Three-Year Marketing Plan – Heron Engineering Word count: 1500 excluding table 1 & 2 1.0 Executive Summary Heron Engineering (Heron hereafer) is to regain its market share in the Western European region (WE) and Central and Eastern European region (CEE) in both high-and low-technology sectors. Heron is capable of reestablishing its former positon as a market leader in both markets, given the producton of high-quality products that ofer more functonalites and productvity than its rivals at a very compettve value-added price. The primary marketng objectve is to retain outstanding reputaton with respect to the producton of extensive and high-quality product range in both markets. The primary fnancial objectve is to increase its market share and sales over the next three years. 2.0 Situation Analysis Established in 1899, Heron was the global market leader in the industrial stacking and storage business. By the end of 1990s, its European division was facing pressing problems in WE and CEE regions in high- and low-technology businesses. This ensued a loss in market share in both markets. 2.1 Market Summary Heron market shares have dropped in two European regions.
The main factors behind the market loss are tough competton, new players entering the market, and change in the environment in which Heron operates. 2.1.2 Geographics Heron divides the market geographically into WE and CEE regions. 2.1.3 Target Market 1. Low-technology products: manufacturers, wholesalers and distributor industries; 2. High-technology products: factories, airports, docks, warehouses and other large facilites. 2.1.4 Target Market Choice Criteria • Low-technology products: (1)price; (2) product availability; and (3) product functonality. • High-technology products: • WE: (1) product functonality; (2) system customizaton; close relatonships with suppliers. • CEE: (1) atractve fnancing; (2) systems functonality; and (3) price, customizaton and close relatonships with suppliers. 2.2 Marketing Audit 2.2.1 The external audit: The Market • The European market worth: £275,000,000.00 • Heron sales revenue: £100,000,000.00 • Heron gross profts: £24,000,000.00 Competition Heron’s high- and low-technology businesses face tough competton in WE and CEE regions. Lowtechnology rivals challenge Heron on price, whereas high-tech compettors do so by customising their oferings and building local relaton to meet customer requirements.
Table 1 illustrates the competition faced by Heron as well as the strengths and weaknesses of its rivals. • Competition faced by Heron Engineering Western European markets 65% Central and Eastern European markets 35%
High-technology systems £42,250,000.00 Low-technology products £22,750,000.00 exporting
Low-technology products £22,750,000.00 High-technology systems £12,250,000.00 exporting
Strong in high-technology systems Weak in low-technology products
Strong in low-technology Products (lower price) Weak in high-technology systems
Competitors strengths and weaknesses WE Competitors key strengths CEE – – Strong in low-technology sectors; Lower price.
Strong in high-technology systems; Willing to customise their oferings to meet customer requirements; Providing a wide network of sales ofces throughout Europe; Lower price.
Competitors key weaknesses High-technology compettors’ products ofer less functonality and productvity; Low-technology compettors produce only crude, simple products with far less functonality; Compettors of high-technology systems are priced higher.
2.3 Internal Audit Western European markets Sales £65,000,000.00 (65%) as follow High-technology systems:(65%) £42,250,000.00 Low-technology products:(35%) £22,750,000.00 Market growth Market shares negligible high Central and Eastern European markets Low-technology products:(65%) £22,750,000.00 High-technology systems:(35%) £12,250,000.00
£35,000,000.00 (35%) as follow
From over 50% in 1990 to around 49% in From approximately 50% in 1995 to about 1999 in high- and low-technology sectors 30% in 1999 in high- and low-technology sectors 12% above full average costs
Profit margins Price
Heron is able to undercut its rival’s prices in the high-technology sector in both WE and CEE regions; Rivals have achieved much lower costs and prices than Heron in the lowtechnology sector in both regions.
Heron handles its high-technology business directly; Heron uses independent distributors for sales of low-technology products.
2.3 SWOT Analysis Strengths – Innovative products: Heron’s high-quality products ofer more functonality and productvity; – Reputation: Outstanding global reputaton at the market; – Product range: The only frm in CEE ofering the full range of high- and low-technology products; – Pricing: High-technology products are priced lower than that of competng rivals in both markets; – R&D: Maintenance of a contnuous product innovaton policy to preserve its strong reputaton for product functonality and quality.
Weaknesses – Distribution: Heron’s distributors of low-technology products are ofen difcult to communicate with and do not appear to push sales energetcally. Many distributors ofen sell products above or below the agreed price and some of them carry compettors products. – Price: Low-tech products compettors ofer lower prices than Heron. – Customization and sales network: WE rivals are more willing than Heron to customise their oferings to meet customer requirement in a region where functonality and systems customizaton are considered to be the prime supplier selecton criteria. In additon, compettors have a wide network of sales ofces throughout Europe. – Environmental change: Slow to react to changing compettve conditons in WE. Opportunities – Growing demand: Demand for storage technologies has grown strongly in CEE following the collapse of the former communist regimes in the region; – New products: Possibilites for developing a new product range of high- and low-technology products; – New factory: Potental for opening a factory in CEE that produces low-technology products in order to reduce producton cost and undercut compettors’ price.
Threats – Increased competition in both markets: competton from rivals have intensifed – numerous local producers of low-technology products had emerged afer 1992 and achieved much lower costs and prices than Heron. From 1995 onwards, several other WE companies have been successfully ofering high-technology systems in CEE; Downward pressure on pricing: customers in the low-technology sector in WE and CEE are price sensitve. Customers in CEE experience difcultes in paying for the high cost sophistcated storage systems due to hard currency shortages and inaccessibility to internatonal credit.
3.0 Marketing strategy 3.1 Business mission Heron’s engineering is commited to provide customers with the widest range of high-quality stacking and storage products. Its high-technology systems and low-technology products (innovatve products) ofer more functonality and productvity than compettors, and exceed the expectatons of customers. 3.2 Marketing objectives – To retain outstanding reputaton of extensive and high-quality product range in WE and CEE regions. – To add at least one product range of high- and low-technology products each year based on consumer feedback and technological advancements. 3.3 Financial objectives – To increase market share in WE from 49 to 55 over the next three years. – To increase sales by 30 percent in CEE over the next three years.
Table 2 illustrates the gap analysis and the course of action to be pursued by Heron in both European markets • Gap analysis required
Diversification New markets New products
Market penetration Productivity: reduce cost and improve the productvity of the sales forces for the high-technology products and the sales force of the distributors for the low-tech products
Heron growth opportunities
PRODUCTS Market penetration – To atract compettors’ customers by demonstratng high quality and more functonality of their highand low-technology products. – To convert non-users by demonstratng the benefts of using their high- and lowtechnology products over their compettors. Product development – To contnuously add new features and more functonalites to their range of products. – To add a new product range e.g. shelving slides (low-technology product) or energy storage system (high technology product). The f rst product could be used by their current/prospectve customers to store more items/goods at no additonal space, whereas the second one – to store solar energy/power and reduce polluton. Diversification – To acquire two compettors who have sales ofces in countries/capitals where Heron lacks such physical presence(one in WE and another in CEE). This acquisiton would enable Heron, among others, to serve new clients, gain presence in new regions/areas, and build closer relatonships with its current or potental customers.
Market development – To identfy new potental user groups e.g. garages, bakeries, pharmacies, groceries, ofces, homes, etc. for low-technology products and university libraries, banks, hospitals, etc. who are in need of sophistcated storage systems e.g. electric movable shelving systems. – To seek additonal channels of distributon, i.e website, additonal distributors and sales personnel in new regions/areas.
3.4 Positioning By using product diferentaton strategy, Heron positons its high and low technology products as the highest quality products with more functonality and productvity than its compettors. 3.5 Strategies Herons’ strategy is comprised of the following approaches to product, price, promoton, and distributon. Product: • Customer perceived value: to clearly communicate the benefts of its products across all its marketng channels in WE and CEE; • Customization: to customise its high-technology products to meet customer needs, especially that Heron’s products provide more functonality and productvity than compettors; • Features: to add new features and enhance functonalites of its high- and low-technology products; • Warranty: to ofer extended warranty on its high- and low-technology products. Price: • Reduce price: to undercut its rivals’ prices on high- and low-technology products; • Discount price: to ofer new distributors an entcing discount for their inital stock order;
• Payment facilities: to provide atractve fnancial payment packages for its high-technology systems in CEE market, e.g. 15 per cent upon delivery and the remaining to be amortzed over 36 or 48 months. Promotion: • Update and expand the website: to ofer discounts, best deals, e-voucher, to increase sales and encourage the use of webshop. The website should feature an online assistant to assist customers; • E-marketing: to add “web analytcs” to the website in order to know the list of users who visit the site and the products they browse. These users may be targeted with special ofers and deals through e-marketng; • E-mailshots: to send informaton along with incentves and special ofers of its products to a list of potental customers; • Increase exhibition coverage: to increase the presence of company products at industry exhibitons; to encourage distributors to exhibit a greater range of Heron’s products as well as provide distributors with the necessary equipment and support. • Change salesforce organization: to change the selling strategy by means of strengthening sales organizaton, recruitng additonal sales personnel, and reorganising salesforce for partcular region, etc.
Distribution • Improve service: to provide adequate training to distributors and ofer them generous incentves/discounts (trade/quantty/promotonal or cash discounts) and special payment terms depending on the volume of orders. Moreover, it is desirable to improve partnering arrangements with key distributors by further understanding their capabilites, resources, needs, goals and desires. • Improve salesforce productivity: to train, motvate, provide feedback and reward extra performance of the sales force in every ofce that handles high-technology systems. • Increase sales coverage: to fnd additonal distributon outlets in new areas/regions in order to secure a wider market coverage than compettors. • Online shop: To sell directly to costumers through the company’s website. The website enables customers to order products directly or could refer them to the nearest distributors upon their request. • Appoint distributor sales manager: To employ one distributor sales manager for each market (WE and CEE) to look afer the distributor’s account.
4.0 Controls Controls cover the implementaton and re-organizaton of Heron marketng actvites. 4.1 Implementation: Heron must closely monitor the quality of its products, new-product development, monthly and annual revenue and expenses, and customer service satsfacton. By gauging the performance of the aforementoned areas, Heron will be able to swifly react to new challenges in the market. 4.2 Marketing organization: Heron’s marketng director for its European division, John Tof, will be responsible for the marketng actvites. He must be aware of all the rewards and problems associated with marketng planning as well as the recommendatons to overcome such problems.
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