BUSINESS ENVIRONMENT

CASE STUDY 1

MARKETING
This section is based on three companies involved in different business activities. The main company is Swift Transport plc, who have recently taken over a merchandise company called Keepsake Ltd. They are also looking to take over a travel company called Happy Hols Ltd.

The marketing function within a company is responsible for ‘anticipating, identifying and satisfying consumer needs profitably.’

A company must:

• decide on its marketing objectives (what does it want to achieve?)
• conduct market research (find out what people want, and what competitors are doing)
• devise a marketing strategy (decide how to target its potential customers)
• put the marketing mix into effect (the 4 Ps) monitor and modify its strategies and mix, according to how successful they have been.

Marketing objectives
Swift Transport hope to succeed by providing a reliable and competitive delivery service. Happy Hols aim to provide holidays which people want, at the right price. Keepsake want retailers and other businesses to buy their souvenir merchandise. If these companies can successfully identify and meet the needs of their target market, they should be able to sell more deliveries, holidays and merchandise which should make them all more profitable.

Market Research
The companies all need to carry out market research to gather the information they need. Research can be either primary (field research), or secondary (desk research).
Primary research involves gathering firsthand information. For Happy Hols this would probably include:

• questionnaires to past customers, and others, to try to establish whether their needs are being met at present, and how satisfied they are with the holidays on the market, as well as factors such as who they are, how much they would be prepared to spend, and what they would look for from a new holiday destination.
• competitor surveys to find out what the competition is offering, in terms of product range, quality, availability and price.

Secondary research might include:

• looking at the historical sales of a range of holidays.
• looking at Mintel and Keynote reports to see where the current growth in the market is.
• Looking at the accounts of companies such as Thomson, First Choice and Airtours, to see how successful their holidays have been.

Having carried out market research, Happy Hols should know who their likely customers are, what they need, how satisfied they are with what’s currently available, how much they will spend on holidays, what other companies offer, how successful they have been.

This information will allow the company to develop its marketing strategy. Happy Hols should now be able to decide:

• who to target
• what to produce
• how many to produce
• how much to charge
• how to promote its products
• where to sell them

This information will allow them to implement the marketing mix.

Price
The three companies are aiming at different target markets and this will influence the decisions they make about price. Happy Hols may decide to charge a low price and attract families on a budget, or a higher price, to attract people wanting a luxury holiday. Where companies face a lot of competition, they must ensure that their prices are competitive.
Keepsake Ltd are wholesalers who sell to retailers, who also want to make a profit. They will want to pay as little as possible for the merchandise they buy in.
Different pricing strategies the company might use are penetration pricing, market skimming, competition-based pricing, market-based pricing and cost-based pricing.

Product
We have seen that the products and services companies offer depend on the needs of their target market, and the extent of competition. They must ensure that their product matches as closely as possible the needs of their target market. This means that Swift Transport need to find about the need for guaranteed overnight deliveries, for example. Happy Hols need to make sure that the holidays they offer are the holidays people want to buy. Keepsake must ensure that the merchandise they buy from manufacturers is in demand, or retailers won’t buy it.

Promotion
Promotion is concerned with informing consumers about the product, and persuading them to buy it. There are a number of ways of promoting goods and services. They include:

• advertising
• packaging
• sponsorship
• sales promotion
• public relations

Again, the best way to promote the new products will depend on the target market and the marketing budget available. Companies need to think carefully about how best to spend their promotions budget. Advertising on TV will reach a huge audience, most of whom will not be in the slightest bit interested in the services of Swift Transport. On the other hand, TV advertising might be a good way to sell holidays, as it allows viewers to see and hear about the destinations on offer.

Public Relations
Public relations refers to the strategies employed by companies to try to get the public to see them in a positive light. Instead of promoting an image for a particular product, PR is about creating an image for a company. This can be achieved through community activities: companies sponsoring litter bins, BT providing equipment for the disabled, for example.

Other forms of sales promotion are:

• free gifts. Happy Hols could offer gifts to their customers or free child's places, etc.
• competitions. Many companies run competitions such as prize draws, or slogan writing. Happy Hols could offer a free holiday to the winners.
• money off. All the companies featured could reduce the price of their services. This would probably increase sales, but would it increase total revenue?

Place
In the case of Swift Transport, place is of vital importance. They need to be based within easy reach of as many of their customers as possible. They also need to locate in an area where they can access the motorway network easily. By choosing the best location, Swift will be able to save money on diesel, which they can use to offer lower prices, or to make higher profits per delivery.
For Happy Hols, place is also essential. They need to make sure that they are located in an area where potential customers will be able to get to them, and are likely to visit. However, if Happy Hols decide to concentrate on offering holidays on-line, then place will be less important, meaning that they can save money on expensive sites, and on furnishing outlets.
Keepsake need to ensure that they are located in an area where customers (retailers) can get to them easily. Wholesalers tend to be large, and so cost is important. They also need to be near good roads, so that vans and lorries making deliveries, and buying goods can get in and out easily.

Monitoring and Evaluation
Companies must monitor how well their sales are going and be prepared to change if sales start to decline.

Swot analysis
Swot analysis is a useful tool for looking at how well the company is doing. Businesses should also closely monitor their own sales figures as well as those of their competitors.

The Product Life Cycle
Much earlier, we said that for companies to succeed, it is important for all the different departments within the organisation to work as a team. Let’s examine this, by looking at how Happy Hols might try to extend the life cycle of its holidays. The product life cycle shows the different stages that sales of a product or service go through during their life. Businesses use the idea of the product life cycle to help them to make decisions such as when to introduce new products, when to change the marketing of a product, and when to take a product off the market.

Imagine Happy Hols have spotted that sales of holidays to Portugal are in decline. There are a number of options open to them. They could reduce the price of the holidays - this would affect the finance department who will be more worried about making a profit than simply increasing sales. They could find new holidays to offer. This would involve the buying and marketing teams finding the best prices for deals, which Happy Hols would be confident they could sell. They could spend extra money on promoting holidays to Portugal - again the finance and marketing departments would both have a say in the final decision. All of these activities are attempts to try to keep sales as high as possible for as long as possible.