Marketing Strategy

1)Discuss the attitudes and related beliefs toward coca-cola of intensely brand- loyal consumers (perhaps like those who were upset by the new coke in 1985). How might their attitudes and beliefs differ from those of less involved, less loyal consumers? What marketing implications would these differences have? 2)Do you think it’s possible for consumers to be loyal to more than one brand of soft drink? What about more than one brand of cola? Discuss the pros and cons of having several brands in a product category (as do coca-cola and Pepsi in the cola category).

Compare the strategy of line extension to that of creating completely distinct brands for these products. What factors should marketers consider in making this important decision? 3)Many marketers made a distinction between customers and consumers. For instance, coca-cola sells cola syrup directly to its customers, the operators of bottling plants. The bottlers sell bottled coke products to retailers, vending machine operators, restaurants, airlines, and so forth. Those organizations, in turn, sell coca-cola products to individual consumers who drink it.

Discuss how the salient beliefs about coke products might differ for customers and consumers. How might their attitudes toward coke differ? Who should coca-cola pay more attention to its customers or the consumer? Why? 4)Discuss coca-cola’s various strategies for managing brand equity of its many products. For instance, what are the pros and cons of borrowing versus creating brand equity? Analyze coke’s attempt to revive brand equity by reintroducing the contour bottle around the world. 5)What is your opinion about the effects on consumer attitudes and intentions of coca-cola’s proliferation of choice alternatives? Why do you think so?

ABSTRACT

Nowadays, the management must not disregard marketing strategies even if these companies are already established. Continuous improvement and product innovation is necessary to catch up with the new technology and customer requirements. This paper would show the different marketing strategies that Fanfare Inc. could do in order to improve their sales and Marketing Performance.

Purpose of the Project

The main purpose of this paper is to provide information regarding the marketing strategies that the company could implement to increase their market share and sales. The strategies include the improvement of product knowledge of the sales force, product awareness of customers, innovation and the product’s sales channels.

I.                   Summary

There are several marketing considerations that the firm needs to see to improve its marketing performance. Advertising is crucial in the promotion of the products of a manufacturer. In the discussion, the several advertising alternatives that were discussed were the use of trade shows, consumer advertising, and advertising placements in magazines and circulation in the industries that use mini-fans.

Sales Organization is also an issue for consideration in the development of marketing plan. This would be discussed in detail in the latter part of the paper. Other marketing considerations that would be used in the report are, the use of the internet as a sales tool, and the gathering of information or research in the industry and its customers.

Several technical concerns in the company were also raised. Product innovations, systems production set-up, the flexible production and Quality Control needs to be addressed. The marketing department had been assigned to determine the necessary steps that the company must do in order to address the issues that were reported by the clients. Each of these technical concerns are important in addressing the customer needs and preferences.

II.                Background

Fanfare manufactures and engineers small electric fans that are used for heating and cooling units. These small electric fans are incorporated in automobiles, appliances, and electric equipment. Fanfare had been in the industry for over 40 years. Fanfare shares only 21% mini-fan category market, 32% is shared by Air Circ Inc. and 25% is shared by M.T. Mind and Sons. The other remaining percentage of the pie is shared by small suppliers in the industry. The company has 21 Regional Sales Managers and each is responsible for the sales development and service in a defined geographical territory. The divisions of Regional Sales Managers are as follows: 12 in the United States, 5 in Europe and 4 in Asia.

III.             SWOT Analysis

The SWOT Analysis can be used as a tool to analyze the industry and the firm. In order to have a successful marketing plan and sure a better performance, the marketing department must invest on its Strengths and Opportunities and make some adjustments on its Opportunities and Threats. This part of the paper discusses the Strengths, Weaknesses, Opportunities and Threats of the company.

A.     Strengths

The company has been in the industry for over 40 years. This p of time only shows that the company had maintained its businesses and is still doing business with its regular customers. The 40 years in the industry had created a niche of customers or clients in the industry. As stated a while ago, there are 21 Regional Sales Managers in the company. The use of the Regional Sales Manager had been able to increase the area where the company market’s its product. Since their Regional Sales Managers are spread out, this ensures that the company has clients in different locations in the globe. Based on the data, the company has its own pool of regular clients such as Uni-dash. The pool of regular clients makes sure that the company has customers.

B.     Weaknesses

The company has several weaknesses that the marketing manager had exposed. The company had been unable to tap new prospective clients in the past years. The Regional Sales Manager counteracts that they do not have enough time to explore the different clients in other industries. Since the Regional Sales Officers are not able to cross paths with different clients, the company is left behind regarding the information needed in product specifications in other industries. As a result the sales people are unaware of the needs that the customer requires in the product. Product Innovations seems to be impossible since the sales people do not know the needs of the market because of lack of contact with the other industries.

Another factor that did not help in the marketing performance of the company is the fact that the products does not have a brand name. This makes the products made by the company as generic ones and thus the company had not been able to use its reputation as a good quality maker of fans. Lastly, the company is still using an outdated scheme in its Quality Control. Present scheme in the industry is that for every 100,000 fans only one is defective. Since the company is using the scheme 2 out of 100 fans is used, tendency is that the clients are expecting a 0.02 or 2% rejection rate which is if converted to 100,000 gives a value of 2,000  minifans.

C.     Opportunities

The company can introduce its product and increase contact by launching their products in Trade Shows. Internet Marketing like e-commerce could also provide help in the selling and promotion of the product. The company could also use magazine advertisements and provide information on their products in the circulation of the industries that uses their products. This could increase opportunities of company awareness in the consumers.  Other industries that use the system production in order to have sales. An example of which are the dashboard manufacturing in cars. The company could consider doing such measures in their product to increase it sales. Lastly, the company could make a flexible production to address the exact demand of the customer and avoid inventory build-up.

D.    Threats

The dangers that the company faces are its competitors Air Circ and MT Mind and Sons. If the company do not increase its share in the market, there could be a chance that either of the two supplier could gain the current share of the market. The Research and Development team creates innovations based on what could be a potential product for sale. The Research and Development team must make a step in garnering information that they need before developing a product.

IV.             Objectives

The company aims to improve its sales performance in the industry by at least 5 percent in the next year. The company aimed for an improvement of 5% because this is the most feasible value in sales performance improvement.

V.                Strategies

This part of the research discusses the different strategies that the company can undertake to improve its sales performance. Strategies are ranked according to its effect in sales growth and information.

A.     Marketing and Client Research

Since the company lacks sufficient knowledge in its client, it is important for the marketing department to gather information on the industry. The company could hire marketing professionals to do a research on the needs and wants of the clients in the industry. The group must determine the clients of the mini fans, the percentage of consumption of the mini-fans per industry so that the company would be able to determine what industries they should concentrate on. These professionals would only be hired until the research is complete.

B.     Advertising

The company could do several advertising schemes to improve customer relations and product knowledge to its clients.

1.      Introduction of Products in Trade Shows

According to AllBusiness.com, trade shows are beneficial to the promotion of products. In the United States and Canada there are over 110 million people who attend more than 4,000 trade shows. Through showcasing, the company would be able to show the capabilities that their product has. There are four steps to a successful trade show according to allbusiness.com. The company must plan, prepare, present and follow-up. In planning the marketing group must determine the right show for their product. The Industry or Trade Association could help to determine the right shows that the company must join in, these groups could provide referrals and schedule of shows Preparation on what the plans are must be done. The budget for the trade show is important. The staff that would go to the affair must also be selected, product demonstrations and giveaways, displays and other materials needed must be prepared. Presentation of the booth would depend on the committee assigned. After the show, the company would be able to gain contacts and leads in marketing their products. Information on the new trends and customer requirements could also be gathered in the trade shows because the company is able to interact first hand with its customers

2.      Using the Internet as a marketing tool

Since the firms can go directly to the website of the manufacturer. Through the use of the internet, the middlemen are cut out of the picture. Information regarding the goods is shown and selling could be done online. Transactions with the customer could also be direct through the use of the internet. However, dropping the sales force completely could also become an obstacle in the sales. There are some people who prefer not to use the internet. Not all people like to transact their businesses online. The roles of the representatives would be to look for these firms.

In an article from Syracuse University, that had featured the Dell Company the strategies that the company had used had led to the downfall of the B2B business of the company. The choice of products to sell, the suppliers, the timing and competition had led to the downfall of the B2B business. According to an article from D.Edson company, the company had investigated the top B-to-B websites and had found out that Traditional Branding, Advertising and some level of customer service are present in the B-toB websites. Most of the companies that are in the top 50 site uses the internet to cutdown costs in marketing. An example of which is the ORACLE. The company had been able to save a Billion dollars in a year because of B-to-B marketing.

3.      Increase Company Awareness

Based on the applications of the mini-fans in the industry, it is better for the company to advertise in the horizontal publications. If the company chose Vertical Industry magazines, it would just target a specific industry. Since the aim of the company is to know the different industries where their product should be used then it is more beneficial to them to introduce the product to horizontal marketing. Advertisements are necessary so that the company would be well-known in the industry and it is also necessary to build up the image of the product.

Purchasing agents are big influences in the marketing of a certain product. The company sales representatives of Fanfare must persuade the purchasing agents that the right product that the company needs is the mini-fan of Fanfare. Through the purchasing agents, the company can also determine the requirements of the clients and if ever that most of the purchasing agents are in need of a certain type of mini-fan the company could develop one to provide for the specifications of the client.

            Business to business marketing is important in the case of the mini-fan because the company’s products are usually a part of a whole. Mini-fans are assembled to the main product of that company and it cannot be used independently by the consumer. The reasons stated above just show that it is good to have business to business marketing strategy.

C.     Training Regional Sales Managers Versus The Use of Industrial Representatives

As discussed, the training of regional sales managers and the accompaniment of the technical people when going to clients is a rather extreme approach to broaden the opportunity of the market. However, this is better rather than firing the Regional Sales Managers. IF the company laid off the Managers as it was stated in the case, the managers would be absorbed by the competitors. Through grooming and training of the Regional Sales Managers, the sales force would learn more about the product which is really a necessary tool for a sales representative to have.

If the technical people or representatives in the research and development team could go with the marketing sales personnel during the meeting with the client. By doing so, the R&D team would be able to produce the products with the correct specifications. Through advertising in vertical magazines and circulation, the introduction of the product to new industries would be covered.

D.    Production Strategy

The manufacturing of systems incorporation of the mini-fan is a bit off from the capabilities of the plant as per Deirdre and Kant. Although it is a good idea to introduce such concepts in the market, it would be hard for the company to do so because of its capabilities and the time that would be consumed in developing the air handling system customized for a specific client.

Short runs are more feasible than the systems incorporation. However, short runs are more expensive than long runs. In order to gain back the costs of the repeated  changing of production styles, the company could increase the prices of the product. However, this could again affect the sales of the said product.

E.     Improvement of Quality Control

The company must make a new scheme for its quality control. Rejects can be additional cost of materials and processing. If there are rejects the reputation of the company is also at stake. Although this cannot be quantified in monetary terms, it has an effect on the economic accounting. Through the use of EVA or Economic Value Added concept, the company is able to compute its economic loss in terms of its rejects.

VI.             Conclusions and Recommendations

The management could still deliberate on what part of the strategy would they do first. The success and improvement of the marketing performance would depend on the decision that the management would take. The chronology of strategies can also affect the performance of the Fanfare. It is advised that the market research would be the first choice of the management because this would be the source of information that the company needs for their marketing and production requirements

REFERENCES

Syracuse University. (2005) Dell Computer Corp.: Failure in B2B E-Commerce Strategy Retrieved last September 25, 2007 from Syracuse University Website: web.syr.edu/~efedelma/dell.html

WWWeb-Works Web Design Studios. (2007). E-business Web Sites Examined. Retrieved last September 25, 2007 from D. Edson & Company Website: dedson.com/e-business/e-business_sites/e-business_sites.html

All Business. (2007). Trade Show Strategies.  Retrieved last September 25, 2007 from All Business. Website: http://www.allbusiness.com/print/897-1-22eeq.html

The reports answers five questions elated to the case of cola in China. These questions include; 1 How effective is the positioning of Future Cola? ; 2 What are the factors that have contributed to Future Cola’s growth so far? ; 3 How might Coca Cola and Pepsi Co. Respond to Wahoo in the carbonated drinks category? ; 4 What should Wahoo do to anticipate and respond to the next level of competition? ; 5 what other strategies and tactics could Future Cola employ to continue to grow its market share?

The author has used different tools to answer these questions including SOOT, PEST, Five Forces Model, Anions Matrix, Core Competencies and Competitive Advantages. To measure the effectiveness of Strategic Positioning of Future Cola the author first analyzed its strategic positions using competitive advantage theory followed by SOOT and PEST analysis as well as porter’s five forces model which helped to explore the strengths, weaknesses, opportunities and threats for the business.

Also the political, social, economic and technological factors that are contributing to the success of Future cola have been discussed. Also the business environment was analyzed by identifying threats of substitute products, threat of new products, intense rivalries among existing players, bargaining power of appliers and bargaining power of buyers. It was found that Future Cola has become a successful brand and is competing with international brands in China because it has been advertised as a patriotic brand Intelligent.

Further Wahoo Group holds vast wholesale and retail network. Also the prices of Future Cola are low as compared to other brand. Pepsi and Coca Cola can meet the rising demand and success of future bola by adopting a localized marketing strategy, lowering prices and introducing new flavors that are close to the taste that Chinese people like. 4 Report also offers recommendation to Future Cola for becoming leader in China and or succeeding globally. These recommendations include; target developing nations, medium calorie drinks as well as drinks with natural ingredients Q-1.

How effective is the positioning of Future Cola? Strategic Positioning “Pretax profit last year at Hangout Wahoo, the Chinese beverage giant controlled by the country richest man Gong Singing, climbed by 18% to 10. 1 billion Yuan, or $1. 6 billion, amid a fall in raw material costs, a company spokesman told Forbes”. (Forbes, 2013) The Company started its operations in 1987 as a milk factory that was run by a School with the goal of providing children with nutrient drinks. The company is among top five global beverage producers.

Future Cola was introduced by Wahoo Group of China in 1998 at the time when carbonated drinks had become popular and this category was covering half of the volume of the soft drink industry. In 1997 the output of cola in China was 1. 36 million with 80% combined market share of Pepsi and Coca Cola. Currently on number three in China and Number five in the world among soft drink manufacturers Wahoo has successfully achieved and maintained its position. (Nancy Dad, 2004) Competitive Advantage The competitive advantage of Future Cola lays in its generic business strategy that fermentation strategy.

The Future Cola gained success because the CEO was prepared on how multinationals will respond to this new brand and prepared to compete with response as well increase its market share in the future. (Nancy Dad, 2004) The outward evidence of competitive advantage for Future Cola can be seen in its success in China as third major soft drink in China and high growth in sales. Future Cola is enjoying superior delivered cost position due to low costs 6 international brands and close to the Chinese taste and culture. Positional advantage has many benefits and cannot be exploited

In theory, the competitive advantage is described from two perspectives; 1 . Resource 2. Capabilities As regards resources Future cola has competitive advantage that because it has vast distribution network, financial capacity, its manufacturing and distribution network in low cost, has production capacity, it purchases raw material. Capabilities include focused knowledge, orientation of customer service, expertise in design, experience as a food and beverage company, holds trade relationship in China, is able to utilize relevant technologies, capability to design system as well as to response capability.

SOOT Analysts Strengths Weaknesses ;Brand name resembling to Coca Cola ;Fifth biggest brand in the world ;Third Major Brand in China ;China’ National Brand ;Vast network of wholesale ;Cheaper than its competitors ;Attractive Marketing Strategies ;Brand Management Skills ;Not an international brand like Pepsi and Coca Cola ;Focusing less on Threats Opportunities ;Great Competition ;Changing consumption trends ;Restriction on carbonated drinks ;Can expand its network to emerging markets and developing nations to ;Can introduce different flavors to grow sales ;Can acquire major players in China

Figure I-SOOT Analysis Future Cola Brand name resembling to Coca Cola which is already familiar One among the five biggest brands in the world Third Major Brand in China Established as China’ National Brand Vast network of wholesale Cheaper than its competitors Attractive Marketing Strategies and Brand Management Skills Weaknesses 8 Not an international brand like Pepsi and Coca Cola Can expand its network to emerging markets and developing nations to increase sales and profits Can introduce different flavors to grow sales Can acquire major players in China Great Competition with presence of major brands Changing consumption trends

Cattle should focus on rural and semi-rural areas as their mall battlefield. Situation Analysis: Strength: 1 . Cattle providing superior quality products with high reputation In the market. 2. At has a strong market position and brand Image due to Its advancement In technology and Innovation. 3. TTS toothbrush product line Is extremely competitive, which It has Invested in growing It toothbrush manufacturing capacity and Improving productivity. They product mix can be adjusted to meet demand without relying on the expensive and risky import process. 4.

Only providers of the Battery operated toothbrushes, biggest advantage capture share in market in future. Weakness: 1. Director Patella did not see value in building relationship with seed distributors and small-store owners. 2. Its communication is very weak in rural areas. Opportunity: 1 . India people lack knowledge and understand about Cattle Tailor’s product and its effects. 2. Its product are not more popular in rural areas and semi urban area, so it has change to expand its business and product awareness in rural area with help of increase percentages advertising and promotions.

Threats:l . Other two strong competitors (Hand-Dalton and Sardinia) have a good reputation in markets and Cattle has threats to be captured its market share. Positioning Analysis: Good positioning strategy leads good marketing strategy, and improve customer knowledge and attracts them to purchase the product. Positioning creates an image for the product based on its customers. Image can be created by UP. Product:Analysis which product(low end, mid-range and battery-operated) offers the customer value, and If not, then how to do they change their product to meet customer needs and satisfaction.

|Marketing Strategy | |Comcast Corporation | | | | | | | | | | | EXECUTIVE SUMMARY

Comcast Corporation is facing strong new competition in markets where it used to have none. Comcast has been losing analog cable television customers while at the same time seeing reduced growth of subscribers for its new services. For example, Comcast added 247,000 digital cable subscribers in the 4th quarter of 2008, which is less than half of the 530,000 subscribers they added at the same time the previous year (businessinsider. com). Comcast is the largest cable company in the United States. In most of the regions that they operate, they are almost a monopoly. In Maryland alone, they command 82% of the cable market (allbusiness. om). Unfortunately, Comcast has taken the attitude of a monopoly when it comes to customer service and pricing. In 2004 and 2007, Comcast had the worst customer satisfaction rating of any company in the country (wikipedia. org). Comcast’s legacy of terrible customer service has their customers ready to jump to a new company’s service as soon as it becomes available. Telecommunications companies have begun to capitalize on this by implementing new technologies to provide digital television, high speed internet and internet telephony services over their existing networks in order to compete directly against Comcast.

In order to fulfill Comcast’s mission of offering the best products and the most customer-friendly and reliable service in the market, we are proposing a new Customer Service initiative as well as a Total Content Distribution strategy. This involves acquiring media content providers in order to provide exclusive content and to offer a one-stop shopping experience for consumers for all their entertainment and communication needs. Market Definition and Opportunity Comcast identifies its target market size as 50. million homes, located in 39 states and the District of Columbia, which can be connected to its distribution system without further extension of transmission lines. Currently, Comcast has 24. 2 million video customers (47. 8% penetration), 14. 9 million high-speed internet customers (29. 7% penetration), and 6. 5 million phone customers (13. 9% penetration). Comcast generates approximately 95% of its consolidated revenue from its Cable segment. Its cable systems simultaneously deliver video, high-speed internet and phone services to its customers (2008 Annual Report). Appendix A: Example Customer Satisfaction Survey

In your most recent customer service experience, how did you contact the representative? ( )In Person ( )By Telephone ( )Internet ( )Other About how long did you have to wait before speaking to a representative? ( )I was taken care of immediately ( )Within 3 minutes ( )3-5 minutes ( )5-10 minutes ( )More than 10 minutes Did our representative… (Select all that apply) ( )Quickly identify the problem ( )Appear knowledgeable and competent ( )Help you understand the cause and the solution to the problem ( )Handle issues with courtesy and professionalism About how long did it take to get this problem resolved? )Immediate Resolution ( )Less than a day ( )Between 2 and 3 days ( )Between 3 and 5 days ( )More than a week ( )The problem is still not resolved How many times did you have to contact customer service before the problem was corrected? ( )Once ( )Twice ( )Three Times ( )More than Three times On a scale of 1 to 5 where 1 represents “Extremely dissatisfied” and 5 represents “Extremely Satisfied,” please answer the below questions and provide any explanation that could help us to improve our customer service. How satisfied are you with the customer service experience? Overall, how would you rate your level of satisfaction with Comcast?

If you were less than totally satisfied, what could have been done to serve you better? WORKS CITED “Comcast. ” Wikipedia. org. Wikipedia. org, 2009. Web. 24 November 2009. http://en. wikipedia. org/wiki/Comcast Comcast Corporation. Annual Report, 2008. Philadelphia, PA: Comcast Corporation, 2008. Frommer, Dan. “Comcast Beats Street, But Growth Hits the Wall. ” The Business Insider. Silicon Valley Insider, 2009. Web. 18 February 2009. http://www. businessinsider. com/comcast-beats-street-but-growth-hits-the-wall-2009-2 “HD Market Penetration at All-Time High. ” Afterdawn. com. AfterDawn Ltd, 2009. Web. 19 October 2009. ttp://www. afterdawn. com/news/archive/16014. cfm/ Herman, Josh. “Consumers on the Move. ” Direct, 1 June 2006: pp 30-31. Mello, John P. “DVR Market Penetration: Riding a Provider-Powered Wave. ” TechNewsWorld. com. E-Commerce Times, 2007. Web. 19 October 2009. http://www. technewsworld. com/story/media-convergence/59497. html. “New Verizon Wireless Advertising Campaign Introduces the People Behind the Nation’s Most Reliable Wireless Network. ” World’s Technology News. Technology News, 2009. Web. 25 November 2009. http://www. mirror99. com/20060514/new_verizon_wireless_advertising_campaign_introduces_the_peo le_behind_the_nation_s_most_reliable_wireless_dfjg. jspx O’Donnell, Jayne. “Gen Y Sits on Top of Consumer Food Chain. ” USA Today, 11 October 2006: p. 3B “Research: Internet connected TVs the trend for 2009. ” Copypaste. nl. Copypaste Media, 9 August 2009. Web. 19 October 2009. http://www. copypaste. nl/788/research-internet-connected-tvs-now-officially-the-trend-for-2009. Waddell, Ray. “Comcast Center Title Deal Is One For Record Books. ” AllBusiness. AllBusiness, 2000. Web. 24 January 2000. http://www. allbusiness. com/services/amusement-recreation-services/4560069-1. html

Answer the following In about 15 words (i)List the tlelds in which Trailblazer’ has business strengths. A. The trailblazer’s business strengths could include the medical, technology, finance, legal and consulting fields. Being strong strategic thinkers, they focus easily on marketing and operations. (it) List the fields in which ‘Motivator’ has business strengths. A. The motivator’s business strengths: They do well in retail, sales and HR. They do well in almost any business that Involves people, as long as Its d somewhat non- confrontational environment.

Ill) List the fields In which Collaborator has business strengths. A. collaborators are good at running customer service-oriented or retail businesses or any business where there is a need to convince others. Collaborators can be great salesmen in a warm selling market because they use their sociability to sell their expertise. (Iv) List the fields in which Diplomats’ has business strengths. A. The diplomat’s excel In retail or other people-oriented environments. They are good at multi-tasklng and can work well under pressure They get things done quickly end work well with deadlines, Q2.

Answer the following In about 50 words. (i) Describe the characteristics ot a ‘go-getter’ type ot personality. Ans. They have a higher-than-average level of both dominance and sociability and very driven and independent. Go-getters represent the largest percentage of the founders. Their natural style lends itself to managing and leading both processes and people. They can work well in ambitious and unfamiliar environments. means they can invest in, buy or start a business that’s totally new and still make a success of It.

They don’t need to be an expert In the field to start the business, as they are good collaborators nd can learn as they go (it) What is brain storming? Ans. A group of persons sit together and generate a number of business ideas by innovating alternative ways of meeting the needs and solving problems. It is usually an unstructured discussion in which one idea leads to another. This is a very productive method of generating as many as possible. Oil) What do you mean by ‘environment scanning? Ans.

One of the Important techniques that can be used to generate Ideas Is environment scanning, the screening of large amounts of Information to detect emerging trends. A lot of Information Is available from news magazines, reviews, government and consumer publications, trade publications, commercials, etc. These have to be scanned to obtain workable ideas. The challenge in this method is that there is too much information to scan from. However it is very useful way to generate ideas. (iv)What are focus groups? services in a structured setting.

In a typical focus group a moderator focuses the group discussion or whatever issues are being examined. A focus group can provide an excellent way to generate new ideas and to screen proposed ideas and concepts. v)Explain feasibility study? Ans. Centre for Entrepreneurship at University of Rochester explained that “a feasibility study can be defined as a controlled process for identifying problems and opportunities, determining objectives, describing situations, defining successful outcomes, and assessing the range of costs and benefits associated with several alternatives for solving a problem. The information gathered and presented in a feasibility study will help entrepreneurs to: A) List in detail all the things they need to make the business work; B) Identify logistical and other business-related problems nd solutions; C) Develop marketing strategies to convince a bank or investor that their business is worth considering as an investment; and D) Serve as a solid foundation for developing their business plans. vi)What do you think is the reason for failure of business plan execution? Ans. Strategies most often fail because they are not executed well. Expected results and outcome may not happen and leading to underperformance. This creates significant frustration and cynicism within an organization. Even good plans can get a bad name because they are assessed by the results of its execution.

The Marketing Strategy of Gazprom

Energy makes the world turn. There is nothing else that could move airplanes, railways, buses, cars, or even make a home function the whole year round. It is understandable why nations would go to war for oil, natural gas, coal and any other fossil fuel imbedded in a country’s territory (Gaddy, 2002).

It is also no wonder that one of the most profitable businesses are those that trade in hydrocarbon fuels. One of the most prominent and rising fast – to be one of the elite in the pack is a Russian company called Gazprom (Victor, Jaffe, & Hayes, 2006).

The booster-rocket-like speed with which Gazprom climbed the charts can be explained in three ways. These are listed as follows:

1) trading in a precious commodity;

2) ability to access and produce a huge amount of said commodity;

3) monopolistic practices;

4) combining all three to create a marketing strategy unique to Gazprom.

A marketing strategy that not only is unique to a post-USSR Russian company but also a strategy that could be the envy of other energy firms (Gavrilenkov, Wiegert, & Welfrens, 2004).

This study aims to take a closer look at the factors affecting Gazprom’s success with a focus on their marketing strategy. By marketing strategy, the proponent will use a non-conventional approach to understanding marketing. This is because the popular understanding of what marketing is about will not be enough to accurately understand Gazprom’s activities and even any corporation for that matter. Aside from that, strategic marketing will be defined with an eye towards comprehending the extent of Gazprom’s influence and ability to change Russia and perhaps the world (Rosner, 2006).

The goals of this study can only be achieved by looking at current trends in marketing strategies. Another method that can be utilized in having an in-depth understanding of how Gazprom operates would be to look at the internal environment from which it operates as well as the neighboring regions that affects its operations. Then finally it would be impossible to fully grasp the essence of Gazprom without taking a step back and see the larger picture (Weitz & Wensley, 2006). Learn about Dell Marketing Strategy

By seeing the larger picture the proponent meant, seeing the global aspect of the operation as well as how nations that are within the influence and scope of Gazprom’s operations play a part in this complex world of selling energy (Balmaceda, 2006).

Internal Environment

The western world may have seen in simplistic terms, the end of the cold war. This is the period in history when the once mighty Union the Soviet Socialist Republic was brought to its knees. The illusion, which is communism, was exposed for what it really is – an ineffective way to rule a great people. And that way of ruling is by means of a centralized government in the heart of Moscow, which can be argued as a different political system yet at its core suffers from a common problem of bureaucracy and corruption (Victor, Jaffe, ; Hayes, 2006).

In the 1980s communism is showing its cracks all over the globe and when it died down in the former Soviet State, it created a vacuum of power. The old USSR was broken to pieces huge landmass was seceded and the new government could not properly manage some of the remaining territories. What was true in the political landscape was also true of the business climate. Chaos could be a mild term to describe what happened. For a time the once proud Russians who were once feared to rule the world, are now staring hopelessly into the future. The once utopia promised by communism was replaced with widespread hunger and despair (Lewis ; Littler, 1999).

Reforms were made in the hope of duplicating the successful capital model of Western countries. But things did not happen as expected (Gaddy, 2002).

A Joint-Stock Company

In the official website of Gazprom one can see that the official designation of the business is a joint-stock company. At first glance it is indeed a conventional joint-stock company as it possesses the attributes of one. As described by R.P.Maheshwari a joint-stock firm have the following essential features:

a) Distinct legal entity;

b) Perpetual corporate existence; and having

c) centralized and delegated management (2004).

But in reality Gazprom behaves in dual mode; it is partly a conventional company – in fact its shares are publicly traded (see Gazprom.com) – and at the same time an extension of the government. It can be argued that it is a natural monopoly, a product of the environment from which it sprung (Victor, Jaffe, ; Hayes, 2006). This idea will be explained in detail much further in the following pages.

Natural Monopoly

The transformation of Gazprom which have its roots in the glory days of the USSR – a centralized government with an eye towards world domination and at the same time a paranoia against anything Western – has significantly influenced its development. By this one means its metamorphosis from a public enterprise into a business geared to compete in a free market system and then into a natural monopoly.

Pierre Guslain documented Gazprom’s early history:

Gazprom was also privatized in 1994 and managed – pursuant to a special 1992 order of President Yeltsin- to escape breakup, the fate of most other huge Russian monopolies; it remains a vertically integrated company, from exploration all the way to distribution, and has been described as a state within the state (1997).

Younkyoo Kim explained further the extent of this monopoly:

Gazprom retained a substantial degree of operational control over the entire Russian gas

Business, not only the responsibility for structures which were directly connected with the gas supply but also those that had to do with gas supply only indirectly, for example building companies, machine producers as well as agricultural operations and consumer goods producers (2003).

There is no escaping its past and perhaps the environment from which it has to exist. At the onset, Russia began the initial steps and headed for reforms. The predictable changes was the transformation of State owned firms into businesses that are independent of state control and therefore freed from tendencies of corruption and inefficiency common in many government owned businesses (Vogelsang, 1999).

There is evidence to prove that the Russian government is tolerating Gazprom’s role as a more direct tool of the government to improve the economy. This is because it is left with no choice but to embrace Gazprom as an equal and sole partner in exploiting Russia’s fossil fuel reserves. Part of the evidence is found in the observation findings of Gavrilenko, Wiegert, and Welfens, “Energy is by far the most important sector in the Russian economy, and a central pillar of its foreign trade. However, the country has been unable to pull the economy from its post-socialist slump” (2004). In this grim scenario Gazprom pumps money into the economy, “The energy industry provides almost one-third of industrial production,and more than a half of export revenues” (Gavrilenko, Wiegert, and Welfens, 2004).

There were changes all right but it seems that culture and habits are social factors that could not be easily taken out or inculcated into a particular society. What Russians now have is a country that tries hard to imitate countries belonging to the so-called G8 group but failing to behave like one (Larsen, 1997). A look at Gazprom will further explain this point.

First of all, Gazprom is not like any giant firm that say operate in the United States or in the United Kingdom because of the degree of involvement of the State. The above mentioned recent history of Russia partly explains why Gazprom have its own unique business principles. Reiterating these factors one can easily recall culture of the country, culture of the region, habits formed by decades of communist rule that relied so much on a centralized government and the bad practices associated with such a regimented type of governance (Gaddy, 2002).

In a study on the kind of internal environment one can find in Russia, Jean-Jacques Lambin and Inge Vanfraechem reiterated the following case:

Dane McSpedon, Office Manager of Honeywell Home and Building Control, St. Petersburg felt the temperature in his office was rising beyond the level of comfort. But there was no valve to regulate the temperature […] everything was controlled from a central boiler house somewhere in the city (as cited in Larsen, 1997).

Since Honeywell is a Western company then it follows that the said manager proceeded to solve the problem using a “Western” mindset and he thought of selling Thermostatic radiator valves produced by Honeywell (Larsen, 1997). But J. Lambin and I. Vanfraechem was quick to point out that it was not that easy to do in Russia. The following are the reasons why:

1.      Monopoly – Lenenergo is the main producer of heat energy in St. Petersburg and controls about 50% of the retail market.

2.      Infrastructure – One of the biggest disadvantages of the central heating systems is the very bad condition of the pipe work system.

3.      Technology – It is very difficult to control the output parameters (pressure and temperature of the water).

4.      Overhaul – There is a need to change the system from the ground up just so one can deliver customer satisfaction and significant energy savings from the installation of the valves (as cited in Larsen, 1997).

The above scenario is common in Russia and offers a view into kind of culture, bureaucracy, and inefficiency the Russian people are enduring for decades now (Gavrilenkov, Wiegert, ; Welfrens, 2004).

Gaddy (2002) made no qualms in condemning Gazprom as part of a troika – tri tolstyaka – known popularly as the “Three Fat Boys of Russian monopoly: RAO UES (the electricity monopoly); MPS (the state railways); and finally Gazprom (the natural gas monopoly).

Rosner made the same conclusion and was emphatic in his remarks about the government’s not so discreet way of showing that it is using Gazprom:

Gazprom for all its hope at being perceived as a legitimate commercial enterprise, remains largely a tool and now the crown jewel of Russia’s quest for empire. This was definitively settled as a result of the government’s reconsolidation of its majority ownership position over the world’s gas giant in 2005 (2006).

Second, the product sold by Gazprom is not an ordinary product. It is not a product that a competitor can come in and could easily copy, manufacture, and ship to key customers of Gazprom. In other words it would not be easy to weaken Gazprom by virtue of producing a superior product because what Gazprom is selling is a precious resource. Gazprom is not only enjoying monopolistic control over this resource but it is also controlling a significant amount by global standards (Kim, 2003).

Clifford and Ickes offered an idea of the amount of precious resource Gazprom is sitting on, “Gazprom is the largest producer of natural gas, some 23 percent of the world output, while its proven reserves account for some 35 percent of world reserves” (year).

Third, the commodity being discussed here is not only precious but the manner of extraction is also unique for one requires massive infrastructure to deliver the product to its customers. Now, the massive infrastructure required is half of the story. What is significant is the kind of infrastructure that needs to be constructed and the location where it should be constructed. There is one word for all that – pipelines. In simple terms, when one builds a pipeline – especially in the case of Russia and Gazprom – it is inevitable to cross borders and enter territories of other geopolitical nations. That is one major production and logistical problem for this type of industry. And it contributes largely to the strategic planning and marketing of Gazprom.

An example of the production challenge faced by the company is seen in the construction of the Yamal pipeline. A Harvard professor of Russian and Eurasian studies offered a glimpse to the significance of the said pipeline on the production aspect of Gazprom:

The Yamal-Europe pipeline was conceived as a gigantic project involving the development of the Yamal gas fields in Siberia with transport to Western Europe via a 6670 km pipeline passing through Belarus, Poland, and Germany […] and also to reduce dependency on gas pipelines passing through Ukraine (year).

Fourth, the product being offered by Gazprom is not only a precious commodity like say diamonds for example that in the case of high prices and high demand a person can learn to live without. The product is not only precious but in fact is a vital resource. It is so vital that it can be used as political concession, something that could be used as a leverage and put simply can be utilized to blackmail a country and make it bend backwards to the wishes of Gazprom and whoever is controlling it.

Fifth, the product being discussed is one of the few commodities that could change history and therefore the world is watching every step that Gazprom will be making and that would be to their advantage or disadvantage depending on how they will play their cards. This is a global company whose actions can have global consequences.

Combining all five factors together one gets a interesting mix of power, influence, and wealth. This means that the Russian government wants to control Gazprom then it would do all it can to wield control of the company. This also means that nations within its borders will now become more active in their negotiations with Gazprom making distribution and production of the product complicated. Moreover, this also means that industrialized nations will be wary of Gazprom and would do all that they could to restore the balance of power.

In the midst of all these is Gazprom, a firm in the cusp of a breakthrough of global proportions. In terms of marketing strategy, Gazprom could not afford a misstep. And it starts with having a correct understanding of what strategic marketing is all about. In the latter part, it will be shown how Gazprom is using all the factors directly and indirectly working against and for the firm to create a competitive edge.

Macro-environment

One of the more crucial aspects in the strategic marketing thrust of Gazprom will always concern its neighbors and the nations near its borders. There are two major reasons when talking about creating a competitive edge amongst its closest rivals, the immediate advantage being enjoyed by Gazprom is the proximity of the source of their product and these neighboring nations. This means selling their wares at a very competitive price, which will make it impossible for competitors to beat. If this trend can be maintained of course with peaceful relations and serving common interests then Gazprom is already assured of steady demand that can translate to expansion and upgrade of its facilities (Balmaceda, 2006).

But there is one more important reason why the nations near its borders occupy a special place in the firms planning phase – the pipelines. Nations like Belarus is a key part of the strategy in Gazprom’s bid to reach the top and ensure a bright future for all its investors.

Balmaceda described the strategic importance of Belarus, “Strategically placed between Russia and Poland, Belarus is the shortest route between Russian energy fields and Western European markets, making it an important player in European energy transit” (2006).

Arguing along the same lines, Rosner alerted everyone who wants to listen that all the aces are in the hands of Gazprom:

European Union (EU) G8 Member dependency on Russian imports for these fuels is growing […] Member’s import dependency was allowed to grow, if not encouraged, as dependency was at least partially viewed as preferential to continued and expanded dependence on the decidedly non-democratic regimes of the Middle East, a classic example of expanding energy security through diversification of source country for primary energy sources (2006).

Strategic Marketing

The popular notion with regards to marketing is that it is all about sales. Marketing then denotes selling. This is then simplified as having already a product, fresh from the production line and now being displayed in the showroom and the salesman does his job to sell it to the customers (Bove ; Arens, 2005)

Moreover another wrong interpretation of marketing is the activity done to make customers purchase a product that is of very little utility and that the primary method of doing this is advertising. Weitz and Wensley commented on the oft repeated and they wrote, “A reading of marketing textbooks suggests that it is almost axiomatic that advertising increases product category sales” (year). Both authors then quoted J.J. Lambin an expert in marketing studies who made the following conclusions, “Limited empirical support is given to the view that advertising increases primary demand” (Weitz and Wensley, 2006).

In the same vein Mcdonald, Rogers, and Woodburn made the following assertions:

Another endemic problem in business is the depth of ignorance about what marketing actually is. This is graphically illustrated by the comment of one managing director, who announced aggressively at a public seminar that, ‘There is no time for marketing in my company until sales improve’ (2000).

The correct way is being exemplified by Slack when describing the ideal processes occurring within an enterprise and he wrote:

Marketing, like other functions and the organization as a whole, may have a plan, which sets out the objectives and the means of achieving these. The plan can be viewed as a blueprint for future action. It will also set out targets which performance can be monitored (1999).

This piece of information is significant in analyzing Gazprom’s marketing strategy because there is evidence to support the assertion that the firm knows about essence of a real marketing strategy and that they are exploiting this knowledge to the full. An example of a Gazprom business policy that focuses more on making the customer need their product rather than wasting time in useless marketing gimmicks can be seen in their dealings with Belarus (Balmaceda, 2006).

Russia is providing the country of Belarus oil that are significantly lower than market prices which the importer in turn exports at world market prices – leading to significant profits for Belarus. Balmaceda made comments on the what is behind all this fraternizing and she remarked:

Russia’s willingness to continue offering Belarus subsidized energy in exchange for political and military also tells us that in an era where Russia has officially embraced free-market prices […] it is still willing to use energy for clear foreign policy purposes” (2006).

As mentioned earlier the common definition of marketing is not an accurate description of what marketing is really about (McDonald ; Woodburn, 2000). This leads to a wrong analysis of Gazprom’s activities and what it is trying to do in the present that will ultimately affect its future. This is because a major component of strategic marketing deals with the future, since it involves forecasting (Lewis ; Littler, 1999).

Again, using Belarus’ Gazprom entered into a mutual relationship with the said country not only to ensure steady production and delivery but also because it was already preparing for the future in case problems will develop in other pipelines especially those located in Ukraine (see Balmaceda, 2006).

Another example of strategic marketing employed by Gazprom was revealed by Victor, Jaffe, and Hayes when they made known how the gas giant is using its influence and position in a rigged market and they wrote:

Low producer prices and uncertain access to pipelines prevented most independent producers from entering the market. Thus Russian gas production includes only minuscule quantities of associated gas, even though Russia’s oil industry is one of the world’s largest…(2006)

Competitive Edge

            It would be foolish to assume that Gazprom is not poised to become the top dog of the gas industry. Therefore, it is important to read carefully what it is doing and carefully connect it with its role in the Russian economy, the Asian Economy, and the European Unions’s collective economy. Add to that one must find the linkage between its already dominant position as being a natural monopoly that is sanctioned indirectly by the Russian government (Rosner, 2006).

Putting it all together one can see a clear picture of how Gazprom is strengthening its position and at the same time forming a formidable marketing strategy not yet seen in the history of the gas industry. Not in this scale and surely not in the kind of audacity shown by its leadership and whoever is behind it (Gavrilenkov, Wiegert, ; Welfrens, 2004).

At the end, history will be the only capable judge in determining whether the Russian government and the leaders of Gazprom are right or wrong in terms of the mutual understanding that existed between two parties. This is because in the words of Ingo Vogelsang a “Public Enterprise” is an oxymoron in that the two concepts could not be reconciled (1990). Vogelsang clarified his point by saying, “… public production of private goods is seen as creeping Socialism” (1990). The author then added the final reason as to why he sees no harmony in such a set-up:

Controlled by lethargic bureaucrats and buffeted by political demagogues, how can anything ‘public’ also be an ‘enterprise’ with its connotations of efficiency and entrepreneurial dynamism?

Vogelsang may be correct in his assessment but it seems that Gazprom is set to prove him wrong as the company is raking in profits (see Gazprom.com).

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