Marketing Report

AS and A Level Media Studies

T27 Firm 1 Lu Shang

Marketing Report

1. Introduction

2. Segmentation

3. Decision 1

4. Analysis Period 1

5. Decision 2

6. Analysis Period 2

7. Decision 3

8. Analysis Period 3

9. Conclusion

Introduction

This article is about the business strategy to a new product V-box (voice recognition device) and the successes and failures of the strategy. V-box is a device to recognize human-being’s spoken language and translate it into computer commands,

This section looks at the downfalls V-Box has had to face and then leads onto the strategic action to counteract these negative issues. It comes to 3 decisions with 3 analyses about it, and ends up with a conclusion.

Segmentation

The chosen segmentation is modern students, home users and concerned parents. The reason of choosing those segments was because it is close to student’s life and it could be easier to understand what they want and need.

Modern students may use VRD very frequency. For example they use it as educational technology, like communicate with family and friends, do their assignments in the school campus.

Home users probability use VRD for online shopping or communicate with others. The last one is the concerned parent. They usually use it for themselves or their children to get interest in and experience with it early.

From the table in P18 (The Marketing Game), we could see that, although parents and home users did not have the largest total unit sales, but still got lots of potential powers to grow.

Decision 1

The name of the brand was made because of the first meeting was occurred after marketing tutorial; the teacher has maintained a game player called X-Box. This kind of player was quite similar to the VRD. It both new technology and will bring lots of fun to the users, thereby V (voice)-Box was given to the Voice Recognition Device.

Channel 1 was targeted as the main market and got the largest distribution intensity, therefore, the staff needed and the production requested for this channel were approximately twice than in channel 2 has. Because channel 1 as full services dealers, they focus on in-store sales. Based on the experiences, students, home users and parents more likely to purchase in the shop, because VRD as a new technology, they need well-trained sales people provide lots of suggests and technical information and it is also easier for them to compare different products. Furthermore, channel 1 also has an advantage, it charges usually includes a service agreement, which is very insurance to the buyer. Channel 2 is discount dealers, it usually sell products on the Internet. Consequently, the firm just need few staff do the computer work. In addition, they do not provide much service or suggestion to the users. From the customers point of view, channel 1 should be more popular than channel 2. Moreover, the customer service charges should be only issued in channel 1; hence it could not be a bigger number. The base unit cost was calculated based on the formula; meanwhile in order to make profit, the wholesale price should be higher than the unit cost.

Special command means the additional commands the customers may require besides the standard commands. Every segment has different command for VRD, it may very important for some segments. In this case, students and home users wanted lots of special commands and parents did not.

Error protection is a way to prevent users from technical problems. Home users and parents may do not know computer and VRD very much. Therefore, they may need high level of error protection.

Ease of earning is how easy it is to learn to use VRD. It is also the same as the ...

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Error protection is a way to prevent users from technical problems. Home users and parents may do not know computer and VRD very much. Therefore, they may need high level of error protection.

Ease of earning is how easy it is to learn to use VRD. It is also the same as the error protection, home users and parents are willing to learn the method quickly and efficiency.

Considering the market share by channel, consumer reference study and marketing effectiveness report as the marketing research method because those methods would be clearly identified which channel could sell more units and how the different segments’ consumers reacted to the VRD according to their behaviors. What is more, the last one was summarizes the effectiveness of customer service, advertising and personal selling decisions.

Advertising is very important, because build a positive awareness is the key factors of being successful in the business. Therefore, it was necessary to spend amount of money on it. This amount of money was calculated after the total of budget minus the expenses made before.

Analysis Period 1

After the period 1 results been handed out, the firm has made a negative net contribution which was ＄512,972 and the budget for next period decreased to ＄800,000. The total expenses shown in the planning form was not equal the figure shown in the financial summary. After discussed, there were several reasons for this problem.

No one realized that there was a fixed formula for calculating salary which was paid for the sales reps. It was caused by the shortage of the book reading. In addition, it could be shown in both financial and production summary, channel 2 sold more units than channel 1, and the required for the production in both two channels were too high, the product actual produced and sold was not equal. In other word, the units sold could not catch up the number of units which were expected. Moreover, the sales force-commission did not calculate correctly. It should be 5% of the gross sales, instead of a made up number. Because of those, the advertising fees changed to ＄80,000 instead of ＄315,000.

Compared with others brands the number for error production and ease of learning were too high which was not needed, it could cut down a little bit next time. The bigger competitor faced was Evolution. Because they got enough money for the advertising and also had lots of market share which was quite successful. Nevertheless, the main target for next period was changed the situation from losing money to making profit.

On the other hand, there were also good aspects. For example, the total units sold in both channel 1 and 2 had the largest proportion of shares in the competition. That means a bit because the bigger of the shares in the competition, the better position the company is on. Sometimes the share indicates the future, which is more important than the present profit.

Decision 2

After absorbed last time experiences, this time was quite easier to target the market.

In order to cut down some expenses, there were 10 sales reps has been fired from channel 1 and employed 3 more for channel 2. Because the sales situation in channel 1 was not like what’s expected, cutting down the expenditure from this channel was quite necessary. Furthermore, decreasing production order quantity is also very important, so there was a reduction in both channel 1 and 2. In addition, the charge for customer service was slight increased, because compared with the others competitors, they all set this number very high, therefore, maybe this figure was a key factor for being successful in channel 1.

What is more, according to the last period average customer preferences, it gives the average number of the segmentations. In order to make the VRD more suitable and attractive for the customers, the method for measuring that number was changed from adding the number which the firm targeted and dividing it by 3. After decided the product features, the unit cost was worked out, and it was lower than the last time. Consequently, the wholesale price should be lower as well.

Because of the budge for this time was just ＄800,000, so, the rest of the money were spent on the adverting dollars and the marketing research. In order to get more money for advertising, so the firm just used customer shopping habits survey method for the marketing research.

When calculated the total expenses, because of the tutorial was running out of time, the teacher was to press for handing the planning form. Consequently, everybody was in a hurry, and the total expenses were not calculated correctly.

Analysis Period 2

This time the firm was made ＄126,037 net contribution and the budget for next period was increased to ＄912,000. Although it was not very profitable and the total expenses could not equal, it still has encouraged to do better on next time.

First of all, although the requested production was cut down, the actual production and units sold still could not catch up. What is more, same as the last period, units sold in channel 1 still lower than in channel 2. What is more, according to the detailed sales analysis, students, home users and parents were more willing it buy VRD in the channel 2.

Maybe need to require more in channel 2 and reduce more in channel 1 next time. Because of the selling situation was not very good, therefore, the gross margin was lower than the expected. All of those caused the total market shares were decreased to the last one in the competition. Furthermore, compared with others competitor, the advertising dollars was the lowest one as well, next time, need to charge more in this aspect. The firm needed to build very good reputation; otherwise, customer could not buy your product.

The main competitor in this period was Mindy. It could see from product features and prices report, their targeted market was quite same as V-Box and they also did better. They got the larger shares in the market and quite successful on the advertising and customer service.

Decision 3

The target for this time was based on the previous profits made and makes more contributions. Changed the net contribution from negative to positive could be a easy things, but keep earning profit, should be a difficult one.

First thing to do, was increased the customer service fees, from the previous experiences and compared with others firms, it was easy to see that, increase the customer service charge, could increased the buyer behavior. Good customer serious made the users who bought VRD from channel 1 more satisfy and happy.

Because this is the last time to make the decision, the firm was tending not to concern the result too much. In order to increase channel 2 markets, the firm employed 1 more sales people, because the main market changed to channel 2 from channel 1. First two periods, the firm could not sell the units they wanted, so this time there was a decrease in production order quantity. Nevertheless, compared with before, the firm ordered more in channel 2 and less in channel 1.

The production features was not changed too much, just decreased 1 point in ease of learning.

Because the budge was increased, so got more money could spend on advertising and marketing research. Consequently, the firm used three methods: consumer preference study, marketing effectiveness report and sales by segment by channel to do the research part.

Analysis Period 3

The result shows that, the net contribution was increased to ＄398, 543, and the budget for next period was ＄999,000. Furthermore, there was one thing which was really good, units sold was exactly the same as the units produced.

In addition, the proportion of the market share was increased slightly; the firm was quite successful on the product features, especially in last two periods. The number was set very suitable for the segmentations.

the graph here, was the net contribution for each period, according to this graph, could clearly see that, the net contribution was increased from ＄-512, 972 at beginning to ＄398,543. The first period is obviously the worst period, because the net contribution is less than zero, which means, no contribution at all, and even consuming resource. The period 2 is when it starts to get net contribution, though the amount is not so large. As for the flying 3rd period, the contribution is more than twice of the 2nd period. It is really a good sign. From the graph, it can recognize the tending and it is much more important to see the tending rather than the fixed data. The tending is to more and more contribution.

From the production report, could see the reason of the tending that just discuss in last paragraph. For the period one, more order than production, and more production than sold units. It could be caused by poor management on getting order, etc. Period improved this situation. Period 3 is perfect combination – order quantity equal to production, and equal to sold units. Nothing is wasted, and the sold units are more than period one and period two.

Conclusion

Overall, the firm was not performed too badly. Although it made a loss at beginning, after adjusting the number, the firm was made profits. The changing in period two is the key to success. By looking at the graph carefully, sold units in period 2 is less than the ones in period one. This might because of strictly asking for the proof that the entire ordered unit will be really bought after production. This method might make the order amount less, actually it is, but the waste in production is more avoided. Now it can tell that the decision made in period 2 is right, but at that time, when the order amount largely decreased, managers must be facing big pressure to insist the changing. This tells that the firm should focus on future and real profit, rather than un-reliable present number, no matter how attractive they seem to be.