The Lego Group: Building Strategy Essay

The Lego Group: Building Strategy Essay.

The Lego Group has been making toys successfully for 80 years and has grown to having close to 3.16 B USD in sales for the 2010 year. They specialize in toy building sets, a sector of the market that has seen 13% growth in 2010 and is forecasted to grow further. However, the Lego Group is at a cross-road in their business plan and requires a strategic plan going forward.

Currently, the company needs to look at its existing partnerships with Disney after Disney’s significant mergers and acquisitions in the past year.

Lego is regarding Disney’s purchase of Hasbro and Mattel as a threat to their market share of the toy building block sets due to potentially losing kids who want to buy themed sets based on Marvel comics. Meanwhile, the Lego Group is straying from its core competency and is developing video games. Furthermore, the Lego Group is not retaining a majority of its cash flows and therefore is not following a corporate structure designed for growth.

Strengths & Weaknesses of The Lego Group, Market Opportunities and Threats

Strengths: Lego Group •Incredible brand equity (quality, history, loyal following) and called ‘toy of the century’. Lego has global growth potential •Recent (2005) overhaul of supply chain has increased efficiency and resulted in a huge cost savings. Lego is leaner and profitable •Major market share at 9:1 vs. their closest competitor, Mega Bloks indicates leadership in the toy building sets market (Lego 3.16 B vs. Mega Bloks at 0.368 B in2010 note: conversion factor 1 DKK = 0.1925001925 USD)

Weaknesses: Lego Group •Dividends of DKK 1,500 million were paid in May 2010, corresponding to DKK 7.3 million in average per share. Expected dividend for 2011 is DKK 2,500 million. Lego is paying the Kristiansen family too much money. •Had slipped into financial trouble early in the 2000 decade and was not aware of costing and expenditures. •Core competencies are in question with the concentration on video games. Is Lego a toy company or a video game maker?

Market Opportunities •Lego Digital Designer had more potential with users of the online site for them to design Lego’s next success story •Two major competitors in the toy industry, Mattel and Hasbro are under new ownership with Disney. Opportunities to expand on existing partnership with Disney using Lego’s brand equity and proven success with Star Wars and Pirates of Carribean •13% overall growth in building sets over previous year, one of the fastest growing segments of the toy market.

Market Threats •Loss of trademark protection could equate to lower barriers to entry of cloner type competitors like MEGA Bloks •Unified competitors Mattel and Hasbro are bought by Disney and now have potential access to large capital budget for expansion •Kre-O set to launch in 2011 as a direct rival for the Lego Group. The owner, Hasbro, is the world’s second largest toy maker as of 2010 and can get behind the success of Kre-O

Recommendations: The first recommendation to the Lego group would be to curb the dividend payouts and reinvest the cash flows from the Lego Group back to the company. Growth is the product of a firm’s retention ratio and the firm’s return on retained earnings. Therefore without retained earnings, there cannot be growth at the Lego Corp. A second recommendation for the Lego Group would be to remove itself entirely from designing video games and focus on producing popular constructive toys for children and adults. Lego’s strength is exists in its brand equity and in its unwavering mission to develop children. Video games are fun and are a growing market for children but Lego is not an expert in this field and should move back to its core competencies. Thirdly, opportunities for its existing partnerships with Disney should be re-examined for potential growth given Disney’s acquisition of Mattel and Hasbro.

Implementation: The dividend payment reflects the strategy behind the capital structure where the LEGO Group is the operational company and any surplus liquidity is distributed to the Kristiansen Family and it is expected to be significantly bigger in 2011. Lego’s CEO, Knudstorp, and his team of senior executive managers can address the dividend issue with the board/owners and argue that the money is needed to grow the company. Cutting the dividend of a private company does not have any effect on their perceived public image and brand equity. Implementation should be immediate.

Video games are very complex and have developed immensely in the last thirty years. Lego Group is not a specialized company for video games and should therefore remove its interest in developing their online Lego Universe. It is imperative that the www.LEGO.com site be interactive and engaging as well as serve to promote their customer project designing feature which has proven successful. However, having a paid membership high end video game does not fit with the core image of Lego being a building toy manufacturer with a vision to develop children. Lego Universe should be scrapped as soon as possible and efforts should be directed to promoting successful lines of building toys. Disney has recently purchased two of Lego’s main competitors, Mattel and Hasbro, who are the first and second leading toy sellers respectively.

Hasbro’s deal with Marvel comics is now effectively Disney’s deal with Marvel comics. Lego has an existing partnership with Disney and should be capitalizing on Tom Stagg’s goal to pursue third-party licensing agreements with respect to toy production. Lego will argue that its main strength is its brand equity and its biggest successes have come from Star Wars and DC comics (Batman and Spider Man) themed sets. Lego will argue that it has established itself as the global market leader in theme based construction toys. Lego’s nearest competitor, Mega Bloks, which has been dogging them as a clone for twenty years has a mere 1/9th of Lego’s market share.

By selling itself as the industry leader and with its superior brand equity, Lego stands as the top market ally for Disney and will have to pitch its ideas for an extended and greater partnership in the very near future. The best method of approaching Disney is to create a group of sales staff from existing managers in the Lego Group who have been instrumental in the rollout of successful themed packages. The objective of the group should be to assemble and bolster the strength and tremendous successes of the Lego themed packages and market their product to Disney in an aggressive manner. Waiting for Disney to approach them would be a mistake and Lego needs to be proactive in seeking out a solid partnership.

The Lego Group: Building Strategy Essay

Push and Pull Strategy Essay

Push and Pull Strategy Essay.

Push Strategy A “push” promotional strategy makes use of a company’s sales force and trade promotion activities to create consumer demand for a product.

The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers. A good example of “push” selling is mobile phones, where the major handset manufacturers such as Nokia promote their products via retailers such as Carphone Warehouse.

Personal selling and trade promotions are often the most effective promotional tools for companies such as Nokia – for example offering subsidies on the handsets to encourage retailers to sell higher volumes.

A “push” strategy tries to sell directly to the consumer, bypassing other distribution channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer promotions and advertising are the most likely promotional tools.

Pull Strategy A “pull” selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product. If the strategy is successful, consumers will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers will ask the producers. A good example of a pull is the heavy advertising and promotion of children’s’ toys – mainly on television. Consider the recent BBC promotional campaign for its new pre-school program – the Fimbles. Aimed at two to four-year-olds, 130 episodes of Fimbles have been made and are featured everyday on digital children’s channel CBeebies and BBC2.

As part of the promotional campaign, the BBC has agreed a deal with toy maker Fisher-Price to market products based on the show, which it hopes will emulate the popularity of the Tweenies. Under the terms of the deal, Fisher-Price will develop, manufacture and distribute a range of Fimbles products including soft, plastic and electronic learning toys for the UK and Ireland. In 2001, BBC Worldwide (the commercial division of the BBC) achieved sales of £90m from its children’s brands and properties last year. The demand created from broadcasting of the Fimbles and a major advertising campaign is likely to “pull” demand from children and encourage retailers to stock Fimbles toys in the stores for Christmas 2002.

Difference Between Push And Pull Strategy

Push marketing is when you use various activities to get your message in front of your ideal client. The marketer is in control of what the message is, how it is seen, when and where. Marketing activities that encourage your prospect to seek you out and find out whether you have something of value to offer them. Pull marketing activities build relationships and can include blogging, podcasting, article marketing and networking (both on and offline).

Pull marketing uses the law of attraction, incorporating all the components of your personal brand to attract and retain these people as your biggest fans. Pull marketing is where you develop advertising and promotional strategies that are meant to entice the prospect to buy your product or service. Some classic examples are “half off!” or “bring in this coupon to save 25%” or “buy one get one free”, etc.

With pull marketing, you are trying to create a sense of increased, time limited value so that the customer will come into your store to buy. Pull is not about pulling consumers in; it’s about giving consumers a reason to pull us in. Remember truism #1 – they’re in control; they (not we) decide where they go and what they experience. We’ve lost the right to pull consumers anywhere (if we ever really had that right at all.)

Pull means that we to go to them, join their communities, give them reasons to voluntarily draw us into their personal media experiences. We’re not interrupting them. They’re opting into us.

You may also be interested in the following: push pull boundary

Push and Pull Strategy Essay

Kaleidoscope Strategy Resume Essay

Kaleidoscope Strategy Resume Essay.

Pursuing success can feel like shooting in a landscape of moving targets: Every time you hit one, five more pop up from another direction. We are under constant pressure to do more, get more, be more. But is that really what success is all about? Laura Nash and Howard Stevenson interviewed and surveyed hundreds of professionals to study the assumptions behind the idea of success. They then built a practical framework for a new way of thinking about success—a way that leads to personal and professional fulfillment instead of feelings of anxiety and stress.

The authors’ research uncovered four irreducible components of success: 1.- happiness: (feelings of pleasure or contentment about your life); 2.- achievement (accomplishments that compare favorably against similar goals others have strived for); 3.- significance (the sense that you’ve made a positive impact on people you care about); and 4.- legacy (a way to establish your values or accomplishments so as to help others find future success). Unless you hit on all four categories with regularity, any one win will fail to satisfy.

People who achieve lasting success, the authors learned, tend to rely on a kaleidoscope strategy to structure their aspirations and activities.

This article explains how to build your own kaleidoscope framework. The process can help you determine which tasks you should undertake to fulfill the different components of success and uncover areas where there are holes. It can also help you make better choices about what you spend your time on and the level of energy you put into each activity. According to Nash and Stevenson, successful people who experience real satisfaction achieve it through the deliberate imposition of limits. Cultivating your sense of “just enough” can help you set reachable goals, tally up more true wins, and enjoy lasting.

Kaleidoscope Strategy Resume Essay

Haier’s Strategy for Global Success Essay

Haier’s Strategy for Global Success Essay.

In 1920s China, a small factory opened in Qingdao, Shandong province, to manufacture refrigerators. Though the Qingdao factory survived for more than sixty years, by the early 1980s, poor management and heavy debt nearly forced it to declare bankruptcy. At the same time, the opening of the Chinese economy to the international market saw an influx of foreign companies seeking investment opportunities. One such company was Liebherr Haushaltergäte (Liebherr), a leading German appliance maker. Liebherr saw a burgeoning market for appliances, and proposed a partnership with the Qingdao factory, in which Liebherr’s technology and manufacturing know-how would be sold to the factory.

In 1984, Qingdao Refrigerator Co. Ltd. was born out of this partnership. However, technology alone was not enough to rescue the company.

That same year, CEO Zhang Ruimin, then the assistant manager of Qingdao city’s household appliance division, arrived, bringing with him management techniques adopted from Japan and the West, with a focus on building a strong brand name founded on quality products.

Mr. Ruimin’s techniques were successful, and by 1991 the company had turned a considerable profit and diversified into other household appliances such as freezers, microwaves and air conditioners. Recognizing that the company’s name was no longer synonymous with its products and had a poor reputation from its prior history, Mr. Ruimin decided to take a new name.

The company adopted an abbreviation of the phonetic spelling of Liebherr – written as Lieberhaier – to become the Haier Group Corporation (Haier). This name change marked the birth of a new brand name and the revitalization of the company’s image. Capitalizing on its new management and brand, Haier transformed itself into the second largest home appliance company in the world, and the number one such company in China. By 2010, Haier designed, manufactured and marketed over 15,000 products in 96 categories sold in over 100 countries throughout the world.

Branding

The beginning of Haier’s brand strategy is the stuff of corporate legend. In 1985, one of the company’s customers brought back a refrigerator (still a rare luxury item in China at the time) because it did not work. Mr. Ruimin and the customer went through all the company’s available stock of refrigerators until they finally found a working model. Of the 400 or so finished refrigerators in the factory at the time, 76 were found to not be in working order. In response, he called his employees together and ordered that all of the dud refrigerators be lined up on the factory floor. He then gave sledgehammers to the workers and ordered them to smash the refrigerators. Mr. Ruimin is reported to have told the workers: ‘Destroy them! If we pass these 76 refrigerators for sale, we will be continuing a mistake that has all but bankrupted our company.”

This event brought the importance of quality products to everyone in the company, and Mr. Ruimin stressed to them that quality products linked to a strong brand name were essential to the company’s survival. With this new commitment to quality, the installation of new equipment and the transfer of manufacturing know-how from Liebherr, sales rose 83% in two years. With the company’s reputation increasing, the name change to Haier created a new brand synonymous with quality cutting-edge technology that would inspire customer confidence and do away with any negative sentiments associated with the company’s former name. Developing new products backed by intellectual property rights (IPRs) such as patents ensured that the brand’s success would continue and it would maintain a competitive edge.

The company and its customers also took pride in the ability of the Haier brand to successfully compete with more established international competitors. Haier knew that its brand was its most valuable resource, with brand image at the core of its business identity and strategy, therefore its early branding strategy was to build a strong, leading national brand name. Throughout the 1990s, the company realized its vision, and made multiple acquisitions to diversify its product portfolio and the company brand quickly become ubiquitous throughout China. With its position in China profitable and secure, Haier embarked on a global branding strategy.

This strategy aims to position the company as a local brand in different world markets in conjunction with enhanced product competitiveness and strong corporate operations. The company focuses on localizing the design, manufacturing and sales processes, so it can truly become a “local” brand. The company is close to achieving its goal in important markets such as the United States and Europe, in which it has local production facilities. Its products are available in twelve of the top fifteen chain stores in Europe and in ten of the leading chain stores in the United States.

Research and Development

Since the company’s restructuring in the early 1980s, innovating new quality products has been of central importance to its goal of building a globally recognized brand name. Haier and its subsidiary companies constantly focus on innovating new products through research and development (R&D). One such technology the company’s R&D efforts developed is its “Safe Care” technology, which it applies to appliances such as water heaters. Safe Care monitors wiring and electrical components of the appliance and gives a warning should any electricity leakage pose a risk to the consumer.

This technology was introduced at the 66th International Electrotechnical Commission Conference in 2002, and products equipped with Safe Care went on sale in 2006. This is just one example of Haier’s innovative capabilities through its R&D efforts. The R&D department is also responsible for developing all of the computer software that runs its products such as Safe Care, and this is an essential part of the company’s R&D strategy.

Patents, Copyrights and Trademarks

Haier’s innovation and expansion has led it to be the owner of over 6,000 patents and over 500 software copyrights worldwide. To maintain its competitive edge, the company ensures that it secures protection for all of its intellectual property (IP). Haier is an avid user of the Patent Cooperation Treaty (PCT) system, and has made over twenty PCT applications. Because the company endeavors to build a global brand, trademarks are also an essential aspect of its IP strategy. As such, Haier has registered a trademark for its company name under the international Madrid system. It has also made trademark registrations for its name in the United States with the United States Patent and Trademark Office (USPTO) and in Europe with the Trademark and Designs Registration Office of the European Union (OHIM).

Commercialization

Haier designs, produces and markets its products through its global network and business framework. As of 2010, Haier had fifteen industrial complexes, thirty overseas production factories and bases, eight design centers and over 58,000 sales agents worldwide. In the domestic market, Haier focuses on four leading product categories: refrigerators, refrigerating cabinets, air conditioners and washing machines. Haier also has a significant consumer electronics division. For international markets, Haier has adopted a unique strategy to penetrate difficult markets such as the United States and Europe. When it first entered the market in the United States, it identified two potentially lucrative yet underdeveloped niche markets – that of small sized refrigerators for dorm rooms, hotels, and the like; and electric wine cellars.

Haier’s imports of these appliances, coupled with a strong design and development team, helped the company rapidly develop its brand, and by 2000 it was a major player in both product markets. The success of Haier in such niche markets has allowed its brand name to become well known, which encouraged the company to target the higher-end full size refrigerator market in the United States. To do so, the company built its first manufacturing plant in the United States in Camden, South Carolina in 1999. In line with the company’s goal of making its brand name “local” in international markets, this initiative was a resounding success. Haier has since undertaken similar initiatives in other markets such as the European Union and the Middle East.

Business Results

Haier’s focus on building a strong brand has brought it from the brink of bankruptcy to one of the most successful appliance companies in the world. By 2010 the company had over 50,000 worldwide employees. It enjoyed an annual growth rate of 68% between 1984 and 2005, with revenue in 2005 totaling 103.4 billion Chinese Renminbi (RMB). The company enjoys a 40% market share for household appliances in China and has successfully entered difficult markets such as the United States, and it is now the world’s number two refrigerator manufacturer, only second to Whirlpool.

Despite the economic slump in 2008, Haier profits increased nearly 20% that year and enjoyed net profits of RMB 768 million. In 2004, Haier acquired a controlling stake in Haier-CCT Holdings, a joint venture which was listed on the Hong Kong Stock Exchange that same year. Haier’s international success and well known brand name led to the company becoming an official sponsor for the 2008 Beijing Olympic Games.

Success Built on the Shoulders of Branding

Key to any company’s success is its brand, and strong brands allow a company to not only grow domestically but also internationally. Haier rode the wave of its strong domestic brand to enter new markets and expand into a fast growing multinational corporation. In March 2009, the Financial Times recognized Haier’s success when it ranked it among the Top 10 Chinese World-class Brands. Through protecting its IP and brand names with trademarks, Haier has built up a powerful asset that has transformed the company and brought global recognition for its brand and products.

Haier’s Strategy for Global Success Essay

Sunsilk Promotion Strategy Essay

Sunsilk Promotion Strategy Essay.

Sunsilk was launched in 1954, in the UK, Sunsilk had quickly become Unilever’s leading international shampoo brand. By 1959, it was available in eighteen countries world-wide marketable devices that identify and differentiate the brand.

Brand

Branding Decisions Branding strategy is one of the most vital decisions taking by marketers. It is a strategy, which brings lots of positive feedback for a firm. Indivual name: Unilever follow individual name for setting brand name for their different products, such as Sunsilk, Dove (Shampoo), Ponds, Fair & lovely, Dove for skin care.

 Brand Elements Brand elements can play a number of brand building roles. Band elements are those trades

Brand elements

Memorable: every consumers mind catches the brand name. Their marketing programs set the brand name in consumers mind. Their short brand name such as: Dove, ponds, Sunsilk are easily memorable. Meaningful: Every consumer has a clear meaning about sunsilk. Consumer thinks about sunsilk as a product which solve their problem relating with hair. Likable: From our research we found that most of the people like the brand verbally and visually.

Protectable: The brand name is legally and competitively protectable. The brand retain their trade mark rights and not generic.

Target market of Sunsilk:

The main target market of Sunsilk is females between the ages group 16-40 belonging to thelower and middle income classes. But in their promotional activities, they cover the wholemarket irrespective of these classes.Sunsilk target its market on the basis of consumer buying behavior, income level, and purchasing power of people. For which quantity of the product can be changed according tothe income and purchasing power of the consumers as in case of Sunsilk 120ml and 5ml packs are also available to target low income groups. Traket market of srilanka The main target market ofsunsilk is femalesbe tw ee n theagesgroup16 -40 belonging to themiddle&l ow er incomec la ss es

Competitive Strategies for Sunsilk

Defining the strategic objective:

The Sunsilk Shampoo aims at fulfilling the needs of its target market by offering a high quality, assessment of the concept in terms of its acceptability, credibility and perceived benefits that it offers a healthy choice shampoo alternative to the targeted consumer. The theme of the product shall be anchored around the motto.

Expanding the total market:

Sunsilk is very sensitive to increase its market. It’s sometime very challenging for a firm toexpand its total market. Sunsilk basically wishes to increase new customer and more usage.

New customers:

Sunsilk trying to attract buyers who are unaware of the product or who areresisting it because lack of such features. Sunsilk using market penetration strategy, newmarket segment strategy and geographical expansion strategy for searching new consumers.Very attractive advertising and other propositional activities perform a vital role in this case.

More usage:

Sunsilk recently increase the amount, level and frequency of consumption. Italso improves packaging and redesigns the product. It offers larger package sizes and makesthe product more available. They emphasize more on marketing program, which inform theconsumer about the brand and it frequently develops the product which also spurs new uses.

Choosing General Strategy:

1.Flank Attack:

Sunsilk can follow segmental strategy. In market Head & shoulderstargeting mainly high and middle class people but big portion in lower class consumer could not adopt their product. So, Sunslik targeting the lower class, who have lower income and launch new product at a lower price.

2.Frontal Attack:

Sunsilk can launch new shampoo combining conditioner, anti-dandruff, and shinning in a one product as follow as Head & Shoulders.

3.Bypass Attack:

Sunsilk can introduce anti-dandruff shampoo and provide an extraconditioner in a package. Identifying competitors

.Analyzing competitors:

The new Sunsilk shampoo aims to fulfilling the need of its targetmarket by offering a high quality, assessment of concept in term of acceptability, credibility,and perceived benefits that it offers a healthy choice shampoo alternative to target customer.

Competitor review:

The major competitor of Sunsilk in rural areas is BIO AMLA and in urban areas Sunsilk mainly cutthroat of Head & Shoulder. The main advantage of BIO Amla is herbalcomposition, low prices, which attract rural market but in term of quality they are far behindSunsilk shampoo. In urban areas Sunsilk acting market challenge with Head & Shoulder.Sunsilk has got the advantage of keeping their prices lower than P&G but P&G has captured a large market share due to its intense promotional activities.

Milestones
1954 – Sunsilk first launched in the UK.
1955 – First advertisement of Sunsilk appeared on TV.
1964 – Launch of Sunsilk hair spray.
1968 – Sunsilk shampoo re-packaged in PVC bottles.
1971 – Launch of Sunsilk conditioner.
1975 – Sunsilk became the biggest name in hair care.
2003 – Sunsilk glossy magazine launched in Argentina.
2008 – Social networking site Gang of Girls was introduced in India. Celebrity associations
Madonna, Shakira
Marilyn Monroe
Humaima Malick pakistan
Priyanka Chopra India
singer Delta Goodrem Australia.
.
Gang of Girls
In 2008, Sunsilk India launched a social networking site called Gang of Girls,[7] which offered its users access to a variety of local and global experts to address various hair care needs through its content, blogs and live chat room.

Co-Creation collaboration

From 2009 Sunsilk started working with a number of professional hair “experts” to develop new and improved products. Each hair “issue” variant links to an “expert” with the relevant specialist hair knowledge.

Availability

Sunsilk is available in over 60 countries worldwide. However Sunsilk products seem to be no longer available in the United States.

PROMOTION STRATEGY (Sunsilk)
i) Advertising

Advertising is known as any paid form of nonpersonal communication about an organization, product, service, idea or cause by an identified sponsor. Sunsilk company has done various advertisement. One of the most frequent advertisement is newspapers. Sunsilk mostly advertises their products through newspapers and flyers. The advantage of using newspaper is very effective to communicate with large audience which actually mean that newspapers are being read by almost all the citizen whether at home, at restaurant, at a coffee shop or etc. Besides, sunsilk products are also being advertised through mass media (television). This can be an effective way to create brand images and symbolic appeals. For examples, the product can straighten the hair of model and resolve many bad conditions of hair. Sunsilk do also faces disadvantages where they had to look after the production cost for the advertisements.

ii) Sales promotion

Sales promotion consists of short-term incentives to encourage purchase or sales of a product or service. Sunsilk company promotes their products in many ways. For instance, it offers consumers with products 2 in 1 pack with lower price. Besides, Sunsilk also give out free packs or small bottles of sample to consumer together with the shampoo they purchase. This to be said as promotions is to target the ultimate users of Sunsilk. Besides, it also targets the retailers, wholesalers or distributors of the brand. This is when the marketing intermediaries carries activities like value packs (as mentioned above), trade shows and price deals.

iii) Public relations

Public relations aims to build good relations with the company’s various publics by obtaining favourable publicity, building up a good corporate image and handling or heading off unfavorable rumors, stories and events. Public relation can have a strong impact on public awareness at a much lower cost than advertising can. Sunsilk..

Sunsilk Promotion Strategy Essay

Pharmasim Preliminary Market Strategy Essay

Pharmasim Preliminary Market Strategy Essay.

Allstar Brands’ over-the-counter cold and allergy remedy Allround will continue to be the market leader among OTC cold medicines and continue to increase its stock price over the next decade in order to remain not only competitive, but the premier stock choice among competitors in the OTC cold and allergy remedy market. To further grow the Allround product it is essential to build upon the current strengths of the brand, but also seek additional areas for opportunity and growth. These goals will be accomplished by evaluating competitors entering the OTC cold and allergy remedy market and through careful planning and execution to enhance our current product to meet the desires and needs of consumers.

Allstar Brands’ Allround product holds a strong position in the over-the-counter cold and allergy remedy market by being the market share leader, but there is no guarantee this trend will continue. Allround recognizes the need to continue to diversify and reformulate its current product line in order to remain competitive in light of an influx of competition.

Allround competes in one of four product categories in the OTC market with no emphasis in the cough, allergy, or nasal categories. We will be better enabled to meet the desires and needs wanted most by consumers by enhancing the current Allround product line.

Allstar Brands’ Allround product has been a profitable brand with manufacturer sales of over $355 million in its most recent period. To further increase sales it is crucial to ensure the Allround brand is being sought by all consumers in the OTC cold and allergy remedy market. Recent surveys show the Allround brand did not receive the best shelf space placement and this is a great concern to the future of the brand. It is important Allround reallocates its resources appropriately to maximize the efficiency of our channels of distribution in order to promote our brand to its fullest potential.

Allround’s brand effectiveness and high recognition have allowed it to be among the price leaders in the OTC cold and allergy remedy market. This current trend is a great concern to the management team at the OCM group of Allstar Brands. In order to remain competitive Allround must closely monitor all pricing aspects associated with manufacturing and selling the brand. To ensure Allround can maintain a price leadership role in the market it must continually adjust its pricing tactics to better suit its consumers in periods of growth and decline. Allround’s success depends on the consumers who buy its product.

To ensure consumers are purchasing our product Allround must offer the greatest value. By promoting our product to the appropriate demographics we can develop more sales and grow our customer base. Allround brand recognizes the need to promote its product through all types of mediums including coupons, point-of-purchase vehicles, and trial-size packages in order to maintain customer loyalty. If Allstar Brands is able to understand its customers on a more intimate basis then it can better provide for desires and needs sought by those purchasing medicine in the OTC cold and allergy remedy market.

Situation Analysis

The following is a situational analysis of all pertinent aspects of the current state of the market and of the Allround product. Using the “5 Cs” we have developed an overview of the current situation and hope to present it in a clear and concise manner. This covers the current external factors, major competitor factors, projected customer’s information, fellow distributor’s and retailer’s factors, and current company outlook. -Context: External factors

-Collaborators: Who are we using to promote our product, and how do we motivate them? WhoWhyMotivate

PharmacistsCustomers value and trust the opinions of pharmacistsMarket that boosting the sales of Allround will also boost drugstores sales Chain DrugstoresStatisticaly a high volume of sales come from thesePromoting this product will boost sales and garner more customers for both Allround and the drugstore Grocery StoresStatisticaly a high volume of sales come from theseConvince that this is the best OTC cold medicine and that stocking this will increase store sales DoctorsDoctors could recommend product to patientsDistribute samples to local doctors to encourage recommendations to patients

-Company: Goal? Strengths and weaknesses?
GoalsMetricsStrengthsWeaknesses

Increase Stock Price10% increase per yearBrand awareness, market share, product quality, high potential growthUnacceptable budget allocation Increase Company Net Income10% increase per yearHigh income, high price, brand awarenessWeak portfolio Increase Company Annual Net Income~$74MBrand awareness, company growth, inelastic pricingSales coverage, Unused R&D capacity Increase Company Utilization~93%#1 product in market, new product line and reformulation optionsAlcohol additive in current formula, budget Increase Shelf Space Rank#1 product in retailBrand awarenessSales coverage and promotion, diluted advertising plan, budget constraints

Target Market:

The Allround initial marketing plan will be focused on four core groups. The four groups include empty nesters, mature families, singles, and retirees. The main marketing focus will be on singles and empty nesters, as those are our core customers.

Singles and empty nesters is Allround’s primary demographic. These 2 groups are the perfect candidates due to their age. Young singles are defined as young adults living alone; Allround was made for fast relief for adults. Young singles, being largely independent, require fast and effective relief from cold symptoms. Empty nesters are classified as older people whose households are now empty.

Mature families are also a large group of interest. Mature families usually have older children and are less cautious of the side effects on a teen. The parents of the household are also usually middle aged and still in the workforce, this is a perfect demographic for a fast relief cold medicine. Retired is an important, but already established, market for Allround. Due to this fact the company should focus less advertising on retirees. People past the point of retirement have already been largely exposed to the product. The chance of acquiring new customers from this demographic is low, and the advertising opportunity is past its prime.

The marketing team has decided against advertising to young families, at least for the moment. Young families are especially concerned with side effects of medicine. Many families with young children won’t be as interested in adult cold medicines. Therefore, advertising efforts should be focused elsewhere. Allround should look into developing a child’s cold medicine in the future; bundle that with the original formula and market it to young families.

Recommendations:

Our recommendations are focused on the initial four major company expressed at the beginning of this report. First we will discuss how to improve our product, and by extension customer satisfaction, as well as possible new product lines. Second, we will focus on product placement and improving distribution channels. Third, we discuss possible pricing options and contingencies. Finally, promotion plans and increasing our circulation through major markets.

The Allround product is a well recommended and widely trusted OTC cold and allergy medication. To maintain this image we need to further show our customers that we are listening. A major issue with current customers is the alcohol content, and resulting side effects, of the current Allround formula. To improve Allround’s image even further we must reformulate the current product to rid it of alcohol while still maintaining its effectiveness. Customers have also expressed interest in chest decongestant; by again reformulating the product we can add expectorant to further the overall quality of cold symptom relief. A final possibility would be to explore new product line options, such as an improved Allround product or a child’s cold medicine, to diversify the company and reach more markets.

Allround has a very high shelf stock, however due to a large number of new competitors this number is decreasing. The first recommendation regarding placement of the product would be to increase the number of detailers to increase support of wholesalers and merchandisers; it is recommended that the number of initial detailers be at least doubled. Secondly, support must be shown for independent drugstores, therefore it is advised that the company allocate more of its sales force to that resource. Finally, more advertising and trial promotions need to be focused on chain drugstores and grocery stores.

Allround has consistently been one of the higher priced OTC cold and allergy medicines, justified by its proven quality. Price is more mercurial than other factors in marketing; pricing must be determined on a yearly basis. Inflation rate and marketing forecast must be closely monitored to determine the companie’s actions regarding price. If the market outlook is favorable then price increase should match that of inflation rate; if the market outlook is not favorable the price increase must stay below inflation rate. Following this plan should ensure sales will follow a steady or upward trend, minimizing loss.

Allround tries, and largely succeeds, at being a household name. To ensure this stays true promotion must be increased to compete with the influx of competition into the market, to do this we go back to reformulating the product. Due to Allrounds alcohol content, and subsequent side effects, doctors are more apt to recommend competitors with alcohol-free products. Removing the alcohol content would go great lengths in increasing doctor and pharmacist recommendations. More focus needs to be placed on trial promotions, while couponing should stay the same for the base product. Promotion funds need to be more targeted toward our major retailers, chain drug stores and grocery stores, as these largely use circulars and other promotional strategies.

Pharmasim Preliminary Market Strategy Essay

Strategy Formation at Disney Under Michael Eisner Essay

Strategy Formation at Disney Under Michael Eisner Essay.

Walt Disney was a real visionary in term of animations. He developed his capability to select new ways to invent special cartoons, with a “Disney’s prestige” that was going to be the most famous brand in terms of family entertainment. Since Walt Disney’s death in 1966, The Walt Disney Company had barely survived appropriation attempts by other corporations. Its shareholders Sid Bass and Roy E. Disney brought on Michael Eisner and Frank Wells to maximize the company’s assets. Disney Chairman and CEO Michael Eisner had a path of triumphs and challenges in the Company but in his last years as chairman and CEO two main problems prevail.

First Disney’s standing for fragile authority and second, disputes among the top positions of the organization. Whereas it is challenging to determine which originated first, each of these disputes continued during his reign and his management style became a problem to Disney growth and by removing him from his power position was the only way to recover.

His management Style can be explained by the power school, which focuses on strategy formation as a process of negotiation between power positions within the company and/or between the company and its external stakeholders. Politics therefore became a synonym with the utilization of power in other than just simply economic ways. Two types of power describe Eisner strategy in Disney, Micro Power dealt with the politics within the organization and Macro Power referred to the use of power by the organization (Mintzberg 235). Strategy formation under Eisner was shaped by power and politics, the strategy that resulted from such a process became emergent throughout the whole company. Under Micro Power the strategy was his firm’s knowledge and his ability to grow by controlling the decision making process, which later led to direct confrontation between top rank positions. However, under Macro Power the company was promoting its own welfare by cooperating with other organizations, through the usage of strategic manoeuvring as well as collective strategies in various kinds of networks and alliances (Mintzberg 260).

Under Eisner’s reign, a burst of successful animation franchises were born such as The Little Mermaid, Aladdin, The Lion King to name a few, also the Disney theme parks experienced substantial expansions and stockholders were treated with a increasing stock value. During his 20 years as Disney employee, he faced significant experiences that shaped his personality as the leader he later became. In 1994 a helicopter crash cost Frank Wells his life leaving Eisner CEO and Chairman of the company. He started looking for a new replacement for Wells position, which led Jeffrey Katzenberg resignation when he wasn’t offer, Well’s position. In that same year Eisner faced health problem with his heart and ended with a bypass surgery. According to Eisner that was the best night’s sleep he had in a year (Eisner 18). After his surgery the search for Frank’s predecessor continued and after year of attempts Michael Ovitz took the role as President of Disney.

Eisner was finally able to focus on the creative process, or at least that is what he thought, Ovitz role gave more difficulties to Eisner than the solutions he wanted to encounter. Ovitz focused more on the company’s growth than the Disney cultural organization, which later led to confrontation and his dismissal from Disney presidency and the arrival of Bob Iger as the new president of Disney. One of the biggest triumphs of Eisner was the landing of the ABC network. Wanting to expand Disney audience and though increase Disney assets, his plans at the time were focused on the acquisition of a network. Various networks were in pursued such us CBS and Cap cities/ ABC, board members though felt that the acquisition of Cap Cities was the best choice.

The turn of events at the Herb Allen’s Conference in Sun Valley made the acquisition of ABC the next step on Eisner agenda. ABC’s relationship Disney has been in place for a while with when Leonard Goldenson back in 1953 invested sufficient money so that the “Disneyland” theme park could be terminated. With this relationship in place came efforts of cross-promotion, which led to countless meetings and negations within board members as of what would be the most beneficial option to Disney. Finally, in 1996 The Walt Disney Company acquired Capital Cities/ABC, and renamed the broadcasting group ABC, Inc. (Eisner 2 357-371). The acquisition of ABC increased Disney costumer audience putting them in a leading position in the entertainment industry.

The following years Disney experience successful acquisitions and rapid growth in its assets. Although with this period of success, Eisner became convince that he was the rightful heir to Walt Disney. Michael Eisner began making an array of changes to Disney’s governance structure and The Walt Disney Company had come under a severe examination for its governance practices. The Board of Directors were often criticized for a lack of independence and inside dominance.

Roy Disney, founder Walt Disney’s nephew, resigned as an executive from the Disney Company in 1977 due to disagreements with Eisner as well as a feeling that Disney creativity was beginning to vanish. However, he retained a seat on the board of directors but after acknowledging he was not going to be renominated to the Disney board he presented his resignation from the board in 1984. After Roy’s resignation his financial adviser Stanley Gold left the company as well. This was the beginning of a series of developments that led to the replacement of company president and CEO which was called as “save Disney” War period.

The war started when Roy E. Disney Stanley Gold called for Eisner’s replacement as both CEO and Chairman of the Board. The Disney war was fought for several years, employees felt that what once made Eisner a great leader was now acting as a disadvantage for the company. He was greatly criticized for not sealing the deal with Pixar and from there his management failure became more noticeable. His management failures describe in the Disney war text included the inability to delegate, a frequent mistrust of subordinates, impulsive and uncritical judgments, his pitting of one exercise against another among others (Eisner 2 532). Michael Eisner was blamed for his recent management failures, and as concern thoughts were increasing within the company, change had to be made.

The board was divided into two groups, those who supported Eisner and his actions and those who did not. The majority of the votes were against Eisner staying as both chairman and CEO of Walt Disney Company. After 20 years of managing the company, Eisner had to make a decision that would affect the world’s largest entertainment company as well as his own destiny in company. Eisner decided that for the sake of the company he would no longer be chairman of the board and he will only remain CEO of the company, Disney’s board then gave the chairmanship position to Mitchell.

However, the board did not immediately remove Eisner as chief executive. On March 13, 2005, Eisner announced that he would step down as CEO. On September Eisner resigned both as an executive and as a member of the board of directors, and his replacement was his longtime assistant, Robert Iger. (Eisner 2 532-534) When Eisner was brought in to lead The Walt Disney Company in the early 1980s, times were tough and some thought that new blood was needed. It was now his time to step down his reign and let Disney prosper under new authorities. His success is undeniable and he will always be a key factor on Disney growth and leading position.

Strategy Formation at Disney Under Michael Eisner Essay

Southwest Airline – Distribution Strategy Essay

Southwest Airline – Distribution Strategy Essay.

Operating under an intensely competitive environment, Southwest Airlines carefully projects its image so customers can differentiate its product from its competitors. Southwest positions itself in all its marketing communications as the only low-fare, short-haul, high-frequency, point-to-point carrier in America that is fun to fly (Cheng, 2010). Its low-priced fares are a brand equity which it “owns” in the mathematical sense of being the only major airline with a strong score on this attribute based on consumer research. Southwest’s brand exudes an element of fun: a down-home attitude which it leverages to present the consequences of low fares in a positive light.

This is great for Southwest Airlines, but they are able to improve upon this by being more transparent and allowing the customers to see exactly what their hard earned dollars are going to get them. A great inflight service crew, a possible chance for and inflight contest, pay more for a meal while inflight if needed?

What I haven’t found is the business practice Southwest has in place for people that need to eat, such as those with diabetes, elderly or in poor general health.

Southwest would be wise to post these issues with their remedies and allow customers to present their own remedies. This would allow Southwest Airlines to address more of the customer issues they are and are not aware of. Bridging the apparent gap between what their business model shows as issues and what issues really lie with the flying populous. Using extreme dignity or acknowledgement might not be the first words one would think of to describe how Southwest Airlines treats passengers: no first class; no food other than peanuts; no assigned seats; no transfers of luggage to other airlines. Southwest’s in-flight service has, in fact, become pejoratively synonymous with peanuts; but the payoff in savings is huge (McDonald, 2007). Southwest has a well-defined business model that uses single aircraft type, short-hauls, secondary airports, point-to-point hubs versus hub-and-spoke to keep its costs down.

Southwest tries hard to differentiate itself by doing things that you and I would seemingly classify as weird. For example, not assigning seats in its flights helps to reinforce its image that it gets passengers to their destinations when they want to get there, on time, at the lowest possible fares. By not assigning seats, Southwest can turn the airplanes quicker at the gate. If an airplane can be turned quicker, more routes can be flown each day. That generates more revenue, so that Southwest can offer lower fares. The huge savings have built a phenomenal brand loyalty for Southwest Airlines. However, some travelers do not like to be herded into the plane and be stuck next to someone equally as large or next to the proverbial crying child. I have a family of five and if we fly via Southwest, it would be helpful if we could pay extra or board first with limitations on the location within the plane we could sit. I wouldn’t try to take up the first five seats as this would be unjust to those that would get them if I wasn’t bring my brood with me. There are areas for improvement for Southwest when it comes to gate calls, seating and inflight experience.

With the amount of monies that Southwest is saving and generating with their current business model, they could benefit not filling the plane to max like other carriers. This would allow movement of the passengers within to better accommodate issues that arise. Also, for individuals that are taller and heavier such as myself, I would be able to have more leg room or contain my kids in one area of the seats so as not to bother other passengers or at least minimize the issues as much as parentally possible. The Internet caught many carriers unaware. It added a new distribution channel, but the companies that became self-aware of this and immediately tapped into it had a much better handle on what could be done with it (Rottman, E., Sarah, H., & McGowan, B., 2007) . Southwest was paying attention. It began participating in online sales at the Basic Booking Request level, a level specifically designed for its own needs in 1995, largely to make life easier for travel agents in its home market of Dallas (Bremner, C. & Fiona, J., 2008). This method of distributing their “goods” has benefitted Southwest Airlines immensely.

Lower ticket costs, higher sales volume and cutting out the middle man, offering a pseudo bulk break method for the airline shopper. Southwest could improve on this media through progressive marketing campaigns targeting the areas of air travelers they currently do not. The elderly, young college students and those with children; these untapped areas hold a great possibility for revenue if Southwest is willing to target and market to them. Southwest employs a relatively simple fare structure, featuring low, unrestricted, unlimited, everyday coach fares as well as even lower fares available on a restricted basis (Bailey, et. al., 2009). In January 1995, Southwest Airlines became the first major airline to introduce a Ticketless Travel option, eliminating the need to print and process a paper ticket altogether (About, 2012).

This innovation was born out of necessity after it was tossed out of three other computer reservation systems (United, Continental and Delta’s, as these airlines felt threatened by Southwest’s competitiveness). This innovation allows customers to completely bypass the computer reservation systems of major airlines by obtaining a confirmation number and showing up for the flight (Wilkening, 2012). Customers loved the idea and the paperwork was reduced tremendously therefore, saving money. This practice is now pervasive in the industry, due to its cost savings ability. Currently, if a customer wants a printed ticket, there is usually a surcharge of $20; and if a passenger uses a travel agent, there is an additional $25 service fee (Ranson, 2011), yet these fees do not get passed onto the Southwest Airlines customer. Southwest Airlines hit the mark with their self-ticketing and kiosk options for air travelers.

One way they could improve is to allow printing from home/office via email attachments like most other carriers. A possible smartphone application download could bused so you as the customer merely needs to have your phone on you and the ticket with barcode present in order to board or clear baggage check in. This will allow for an even faster boarding option, quicker flight boarding thus creating less gate to takeoff time; creating larger revenue and more flights per day. Unlike other airlines, SWA does not rely on travel agents to distribute their products. Travel bookings on Southwest Airlines are done primarily through direct marketing: by phone and the Internet (Arsenault, 2009), without a middleman. Southwest also does not interline or offer joint fares with other airlines, nor does it have any commuter feeder relationships (Taneja, 2008). This lack of middleman is very lucrative for Southwest Airlines, generating large revenues and saving that they pass onto the consumer. Southwest Airlines would be wise though to have a help section on their website that was truly insightful.

The current help section is cumbersome and makes for an unpleasant experience for those having problems. Install a live chat feature and/or a call back feature like some competitors have. This will make the purchasing experience a positive. Happy customers spread good advertising to one or two people while unhappy customers spread the word to ten or more. Overall the distribution plan Southwest Airlines employs is working in conjunction with their business model and has done so for over 40 years. There are several strong areas that have carried southwest through tough times as they were tried and true methods.

With the advent of the internet and the quick escalation of social media sites, blogs and forums; Southwest Airlines has had to re-engineer its distribution plan to include these. There are and always will be areas for improvement and growth in the ever changing, fast paced environment of today’s digital world. Key areas to improve upon include marketing to demographic areas outside of the current business traveler, use other means of selling/advertising besides Southwest Airlines website, use more non-traditional ticketing methods and allow for seating alternatives for those needing some assistance. If Southwest can keep its eye on the airline monetary prize and embrace these few changes, they will be around for another 40 years.

References
About Southwest. (n.d). Retrieved 05 May 2012, from http://www.southwest.com/html/about-southwest/index.html Arsenault, S. (2009) Airline loyalty: a new prospective. UNISYS. Retrieved 05 May 2012 from www.unisys.com/transportation/insights/insights_compendium/WO-Airline_Loyalty.pdf Bailey, C. D., Collins, A. B., Collins, D. L., & Lambert, K. R. (2009). An Analysis of Southwest Airlines: Applying the Horngren, Datar, and Foster (2006) Strategic Profitability Analysis Approach. Issues In Accounting Education, 24(4), 539-551. Bremner, C. & Fiona, J. (2008) World travel marker global trends report 2008. World Travel Market and Euromonitor International. 1-29 Cheng, K. (2010, November). Evaluation of us legacy airlines distribution strategies. Journal of Air Transport Management. 16(6), 337-339 McDonald, M. (2007, August). Changing channels. ATW, Air Transport World Magazine. 12(2), 5 – 9 Ranson, L. (2011). North America: disciplined returns. Airline Business, 27(8), 34. Business Source Complete, EBSCOhost (accessed April 22, 2012). Rottman, E., Sarah, H., & McGowan, B. (2007). How social computing changes the way you sell travel. Forrester. Retreived 04 May 2012 from www.forrester.com/research/document/excerpt/0,7211.42100,00.html Taneja, N., (2008) Simpli-flying, optimizing the airline business model. Retreived 05

Southwest Airline – Distribution Strategy Essay

Lg Global Strategy Essay

Lg Global Strategy Essay.

This assignment focusses on LG’s Global Strategy looking into their operations in Brazil and India as well as researching minor parts of their efforts in Australia, China and the USA. LG (Lucky GoldStar) operates in the Consumer Electronics Industry on an international scale. The sources of information used for empirical evidence range from Academic journals and Interviews with LG Directors to information gathered from the LG press website and other academic online resources. To evaluate LG’s strategy one must access its worth, its usefulness and whether LG’s decisions and investments turned into tangible revenue.

To understand LG’s Global Strategy success one must understand LG’s background. LG started in 1947 as a cosmetics cream manufacturer. LG expanded in to many industries in later years, eventually LG operated in the consumer electronics market. LG has turned into a very successful multinational company now, in the past two decades LG Electronics’ market share had grown at 22% from £130 million in the 1980s to £65 million the 1990s and £7.

1 billion by early 2005. LG owed much of its success to the South Korean Government’s incentive rich market it provided for the consumer electronics market.

President Park Chung Hee of South Korea enacted the Economic Development Plan, which aimed to help the electronics industry by making it the national priority sector that would be developed. As a result, many western companies came to set up joint ventures, LG partnered with Philips, a European electronics company. LG-Philips became the largest manufacturer of flat screen TVs in world. By 2006, the group’s sales revenues massed up to $23 billion, making profits of $500 million. Of all of LG’s various revenue streams, LG Electronics provided 47% of the total revenue. LG knew they had to operate in the consumer electronics market internationally.

LG was encouraged to invest in localized research and development by the Government making extensive amounts of research infrastructure. This particular point is one of the most important methods by which LG implemented a successful Global Strategy. During the mid-1980s over 120 private research institutes and 18 research consortia were created. (W. R. Shin and A. Ho, 1997.) Having high quality research and development infrastructure allowed LG to create a series of products that were tailored to the needs of South Korea. LG learnt from this episode that research and development created a competitive advantage for its products, and this was something they had to do in every countries across the globe instead of selling a set of standardized products. During the 1990s LG started a International Strategy that aimed to capitalize on the emerging BRIC economies (Brazil, Russia, India and China).

LG started in Brazil by building a manufacturing plant in Manaus creating televisions and VCR’s to be sold around Brazil. The Government of Brazil offered low-tax rate incentives for businesses to build manufacturing plants in underdeveloped areas as well as subsidizing land for investors setting up operations. LG took full advantage of these incentives to establish themselves in Brazil. Brazil In the 1990’s had very high import tariffs, low brand recognition and had high competition in the grey goods market.

In 1990, exchange rates plummeted making planning for businesses very difficult. Global players in Brazil decided to withdraw their operations or terminate them entirely. This provided a turning point for LG, they decided to expand their presence and create a strategy that would make Brazil a manufacturing hub for exports in South America and the USA. The fall in Brazils’s currency allowed LG to take on some low-cost advantages that make exporting very advantageous(Ramaswamy, K. 2007). LG was the largest exporter of electronic goods in South America. LG now tackled the areas of marketing and financial management to clamp down it presence in Brazil.

LG wasn’t well recognized in Brazil so it needed to build some strong customer awareness. LG took advantage of the immense national popularity of football and started a branding campaign with sports events sponsorship. The LG sponsored a high ranking national football team in Sao Paolo(Ramaswamy, K. 2007), this brought immediate brand recognition to it’s products. LG now needed to transfer its brand recognition into tangible revenue though customizing it’s products to suit the needs of Brazilians. LG’s consumer electronics were a refreshing taste to Brazil’s market, LG gave most of its products a 3 year warranty pairing that with their promise of instant service if a customer’s product failed or broke-down. It used repair service vans able to reach a customer’s location in short time period. This helped ensure customers would receive a high level of quality and reliability from LG, this proved to be a worth-while competitive advantage over other competitors.

LG’s efforts in Brazil certainly reflected a good example of a well implemented global strategy. They took advantages of the Governments tax incentives, furthermore LG filled the void in the consumer electronics market that was created by previous companies leaving when times got tough and created a strong marketing campaign. The best measure of their strategy’s success in Brazil is that in 2006 LG posted sales of £1.2 billion, a 36% increase compared to the previous year. LG’s well implemented strategy in Brazil clearly led to market domination and a high profit. This was a strong international strategy, and LG adopted similar tactics in India.

LG started operating in India when the Indian Government created advantageous market reforms allowing foreign companies to establish their own wholly owned subsidiaries in India. LG quickly took advantage of these reforms and created LGEIL (LGE India Ltd.) in 1997. LGEIL’s first factory was built in Greater Noida(40km from New Delhi), which manufactured washing machines, televisions, air conditioners and refrigerators.

Mr Kwang-Ro Kim, Managing Director at the time said, “We knew it was important, for example, not to downgrade the Indian market and instead to treat it seriously as we would any developed market”, he goes on to explain “this meant preparing a preparing a full strategy and emphasizing good-quality products, the best technology, the best network and access to the best people”(Kim, K. R. 2005.). LG created these specialized products with vast research and development infrastructure, just like they had in South Korea.

Local research and development teams were made to create product variations that were designed for the unique demands of India’s market. For example, they launched a cricket television set that had a built-in cricket game to take advantage of the millions of people who adored cricket in India. LGEIL’s Golden Eye technology used in TV’s allowed the brightness of the screen to be adjusted to the surrounding level of light., this proved to be an important feature because India is very prone to power supply imbalances that effect lighting intensity.

Furthermore, they designed an air filtration system to keep it’s air conditioners working efficiently. This design was implemented because India’s metropolitan areas have high levels of particulate pollution. Its home appliance products were fitted with circuits able to handle the regular voltage fluctuations Indian households had. LG presented “an ‘Indianised’ face to its products but keeping the technology at global standards”(Mathur, U. C. 2010). These variations in products brought a refreshing taste to the Indian home appliance market.

One problem LGEIL faced was the geographical diversity and India’s lack of infrastructure making distribution of it products difficult. To reach small towns and villages in India a solid distribution system needed to be adopted, their tiered approach allowed an anchoring regional distributor to supply cities and then complimented this system with offices in remote areas for the small towns. This system encompassed 4,000 access points to reach the masses to India’s giant population. A website called lgezbuy.com helped their distribution with online ordering as well as providing detailed information about their products and comparative pricing for different areas of the country. This was the first attempt by a major electronic goods manufacture and proved successful by creating another competitive advantage for LG.

Customer Service was an important part of LGEIL’s strategy, just as they did in Brazil, they provided repair vehicles for reaching remote areas in short periods of time. Vans were fitted with electrical generators to ensure appliances could be fixed even in a country with regular blackouts. This was unseen to the Indian Market from any other competitor and became very favorable for customers. “This ‘walking-after sales service’ allowed traveling crews to cover ares that were previously unaccessible(Lee, D. W. 2005). This gave LG a competitive advantage over its Indian market competitors such as Onida or Whirlpool.

In terms of marketing strategy, LGEIL decided to sponsor an Indian Cricket team. This proved such a success that LG decided to sponsor the Cricket World Cup in 2002(LG. 2009). LG became the largest sponsor of cricket in the world and this gained instant brand recognition for them across India, a country full of millions of cricket fanatics.

A strong marketing campaign reaching customers all over India; LG’s localized product range and services provided with the products paid off rich dividends. LG’s “turnover for 2002 crossed Rs. 3000 Crore, that is a 37% increase on the previous year”(Mathur, U. C. 2010), that’s £38million. LGEIL clearly beat their competitors, for example in the color television market LG had a market share of 26.4% and their nearest competitor, Onida, only had 10.8%. In the refrigerator market LG had a market share of 30.9%, Whirlpool, their nearest competitor only had 23.6%(Sinha, P. R. 2005)[1]. This was the same story with all their other home appliances. Clearly LG was making considerable profit and stood out from their competitors by providing quality products and services. But LG knew they had to do more to establish a strong foothold in India.

LG had to demonstrate to India that they were not purely profit driven; they believed this would give LG a credible name in India and gain the loyalty from the Indian market. LG subsidized primary schools and gave educational books to children. They even built a village school close to manufacturing facilities. Local employees were staffed for most of the top managerial positions of LGEIL. This managerial tactic allowed a South Korean company to appear as an Indian business. These resulted in huge good-will from Indian customers which was the final tie in a successfully implemented Strategy.

In 2006 Mr Nam Woo, President of LG Electronics (LG), unveiled LG’s ambitious plans to grow its presence in China. LG had leant many lessons from its early missions in emerging markets such as Brazil and India that would help LG stay a dominate global player. “We want to make China a strategic base for our business, so we must be a leader not only in sales, but also in research and development and in localization.”(Liu Baijia, 2006). LG took advantage of China’s cheap labour costs and soon where able to “leverage an entire manufacturing network to serve countries such as Russia and the USA” (Ramaswamy, K. 2007). This is evidence of LG looking elsewhere to export their products, this was an integral part to LG’s Global Strategy.

Not every part of LG’s strategy was perfect though, many of their products were recalled, for example, in Australia 2009 some of LG’s refrigerators broke down due to faulty wiring “which resulted in reduced insulation from electricity passing through. It could cause minor electric shocks”(Global Data, 2009). Furthermore LG had to “recall it’s Spyder Cell Phones in the USA…over 30,000 cell phones of this type were in use” (Global Data, 2009). This adversely affected their brand name and shows lack for careful attention to product design which reflects a bad global strategy, this showed similar results to their efforts in the USA.

LG started to look towards providing its products in the West, most notably the USA, an already challenging market. LG started supplying US stores with its home appliances such as microwave ovens and toasters. The conquest for shelf space was extremely difficult because of LG’s poor brand recognition as well as questions about LG’s product reliability and quality. The USA was not the place for LG to display its products. The products that the USA consumer electronic market wanted were the more fashionable European and Japanese home appliance products. LG failed to create a series of products the USA market wanted in comparison to its competitors. This clearly shows a weak strategy in LG selling its products global.

Overall, the international strategy LG implemented shows a pattern, in emerging economies such as Brazil and India, LG thrived, however in developed economies such as Australia and the USA, LG was unsuccessful. LG’s successes derived from 3 key areas that created a useful and worth-while international strategy. Firstly, they invested heavily in research and development to create products that suited the needs of the local market. LG now has over “36 research and development activities worldwide” (Global Data, 2009). Secondly, they pursued a marketing strategy that targeted each country’s whole population. In both Brazil, and India we see LG sponsoring sports events and teams which was a great way to create instant brand recognition across each country.

Thirdly, LG treated emerging markets seriously by providing quality products complimented with high caliber services, this was a worth-while decision because countries like Brazil and India hadn’t been subject to this kind of service. The content researched is very interesting and insightful and poses the question, ‘Can these three factors be applied as a international strategy for any multinational company?’. To fully evaluate LG’s international one must further research there operations in Russia and China. Whilst LG showed signs of weaknesses, their international strategy gave their products and services a competitive advantage over their competitors making them market leaders in specific countries. LG’s efforts created LG a net income of over $13.1 billion in 2011 due to their global presence and is ranked 47th in the Fortune 500 companies, these achievements derived from what was a successful International strategy.

Bibliography

W. R. Shin and A. Ho, 1997. Industrial transformation: Interactive decision-making process in creating a global industry. Public Administration Quarterly. Summer.

Kannan Ramaswamy, 2007. LG Electronics: Global Strategy in Emerging Markets. Understanding Global Strategy.

Kwang-Ro Kim, 2005. Premium Marketing to the Masses: An interview with LG Electronics Managing Director. The McKinsey Quarterly Special Edition: Fulfilling India’s Promise

C. Mathur, 2010. Global Business Strategies. LG Group. Pg 290

Duk-Woo Lee, 2005. LG the No.1 company in India. LG News. february, Vol. 24

LG, 2009. Asia and Pacific Sponsorship, the Cricket World Cup. LG Press Website. (URL
http://www.lg.com/global/about-lg/corporate-information/global-sports-sponsorship/cricket-world-cup.jsp)

P. R. Sinha. 2005 Premium marketing to the masses: An interview with LG Electronics India’s Managing Director. McKinsey Quarterly.

Liu Baijia, 2006. LG wants local managers to aid growth. China Daily. April 20, 2006

Global Data, 2009. SWOT Analysis of LG.

Lg Global Strategy Essay

Canon: Modifying a Successful Strategy Essay

Canon: Modifying a Successful Strategy Essay.

Canon is a Japan-based manufacturer, with worldwide sales exceeding US$45 billion, and profits of almost US$3 billion. Canon’s well-known product lines include business machines, medical equipment, semiconductors, cameras, video equipment, and broadcast equipment. Business products account for 75 per cent of Canon’s total annual sales, cameras represent 18 per cent of sales, and optical equipment and other products comprise 7 per cent of sales. In most of its markets throughout the world, Canon’s major competitors are other Japan-based manufacturers, such as Sharp (which has a strong line of inexpensive photocopiers and other products aimed at the same small-business market that Canon often pursues, Minolta ( Japan’s largest camera manufacturer and Nikon (known for its technologically advanced products).

It also competes against such U.S. firms as Xerox, Kodak and RCA. In 1985, Canon was the 125th largest firm in Fortune’s ranking of industrial corporations outside the United Stats; today it is in the top 100,

Because it is highly committed toward maximizing its long-term performance (as are most Japanese companies), Canon re-evaluated its overall Marketing approach and strategy – so that it may prepare properly for the future.

In particular, Canon addressed these two areas: its need to be more market-oriented; and the need to maintain its strong level of foreign sales, particularly in North America and Europe.

Over the years, Canon viewed itself as a technology-driven company. According to its corporate communications manager, “we aim to develop our own unique technologies, which can then form the basis of our products.” As a result, Canons new – product development has been considered a function of Research & Development, not Marketing. But then, the firm realized that this approach must be modified:

Canon must change from a product-oriented company to a market-oriented one. Until now we have been more concerned with production and sales than Marketing. We will be focusing more closely on the needs of different consumer groups in each country and less concerned with the traditional production-oriented way of thinking.

As part of the need to be more market-driven, Canon restructured from its present three product-based divisions (business machines, cameras, and optical equipment) to a more market-driven structure.

In giving Marketing a greater role, Canon is also keeping this in mind: “As Marketing is made stronger, there is the risk it will weaken the motivation of the engineers who both pilot the new technologies and develop the new products.”

With regard to its international efforts, Canon relies on overseas markets for 70 per cent of its total annual sales; this is a much higher percentage than for its competitors. For example, North America and Europe are Canons largest markets; each of these markets comprises 30 per cent of Canon’s sales. Annually, the company spends millions on media advertising, point-of-sale displays, and other promotion materials in North America and Europe.

To be more responsive to foreign-market needs, Canon introduced a global Marketing system in recently. This system allows Canon to have similar products and Marketing approaches in various overseas markets while it better tailors business plans to the specialized needs of major market areas. For instance, Canon could develop a computer system with standardized hardware for all market areas, but with software that is tailored to each specialized market.

To reduce the impact or trade barriers (such as trade-protection laws restricting the sales of foreign products in domestic markets) and the high value of the Japanese yen relative to other currencies (thereby making Japanese products more expensive in other markets), Canon has begun opening more Research & Development and production facilities abroad. The objective of such a strategy “is to make Canon a company with no national identity and free from trade friction, keeping production facilities close to the place of consumption.”

1aDescribe the potential areas of conflict between the research-and-development department and the Marketing department at Canon.

1b How may potential conflicts be minimized?

2a Evaluate pros and cons of Canon’s proposal to switch from product-based to market-based business units.

2bWhat are Canon’s new business unit names? Briefly describe the target segment for each business unit.

3.What are the advantages and limitations of using the Boston Consulting Group for business analysis? How can Canon use the BCG matrix in planning its Marketing strategy?

4aCritically assess Canon’s recent international Marketing decisions.

4bIn light of the restructuring, devise a new vision statement for Canon. (Hint: “A vision is a guiding image of success formed in terms of a contribution to society. If a strategic plan is the “blueprint” for an organization’s work, then the vision is the “artist’s rendering” of the achievement of that plan. It is a description in words that conjures up a similar picture for each member of the group of the destination of the group’s work together.”)

5.Why might is be necessary to modify a successful strategy?

Canon: Modifying a Successful Strategy Essay