Features Of The Strategic Marketing In Bang & Olufsen - Case Study Example

Features Of The Strategic Marketing In Bang & Olufsen 1. Introduction Through the decades, the development of marketing policies worldwide has been increased as a result of the increase of competitiveness among firms that operate in the same or similar business sectors; the increase of consumers’ demands has been another fact leading to the above outcome. However, the quality and the effectiveness of marketing policies adopted by firms in the global market are not guaranteed; for this reason, appropriate strategies have been developed for the evaluation of these policies – in order for them to be aligned with the standards and the rules set by the state or the international community. Ethics of commerce are also likely to be used as criteria for the evaluation of marketing plans adopted by firms in different business sectors. Current paper focuses on the evaluation of the marketing plans of Bang & Olufsen, a firm, which is well known for the quality and the aesthetic of its products. The turbulences in the firm’s performance – a phenomenon that it is repeated periodically – lead to the assumption that the marketing policies of the firm need to be appropriately evaluated as of their effectiveness – failures need to be identified and corrected accordingly. Through appropriate methods of evaluation it is proved that the quality of the firm’s marketing plans cannot be doubted; however, appropriate changes and improvements should be made in order for the firm to increase its competitiveness in the global marketplace. 2. Bang & Olufsen – overview – brief presentation of the failures in the firm’s operational activities – role of marketing Bang & Olufsen was founded in 1925 in Denmark. The firm operates in the area of multimedia products and has a significant performance – if taking into consideration current market condition. More specifically, for the year 2007-2008 the firm’s profits were estimated to 548 million euros. A major problem for the firm’s managers seems to be the lack of stability in the firm’s profitability; other problems, like the cooperation with dealers and the effectiveness of leadership have been proved to be responsible for the instability in the firm’s productivity and performance since its establishment. The examination of the firm’s overall strategies can lead to the assumption that the business department that holds the major responsibility for the firm’s operational and performance delays is the marketing department – the firm’s marketing policies have not been appropriately designed and modified in order to meet the organizational aims but also the market trends. The evaluation of these policies – through appropriate strategic methods – reveal the problems and show the criteria for the improvement of the firm’s marketing plans. 3. Major macro and micro environmental strategic marketing issues for Bang & Olufsen 3.1 Marketing environment - Strategies for evaluation of marketing plans The marketing strategies used by the firm through the years have been proved inadequate – taking into consideration the strong turbulences in the organizational performance – to support the firm’s stability and growth. The reasons for this failure could be identified in to the firm’s marketing environment; at a next level, it would be necessary to use the appropriate methods for the evaluation of the relevant findings. The term marketing environment is used in order to describe all the forces that act on a firm’s marketing plans (Kotler et al., 2008); these forces are not relevant with these plans; however, they can influence their performance – even if the level of influence cannot be determined in advance but it is depended on a series of criteria, as analytically explained below. The types of marketing environment should be also presented – different parts of a firm’s marketing policy would required different criteria for their evaluation – their influence on the success of a firm’s marketing policies would be also differentiated in the context of their involvement in the development of these policies – market conditions would be also of significant importance. Marketing environment can be divided in two major categories: macro environment and microenvironment. In the case under examination these categories would define the elements that should be taken into consideration when having to evaluate the performance of marketing policies used by Bang and Olufsen. The methods used for the development of this evaluation would have specific stages and forms, in accordance with the theories held in the particular field. In marketing, macro environment refers to the following factors: a) the political factors which represent the form of political structure and characteristics of the country in which the firm operates, b) the economic factors, i.e. the conditions of local – national – economy, c) the technological factors, i.e. the advances of technology in a specific geographical or time context, d) the cultural factors, which are related with the ethics and the social values held in a particular society, e) the demographic factors, which refer to the key characteristics of consumers in the region targeted by a firm’s marketing policies and f) natural factors, i.e. the natural environment of a particular organization (Kotler et al., 2008, 179). At the next level – moving closer to the firm – factors that are characterized as microenvironment can be identified. These factors are the following ones: a) the firm’s other departments, b) the firm’s suppliers, c) the marketing intermediaries, i.e. those firms that support the promotion and the distribution of the firm’s products/ services in the targeted market, d) the consumer markets, i.e. the consumers, both individuals and firms and e) the firm’s competitors (Kotler et al., 2008, 179). The evaluation of the firm’s current marketing plans – in relation with the factors described above – will be made using the following strategies: PESTEL analysis and SWOT analysis. Findings will be used to evaluate the marketing policies of Bang & Olufsen. 3.2 Evaluation of firm’s marketing plans using the Pestel analysis and SWOT analysis. Through the Pestel analysis the following factors of a firm’s macroeconomic environment are analyzed: political, economic, social, technological, environmental and legal. In relation to the firm under discussion, these factors could be analyzed as follows: a) political environment. Bang & Olufsen operates in a country – Denmark – which is characterized by stable political conditions; no political turbulences have been recorder up to now in the specific country, a fact that creates positive prospects for the firm’s expansion in the local and the global market, b) economic. Denmark is a country with a strong economy; in current crisis, the country’s economy was proved to be well supported – no threat seems to exist for the enterprises operating across the country – including Bang & Olufsen, c) social. The social and cultural traditions of Denmark are not opposite to any potential advance of technology; in fact any progress in the specific area is well accepted by the public – the firm’s performance through the years is an indicative sign – even if periodically downturns were reported to the firm’s performance, d) environmental. Entrepreneurial activity in Denmark is developed on specific ethics and standards; the protection of the environment is set as a priority for entrepreneurs across the country – marketing policies used in the particular country need to be aligned with the above principle, f) legal. Like in all countries worldwide, the marketing activity related with products/ services in various sectors need to be developed within the framework set by the local laws – the application of the rules of international law may also be enforced in case of products/ services that are available in the global market. Through the SWOT analysis – which is related rather to the firm’s microeconomic environment, the identification of the firm’s strength, weaknesses, opportunities and threats can be used in order to suggest the necessary changes/ improvements on current marketing policies. The strengths of the specific firm could be summarized to the following ones: a) Bang & Olufsen is a firm that operates in the particular market for quite a long – since 1925; the specific firm is well known in its local market but also in the international market – its brand name is a valuable basis for the development of the firm’s activities, b) the technological expertise of the firm cannot be doubted; through the years the experience and the knowledge of employees has been further developed and improved, c) the firm has the support of consumers in Denmark – the firm is considered to be a fundamental unit in the country’s commercial sector. All these issues seem to be emphasized in the marketing plan adopted by the firm for the promotion of its products. However, the particular plan also presents certain weaknesses: a) it does not highlights the firm’s history in the development of products and winning of prizes –see the 1970s – 1980s period, b) the change in the firm’s practice to emphasize on the development of unique products rather than on the development of products that are most likely to be preferred by a specific part of the population, c) the firm’s employees may lack the expertise required in order to participate in the production of the new products – hiring of employees will be required. The opportunities related with the firm’s marketing plan could be described as follows: a) the criteria for the selection of the products were extremely strict, b) the coordination between the employees has been improved and c) the firm’s priorities are taken into consideration when developing the firm’s marketing plan – the products of the firm reflect the corporate ethics and culture. Potential threats for the firm’s marketing plan also exist. We could indicatively refer to the following ones: a) differences between employees’ perceptions and managers’ perceptions especially regarding the corporate culture, b) lack of sufficient time of testing of the new marketing plan – that it is different from the ones used by the firm in the past, c) the response of the public to the firm’s marketing plan may not be the expected one. Another approach that could be possibly used for the evaluation of the firm’s marketing plans would be that of ‘Weak Disidentifiers’ – an approach proposed by Moingeon et al. (2002, 61). This approach is characterized by the identification of the firm’s sectors or policies, which are proved to cause delays to the organizational performance – or else for the sectors/ employees that under-perform. At a next level, the restructuring of these units or policies or the removal of employees could be decided in order to support the improvement of the firm’s productivity. Kerin et al. (2003) set a series of criteria for the development of effective marketing plans. In accordance with the above researchers, the following issues should be addressed by marketers that seek to develop successful marketing plans: ‘a) the target audience and purpose, b) the kind and complexity of the organization and c) the industry’ (Kerin et al., 2003, 43). Through a different approach, Wood (2007) emphasizes on the importance of developing an effective Integrated Marketing Communication strategy (Wood, 2007, 74) the success of which is depended on its alignment with the relevant legal and ethical rules (also in Young et al., 2006). The above view is in accordance with that of Hollensen (2009) who also depends the effectiveness of marketing plans from the appropriate alignment of company culture with the local culture and ethics. These views, if used for the evaluation of the firm’s marketing plans, would lead in a slightly different result – compared to the PESTEL analysis and SWOT analysis developed above. The latter are likely to emphasize on the market value of marketing plans – in terms of the direct increase of the firm’s profitability – the former are more related with the promotion of the firm’s ethical values and priorities – any change that could be made on the firm’s existing marketing plans through these approaches would lead to an improvement of the firm’s profitability that could be visible after a specific period of time – i.e. in the long term and not in the short term. 3.3 Time framework Taking into consideration the findings revealed above, the restructuring of the firm’s marketing plans would be completed within a rather short time framework. In the past, the failure of the firm’s board to react quickly to the need for improving of the firm’s strategic plans – including the marketing plans – led to the limitation of the firm’s profitability. On the other hand, through the years the firm’s managers have adopted different strategic options but they were all characterized by severe delays in the implementation and the full development of the relevant policies – as a result the effectiveness of these policies was limited. 4. Marketing - Strategic options for Bang & Olufsen The marketing policies used by modern firms can be differentiated in accordance with their needs, their characteristics but also the marketing environment – as analyzed above. The structure of firms where marketing constitutes an active organizational sector is presented in Figure 1 below. Despite the fact that the marketing strategies used by the firm currently can be characterized as rather satisfactory – in accordance with the results of the evaluation developed above – there are certain strategies that could help Bang & Olufsen to increase its competitiveness in the global market. In this context, the following policies could be applied by the firm’s strategic managers: a) increase of advertising; the specific strategy could help ‘to establish a pre-selling environment’, i.e. to increase the firm’s sales by creating the terms that would lead consumers to prefer the firm’s products/ services instead of those of its competitors – the specific policy is analyzed in the study of Stanco (1995, 182), b) align its marketing policies with the cultural characteristics of each region – referring to the markets in which the firm’s products are promoted; advertising would have again a crucial role in highlighting the support of the firm to the local cultures and traditions (Mooij, 2009, 45), c) develop a clear organizational plan and ensure that all employees are aware of it (Wilmshurst et al., 2002, 126) – through this policy, conflicts within the organization will be avoided; the specific policy is proposed by Wilmshurst et al.(2002) as a measure for the limitation of conflicts between a firm’s production department and its sales department, d) increase the monitoring of the employees’ coordination – the particular policy is expected also to help towards the elimination of conflicts in the internal organizational environment (Wilmshurst et al., 2002, 126). Figure 1 – Organizational structure – marketing department is included as a separate organizational department (source: Wilmshurst et al., 2002, 127) The firm’s managers could choose among different strategic options in order to improve the performance of the firm’s marketing policies; an indicative plan of action is proposed in the study of Kerzner (2009) where it is noted that the evaluation of marketing projects could be made using different approaches – the systematic effort, the custom design, the risk and the product life cycle (Kerzner, 2009, 24) are mentioned as indicative approaches/ factors for research available to marketers in the modern market. 5. Conclusion The restructuring of the marketing policies used for the promotion of the products of Bang & Olufsen can be characterized as rather successful – if taking into consideration the turbulences in the firm’s profitability during the past decades – even during 1970s and 1980s that the firm’s performance reached high levels. The evaluation of the firm’s marketing plans using different strategic tools led to the following assumption: each method of evaluation can lead to different results regarding the potentials of the firm’s marketing policies; the priorities set by the firm’s managers seem to be the key criterion for the choice of the evaluation method that will best suit the firm’s needs. The credibility of results of all the strategic methods of evaluation cannot be doubted; however, after using these methods, the firm’s managers can lead to different assumptions regarding the hierarchy of the firm’s activities and practices that need restructuring. The firm’s needs would be the most valuable criterion for the choice of methods of evaluation that could effectively support the firm in current market conditions. The specific criterion would be also used for the choice of marketing plans that can best serve the firms priorities – taking into consideration the failures in the past and the potential prospects in the future. References Gummesson, E. (2008). Total relationship marketing. Butterworth-Heinemann Hollensen, S. (2009). Essentials of global marketing. Pearson Education Hooley, G., Saunders, J. (2008). Marketing Strategy and Competitive Positioning. Pearson Education Kahle, L., Kim, C. (2006). Creating images and the psychology of marketing communication. Routledge, 2006 Kerin, R., Hartley, W. (2003). Marketing: The Core. McGraw Hill Professional Kerzner, H. (2009). Project Management: A Systems Approach to Planning, Scheduling, and Controlling. John Wiley and Sons Kotler, P., Armstrong, G. (2008). Principles of marketing. 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