Industrial Technical Development Company Analysis

Marketing mix analysis of a business company is the necessary step for the evaluation of business performance and marketing activity of the company. Originally, this type of research entails the analysis of the four Ps: these are Price, Promotion, Product and Place. Nevertheless, these aspects are the basic analysis of the business segment and activity, while there is also a strong necessity to incorporate SWOT and PESTLE matrixes into the research.

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The company, which will be analyzed, is engaged in the sphere of repairing services and technical maintenance of the steel furnaces and supplementary equipment. The company started in the sphere of delivery the complementary parts for the steel works, so, the name of the company is ITD (Industrial Technical Development). Currently, it deals with numerous steel works plants and factories all over the world, nevertheless, in spite of wide business cooperation, the performance of the company is rather poor, as the companies, which ITD deals with, do not regard the company as a reliable companion.

The aim of this paper is to analyze the performance of the company, and give the recommendations for the improvement of marketing activity, by paying special attention to Human Resources, Advertising, Marketing and supplier-customer relations.

PESTLE

This type of analysis presupposes the research of the business environment, and the factors, which influence the allover performance of the company.

Political

The company is located in Australia, and, everything that should be stated on the maters of political environment is that it does not create serious obstacles for business development. The liberal party, which currently heads the government, makes everything possible to encourage the business development, especially if it is engaged in the sphere of strategic industries. From this perspective, there is strong necessity to emphasize that the political environment is one of the most favorable; consequently, the problems are covered deeper.

Economic

Economic aspect of business environment is regarded to be less favorable than the political one, nevertheless, the factors, which form the financial aspect of business performance create particular difficulties for the company. Thus, the economic system presupposes the increased taxes for the transnational operations. Moreover, it should be highlighted that the taxes for the private entrepreneurship are increased proportionally to the income of the company. ITD operates the allover income of $2,875,000, and 15% in total are paid for taxes.

Social

This aspect of business performance is the least influential for the activity of ITD. The demographic situation in Australia creates no obstacles for the development of private entrepreneurship, however, technical education is not extensively developed in Australia. Consequently, it is hard to perform the effective HR management. Though, the turnover is low, as industry related business companies are also rare, and the employees do not wish to lose one of a few opportunities of professional growth and development.

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Technical

Originally, the company is dependant on the communication technologies. The main aim of the company is to find the necessary equipment or the necessary personnel. The company acts as an intermediary, consequently, the particular emphasis is made on the matters of communication, documentation, archive storage and systematizing, as well as searching for the necessary specialists. Consequently, all the equipment and technical base, which is used for the business performance is the computer based communication and data storage systems.

Legal

This type of business does not presuppose any illegal activity. The Australian legislative base, which regulates business sphere touches upon the matters of taxation (which have been already described), Human Resource aspect as well as the issues of treatment of the retired or fired workers. ITD does not have any problems with the legislative bodies, thus, this aspect may be regarded as favorable enough for the business development

Environmental

It has been already emphasized that the company is not engaged directly into the steel works industry, but it provides the technical maintenance and services for the industrial equipment and machinery. Nevertheless, the Green movements, which are of particular popularity in Australia, often arrange demonstrations in order to save the nature, and gather signatures for closing all the companies, engaged in the sphere of heavy industry. Thus, up to 7-8% of the allover expenses are spent for the lawyers.

As for the environmental aspect of business performance in general, there is strong necessity to emphasize that the obstacles created by the environment are not serious enough for explaining the poor performance of the company. All the analyzed factors are regarded to be comparatively favorable, and the reasons of poor performance should be looked for in the internal factors, such as policies, customs and practices.

Tendencies of the Industry

Another Environmental factor which requires analysis is the factor of the industry. The steel works industry is regarded to be one of the most stable industries; nevertheless, it is hard to talk of any development. Originally, it is explained by the fact of expensive equipment and low availability of highly qualified experts. Any company, which enters this sphere should take into consideration the fact, that this sphere is difficult to enter and easy to leave (Leslie and Reimer, 2008)

SWOT

Originally, SWOT analysis is regarded to be the primary analysis, if the business performance, or activity in general requires analysis. The main aim of this analysis is to give the image of the internal factors in the context of business surroundings.

Positive Negative
Internal Strength:
– Accurate performance of business assignments
– Professional approach towards technical maintenance of industrial equipment
– Low Turnover
Weakness
– lack of properly elaborated HR policy
– improperly implemented communication system
– financial management needs essential improvement
External Opportunity
– Low competition
– High demand for the services
– high incomes guaranteed if the tasks and assignments are performed properly
Threat
– Green movements
– Closed character of the market (difficult to enter, easy to leave)
– low availability of high quality production and personnel

Summary of the SWOT analysis

The matrix reveals the notion, that opportunities and strengths are rather powerful, and create the necessary environment for the further development of the company. Nevertheless, the internal problems, which are experienced, totally nullify all the efforts and opportunities, even in spite of the fact that these can be easily solved. The company which depends on communication can not afford having improperly implemented communication system, and even poor development of communication technologies in Australia can not create a serious obstacle for a company, which acts on a market with high incomes and close to perfect stability.

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Marketing Mix

The four Ps of marketing activity are generally represented by the following factors:

  • Product
  • Promotion
  • Price
  • Place

Originally, the successful and proper implementation of all four factors may guarantee the successful business performance and high and stable income. If some of the four P’s are not implemented properly because of some environmental factors, the situation may be compensated by the incorporation of improved management strategy principles, and technologies, incorporated into the business performance. The detailed explanation of the four Ps may be represented in the following matrix:

Marketing Mix

Originally, this matrix represents the four components of the marketing mix, which is equal to successful business performance. On the other hand, it is necessary to give the words by Houston (2006, p. 229), who emphasized the following:

The term ‘marketing mix’ however, does not imply that the 4P elements represent options. They are not trade-offs but are fundamental marketing issues that always need to be addressed. They are the fundamental actions that marketing requires whether determined explicitly or by default.

Product

The variation of the product is the factor, which defines the necessary range of the adaptation, in the case of the changes of the business environment. Originally, the metal and steel industry is one of the most stable spheres of business, and it is not subjected to quick changes and restructurings, consequently, the range of the services, offered by ITD will b demanded within the following fifteen years.

The differentiation of the product is covered in the notion that the offered services may be performed by the industrial enterprises by themselves, nevertheless, ITD positions itself as the reliable partner, engaged in searching the necessary complementary parts and qualified personnel for the technical maintenance of the equipment.

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As for the matters of innovation, the ITD Company did not provide the proper promotional strategy for confirming the real innovation that it offers. Taking into consideration the fact that the company may save much time for the industrial enterprises, which they spend for searching the reliable sources of complementary parts and qualified personnel, ITD did not elaborate the well-planned strategy for the market penetration, even in spite of the fact that the competence level is very low. From the theoretical perspective, it should be emphasized that “the theoretical and empirical work, which regards product innovation and new product marketing as the two sides of the same coin, is scarce” (Stone and Mccall, 2004, p. 116). Consequently, there is strong necessity to exceed the frames of theory, as the concept of the product may be restricted only by the mind of those, who penetrate the market with this product.

The factors of product elimination will come into force when the equipment for the metal works is perfect and does not require any maintenance. Nevertheless, this moment is far enough, for the ITD did not experience any concerns on these matters.

Price

First of all it should be stated that Price is the amount of money, which the consumer pays for the service or product, and, originally, it is defined by numerous factors, such as market share, competition level, the costs of the product or service, and product identity. In accordance with the economic theory, Price is the necessary components if market relations, which reflects the existing interaction between the opposing considerations. Vareya and Lewis (2000, p.341), who are the followers of resource allocation theory, emphasized the following consideration in his research:

The factors of demand considerations are based on marginal utility, while on the other side the supply considerations are based on marginal cost. An equilibrium price is supposed to be at once equal to marginal utility (counted in units of income) from the buyer’s side and marginal cost from the seller’s side. Though this view is accepted by the economists, and it constitutes the core of mainstream economics, it has recently been challenged seriously.

From the point of view of Austrian Price Theory the components of price, which are stated in the matrix are relevant for any type of business performance, and, despite of the competition level, penetration price is required for entering the market and attracting consumers. The amount of partners, which ITD has acquired for five years of business activity is rather low. The analysis of the financial reports revealed the fact that penetration strategy was poorly planned, and implemented without sufficient accuracy. Thus, the target audience was not hit, and the potential customers stayed in the rank of potential.

Place

This factor represents the location where the product or service can be purchased. Taking into consideration the specification of ITD’s performance, place is more related to the distribution channel. In spite of the fact that the company mainly operates through internet, it is impossible to equate the channel to the e-commerce, as the services are real, but not virtual, while the technical personnel is often sent overseas. The distribution of the services is performed from the perspective of providing technical assistance and maintenance for the costly equipment, thus, the consumers will not wish to chose an unreliable companion. Stone and Mccall (2004, p.401) emphasized the following fact from the theoretical perspective:

Distribution channels often require the assistance of others in order for the marketer to reach its target market. While on the surface it may seem to make sense for a company to operate its own distribution channel there are many factors preventing companies from doing so. While companies can do without the assistance of certain channel members, for many marketers some level of channel partnership is needed. Marketers who are successful without utilizing resellers to sell their product may still need assistance with certain parts of the distribution process.

Consequently, the factor of distribution requires essential improvement, as there is strong necessity to improve the business partnership and extend the volumes of cooperation by improving the quality of the services as well as reliability of the performance.

Promotion

Originally, promotion may be divided into four types:

  • Advertising
  • Personal Selling
  • Sales Promotion
  • Publicity

ITD makes a special emphasis on Personal Selling, as all the promotion activity is based on the personal communication with the duly charged representatives of the industrial enterprises, which may be interested in the services provided by ITD.

On the one hand, this approach seems to be correct, nevertheless, it is restricted essentially. It is impossible to know all the representatives of the target audience; thus, advertising should be also implemented into the marketing strategy, for the companies, engaged in the sphere of complementary parts delivery could deal with ITD as an intermediary, and technical specialists could find the opportunity of qualification improvement or a job.

From the perspective of the Push Pull Theory, communication with potential consumers appears to be successful, if the company has already achieved sufficient success and reputation on the market. Thus, the consumers will operate the data on the successful deals; currently, ITD is not considered as a reliable partner, consequently, personal communication can not be used with 100% efficiency.

As for the matters of marketing mix in general, there is strong necessity to emphasize that managerial strategies, which are defined by the four Ps of marketing require essential improvement. Thus, there are no claims for the Product aspect, however, the range and the quality of the services should be improved. Moreover, a particular accent should be made on the rapidity of performing the assignments and dealt obligations (taking into consideration the weakness of communication system, the solution of this problem is obvious).

Pricing strategy is accurate enough; nevertheless, it is far from perfect. The company has neglected the market penetration phase of the pricing strategy; consequently, entering the market can not be regarded as successful. Thus, the distribution channels are not filled, and the efforts in promotion are not effective enough for attracting customers.

Recommendations

The outline of the problems is the following:

  • lack of properly elaborated HR policy
  • improperly implemented communication system
  • financial management
  • Improper promotion

Thus, in spite of the low turnover, the company is unable to arrange the HRM strategies properly. The fact is that, people do not wish to work in a company, which is closer to outsiders than leaders. Thus, mainly inexperienced workers perform the tasks of strategic importance. The solution of all the problems should be started from HRM. There is strong necessity to hire new personnel, and train it for they could perform their assignments properly. Then, in order to minimize their dissatisfaction, fine / bonus system should be implemented. Originally, it allows people to earn as much as they work, thus, they will have additional stimulus for performing their work properly.

The next step is the improvement (or total change) of the communication system. Internal communication is required for keeping workers the track of events. External communication is required for dealing with customers and suppliers. The more effective the communication system – the faster is the reaction for the business events. Surely, the system requires proper technical maintenance. In the light if this fact, the necessity to employ IT personnel is obvious.

Financial management system should obey the allover financial tendencies of the market and the internal factors of business performance. It means that if ITD starts from the very beginning, the corresponding actions in financial management should be undertaken. Penetration strategy, which was neglected, should be included into the “recovery” actions. When the sufficient amount of customers are attracted, the pricing strategy will be changed, nevertheless, it should be taken into consideration that ITD will have to earn sufficient reputation for not distracting consumers by price increase.

As for the promotion actions, the only solution is to extend the advertising campaigns. This would require internet promotion, participation in expos, extensive participation in discussions of the future of the steel industry (conferences), and, surely make its own contribution in the development of technical maintenance sphere. Innovations will be the best promotion of the company.

Conclusion

Finally, it should be stated that the analysis of the company, engaged in metal works equipment from the perspective of Marketing Mix concept revealed the necessity to improve the strategies and principles, which touch upon the Four Ps indirectly. Nevertheless, the factor of Promotion requires thorough elaboration and complete restructuring.

Reference

Houston, F. S. (Ed.). (2006). Marketing Exchange Relationships, Transactions, and Their Media. Westport, CT: Quorum Books.

Leslie, D., & Reimer, S. (2008). Situating Analysis in the World Metal Works Industry. The Canadian Geographer, 50(3), 319

Mason, R. (2005). Interpersonal Effects on Consumer Demand in Economic Theory and Marketing Thought, 1890-1950. Journal of Economic Issues, 29(3), 871

Stone, M. A., & Mccall, J. B. (2004). International Strategic Marketing: A[N] European Perspective. New York: Routledge.

Varey, R. J. (2004). Marketing Communication: Principles and Practice. New York: Routledge.

Varey, R. J., & Lewis, B. R. (2000). Internal Marketing: Directions of Management. London: Routledge.

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