Marketing plan for Kenwood group - Essay Example

? MARKETING PLAN FOR KENWOOD GROUP AFFILIATION Table of Contents Introduction 4 Introduction to Kenwood Group 4 Reason for product selection 5 PEST analysis of UK 6 Political factors 6 Economic factors 7 Social factors 8 Technological factors 8 SWOT Analysis 9 Market Segmentation 12 Agricultural sector: 12 Indoor units 13 Market Entry 13 Product 14 Key features 14 Product specifications 14 Types of humidifiers 14 Price 15 Place 15 Promotional activities 15 Advertisement on electronic media 15 Advertisement on print media 16 Social media marketing 16 Sales promotion 17 Controlling and Measuring 19 References 20 Introduction It is said that if we are strong, our strength will speak for itself. If we are weak, words will be of no help (John Fitzgerald Kennedy). This saying carries meaning in itself and highlights the importance of developing such plans that are not only realistic but are communicable as well. One cannot explain any phenomena; his/her intended feelings, his plans or anything else if there is lack of communication channels and proper marketing strategies. Thus, we can generalize this thing that effective communication and competitive marketing strategies have become mandatory in every type of business activity. With special regard to businesses, communication phenomenon, development of competitive and effective marketing strategies has grasped huge attention over the past few years. Its awareness truly started to spread when businesses realized the importance of communicating their purpose to their target audiences affectively. It is important to determine how businesses can communicate their purpose, intended goals and their products’ specifications to their customers. This report will focus on marketing plan put forward by a company named as “Kenwood”, manufacturers of home appliances. This report will shed light over different marketing aspects that need to be considered by the Kenwood group for extending their operations in international market. Introduction to Kenwood Group Enacted in 1950 Kenwood aspires to deliver its current and prospective customers with innovation, change, high quality and unique design products. It specializes in providing its customers with kitchen appliances, like beaters, food processors and many others that serve as a luxury and a gift for the upcoming generation. (Kenwood, 2012) It aspires to deliver such products that makes your life easy and offer a wide range of products including hand beaters, bread makers, blenders, food processor and many other electronic appliances of this nature. (Kenwood, 2012) Reason for product selection Kenwood group is offering a wide range of products including home appliances, compressors, environmental care products, compressors and many more. The underlying reason behind the selection of an environmental care product i.e. Humidifier lies in the fact of the changing climate of UK. The fluctuations in the climate of UK have made the Kenwood group to think about expanding their operations into the UK market. According to one of the environmental reports (2010) the UK climate is changing rapidly and that the fluctuations have been observed globally. The time span of winters has increased tremendously and the snow cover prevails for a longer period of time in some parts of UK. Observations indicate that the temperature in Central England have risen by about 10C whereas in other parts like Scotland and Ireland it has increased roughly by 0.80C (Environmental report, 2010) In addition to this, agricultural sector of UK is progressing by leaps and bounds and is contributing a lot towards economic growth and development. UK ranked 5th in the production of sugar beet and in terms of wheat production it is ranked as fourth among all the EU countries. (Environmental report, 2010) However, for crops production humidifiers act as a major unit in keeping the crops moist and humid and the Kenwood group after recognizing the need aspire to launch humidifiers in UK market for agricultural products. Thus, keeping in view these strong climatic fluctuations and its possible effects in terms of health issues and home care, the Kenwood Group has selected humidifiers as their product for expansion in UK market. PEST analysis of UK Carrying out PEST analysis is desirable when any organization wants to expand its operations outside the borders and want to know the possible effects of the external environment over their business. Pest analysis is the acronym of political, economic, social and technological factors that impact business operations. According to Johnsen and Applegate (2007) pest analysis is one of the helpful tools in analyzing and scanning the general environment and then finding out the way to convert the key drivers of this general environment into a competitive environment. The pest analysis of the target country i.e. UK is as follows: Political factors Political factors of the pest analysis deals with the effect of government policies and the rules and regulations applicable in the country. Following are the political factors that can affect the launch of a humidifier in UK’s market: UK government rules and regulations including taxation laws can affect the manufacturing of humidifiers. Environmental protection laws given by government e.g. employment of the wastage of plants for the purpose of conserving the environment by the UK government can affect the company’s reputation in the long run if they consider environment conservation as their primary objective. Import and export regulation e.g. export and import duties that are applicable by the government of UK on the products being exported or imported can affect the business operations. Any political instability like takeover, elections can affect the business operations as any sort political instability in any country hinders the smooth functioning of the business operations. Corporate taxation laws given by government of UK can affect the company’s profitability in the long run. Economic factors According to Waters (2006) economic factors incorporated in all those issues that affect the cost and the purchasing power of current and prospective customers. The bearish and the bullish trends in the economy greatly affect the consumer demand and supply factors. Following are the economic factors that can influence the launch of humidifiers in UK market: Business Cycles: Companies operating in developed economies undergo through business cycles in which the periods of faster growth are often followed by periods of slower growth because of economic factors and such business cycles affect almost all kinds of businesses except food industry where the trends remain consistent for an indefinite period of time. Employment levels: Employment laws applicable in UK can affect the demand for the product. Low employment levels reduce the demand for the product while on the other hand labour can easily be hired at cheap rates in case of economic downturn and this situation can affect the business’ profitability. Inflation: High inflation rate can also be one of the economic factors that can affect the launch of humidifiers by the Kenwood Group in UK. This is because of the fact that when company buys raw material by incurring high cost then in that case it charges high price for the product which eventually affects the business profitability in the long run. Interest rates and exchange rates: As the parent company operates globally so the exchange rate is one of the most important economic factors to be considered. Increase or decrease in exchange rate can make products either more or less expensive to the prospective customers. However, increase in interest rates can make borrowings from the financial institutions more expensive and hence, affects the profitability of the business. Social factors According to Henry (2008), social factors refer to the cultural changes within the environment and are often referred as socio-cultural factors. Some of the social factors that can affect the launch of a product in UK market are as follows. Population and demographic shift affects the company’s demand for the product. Most of the developed economies and the western world are experiencing increase in population ages and this causes shift in their consumption patterns. However, in case of a launch of a humidifier it does not take into account the effect of social factors as it is a home appliance used for indoor and agricultural purposes and does not incorporate into it any cultural factor. Technological factors According to Raspin and Smith (2011), technological factors incorporate all those factors that open new horizons for innovation and change and create a competitive environment. Some of the technological factors that can affect the launch of humidifiers in UK market are as follows: Research and competition by competitors Level of competition and research by the competing firms affect the launch of a new product. Any new technology change in production processes pursued by the competing firms will make it compulsory for the Kenwood group to update their manufacturing processes as it is what is desirable for achieving competitive advantage. Pace of adoption of new technology Frequent adoption of new technology changes by the competing firms that create a thirst in other companies competing in a same market place. This is done to adopt the technological aspects that have enabled their competitors to achieve competitive advantage. Therefore, launch of humidifiers require Kenwood group to keep themselves updated to the modern and advance technology so that they can produce humidifiers with latest components and latest machinery. SWOT Analysis In order to assess the current and past performance of the company, SWOT analysis was carried out for the purpose of analyzing strengths, weaknesses, opportunities and threats. Strength Following are the factors that made Kenwood a successful company in home appliances industry (Henry, 2008). Global manufacturer of food appliances and manufacturing of humidifiers with latest technology will give competitive edge Operating under the name of Kenwood Regarded as the prime manufacturer of humidifiers with updated technology Employment of good marketing activities as compared to those conducted by small brands. Weaknesses Following are the weaknesses of Kenwood. Most of the people do not prefer using humidifiers and rely on heating systems so this can result in reduction in sales volume. As the name of the company is famous for kitchen appliances so launching a different product can result in changing the perception of people regarding company’s operations. Opportunities In today’s era of technological advancements providing agricultural sector with humidifiers will be a lucrative opportunity for the company. Can extend their launch of product outside the borders of London. Launching a new line of products can increase sales volume in near future. Threats As China has now control over world’s markets so Midea group in China can pose strong competition to Kenwood. Any fault in the working of the product as it is electronic and technology based can result in spoiling the image of the company. Changing environment i.e. decrease in frost and snow period or development of advanced methods in agricultural sector can lead to decline in the sales volume. Competitors’ analysis With increase in technological advancements and updated methods, China has taken control of the world’s market by introducing affordable and varied quality products. Kenwood can face severe competition from Midea Group as it has a global presence and is enjoying a huge market share in different parts of the world in home appliances industry. Target Market Appraisal Kenwood group is one of the largest groups operating in different types of home appliances, compressors, air conditioners and many other products of this type and is enjoying high market share as it has a lot of subsidiaries that is manufacturing different types of products. Kenwood group is currently distributing its products in almost 21 overseas countries and to name some of them are United States, Russia, Malaysia and many more. However, for the launch of humidifiers Kenwood has selected UK as their target market. Having stood on a strong financial base and enjoying huge market share Kenwood group is now thinking to expand its operations in UK to capture more market share as they see a potential and growth in UK market for this very product. According to the Kenwood Group financial statement (2010) the sales revenue for the year increased by almost 40% and hit a record of 90 billion pounds. According to the national bureau of Statistics Kenwood Group ranked as 52 among 500 large enterprises (Kenwood, 2012). However, seeing this tremendous success and growth of their product the objectives that were set by the marketing managers for their new product launch in UK market is as follows: Marketing Objectives To achieve high market share up to 5% in first two years. To stimulate the market growth of humidifiers by 3% in next two years. To open a new subsidiary solely for the manufacturing of humidifiers in first three years. To earn huge profits up to 10 billion pounds in first three years. To become a market leader in the manufacturing of humidifiers in first two years. Market Segmentation Kenwood group has segmented the market into two i.e. home and agricultural segment. Region: Europe Country: London Rural and urban area: North-west of England, South west of England, south-east of England and east of England. Agricultural sector: According to Barrow (2011), UK economy is earning huge revenues from its agricultural sector. Different agricultural products include wheat, barley, oats, potatoes, sugar beet, vegetables, oil seed rape, fruits. UK is ranked as the fifth largest producer of sugar beet. However, keeping in view this the Kenwood group has decided to launch humidifiers specifically for agricultural sector. \ Retrieved from DEFRA (2008). Indoor units Kenwood group while making plan for the launch of humidifiers consider its domestic usage inside the homes during winters as one of their potential target market. As mentioned already that UK’S climate is experiencing climatic change accompanied by prolonged snow cover and winters duration. Thus, to keep their homes moist and humid in cold weather and to keep oneself protective from flu and other sort of health problems, humidifiers have been considered as a best possible solution and that is why the managers have selected UK as their target market. Market Entry According to Baumal and Blinder (2011),industrial and business markets’ structures can be analyzed using directories, press release, company’s financial data, financial reports, trade association output and government statistics. However, while examining the type of market to enter, the marketing managers have asserted that Kenwood group will enter into electronics and home appliances industry under perfect competition where they will accept the price that prevails into the market. However, with the passage of time, with the introduction of technological advancements and innovation in their product they aspire to become a market leader and then they will set the price that will prevail in their industry. Marketing Mix Strategy Product The product selected by Kenwood group for the launch in UK market is humidifier. There are several types of humidifiers and their selection depends upon the purpose for which is being purchased. Key features 2 heater settings with humidity output adjustable with power indicator and safe waterless thermal protection. Product specifications 1. Capacity of water tank: 3.2L 2. Humidity created by the humidifier: 370ml/h 3. Electric power required: 320w 4. Humidifier size(mm):215x190x235 5. Packaging(mm):245x220x265 6. N/W:1.9kg 7. G/W:2.35k Types of humidifiers Following are the types of humidifiers that will be launched by Kenwood ultrasonic cool mist humidifier evaporative cool mist warm mist ultrasonic warm mist Product diagram Warm Mist Humidifier Retrieved from http://www.Midea.com.cn/Midea /productDetail.do?action=%20&id=239 Price The price charged for this product will be 93.5?. The price range will vary according to the order. As for agricultural use, the humidifiers will be required in bulk and in that lower prices will be charged. The consumer price for this product is mentioned as above however if the order will be in bulk the price for the product charged will be 90?. Place Kenwood group’s major target market is agricultural sector. Major distribution channel will be developed in North West of England i.e. Scotland and Wales and comparatively small distribution channels will be developed in South West of England and East of England. Promotional activities Following promotional activities will be carried out by the Kenwood group for creating awareness among prospective customers. Advertisement on electronic media Advertisement on print media According to Wells (2007), print media is one of the most effective communication tools, even more than broad cast or electronic media because people can stop and re-read the publication. Social media marketing According to Evans (2008), social media marketing is a way ahead from traditional means of marketing i.e. electronic and print media. It is not that it has replaced any of these means but it is just that it has added a lot for the organizations to market their products on social and public forums. Time Period Activity Budget allocated 1 year Facebook, twitter and MySpace 5000? Sales promotion Schultz, Robinson and Petrison (1998), are of the view that one of the most powerful tools of marketing campaigns is sales promotion because it really attracts customers and produce results. Time Period Activity Budget Allocated 2 months Coupons for free shopping 5000? 3 months POP display in all renowned and famous shopping malls 4000? Financial analysis Financial forecasting that includes information on budget and cost issues are important and should not overlooked while going for a product launch. Following are the costs and profit estimates that are expected to be incurred during the launch of humidifiers. For the preparation of income statement following assumptions has been made: Income Statement Description Amount in ? Sales Revenue 20760 Interest revenue 890 Total revenue 21650 Cost of goods sold 12780 Selling expenses 850 General and administrative expenses 1710 Interest expense 440 15780 Income from continuing operations before income taxes 5870 Income taxes (flat rate 20%) -1434 Income from continuing operations 4436 Income from discontinued operations Income from operations of discontinued operations (net of taxes) 9900 Extraordinary items Gain on early extinguishment of debt (net of taxes) 9000 Total income 18900 Net income 23336 Calculation of Profit Profit= Sales- Cost of goods sold Profit= 20760- 12780= 7980? Controlling and Measuring Controlling the actual performance with desired performance is important for businesses to critically evaluate their performance in terms of achieving their intended goals. Controlling the actual performance in a way that it matches the desired standard is what that is required. Following are the aspects that need monitoring and were evaluated critically to see if they fulfil the desired standard. Quality control is one the aspects that need to be specifically looked into by organizations. Controlling quality at its maximum will enable company to earn good repute and high profits. Though, it is famous for home appliances, a proper quality control department need to be developed that will take care of quality related matters. Talking about marketing campaign budget, the allocated budget was 65000? but the entire promotional activities were planned in less amount than was allocated. This shows that the actual performance was better because the rest of the amount will be used time to time if need arises according to the circumstances. Proper system for customer feedback needs to be developed. Any company cannot just earn revenues from its promotional campaign, but other factors like satisfied customers are also critical to the success of organization. In view of this, customer relationship management process needs to be focused on. Development of special information systems that can track customer complaints and maintain complete record needs to be employed which in this company is not given any attention. Extending operations outside the border of London will also be an attractive opportunity for Kenwood Group. Enthusiastic farmers living in other parts of the world should also be targeted as a new market. Sales volume can increase to a large extent if company starts offering several gifts like a beautiful card, a beautiful decoration piece showing the significance of using humidifier for agricultural and domestic purpose can prove beneficial. References Barrow, M. (2011). British Life and Culture. [Internet] available at http://www.woodlands-junior.kent.sch.uk/customs/questions/farming.html [assessed at 23rd December, 2011] Baumol, J.B and Blinder, S.B. (2011). Economics: Principles and Policy. 12th ed., UK: Cengage Learning Evans. D. (2008).Social media marketing: an hour a day, John Wiley and Sons.UK Henry, A. (2008). Understanding Strategic Management., USA: Oxford University Press. Johnsen, A and Applegate, E. (2007).Cases in Advertising and Marketing Management: Real Situations for Tomorrow's Managers. Rowman & Littlefield Publications. Schultz, D. Robinson, W. Petrison, L (1998). Sales Promotion Essentials: The 10 Basic Sales Promotion Techniques-- And How To Use Them. New York: McGraw-Hill Professional. Smith, B and Raspin, P. (2011). Creating Market Insight: How Firms Create Value from Market Understanding., USA: John Wiley and Sons UK Stationery Office. (2010). Adapting Institutions to Climate Change- Twenty Eighth Report., UK: The Stationery Office. Waters, D. (2006). Operations Strategy., UK: Cengage Learning EMEA. Kenwood (2012). Humidifier [internet]. Available from: http://www.Kenwood.com.cn/Kenwood/productDetail.do?action=%20&id=239., [Assessed 2nd March, 2012]. Wells, W., Burnet, J, and Moriarty, S. (2007). Advertising principles and practice, 7th ed., Pearson Education., India. Read More