Steelco - Marketing Analysis of Company Products - Research Paper Example

Product Analysis Steelco is one of the foremost players in the wide flange steel industry that has only two big competitors and Steelco is one of them. Apart from these two players, there are quite a few local players who also compete in the same industry. But Steelco has already become a brand that is widely known in the industry. As far as the product offerings of Steelco are concerned, the wide flange iron beams are its main products. The major products offered by Steelco are a typical business-to-business product, and these products are based on the standardized specifications in the industry. Kotler (2007) has noted that there are as many as five levels of values associated with the product: Core benefit Basic product Expected product Augmented product Potential product In terms of the core feature of the product offerings of Steelco is concerned, the core value of the product lies in support it provides to the structures being built. Thus the core value of the product lies in its reliability that one can bank on it and subsequently use it for the structures one builds. The basic product is the wide flange steel it offers to its customers. The expected value of the product lies in the special as well as extra support it would provide to the structures it helps in building in comparison with other similar products in the market. Given that wide flange steel is at one end of the product spectrum in the light of its high level of tangibility, so the scope of making it an augmented or potential product is less (Klopper, et. al. 2006). Tybout & Calkins (2005) has opined that points of parity or (POP) comprises those associations which are not one of its kind to the brand, and that these points may be found in other brands as well. On the other hand, Keller, Jacob and Parameshwaran (2011) have been of the opinion that points of difference are attributes which consumers strongly associate with a particular brand and are even believe that the particular point cannot be found to the same level in any other brand. The products offered by Steelco are standardized having specifications based on which these are sold in the market, thereby implying that the demand is specific and a marketer cannot come up with any product by dint of its innovation. Thus the points of parity are likely to be many and there remains hardly any scope to go beyond the said specifications of the product. In this case the points of difference is not likely to be much and therefore it is based on either the distribution network or price of the product. It is given that the prices of the products of Steelco are very competitive since the market for these products is very price sensitive. Though the product offerings of Steelco are much more focused on the thickness of the wide flange steel that sell more in the market, USX, the main competitor has a wider range of products in this area. Thus the product strategy that may be part of the branding strategy has to be based on the quality added to the specifications that these competing products meet. In this case, since product specifications define the markets and there is not much scope to innovate on the product front, the branding can be based on the longer durability of the product as compared to its competitors. Other than that, convenience of purchase as well as low price may be the branding strategy as compared to the large variety of products offered by USX. The basic difference between the product offering of Steelco and its competitors lies in the durability of the product as well as the wide distribution network and also the low price at which they sell their products. Place Analysis Place plays a major role in these markets since the product offerings are standardized. The distribution network of Steelco has been said to be much better than its local competitors and is spread throughout the nation. Thus the convenience of the customers of Steelco has been taken care of. However, the actual place of the company is wherever structures are being built and thus the aim of the firm should be to not only reach its direct customers but also seek to be present at these construction sites so as not only to exhibit better market presence but also to become more “convenient” in terms of its distribution network. This is in tune with what Lovelock, Wirtz and Chatterjee (2010) since they have noted that customers have been increasingly demanding convenience in terms of places where they can take delivery of their core products. Thus delivering the wide flange steel at the doorstep of the construction sites would enable to promote a better delivery network than its competitors. Selling on the websites is also possible. However, major stress on the web presence of the product offerings of Steelco is to provide information rather than sell the products through this online channel. However, it can also be sold over the internet since these products must conform to the preset standards of the industry. Thus these products can be sold to parties that are in demand of wide flange steel products and can rely on the brand that Steelco has created. In terms of customer service, the following points list the services in this particular domain: Creating a large physical distribution network of round the nation distribution services Stressing on products to be sold on the internet through effective use of the company’s website On site delivery of the products that are bought by the customers so as to create more convenience for the customers. The main difference between the competitors and Steelco in terms of distribution network is that while USX is the biggest competitor having a nationwide distribution network, Steelco also boasts of such a network and more. Here the point of difference would be to be present even at the fabrication or the construction site from where the product would be actually used. Also, web presence would serve as an extra distribution channel for the firm. Pricing Analysis The first point to be noted about the price analysis is that the wide flange steel products is that the market is very price sensitive. Thus the market is very competitive for any marketer and local players compete on the basis of the low prices they charge in lieu of these products they sell to the customers. Thus Steelco also prices its products very competitively and so does its main competitor USX. So, the price sensitivity of the market is very high and even a rise of $10 per ton can become a deterrent for sales of the product, as exemplified in the case. In terms of the positioning of the wide flange steel products marketed by Steelco, since much cannot be done to come up with an innovative product, thus it has to focus on other aspects so that Steelco is able to capture a distinct space in the minds of its customers. In this regard, positioning is defined by Ries and Trout (2003) as the creation of a distinct position of the products marketed by the firm in the minds of its customers. Now, if Steelco were to position itself distinctly keeping in mind that the product offerings of its major competitors are more or less the same, given the specifications of the industry standards, it has to go by the other determinants like price and distribution of their products. In that case, in keeping with their lack of demand for their newly thought of products, the ideal strategy should be to price it distinctly lower than that of their competitors. This should also be coupled with the extra efforts to become more convenient in terms of the delivery of their products. Thus the distinct position created would project them as a marketer of wide flange steel products that are at par in terms of technical specifications but low on price as well as convenient to purchase. This is very likely to give Steelco distinct competitive advantage over its competitors. In this context, competitive advantage refers to those organizational resources or skillful use of core competencies that result in above average returns for the firm (Porter, 1985; Kazmi, 2008). Also, the POD and POP activities become very important determinants in positioning these products of Steelco. As mentioned earlier, the points of parity are the technical specifications that make all the competing products almost alike. However, the points of parity have to be thus based on factors other than the product specifications. These can be chiefly price and distribution network. The key differentiating factors for Steelco with that of the competitors is that they have a nationwide distribution network, again something that USX also has. Thus the only factor left for them is to price differently or may be lower than that of USX, their main competitor. The best pricing policy to resort to would be to go for a lower pricing policy for all the products of Steelco given that this would attract more customers in a price sensitive market. Also, it may help Steelco enter into the markets for wide flange steel above 24 inch given the advantage in price they offer. Steelco Products Price Analysis and effect on market share Product Action Price Effect Reason Upto 24 inch No Action competitive Big Market share Established Player in the market Increase in Price Higher Price than competitors Loss of market share Price sensitive market Decrease in price Lower price than competitors Increase in market share Price sensitive market Above 24 inch No Action competitive No market share New player in the market & new technology Increase in Price Higher Price than competitors No market share New player in the market & new technology Decrease in price Lower price than competitors Gain in market share Lower price compared to competitor References 1. Kotler, P. & Keller, K. (2007). A Framework for Marketing Management. New Delhi: Pearson Education 2. Klopper, H., Berndt, A. & Myers-Smith, P. (2006). Fresh Perspectives: Marketing. Cape Town: Mascew Miller Longman 3. Tybout, A. & Calkins, T. (2005). Kellogg on Marketing. Kellogg: Kellogg School of Management 4. Keller, K., Parameshwaran, M. & Jacob, I. 2011. Strategic Brand Management. New Delhi: Doris Kindersley (India) Pvt. Ltd. 5. Lovelock, C., Wirtz, J. & Chatterjee, J. (2010). Services Marketing: People, Technology, Strategy. New Delhi: Prentice Hall 6. Ries, A. & Trout, J. (1981). Positioning: The Battle for your Mind. New Delhi: McGraw Hill 7. Porter, M. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. NY: The Free Press 8. Kazmi, A. (2008). Strategic Management and Business Policy. New Delhi: Tata McGraw Hill Read More