The firm’s objectives can be met and a go–ahead is suggested subject toaddressing the recommendations. Macrosegmentation of the market identifiedmachinery, wood, base metals and plastics as target markets for the firm.Revenue expectation based on a 0.4% market share is $329,000. Break even is$259,000 and requires contributions from 17 customer projects at an averagebilling of $15,000. The budget set for implementing the promotional mix is$100,000.
Target ROI = 15%. The following recommendations must be consideredbefore start-up: 1. Protect service names and marks. 2. Conduct amicrosegmentation analysis to refine market segment intelligence.
3. Developmultisegment targeting strategies for the chosen markets. 4. Ensure that fundsare in place for first year’s operation.
5. Develop a decision support systemincluding customer details, candidates for networking and reciprocity. 6.Complete 3 – 4 assignments at cost to establish a credible portfolio. Use as asource of referrals. 7.
Obtain ISO 9000 certification – “walk the talk”.Apply benchmarking standards. 8. Develop assessment and promotional tools usingthe firm’s service. If the service is to work for the client it should workfor the firm.
9. Finalize details of the promotional plan. 10. Develop influenceas a trade mission co-ordinator.
Organizational Mission The firm’s mission isto provide innovative and effective global marketing services to BritishColumbia industries. They focus on E-business as a primary means of achievingclient objectives and measure their effectiveness in terms of customersatisfaction and referral business. Market Opportunity Analysis Analysis of thesize and sustainability of various market segments. The segmentation basis usedis demographic.
Primary descriptors are geography, customer type, growth rateand size. Demographics – (BC Statistics) ? There are 13,700 small andmedium exporters in BC – 4.6% of all businesses in British Columbia. Theyaccount for $3.
7 billion or 13% of British Columbia’s total export value. Theaverage small and medium exporter typically exports $269,500 annually. ?Rising trend – small and medium exporters ? 1000 per annum and export? $200+ million per annum. ? British Columbia’s small and mediumexporters typically ship “value added” products – less susceptible toeconomic slowdowns. During a recent slowdown they actually increased theirexports by $12 million.
? 79% of small and medium exporters are dependenton the United States as their primary export market. Environmental Scan(Purchasing On-line) Social Forces ? Increasing competition is forcinghigher standards in the global marketplace – TQM, ISO 9000. ?Globalization of trade increasing competitive pressure on domestic producers dueto foreign competition – simultaneously offering new opportunities for export.? Small and mid-sized businesses often lack vision and resources todevelop world class enterprises – need help.
Political/Legal Forces ?Various Governments are attempting to stimulate business on the Internet –taxation moratorium, privacy protection, copyright protection and fewerregulations. Technology ? Dramatic increase in Internet use for business– 73% of corporate buyers use the Internet. ? Opinion leaders such asIBM are shifting their entire purchasing systems onto the Internet. ?Vendor analysis is more efficient – faster and more comprehensive comparisonof supplier alternatives. ? Distribution improvement – intermediariesbecome redundant as suppliers and buyers connect directly. ? Purchasingcycle time reduced – RFQ’s that used to take 20 days to process now take 20minutes.
? Shipping/Logistics – tracking, price brokering,inventory/shipping integration are streamlined. ? Real-timeSupplier/Purchaser dialogue and co-operative design over the Internet eliminateswaste, reduces costs and speeds up new product development. ? Internetnot expected to be significantly affected by Y2K problems in either NorthAmerica or Europe. ? Perceptions of transaction security remain aconcern.
(This perception is rapidly diminishing) ? Suppliers are illequipped to provide E-commerce – (Actually a plus for Global Reach Inc.)? Heterogeneity of service is a concern as buyers are confronted withnumerous unfamiliar suppliers and engage in extensive, high-involvementdecision-making. – (Actually a plus for Global Reach Inc.) CompetitiveAnalysis (Business in Vancouver, The AD Pages, telephone survey) There are 51Marketing Consultants operating in the Lower Mainland. Average market share of1.9% is inferred – no data available.
Web page development and media promotionare standard. Larger firms have the capacity to develop E-commerce solutions butare focusing on expensive EDP and Intranet strategies – suitable for only thelarger exporting firms. Some are involved in E-commerce on the Internet – nosignificant impact on the market. Methods of charging for services are fixedprice quotations, cost plus arrangements, often with performance bonuses. Assumeaverage annual billing per client is $15,000. Fee range = $25 – $200+ perhour.
Target Market Profile and Analysis ? 16% Machinery ? 11%Wood ? 7% Base Metals ? 6% Plastics Total Firms = 5,500 We havetargeted the above market segments for the following reasons. ? Theyinclude four sectors that involve the greatest number of small and mediumexporters. ? Their products are non-perishable, usually standardized andcan be transported with safety. ? Their products are readily cataloguedand adaptable to the Internet.
? They are value-added products and arerelatively immune to economic slowdowns. ? The average size of firm lieswithin the lower end of the small and medium exporter range thereby lesseningdirect competition from large marketing consultant competitors, yet they aresustainable as market segments and they show growth of more than 10% per annum.? They are already involved in export and have strong unfilled needs andwants in this area. They are often early adopters of technology and arecustomers with a strong tendency to rebuy.
Target market Strategy ? Tostimulate recognition of Global Reach Inc. as an innovative and credibleenterprise from the target markets and to stimulate learning and acceptance ofthe marketing methodology used by the firm. ? To build strong clientloyalty by branding the firm’s services and providing verifiable assurancethrough ISO 9000 certification. Marketing Objectives (1st year – buildawareness and market share) ? Develop strategic alliances and reciprocalagreements with key reference groups, opinion leaders, suppliers and buyers.
? Achieve a 0.4% market share and gain name recognition as a premiumservice by 30% of the target markets. ? Develop a viablemicro–marketing database. ? Build a credible project portfolio ?Exploit differential advantages of unique attributes ? Cover costs ofoperation. Marketing Mix Product A comprehensive marketing service offeringeffective strategies for global trade.
Unique attributes are: ? ISO 9000certification ? E-business specialists ? Global marketing focusDistribution ? The distribution channel is direct to the consumer. Thecore service of the business is information processing using high technology.Service delivery involves high-tech media such as video conferencing andreal-time consultation over the Internet. High-tech distribution is balancedwith personalized, pre and post-sale services conveying tangible cues affirmingthe firm’s positioning as a premium service. Seminars, workshops and videoconferencing provide much of the education and assurance components.
Pricingstrategy Pricing includes fixed price and cost plus contracts and mayaccommodate performance bonuses where practical. Pricing is based on an hourlyrate of $79. Fixed price contracts to include a 15% contingency reserve. Pricingis significantly below larger consulting firms ($100–200+) but above smallerlimited service firms’ ($25–$50) establishing an aggressive, yetprestigious, pricing strategy for Global Reach Inc. as a new premium servicecompany.
Revenue/expense & breakeven analysis Assumptions are: * marketshare of 0.4%. * 80 billable hours per week (net of sales and administrationtime) * contingency = 15% * No variable costs. * Avg. Project = $15,000 Marketsize Market share Billable hours Billing rate per hour Expected revenue No. ofprojects Avg.
hours per project Fixed cost contribution 5,500 0.4% 4,160 $79$329,000 22 projects 189 $15,000 Fixed cost Office expense Promotion budgetPartnership draws ISO 9000 certificate 15% contingency Total costs $25,000$100,000 $80,000 $20,000 $34,000 $259,000 Breakeven point 17 projects Desiredprofit @ 15% $39,000 Breakeven point ROI 20 projects Promotion ? Imagedevelopment as a progressive high quality firm offering premium customerservices. ? Relationship marketing is emphasized and education servicesprovide the opportunity to heighten learning and awareness of the firm’scredibility, customer focus and methodology. ? Trade missions andInternet trade portals demonstrate the firm’s ability to connect with theglobal community.
? Use AIDA concept to stimulate attention, interest,desire and action for the firm’s services. Promotional Mix Est$ MediaPurpose/Expected Result 30K Advertising Trade journals – frequency –pulsating – coincide with seminars, workshops and trade missions. Buildawareness and generate interest/leads. 10K Direct Mail Interactive CD-ROMtechnology – stimulate preference, conviction, lead generation. 5KTelemarketing Follow-up, reinforcement and post-sale assurance and empathy.
5KInvitations To solicit response to trade missions and special events. Buildbrand loyalty. 5K Web Site Rich content with useful application aids, tradingportals. Lead generation. 10K Workshops Learning and acceptance of newtechnologies.
Develop preference, conviction. 5K Video Conferencing Educate andprovide better diffusion throughout target markets. Follow-up and post salesupport. Build customer loyalty.
Generate referrals. 10K Sales Promotion Freeseminars. Stimulate need recognition and develop preferences for the Firm’sservices. Lead generation.
Qualify prospective customers. Build commitment. 15KPersonal selling Consultative and need satisfaction approaches. Strongrelationship sales focus. 5K Public Relations Computer camp for disadvantagedchildren – Network for a good cause. Suggests a caring, progressiveorientation.
Strong relationship builder. Recommendations 1. Protect servicenames and marks “Global Reach”, “Compete With Big Business By BuildingCommunity”. 2. Conduct microsegmentation analysis.
Determine customerpurchasing strategies, criteria importance and unfilled needs and wants. 3.Develop multisegment targeting strategies for chosen markets. 4.
Ensure thatfunds are in place for first year’s operation. Capital obtained from familyconnections. 5. Develop a decision support system including customer details,candidates for networking and reciprocity. 6. Complete 3 – 4 projects at costto establish a credible portfolio.
Use as a source of referrals. 7. Obtain ISO9000 certification – “walk the talk”. Apply international benchmarkingstandards.
8. Develop assessment and promotional tools using the firm’sservice. If the service is to work for the customer then it should work forGlobal Reach Inc. 9. Finalize details of the promotional plan. Use results ofmicrosegmentation analysis.
10. Develop influence as a trade mission co-ordinatorfor small and medium exporters.