Smart Machines Inc - Strategic Marketing Plan for the Smartphone in the Developing Countries Markets - Example

SMART MACHINES INC. STRATEGIC MARKETING PLAN FOR THE SMARTFONE IN THE DEVELOPING COUNTRIES’ MARKETS (PART II) Executive Summary This report forms the second part of the strategic marketing plan for the Smartfone – a smartphone mobile product developed and marketed by Smart Machines Inc. in markets in developing countries in Asia, Africa and Latin America. It contains the following details: the relevance of the growth market strategies for the company, the strategic options that the business will adopt in order to maintain its competitive advantage in the market and the appropriate organizational structure that will be adopted by the business. It covers the strategic considerations for the business during the shakeout, maturity and declining stages of the Smartfone in the market. Form the plan, it can be concluded that Smart Machines Inc. will adopt a product management organizational structure. Also, the company will seek to increase its market share after successfully launching the Smartfone in the market. This is the strategy that shall be pursued by the company during the growth and maturity stages of the market in the product. When the market declines, Smart Machines Inc. will take advantage of niche marketing in segments that have the potential to remain profitable. Lastly, it can be seen that the marketing strategies of the Smartfone shall be evaluated basing on the Smart objectives that cover targets in the market share and brand awareness. This shall be done by carrying out a marketing environment audit and the objectives and strategy audit for the company. Table of Contents Executive Summary ii Table of Contents iii Introduction 1 Product Life Cycle 1 New Market Entry 3 Pioneer or Follower Strategies 5 Growth Strategies 6 Shakeout, Mature and Declining Strategies 8 New Economy Markets 10 Organization Structures 11 Marketing Plans 12 Marketing Metrics and Marketing Audit 15 Conclusion 16 References 16 Introduction Market information indicates that the demand for Smart phones is set to rise in the coming decades (Ilyas & Ahson, 2006, p. 153). This demand will be experienced in the developing countries in Asia, Latin America and Africa than anywhere else. Since the Smartfone is a product developed to suit this emerging market, the product is set to experience different strategies in its introduction into the market. This plan presents the second part of the strategic marketing plan for the Smartfone by focusing on six main areas as follows: the product life cycle, new market entry, pioneer or follower strategies, growth strategies, organization structures, marketing plans, marketing metrics and lastly, marketing audits. Product Life Cycle The product life cycle refers to the stages through which a product goes through after introduction into a new market. According to Vashisht (2005, p. 129), product life cycle entails five stages though which all products go after being introduced in the market. These are as follows: the introduction stage, growth, shakeout or competitive turbulence, the mature stage and finally, the declining stage. All these stages have different characteristics; these are discussed as follows. The introduction stage is characterized by the following features; high technical changes in the design of the product, negative profitability, a moderate rate of market growth, few segments and lastly, few competitors. Firms operating in markets which are in such a stage develop an overall marketing strategy that seeks to stimulate primary demand for the products in the market. This is achieved by developing narrow product lines that are of improved quality. In addition to this, firms develop products that are marketed in highly selective areas; adopt a skimming pricing strategy and seek to gain high marketing and sales promotion campaigns (Zheng & Ni, 2006, p. 22). On the other hand, the growth stage of the product life cycle is characterized by the following: high rate of market growth, moderate technical changes in the design of the product and increasing competition resulting from the attraction of high profits (Hitt, Ireland & Hoskisson, 2010, p. 178). With the growing market, firms operating under such circumstances seek to build the market share of their products and services. This is done by seeking to improve the quality of the products continuously as well as reducing the prices. In the shake out stage of the product life cycle graph, the rate of growth of the market is levelling off (Vashisht, 2005, p. 135). This means that there are limited changes to the technical design of the products in the market. Also, with declining profitability, the number of competitors in the market is decreasing during this stage. Similarly, the overall strategic objective of firms operating in such circumstances is to build the market share of their products and services. The maturity stage of product life cycle is characterised by an insignificant rate of growth of the market. Also, it is only leaders in market share that experience high profitability during this stage. This means that firms seek to hold onto their market shares by running high marketing that focuses on the features of their products. Lastly, in the declining stage, low profitability is a result of a negative rate of growth of the market (Avlonitis & Papastathopoulou, 2006, p. 44). This implies that firms seek to develop a harvest marketing strategy for the products. Since the Smartfone is developed specifically to satisfy the increasing demand for smartphones in countries in the developing regions of the world; the product fits into the introduction stage of product life cycle. This implies that the strategic marketing objective of the product will be to gain product acceptance and accelerate overall market growth of the product in the market. New Market Entry According to DuBrin (2011, p. 63), new market entry for products and services takes into account different factors such as cost reduction, repositioning of the product or service and developing new product lines. Since the Smartfone is developed to take advantage of the demand for smartphones in developing regions of the world, Smart Machines Inc. will seek to develop product acceptance in the market before seeking to increase the market share. According to Zheng and Ni (2006, p. 36), new products in the market exist under different categories. For instance, new to the world products are new innovations that are new not only to the market but to the firm as well. On the other hand, new product lines are new to the company but not to the customers. Also, new product lines can be based on improvements to existing products. This means that the new products have new improvements that increase their value and usability in the market. Also, new products can be as a result of repositioning products that already exist in the market. This takes into account new market segments to which the products are now marketed. Apart from repositioning, new products can also fall in the category of cost – reduced products. These are products which, as a result of modifications, offer similar performance but at a reduced cost. Two options for new products stand out exclusively for the Smartfone in developing markets: repositioning and cost reductions. It has been pointed out that the majority of smartphone users in the developing countries are deterred by the high prices of smartphones that have been developed and marketed in the of the regions of the world (Pride & Ferrell, 2011, p. 32). Also, the smartphone industry is in the growth stage of the industrial cycle; meaning that the industry is characterised by factors such as highly differentiated products and increasing competition (Boone, 2012, p. 265). Smart Machines Inc. will take advantage of the situation of the market in developing countries by seeking to market the Smartfone as offering the same performance to other Smart phones in the rest of the world but at a lower cost. This means that the product will offer features similar to the smartphones offered by Samsung, Apple Nokia in other markets in the world. These slight modifications will make it appealing to the emerging markets in the developing regions of the world. By exploiting technology in a new way, capitalising on distribution strength in developing regions of the world and establishing a foothold in the rapidly developing market for smartphones in the developing regions of the world, Smart Machines Inc. will seek to achieve the right placement of the product as a new product in the market. Pioneer or Follower Strategies There are basically two ways on which new products gain entry into the market: either by following the pioneer strategy or the follower strategy for their products. These two approaches differ in many respects. For instance, whereas the pioneer strategy means that a firm sets the standards in the market as a result of exploiting the advantages of economies of scale and extensive distribution channels, firms that adopt the follower strategy have the potential advantage of learning from the mistakes of pioneering firms. This means that follower firms can make amendments to their strategies in terms of the possible mistakes committed by the pioneering firm in product design, positioning and marketing. Since the Smartfone will be marketed as a premier Smart phone product for the emerging market in the developing regions of the world, its entry into the market will follow a pioneer marketing strategy. This is enhanced by the fact that the product will be marketed as combining two vital features: bringing real smartphone experience to new consumers at a reduced cost. According to Damodaran (2008, p. 130), the pioneering strategy of gaining entry into new markets is defined by several strategies that can be employed in order to realise the objectives for the product in the market. These strategic options available under thee approach include the following: mass market penetration, penetration into the niche markets, skimming and early withdrawal from the market (Fifield, 2012, p. 95). All these strategies bear different advantages depending on how appropriate they are in a particular market scenario. The Smartfone will employ the wide market strategy in its entry into the market. This means that the marketing strategy for the product will seek to capture and maintain a large share of the total market for Smart phones in the developing market. Since the market for the smartphones in developing countries is composed of many segments that are represented by different countries, Smart Machines Inc. will adopt a global strategy that will develop and market the Smartfone as a homogenous product for the entire market. The marketing strategy will seek to capture over 10% of the total market in the first five years after entry. Consequently, the marketing strategy of Smartfone in the new market will follow a skimming and early withdrawal strategy in the subsequent years. With the possibility of increasing competition as many manufacturers of smartphones, like Apple and Samsung, will develop devices for the market in developing regions of the world, Smart Machines Inc. will seek to recoup its investment during the early years after entry into the market (McCray, Gonzalez & Darling, 2011, p. 246). Growth Strategies According to Driskill and Brenton (2010, p. 123), markets that are experiencing growth present the following opportunities for firms: profitable share gains, less intense price-based competition and relative ease in gaining a share in the market. Since Smart Machines Inc. will market the Smartfone as a pioneering Smart phone in the market in the developing regions of the world, it follows that the company will adopt and follow the market leader growth strategy for the product in the market. This strategy will seek to capitalise on the advantage of the firm being a first entrant in the market in order for the company to stay in absolute market share. Following the market leader strategy for growth presents the firm with a number of different strategic options that include the following: defending the position, confrontation strategy, flanker strategy, market expansion strategy and withdrawal strategy (Viardot, 2004, p. 25). For the case of marketing Smartfone in the emerging markets in the developing regions of the world, Smart Machines Inc. will adopt two strategic options: market expansion and confrontation strategies. Under the market expansion strategic option, the company will seek to increase its ability to attract new customers of the Smartfone. This will be done by offering new products that are aimed at a variety of new applications and user segments in the market. This strategy is informed by the fact that the market for Smart phones in the developing regions of the world is treated as being a relatively homogenous one. On the other hand, pursuing the confrontation strategy in the market will entail protecting against losses of shares in the market in the future. This approach is necessary in order to counter the possible effect of increased entry into the market by other established smartphone manufacturers who would be intent to capitalise on the rapidly expanding market in developing countries in Africa, Asia and Latin America. For the company to achieve these strategic objectives for growth, it will seek to implement the following in the market. First, the company will seek to maintain or improve the level of satisfaction among customers and their loyalty to the Smartfone brand. This will be achieved by increasing the level of attention to quality control, increasing the benefits offered to the users of Smartfone and focus the advertising of the product on stimulating selective demand in the market. Secondly, Smart Machines Inc. will seek to reduce the attractiveness of customers switching to other brands of smartphones; considering the possibility of entry of other established players who will seek to replicate the success of their products in the emerging market. In order to counter this situation, the company will employ heavy promotional efforts for the Smartfone as well as develop multiple-line extensions for the product in the market. Shakeout, Mature and Declining Strategies Each of these stages in the life cycle of a product in the market are characterised by different characteristics. Changes in the level of competition in the market as well as in the rate of growth of the market during each of these stages present different strategic challenges for products in the market. For instance, products in a mature market are faced with the challenge of the need to maintain the financial success of the product in the market. This means that the company will have to maintain the perceived quality of the product as well as the superiority in customer service (Viardot, 2004, p. 35). On the other hand, products in the declining stages of their life cycle present the challenge of deciding whether to liquidate the business or focusing on harvesting maximum returns from the product during its remaining time in the market. In order to address these challenges, Smart Machines will employ different strategies during the shakeout, mature and declining periods of the Smartfone in the market in developing countries. For instance, when the market growth rate slows down during the shakeout stage, the company will seek to utilise its competitive advantages for the Smartfone in order to get insulated from increasing competition in the market. These advantages will be in terms of both technological advances in the product as well as advantages that will come with being the first mover in the market such as economies of scale, increased distribution channels and a well established brand loyalty. In the maturity stages of the life cycle of the Smartfone in the market, the company will pursue the market expansion strategy. According to Bradley (2005, p. 58), market expansion in a mature market seeks to reach the untapped or underdeveloped segments in the market. With the maturity of the market, Smart Machines Inc. will seek to develop a differentiation strategy for the Smartfone as a means of reaching different countries in the developing regions of the world. Differentiation for the product will be developed along the following lines: performance, durability, reliability, conformance with the specifications and the features. Also, in order to attain market expansion for the Smartfone, the company will take advantage of its marketing and distribution competencies in the market to access new segments in the market. When the market finally gets to the declining stages, the company will pursue a niche marketing strategy for the Smartfone in the market. This means that the company will seek to strengthen its position in a few segments in the market which have the potential for continued profit. This strategy augurs well with the market expansion strategy that seeks to develop new segments during market maturity. This strategic choice will be necessary since with the decline of the overall market for Smart phones in developing countries, only a few segments; represented by countries and regions; will remain profitable (Vashisht, 2005, p. 138). Also, the objective of maintaining focus on niches in the market will be necessitated by the possibility of marketing resources of the company being limited as a result of negative rates of growth for the market. New Economy Markets According to Meyer (2002, p. 103), new economy markets can be defined in terms of the following trends: emergence of digital products, proliferation of applications that are based on the internet, variability in product promotions and changes in customer service and support mechanisms. In essence, the new economy incorporates industries which are involved in the following businesses: one, e-commerce services; two, industries that take part in telecommunication services and three, industries that develop and market software and hardware that is used in the business (Meyer, 2002, p. 123). Since the smartphones forms a central part of the digital devices that drive the technologies of the new economy markets, Smart Inc. will seek to provide the market with enabling technologies that will meet the needs of the market for Smart devices. The Smartfone by Smart Machines will seek to drive the new economy by offering the following standard software features to consumers in the emerging market: connectivity features; MMS; email services and office document editing features. Since these applications in the Smartfone will be compatible with many other applications in the market, the device will offer superior software and hardware features in the market. This will not only fill the actual needs of the customers in the market but also ensure that the Smartfone delivers the performance and value that customers in the market are willing to pay for. Organization Structures Organizational structures take into account three important factors: formalisations, centralisation and specialisation (Avlonitis & Papastathopoulou, 2006, p. 246). Whereas formalization refers to the extent to which the decisions and working relationships in an organization are governed by formal rules and policies, centralisation refers to whether the decision making framework within an organization is distributed or rests upon central figures (Hitt, Ireland & Hoskisson, 2010, p. 184). On the other hand, specialisation refers to the degree to which responsibilities are distributed across different positions within an organization. For the case of Smart Machines Inc., a product management organizational structure will be used. Such an approach to organizational structure ensures that the decision making process is decentralised while increasing the level of product specialisation (Pride & Ferrell, 2011, p. 45). This organizational structure is also characterised by the fact that although the product managers are responsible for obtaining cooperation fro other functional areas of the marketing department, they do have formal authority over these areas. The marketing functions will fall under in the docket of the marketing manager of the company. With different regions representing the developing world forming the key markets of the company’s product, there shall be different regional marketing managers who will be charged with the responsibility for marketing in the different regions of Africa, Asia and Latin America. This organizational structure will allow Smart Machines Inc. to use self-managing teams in a collaborative network when marketing the Smartfone in the designated markets. This is in line with emerging trends in organizational structures which take into account factors such as the need to adjust the structures of organizations as a result of changing markets and the need to develop global structures for products (DuBrin, 2011, p. 116). Marketing Plans The SWOT analysis presents the strengths, weaknesses, opportunities and threats that a company faces in a particular market. By taking advantage of the strengths and opportunities while minimising the impact of weaknesses and threats, an organization can ensure both short term and long term success of its products in the market (McCray, Gonzalez & Darling, 2011, p. 249). The SWOT analysis for Smartfone by Smart Machines Inc. can be performed as follows. Strengths 1. The Smartfone will have an enhanced web browser that will deliver superior internet experience to users in the designated markets. This is because the customers in these markets seek to use the Smart phone as a primary tool of accessing the web. 2. The Smartfone will build its strength upon enhanced brand awareness that comes with the advantages of being the pioneer Smart phone specially built for and marketed in markets in the developing regions of the world. 3. Smartfone will derive its strength from superior quality in its design, functionality and performance. This is in tandem with the needs of the customers in the market. Weaknesses 1. There is the possibility of long term decline in the gross margin. This will be enhanced by increased competition in the market when established players will seek to gain a share of the market. 2. Since Smart Machines Inc. will use different technologies for the Smartfone, this will open the possibility of future patent wars with software developers in the industry. Opportunities 1. There is a huge demand for Smart phones in the emerging market that has not been met. This huge and increasing demand is created by the absence of smartphones that have been developed for markets in countries in the developing regions of the world. 2. With evolving technology and other developments in the market, the market for Smart phones is likely to remain unstable. This is an opportunity which Smart Machines Inc. can take advantage of in order to ensure that it attains and maintains leadership in the emerging market. This leaves room for development of new products, models and features for the market. 3. There is also the opportunity for increasing demand for other services that are related to smartphones in the market. Developments of new applications and platforms will create new business opportunities for Smart Machines Inc. in the market. Threats 1. With time, the company will have to grapple with increasing competition from new entrants into the market such as Google, Apple and Samsung. Many manufacturers of Smart phones will seek to replicate their success in other regions of the world by developing special phones that target the emerging market directly in terms of having reduced costs and enhanced features. 2. With increasing competition during the mature stages of the market, competition in terms of prices is likely to reduce the earnings of the company from sales of the Smartfone in the designated market. 3. Rapid changes in technology will present pressure on the company to keep on making changes on the Smartfone in the market. This will be a threat to the reduced cost model that will be used for the Smartfone in the market. 4. Regulatory frameworks in the markets in developing regions of the world may be unfavourable to Smart Machines Inc. In addition to this, high taxation and other policy regulations may threaten the ability of the corporation to provide standard Smart phones at reduced costs to the markets in these countries. Marketing Metrics and Marketing Audit Smart Machines Inc. will have the following as the objectives of marketing the Smartfone in the designated markets: one, to attain a 5% market shares in the target market within the first two years; two, to increase the percentage of awareness for the Smartfone brand in the market segments by 20% in the next two years after entry into the market and lastly, to increase the sales of the Smartfone in the target market by the first two years. These metrics will take into consideration analysis of the market share, brand awareness and sales volume. This will entail analysing the relevance of sales figures from different market segments that are represented by different countries in the regions of Africa, Latin America and Asia. For the case of Smart Machines Inc., two types of audit shall be carried out to access the progress of the marketing strategy: the marketing environment audit and the objectives and strategy audit. This will be in line with the need to use effective control systems in order to maintain the competitive advantage gained in the market. Conclusion In summary, the successful placement of the Smartfone in the emerging markets in the developing regions of the world will be followed by a number of strategic decisions that shall be taken by Smart Machines Inc. as a way of ensuring long term success of the product in the market. Since the company will be a the first one to develop a Smart phone that is specially designed for and marketed in developing countries, the company will adopt a pioneer strategy for its premier product; the Smartfone. Consequently, the company will pursue a market expansion strategy; following the successful acceptance of the product in the market. By developing new features and models of the Smartfone, the company will expand its share of the market in both existing and new segments. With anticipated negative growth in the market during the declining stage, the company will focus on new segments developed during the earlier stages which have the potential to remain profitable. In implementing this approach, Smart Machines Inc. will have to tackle the threats posed by increasing completion and rapid changes in technology. However, the company will seek to take advantage of the opportunities presented by the presence of an untapped market for Smart phones in emerging markets. References Avlonitis, G. & Papastathopoulou, P. (2006). Product and Service Management. London: SAGE Publications. Boone, L. E. (2012). Contemporary Marketing. Burlington: Butterworth-Heinemann. Bradley, F. (2005). International Marketing Strategy. London: SAGE Publications. Damodaran, A. (2008). Strategic Risk Taking: A Framework for Risk Management. New Jersey: Wharton School Publishing. DuBrin, A., J. (2011). Essentials of Management. Mason: South-Western Cengage Learning. 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