All businesses need to pay their bills, utility bills are their primary sector of a business – without it, and nothing really is possible. Some of general issues but they all have to be looked up in a business to keep it obtainable.
Customer Service
Microsoft has a customer services department as it the most important element for a business; keeping good customer service keeps good business reputation. The job of the customer service person is to pass over basic information to all aspects of the business, and the role of the other areas of the business is to fulfil their requests as they are set by the customers. The basic customer service request could be to answer telephone calls, take on orders, mass on messages from one area to another, resolve any customer disputes etc…. Microsoft’s customer service staff will also take on; any form of complaints, returns / exchange or any general queries by customers. The role of the customer services plays a big impact on the business; it provides useful information collected by other members to run a good business and to fulfil all needs. To keep a good customer service, member of the staff need to communicate effectively with customer, take in consideration of what they say, and be co-operate with them.
Operation/Production
The production quarter of the business would be looking after taking orders producing the software and hardware in addition to this they will be taking information from the customer services what customers want, and what are customers willing to pay for. But production depends on how much capital is available for Microsoft. Testing is carried out via internal staff as well as releasing developer or beta version of the products to the customers and getting feedback on what they thought of the product, etc.
Production process
The production process mentioned above is the basic steps carried out by most businesses to manufacture a product. This is also one of the key elements as a lot of workers or staffs are involved in the process of marketing the product.
Research and Development
The research and development department will basically research through the market and with Microsoft obviously there are always re-developing and upgrading the released software and hardware. Many examples of this can be seen. Firstly we could say that Windows 7 that was released last year was a redeveloped and upgraded version of Windows Vista. A lot of research was done in-order to make it meet customer needs. Hardware such as Xbox 360 was the redeveloped of Xbox. Microsoft’s R&D department focuses on solving real-world problems ranging from climate changes to global AIDS epidemic, but in addition to this the department is backed via largest successful companies, which allows funding or budgets. The department is split up into 5 different specialist sub-division. They are Windows Azure, Health Solutions, Trustworthy Computing, Unlimited Computing, Unlimited Potential and LiveLabs. The Windows Azure specializes in developing operating systems such as Windows 7, Windows XP, etc. The Health Solutions division helps improve healthcare around the world via the use of technological advancements. Microsoft will build software which can help medical professionals. Trustworthy Computing is similar to the Quality Assurance department because everything that is developed is made sure of that it meets customer needs and also the products are reliable, secure, and respectfully of privacy. The Unlimited Potential team or division on the other hand is similar to the Human Resources department. This department’s job is to explore the technological progress which allows social and economic opportunity for the underserved people of the world. In addition to this the division also creates jobs and help education. Finally the LiveLabs teams looks at the every changing world and incubate the next big technological progress and makes sure it tackles urgent societal and technological challenges.
Quality Assurance
This is another point businesses look at; Microsoft produces some of the most complex software which meet customer requirement whether it be individuals or other businesses, To make sure each of the products produced are up to standard and meet customer requirement testing will take place for every few samples to make sure customer get the right products, the test will check upon the stability, performance, user interface, etc. If any batch fails to ‘pass’ the quality assurance test they will recheck it or discard it.
Human Resources
The role of the human resources department in Microsoft is to take on new employees, interview them and find a suitable part of a job in the business. This will include successful trainees that will train the new workers to take on the particular job role and provide them a good job that they would prefer. Another aspect of the Human Resources department is to look out for those that need a holiday (it could be paid holiday, sick leave or suspension). They will provide the right pay for them.
Sales
The sales team will take on responsibilities that will look after taking orders from stores, these orders will be taken off from the customer service which will passed on to the sales department to pass on to the production. This department will be looking into selling the product through different methods e.g. Internet, E-mail, Letter, Door-to-Door, etc
Administration / ICT
The administration department deals with emails, such as ordering products, customers paying for the products. In Microsoft’s case, customers will send the administration department an email of orders of what they want or other suppliers of Microsoft will send them a e-mail regarding the needed stock of products.
ICT is Microsoft’s main specialisation so it’s not unusual for them to use ICT to make calculations of how much profit is made; it can be used to advertise their product (Microsoft have customers who have signed up to email subscription of products and updates). ICT also makes it easier to take payments from customers who are paying over the internet, via credit-card, etc. In addition to this ICT is also helpful to businesses because they can collect feedback from customers over the internet.
All these functional areas in a business are required to run a business each of them link with each other in all aspects.
Interlink between Marketing and other department.
The finance department will help marketing department with fixing budgets and also analysis promotion of different products. Finance can also help with making sure that money is not overspent on some of the departments
The customer service will help marketing department because if the customer service receives good feedback than they can let the marketing department that they are doing a good job of promotion, whereas if they receive bad feedback or have a problem with the company and something is done than this will have a multiplier effect as it will result in the company having good customer service therefore having good reputation and this will spread among customers and this will help marketing as customer confidence is built up and people will buy more and more from the business thus gaining more money and having more money for other departments
The operations/productions and marketing department have a direct link. The operations department simply makes the product and the marketing department will market it in-order to sells the product. This operation/production will let the Marketing department of what is in stock and what is being produced so that they can forecast and market products to the customers.
The quality assurance and marketing are quite interrelated as quality assurance looks at the product and makes sure that it meets customer requirements set by the marketing department. It’s a two way process as marketing will tell quality assurance department what should be looked for in a product and the required things for a product. The quality assurance in reverse will feedback to the marketing department as whether the products meet customer requirements (it’s always wanted that the product meet customer requirements, otherwise it’s pointless of the product being developed), this will allow marketing to tell customers that their products meet customer requirement thus increasing customer base and increasing revenue.
The human resources and marketing are interrelated as if the staff is well-trained then they are able to market but mainly provide good customer service. The marketing will want the best trained staff as they will need to provide and help customer needs and they will not be able to do this without the help of the human resources.
The Admin/ICT and marketing are related as Admin/ICT is making sure that all the departments are communicating well together and marketing will need to know this as they will need communicate with other department. Good communication means that correct information is provided and marketing can meet customer needs.
Other department’s communication
Marketing Mix
Marketing mix generally known as the four P’s describes the strategic position of a product in the marketplace. The four Ps are a set of tactical marketing tools which work together to allow a business/company to achieve its aims and objectives. The idea of marketing mix originally came about in 1948 when James Culliton said “that a marketing decision should be a result of something similar to a recipe”. This idea was taken a step further by Neil Borden in 1953 in his American Marketing Association presidential address and coined the term marketing mix. Major market player E. Jerome McCarthy proposed the four P’s classification in 1960 which since then was widely used. The fours P’s are Product, Price, Promotion and Place.
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Product: An item/product can be a tangible or intangible item. These are mass produced or manufacture on a large scale with a specific volume of units. E.g. quite well known mass produced item could be pens, paper, etc. example of less known mass produced items could be operating systems. When a product needs to be made and released product decision need to be made. These decisions are:
- Product & Service Classification System
- The Product Life Cycle
- Introduction to product
- Boston Matrix (Growth/Share)
- Product Value Analysis
The product & service classification system is deciding what is it.
- Is it a convenience good – little effort relatively effectively inexpensive
- Shopping goods – DIY equipment, more expensive less usage.
- Speciality goods – Extensive research e.g. Jewellery, gourmet food
- Unsought goods – Double glazing
- Industrial goods – Specialist goods only available to businesses/firms
- Installations – Goods requiring installation such as industrial market goods – plants and machinery
- Accessories – Maintenance and office equipment.
- Raw materials – wood, crude oil, etc
- Business to Business – Consultants, accountants, solicitors.
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Price: This one creates sales revenue everything else is cost. Price of an item is very important because it determinant of value of sales made. What I mean by this is that price will determine how many sales can/could be made. Technically speaking price is actually based on what customers perceive. Knowing customers opinions about the price of a product is important because if a customer thinks prices are too high and they are not put down and this could result in customer loss. Different organizations will have different pricing strategies. Here are some of the strategies.
- Premium Pricing – This is used when uniqueness about a product/service is emphasized. This type of pricing is normally used when substantial competitive advantage exists. E.g. Concorde flights, Trip around the world.
- Penetration Pricing - This is usually used by businesses like sky, because this helps them get market share and once they achieve this they will increase their prices. This is a risky way of pricing because if prices are increased customers complain this is bad for business,
- Price Skimming – This is slightly opposite to penetration pricing because this is reverse. A higher priced is charged due to substantial competitive advantage. The price later tends to fall due to high prices attracting new competitors into market. Once a company gets other competitors into the market, they will change to other marketing strategies.
- Economy Pricing – This is simplest form of marketing, there are no added extras. Supermarkets have a tendency to use this type of pricing. Costs of marketing and manufacturing are kept to absolute minimum.
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Promotion: This is about getting in touch with the customers. It helps achieve information that will help decide to purchase product/service. The overall cost of producing an item will represent sizeable proportion form the cost of promotion and advertising goods. Increases of sales will take place if the promotion is successful. Competitive markets will often tend to increase promotion activity and this could be a problem. There are two types of promotion above the line and below the lines.
- Above the line tends to be advertising media. Examples of this are radio, T.V., Newspaper, cinema, e-mail, internet adverts and many other things.
- Below the line is promotion media, which the firm has control over. This is direct mail and trade fairs. E.g. of this type of advertising are personal selling, public relations, sponsorships.
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Place: Also, know as channel and distribution. It is about transporting, storing and getting products to the customers. E.G. Market coverage, Transportation, Order processing, etc. Distribution system is needed is the product needs to be at the right place at the right time. Distribution often depends on the circumstances. Sometimes a manufactures prefer to sell to wholesalers while on the other hand others prefer selling directly to retailers or customers.
The product-portfolio is very wide but I am going to focus on the software and entertainment side of it. Their three main products Windows, Office Suite and Consumer Products such as keyboards, mice’s, gaming consoles, etc.
Product Life Cycle
As human beings go through a life cycle, in the same perspective products go through a product life cycle. A product is simply anything that meets customer needs. The product life cycle goes through many phases of its lifetime such as development, maturity and decline. In another words a product life cycle is a business model in which shows the life of a product in the market. After the product is launched in the market it will start to gain more and more customer over a period of time, eventually the market for the product will stop growing and the market will stabilise and the product matured. After a short period of time another competitive product will be launched or a improved version of the product and the original product will start to decline eventually exit the market. Example can be seen all around the markets for different products. The market for my product is consoles. E.g. Microsoft firstly launched the Xbox which was supposed to compete the Sony PS2, the product gained popularity and then after couple of years the development for the product stopped due to Microsoft launching an improved version of the product the Xbox 360 and also Sony launching the PS3. The graph for the product life cycle and its stages can be seen over the next two pages. As with any business models there are problems and drawbacks of the models. The problem with model is that even though products have a life cycle very few products will tend to follow a model like this. When a product has reached a stage such as time between maturity and decline a business will know this due to stabilising and slow down in the amount of customers, therefore in order to keep the product in the market a price cut will be introduced in the market therefore the product will either have a new customer base which will allow the product to be around the stage before maturity. This would normally result in the product life cycle extended. Some product do not make it through all then stages or skip some stages, therefore it might not be easy to tell which stage the product is in. A famous example of a product like this could be the Ford Edsel, which did not manage to stay in the market for long. Only 64,000 managed to sell in the first year even though there was big customer base at introduction.
Product Life Cycle Stages Explained
The Boston Matrix
Boston Matrix is a well known tool amongst businesses for marketing managers. It was developed in 1968 by a large US consultancy group known as Boston Consulting Group. It was a approach which allowed product portfolio planning to be made. The Matrix has two main controlling aspects. Relative market share and market share. Both of aspects range from high to low as show in the above graph. To create a portfolio you would take each of the products and place it on the graph. This would allow you to find out how each of the products are doing and is the company losing customers or gaining customers. The different regions of the matrix are Dogs, Cash Cows, Start, Problem Child (Question Mark). It’s best to try and keep Cash cows, problem child and stars in equilibrium taking out dogs from the equation.
Dogs
Products which have low market share and also growth would go under this heading. Normally products in a product life cycle which have reached the decline stage could be put under this heading. Products under this heading will normally absorb cash which is generated from other products. These products could be said as the break-even units as they make barely enough cash to keep small amount of market share. It might be said that dogs are best of to get rid off from a financial point as they do not generate cash, but break-even might have an advantage of keeping as it creates job.
Cash Cows
Product with high market share but slow growth would be put under this heading. These products would normally tend to generate more and more money as more is invested in them. So it’s normally beneficial for a company to keep these products in the market.
Problem Child
Also know as question marks are products which are rapidly growing and consume lots of cash, but have a low market share therefore they do not produce much cash which results in large amount of net cash consumption. A question mark has the potential to become the best product out of the portfolio and move onto a star. If a product does not become successful after years of cash consumption than there is a chance than it would degenerate into a dog as soon as the product reaches its decline stage in a product life cycle. Question marks need to be given importance when analysing as it helps forecast whether it’s best to invest to grow its market share.
Stars
Finally stars are the best product in the business simply because they have a high market share and also high market growth. These products are hopefully as after gaining maturity it can still move onto the next stage as cash cows. It’s best for businesses to keep investment going into the star product as it will keep leadership in the market.
Boston Matrix Problems
There are many misassumptions. E.g. If the market share is high than there will be high cash generation, but this will not always be the case as massive products such as airplanes will have very high market share at launch but due to its even higher production or development cost, t he money that comes in is re-distributed to cover original cost. Boston Matrix is normally applied to Strategic Business Units (SBU’s). SBU’s are business areas rather than products. E.g. Jaguar in the UK is owned by Tata in India. It’s thought to be that SBU will always work properly, but that is not always the case.
Product Value Analysis
Product value analysis is a method used to analysis a product in-order to improve upon cost as well as performance of the product. Value of the product is defined as ration of function:cost. Therefore this means that value of functions can be improved by decreasing cost whether it be production cost, packaging cost, etc. Value analysis is simply making sure that the produced product meets customer needs and that it is profitable. A product must be aesthetically pleasing so that if it is food than it should taste nice, whereas a home entertainment product such as a DVD player should look nice and should make the TV stand or wherever it is placed should make the place and make it appealing. The problem with making sure that a product should do its function is that if a product does it’s function that more is wanted. Such as a new console is made and meets the function of playing games but then customers want a new function of the console being able to play video. Finally the product should meet customer needs as if the product does not meet customer needs than it would be pointless to produce and business would be losing money.
Mass & Niche Marketing
Mass marketing is basically creating product which is universal and appeals everybody. Brand name is used for the product name rather than a new. E.g. of this could be Coco Cola because it’s a brand as well as the name for their fizzy drink. It’s easier to market the product globally because it allows similar marketing techniques to be used to sell the product globally. The aadvantages of this strategy is in terms of low cost in production costs and tends to masters market monopolistic ally. Another advantage of this strategy is producer can close all markets from competitor. The disadvantages of this strategy, now market has been fragmented into small segment and required specific strategy on each segment market. This strategy needs to manage different marketing mix to reach target market and need to produce multiple products.
On the other hand niche marketing is basically creating a product which is specific and does not apply to all customers. It’s a smaller segment of a bigger market. Due to being specific and not mass it will have a tendency to get less sales, therefore higher price is charged to get profit. This works because people will be willing to pay more as it’s specific. It’s also easier to run a niche market as there is less competitions. Example of niche market is lobster, Rolls Royce, etc. There are many reasons why niche market is started has low capital, low costs, have highly specialization, and the characteristics of target market needs customize and specialize products or services. The advantages of niche market is become specialize and has strong brand image.
Microsoft is going to release a new entertainment device sometime next year. The product will be called “Stroxbox”. Its codename as mentioned before is “PHENEX”. This box will simply allow users to connect to the net using 1 GB broadband lines connecting directly to our server. The box provides gaming services as well as entertainment so it will allow user to connect to our server and play any video game and music + video. The box will be 13"(W) x 4"(H) x 8"(L) and just weighting at 2.5 Kg. The box itself will cost around £300 and then when market share is achieved it will be lower down to £150. There will also be monthly charge of £10 or £100 for a year. The objective of this product is to take leadership the entertainment industry and revolutionise the console industry. This product will be completely off the current hardware lines and a new line of products will be started based on this. The product will in a way fit in with our current product portfolio as Microsoft has already specialised in entertainment products such as webcams and gaming products such as Xbox’s. The new product that I will be proposing will integrate the entertainment side off it such as watching videos, listening to music, etc. On the other hand it will also integrate gaming side of it.
