What Will Influence the Marketing Decisions Your Firm Makes?
External Constraints
Competition- SOS’s marketing decisions will be strongly affected by the actions of its competition. When items are discounted or when prices are lowered, SOS must also make the necessary moves insuring maximum sales and customer satisfaction. If competitors are receiving more attention from customers, SOS must make the appropriate moves in order to maintain a steady level of profit by attracting customers in a more efficient way than its competitors.
Market demand- this will also influence SOS’s marketing decisions. SOS will do whatever it takes to provide our customers with the best qualities of stationary material at very competitive prices. When the market demand changes, so will SOS’s decisions towards marketing. We do this because customer satisfaction is a priority. If the number of customers start to decrease, this means that we are not doing enough or our marketing techniques are not efficient.
Market Trend- SOS will following the market trend in order to stay with the competition. A change in the market trend will hinder the business externally.
Internal Constraints
Budget - the budge of SOS is very tight as it is a new store. The marketing decisions that SOS make is based squarely on its carefully planned budget. Expensive advertising like on television will be thought about more carefully because SOS’s limited spending supply will limit its expenditure. If money runs low, SOS will have to change its marketing methods into more economic forms.
Cost of business (rental, labour, production) - SOS’s lack of expertise is a real disadvantage. The actions of SOS and its future success depends on the cost of settlement, including rental, furniture, labour, and production.
Lack of experience and knowledge of the market - SOS is a new entrant into a market, which already has contenders. This is a disadvantage to SOS. A lot of SOS’s marketing decisions will be based on what its competitors do. SOS will invest in extensive market research in order to gain clear and precise knowledge of where it stands and what is required that is not yet put to use.
The Marketing Mix
The marketing mix which consists of the four P’s, product, price, place, and promotion is very important to a new business. The marketing mix that SOS has put together is appropriate and has the right qualities for marketing a new range of products. This is necessary to increase the market share, increase customer traffic and ensure future growth.
Product
SOS will be selling a range of high quality stationary products. We will invest in research and development in order to manufacture better, unique, value for money products that are comfortable and stylish to use. We hope that these will meet customer demands. SOS will also need to consider the price.
Price
The price of SOS products will be very competitive but will also enable the business to make a profit. The prices will be determined by the customer demand, competitor prices and the internal situation of the business. Next SOS will need to find a place where stationary can be sold at the best prices.
Place
SOS needs to make sure that the products are being sold in the right type of outlet. The Festival Walk shopping centre is a convenient place which attracts a wide range of people from difference ages to different countries, with different interests and different educations. After finding the place to open the outlet, SOS will then need to use different methods to promote itself.
Promotion
Customers will have to know about this new outlet in order for SOS to make sales. The methods that SOS will consider will range from word-of-mouth to expensive advertising campaigns to inform the customer about the new products. The promotion of SOS is an important part of its marketing strategy because it is a new company and it needs to be made known to the consumer world. Customers have to know some details about SOS in order for them to use the store. If the appropriate methods of promotion are used, the market demand will increase, boosting sales and revenue.
Promotions will increase revenue but will come at a cost because “there is no such thing as a free lunch”. Therefore the cost will also increase. This means that promotion needs be used to the point when the increased revenue from promotions is higher than the expenses used for promotion. This way, there will be a profit and thus a return.
SWOT Analysis
What Types of Media Are Most Suitable?
Radio- The radio reaches a wide range of people in and around HK. It is not as expensive as television. Therefore, it is a very suitable type of media that SOS can use. SOS will mainly put advertisements on local radio channels in order to reach the target audience.
Advantage
- People can listen to programmes while doing other things, such as driving a car or working at home
- Radio audiences, in general, are more highly selective by the type of programming than are television audiences
- It is a lot cheaper than television
Disadvantage
- No visual representation, which may lower interest.
- Not as much information can be told about as TV.
Availability
There are plenty of radio stations around Hong Kong that offer companies to advertise in. Suitable stations include FM Select 104, Hit Radio 997, RTHK Radio, Supercharged 88.1 FM and Ultimate 90.3 FM.
Cost
The price for putting an ad on the radio varies. A well-established station like Ultimate 90.3 FM will charge a small fee for an advertisement. The price depends on the length of the commercial (30s, 60s, and 90s).
Appropriateness
It will be more appropriate to put advertisements on local radio stations than national stations because SOS does not want to reach people who will not use the store. Using local stations is more specific and reaches a more targeted audience
Billboards- This method of advertising is not as expensive as television and is rapidly growing in popularity. SOS will try to grab some of the limited space on the MTR railway station’s billboards as soon as possible. SOS will try to put up posters around the neighbourhood, including places like the City University of Hong Kong, Parc Oasis, and primary and secondary schools such as the Australian International School and Kinston International School.
Advantage
- Since people pass by the signs repeatedly, large and colourful signs easily attract attention.
- Cheap
- Can be put up in many different places: more chance of being noticed
Disadvantage
- Limited space
- Passers-by don’t spend long viewing the signs
Availability
There is limited space in MTR stations. However, signs can be put up outside the stations and around Festival Walk. Posters are welcomed at the club house of Parc Oasis, which is a large and well-known residential area. Signs are permitted to be put up at many international schools in Kowloon Tong including the Australian International School and the American International School.
Cost
The cost of advertising in railway stations is relatively low compared to the radio and television. Advertising in schools costs nothing. The cost of advertising in residential areas varies from nothing to HK$200 a month. Parc Oasis charges nothing.
Appropriateness
Billboards, posters and signs are appropriate for SOS because it is cheap and is able to reach a lot of people.
Newspaper- Newspapers are fairly cheap to advertise in and reach a huge number of people, especially the Metro, which is distributed at no cost at every MTR station in HK. MTR railway stations are used by over 2,500,000 MTR travellers daily. Other newspapers that are suitable include the South China Morning Post and the Apple Daily.
Advantage
- SOS can prepare and publish an advertisement within a day
- SOS can appeal to people with special interests by placing their ads on certain pages
- Cheap
- 83% of people read newspapers in Hong Kong
Disadvantage
- Easily overlooked
- Limited space
- Cannot reach as many people as television
Availability
It is very easy to put advertisements in newspapers. The availability depends on which newspaper SOS wishes to advertise in. Classifieds are only for advertisements, so SOS will use that.
Cost
A full colour standard size advertisement on the front page will cost HK$22,480. A small sized colour advertisement on pages 2-7 ranges from HK$221 to HK$704.
Appropriateness
Using this type of media is appropriate for SOS because it does not cost as much as a televised commercial and will reach a huge audience.
Television- this type of media is a little on the expensive side. Since SOS is a new contender, it cannot afford to spend these large amounts of money on commercials. If SOS is to become successful in the future and expand, it may consider advertising on television.
Advantage
- Brings sight, sound, and action directly to consumers in their homes
- Reaches a vast, nationwide audience
- There are always commercials on television, usually during programs and shows
Disadvantage
- Expensive
- Audience’s attention is usually somewhere else during commercials
Availability
Advertising on television is very limited, especially during Peak Time between 6 and 10pm. This is when there is the most people watching television. The availability can be very low because SOS will have to compete against larger companies from room during commercials.
Cost
Television the most expensive type of media to advertise in. SOS is not ready to use television yet.
Appropriateness
It is not appropriate for SOS to advertise on television at the moment, but when the franchise has grown, it will consider advertising on television.
Why is Market Research Important for Your Firm?
Market research is important for SOS because it shows who the customers are, what the customers want, and where and when they want it. This research can also expose problems in the current product or service, and find areas for expansion of current services to fill customer demand. It should also encompass identifying trends that may affect sales and profit levels. Market research will give SOS more information, however, than just who the customers are. Using this information, SOS can determine matters such as its market share, the effectiveness of its advertising and promotions, and the response to new product developments that SOS have introduced into the market.
What Secondary Data Will I Use and Why?
Internet- SOS will use the Internet to obtain secondary data because it is very easy to access and the information available is limitless. The Internet is a cheap source of data, which will benefit SOS greatly, especially in the beginning when spending needs to be at a minimum.
Text Books- This source of data is useful because it contains valuable information that was gathered by professionals and it can be accessed easily.
Which Methods of Field Research Will I Use and Why?
SOS will send future staff to the opening location in Kowloon Tong to analyse the area where the shop will be opening. They will find out the number of stationary shops that already exist in the area (competition), the transportation that is used to get to and from the area and the potential customers from the surrounding neighbourhood.
A survey will be conducted to extract some vital information, which is required before opening.
Survey- Stationary
- Do you go to Festival Walk, regularly?
- Do you buy stationary from the school shop or from outside shops?
- What do you usually buy?
- Do you think the prices are reasonable?
- Are you currently studying? If so, where? University, primary, high school?
- What are the things you are not satisfied with in your stationary shop?
- What do you want to see more of in a stationary shop?
- Do you look for quality or price in your stationary tools?
- What is your favourite brand of pens, calculators, workbook, and such?
- If a new stationary shop opened near you, would you try it out, or stick to the old one?
- What type of advertising do you respond mostly to?
Survey Tally Chart
1. Yes No
2. School shop Outside shops
3. Writing equipment Books/Paper Folder Electronics
4. Yes No
5. University Primary school High school Not Studying
6. Customer service Lack of stock Pricing Quality of product
7. More variety Better brands Better quality Electronic equipment
8. Quality Price
9. Pilot Artline Uniball Casio Sharp Others
10. Try it out Stick to old outlet
11. Newspaper Radio Magazine TV Billboards Internet
Analysis of Data- Customer Survey
Q1.
32 out of 50 (64% of) people said that they go to Festival Walk regularly, while only 18 (or 36%) said that they don’t. This shows that many people do go to Festival Walk, which means that SOS has a good chance of attracting a sufficient number of customers. I think that lots of people go to Festival Walk because it is one of the best shopping centres in Hong Kong.
Q2.
From this question, it was found that 88, almost 90% of people buy their stationary equipment from outside shops. Only 12% bought their stationary equipment from the school shops. This is probably because the school shops are less reliable than outside stores in the areas of the variety of products, customer service and quality of the product. From this information, I have learned that, potentially, most people would prefer to go to SOS rather than buy their stationary from school shops.
Q3.
This question showed what types of stationary SOS should distribute and how much of each. It is clear that writing equipment is the most popular, followed by books and paper. The stationary product that SOS should sell least of should be folders because it is, clearly shown in the results to be, the least popular product.
Q4.
62% of people thought that the prices that they bought their stationary at were unreasonable. This meant that if SOS was to sell products at a slightly lower price than its competitors, customers might start to switch to SOS for their stationary goods.
Q5.
Out of the 50 people who were surveyed, 26 or 52% of them were university students, 17 or 34% were high school students, 6 or 12% were primary school students and 2 or 4% were not studying at the moment. The majority of them were university or high school students. This means that SOS would need to target its advertisements to people aged between 10 and 28 years.
Q6.
Every person who was asked mentioned something that they weren’t satisfied with in their local stationary shop. The thing that was most unsatisfied with was the price (18 or 36%). The lack of stock also upset 26% of customers. Only 8 (or 16% of) people were not satisfied with the customer service and from this information, it is clear that SOS’s pricing would have to be low enough
Q7.
This showed what to sell more of. 42% of people wanted to see more variety, 32% wanted to see more electronic equipment, 20% wanted to see better quality in stationary goods and only 6% wanted to see better brands.
Q8.
There was not much of a difference in the people who looked for quality and the people who looked for price in their stationary equipment. 27 or 54% of people looks for price while 23 or 46% looks for quality. This shows that price and quality are both very important. SOS must make sure that its products have both, good quality and competitive prices.
Q9.
The results from this question can be used to determine which brands to sell more of in order to attract more customers. The majority, 36% preferred Artline products, 18% like Pilot and Casio, 6% like Sharp, 10% like Uniball and 6% like other brands. SOS will consider selling more Artline products.
Q10.
This question clearly showed that SOS has a good chance to become successful if it is to open in Kowloon Tong. 42 out of 50 or 84% of people would try out a new store while only 8 out of 50 or 16% would stick to the old outlet. This suggests how reliable people think their local stationary store is.
Q11.
Knowing what type of advertising people respond to can greatly benefit SOS. Since 32% responds to billboards, it will definitely be considered. So will newspapers, which 12 out of 50 or 24% of people respond to, and radio, which 9 out of 50 or 18% people respond to. Television will be considered later because SOS is going to try to minimise its spending in the early periods of trading.
What Other Data Would Have Been Useful?
In the survey, there could have been more questions that would have gave SOS further information about the market it is entering, the demand for stationary goods, the type of advertising that would be appropriate and the type of people that would be future customers to SOS.
Other sources of information could have been used, including magazines and interviews, but SOS has acquired sufficient data from the survey, texts books, the Internet and newspapers.
Possible Options- Making Judgements
Conclusion
After conducting the necessary market research, we have come to a conclusion that SOS does have the potential to become a successful outlet and top competitor in its market sector. We at SOS believe that the right marketing mix will give us a competitive edge over our rivals. The market demand for stationary products in the Kowloon Tong area appears to be very high because there is no shop that sells only stationary goods (their range of products are very limited). Therefore, specialising in this particular area will meet customer demands.
Recommendations
- SOS will sell its stationary products at competitive prices, which will see a profit and improve customer satisfaction.
- Advertising will be done in newspapers, on the radio, and on posters and billboards in popular transportation areas such as the Hong Kong underground railway stations (MTR) and the Kowloon-Canton Railways stations (KCR). The survey showed what types of advertising customers respond to.
- Market research was be done using primary sources like surveys and secondary sources like newspapers, text books, internet, and magazines.
- SOS will sell a large quantity of electronic equipment, writing equipment and material, and books and paper. SOS will make sure that there is a wide selection of brands to choose from and its products is of the highest quality. Customer service will be a priority to ensure customer satisfaction. This way customers will return to SOS for future purchases. This was all determined by the results in the survey questions relating to products and price.
Evaluation
High commitment will ensure successful implementation of these recommendations. The recommendations which were made from the possible options will be improved in the future. If sales are high, expansion is definitely an option. This plan is appropriate for the purpose of opening a retail shop.
References
1. Internet
2. CD Rom
World Book 2001 Multimedia Encyclopaedia
3. Text Books
GCSE Business Studies
By Pat Bond and Jill Martin
Published in 1988 by Heinemann Educational Publishers
4. Teachers/Professors
Mr. Jackman- Business Studies teacher
5. The Public
Survey
Appendix
