to associated costs
c. market focus- a segment is targeted and their preferences are established to make products based on these needs. (Duan et al.p.2:4-2:6
Within the lower tier strategies the planning is made up of four elements;
a.Product- the goods that the company has to offer and the role of marketing is directed towards selecting a target market for this particular type of swimwear, aid in product design and testing of it, establishing long run demand, how the product will enter the market and management of the product during its lifecycle
b. Price is the amount of money the customer will pay and looks at minimisation of costs of producing the product and market differentiation of the product
c. Promotional strategies are directed towards how tocommunicate to the consumers the advantages of the product as opposed to the competition
d. Placing strategies are concerned with intensity of market coverage, selection and screening of marketing intermediaries and how to distribute the final product. (Duan et al, p2:7-2:8),( Kotler et al p57-58)
Lower tier strategies bleed into upper tier strategies as in the FIT-U concept the choice of selecting a product differentiation strategy influences product strategies like product design, development and brand loyalty establishment and distribution networks.
2. Setting marketing goals
Goals are set that are operational and consistent with organisational objectives
3. Selection of market strategy
4. Marketing plan implementation and feedback
This is where a marketing action plan is devised explaining what will be done, who does it, when and for how long.The success of implementation depends greatly upon how practical the strategy is for the environment ( ie the strategy-environment fit).As environmental conditions change the strategies will be reassessed as to their ability to retain competetive advantage in changing markets .
(Duan et al/p.2:9-2:11)
The marketing management process is analysis, planning, implementation and control of programs designed to create, build and maintain beneficial exchanges with target buyers for the purpose of achieving organisational ojectives ( Kotler et al.p.13 ).
The application of the correct process can help the new company in many ways and contribute to success by putting into action the marketing mix that will best achieve its objectives in the target market it chooses to serve. A marketing plan can serve to aid this end by systematically assessing the current situation, identify opportunities, threats, strengths,weaknesses and issues facing the product, define the financial and marketing goals, present the broad marketing approach and specific marketing progrsms that is to be implemented to achieve the company’s objectives, forecast the outcomes in financial terms and finally how the plans are to be monitored. ( Kotler et al p.72-89)
The strengths of the FIT-U concept are that it offers personalised style, fit and colour, and therefore a unique design for each customer as it is a personalised design.
The company and the concept are customer centric therefore placing them in an ideal situation to respond to changing environmental conditions , particularly changes assocaited with customer wants and the abolishment of the tariff on imported swimwear products
The actual maunfacturing of the product is cost efficient as not alot of money is tied up in stock, particularly so with the style of inventory of “just in time”.Additionally with this is the size of the operation, initially it can be quite a small premise, therefore minimising on costs here.
The size of the company is a strength as it can adopt an organic design to facilliatate responding to customer wants and changing environmental conditions.
The weaknesses of the concept is that being a new enterprise on the market, there isn’t any associated value that the leading brands have already established and question therefore of the perceived value.
Due to the type of maunfacturing there would be lost sales as there’s no potential for impulse buying, which the competitors have a hold on as their product is mass produced and waiting for such buying habits.
The speed of delivering the product would have to be prompt which maybe hazardous due to the just in time management of the inventory, if a certain fabric wasn’t available or a delayed in delivery could seriously affect the consumer’s perceived value and satisfaction of the product.
Finally the way the orders are manufactured initially is cost effective and the designs are aided by CAD software, yet as the demand grows, running up orders on a machine by one owner isn’t going to be effective or efficient and could impact upon the quality of the finished product.