Inspirations Market Strategies - Research Paper Example

Inspiration’s Market Strategies Abstract/ Executive Summary Inspiration is a company that provides painting services. It aims at having new distribution strategy to be developed. This will enable them to deliver services efficiently while managing potential channel conflicts which could come up as a result of customers perceived risks by the of losing business due to the new DIFM program. Recently, it has broadly been accepted that sustainable development requires long-term fundamental economic change. This change must involve not only new technologies, but also new institutional arrangements and – last but not least – new consumption patterns.1 Achieving durability of goods, the private reduction of energy consumption and a new modal split in transportation is not so much a problem of technological possibilities, but rather one of behavior, preferences and individual organization. This begs the question of what economic theory can contribute to this problem of dynamic change and what kind of theoretical approach is appropriate to deal with it. Introduction This report outlines the results from activities that were undertaken in order to recommend a comprehensive distribution strategy for Inspiration’s newly introduced DIFM program. Quantitative as well as qualitative researches were conducted in order to gather data and information to examine consumption patterns and consumer needs. Data collected was carefully analyzed using data analysis programs such as SPSS in order to transfer the data into appropriate, logical information sets which can be used to make recommendations to management about the design of a distribution strategy for the DIFM program. This report also incorporate the results of the study of intellectual theories relating to the marketing of services, channel management and distribution theories. While developing the strategies for distribution, channel conflicts need to be considered in order to ensure that the distribution strategies and channels employed are able to maintain potential channel conflicts to a minimum, especially with Inspiration’s trade customers. Literature Review The Five Forces Framework The Five Forces Framework set out by Michael Porter is a well-known market analysis that examines on the degree of competitiveness, various industry forces has on the success of a company in an industry (Peng 2009). This framework underlies the effect of five competitive forces: This, Rivalry among competitors, Threats of potential entry, bargaining power of suppliers, bargaining power of buyers and Threat of substitutes. However since the main focus of this project was to develop an effective distribution channel for the new DIFM program, it was then most appropriate to focus on the bargaining power of buyers which examined not only on Inspirations to its trade customers (i.e. the painters) but also Inspirations to its regular customers (i.e. Mums and Dads, Dyers etc.). For Inspirations, switching costs for trade customer are relatively high. Inspirations’ trade customers are often repetitive customers since they could enjoy better price or product incentives from economies of scale or from being brand loyal. In addition, the strong bonds between Inspirations and its trade customers are built through a long term process of business coordination and trusts. If trade customers switch to other painting company like Bunning’s as a result of the new DIFM program, they may not be able to receive the same incentives or benefits they would have been offered with Inspirations. Also, trade customers would not be able to enjoy the excellent customer services it would have with Inspirations if they switch to Bunning which mainly forces on low prices and self-services. The five forces framework also emphasis that bargaining power of buyer is dependent on the threat of its suppliers to integrate forward into the buyer’s industry (Peng 2009). From this information, it can be assumed that the bargaining power of Inspiration’s trade customers would decrease with the introduction of the new DIFM program. The Five Forces Framework assists in identifying the opportunities and threats customers has on the successful implementation of the new DIFM distribution strategy. The Services cape Model The new DIFM program requires an effective distribution strategy that assists in facilitating an effective flow of information and communication through each service delivery touchpoints. The servicescape model developed by Bitner is a comprehensive framework that examines on how different attributes in the service environment can impact on both the behaviour of the consumers and employees (Lovelock, Wirtz & Chew 2009). The servicescape model can be applied effectively in designing Inspiration’s service environment since apart from the paint as a product it self, the rest of the DIFM process involves services elements. Many services industry like the hotel industry places great importance in designing its servicescape as to overcome the problem of intangibility and to lower customer’s perceived risks during the service delivery process. The sevicescape model also provides an overview of the different dimensions that help to shape an effective service environment (Servipedia 2006). Therefore when designing the new DIFM program, Inspirations would need to examine on elements such ambient conditions, store layout and various signs (i.e. colour displays) in order to enhance consumer’s purchasing experience during the service deliver process. These will not only helps in maximising customer satisfaction in the purchasing process but it may facilitate repetitive sales and positive word-of-mouth. According to the servicescape model, designer must be aware of how particular environment enhances the productivity of frontline personnel and the quality of service that they deliver (Lovelock, Wirtz & Chew 2009). This is important for Inspiration since the new DIFM program requires customer to get to the service, thus the first point of interaction will be between the consumer and Inspiration staffs. Therefore, the appearance and behaviour of service personnel can strengthen the impression created by a service environment or weaken it. Methodology and Research Design Qualitative We conducted Focus groups:Two focus groups (consisting 6-8 people each) of the target market were homogeneous but with enough variation to allow for contrasting opinions (Hair et al, 2008) as it was believed that it would be complicated, ineffective and difficult to manage more than 10 people in a single focus group session. Yet, a focus group with less than 6 people may affect the data validity because the group size was fairly small, as a result, insufficient. In addition, it was recommended that the number of people in a focus group be usually from six to ten (MacIntosh, 1993) as this number was not only small enough for everyone to have the opportunity to express their individual thoughts and opinions and for the moderator to be able to mange, but also large enough to grant a diversity of opinions. The used focus groups took about approximately between 90 minutes to two hours each session depending on the dynamic of the discussion. However, a good moderator guide consisting of precise questions was a must to help the moderator able to manage the group discussion. Otherwise, the topic would be to either too board to cover nor too narrow to provide sufficient data. Instrument and Interviewing Face-to-face interviews: One-on-one interviews will consist of a sample of 36 people. These respondents of 36 people would be selected using the criteria of selection which are aging over 50 and living in Newscastle. We believe a sample size of 36 is reasonable and manageable to avoid invalid data. The use of face-to-face interviews could possibly provide the researchers with more extra information through social cues such as voice, intonation, body language, etc of the interviewee (Opdenakker, 2006). Moreover, the questions would be clearer for the interviewee to understand as the research could rephrase the wording or explain any doubts that the interviewee may have. Ethnography: Observation and in-depth interview of the target market in a natural purchase setting in stores. By analyzing the behaviors of the potential target market and observing the conversation between them and the store assistants, we can gain a better judgment of the need of DIFM. After observing the subject, we asked to have a short interview with them. The collected data gained from interviews straight after store visitations provide valuable insights of the overall experience at the store. Ultimately, we gauged the positives and negatives of the experience and used the data and information to enhance the distribution strategy for the Inspirations DIFM program. For all the above methods of qualitative research, we aimed to get a solid understanding of how the target market perceive the DIFM program and to identified the appropriate methods of communication Quantitative We conducted the survey on 100 customers. The aim of this quantitative research was get the statistical data such as, percentage of how many customers prefer DIY or DIFM, the frequency of repainting their estates, other demographic aspects and the data of any significant insight discovered in the focus. Since the more interviewees’ response will provide more insights for the researchers to find the most suitable attempts for the company to be successful in delivering the DIFM program, the survey would be undertaken with 100 customers. It is believed that this sample size would be enough to generalize the findings from the survey and compare with the hypotheses we set up prior to the survey. Also, due to limited time given, the researchers would not allow conducting survey with more than 100 people. With the sample size of 100 customers, we will be eventually able to perform the data analysis in SPSS, computer software for statistical analysis. The sample size plays a crucial role in those cases of statistical studies If one has to compare the differences of means of two populations with some sample size, or has to test for a single mean with some sample size, or has to compare the means from two different populations with some sample size using the Z- test, then the sample size should be greater than 30. (Macleoud 2002) We plan to use 100 as a sample to make our testing on SPSS or any flexible statistical software. Methodology conclusion Whilst three kinds of methodology were undertaken as mentioned above, we realized that responses we have gained were so varied that some responses were even beyond our expectation. This can be further justified by Hayes and Nick. Body How Inspiration should develop an appropriate distribution strategy Inspiration’s traditional consumer theory is based on rather strange assumptions when it comes to explaining processes of long-term change. It is founded on the view that households have stable preferences for certain market goods and maximize a utility function assuming perfect information. Accordingly, individual behavior only depends on relative prices and income. For every set of income and prices, there is exactly one consumption optimum the household chooses and maintains over time. Consumption can only be changed by altering prices or income, the new optimum again being determined by the individual preferences. This approach takes no account of time, history, transaction costs or the institutional framework; moreover, no endogenous change or social feedbacks occur. Table 1- Shows the amount that the customers will pay for a premium service Frequency Percent Valid Percent Cumulative Percent Valid $0-$499 16 16.0 22.5 22.5 $500-$999 31 31.0 43.7 66.2 $1000-$1999 18 18.0 25.4 91.5 More than $2000 6 6.0 8.5 100.0 Total 71 71.0 100.0 Missing System 29 29.0 Total 100 100.0 According to this table, we found that there is a good consumer pattern because the total amount indicated in this table is more compare to the number of customers. The frequency in the table above shows that there are there is a high demand of the premium services. In recent years, there has been growing interest in the analysis of dynamic processes of social change and development. One of the basic approaches is the work of North (1981 and 1990) focusing on the problem of institutional change and its implications for economic performance. Dynamic aspects of market systems are being increasingly analyzed within the theoretical approach of evolutionary economics (Witt (1990) and (1992), Erdmann (1993a)). Discussion and conclusion As a whole, the new theoretical approaches of consumer behavior including household production theory, bounded rationality and evolutionary economics paint a different but still ambiguous picture concerning the prospects of sustainable change. A huge potential for ecologically beneficial consumption is evident in the long run. Information deficits, cognitive limits and the possibility of producing basic commodities such as social acceptance in a completely different way indicate that current consumption patterns can be changed dramatically without utility losses. On the other hand, the evolutionary concepts of path-dependency and lock-in of behavioral patterns caused by habit formation, conformity, institutional and techno-economic inertia illustrate the difficulties and barriers which have to be overcome to induce a process of change. From an institutional point of view, one of the crucial factors is the information available to the consumer. Thus, environmental policy should be focused on overcoming information barriers, e.g. by product labels or consumer advice concerning improved ways of household production (Scitovsky (1976)). Moreover, the government could directly support innovative behavior. The evolutionary view suggests that new consumption patterns need opportunities to achieve learning effects and develop the required institutional and techno-economic framework. Consequently, public innovation policy should be focused more on consumption patterns that can serve as a model to the average consumer. Additionally, the government could attempt to reinforce the cumulative process of imitation, e.g. by gaining the support of individuals who are widely accepted as experts or fashion-leaders. Finally, the possibilities of establishing sustainability as a socio-economic paradigm and guiding norm of behavior have to be explored. As a result, the new theoretical approaches indicate the necessity of a cooperative role by the state, stimulating and supporting new consumption patterns in a (co-) evolutionary process of institutional, technological and behavioral change. However, more research into the design of such a policy approach is needed. Reference Maslow, A. H. Motivation and personality, New York: New York Press, (1970). Michael, R. T. and G. S. Becker. The New Theory of Consumer Behaviour. London: Swedish Journal of Economics, (1973). Nelson, R. and S. Winter. An Evolutionary Theory of Economic Change, Cambridge: Cambridge Press, (1982). Norgaard, R. B. Co evolutionary Development Potential. London: Cambridge Press, (1984). North, D. C. Structure and Change in Economic History, New York-London, (1981). North, D. C. Institutions, Institutional Change and Economic Performance, Cambridge-New York-Port Chester-Melbourne-Sydney, (1990). Dosi, G., C. Freeman, R. Nelson, G. Silverberg and L 23. Soete. Technical Change and Economic Theory, London: Cambridge Press, (1988). Duisenberg, J. S. savings &Income and the consumer behavior theory , Cambridge: Cambridge Press, (1949). El-Safty, A. E. Adaptive Behavior and the Existence of Weizsäcker’s Long-Run Indifference Curves“, Journal of Economic Theory, New York: New York Press, (1976). Erdmann, G. Elemente einer evolutorischen Innovationstheorie, Tubingen: London Press, (1993) Erdmann, G. Evolutionary Economics as an Approach to Environmental Problems , Heidelberg: Cambridge Press, (1993b). Freeman, C. The Economics of Hope. Essays on Technical Change, Economic Growth and The Environment, London: New York Press, (1992). Read More