Executive Summary
As a new startup entertainment company, we plan to manufacture SmartTV as well as crate programs to be broadcasted on all television through established broadcasting network. As a step in that direction, our mission is to deliver continuously innovative entertainment products for the diverse needs of the viewers. We are in the process of doing SWOT analysis as a part of generating situational awareness. This process of environmental scan will help us better understand our position in the market. Next we will be applying the principles of Market Opportunity Analysis (MOA). These steps will help in goal formulation.
The next stage would be of market research. This will allow us to get a regular feel of the pulse of our target customers. This regular feedback will go towards subsequent strategic planning session. That process will allow us to complete the cycle of strategy, implementation and gathering feedback. We will also continue to do external environmental scan on our own to develop a greater understanding of evolving market.
As the same time, we will work toward finalizing the value proposition that we offer to our client. It shall be extremely important for as that will determine what kind of expectations we set for our clients. Next, we will finalize our pricing strategy. Although we are following the market dominance strategy, pricing will still be important for us.
Finally, we will be developing our channel network. Initially we plan to go for our vertical approach, without any wholesalers. Later on we might consider shifting to horizontal approach to even multi-brand retailors.
Strategic Planning and Overview
The best way to enter an existing television market would be to begin with strategic planning process. First, like any other large corporation, our company has four organization levels; the corporate level; division level; business level; and product level. First of all we will have to being at the level of corporate and division level strategic planning. At the corporate level, we will need to take four planning activities; defining the corporate mission; establishing strategic business units; assigning resources to each SBU, and planning new businesses, downsizing, or terminating older businesses.
Our corporate mission will be to deliver continuous innovative entertainment products for the diverse needs of viewers. The company sees itself as diversifying into two categories: manufacture and sales of television; and as a content provider for industry in general. Rather than being a product driven, we want our company to be a market driven. As our company is strategic market driven, our focus will be to bring entertainment to home to people from all age group and with diverse interest. In this regard, we see competition not only from other TVs and channels, but also from print, internet derived, home-theatre system, and other forms of media. So, based on the two diversified categories it plans to operate, we will be creating two strategic business units. Each of these strategic business units will be able to do its own strategic planning independently of the other unit. As the nature of their business is different, they are expected to have their own competitors. Finally, these units will be headed by their own Executive Director.
Business Unit Strategic Planning
Each business strategic units will have their own strategic plan and will do its own SWOT analysis.
Environmental Analysis: SWOT.
The will entail an overall evaluation of a company’s strengths, weaknesses, opportunities, and threats. Further, we will evaluate what it takes to win in each of the segments of business units. Next, we will keep a close eye on macro-environment and micro-environment factors. This will allow us to recognize new marketing opportunities in new SmartTV manufacturing and content development in the UK business sector.
Next we would apply the concept of Market Opportunity Analysis (MOA) to determine the attractiveness and success of each opportunity. In this process, we will be asking ourselves five questions.
- Whether the benefits involved in the opportunity be articulated convincingly to a defined target market?
- Can the target markets be located and reached with cost-effective media and trade channels?
- Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?
- Can the company deliver the benefits better than any actual or potential competitors?
- Will the financial rate of return meet or exceed the company’s required threshold for investment?
Goal Formulation.
The next stage would be the goal formulation for implementation of strategies of both the business units. We would be taking the following steps towards the formulation of goals.
- The objectives must be placed in the order of hierarchically, from the most important to the least important.
- They should be stated quantitatively. For example, we will be creating our objective as “increase the return on investment (ROI).”
- The goals we set will be realistic and achievable.
- We will be keeping our objectives consistent.
Market Research
- Define the problem, the decision alternatives, and the research objectives. The specific objectives in the context of the industry. For example, what age and educational categories of viewers and customers should we be responding to most? How many types of TV should we be manufacturing and what different kinds of TV channels should we be airing? How many more viewers or buyer can we expect to add by expanding our line? How can we capitalize on the goodwill earned? To determine how important is the value added services to the marginal clients?
- The next step would be to develop a research plan. This entails developing the most efficient plan for gathering the needed information. This requires the need for decisions on the data sources, research approaches, research instruments, sampling plan, and contact methods. The data sources can be primary, secondary, or both. The research approaches can be observational research, focus-research, or a combination of both. We will be using research instruments like questionnaires, psychological tools, and mechanical devices. We will be using a sampling plan to identified target audience of the right sample size. Therefore, will be using statistically important sampling procedures.
- This is probably the most expensive and also most prone to error. We expect to encounter four kinds of major problems. Some respondents will not be at home and will have to be recontacted. There would be some who would refuse to cooperate. And then there would be those who would be biased and dishonest. The fourth and the final categories would be the one who will give honest answers.
- The next stage is that of analysis of information. We plan to tabulate the data and determine a frequency distribution. The analysis will also require correlational and descriptive statistics.
- And the next step would be the presentation of the findings.
- Lastly to make a decision based on those findings.
External Environment Analysis
This will help us determine the rate of growth of baby boomers as they would be the biggest buyers. That will also help us determine the TV channels mix. Various age subgroups will have their own preferences. Similarly, in an ethnically diverse country like UK, there is a need for TV channels for each of the diverse ethnic groups. TV channels will have to cater depending upon the educational breakdown of the target population. Another factor to take into account will be the household pattern.
After analyzing demographic environment, we now come to economic environment. In this category, income distribution shall be the most important aspect. Markets such as U.K. are often distinguished based into; very low income; mostly low income; very low very high income. To me be competitive, we will be creating TV channels for each of the segment.
Next, we come to the analysis of the natural environment. Among various factors that make up the natural environment, energy cost will be most important for us. We plan to ensure that our products are energy saving certified. More importantly, we plan to make our plant very energy efficient. Besides saving on energy bill, we also want to make a positive impact on the environment.
The most significant environmental factor will be the technological environment. We plan to keep pace with the technological developments in both the business segments. In fact, our effort shall be to a step ahead in the game through increased investment in research and development. We tend to explore all possibilities towards creation of innovative products and services. In an effort in that direction, we plan to use management accounting principles in an effort to strategically allocate our resources towards research and development initiatives.
At the same time, we will be keeping a close eye on the political and legal environment affecting both or our strategic business unit.
And finally, we will have to be cognizant of the socio-cultural environment of our service area. This includes taking into account the view of our employees, viewers and customers, competitors, society in general, and that of nature.
Developing Value Proposition
It shall be our effort to generate high customer loyal in both the business segments. And key to generating loyalty shall be delivering them high value products. This idea of value proposition consists of a whole portfolio of ideas that we promise to deliver. In our case, the core positioning shall be “quality entertainment”. Other benefits to the customers would be durability of the product, excellent customer service, and honest warranty offering. Our value proposition shall reflect the resultant experience our customers will gain from our company’s offerings and their relationship with us.
Value Delivery System, which is a similar concept, includes the elements of communications and channel experiences our customers will gain upon buying our products. However, it will be a challenge to determine if our customers will receive the promised value from our products. This will depend on our ability to influence various core processes of our business, including partnership with suppliers, network coordination, planning, asset management, and our reputation. We will also need to monitor our competitors’ performance, as well. For company like ours’, the satisfaction of our customers is both a goal and marketing tool. We can use it to gauge their level of satisfaction with you. Tracking and measuring the customer satisfaction involves a system to register complaint and suggestions, doing regular customer satisfaction surveys, ghost shopping and lost customer analysis.
Developing Pricing Strategy
In setting up of pricing strategy of both our business units, we will have to take into considering the following factors; selection of the pricing objectives; determining demand; cost estimation; analysis of competitors’ costs, prices, and offers; selection of pricing method; and final prices selection.
Beginning with the first, which is a selection of pricing objective, we believe in maximizing our market share. Therefore, we would like to practice market-penetration pricing strategy. In that context, the following conditions seem to follow setting up of low price; the market is highly price-sensitive, our production and distribution costs fall within the accumulated production experience, and it is expected to discourage a present and future competition.
After setting pricing objective, we come on the determining the demand of our products. As our company follows the market dominance strategy, we will have to devote time to customers who are less price-sensitive. To achieve success in this segment, we will have to ensure that we follow the following factors. Our R&D will ensure that our products are unique. Also, we will make sure that customers are able to differentiate them from substitutes. In this regard, the quality of our product should be obviously such that customers can easily differentiate them. Although we follow the market dominance strategy, we will ensure that we remain price competitive in our segment. We will also ensure that our products are compatible with other products, which our customers would have previously bought. Together these measures will ensure that products have quality, prestige, and exclusiveness.
We also need to take into account the pricing methods our competitors have been following all along these years. This has pretty much shaped the market, and it is something our company cannot ignore. If competitors have been there long enough, the market is most likely price competitive.
Next, we plan to select a pricing method. As we are following the market dominance strategy, we believe that the Perceived-Value Pricing model will be most appropriate. Under this pricing model, we intend to deliver the value we promised under our value proposition, and the customer’s perceived value. This is made up of several elements such as; customer’s image of our product; the channel deliverables; quality of warranty; customer support; and other minor qualities such as our reputation, trustworthiness, and esteem.
All the above factors will help us in setting the final price.
Channel Development
We intend to take the following channel development steps. The first and the foremost step would be the selection of channel members. We will be careful in their selection because, for the customers, they are the face of the company. Though, it will be a challenge to select right channel members due to their great demand. It is our strategy to determine the favorable characteristics of the channel partners. We intend to evaluate them for the number of years in business, other product lines they carry, their growth and profit record, financial strength, cooperativeness, and their service reputation.
Our next step would be to continuously motivate the channel members. We believe in rewarding the channel members. Typically companies reward some extra benefits in return for over performance. Without doubt, reward power generates better results than coercive power. With our channel partners we aim to build a relationship based on cooperation, partnership, and distribution programming. As a step in that direction, we plan to use positive motivators, such as higher margins, special deals, premiums, cooperative advertising allowances, display allowances, and sales contests.
The next logical step would be the evaluation of the channel members. We intend to periodically evaluate our channel members against various performance standards such as; sales-quota attainment; average inventory levels, customer delivery time, treatment of damaged and lost goods, and cooperation in promotional and training programs.
We also plan to periodically review and modify our channel arrangements. This becomes necessary when the distribution channels are not working as planned, consumer buying patterns are changing, market is expanding, new competition is arising, new innovative distribution channel emerges, and product moves into later stage in the product life cycle.
Finally, coming to channel dynamics, we plan to go in for vertical marketing systems. This conventional marketing channel is made up of independent producers, wholesaler and retailors. Although in our context, we will be directly marketing to retailors. Although, we may consider going for horizontal marketing system at a later stage. That will be helpful if we decide to market both our product lines through the same system. We may also consider multichannel marketing with established retailors. This will enable us to take advantage of their experience and their clientele.
Finally, we will also put in place conflict resolution measures. Therefore, we and our channel partners will be able to cooperate to meet the challenges.
We also plan to explore the option of e-commerce. It has great impact on channel management. The topmost issue will be avoiding channel conflict. There are bound to be some issues, particularly with pricing. Thorough research has zeroed into the need for “dedicated channel management groups, documentation of channel strategies, and superordinate goals are identified as strategies for minimizing unwanted conflict.”
Conclusion
In conclusion, we feel that we have done our groundwork rather well to start this new innovative company. With emphasis on strategic planning approach, we have kept out best foot forward.
Recommendations
Therefore we recommend that we regularly evaluate our strategic plan. In particular the environmental scan should be done more regularly. We have to be very dynamic as new competitors might step in and also, the current players might change their strategies. We will continue to lay emphasis on our value proposition. Further, we will continue to revisit our pricing policy. Lastly, it is important to continue to build good relations with our channel partners.
References
Kotler, P., & Cunningham, P. (2004). Marketing Management. Toronto: Peason Prentice Hall.
Webb, K. L. (2002). Managing channels of distribution in the age of electronic commerce. Industrial Marketing Mangement, 95 - 202. Retrieved from http://elogistics.lhu.edu.tw/may/course/93_1/mid_term/iem2/%E4%BA%8C%E5%B9%B4%E7%B4%9A/%E7%AE%A1%E4%BA%8Cb%E9%9B%BB%E5%AD%90%E5%95%86%E5%8B%99%E6%9C%9F%E5%88%8A/%E7%AE%A1%E4%BA%8CB%201-10/%E7%AE%A12b06%E9%83%AD%E5%96%9C%E5%90%9B.pdf
