Design Services Pty Ltd is a company incorporated in Australia and offering design services. The company is faced with a growing market but is constrained by the presence of internal inefficiencies and a lack of proper strategies to capture the opportunities available in three different market segments. The best approach to marketing strategy is through a focus on internal and external elements with influence on the marketing and branding of the companies services.
Design Services Pty Ltd offers a wide range of design solutions. This ranges from multimedia design, signwriting, and graphic design services. It also offers other related services as per customer specifications.
Current Marketing situation
An analysis of the current marketing standing for the company reveals a number of positive elements which are working for the company and have enabled its growth. It also reveals gaping weak points which have to be dealt with promptly by taking advantage of the opportunities available in the market. The company relies heavily on a few customers to raise most of its revenues. A dismal 15% proportion of the customers generate a whopping 75% of the companies business. This leaves the other 85% offering only 25% of the company’s revenue. This is definitely a very risky state for the company. Reliance on a few customers increases business risks as the business gets very vulnerable to decisions made elsewhere. This is due to the fact that in a case where one of the major customers stops buying the services from the company or scales down the orders for any reason the company is bound to be affected in a very big way and could even resort to closing down due to loss of business. A wide customer base guarantees a certain sustainable level of business capable of sustaining the company without strain. Even in cases where one or a small group of customers cannot continue buying the product, the continuity of the business is not put at risk. The remaining customers continue to support it. The implication here is that expanding the number of customers not only increases returns for the company but also reduces risks (David, Merrilees, & Rhett, 2000, p311).
Marketing experts insist that a business operating in a competitive environment should not have one customer offering more than 10%. The reasoning here is that the company is exposed to higher risk if the big customers fail. The goal of ensuring a maximum of 10% contribution at times appears too high but should be considered as the target for any business. The 15% proportion of customers who generate 75% of the business pose a great amount of risk. This being the case, the company needs to immediately discover new markets in a bid to diversify the customer portfolio hence minimize risk by guaranteeing continuation despite the failure of some customers.
The range of services described above is also offered in different proportions. Multimedia design accounts for 39% of the company’s total revenue; Signwriting contributes about 26% same as general graphic design. Other services account for a paltry 9% of the revenue collected. As can be seen, the multimedia design segment accounts for the largest share of the revenues. This in essence means that this product drives the business. The failure of the product in the market means added risks for the company. This problem can be dealt with in two main ways. First, the company can focus on growing the number of customers for this service. This in itself reduces the chances of complete failure of the market for the product. On the other hand, the company can invest and grow the market for different products a strategy known as diversification. Bearing in mind the fact that the company already offers four different services, enacting this strategy is a real possibility. However, there has to be adequate consideration of the market conditions prevailing for the different services offered. A quick review of this business segment gives the areas of strength that need to be maintained and areas of weaknesses that should be the focus of the marketing strategies to be developed. The company has a high-quality design technology which gives it superior abilities to develop high-quality designs and ensuring timeliness of deliveries as well as ensuring technical reliability of support services. This is a major strength that has the potential to accelerate the company’s growth. The fact that the design’s competitiveness is based more on quality than price means that with quality, the company already has an upper hand to beat the competition. There also exists a good relationship with the existing customers. These good relations can much easily be harnessed and transformed into royalty as well as tools of marketing the company to other customers. In addition, it ensures timely delivery to customers. This way, customers are not only able to plan effectively but also develop confidence in the ability of the company to keep promises. Such strengths offer a foundation for establishing even better customer relations in the development of the marketing strategy. The fact that the company has adequate technical competency in producing stable and functional website designs points to quality. Having high-quality services goes a long way in establishing customer royalty. The company is also endowed with adequate technical reliability of support services for website designs. The capacity to offer adequate support services especially in the case of website designs where continued support is often required is a huge boost to the marketing strategy to be developed as it adds to the competitiveness of the firm.
However, the company faces some challenges. First, it lacks a clear reputation in the market. This is mainly because it operates on a relatively small scale. It is yet to develop a name in the market. On the same note, customers are not well aware of the existence of the product from the company. Lack of awareness is one major hindrance to growth for any business. The exposure of the product to a wide range of potential customers is what drives a large percentage of business growth. Thus lack of consumer awareness, In addition, the design market relies heavily on the reputation of a company in terms of past projects undertaken for large clients. The company is yet to engage in such prestigious projects to gain approval among large corporations. This limits access to the market involving big corporations which offer the best platform for growth. Again, lack of proper professional account management destroys the gains made in impressing customers. It portrays the company as one run unprofessionally. Improper account management means that the client’s accounts are not kept accurate and up to date a situation likely to lead to confrontations overpayments as well as cases of overpayments and underpayments. A non-professional outlook can be detrimental to the company’s image despite the quality of products. It also lacks support documents as well as prestigious projects with major corporations which give other customers confidence. Its market research is poor as it does not conduct needs analysis which assists the development of tailor-made solutions. Finally, there is the inadequacy of expectations management which makes some customers feel cheated at the close of a deal. This implies that on top of expanding the markets the marketing strategy must address these challenges (David, Merrilees, & Rhett, 2000, p312).
Opportunities and Issues
There are immense opportunities for expansion, especially in the multimedia design market. Research shows that the growth rate stands at between 3%-5% each month. This accumulates to 36% to 45% annually. Such a growth rate simply means immense opportunities for the firm. The company should be part of the growth. This coupled with the fact that only 11% of Australian companies already use multimedia means that the product is still young in the market and the company can take advantage of its already developed business to successfully expand in the sector. Before the product’s life cycle matures and fierce competition sets in, it is possible to be along with the leaders who will be pioneers to the design services. Maintaining such lead is crucial for improved competitiveness as well as continuity of the business. Projections show that e-commerce is expected to grow immensely. About 13% of non-multi media users wish to include multimedia strategies. Overall, there are expectations of increased adoption of multimedia and that the product is still young. In addition to the fact that the majority of businesses in Australia are yet to develop multimedia applications, many of those who already have require upgrades. This grows the market for the firm even further especially due to the fact that it already has a well developed customer support system which can be expanded to include the servicing section of the business. Again, competition in the industry is based on the quality of design, technology used and the after sales service. The company scores well in all these vital areas. More importantly, the product mainly competes on quality rather than price. This means unique opportunities for the company as it already has high quality. This being the case, if the company is able to continue offering high quality services it is bound to increase the rate of return. (David, Merrilees, & Rhett, 2000, p313).
The main objectives of the market strategy are to expand the market for the company with multimedia services being at the forefront. In addition to expanding the market, there will be focus on improving internal systems which restrict the company’s growth. The three customer segments available are government department, institutional organizations and commercial organizations. The government departments are those departments existing in the public sector. These are usually under heavy influence by the policies enacted by the government. Key decision makers in these departments are the head of department committees who under normal circumstances are influenced by departmental personnel. The common motivation for purchase is to create awareness on issue. Currently, these departments contribute 42% of revenues in design segment.
Institutional organizations comprise of institutions which govern themselves by tradition. Examples are educational institutes and other government owned enterprises. The influential figures here are the heads of the institutions as well as purchasing officers who are mainly influenced by department staff and business managers. The main reason for purchase of the multimedia services is its ability to aid the learning process in the institution. This customer segment already accounts for a whooping 46% of the designs revenues. It is however expected that the largest growth will be in commercial organizations. This objective will be to develop effective marketing strategies which best suit the different segments to expand the number of clients and hence reduce reliance on a few clients while at the same time expanding revenues.
The marketing strategy best fitting Design Services Pty Ltd should be in two approaches. The first approach is the focus on internal processes within the organization while the second focus on aggressiveness in expanding business by taking advantage of the opportunities in the market.
Internally, the company should establish an efficient accounting and client correspondence with impeccable professionalism. This will not only improve accountability and control in the internal processes but will enhance the company’s image among the existing customers making it easier for them to confidently recommend the company to others. Injecting professionalism will support the brand positioning measures to be developed under the external category (David, Merrilees, & Rhett, 2000, p314).
Externally, the company should focus on two issues. The first is to aggressively market the products to the various customer segments with full consideration of the different factors in play for the different customer segments. The most important thing here is targeting the most influential figures in the different segments to generate new sales. For the government departments, the marketing team should formulate strategies which target the head of department committees as well as departmental personnel. The company should develop unique high quality designs suited to the function of creating awareness. These should be presented to the influential parties at different forums.
For the institutional organizations, the target will be the institutional heads and departmental staff. Designs for this segment should focus on the need to aid learning for them to be acceptable. As mentioned above, the commercial segment represents the biggest growth opportunities for the company. Target persons for the marketing department should be the various stakeholders such as managers and business employees. Designs for this segment should focus on improving competition through innovations and mew medium. The strategy of developing tailor made solutions for each customer is what will offer the best image for the company. Focusing on the influential figures will definitely improve the efficiency of the marketing team in developing new sales. Special attention should however be given to the commercial sector since it offers the highest growth opportunities for the design. Due to the dynamic nature of the corporate sector, the company has to ensure that it can continually be able to develop unique designs which take to full consideration the nature of operation for each client. The designs also have to offer some competitive advantage against rivals.
Secondly, there should be efforts to establish a strong brand in the design services for the company. The company should be positioned as one which offers high quality and effective solutions to e-commerce. When this is backed by a genuine track record of excellence even big corporations will gain confidence to contract the growing firm. A strong brand will greatly drive the expansion program across the market segments despite the challenges that may appear.
The implementation of the external and internal marketing strategies will require the development of several action programs. Internally, there may be the need to retrain the staff already present at the firm as well as review the culture so as to instill elements of efficiency, accountability, professionalism and most importantly good customer relations. There may be requirements to create a new department dealing with customer relations and hire experts to run it to ensure that no customer feels neglected while dealing with the company. Professionalism also needs to be injected in the accounting section accompanied by the presence of adequate documentation which gives confidence to customers.
Externally, there is the need to engage advertisement and promotional campaigns in the media and more importantly, in areas where the various decision makers of the different customer segment meet. Considerations for the mass media should lay great focus on television and radio advertisements and more importantly the internet. In advertising over the internet, there should be clear targeting of sites widely visited by the targeted influential members of the three different customer segments.
Projected Profits and loss Account
Implementing the above outlined programs requires substantial expenditure for the firm. The most important consideration here is the fact that design services compete mainly on quality and not price. Since the company is well able to develop top quality design services using the latest technology, it is possible to price the services at a premium and still be able to maintain customers especially with the branding efforts going on (David, Merrilees, & Rhett, 2000, p315).
The pricing strategy will avail enough funds to cater for the extra financing required to expand the scale of production and maintain the marketing promotions adopted while at the same time remaining profitable. If such a company was to experience growth, there is the possibility for it to realize a profit margin of about
30% profits from its sales. Such returns should be ploughed back to the company in the short-term so as to be able to adequately fund business expansion a situation which will enable the firm to expand its market share and more importantly build adequate capacity for provision of services competitively in the future.
This marketing strategy if properly adopted and implemented has the potential to solve both the internal as well as external constraints which are limiting the firm’s ability to expand by taking advantage of the glaring opportunities in the market for multimedia design. The two pronged approach which focuses on the internal processes as well as external processes is poised to ensure success in the expansion plans. The external measures will seek to expand the business by establishing new clients and creating new sales as strategy for growth and also diversification of risk. On the other hand, internal efficiency will ensure the success of external measures by establishing a good platform that will ensure that the new customers are comfortable. These, coupled with the high quality offered will ensure that the business has a fairly strong base to continue realizing its growth plans.
Even more targeted promotional campaigns should be adopted. The marketing team should constantly identify potential clients and be able to create opportune times to make presentations to the concerned parties so as to expose the company’s products even further. This is after an analysis of the different customers and internalizing their needs and requirements. A strong sales team is expected to drive this program. All the above described action plans should however be implemented in close consideration of cost benefit analysis techniques.
David W., Merrilees, B., & Rhett H. (2000). Strategic marketing management for the Pacific region. Sydney: McGraw-Hill.