Introduction
For a business to succeed and gain a higher market niche than its competitors, strategic management is necessary. This task is mandated to a panel of strategic managers who frequently assess the market performance of a company’s products and make the necessary decisions to maintain or improve its performance. Market simulation is therefore a strategic approach that is used by managers. It involves assessing a situation to find the reasons behind the current results and planning the probable approach to mitigate the menace of the situation.
Quarter 1 and 2
Quarter1
Vita computers is a company that has a wide experience of producing and supplying computers and its peripherals to the customers in the world. Due to the rapid advancement in the technology industry, the company’s strategy management under the leadership of Peng, Yue decided to establish a new production line to counter the rising market and caution itself against revenue loss.
Target market
The company decided to produce microcomputers to target the high-end earners in the business industry. Our market was confined to South America, North America Europe, Africa and Asia. In these markets, microcomputers had not been introduced before. Inaddition, our target customers were the business sector. Initially there was no supplier of microcomputers in the short-run period; we operated as monopolists where we determined the quality, quantity and price in the market. By enjoying economic profits, firms were enticed by our venture and concentrated their resources to enjoy the market share.
Mercedes segment
The clients sought for a high performance computer to enable efficient manufacturing and engineering applications .Their indication was that Collective bargaining of suppliers, one of porter’s competitive forces was appropriate to adjust the price higher to cater for the new applications. They were willing to pay for any price as long as it complemented the quality
The workhorse
These potential clients needed a convenient computer for use by its workers. Their demands complemented our business venture since microcomputers were convenient and enhanced ease of use by the customers.
Travelers segment
The clients included business executives and sales persons. Having such group of clients was essential to our strategy because microcomputers were effective for business travelers due to its portability. In addition most sales persons have adopted online trading to enjoy a higher market niche. Therefore the segment will serve our purpose to diversify and increase revenue satisfactorily
Sale offices
The decided to use single point sales other than franchising. They opened sales office in Shanghai where initial cost was zero because the company had not started operation. In the long run fixed costs would reduce to zero with variable costs increasing with expansion of the firm. The approach to establish single point of sales was appropriate to cushion customers against price discrimination by intermediaries.
Quarter 2
The strategy management under the president’s leadership decide to on the travelers segment as our first market segment. The sector is very sensitive to price and tastes and preference fluctuations. Over the past decades, the market served the clients with only non-portable computers. We decided to introduce microcomputers that will serve the convenience of executive businesspersons and sales people especially the online traders. The industry differed on the preference of the product quality and its uniqueness and therefore through research was necessary to accommodate the market interests. With no history of competitors, we had to present unique and quality products to shield rom market dominance of other firms in the future.
Marketing
Brand name
The marketing executives held a brainstorming session to discuss on the brand name to feature in our advertisements. This was necessary because the industry was monopolistic and therefore did not restrict entry and exit of similar firms. The brand name “Air Superman” evolved and it would be used to identify ourselves in the market
Advertising content
It was necessary to decide the key essentials in our products that would captivate the customers’ attention to purchase the products. The rating on complexity approach would be used to caution the company against the axiom by the customers, which would increase the cost of advertising the product. To entice the customers about the uniqueness of the product, the following components needed to strictly and continuously feature in the marketing presentation
Based on the customer needs assessment,Base components of the computer needed to feature in the marketing segment In addition, the microcomputer needed to be highlighted as standard and branded as a portable laptop with a 14-inch monitor and a high-speed keyboard and network connectivity.
The management ranked the essential segments and their frequency visibility in the media. Rebate special price deal, Mention of Brand name, portable designs, linkPCs with internet, fastest processor in the market and the largest data storage on the market ranked in the order of priority in the advertisingsector. Presentation of applications, office applications and picture of business professionals tailed after data storage in that order. This order was based on the customer needs assessment. Rebate price deal was essential to woo customers’attention quickly to the new product. The ranks ranged from zero to nine in a respective order. The future that was ranked indicatedthat the advertiser needed to feature them conspicuouslyto attract customers. This assessment was based on priority of customers’needs. Mentioningbrand name frequently was strategic to instill its presence in the customer’s needs.
Forconveniencedata network high-speed capacity andlarge storage capacity were the essential content that were prioritized by customers.Therfore thy ranked higher and featured conspicuously
The company used Shanghai offices as the point sales office. Besides the company planned to open Chicago offices to strategically position it at strategic points to tap higher market share. This would increase the cost of setting up offices but would counter the cost incurred in delivering the products from a central store in shanghai. This was necessary to enable customers have access to products in a one shop and caution them against price discrimination by intermediaries.The company hired a labor force of four to help in delivery of products.This was strategic to reduce the cost of labor.
Quarter 3
The management revised the performance in the previous quarter andadopted anewstrategy. Air superman brand name was modified to Bumbleman.This was necessary since the brand name had dominated the market and therefore it was necessary to redefine the company to the customers. Besides, Entry of other firms prompted modification of the brand name to realign itself along new brand names. The essential content to feature remained unchanged.
Advertising
During the quarterly market study, the management realized that different travellers had different careers and travel interests. Amongthe travellers, there manufacturing company executives, service delivery executives and sales agents. Therefore, using a single brand to market the product denied essential information to some categories. For instance, the prime optimus ranked high the engineering and manufacturing features to suit production company travelers. To save on advertisingcosts, feature that would be necessary in both brand names could be featured in either especially the olderbrand. The company decide to feature portable design character in the bumble man brand since it still shared the same interest with Prime optimus. This strategy was important in ensuring all essential features were factored.
Sales offices and sales people
It was necessary to increase the market dominance to Sao Paulo-LATAM. Consequently, offices cost operation rose due to increased workforce. Increasing the number of sales pointscautioned the company gainst reduced market share due to increased firms. Symmetrical information among customers could result in low market share since customers are informed about the available products. Therefore, using new sales points and different brand names outsmarted the rivals.
As aresult the number of sale per unit increased and eventually a slight increase in revenue earnings
Quarter 4
The best strategy for a company to remain relevant in the market is modifying the old branded version.Horizontal product differentiation would require retention of brand name but change the content. However,this may not work well with vertical product differentiation .this necessitates introduction of a new brand name. Forinstance,Megatron Awas used to brand Mercedes products. In addition, the brand name was used to market the production of a different monitor sized desktop produced. This differentiates the tastes of customers as anyone who prefers a 19” inch microcomputer would not concentrate on other branded products.This strategy enabled the company sell its products on modification basis besides features. With such a strategy, themanagement was able to assess the preferred brand on physical basis
The introduction of a new brand name For instance Megatron A required prioritizing Rebate price deal to enhance relevance in the market. This strategy led to increased operatingcosts, andrevenues. Asmarket, suppliers continue to increase the operating costs and revenue increase disproportionately.This due to the law of diminishing returns to scale which indicates disproportionate change in the dependent variable due to a change in any exogenous variable.
Market diversification necessitated opening of new sales points in Paris-EMEA.Openingof new sale point strategic to serve a different market segment of Mercedes customers. Geographical dominance of product customers prompted establishment of new office points. For Instance, openingParis sales point was due to higher market share of Mercedessegment clients whose revenue was viewed as favorable to raise economic profit in the short run and normal profits in the long run. In addition, being the first supplier, introducing itself to the customers as a new entity was strategic.
Quarterly training costs increased as new workers had to be trained to fit in the market segments. Number of sales people increased because of new workers.
Quarter 5
Vita computers was a going-concern entity.Therefore, it was imperative to constantly assess the quality of their products to suit the current market needs. Continued entry of rival firms due to market dominance of Vita computer s was achallenge.
Increased competition from rivals prompted the management to strategize its marketing strategy.Diffrent firms had produced similar products that were closely substitutable with other products. This required modification of current models or introduction of new models to tap an unsubstitutable market share. For instance, mention of brand names in the adverts was not highly ranked due to market influx. Qualityof the product gave the people, chance to choose their preference some features that have consistently dominated the advertisements articleswere strategically eliminated due to their negligible impact.
For instance, Megatron A+ ranked first the “easy to use” benefit to the clients. This factor would augur well with the interest of MercedesCompany whose worker requires simplicity. Other factors that had little impact in the production stage were recognized under this quarter as they increase value of the product. The standard of the product depicted as highly comfortable raise the benefit of the machine thus high revenue. The total cost sales rose due to increasedworkforce. As companies dominated the market share, the costs continue to stabilize towards optimal sincemonopoly power continued to diminish slowly.
New brand names require new ambassadors to market the product. Besides, new workforce was employed thus raising the training costs. However, thecost not rise rapidly since the customers had been informed about common features in the microcomputers thus reduced the time and resources of marketing products.
Quarter6
Continued modification of products leads to saturation point where no more modification can be added. Thus, quality of the product becomes the next priority. As firms entered the market and produced similar but slightly differentiated products, economic profits enjoyed becauseof monopoly vanished. This led to stagnation of the market. For instance, the easy to use feature dominated products strategy to remain relevant in the market. Besides internet connectivity, ranked second highest. This was because the market had already defined the market’s tastes and preference.
Quarterly training costs increased due to employment of highly skilled workers to maintain the competitive quality strategy. The company could not open more offices as it had strategically positioned itself to cover the key market areas. Thus, office costs did not increase. The market had reached its influx and could not allow more workers. Employing of more workers would be uneconomical and result in internal diseconomies of scale. The retail price stabilized as quality based competition slowed to equilibrium.
Recommendations
In addition, the company embrace a common branding name to enhance uniformity. This is because customers are not confined to single character of preference. This may confuse the customers and shift to the rivals unknowingly. To create differentiation,the brand name could be differentiated with colors and writing inscriptions
Detailed prefeasibility study should be done to cushion the company against unnecessary costs. Employing workforce to advance quality of a product cost the company’s training time and resources.
References
Hawkins, D. I., Best, R. J., & Coney, K. A. (2004). Consumer behavior: Building marketing strategy. Boston: McGraw-Hill Irwin.
Virtual business World. (2012, November). Retrieved December 6, 2013, from http://www.Marketplace-live.com
Wilson, R. M., & Gilligan, C. (2005). Strategic marketing management: Planning, implementation and control. Amsterdam: Elsevier/Butterworth-Heinemann.
