MKT7010- Marketing Management
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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). Situation analysis is defined as a systematic collection of data by using a 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 itself over a period of time in a market by its strategy of quality above price. The managing director Craig Huggers has a firm belief in the development of the 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.
Macro Market Environment
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 that 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 that 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 future risks and to mold their 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 the 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 an impact on organisation’s policies and decision making ability as …(content removed – please contact us to access full version)
Economic factors are the factors that deal with the management of supply and demand in the country. These factors have a significant effect on an organisation and its profit margins. The main economic factors are exchange rates, inflation, interest rates and incomes of people, economic growth, and the business cycle. The organisations 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 a bicycle as a source of commute in the region, however, due to 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 bicycles, especially for youngsters. The people prefer to use the ways of commuting which do not provide convenience but also provide health and fitness in their lives.
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 the 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 ecosystem or the surrounding environment. There are certain industries that 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 green development. The involvement of the UK in the Kyoto Protocol has been 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 the business strategies in accordance with the legislation 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
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)
Bargaining Power of Buyer
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 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)
Bargaining Power of Suppliers
The bargaining power of suppliers assesses how easily suppliers can alter the price of products and services. The power can be altered by a number of factors such as the number of suppliers and how much it would affect an organization to shift from supplier to supplier. If the number of suppliers is high the power of the supplier will be low because then the company can reach more suppliers who provide raw materials at desirable prices (Hollensen 2015). …(content removed – please contact us to access full version)
Threat of Substitutes
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)
Threat of New Entrants
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 attract new entrants, however, …(content removed – please contact us to access full version).
Competitive rivalry is the last force that 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)
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The marketing strategy of an organization is the way it markets its products to customers. It includes a comprehensive plan with all the marketing goals and objectives (Ferrell & Hartline 2012). An effective marketing strategy requires extensive market research and a sound focus on product attributes in order to attain a high profit. In other words, it is the selection of the 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 the full version)
Geographic segmentation is the division of customers on a 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 bicycle. 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 the market by applying a specific marketing mix to 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 consumer loyalty towards the brand.
The main attributes of the bicycles manufactured by the ROMPTO have been the most portable, neatest, and folding quality of a bicycle. The bicycle can also be assembled in just 30 seconds: all the attributes provide 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 has been the folding bicycles and these bikes are even lighter in weight and easy to carry. With this strategy, the company has positioned itself in the domestic and international markets.
By Product User
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.
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The ROMTO bike manufacturers are required to do market research to gain 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 the marketing mix. It has the ability to 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
Price skimming strategy refers to the entering 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 to make the product available in the market and gain brand awareness in the market (Ingenbleek & Van der Lans, 2013:27). The ROMPTO folded bikes entered the market with a relatively higher price than the other brands. The range of the folded bikes started from 825 euro and came at the high end of the market.
Price Penetration Strategy
Price penetration strategy is referred to entering 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).
The 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 losses as the markup is added to the production cost to generate variable and fixed costs.
The demand approach is defined as the pricing of products 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)
Channels of Distribution
The channels of distribution are referred to the chain of business through which the company reaches potential customers. It includes wholesalers, distributors, retailers, and online selling brands.
Direct selling is defined as a channel that reaches directly to the customers. In this sense, the consumers buy products directly from the manufacturers. In direct selling, the manufacturing companies do market research in order to select the customers who are willing to make direct purchases. ROMPTO sells its folded bikes in various stores around the world. The independent bicycle shops are located in different cities of the world and sell a large number of cycles to a strong customer base.
Wholesaling is a channel in which the retailers and wholesalers reach 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 products in the market.
Mail order is the cheapest distribution channel. It is considered a convenient way of reaching the customers Gammoh, Koh & Okoroafo 2011). This can be done by putting different ads on different locations and targeting the audience according to demographics, which identifies consumers’ preferences.
The channel which castigates all the traditional ways of distribution is the online channel. The companies provide number of online portals in order to sell 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 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 that the company designs to market its products. 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 the 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 Confectionery Start-Up.
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