MKT7010- MARKETING MANAGEMENT
Academic Subject: Marketing Management
Word Count: 2600
Submitted by: Student
Situation analysis is a part of SOSTAC, a model proposed by PR Smith in his book Strategic Marketing Communications. He developed his six fundamental principles for conducting analyses such as situation, objectives, strategy, tactics, action and control (Cowley 2016). The situation analysis is defined as a systematic collection of data by using number of methods. These analyses are drawn in order to understand micro and macro environmental factors of any organization, its capabilities, business environment and customers (Peter & Donnelly, 2011). ROMPTO is a UK based company engaged in bike manufacturing. Operating since 1975, the company’s top management has included the tech savvy team to take the business to the next level. The company has established over a period of time in a market by its strategy of quality above price. The managing director Craig Haggers has a firm believe over the development of customer base of ROMPTO bike manufacturers. The situation analysis of ROMPTO has been drawn in order to analyse the pertaining market conditions for the company.
The macro-environmental factors are those which are uncontrollable by the company. These factors influence the decision making process of the company as well affect its strategies and performance (Johanson & Mattsson 2015:111). The main factors which all the companies would have to analyse include political, economic, socio-cultural, technological, environmental and legal factors.
PESTEL analysis is a comprehensive tool which the marketers use in order to analyse the macro-environmental factors impacting an organization (Jurevicius 2013). It is one of the most important concepts of marketing principles which the companies use to track the macro environment in which they are operating as well in order to launch any new product or service in a new country. ROMPTO Bicycle manufacturers need to identify these factors for alleviating the future risks and to mould its strategies accordingly. The company will have to analyse political, economic, socio-cultural as well as technological factors of China and will have to design its strategies accordingly.
The political factors are about the degree to which a government intervenes in the matters of economy (Andrei & Prisecaru 2014:247). The factors include the government’s stability or instability as well the policy of the government in foreign trade, overseas markets, labour law, trade restrictions and others. These factors have impact on organization’s policies and decision making ability as …(content removed – please contact us to access full version)
Economic factors are the factors which deal with the management of supply and demand in the country. These factors have significant effect on organization and its profit margins. The main economic factors are exchange rates, inflation, interest rates and incomes of people, economic growth and business cycle. The organizations compare the current level of employment, inflation, international trade and economic growth in order to carry out a marketing and strategic plan (Hollensen 2015). The recession in the UK has been the main factor for the downturn in the economy. This has occurred due to the BREXIT …(content removed – please contact us to access full version)
Socio-cultural factors scrutinize the cultural and social aspects of the market. These factors are important to analyse in order to have a sound insight into people’s preferences as well demographic and cultural trends of the population (Wilson & Gilligan, 2012). The people in the UK like to use bicycle as a source of commute in the region however due the rising competition in all the sources of commuting the people’s preference has been altering day by day. Nevertheless, the overall demographics in the UK are skewed towards an appetite for fun and fitness activities like bicycle especially in youngsters. The people prefer to use the ways of commuting which do not provide convenience but also provide health and fitness in their lives.
The technological innovations and advancements have a tendency to affect the performance of the industry in a negative or positive way. Technological factors include research and development, automation and new inventions in market which help the industry to produce goods and services which are less obsolete (Mullins et al. 2012). However, …(content removed – please contact us to access full version)
The environmental factors consist of all those pertaining factors which affect the eco-system or the surrounding environment. There are certain industries which need to assess the environmental sustainability prospects in order to preserve the environment (Kotler et al. 2014). The environmental factors also include government regulations to penalize the firms for using adverse modes of production. The growing importance of environmental sustainability has led many people to be inclined towards the green development. The involvement of UK in Kyoto Protocol has been the evidence that the country’s stance on mitigating the emissions of CO2 gases has been encouraged. This is the opportunity for bicycle manufacturing companies as the release of harmful gases from these vehicles is minimised.
The legal factors are incorporated with both internal and external aspects. The business environment of any country can be affected by certain laws and those laws must be maintained by the companies in order to operate in foreign markets (Jurevicius 2013). The marketers design business strategies in accordance to the legislations such as consumer laws, legal costs, labour laws and safety standards. This part of PESTEL helps …(content removed – please contact us to access full version)
Porter’s five forces model was discovered by Michael E. Porter in order to identify the five competitive forces which shape the business or industry. These forces determine the strength and weakness of the industry. The model helps to determine the dimensions in the sustainability of profit levels in the industry (Kotler et al. 2014). Porter’s five forces …(content removed – please contact us to access full version)
The force of the bargaining power of the buyers assesses the ability of the customers to drive down the prices. This happens when customers have a many choices in the industry. The force analyses the number of customers, their significance and reasons for the customers to shift from one product to another (Wilson & Gilligan, 2012). If the buyers have …(content removed – please contact us to access full version)
The bargaining power of supplier assesses how easily suppliers can alter the price of products and services. The power can be altered by number of factors such as number of suppliers and how much it would affect an organization to shift from supplier to supplier. If the number of supplier is high the power of the supplier will be low because then the company can reach to more suppliers who provide raw materials on desirable prices (Hollensen 2015). …(content removed – please contact us to access full version)
The threat of the substitutes is the existing substitute products and services in the market which the customers can prefer. The alternatives …(content removed – please contact us to access full version)
The company might get affected by the new entrants in the industry or a market. This can be further identified by the entry costs on the market. If the cost of entry is low the new entrants would easily enter the market and hence the level of threat would be high (Mullins et al. 2012). The profitable markets and industry attracts new entrants however, …(content removed – please contact us to access full version).
Competitive rivalry is the last force which determines the number of competitors in the market. More will be the number of competitors more will be the competitive rivalry in the market (Andrei & Prisecaru 2014:247). …(content removed – please contact us to access full version)
|Strengths||· High-tech management team
· New innovation of folding bikes
· Iconic status
· High-built quality
|Weaknesses||· Lack of market expertise
· Low consumer preference
· High prices
|Opportunities||· Tech savvy industry
· Potentially growing market
· Consumer preference of bicycles
|Threats||· High competition
· Large number of substitutes
· Traffic congestion in large cities
The SWOT analyses are the best way of guiding a business to incorporate a sound strategy. The ability of the tool to analyse the strengths and weaknesses of the company can brainstorm many ideas in the business to make the high level of operational efficiency and organizational performance. The analyses can also provide the vision to assess the future concerns of the business and help to counter the threats with the identified strengths of the business. …(content removed – please contact us to access full version)
SWOT analyses also have some disadvantages which are due to the limitations in the tool. The tool ignores the prospect of valuation and other significant metrics like cost of capital, margins and return on capital. The analyses do not assess the investors to have a fair insight in shared profit and stock exchange of the business. Moreover, SWOT does not involve non-material threats and opportunities and due to this the scale or scope of opportunities are unable to identify (Friesner 2011) …(content removed – please contact us to access full version).
The marketing strategy of an organization is the way it market its products to the customers. It includes a comprehensive plan with all the marketing goals and objectives (Ferrell & Hartline 2012). An effective marketing strategy requires an extensive market research and a sound focus on product attributes in order to attain high profit. In other words, it is the selection of audience and the assessment of their demands in the market.
Market segmentation is the marketing strategy in which an organization selects the potential customers in order to market its products …(content removed – please contact us to access full version)
Geographic segmentation is the division of customers on geographical basis. The people living in different locations have different needs and based on those needs the marketers segment the customers (Cleveland, Papadopoulos & Laroche 2011:244). ROMPTO bicycles have segmented the people who are office going employees in Europe so that they would travel to work by bicycles. Moreover, the company segmented Wales because of the high consumer’s preference of the bicycle in the country.
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Target market is a strategy in which the marketers target the people who will make more purchases of the products…(content removed – please contact us to access full version)
Differentiated marketing is the assessment of the difference between the various segments of market by applying a specific marketing mix on a particular segment. The company identifies …(content removed – please contact us to access full version)
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Positioning is defined as a strategy of aiming to put a brand in a market that differentiates it from other existing products (Gammoh Koh & Okoroafo 2011:48). …(content removed – please contact us to access full version)
The price/quality strategy of ROMPTO bicycle manufacturing company has been the positioning strategy in which the company has positioned its bicycles by providing high quality. The product life cycle of the bicycles has been recorded as high and this has also increased the consumer loyalty towards the brand.
The main attributes of the bicycles manufactured by the ROMPTO have been most portable, neatest and the folding quality of a bicycle. The bicycle can also be assembled in just 30 seconds: all the attributes providing convenience and ultimate satisfaction to the consumers.
The ROMPTO bike manufacturers have positioned themselves in the market by providing the bicycle which no other existing brand manufacturers. The most famous have been the folding bicycles and these bikes are even light in weight and easy to carry. With this strategy, the company has positioned itself in the domestic and international markets.
The ROMPTO manufacturers have positioned their bikes in the market by choosing the Netherland as the highly penetrated market. Amongst all the regions in the world, the Netherland is the country where most people use bikes for travelling from one place to another.
The ROMTO bike manufacturers are required to do a market research in order to have an insight into the various dimensions of the market both domestic and international. The strategies should be chosen …(content removed – please contact us to access full version)
Price is one of the most crucial components of marketing mix. It has the ability generate high or low turnover for the company. It is difficult because it should reflect the demand and supply mechanism of the company in the market. Companies must analyse a price point for generating high sales revenue. The price strategies of ROMPTO bike manufacturers are given below:
Price skimming strategy refers to the entering into market by putting a high price of the product first and slowly and gradually skimming it down to gain maximum profits from the sales. This is done for making the product available in the market and by that also gain brand awareness in the market (Ingenbleek & Van der Lans, 2013:27). The ROMPTO folded bikes entered in the market with relatively higher price than the other brands. The range of the folded bikes started from the 825 euro and came at the high end of the market.
Price penetration strategy is referred to entering in the market by proposing lower prices of the products as compared to the competitors. This is done for achieving consumer loyalty and preference in the market. The penetration pricing increases brand awareness by word of mouth in the market (Shaw, 2012:30).
Cost-oriented approach refers to the cost of production of the products. The organizations reduce the cost of production in order to lower the prices. In this way the companies do not usually have loss as the mark up is added with the cost of production to generate variable and fixed cost.
The demand approach is defined as a pricing of product on the basis of the demands of the customers in the market. This approach analyses the number of customers who are willing to pay for the product. The high price is charged if the demand …(content removed – please contact us to access full version)
The channels of distribution are referred to the chain of business through which the company reach to the potential customers. It includes the wholesalers, distributors, retailers and the online selling brands.
Direct selling is defined as a channel which reaches directly to the customers. In this sense, the consumers buy products directly from the manufacturers. In direct selling the manufacturing companies do a market research in order to select the customers who are willing to make direct purchases. ROMPTO sells its folded bikes in the various stores around the world. The independent bicycle shops are located in different cities of the world and selling a large number of cycles to the strong customer base.
Wholesaling is a channel in which the retailers and wholesalers reach to the potential customers in order to sell the products. The companies choose this channel of distribution if the customers are dispersed in different locations. For this matter the companies offer low prices and high quality of products in the market.
Mail order is the cheapest distribution channel. It is considered as a convenient way of reaching to the customers Gammoh, Koh & Okoroafo 2011). This can be done by putting different ads on different location and target the audience according to the demographics which identifies consumer’s preferences in the market.
The channel which castigates all the traditional ways of distribution is the online channel. The companies provide number of online portals in order to sale their products to the public. The middle man is not involved in this type of distribution and is considered to be the most effective due to consumer’s convenience (Ferrell & Hartline 2012). ROMPTO bike manufacturers also have its own online portal through which the company sells its bike. It is also due to the customer’s convenience as the large customer base requires having everything at a doorstep.
Marketing objectives are the set goals and objectives which the company design in order to market its products in the market. Often the companies prefer to put a time frame for the marketing plan in which the clearly defined objectives are placed (Cleveland, Papadopoulos & Laroche 2011). The marketing objectives …(content removed – please contact us to access full version)
- Andrei, V., & Prisecaru, I. (2014). The use of PESTEL analysis in development of the Romanian geological repository. Scientific Bulletin of University Politehnica of Bucharest, Series C, 76, 247-254.
- Boone, L. E., & Kurtz, D. L. (2013). Contemporary marketing. Cengage learning.
- Cleveland, M., Papadopoulos, N., & Laroche, M. (2011). Identity, demographics, and consumer behaviors: International market segmentation across product categories. International Marketing Review, 28(3), 244-266.
- Cowley, M. B. (2016). ‘Jellies & Jaffas’: Applying PR Smith’s SOSTAC Marketing Model to an Online Confectionary Start-Up.
(complete list of references can be provided on request)