M.Sc in Marketing Management MARKETS, CUSTOMERS & MARKETING
Marketing Plan with product diversification strategy SPYROS LANGKOS ID: 100285557 Tutor: Mrs. Ioanna Tsoka Athens, January 2013 Academic Year 2012 – 2013
MEDIA STROM: « We stay awake…so that you can sleep better »
This study concentrates on the marketing plan of the Greek company Media Strom S.A (Athenian Mattresses Industry) and the development of a new product in a new market:
in the case of product
diversification through innovation.
Marketing Plan with diversification strategy for Media Strom S.A
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1. TABLE OF CONTENTS
1.
Contents ................................................................................... 3
2.
Acknowledgements ..................................................................... 4
3.
Executive Summary .................................................................... 5
4.
Introduction ............................................................................... 6
5.
Situation Analysis ....................................................................... 7
6.
Objectives ............................................................................... 15
7.
Strategy .................................................................................. 16
8.
Tactics .................................................................................... 20
9. Action plan an Controls .............................................................. 22 10. Personal Reflection ................................................................... 26 11. Bibliography ............................................................................ 27 12. Appendices ............................................................................. 29
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2. ACKNOWLEDGEMENTS
The development and the implementation of this plan are made possible by the appreciation of my family and friends and also to the help of Andrew, the library bookkeeper. I would like to thank, our module teacher Mrs. Ioanna Tsoka for her guidance so that we can bring closure to our assignment work.
Still, I would like to thank Mrs. Kaliopi Tsamalou , Head of Corporate Marketing and Communication at Media Strom S.A, for her time and the interesting conversation that we had, over company related issues. Without the help of these people, my research could not have taken place.
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3. EXECUTIVE SUMMARY
This report reviews and evaluates the marketing plan of a well known and established business, Media Strom S.A and recommends an alternative marketing strategy for the needs of product diversification strategy. We examine this proposition alongside with the ongoing marketing plan of the company, as a one to one consultation process.
The paper attempts an overall analysis of the current market, the competition and the influences of the external environment. Furthermore, presents the companyâ€&#x;s capabilities and internal processes, highlighting the strengths and opportunities of the organization.
The solution proposed by this paper moves to the field of product innovation (product case: sleeping pillow enhanced with internal speakers with connector for smartphones), so that it positioned as an inspirational product with distinctive quality and technological function. It mainly focus on introducing a modern relaxing sleep session to the user, which provides affordable bed and sleep-related products to youngmiddle age groups of people with concerns over technology and comfort.
The stated objective here, concerning price analysis, is that the above product category should reach 1/10 of the overall sales of the company, with regional targeting of the western societies, which are more technologically advanced and innovation friendly.
Supporting the above mention, the delivered profit margins are expected to be small with a rising ongoing trend, in the first semester of the launching process. But as the assembly product line grows in numbers and manufacturing experience, the business profits will accumulate as it becomes a usual business service, ensuring the smoothing between marketing and factory operations.
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4. INTRODUCTION
Media Strom was established in 1967 from the brothers John and Nick Niarchos, aiming to offer mattresses that improve the quality of sleep and set new standards on the market. It is thought to be the No.1 company in the mattress industry, having a presence in the field for over 4 decades. It is a 100% Greek-owned company, having offered great sleep up to 3 generations so far. They have eco-friendly facilities without gas and waste emissions due to their strict recycling and packaging program and collaboration with the Hellenic Recovery Recycling Corporation. The history of the firm is filled with innovations that changed the way that most Greek people slept. Above 2,5 million Greek citizens today wake up in a bed or a mattress of Media Strom. The New Sophisticated Factory of Media Strom builted in 2010, is the jewel of the world quilting, confirming entrepreneurship and healthy development. H Media Strom mattresses is a market leader in over 40 years, offering unparalleled quality sleep to customers. Consumers trust it for reliability, unsurpassed quality and hygiene products. Covering a successful career both in Greece and abroad, has managed to make its name synonymous with good sleep. The growth rate of the company's sales are impressive, and the period 2000-2010, which increased to over 329%. In 2006, Media Strom won a major international award and ranked the 266th place among Europe's 500 fastest growing companies, and in recent years has a prominent place in the list of Statbank for companies ' Diamonds of Greek Commerce and Industry â€&#x;. New Factory investment cost was over 25,000,000 euros, and is a model for the European and international standards. This is the largest investment to date, in the quilting industry and one of the largest in Greece. The new company's factory, already houses the most modern and fully automated production lines and additional layers of sleep products and a well-equipped R & D laboratory for testing the strength of the orthopediatric & anatomic layers.
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5. SITUATION ANALYSIS Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others. The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented or supplied to others (Kotler et al, 2012)
1976
1977
1st orthopedic mattress in Greece
1st retail mattress store
Brief Company History 1980 2004 2010 Import of American type beds
Design of Optimum Innovative Greek bed mattress
Built of new Factory facilities, one of the best in EU
2011 Franchise expansion, Globalization
Vision: To constantly improve the quality of Sleep and the quality of Life! "New" is one of the strongest words in marketing. "New" invokes the belief that something is moving forward, that it is different, modern or improved. People are attracted to new products like a magnet. Introducing new products on a constant basis is the best way to get attention and is invaluable publicity for a business. "New" positions a company as being dynamic and forward looking.
5.2 Business environment Fixed business expectations, milder drop production. The confidence indicator in industry remains at the same level in November to 80.4 points (from 81 October), however, higher compared to the respective previous price (72.6 points). On key index variables, the changes are zero or marginal: the estimated reserves remain at the same level, while a marginal decrease in estimates for current orders and demand is offset by the corresponding marginal increase in production forecasts for the next quarter. Specifically, the forecasts for the short-term evolution of production, remain slightly negative, while strongly negative assessments of operations for the current level of orders and demand weakened slightly. Estimates of the level of stocks, although not altered, suggesting slightly swollen inventories for the season. Specifically: a) For orders and demand, the relative negative indicator records fall short and shaped to -46 points (from -44), with half the companies in the sector to report again in the last quarter reduced orders for the season and a 3% ( 5%) to indicate the opposite.
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b) In the provision for the development of production in the next 3-4 months, the index formed again in negative territory, albeit marginally, at -2 points. The 23-24% of businesses in the last two months down fall production and nearly 1/5 expects rise. c) Estimates of stocks of finished products, not change, the relevant balance does not vary by six points. So, again an 18% of firms cited high time for stocks and a 14% believes to be a low for the season. d) Indicators linked to the export activity of companies show mixed trends: estimates for exports in the last quarter varied positively with the relative balance position to win the October 9 points and 1/4 of the respective companies (from 1 / 5) declare that exports have increased over the previous period. On the other hand, orders and foreign demand is not satisfactory (from -18 to -27 points in balance), while a slight decline recorded and forecasts for exports in the coming months, even though the index remains firmly positive throughout through-out the year (+12 from 14units). (Business surveys FEIR (DG ECFIN),2012).
Where economies stand in the global Source: Doing Business database.
Pillow purchase market Consumers first purchased pillows without much knowledge or information concerning the product benefits. As product development increased the consumers became better informed about the benefits and began to focus their interest on sleep health issues, bone-spine structure, sleeping disorders, etc. Advertising and promotion also increased due to creation of premium and super-premium product class. A pillow comprises a filler, often made from foam, synthetic plastic fibers, feathers, or down and elastic foam and latex. Traditionally straw was a filler, but this is uncomfortable and rarely used today. Feathers and down are the most expensive and usually the most comfortable; they offer the advantage of softness and their ability to conform to shapes desired by the user, more so than foam or fiber pillows.
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“ There are few other products that you spend as much time with than the pillow. It's right there on your face, and you spend 8 hours a night on it. It's critical to have the right kind of pillow," says Matt Moses, vice president of marketing for the utility bedding division of Pillowtex, a leading pillow manufacturer. Sales for bed pillows are down, according to the Facts: Bedding, an annual survey by the weekly newspaper Home Textiles Today. Sales in 2011 were 737 million, compared with 840 million in 2010, said the product editor for the newspaper, which tracks the textile industry. Bed pillows made up 11 percent of total bedding sales, which topped 6.7 billion in 2010. Sleep patterns, understanding how you sleep is an important first step toward buying the right pillow, according to a pillow expert at the Company Store, a La Crosse, Wis., bedding company. Not surprisingly, consumers will pay more for a higher-quality, more luxurious pillow. But it doesn't mean you have to spend 200 to find a pillow that fits your needs. Prices vary depending on the fill.
Mobile market trends and sleeping in 2013 “Sleep On It” - Mobile App Tracks Sleep Habits GE and MedHelp have partnered to create a mobile application that tracks sleep patterns, aimed at identifying sleep trends and improving sleep quality.
The app comes equipped with a customizable alarm and snooze function. The alarm is integrated with “Going to Bed” and “I‟m Awake” buttons that initiates the tracking feature. This feature allows users to track nightly sleep patterns to determine what factors may affect their sleep and how much sleep they need each night to feel rested and energized. After waking users can select their mood on a gradient scale that aids the tracker in identifying trends in the users sleep. A calendar view displays overall sleep trends, and easy-to-read charts detail sleep cycles and hours slept in the last seven, 30 and 90 days. Additionally, it allows people to record medications, health symptoms and naps to learn what triggers poor sleep cycles.
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“Good quality and sufficient sleep is vital to our health and well-being,” said MedHelp CEO John de Souza. “Lack of sleep has been linked to serious health conditions ranging from diabetes to obesity, yet millions of Americans are not getting enough sleep. Sleep On It was designed to help consumers understand how much they are actually sleeping and how much they need to get to feel their best.” This app is currently free and can be found at Apple.com.(Mashable 2012).
TOWS Market Analysis
Strengths 1. 2. 3. 4. 5. 6.
TOWS
7. 8. Opportunities 1.
2. 3. 4.
1. 2. 3. 4. 5.
Innovation products for technology oriented generation Extended use and life cycle of a product Strong profitable industry industry Exploit new niche markets Threats Economic downturn Demographics Highly competitive market Low income taxpayers Premium cosmetics have maintained their global dominance
Weaknesses
Leader company in the industry Strong brand name International presence In-house R&D department Pricing policy Strong franchise-retail network Strong corporate cultureinternal satisfaction Capital accumulation
SO
1.
2. 3.
No relevant experience on implementing innovation Lack of innovation orientation Lack of synergies an outsourcing services
WO
Customer value strategy Develop innovative sleep peripherals and supplementary Opportunity to become a star company
ST
R&D costs and product launch time Cost of Training employees on innovation culture Disrupted brand image by possibility of product failure
WT
Mark-up premium price strategy Promotions focused on lifetime added value Product life-cycle strategies for extension to new segments
Strong barriers for opening a new market segment High Young customer base
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5.1 Competitor analysis Identification of competitors:
Linea Strom: The main goal is to provide better quality sleep, through specialized and innovative products of high quality that will satisfy all customer needs. Elite Strom: with a strong network of 26 stores, with thousands of satisfied customers and significant international collaborations with TEMPUR and Hastens, the elite storm is one of the most dynamically developing companies. Coco mat: The COCO-MAT was founded in 1989 and today is a recognized leader for natural sleep products, bed linen and furniture for homes and hotels. The constantly expanding our network includes stores in ten countries Ideal: The ideal storm is a Greek company manufacturing high quality products ideal sleep. The company's philosophy of "ideal conditions Sleep".
Terzostrom: The main priority is the care of consumer taking into account individual needs. Having, as a result of the idealization of the product right and achieving good sleep. Quality - Strength - Detail - Natural Materials
IKEA: offers a wide range of well designed and functional products at prices so low that they can get as many people as possible. This is the philosophy IKEA. From design and buying products until their sale in IKEA stores worldwide.
5.3 Internal environment Porter’s five forces analysis
Industry rivalry:
Customers have low switching costs between companies and products Industry companies is grow very fast despite the crisis Exit barriers are high and rivals stay and compete Fixed cost are high resulting huge production and reduction in prices Media Strom is a market leader with the highest market revenues and then there is equal competition of smaller firms.
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Byers - Consumer power:
Consumer purchasing power is very high in the industry. Consumers can choose from a number of different product variations and test-touch-feel-use-combine them, having a real-time experience, and turn back the ones when they are dissatisfied for any reason. Products have long time-period warranties and good after sale services.
buyers chasing too many goods in one time/place Product are not differentiated clearly enough Buyers are price sensitive
Supplier power:
Suppliers are concentrated and well organized A few substitutes available to supplies Their product is most effective or unique Switching cost, from one suppliers to another, is high Not an important customer to Supplier
Retail network
24 Stores in Attica • 7 Stores in Salonika • 1 Store in Veria • 22 Franchising Stores all over Greece
Wholesale network
2.800 Furniture construction companies, furniture selling stores, white linen stores, etc. • Stromatex in Key Accounts & Hypermarkets (Praktiker)
Hotels product line •
1.000 Hotel Units & Cruise Ships
Stores
“wellness “ atmosphere and to stress the importance of Sleep unique shopping experience different from the competition
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Threat of new entrants:
The turbulent economic environment worldwide makes it very unattractive for companies to invest in any industrial sector at the moment.
High capital requirements to start a business and grow it Few economies of scale are in place due to regulation gaps Low switching cost Technology is not hard to acquire and isn‟t protected well Product is not differentiated
Threat of Substitutes:
Small private business owners who offer competitive prices and customized solution. Future consumer trends and scientific research upon sleeping habits, the dropping importance of sleep. Working life more important.
Competition:
IKEA and Cocomat have a high brand name and brand awareness, 39
%
15
%
in
top
of
mind
positioning
(Media
Strom_presentation, 2010). Competition in the industry is very intense, because of the existence
and
of
numerous
famous
players
in
the
market
(Eurobarometer, 2010). Candia Strom and IKEA are the best players in the market, concerning value for money preposition. In the case of quality Media Strom and Coco-mat are perceived to be way ahead others, something that is demonstrated also by their
exporting mentality. Media Strom is the biggest advertiser in the industry, with 12 million euro (2003-2010). Coco-mat is thought to be an expensive and luxury brand. Few companies have self-owned factories and facilities. Contrary to this fact Media Strom has a state of the art factory with 19,000 sq. m. of buildings in 42,000 sq. m. Land.
Marketing Plan with diversification strategy for Media Strom S.A
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BCG Matrix
New Product Concept: Vertical diversification strategies will be used for a new kind of Pillow, “a high-tech pillow”. This new product will have the same layout as a traditional pillow, but it will be enhanced with two internal micro-speakers that would connect to an external smart-phone device. The user will be able to connect the phone, lie down to his pillow and hear his favorite radio station or music and relax. They key of thin concept is to offer to the buyers the experience of having a fully customized comfort sleep with his favourite audio preferences. This is because, during sleep hearing is the only element and sense that is active till we fall into the deep REM sleep. By offering this pillow add-on the user will record his sleeping patterns and gain access to a more enjoyfull sleeping experience without “harassing” his mind with unnecessary thoughts of the next day Media Strom is in the category shown by the red circle above. It will enter the digital pillow industry as in the middle of Star and a Question mark. Companies which belong to the question category have low market share in
growing
markets
(Hill
2007).
Also
by
building
synergies
and
partnerships with a familiar company to mobile market and exploiting the network store and internal R&D will approach the necessary niches.
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6. OBJECTIVES As Kotler (2012) notes in his latest book, “it is useful to assume that companies strive to maximize profits. However, they differ in the relative emphasis they put on short-term or long-term profit. In order to fulfill this fundamental aim, each one pursues some mix of objectives: market share growth, current profitability, cash flow, technological leadership and service leadership. ”The last two of them, are our new market expansion goal.
6.1 Mission statement In this new pillow market it is proposed that the company will attend to the consumer segment that needs of sleep relaxation with the benefits of “choosing and personalizing their personal sounds/music/etch for mindrelaxation”, offering an enhanced pillow with internal digital microphones connected with the customers Smartphone.
6.2 Objectives
Become an international company within the next 5 years in the categories of bed mattresses and sleep peripherals. To be a major innovative company in the field and gain proper market incentives for other breakthrough sleep-product lines. To exploit the technological oriented new niche segments of the customer base and gain competitive advantage. Upgrade the perceived quality of our products with new digital and customer friendly services. Thought of as Industry Leaderships in Sleep comfort. Identify growth opportunities in new market through the identification of new customer niche segments and new product uses. To Increase production capacity. To manufacture products of high quality, hygiene and innovation To operate with respect towards its employees and the natural environment. To create the conditions for future expansion and Exports.
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7. STRATEGY
In particular, authors have highlighted that key customers provide an understanding of customer‟s problems and needs which is again a critical factor of strategic success for the developer (Mons Freng Svendsen et al, 2011).
7. 1 Marketing opportunities Niche/mainstream positioning strategy: The main focus of niche positioning would be placed on consumers who are concerned about their sleep disorders. There would be many positive benefits to the company from the positioning of the “smart pillow” as a niche product. These benefits would include one, by targeting the segment of consumers who are worried about relaxed sleep, by charging premium prices. Two, Media Strom would be able to differentiate the new pillow from other pillows , because technological superiority over the others already on the market. I if costs were to decrease then it enable us to reduce the losses if it were not successful.
Mission marketing strategy: Media Strom mission strategy is to be successful in the sleep enhancement market, and hope the new pillow is not a failure. They will strive to gain a competitive advantage over other companies, while producing a profit, and satisfying the wants and needs of buyers. A goal of the pillow is for to add utility or value to consumer‟s lives.
7.2 Developing a proposition Media Strom will follow the strategy of diversification (vertical), according to which companies that expand their business by offering new products to new markets (Hill, 2012), as it can be seen in the appendix.
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7.3 Product levels Media Strom functions their production activities at the field of retail mattress production through franchise store sales. The future product expansion of product lines will be made on sleep peripherals and especially on digital high-tech sleeping pillows.
7.4 Service considerations Our main issue here that the product can partly function and serve customers need by its own. Due to its technological aspect, the usage of the product and service is bound by a third party provider. If the final buyer has not a smartphone, the product liability is in question. Therefore, a partnership with another company of that market should be made in the field of promotion and advertising.
Product and Service Existing Product: What is this product's life cycle stage? How are quality and reliability viewed by the customer? Are they pleased with current service levels? How fast can the market grow? Is the product patentable? Can sales, production, and other operations systems absorb the product, or does it require additional support?
Customer: Who is the current potential customer? What do you know about the customer's unsatisfied wants and current level of satisfaction? Who makes the buying decisions, and where and how are they made?
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7.5 Operational dimensions The proposed product expansion has to be carefully designed, tested and launched due to technical issues upon implementation and slow acceptance of add-on innovations. Some of these considerations are minimized by the newly operation of the company‟s Main Factoring facilities, upgrading their original productive capacity to new heights and maintaining an in-house Research and Development Department. The process of customer introduction will be slow and it will take a time period of 2 years until the product grasps full sales potential. This timeline and the promotional activities presented in the appendix.
7.6. Customer segmentation Every person has different sleeping patterns and preferences. Some people want silence while others prefer hearing something to lull them (radio, music, etc). Therefore our target are these people, aged between 20-40, with a fair financial position, who do not fall immediately into a deep REM sleep, are late-sleepers and want technology to ease their sleep (for example, some tend to listen to the radio until their not awake anymore). The most common characteristic of our target is the fact that want technology and innovation to participate in their everyday life by making it easier.
7.7 Risk associated with proposed strategy In today‟s challenging environment, it is extremely difficult to create sustainable growth in the offer of consumer value. Recent studies conducted by PwC and Ernst & Young show that a low percentage of organizations actually link risk management to their strategic planning process. Most organizations address risks as an afterthought. Therefore, we must incorporate a detailed risk identification and mitigation analysis into strategic planning process: Ensure that strategies maximize the potential of an organization‟s resources. Establish what resources are needed to be competitive. Decide what resources are needed to achieve the greatest increase in customer value. Evaluate strategic risk – what could undermine the proposed strategy.
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Determine operational risk – what limitations in current operations will restrict the organization‟s success in the proposed strategy. Examine compliance and financial reporting risk – how might the strategy affect these risks, in addition to affecting risks related to the organization‟s reputation. Avoid the risk by not pursuing certain strategies. Transfer the risk by looking for partners
Accept the risk – determine that the amount of potential risk is within stakeholder.
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8. TACTICS
8.1 Product The new product is a digitally modified sleeping pillow enhanced with 2 internal audio speakers in the core of it, so that the pillow would not loose softness. At one edge of the pillow there would be an input for external phones devices. The product will be accompanied a connector, charged free. An established company like Media Strom will focus on incremental innovation, allowing it to enter the new market of pillows by adapting existing market offerings for new customers and using technological enhanced variations on the core product, so that it can be a step ahead of the market and create alternative solutions for customer problems (for example sleeping anxiety/relaxation). The new pillow , is a product that should add value to a buyer‟s life. It should also add utility, and meet the wants and needs of targeted consumers. The product should be unique and different from all similar products that are already available on the market. The strategy is to differentiate the product‟s design and packaging, so that is more sophisticated and will stand out from the others.
8.2 Price Under a niche-positioning strategy the price of the pillow would form at the premium price of 18,75 EUR per unit. It is of high importance that the product is perceived a qualitative enough to be position as a high-end sleeping commodity which would stand up to the competition of our main competitor Coco-mat, that is thought of as offering high-end products. Mark-up price policy (Kotler et al,2012) A] Variable cost per unit: EYR 5 B] Fixed cost (approximately): EYR 300,000 C] Expected unit sales: EYR 100.000 Unit cost: A + B = 15 C Mark-up price: unit cost = 18,75 euros 1 – return on sales
8.3 Place The high–tech pillow market is spread worldwide mainly targeting company retail network, hotels, airport accommodation, luxury household owners and large retail stores.
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8.4 Promotion The price budget for promotion is set at 7 millions. The company‟s promotion plan is to “induce trial” first. Product promotion is communication spread through advertising, publicity, and sales promotion. It is suggest to advertise their products by using commercial, magazine ads, the radio, TV, internet, ads that are to be placed in billboards, and the sides of buses. Advertising is done to promote new products, remind consumers of existing products, and also promote the image of the company at hand. Through company site the consumers will learn about the new product, features and the potential benefits. Social media will implement the dialogue and feedback for the product. PR and events with NGO‟s and organizations concerning sleeping health will be demonstrated so that the product benefits can be acknowledged. 8.5 People Media Strom‟s people participate in every stage of the products creation and implementation from marketing to design and finally the production. They maintain highly educated and specialized personnel combined with top machinery in order to deliver excellent quality and care. They always train their stuff and sales people so that they can deliver information and offer a unique sleep consultation. Employee‟ will also be a first trial-test for the new product.
8.6 Process
Observe the product usage by customers Ask customers to report product problems Ask customers about their dream sleep Use corporate website for customer‟s ideas on product improvement. Find related blog and posts concerning the general product. Form a community of product enthusiasts. Participants will be seen as collaborators working towards a common goal
8.7 Physical evidence
The company has a unique fame for the pre-sale and after sale service. They have one of the most modern retail networks in Europe, which gave them the Franchise Award back in 2010. They possess 68 store, corporate fleet and factory facilities. The product placement should be made on exclusive bedroom with a digital and technological design theme and gadgets.
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9. ACTION PLAN & CONTROLS 9.1 Finances Fill (2011), proposes that, “the role of marketing budget is the same weather is multinational, trading in numerous international locations, or a small manufacturing unit. The desired result is to ensure we achieve the greatest efficiency with each dollar/euro/pound they allocate to marketing activities. No one can afford to be profligate with scarce resources, and each is accountable to the owners of the organization for the decisions it makesâ€?. Considering the large target group of the brand, the high net deficit, the increasing expenses of first yearâ€&#x;s testing, launch activities, promotions,advertising and the medium-rate projected sales figures, a budget of 15 million Euros, over a three year campaign should be appropriate. Moreover it is proposed to reallocate the budget recommending, an 8 million euro spent in the first year, 4m in the second and 3m in the third. This way our launching period has more chances of integrating and successes. Sales strategy will be to emphasize competitive advantage of comprehensive research and product offerings. This is likely to turn prospective clients into long-term customers because people are often cautious with their financial future and offering a comprehensive solution willing to work extra hard to research all options. Financial projections should be summarised and highlighted. following format is suggested as a guide:
The
Month Month Month Month Month Month Month Month Month Month Month
Sales Forecast
1
2
3
4
5
6
7
8
9
10
11
Month 12
Sales (Euros) planning
0%
0
2,145
2,254
3,215
3,654
3,985
4,124
4,456
4,874
5,014
5,214
5,365
Investing
0%
0
1,245
2,187
3,354
3,547
3,845
4,215
4,545
4,774
5,023
4,878
4,978
0
3,390
4,441
6,569
7,201
7,830
8,339
9,001
9,648 10,037 10,092
Total Sales
Direct
Cost
of
10,343
Month Month Month Month Month Month Month Month Month Month Month
Sales
1
2
3
4
5
6
7
8
9
10
11
Month 12
planning
0
172
180
257
292
319
330
356
390
401
417
429
Investing
0
100
175
268
284
308
337
364
382
402
390
398
0
271
355
526
576
626
667
720
772
803
807
827
Subtotal Direct Cost of Sales
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Annual Sales Forecast Year 1
Year 2
Year 3
Planning
44,300
65,455
72,545
Investing
42,591
62,545
74,545
Total Sales
86,891
128,000
147,090
Direct Cost of Sales
Year 1
Year 2
Year 3
Planning
3,544
5,236
5,804
Investing
3,407
5,004
5,964
6,951
10,240
$,767
Sales (Euro)
Subtotal
Direct
Cost
of Sales
Break-even Analysis Monthly Revenue Break-even
8,518
Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost
8% 7,837
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Year 1
Year 2
Year 3
86,891
128,000
147,090
6,951
10,240
11,767
0
0
0
Total Cost of Sales
6,951
10,240
11,767
Gross Margin
79,940
117,760
135,323
92.00%
92.00%
92.00%
63,120
67,000
72,000
1,200
1,200
1,200
456
456
456
Leased Equipment
0
0
0
Utilities
0
0
0
1,800
1,800
1,800
18,000
18,000
18,000
9,468
10,050
10,800
$0
$0
0
94,044
98,506
104,256
Profit Before Interest and Taxes
14,104
19,254
31,067
EBITDA
13,648
19,710
31,523
Interest Expense
0
0
0
Taxes Incurred
0
5,776
9,320
14,104
13,478
21,747
-16.23%
10.53%
14.78%
Sales
(hundred of Euros)
Direct Cost of Sales Other Production Expenses
Gross Margin %
Expenses Payroll Sales and Marketing and Other Expenses Depreciation
Insurance Rent Payroll Taxes Other
Total Operating Expenses
Net Profit Net Profit/Sales
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9.2 Measuring service quality Marketers are accustomed to measuring the physical attributes of a product: dimensions, angles, power, hardness, tensile strength, colour, and many other characteristics. Getting a handle on services can be difficult. Service provision is radically different from manufacturing. Output measurements that are applied in manufacturing make no sense in a service situation because the customer has such a strong influence over the environment.
Some of the traditional measurements are: • Number of customers processed per hour • Minutes spent on each call • Reports generated per day • Average time per repair • Repairs fixed per shift
The measurements that we should trust are: delivery time, responsiveness, effectiveness, availability and cost control Innovation is the key to long-term survival and the customer should be a part of this process, simply by answering a given questionnaire that we should include inside the label or the manual, for investigating his service satisfaction and get an immediate feedback on our product.
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10. PERSONAL REFLECTION
Aim of this particular section of the assignment is about the evaluation of my overall experiences and management during the writing of this report, so that I can act upon future difficulties and develops the personal key areas that demand more focus. In my opinion, marketing is all about “saying the right thing, to the right people”. Fundamentally, the choice of channels plays a major role to the understanding and consistency of the perceived message. Especially, in our times were economy is on the down term and the budgets are tighter, the chosen promotions should be thought and designed more carefully. Part of the job I do now has to do with, addressing the customer and acting upon customer services. Reading different sorts of Academic information and models, revised for the today‟s digital era, I have found a level of difficulty, in whether I have made the best possible model choices at the given time. I found keeping to the word count and the up to date references particularly difficult, as there are numerous theories around marketing and the implementation. From the lectures, seminars, workshops and the assignment my key learning is that marketing needs must be consistent and adapted to different customer perceptions. I was able to get a very good insight of the company, due to the visit to their offices. I found out that in these organizations, product quality and standards work as “badges” and give their customers the confidence and trust to purchase from them. Relationship Marketing and Reputation Management is a key factor for these types of organizations, because the whole industry is built upon immense pressure to continually improve and become more efficient, in order for a company to maintain competitive advantages. Concerning my future development, I discovered that I need to train more on the field of analyzing the perspective of customers, so that I can understand their experiences and then make recommendations for product improvements.
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11.
BIBLIOGRAPHY
Academic Journals 1. Mons Freng Svendsen et all (2011). “Marketing strategy and customer involvement in product development”. European Journal of Marketing.Vol. 45, No 4 2. Michael Porter (1998). “Clusters and the new economics of Competition”. Harvard Business Review. pp. 77-89 3. Byron Sharp and John Dawes (2001). “What is differentiation and how does it work?”. Journal of Marketing Management. No 17, pp. 739-759 4. James H. Gilmore and B. Joseph Pine (1997). “The 4 faces Customization”. Harvard Business Review. pp. 91-101 5. Wendell R. Smith (1956). “Product differentiation and market segmentation as alternative marketing strategies”. The Journal of Marketing, AMA 6. William E. Cox, JR (1967). “Product life cycles as marketing models”. The Journal of Business, Vol. 40, No. 4 7. Theodore Levitt (1981). “Marketing intangible products and product intangibles”. Harvard Business Review. pp. 94-102 8. Theodore Levitt (1980). “Marketing success through differentiation of anything”. Harvard Business Review. pp. 83-91 9. Jagadish N. Sheth (2002). “The future of relationship marketing”. Journal of services marketing, Vol 16, No 7, pp.590-592
10. Theodore Levitt. “Innovative Imitation”. McKinsey Inc. Quarterly. pp. 35-45 11. Ian C. MacMillan and Rita Gunther MCGrath (1997). “Discovering New Points of Differentiation”. Harvard Business Review. pp 133-145 12. Benson P. Shapiro (1977). “Can marketing and manufacturing coexist?”. Harvard Business Review. pp. 104-114
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Academic Books 13. Dibb, Simkin, strategies. 3rd European Edition 14. Michael J. Baker. pp 335-347, 415-455
Pride,
The
Ferrell.
Marketing
Marketing-concept
Book.
CIM
2nd
and
Edition,
15. Isobel Doodle & Robin Lowe. International Marketing Strategy. Analysis, Development and Implementation. 2nd Edition. Thomson Business Press. pp. 72-74, 78-104, 267-360, 414-430 16. Nigel Piercy. Market-led strategic change. Chartered Institute of Marketing. pp. 137-312
2nd Edition.
17. Helen Peck, et al. Relationship Marketing. Strategy and Implementation. Elsevier, pp. 33-111 18. Phillip Kotler. Principles of Marketing. 6th Edition. Prentice Hall International Editions. Pp 216-307 19. P. Kotler, K. Keller, M. Brady, M. Goodman, T. Hansen (2012). Marketing Management. Pearson Education Limited. 2nd Edition. 20. Porter M.E (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York Free Press.
Internet 21.
http://www.franchisesuccess.gr/pdfs/MediastromPresentation.pdf [Accessed 16/12/12]
22.
http://www.mediastrom.gr [Accessed 16/12/12]
23.
www.iobe.gr [Accessed 22/12/12]
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12. APPENDIX
PESTELE ANALYSIS
Political
Economic
Social Cultural
Competitors
Technological
Greece policy about innovation Unstable governmental environment in Greece Trademark policies
Legal
less available and disposable income Chinese people grasp High Greek Taxes
International
Tense relationships and anxiety Techno-oriented kids Western civilization Strong local competing brands International competitors Many high-end subsidiaries Mobile trends gadget oriented Social media active
Markets
Ecological
Demographics
European guidelines for raw materials Competition and quality assurance law Transfer pricing Vat taxonomies Good distribution channels World trade agreements further expansion of the EU Customs policy Community groups Consumers - money savers Many niche markets Change of Consumer Behaviors Increased concern in recycling of damaged/end of use goods Use of eco-friendly packaging Overall community action upon environmental issues Aging European Population Highly education High young unemployment
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Source: Media Strom S.A
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Source: Imerisia – Hellenic Economic Newspaper
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Year 1 ACTIVITIES
Q1
Q2
Q3
Year 2 Q4
Q1
Q2
Q3
Market research, R&D Choice of new product Objectives Market segments Alternative actions Budget & actions Action planning Budget agreement Review alternative pricing strategies Price strategy Estimate product stock Train employees towards new products Advertising and promotion budget Alternative marketing activities Marketing activities Implementation Retail distribute of new New Product purchase by customer
Source: Class Module
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Q4
Source: Media Strom Company Presentation Handbook 2012
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Strategic marketing models and theories
There is an inherent problem of defining strategy: strategy means different things to different people. " There is no single, universally accepted definition" (Mintzberg & Quinn, 1991). The Roots of strategy come from- Ancient Greek military usage „strategos‟: Initially it was a role - the general in command of an army. Later strategy became "the art of the general". By the time of Pericles (450 BC) had become a recognized "managerial skill". By the time of Alexander The Great (300 BC) strategy was: "the skill of employing forces to overcome opposition and create a unified system of global governance" ( Evered, 1980). The modern business usage of “Corporate Strategy” has become a metaphorical extension of the ancient and modern (military concept). There are many comparative definitions of strategy, a few are: "strategy” is the determination of the basic long-term goals and objectives of an enterprise, and the adoption of the courses of action and the allocation of resources necessary for carrying out those goals." (Chandler, 1962). The business historian Chandler subscribes to the view that strategy is as much about defining goals and objectives as it is about providing the means for achieving them. Kenneth Andrews (1987), distinguishes between corporate strategy which is the lead strategy, and business strategy, a secondary, yet vital, aspect of corporate strategy: "a pattern of decisions which represents the unity, coherence and internal constituency of a company's strategic decisions that position a company in its environment and give the firm its identity, its power to mobilize its strengths, and its likelihood of success in the marketplace." By comparison, Ansoff and McDonnell (1990), separate strategy (concerned with means) from goal-setting (concerned with ends). They define strategic management as: "a systematic approach for managing strategic change which consists of the following, Positioning of the firm through strategy and capability planning Real-time strategic response through issue management Systematic management of resistance during strategic implementation." Cole, (1997) proposes a working definition of strategic management to be:"a process, directed by top management, to determine the fundamental aims or goals of the organization, and ensure a range of decisions which will allow for the achievement of those aims or goals in the long-term, whilst providing for adaptive responses in the short term." Definitions of strategy fall into five categories with differing areas of emphasis: A plan: “a consciously intended course of action”. A ploy: “a maneuver intended to outwit a competitor”. A pattern: underpinning “a stream of actions”. A position: a deliberate stance taken in relation to the environment. A perspective: an all embracing way of thinking about the organization and its approach to the world. Marketing Plan with diversification strategy for Media Strom S.A
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“ A strategy is the pattern or plan that integrates an organization‟s major goals, policies and actions into a cohesive whole”. (Quinn 1980) A marketing plan has been defined as: “ A written statement of the marketing aims of a company, including a statement of the products, targets for sales, market shares and profits, promotional and advertising strategies, pricing policies, distribution channels etc. with precise specification of timescales, individual responsibilities (Masner, 1988). To achieve this marketing plan, the organization will have to go through a number of stages which take the form of questions, as follows: o o o o
The analysis of the current marketing situation. Setting the objectives. Creation of the strategy Monitoring and evaluating
Market economic theories of the Textile Industry
The expectation that textile exports will swamp the US and EU retail markets now that international quotas on those products have been eliminated has fueled much of the discussion of the future of these industries. Although imports from China have surged since the elimination, this conventional wisdom masks important choices that remain for public and private policies over time. In particular, two factors will continue to have major effects on the location of textile production going forward. First, public-policy choices will continue to influence sourcing location; in particular, as they relate to tariffs and regional trade policies as well as to policies affecting the linkages between countries. Second, the lean-retailing model that now prevails requires suppliers to replenish basic and products on a weekly basis. Interest in supply chain management (SCM) has increased as organizations seek opportunities to improve performance. Monitoring plays a key role in enhancing supply-chain performance by highlighting opportunities for improvements. However, evidence on the use of performance measures in SCM is scant (David Smith, Australian Accounting Review, 2008).
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The textile industry is characterized by short product lifecycle, high volatility, large variance in demand, and a high number of stock-keeping units (Jin, 2004). The apparel industry has practiced the philosophy of SCM in the name of Quick Response (QR). QR is a concept that requires three key philosophical aspects: communication of information between trading partners, reduction of time in the soft goods pipeline, and consumer responsiveness (Kincade et al., 1993).With these concepts, QR is one example of SCM already executed by the textile industry. These factors have created long lead-times and poor coordination among trading partners (Aron, 1998; Christopher and Pech, 1997; DeWitt, 1994; Iyer and Bergen, 1997).
Major KPI‟s influencing Business: Demand and Supply Marginal and Total Utility Money and Banking Economic Growth and Development Income and Employment General Price Level Trade Cycles Inflation Recession Exchange Rate Rate of Interest Government Regulations
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