Strategic Marketing Management

 

 

 

Session 1 - Assessing Competitiveness and Core Competences

1.

There is a paradigm shift from traditional means of reading to e-reading. This is based on the fact that majority of the Y generation in colleges have embarked on electronic Media, which is a threat to typography. Therefore, the way people enrich their knowledge is being revolutionalized which threatens the existence of paper-back version of books (Dougherty 2010). Everywhere people are using laptops, Kindle, iPads, and Smartphone among other technology devices to access information. Wexelbaum and Miltenoff, (2012) observes that “all academic libraries are investing in e-books, databases, and online journals” (p. 11), which means that e-reading is an emerging trend. According to Dougherty (2010), 2009 research show that the number of e-readers has increased, and is majorly attributed to fall in device prices, media buzz, and increased content availability. He concluded by stating that e-reading shall become mainstream in the near future as the level of technology increases. As the devices become more widespread, libraries shall have to adapt innovative ideas to circulate materials to potential readers. 

2.

First mover advantage is the combined advantages realized by an organization that makes the initial move into a new market by introducing new products or services (Lieberman & Montgomery 1988). A company like Amazon has been enjoying its first move advantage upon the introduction of Kindle in the market. According to Lieberman and Montgomery (1988), the major way that first movers use to gain advantage is through implementation and adoption of sustainable leadership in innovative technology. In this regard, Amazon ought to adopt a sustainable leadership in technology for Kindle to maintain its first mover advantage. For example, Amazon should focus more on the interface and hardware design for it to maintain its first mover advantage. Currently, though considered the only competitor of the Apple iPad, Amazon has should improve its innovative and creative strategy so that it could be known for its competitions in the market. The other way that can be used is through research and development supported by patents (Lieberman & Montgomery 1988). For example, since Amazon was the first to introduce ‘Kindle’, it can develop a model of anticipatory patenting, to prevent rivals from entering the patent-race (Gilbert & Newbery 1982; Harris & Vickers 1985).

3.  

In the article: “Amazon Kindle Fire HD 8.9 is Good, But No iPad Killer [REVIEW]”, Lance Ulanoff observes that Amazon Kindle can effectively compete with Apple iPad through technology and innovation (Ulanoff 2012). He advises Amazon to invest more on its interface and hardware to create a competitive advantage over Apple iPad. Since Amazon Kindle has already entered the market and received high consumer satisfaction, it has to maintain its lower prices as part of its competitive strategy. According to Ulanoff (2012), Amazon Kindle provides value for money. With regard to branding, Amazon is a strong brand. However, according to Kingsley-Hughes (2013), Amazon Kindle can gain competitive advantage by using abroad appeal supported by a price tag to maintain loyal customers and attract new customers to purchase its brand.

 

Session 2 - Assessing the Competitiveness of the firm II

1.

The acquisition of Cadbury by Kraft was necessary and of significant important. Other than acquiring a closer competitor, “the acquisition of Cadbury by Kraft will generate a joint portfolio of more than 40 confectionary brands, each with annual sales in excess of $100 million, essentially creating the world's biggest confectionary company” (Beaudin 2010). The implication made is that the acquisition of Cadbury shall not only increase its brand portfolios but also increase its sales, and make Kraft the biggest confectionary company in the world. Pooling of resources shall increase the competitive advantage of Kraft as well as its market share, hence high profitability. Moreover, it is through the acquisition that Kraft will break even into emerging markets. Therefore, the move was called for as Cadbury is expected to increase its revenue and global presence (Osborne, Songonuga & Chibwana 2010).

A strategy is the scope and direction achieved in the long term as a result of resources and competencies configuration geared towards realizing stakeholder expectations or set goals (Johnson, Scholes, & Whittington 2008; Mintzberg, & Quinn 2003; David, 2007; Mintzberg, Ahlstrand & Lampel 2005).In reference to the acquisition, it is imperative to note that it was a good strategic move for Kraft to acquire Cadbury. First, there was a need by Kraft to invest in future growth in developing and emerging markets, and they only appropriate strategy was through the acquisition of Cadbury (Downward 2013). Since the strategy for Kraft was to shift its operation into a high growth product market and move its brand to new geographic markets with growth, the “fastest and easiest way to achieve our goals (but maybe not the cheapest), was to acquire an already established company and their portfolio of brands” (Downward 2013). This implies, the strategy was the best as it slowed Kraft to achieve its long term goals through the configuration of its resources and competencies.
2.

The external environment had great influence on the need by Kraft to acquire Cadbury. The factors from the external environment, which had effect on the purchase, were social-cultural factors, economic factors, and political factors.

Socio-cultural factors: Cadbury presence in emerging markets such as India compelled Kraft to buy it. Indian market is characterized by increased demographics such as 92 percent of Indian population as major target, social mobility, and increase in per capita income. In regard to environmental factors, Cadbury has a well established mitigation plan to reduce carbon emission by 50% by 2020 (House of Commons 2010).

Economic and Political factors: The strategy for Kraft was to enter developing and emerging markets, with high geographic growth. Since Cadbury was present in South Africa and India, but Kraft’s presence in South Africa was small while it had no presence in Indian market, the purchase of Cadbury was timely.  Kraft was exposed to 92% of India’s population through the purchase of Cadbury (Downward 2013). As such, Kraft would enjoy high propensity of people to spend, disposable income, high consumption patterns of 92% of India’s population. Moreover, foreign currency rates on cash flows would be reduced via acquisition of Cadbury. Given that Cadbury’s 44 percent of its revenue came from emerging markets, this prompted its purchase by Kraft (Downward 2013).

 

 

Session 3 - Analzying the Market Environment

1.     

Nokia is no longer the market leader in the phone market, since it has sold its Smartphone portfolio to Microsoft, a move that was not expected. The lessons that other market leaders can draw for Nokia’s experience in dealing with change in the phone market is the ability to embrace technology and innovation to expand operations. As noted by Aaker et al. (2009), companies should always align its operations with changing customer priorities and target new emerging segments in the market such as service provision to customers. Moreover, companies should be willing to meet unmet needs, in addition to embracing changes in the market external environment.

2.     

The future strategy for Nokia is to ensure that Nokia’s Solutions and Networks (NSN) acquires and grows into new dimensions. According to the Strategy Analytics, the strategy is to ensure growth in Radio Access Networks (RAN), Software Defined Networking (SDN), and Cloud Based Voice and IMS services (Bibey 2013). With regard to acquisition, the management noted that the company was planning to acquire Emerging Self Organizing Network (SON) vendors, or consider the possibility of expanding its Software Defined Networking (SDN), (Bibey 2013). Therefore, Nokia future strategy is to expand its services provision in the industry after it sold majority of the company to Microsoft. In other words, Nokia shall diversify its operations in new and existing markets through the expansions of its existing services (Aaker, &McLougin 2010).

 

3.              

The major capabilities for a company are financial, human and technological capabilities (Aaker &McLougin 2010). Nokia has the financial capabilities to implement this strategy in the future. For example, Nokia agreed to sell its Smartphone segment to Microsoft for $ 7.2 billion, which can be used for acquisition of a new SDN of expansion of existing SDN (Surowiecki 2013).

Nokia has technological capabilities because it has invested heavily in new technology, research and development. Moreover, the mobile and telecommunication company has a passion for innovation and creativity, which gives it a cutting edge and a competitive advantage in the market (Aaker, &McLougin 2010). The firm resources are adequate, valuable and unique, which puts Nokia I a strong position to developed new services and competitive advantage (Hoskisson et al. 2011).

Human resources capabilities have over the years propelled the company into the market leader. Therefore, Nokia has high human resources capabilities implemented through the ‘Nokia Way’ strategy. Hoskisson et al. (2011) observe that the strategy emphasis on “continuous learning and a flat, networked organization that allow rapid decision making. New ideas are encouraged and embraced. About one-third of Nokia’s workforce is devoted to research and development” (p. 96). Therefore, other than research and development, a third of its employees are part of its research and development, which makes it much easier to adopt the new strategy.

Session 4 - Competitor Analysis

1.     

Billabong is a cool brand because of its strong brand in the surfwear industry. Other than being the dominant brand in Australia, Billabong has beaten other global brands such as Lion Nathan and Coca-Cola Amital to be ranked as the most valuable brands (Preston, 2008). Although facing challenges, Brand Billabong has over the decades maintained its coolness and remained as the cutting edge in the market. Preston (2013) states “with a brand worth just over $1.6 billion, 41% of the company’s value, Billabong works its brand harder than any other company in the nation” (p.1) to remain a cool brand. The implication made is that it is through brand equity that Billabong has remained competitive in the market. Obviously, a brand can continue to grow while maintaining this aspect of its brand equity since in leads to an increase in the financial value of the company. Besides, it increases brand loyalty and brand recognition.

2.     

There are multiple ways in which traditional sports brands can compete effectively with strong brands such as Billabong. One of the methods is through the use of a traditional brand extension strategy, which usually benefits from the existing brand equity. This means that traditional sport brands can use their already well-known brand while launching needs products to create a competitive advantage over Billabong (Giannoulakis & Apostolopoulou, (2011). They also adopt a multi-brand strategy which is used to strengthen core target markets. The use of aggressive consumer segmentation practices can allow traditional sports brands expand and reach the mainstream, making them competitive.

 

3.     

The market faced by Billabong is very competitive as the surf brand is no longer the market leader. According to Jackson (2013), market entry by other players has increased the level of the competition. The surf brand has not implemented a strategy that aligns with the rapid change in consumer demands supported by fashion-forward and more sophisticated consumers (Jackson 2013). Thus, change in consumer demand and sophistication has made the market faced by Billabong more competitive than before.

4.     

Billabong could tweak its marketing strategy to improve sales in nontraditional markets through the use of social media marketing in varied ways. Social media marketing is proposed because social media “enables companies to talk to their customers, and second, it enables customers to talk to one another” (Mangold & Faulds 2009, p. 358). The implication made is that through the use of social media marketing, the company shall communicate directly with consumers in the non-traditional markets, thus enabling brand promotion. Besides, this shall provide a platform that allows consumers to engage, discuss and share the products where perspectives, attitudes, experiences, and opinions about products (Hennig-Thurau et al.  2010). As noted by Mangold and Faulds (2009), such strategy is useful as it can influence consumer ‘s behaviour based on the acquisition of information all the way to post-purchase behaviour like consumer dissatisfaction. As advised by Goodman (2011), effective use if social media marketing as a strategy enables a company gain a better understanding of its consumers resulting to development of products that meet their needs. Therefore, the strategy shall enable Billabong understand its consumers in non-traditional markets, resulting to improved sales.

Session 5 - Organising, Implementing and Controlling

 

1)     

Associated British Foods operates a diverse group of food, retail, and ingredients business in more than 100 countries (ABF 2013). The ABF’s strategic approach is based on the operations of multiple SBUs working in different industries. The major advantage of this kind of strategic approach is diversification of risks as the business risks are spread over in different market segments (Mintzberg et al. 2005). This is achieved through investment in different industries, which enhances such an organization to effectively use its value-added capabilities to provide business operations. The strategic approach as noted by ABF 2013 annual report has allowed ABF “achieve good revenue and profit growth; mature, cash-generative operations; and smaller enterprises that afford exciting growth potential” (ABF 2013, p. 3). This means that through the strategic approach, ABF generates high revenues and profits, as well as growth in its business operations. The other advantages are such as assisting business divisions grow in emerging markets, and added value advantage in terms of human and finance resources (Ashridge 2011). Marketing costs are reduced through cost sharing benefit (Moorman & Rust1999). Lastly, it allows effective management is decision making is centralised and autonomous.

The major drawback of such approach is that decisions take long to be implemented as they all come from a centralised position. Since the group operates as a single entity, any financial and economic shocks in one portfolio affect the group as a whole.

2)     

The use of SBUs rather than a corporate brand to promote brands is more effective and advantageous. Through promotion of brands of different SBUs, ABF creates a competitive advantage and synergy (Daft 2008). Moreover, a corporate brand promotes the whole group as a single entity, without providing specific mission or uniqueness, which makes it hard to capture the target market. On the other hand, SBUs have unique business mission, markets, competitors, and product line, which makes it easier to promote brands of SBUs (Daft 2008). Therefore, the approach by ABF is appropriate as it targets the different markets for each SBU.

It would not be easier to name all the products of ABF because it is much easier to categories the products under individual brands. Aaker (1988) observes that it is much easier to operate and classify business into product categories to enhance autonomy and independence.

3)     

From both a broad strategic and a marketing view point the presence of Primark creates a competitive advantage to the group, in addition to being cost effective. For example, it provides value for money without any advertising costs as it relies on word of mouth and passes cost saving to customers (ABF 2013). As an independent portfolio, Primark capitalizes on new fast-fashion trend and operates through low pricing strategy. According to Kingham (2014), Primark is profitable as it generates “around 30% of group revenues and 40% of operating profits” (p.1). Besides, it promotes success of the other businesses through reallocation of resources to less performing portfolios. Major marketing drawback is its dependence on word of mouth, whilst from a strategic perspective; it sustains the other portfolios which have a slower growth rate.

 

 

 

 

 

 

References List

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