FACULTY OF COMMERCE
Bachelor of Arts in Logistics & Supply Chain Management
Mr. Yohane KasambalaSubmitted By:
Fexter Hopkins Seyara
To discuss Marketing strategies in one of the Retail Company whose sales fell drastically by 50%.Date:
13th August 2018
Marketing can be defined as an activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. These exchange processes calls for a considerable amount of work and skill. Marketing management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties.
A strategy can be defined as a thoughtful examination plan that will develop an organisation`s competitive advantage. It tells its objectives, resolutions, or goals that produce the principal policies for achieving business and organisations economic benefits. To develop an effective strategic plan an organisation must define its mission, analyse threats and opportunities to which the organisation can respond in search of its assignment. This is important because it helps the organisation to measure its own distinctive capabilities. A set of significances must be recognized based on organisational objectives that support with the mission. All these are assessed in the environment which gives organisations their means of survival on the market, CITATION Chr111 l 2057 (Christopher, 2011) .
According to Heizer, (2001) defines marketing strategy as a business overall short or long term plan for reaching customers satisfactions and what the business provides to its consumers for organisations growth and profitability. The marketing strategy of a company contains the company`s value proposition. The strategy has three elements that include goals, policies and action arrangements. If the strategy does not have any of these fundamentals, it cannot enjoy the competitive advantage. In private sector, customers are the one who keeps the organisation in business because if they buy products, it translates into profits.
This paper discusses market strategies that can change situations where the company that faces 50% reduction in sales due to poor implementation of its strategies and strong competition from other retail companies. Before coming up with any marketing strategies, an environment should be assessed whether internally or externally to evaluate the organisation`s capabilities for itself. This procedure of examining the strength and weaknesses of the organisation as well as threats and opportunities relevant to its future strategy is known as a SWOT analysis.
As a marketing consultant who led a team of my fellow marketers to assess the non-performance of Mphepo Zinayi company which is a retail merchandiser in Malawi. Mphepo Zinayi was founded by a business man, Fexter Hopkins Seyara in 2012. The outlet has 50 stores and it’s regarded as the largest retailer in revenue and number of employees it recruits annually. In 2016, it generated MWK 18.4 million in their first quarter translating into 80% of their annual budget.
Mphepo Zinayi serves more than 1 million customers every week through its 50 stores in 28 districts. Due to intense competition, new entrants and change of technologies, their sales drastically went down by 50% hence engaging us to review their strategies. We analysed the PESTEL and SWOT analysis for this retail company before recommending which marketing strategies to be adopted.
We observed that government policies and regulations affected this company in their revenue and profitability. The buy Malawi policy restricted innovations through foreign trade hence creating trade barriers. Government also introduced exorbitant taxes on imported raw materials this forced retailers to close their businesses. We also noted that government was the largest employer and their employees had less disposable income to buy merchandise.
On an economical factor, we noted that the Gross Domestic Product per capta for Malawi was last recorded at 486.45 US Dollars in 2017, this represented 4 percent of the world`s average GDP. When GDP growth is strong, firms hire more workers which lead to more spending by consumers on goods and services. The opposite is true if GDP decline it impacts on consumer, business and investor negatively. Additionally as GDP falls, the unemployment rate is expected to fall and prices decline and consumer spending fell drastically. Economic factors are always very important in the context of trade and business,CITATION Kot02 l 2057 (Keller, 2012) .
Social behaviour was another factor assessed on the retail sector for its profitability. We took a sample in Kasungu district, as per our research we found that most people buy merchandise during selling season for tobacco. This is not a healthy situation in a country which is in the developing stage. Demographic changes and changing of consumer choices have contributed to have a deep impact on a retail sector in Malawi hence affecting Mphepo zinayi Retail Company stores.
Technological factors are more important in 21st century in developing supply chain strategies, customer service or sales revenues. The growth of digital platforms has increased the number of players in the retail industry. The use of VISA cards in urban areas has contributed people to make purchases without proper budgeting hence promoting more sells in those shops positioned in cities, however more and more retail shops are struggling to implement technologies in their stores to satisfy their customers, (Lysons et al, 2006)
Under environmental factors, many industries especially retail sectors have been affected due to waste management. Lack of environmental friendly packaging materials, renewable energy has drastically affected business perspective. Retail shops trades during the day, because of lack of electricity.
Finally under, PESTEL is legal laws. Bad laws enacted by our members of parliament has affected business environment in this country. The minimum wage bill per day is MWK 2,000.00 translating into MWK 42,000.00 if someone works 22 working days. It’s disheartening for people to buy products from our retail shops hence affecting more company`s in this industry and Mphepo Zinayi is not exceptional.
One feature of SWOT analysis is assessing the business environment. It is as this stage where the organisation must consider the economic, competitive, regulatory, social and technological changes happening in the market place. Looking over these dimensions of the environment it can yield awareness into the opportunities and threats that exists so that the organisation must answer on its overall strategic plan and any functional plans, (William, et al., 2000).
With this situational analysis, it is important for the organisation to consider the problems that exists in the marketplace. This helps the business to consider what type of barriers to entry exists in the market place. By knowing these conditions it helps a company to overcome and ensures business opportunity. After analyzing Mphepo Zinayi retail company, we recommended positioning and growth strategy marketing strategies to be implemented because these strategies yielded results where we also conducted similar exercise at Zingonyongo retail company.
According to Kotler (2006) defines positioning as a fragment of the brand uniqueness and value intention that is to be vigorously linked to the target audience. Thus the brand position, which should demonstrate an advantage over competitor brands, represents current communication objectives. Positioning strategy, in general, can be articulated as an application or defining a product or a brand to customers to obtaining a detailed location against competitors in consumers mind, CITATION Nig10 l 2057 (Nigel Slack,Stuart Chambers & Robert Johnston, 2010).
In marketing management, positioning strategies have a significant place because it is only the awareness in consumer’s mind which is exposed by constant communication efforts that defines a brand and makes it different from other competitors on the market segment or place. Brand Positioning is without doubt the most important element of your brand strategy. If your brand position is clearly and definitively selected and communicated internally or externally to the market, you’re marketing program becomes more focused, effective and efficient and yields an improved return on your marketing spend.
This strategy takes a clear understanding of the market which includes target demographics, strength of the competitors and how it gives value, strength and weaknesses. After you have a thorough understanding of the landscape of your market, you can decide which positioning strategy will be the most successful for your products, CITATION Por11 l 2057 (Porter, 2011).
The good part of this strategy is that it focuses on specifically products for specific group of people in reference to age, gender, education and language just to mention a few. For example Telemundo is a Spanish language television network that offers programming to Latino customers. We took this philosophy and applied at Mphepo Zinayi Retail Company to offer specific products to their customers for satisfaction.
However, many companies have not taken advantage of this key marketing discipline because they have internal politics and are misguided by their advisers or because they simply don’t understand positioning. But this is a first step to driving clarity throughout the marketing function and hence improving the customer relationship. For example, we achieved this at Mphepo Zinayi by having two products. Mbaula Chitetezo and Kokoliko mersh whereby our products were well positioned against our competitors so that our consumers had a variety of choice, (Heizer et al., 2001)
Second strategy recommended and implemented used by our retail company was growth strategy which consists of market penetration, product development and vertical integration. Market penetration can be both a measure and astrategy. A business utilises market penetration strategy to enter a new market. The main goal is to get in quickly with your products and service so that you capture a large share of the market.
The management looks for ways to increase the match share of its current products in their current markets. A small company uses a market penetration strategy when it decides to market existing products within the same market it has been using, (Christopher et al., 2011).
This strategy uses aggressive pricing tactics, aggressive marketing campaign and distribution strategies. Penetration pricing focuses in lowering prices for your products and services than that of your competitors. This strategy works well in price sensitive markets so that you maintain a decent level of profits due to the level of volume of sales which decreases your costs per unit for the product. The advantage of this strategy is that it creates goodwill amongst the first customers that purchases the product due to the aggressive pricing hence resulting into customer satisfactions.
The only way to grow using existing products and markets is to increase market share, according to small business experts. There are three major ways to achieve this; Firstly, a company could try to encourage its current customers to buy more or the company Secondly, it could try to attract the competitors’ customers to switch to its brand and lastly, the company could try to convince non-users to start using their products.
The scope of new product development is to meet changes in fashion or the new tastes of consumers, to provide for technological improvements, to introduce new processes and techniques both in production and marketing to keep up with the aforesaid changes and improvements, to extend the sale of existing products to new markets and to meet the onslaughts from the side of competitors, (Lysons et al, 2006)
The vertical marketing systems have emerged to challenge conventional marketing channels. A vertical marketing system comprises the producer, wholesaler and retailer acting as a unified system. Vertical integration makes a firm more efficient in serving existing markets. Vertical integration strategies are useful when the ultimate markets have high growth potential.
Growth strategies for new markets consist of market development, market expansion and diversification. Under market development strategy, it identifies and develops new markets segments for current products. This strategy targets buyers that shun products in the targeted segments. It also focuses new customers in new segments. This helps in sales expansion through new uses for the product. It also helps management to come up with new decisions s to bring current products to new markets. This strategy helped China in developing new market for their product worldwide, CITATION Kot02 l 2057 (Keller, 2012).
For market development, the management must identify potential user groups in the current sales areas. They should seek additional distribution channels in the present location and finally, they should try to sell the products in new locations.
In market expansion strategy, the total market expands and the dominant firm normally gains the most. Generally, the dominant firm looks for new users and more usage of its products. The product has the potential of attracting new buyers. Then the markets can be expanded through discovering and promoting new users for the product. Lastly, the firm has to convince people to use more of the product per use occasion. At present, companies are expanding their markets globally.
Diversification entails developing new products or services for new markets. This strategy is applied only when there`s shrinking of growth in existing markets or environmental changes. Other factors that lead to this strategy is change in technology, economic, regulatory or tough completion that result into risking your business growth, (William et al, 2000)
It is important to note that before developing any marketing strategy, the organisation must decide which one of the several market positions it will take. The emphasis or options are to be a market leader, market challenger, market follower or market niche. Within an industry, one organisation should strive to be the market leader and aim to be the largest market share dominants in a given market. Strategies dictate the pricing of goods and services to the competitors hence earning higher profits than your competitors in the industry.
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