Strategic Marketing
Name of Student
Name of Institution
STRATEGIC MARKETING
Introduction
The advertising business is characterized by the presence of a large number of companies that have to target almost the same customers and with the same kinds of products. This makes it very hard for any one company to become a properly defined leader. All these aspects make the market a complex thing to understand. The first and foremost consideration for any company to assess some opportunity is the strategic direction of itself CITATION Nic14 \l 1033 (Bogdan, 2014). This requires an internal analysis of the company keeping in view the opportunities under consideration. The next stage is the external environment analysis of the company. This will provide the company with the information of the happenings in the external environment and then to reassess the own strategies accordingly. The next stage s the analysis of the various opportunities available to the company. This is done keeping in view the various resources and expertise at the end of the company. The company has assessed the opportunities one by one and stated the possible positives and negatives of each. There is an overview of the digital marketing industry as an option. We have assessed that the company needs to have a clear strategy on the digital marketing front. The detailed analysis has brought us to the conclusion that the strategic alliance option is the best option for the company.
Agenda: The market opportunity in ChinaThere is a great potential for the company in the Chinese market. The company personnel had a large number of meetings with the prospective clients who have shown their surprise as to why the company has not entered the market so far. There are certain competitors to the company who have already started catering the needs of the customers in that huge market. Some experts say that it is the opportunity for all the companies in the near future.
The board has to deal with two issues immediately. First is the decision regarding the entry in the Chinese market in the current financial term? If the answer to this question is in Yes, then what will be the form used to enter the said market.
Entering the foreign market is a decision that has to be taken on the strategic management level. This is because the decision will have a long term impact on the organization in terms of the resources required to implement the decision. In this regard, the first aspect that is required to be assessed is the purpose of entering a particular market. The company can decide to compete with the global players working in china or with the local agencies working in the country. If the resources are put in the decision of entering the market, how will the company develop the presence in the particular market? How will the company make sure that it achieves the success in the said market?
Strategic assessment of the company
The results of the company from the last year have been just adequate. The corruption scandal made us loose some of the clients. These clients will never come back despite the efforts made by the company. The major strategic objective of the company is the focus on the clients. This client based strategy helps the company is making more and more satisfied customers and the business is spreading.
The strategic direction of the company should be growth and continuous improvement as in this kind of industry, there are continuous changes in the internal and external environments which compel the company to change itself. If the company does not change itself, then it will be taken over by some other larger competitors. The company has to learn how to successfully manage the acquisition because the biggest issue so far for the company is that it has badly managed the acquisitions and this aspect has caused the company to lose money as well as the reputation of the company has also affected.
The market research team working in the company is one of the best in the world. The company lacks on the sustainability aspects and this will affect the overall business reputation of the company. This will affect the ability of the company to attract business partners who focus the sustainability options as well as the profit earning motive. The advertising under taken by the company should be safe and healthy for the community as a whole. There should be enough consideration of the use of recycled materials in making these advertisements and they should also promote the renewable resources of energy through the advertisements. The advertising should be undertaken by using the technology that does not harm the environment. All the processes that are related to the product advertising should include the use of renewable energy and resources. All the departments of the company should play their part in this regard.
The company has to form a committee to oversee all the matters related to sustainability. This will be formed by taking employees from inside of the company who are willing to work for this aspect. It is also important that the company communicates the efforts made inside the company to the external stakeholders as well. This will require that the company employs a person who will work in the marketing communication department and is an expert in handling the sustainability issues related to the business. This will help the company in connecting the internal and external environments to each other on this issue.
The solution to the issue should be assessed on the departmental basis. Each department will be asked to employ a sustainability coordinator for the analysis of the situation at different points in time. This will allow the assessment of whether the goals have been achieved over time or not.
Assessment of the External environment
The span of rapid economic growth in China has also helped the advertising market to develop fast. If this pace is continued, the country will become the second largest market in terms of advertising after the US within a short period of time. The teams from our own company have produced the same input on the economic prospects of the Chinese markets.
A major study has been completed by the research and development department of the company that continued for three months. The results of this study have shown a considerable increase in the average advertising spending in China. These expenditures will then continue to increase at a constant rate over a period of time. The exact figure that the country is expected to achieve in the next year is US $ 45 billion in the current year CITATION Zen18 \l 1033 (Zenith Media, 2018).
The company has continued to forecast the various aspects of media and advertising market with the help of the data provided by the 1000 manufacturing companies among which some were from inside of China and some were from outside. This report truly represents the scale of the opportunity available for the company in China.
If the value of the business is assessed, the various businesses will increase the spending on the television advertising by 16%. The most increase has been shown in the spending on the internet advertising showing an increase of almost 30%. This increase can be attributed to the following factors:
Increase in the incomes:
There has been an increase of almost 170% in the per capita incomes of the people CITATION Joh081 \l 1033 (sinclair, 2008). This rise took the income of the people from $ 800 to $ 2400 over a period of 9 years. This huge increase in the income also affected the retail sales that were increased three times over the same period. This increase in the consumer spending is likely to continue and it will also affect the spending made on the advertising by the various businesses.
The distribution networks of the retailers:
In the past the major contributors to the consumption were the largest cities of any country. However, the trends have changed over a period of time and the extension in the retail distributions has resulted in the goods reaching the far flung areas with the same ease as in the largest cities. This opens the gates of some new opportunities for the advertisers. They should now expand their advertising efforts to the smaller cities and try to add new customers to their campaigns. This will require that the company finds new markets in the smaller cities of the country to enhance its customer base. This is also true because the large cities have already been saturated in terms of the market potential and this is the right time to enter some different markets and that too in some smaller cities of the country.
Media inflation:
The cost of advertising has increased over a period of time and this will require that the company also increases the budget allocated for the advertising and media expenses. The best medium for the advertisers is still the television which helps the company in reaching the largest number of people with a relatively lower cost CITATION Hon16 \l 1033 (Li, 2016). The big TV channels have enormous potential for the businesses but the demand for the airtime is very high when these channels are considered and the supply is subject to certain restrictions by the government.
The report forwarded by the market research team has concluded that the market in China is not a simple one. There are some segments that are still emerging, some others are very complex in nature and still others have fragments within the markets. The advertising company will have to consider all these differences that exist in the market and adhere to them while making any policy CITATION Eur18 \l 1033 (European Publishers Council, 2018). This aspect of fragmentation will provide some huge opportunities to the advertisers to pursue.
The company should see itself as the market leader in the sustainability aspect. It should rename one of the parts of the business as green agency and use it to prove that the company is taking the matter seriously. The first step will be an assessment of the current practices and policies undertaken by the company. This will include all the working partners of the company and the company will make sure that all of them adhere to the policies and procedures or otherwise leave the company.
Managerial Evaluation of the Growth Opportunities
The decision options:
Action alternative A: The Company is receiving the feedback form the various clients that the company has been very slow in reacting to the Chinese market. This reaction should have come in the form of some strategies made particularly for the Chinese market. The company has to become a leader in the market rather than to be a follower. The company needs to step into the Chinese market if it wants to be considered as a global player CITATION And15 \l 1033 (Carnelley, 2015). This is because of the huge potential of the Chinese market and the availability of almost all the leading brands of the world therein.
The company can opt for opening an office in the district of Shanghai so that the business is able to attract the other businesses as clients. The lease plan option should be taken up by the company with a specific option available to get out of the agreement after three years if the things do not go very well. All the services related to advertising whether they are aimed at the businesses or to the consumers must be made available by the business CITATION Omn10 \l 1033 (Omnicom Group, 2010).
The staff requirement for the new office should be fulfilled by finding the relevant employees from the local population. A Chinese national in the London office should be given the responsibility to find out the local MD for the business working in China CITATION NDe17 \l 1033 (Delener, 2017).
The analysis of the competitors has shown that there is an expense of 2 million pounds if the company opts to enter the Chinese market in the proposed way. If we consider the components of the costs, we will see that the company will have to take up some new premises, then alter the premises according to the requirements of the company CITATION McK16 \l 1033 (McKinsey and company, 2016). The company will have to find out the relevant staff in China and train them according to the needs of the company. The advertising and promotion of the company so that the potential customers can know about the services offered will also need a good portion of the total expenses. The risk and return analysis of this option will have to be carried out
The company wide information should be communicated about this option. This is because the current position of the company does not allow to spend the huge amount required The group operates in a number of different countries and there is much work required before the company can introduce one strategy across the whole group CITATION PwC18 \l 1033 (PwC, 2018). In order to accumulate the funds, the company can consider selling the promoco business. There should be no discrimination on any basis while making the decisions.
The company can also review the human resources at the New York office and assess whether redesigning it will benefit the company or not in terms of cost savings.
Action plan B:
The second option that the company can pursue to enter Chinese market is that the company should avoid direct competition with the global as well as the local Chinese advertisers. This will demand from the company that it sets up the new office in some of the smaller areas of the country. This will require that the company brings the desired changes in the behavior of the consumers in the consumers of the target areas. The company should plan the expansion to the other city within the time of 18 months. A team of young, motivated and high performing people should be selected from all the offices of the company and they should be given the responsibilities of setting up the company in China. The company perception against the competitors will also affect the option that is most feasible for the company.
The cost associated with this option will be 600000 pounds. There will be lower resources required overall for the company to opt for this side. However, there will be some key players missing from the other offices as they will come and play their part in the Chinese market development. The company can quit away in this case easily if the things are not getting in the right direction because there was a minimum 3 years lease agreement in the first option considered.
Action plan C
The company can assign the duty of making a strategic alliance with one of the Chinese firms working in London to the Chinese employee. This will allow the company to match the strategy and the culture with each other so that it can succeed in the Chinese market. The strategic partner should have the proper knowledge of the segments that the company is already working in. This will help the company to boost its business through taking up this option.
This option will cost the company around 450000 pounds and this will not require much resources as there will be two companies involved in the deal. Consequently the risks of this option will also be lower. The only problem that might show up is the case where a wrong partner is chosen for the strategic alliance. This will be the only risk associate with this option. However, the person who has been designated for this task has a very good track record and is regarded well by all the employees CITATION McK16 \l 1033 (McKinsey and company, 2016).
The company is currently not competing effectively with the competitors over the issues of sustainability. This will create certain problems for the company while working in an alliance with some other company. The reason for this may be that the other company may have very strong principles in action when it talks about sustainability. The sustainability coordinator that has been employed by the company will communicate with the aligning company along with Xao.
Action option D:
This option shows that the company should ignore the situation at the current stage. The reason is that China may present many good opportunities but it also poses certain risks along with them. The company should wait patiently and collect much more information before opting to enter in a new market. The company will ignore the other issues regarding sustainability if it decides to opt for the option D because this does not desire any action on the part of the company.
With respect to targeting the generation Y people, the company should not opt for this option unless some other company which has already opted for the same has been thoroughly studied. This study will be carried out by a team that is from the inside of the organization and this will be least costly option.
Overview of the Digital media industry
The current percentage of the total advertisement spending on the digital aspects is not very high but it is going up every passing day. This aspect also initiated many acquisitions by the companies so that the leadership can be attained. There are certain benefits to the general public if there is a sufficient proportion of advertising done through the digital aspects.
This option is based on results and is targeted very effectively on the customers. This aspect can include many options like searches, games etc. The most modern aspect includes the linking of the devices to the television that takes the experience to the next level.
The major leaders in the market have been the companies like Google but the media related companies are also coming up very fast. The revenues of the digital companies have risen at a high speed. This will mean that there is enough opportunity and potential in the said market. The current scenario is such that the companies are following the mass marketing strategy. This means that one product is considered suitable for all and information flowing from the side of the company only CITATION Tay09 \l 1033 (Taylor, 2009). The modern digital marketing is led by the customers. The customers will decide about the information that has to be received by them and even the medium in which they want to receive the information through. The consumer behavior has been very much altered by the digital media.
The company under consideration needs to identify the people who are capable of being successful in the digital marketing aspects. The culture of the company is also an important component of the strategy. The company is not advised to be investing directly into the IT aspects of the business analytics. The company has to make sure that it makes proper segments of the market before it decides to take on the digital marketing options.
The strategy followed by the company regarding the digital marketing is not very clear. The company has also not invested enough in this aspect to be a market leader. The matter that has to be addressed by the company is that whether it wants to and it can compete directly with the bigger names present in the digital marketing CITATION Cog16 \l 1033 (Cognizant, 2016). If the company decides to start the digital marketing aspect, it will have to decide the best mode to do it.
Conclusion
The company has to assess the various options to be considered to enter China. The major options available to the company vary in the impacts on the company as a whole. The company has to see the positive and negative aspects of all the options available. In my opinion the best option for the company will be to form a strategic alliance with some other company which already has some strong footing In the country. This will help the company in many ways. There will be less expenses on the part of the company and lesser risks will be involved. The other company will share the resources that are already held by it. This will allow the company under consideration to establish itself in the country. The company that is already working in China will have a better understanding of the overall environment of the country. This will help the WRSX Company to learn from it the important aspects of the country environment. The lesser risks will also allow the company to start off from the bigger cities of the company and gradually go towards the smaller towns. Once the company can settle in the country over a period of five years, it can then reassess the situation regarding what it has gained from the venture. If the company has had enough knowledge of the overall scenario of the country, it can now assess the possibility of opening some independent office in the country in some other city. In all the aspects, the company must consider the strategic goals of growth as well as sustainability. This will keep the company on track for long term sustainable growth and development of long term competitive advantage over a longer period of time.
References
BIBLIOGRAPHY Accenture, 2015. https://www.accenture.com/us-en/~/media/Accenture/next-gen/pulse-of-media/pdf/Accenture-Future-Of-Advertising-POV.pdf. [Online] Available at: https://www.accenture.com/us-en/~/media/Accenture/next-gen/pulse-of-media/pdf/Accenture-Future-Of-Advertising-POV.pdf[Accessed 1 May 2019].
Bogdan, N., 2014. Global advertising market:The dynamics of the last decade. Studies and Scientific Researches. Economics Edition, Volume 20, pp. 196-202.
Carnelley, A., 2015. http://tse.pearsoncmg.com/fos2-1/pdf/TSE_Board_Meeting_2_External%20Environment_Report_v2.pdf. [Online] Available at: http://tse.pearsoncmg.com/fos2-1/pdf/TSE_Board_Meeting_2_External%20Environment_Report_v2.pdf
Cognizant, 2016. https://www.cognizant.com/whitepapers/peering-into-the-future-of-digital-advertising-codex1018.pdf. [Online] Available at: https://www.cognizant.com/whitepapers/peering-into-the-future-of-digital-advertising-codex1018.pdf[Accessed 1 May 2019].
Delener, N., 2017. Changing business environments: gamechangers,opportunities and risks. s.l.:Global business and technology association.
European Publishers Council, 2018. http://epceurope.eu/wp-content/uploads/2012/09/EPC_ExecSum_press.pdf. [Online] Available at: http://epceurope.eu/wp-content/uploads/2012/09/EPC_ExecSum_press.pdf[Accessed 1 May 2019].
Li, H. M., 2016. Advertising in China. All china Review, pp. 62-64.
McKinsey and company, 2015. http://www.bluesumac.com/wp-content/uploads/2015/12/The_state_of_global_media_spending_Dec2015.pdf. [Online] Available at: http://www.bluesumac.com/wp-content/uploads/2015/12/The_state_of_global_media_spending_Dec2015.pdf[Accessed 1 May 2019].
McKinsey and company, 2016. https://www.mckinsey.com/~/media/McKinsey/Industries/Media%20and%20Entertainment/Our%20Insights/Global%20Media%20Report%202016/GMO%20Report_2016_Industry%20overview_v3.ashx. [Online] Available at: https://www.mckinsey.com/~/media/McKinsey/Industries/Media%20and%20Entertainment/Our%20Insights/Global%20Media%20Report%202016/GMO%20Report_2016_Industry%20overview_v3.ashx[Accessed 1 may 2019].
Omnicom Group, 2010. http://economics-files.pomona.edu/jlikens/seniorseminars/vector2010/pdf/omc.pdf. [Online] Available at: http://economics-files.pomona.edu/jlikens/seniorseminars/vector2010/pdf/omc.pdf[Accessed 1 May 2019].
PwC, 2018. https://www.pwc.com/gx/en/entertainment-media/outlook/perspectives-from-the-global-entertainment-and-media-outlook-2018-2022.pdf. [Online] Available at: https://www.pwc.com/gx/en/entertainment-media/outlook/perspectives-from-the-global-entertainment-and-media-outlook-2018-2022.pdf[Accessed 1 May 2019].
sinclair, J., 2008. Globalization and the advertising industry in China. Chinese journal of Communication, 1(1), pp. 77-90.
Taylor, C. R., 2009. The Six Principles of Digital Advertising. International Journal of Advertising, pp. 411-418.
Zenith Media, 2018. https://www.zenithmedia.com/wp-content/uploads/2018/03/Adspend-forecasts-March-2018-executive-summary.pdf. [Online] Available at: https://www.zenithmedia.com/wp-content/uploads/2018/03/Adspend-forecasts-March-2018-executive-summary.pdf[Accessed 1 May 2019].
