Theories and Models in Marketing Strategy: of So Fair - Case Study Example

Strategic Client Proposal Introduction Every organisation will always want to win the market place. This normally requires managers to equip themselves with all aspects of marketing strategies starting from formulation, all the way to execution. Marketing management in this case means understanding competitors and customers, building customer relationships by creating value and developing brand strategies (Aeker, 2005). A firm that has in-depth knowledge in creating customer value is well placed to succeed and sustain its profits. This is because competition, market forces, consumers and technology influence the way a company markets its products and services (Hooley & Nicolaud, 2012). This calls for every business company to employ principles of effective strategic marketing management. This is because strategic marketing management is critical in building a winning formula for an organisation that wants to realise market leadership. It further helps a company to enhance its profitability and sustainable growth (Aeker, 2005). The company in focus here is So Fair. This is a social enterprise company located at Southampton Solent University. The company is an initiative to help fair-trade organisations in third world countries by using graduates to develop marketing plans and sales activities (Moshirian, 2012). Currently, the company is involved in assisting a small textile workshop in Southern India. The workshop is run by women in a Tsunami devastated village of Pondicherry. The company has a long-term plan of reaching a level whereby the interns and volunteers can maintain a self-funding social enterprise where students can learn the techniques, joys and pitfalls of managing a small firm before starting their own businesses (Moshirian, 2012). This dream is also meant to extend to a level of offering scholarships at Southampton Solent University. So air is entirely run by interns and volunteers that the university ha employed. So Fair is a company that ventures in the selling of handmade bags. The bags are made by widows affected by tsunami and they use 100% cotton. Such bags include shopping bags, shopping bags without gussets, haversack bags and draw string bags of different sizes. The organisation's ethical aim is to help the unprivileged widows in India create a life for themselves (Moshirian, 2012). This is done by raising awareness in third word countries about their abilities. The project is also meant to give students the opportunity to gain valuable work experience. The company does about its operations by looking for potential customers from different parts of the world and areas like churches. Once the company has identified a potential customer, an order is made to India for the bags. The women in India the send the bags to Southampton for sale. Despite the fact that the company has good vision for the needy and poor, there are still so many challenges that the company faces that hinder its growth especially when it comes to strategic marketing (Moshirian, 2012). This forms the basis of this paper that aims to give a proposal for a strategic marketing management through a review, analysis and application of the theories and models of strategic marketing management. This is to be achieved with the company's motto in mind: 'Not Charity, Not Aide, but fair trade'. Problem Statement The need to recommend a marketing strategy for So Fair is because of the little success it has received since it started its operations. This little success has been to a level where the company close to no sales. This is because So Fair is currently selling one-product: conference or delegate bags. The premium prices are so high and the bags take 6-8 weeks to deliver to the customer. The little success has also been because of very little budgetary allocation for advertising the company's products. Therefore, the overall aim of this paper is to develop very and sound smart objectives for SoFair to push its sales to profit making levels. This would be achieved by reviewing and recommending application of the theories and models of strategic marketing management. The Environment & Trends within SoFair As stated earlier, the So Fair company sells handbags made from India. This company normally targets ladies at college and the working class. Strategic places where the market is good are from schools, churches and so on (Moshirian, 2012). The products range from handbags to shopping bags of different varieties, haversack bags and draw string bags of different sizes. One problem that this company faces is that there is no clearly defined market for its products. The company relies on those already existing customer that have before bought the bags in order to continue selling. It is worth noting that this could be the result of low sales that the company has been facing. The delivery process takes so long and this is a challenge especially when customers want immediate delivery. The bags take 6-8 weeks to reach Southampton (Moshirian, 2012). Whenever they make sales, they price their products so highly that the customers do not buy much. The types of bags are not also suiting the immediate population at the university, which could be the first market segment to be targeted. The biggest challenge here is that no fund has been allocated to the company to enhance extensive advertisement of the products (Moshirian, 2012). A problem that has resulted in poor performance of the company. Theories and Models in Marketing Strategy Before So Fair resolves to any market strategy, it is vital to put in place different theories and models of marketing strategies. Such theories help the company to know what to strengthen and what approach to take in its marketing process. Examples of such theories are game theory, signalling model, Innovation theory, product quality, market share, market pioneering and market orientation. Game theory This model is based on the assumption that firms are rational utility maximizers. Rationality in this case implies that these firms do strive to achieve the most preferred outcomes (Rajan & Jayachandran, 1999). For example, the So Fair company would really want to see the widows in India get a living through selling their bags. The theory states that as the firms do so, they should put in mind that other firms are also doing the same (Rajan & Jayachandran, 1999). SoFair should as well know that there are other global companies selling bags. In the event of uncovering the expectations of their rivals, they will meet uncertainties. This can be solved by forming competitive conjectures, subjective probability estimates of rivals' expectations and behaviour (Rajan & Jayachandran, 1999). Therefore, the greatest principle is for So Fair to put themselves in the position of their competitors and see a way of beating them in business. Signalling Theory This theory requires that a firm develop competitive signals; preview of potential actions intended to convey information from competitors (Rajan & Jayachandran, 1999). This is very important for So Fair as it aims to compete with them. This is because competitive behaviour is often influenced by signals sent by competitors. Innovation Theory Any company like So Fair should always know that the business environment is inherently dynamic and therefore characterized by uncertainty and disequilibrium (Rajan & Jayachandran, 1999). Therefore innovation process in the company should be viewed as one that changes the very nature of competitive advantage rather than as a condition leading to equilibrium (Hooley &Nicolaud, 2012). When a company makes profit in an environment full of uncertainty and disequilibrium, then it is due to discovery and innovation (Rajan & Jayachandran, 1999). Such innovations, which would be appropriate for a firm like So Fair, are reformulation of the products, developing new processes for manufacturing a present product, and developing new channels of distribution (Rajan & Jayachandran, 1999). Product Quality For any firm selling products like bags (SoFair), quality should mean any other aspect of a product that will influence the demand curve of that product (Rajan & Jayachandran, 1999). When price plus that other aspect is combined, quality can be construed as any non-price aspect of a product that signifies its superiority and causes a shift in its demand curve (Hooley &Nicolaud, 2012). As much as a business like SoFair would want to maintain a higher price for its products and a higher market share, the two objectives sometimes become incompatible (Rajan & Jayachandran, 1999). This explains what So Fair should avoid which has been adopting a niche strategy by offering a high quality product at a high price, with a small market niche. This is what made SoFair to exclude itself from the contest for market share dominance in the broader market. Therefore, the management of SoFair should put in mind that the ability of a business to charge higher prices for higher quality is dependent on the ease with which its customers can determine the quality of their products (Hooley &Nicolaud, 2012). This because, when quality is uncertain, consumers tends to use price as an indicator of quality. This suggests a bidirectional relationship between quality and price, in which perceived quality positively influences price under conditions of greater information availability, and price positively influences perceived quality under conditions of lower information availability (Rajan & Jayachandran, 1999). Market Share This model states that the relationship between market share and profitability is robust across different definitions of market share, different sampling frames, and controls for accounting method variation (Rajan & Jayachandran, 1999). If So Fair will operate in a high market share characterized by uncertainties about product performance, then it will take this as a signal of superior quality service to customers. This is because the customers of their products will have developed confidence in the brands. After this achievement, the company will have a ground to command a price premium over low market share and hence high profitability (Rajan & Jayachandran, 1999). Market Pioneering A company can only be a market pioneer if it is the first either to introduce a new product, employ a new process or enter a new market. Market pioneering advantage thus refers to the competitive advantage associated with being the first to enter market (Rajan & Jayachandran, 1999) .This then calls for SoFair to venture in research and be a pioneer in new markets, products or process. This move will help the company because, a market pioneer is normally able to achieve sustainable competitive advantage because of entry barriers (Rajan & Jayachandran, 1999). Through this move, a company can also shape the beliefs of consumers about ideal brand attributes and preferences in its favour (Rajan & Jayachandran, 1999). Market Orientation This model puts it that any firm like SoFair that wants to be successful in its operations should determine customers' needs and wants, and satisfy them more effectively than their competitors do (Rajan & Jayachandran, 1999). The concept of market orientation in this regard refers to the organization culture that most effectively and efficiently creates the necessary behaviours for the creation of superior value for buyers and, thus, continuous superior performance for the business (Rajan & Jayachandran, 1999). The model can thus be approached from three dimensions such as customer orientation, competitor orientation, and interfunctional coordination. Therefore, SoFair should adopt market orientation theory by having a wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization wide responsiveness to it (Rajan & Jayachandran, 1999). Conclusion With such theories in mind, SoFair can easily implement good marketing strategies to enhance its profits because, the theories go hand in hand with the strategies. One major challenge that business like SoFair do experience is finding customers because a successful business cannot do without them (Hooley &Nicolaud, 2012). Getting these customers requires a marketing plan but this also depend with the kind of business. The marketing plan also depends on the product a company is selling. Therefore, the first thing SoFair should do is to figure out who its customer are. This would be followed by a strategy on how to reach them. The SoFair company thus should always ensure that at the beginning of a marketing strategy, it establishes why its product is different from that of its competitors (Hooley &Nicolaud, 2012). This means there need to be something different from their competitors. This is a good road to forming a good marketing plan. Once this is established, SoFair will do very well and should ensure that they have business referrals. The company should work on its networking procedures and as well get feedback from its customers on the kind of goods they may want or they have received (Hooley &Nicolaud, 2012). SoFair also needs to have trade magazines and upgrade their websites to provide more information to potential customers. In addition to this, the company could as well produce newsletters to keep their name in front of their customers and prospects because they help provide key insight into business challenges and offer solutions to customers' problems (Hooley &Nicolaud, 2012). Some newsletters advertise so valuable information needs to be included. The SoFair thus should allocate more funds to advertise the companies through internet websites, TV stations and radios. References: Aaker (2005) Strategic Marketing Management, 7th edition. New York: Wiley. Buttle, Francis. (1996). Relationship Marketing: Theory and Practice. New York: SAGE. Hooley, Piercy, Nicoulaud (2012) Marketing Strategy & Competitive Positioning, 5th Edition. London: Prentice Hall. Varadarajan, Rajan P. and Satish Jayachandran. (1999) “Marketing strategy: An assessment of the state of the field and outlook,” Academy of Marketing Science, (Spring), 120-143 Read More