Proposal of a marketing strategy



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8.2 Targeting


In this chapter we will use theoretical part as an offer on strategies in general we could use in any company. We assume that no strategy is applicable everywhere, in any company, and will therefore highly probably not mention all strategies listed and described above. We would like to suggest new goals and overall marketing strategy direction in this chapter. Going out of segmentation which has been done above we will be able to outline the most convenient approach to areas described in SWOT analysis as the most important. One of the main goals is to overcome or at lease minimize the above mentioned weaknesses and use the strengths as much as possible. In order to be proactive company should respond to the threats and take advantage of some new opportunities.
As mentioned previously, company´s chief goal is to earn profit high enough to ensure not only basic functioning, but also further development and improvement of company´s key functions. We would therefore see the main and long-term target as higher profitability accompanied by partial targets as costs saving, increase in sales and elimination of opportunity loss.
One thing should also be mentioned. In today´s business environment, no more only high profit for any price counts. Customers and mainly those in B2B sector slowly start discerning ways their suppliers approach them. It is therefore necessary to mention also the most important attitude of any company that wants to succeed and it is win-win strategy saying “we will misuse neither your information nor advantage you provide to us and will coordinate our behavior so that we both achieve the positive goals we wanted to and so that after together cooperation both of us are better off than before”.

8.2.1 Strategy According to Product Lifecycle


This chapter will suggest strategy based on information of Product Lifecycle (PLC). In order to get insight into the stage of PLC we took the confrontation of operational cost and operational income for the last three years. As it can be observed in FIG. 14 both rising operational cost and falling income demonstrate the stage of late maturity.

FIG. 14 Operational Cost and Income





Resource: internal documentation
As a company Styl 2000 is rather in the position after its maturity heading towards decline, however the company does not want to clear out the market field and will therefore apply not only decline strategy according to Kotler, i.e. to decrease cost and harvest brand, but also new introduction strategy – to create and support customer´s awarness of the product, make customers wish to try the product. We can connect the product lifecycle with company since we decided to omit other items of product porfolio except for pensile facades. Both strategies do only generally suggest how to beat negative characteristics of two product life stages. In further comments decrease of cost will be reached thanks to more strategies and harvesting of brand will be enabled through increased awarness of current and potential customers through web pages and more marketing and sales activities, e.g. addressing more customers. This way the imperative of new introduction strategy to make customers wish to try product will be fulfilled.

8.2.2 Differentiation strategies


In the four-position model according to Kotler would Styl 2000 belong among the Market Nichers, companies operating in a big market with special features as in our case pensile facades are. We would suggest keeping on the differentiation from other competitors through specialisation. Also according to Hamel and Prahalad the best way for this company is to conform company´s resources with market possibilities and to rely on differentiation. Styl 2000 should find and occupy a gap through offering better services and concentrating on high value added products in business portfolio. Bowman would that is to say in terms of his Strategic Clock assert that is the perceived added value high and price high as well, the company must choose focused differentiation in order to survive.
We have decided to employ differentiation strategy also because of results of competitors´ portfolio analysis. Most of the serious competitors for company do not exactly define pensile facades as the main activity of theirs. In comparison to them we will therefore point this activity of Styl 2000 as the main one. In contrary to those who claim pensile facades to be their main delivery (FASTEC and TRIANGEL) we will employ differentiation in terms of services.


  • Brands differentiation (line filling)

Since there are five main suppliers company is highly dependent on them and on their policy. Unfortunately there are always two and two suppliers delivering almost the same goods differing only in name. Company should start using more and different materials. That is to say that the same ratio as mentioned later in TAB. 46 is to be found also in the storage of the company and since we plan to introduce cut in product line (see chapt. 8.3 Positioning) there will be space for introducing chosen materials and levering them on the same level as ceramics are. We do not either assume higher demands in administrative since the newly acquired pricelists and warehouse lists will firstly replace the cancelled ceramics etc. lists and secondly there already will be CRM system implemented to ensure cut in work with any data and information.
The only cost expected to arise through this strategy are suppliers look-up and verify-cost. We will probably need at least five new suppliers the process might take one week and need two responsible people – technical support assistant and business director. Whole process of acquiring new supplier (out of nine who should be dealt with we expect to reach five real suppliers of new materials) is described in below.


TAB. 41 New Supplier Acquiring Process Cost

Tasks in manhours

Tech.support assistant

Business director

Extra cost

 

Inform. on materials

80

0

0 CZK

 

Setting-up criteria

16

16

0 CZK

 

Look-up for suppliers

24

0

0 CZK

 

Addressing suppliers

0

0,5

9,60 CZK

Phone call

No. of addressed suppliers

20

192 CZK

 

Evaluation of criteria

4

8

0 CZK

 

Business meeting

4

4

400 CZK

Travel costs

No. of dealt suppliers

9

 

 

Final decision

0

8

0 CZK

 

Total manhrs

160

78

 

 

Pers. cost (in CZK)

197,8

329,3

 

 

Total (in CZK)

31648

25685

61125

 

Resource: own calculations


  • Increased quality of services

Services are the only field where company can act independently from suppliers and also represent value added activities, therefore most attractive for customers. Services come only when asked for, there is no proactivity and self-improving approach. Introducing CRM system could help in addressing needs at specific customers and keeping records would keep the level of consistency in an acceptable high.

TAB. 42 Differentiation through Services



Characteristics of services

Current value

Expected value

Can be achieved through

Cost

Order process

  1. time

1 to 10 weeks

1 to 5 weeks

Sharing of information, use of templates

CRM introduction

Order process

  1. reaction time

2 to 3 days

1 to 2 days

Use of new channels – web pages

Web pages driver cost

Order process

  1. no. of visits

4 to 5 (7)

2 to 4

Better knowing customer from the very beginning

CRM introduction

Training


No.of complaints

5-10

1-5

Avoid misunderstandings through sharing information, use more reliable channels, use mistakes eliminating processes

CRM introduction

New channels



Pro-activity (in suggested solutions)

1 to 3

3 to 5

Information from database to address needs

CRM introduction

Better access to materials (use of showroom)

2 to 3 customers

per month



8 to 12 customers per month

Reorganize showroom, modernize, let customers know

Reorganisation cost

Resource: internal documentation, own calculations
As we can see from TAB. 42 ordering process takes a lot of time also due to required proposal of facade layout. In this case we count only how long the process takes on company´s side with substracted time of awaiting necessary information from customer. Through CRM introduction we could not only achieve shorter order process, lower number of visits at the customer or number of complaints, but also increase fame of company for its proactivity and flexibility.
Based on survey at current customers we can introduce in this chapter also list of characteristics of services customers suppose to be key. The percentage of responses to individual items gives factor weighting as in TAB. 43, while the second percentage expresses feelings of customers about conditions existing in services at Styl 2000.

TAB. 43 Key factors in Company´s Services






Importance (factor weighting)

Appearance at Styl 2000

Zero slippage time in execution

100%

65%

Fair behaviour

95%

90%

Receiving information on progress of order process, or possible delays

92%

25%

A can-do attitude

84%

82%

Short time of both order process and execution

84%

52%

Communication possible through more channels

82%

45%

Opportunity to let draw facade plan

82%

100%

Quick response to enquiry

79%

65%

Regular information from supplier about news in technology, introduction of new materials and price

65%

12%

Delivery of additional materials

62%

85%

Communication through web forms

58%

12%

Low or no price of additional services

52%

25%

Possibility to use showroom (create own facade on place, touch and try materials and constructions)

48%

25%

Information on new realisations

48%

65%

Electronical Data Interchange

18%

0%

Certification of services

12%

0%

Resource: customer survey (2007) – internal materials
Some of the results of a survey displayed in TAB. 43 were surprising as e.g. low level of interest on Electronical Data Interchange or certification of services. In the B2B sector there are clearly no delay in execution as well as fair approach very important, surprisingly high is also necessity of communication through more channels. Opportunity to let additional materials for construction deliver achieve rather lower score since the company deals mainly with big building companies that are able to obtain all components for lower price from different sources. Results of Styl 2000 were not really bad since it is know for a good knowledge of facades and therefore the fame for feasibility is high as well as high added value service of drawing facade plans. In improving services we should therefore concentrate on avoiding delays in execution and on providing customers with information be it about the process of ordering or any other inquiries. Customers would also expect shorter time of procedures which can be reached through implementation of CRM system.

8.2.3 CRM


A strategy generally based on CRM should increase the expected level of outcomes. Even though our suggested marketing strategy aims to support business sales in such a measure so that profit rises and the company keeps its position and protects its market share, having implemented a CRM software is also a good starting point for strategy of expansion in market share.
For the purpose of suggesting marketing strategy we will use solely two of four above mentioned dimensions of CRM – key customer focus and knowledge management. A company can however benefit also from the remaining two dimensions. CRM organisation can help improve internal business processe and technology-based CRM will be useful in accountancy or inventory planning. Both key customer focus and knowledge management comply with the objective of keeping a group of key customers who are supposed to bring higher profits when offered better service. They are also closely connected with the idea of differentiation and specialisation strategy.
In the table below we have summarized the benefits after implementation of CRM software. The main goals of CRM strategy are to support all other suggested strategies. The cost and efficiency matters are clearly stated further on (e.g. TAB. 49 or TAB. 50). As for other three quadrats we found out in the survey (TAB. 43) that the satisfaction of a customer is based mainly in quick delivery of requested information. CRM is and will be storage of data from which important information can be extracted, be it manually or per computer on request. CRM also enables any employee provide the same information (eliminating misunderstanding leading to increased cost on both sides, complaints etc.) to the customers in a quicker time that the usual looking in ordinary files is, with less misunderstandings. These benefits are quantifiable (shorter time, more provided information), but not financial. We also have financial benefits which are not quantifiable, such as addressing customers directly or better use of time for various marketing processes). The last square of this table are Strategic and Intangible benefits with no possibility of being quantified or assessed financially. Due to better information spread (more information will be distributed to more customers in shorter time) the awarness of company will increase and the opportunity loss will be eliminated. Thanks to information streaming into the company and being stored in CRM database, early signs showing that the customer tends to leave soon (less contacts, low response rate, fewer enquiries etc.) will be caught and contra provisions taken so that the company does not los its customer. This will lead to higher customer retention.

TAB. 44 CRM Benefits in Marketing of Styl 2000




Yes

Quantifiable

No

No Financial Yes

Cost Reduction and Efficiency Savings

  • More cost-effective use of channels (less use of more expensive channels and switch to cheaper channels)

  • Improved use of resources

  1. lower marketing cost - thanks to

exact targeting – less wasted promotion materials and activities,

  1. less manhours spent on accomplishing processes)

  • Lower number of repeated enquiries (savings in time needed for creation of already existing documents like plans, orders, offers, etc.)

Service Improvement/Added Value

  • Better use of time in marketing processes

  • Higher effectivity of marketing (thanks to exact targeting –addressing customers needs directly)

Service Improvement/Added Value

  • Increase in customers satisfaction (because of time savings and elimination of misunderstandings and dissonance)

  • Quick customer response (database available to any customer contact point at any time)

Strategic and Intangible Benefits

  • Improved spread of information among customers and employees

  • Increased awarness on company´s product portfolio

  • Higher customer retention (thanks to early recognizing of signs for leaving)

Resource: based on internal documentation
To introduce CRM software does not nowadays represent any problem, neither for bigger companies who have bigger budget and can afford solution of well-known companies, e.g. SAP or Oracle, nor for a small or middle one since there are many suppliers offering both low-cost and installment provision.

TAB. 45 CRM Software Provision Cost



 

Nonrecurring expense (in CZK)

Monthly payments (in CZK)

Total (in CZK)

Supplier

Analysis

Installation

Training

Data migration

Application administration

Hotline

Web space

Nonrec.

Monthly

ACMARK

10450

16300

9500

12000

500

500

500

48250

1500

EXACT SOFTWARE

120000

120000

RKA SW Systems

29500

100700

6320

130200

6320

KTK systém

 

22000

88400

 

 

 

110400

RAYNET

 

20700

6900

 

 

 

 

27600

Average






















65690

3910

Resource: internal documentation – offers from above mentioned companies
In TAB. 45 there is a choice of five suppliers with completely different approach. Before a company decides to implement a CRM software it should count well and think what modules or which services it needs. For the purpose of this work we will count the average cost of the system as stated in the last line. Economic consideration if this supporting strategy can be applied and in how long it pays off will be done in chapt. 9 Evaluation.
Below we have introduced also the project of CRM strategy implementation from its very beginning to the completely functioning end. As stated below, the introductory phase contains definition of the problem and financial criteria as well as the process of addressing suppliers and receiving offers from them to the final decision. This phases takes about 46,5 days. In Analysis and Installation the chosen supplier will prove current situation in company´s IT environment and install CRM. This should not take longer than 5 days. The implementation on itself will take approx 33 days due to expected training of employees and final checks. In the final phase we will expect check of the results and company´s feedback on the CRM system functions. Altogether this should not take longer than 4 months from the first idea of implementing CRM software.

FIG. 15 Gannt´s Chart for CRM Strategy



Resource: offers of CRM software suppliers
In this chapter we defined the main goal of a CRM software based strategy and can summarize that the most support will be provided to improvement of services as for those with financial impact on marketing processes but also those which cannot be directly expressed economically, only qualitatively. In the Gannt Chart we showed that the whole strategy would easily fit into our plan for three years. Through implementation of this strategy we will meet the hypothesis on that the CRM implementation will support other suggested marketing strategies by increase in satisfaction of customers.


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