Graves Enterprises is doing well in its business activities in the market while it has been focusing attention on business expansion and develop a new customer base for their for their consumer products. However its business operations in particular require the company to adopt far reaching changes to the existing communication strategy and its orientation.
Any communication strategy must have a customer retention focus that will ultimately produce the desired results. While this would effectively address the concerns raised by the consumer marketing director, there would be a greater degree of structural changes in communication within and without the organization (Zambardino, 2003). 47% of customers being retained would have a positive impact on revenue and profit related outcomes of the company. However $ 2 per unit in gross profit means nothing in the absence of the breakeven figures. The company may have lot of financial commitments by way of sales cost and therefore the net profit margin can be considerably reduce if the 47% customer retention plan fails. Thus the advertising campaign must be not only focused on the core customer base but also be extended to include the peripheral customer whose retention matters in the long term.
As the Marketing Director commercial products suggests the current cash cows of the company would be compelled a carry a greater burden if the slow growth market tend to cash unexpectedly. The company might have a lot of problem children and dogs and as a result there might be a few cash cows and stars. Assuming the communication strategy as based on advertising works out successfully, the net return on the investment must be proportionately higher (Percy, 2008). In other words per unit advertising cost must be much less to support cash cows to move in to sustainable long term profitable stars. Thus the marketing communication plan of the company must be based on a proper alignment of the Boston Matrix with the