Friday, December 6, 2019
Question: Discuss About the Established In 1904 as a Tobacco Company? Answer: Introduction Coca-Cola Amatil (CCA) was initially started as a local manufacturer for beverages and foods and then expanded their business around six countries and is also creating possibilities for more than 100 years. Initially, they started their business as British Tobacco Company Limited during 1904 and soon started diversifying their business through purchase of printing company and moved to Australian beverages and food industry during 1963. Moreover, to focus on the snack foods and beverages, they set aside their interests for tobacco. Finally, Coca-Cola became the major stakeholders for the company and they named as Coca-Cola Amatil. Their mission is to delight their customers with exceptional brands portfolio and are always try to generate value for their partners through driving the productivity with minimization if cost. Further, they make a positive and distinctive contribution to the area in which they operate. Their well-known values are that they are open and straight forward, focus on tomorrow and today and take initiatives for the innovations. As per the company, their vision is the main factor that unites them and increases their energy level to do the best of what they perform. Their vision reflects their business scale and the people with whom they are connected create an emotional attachment with the company (Coca-Cola Amatil | Home, 2017). Product Mix CCA distributes and manufactures various alcoholic and non-alcoholic beverages and various food products all around Australia. Various products they are dealing with are as follows: Non-alcoholic beverages Energy and sports: Powerade Isotonic and Mother Juices: Crusta fruit juices and Goulburn Valley fruit juices Still drinks: Nestea, Pumped, Mount Franklin, Peats Ridge Water, Pump, flavoured milk from Goulburn Valley, vitamin water and Glaceau Carbonated soft drinks: Coke Zero, Coca-Cola, Diet coke with Vanila Flavour, Fanta, Appletiser, Kirks, Bisleri Chinotto, Sprite Zero, Lift and Sprite. Alcoholic beverages Scotch: Highland park, The famous Grouse, Tamdhu, The Machine and Laphroaig Bourbon: Old Crew, Bakers, Bookers, Jim Beam, Basil Haydens, Makers Mark Liqueurs: Harveys, Galliano, Cockburn, Bols, Courvoisier, Cognac and Sherry and Port Tequila: Sauza Food services Grinders coffee, Quirks Australia, packaged vegetable and food products from Goulburn valley and SPC Ardmona (Coca-Cola Amatil | Home, 2017). Production process The eastern creek distribution centre of Coca-Cola Amatil, which is situated at Sydney, employs 250 employees for their distribution centre. The facility has the capacity of producing 210 pallets out and 140 pallets in per hour. Pacific brewery has an annual capacity of 150 million litres that produces the premium beers. On the other hand, the bluetongue Brewery has the capacity of 50 million litres per year and can produce 1 million bottles per day for the beverages. Using these above facilities, CCA produces various products that are mentioned above under the product mix (Coca-Cola Amatil | Home, 2017). There production process involves the following activities: Product and package changeovers Cleaning procedures of the equipments Preventive activities for maintenance (Kaplan Anderson, 2013). Ingredient batch making and processing Using the systems to report and record the production data accurately Monitoring the activity process, troubleshooting and follow-up the proper escalations (Kaplan Atkinson, 2015). Activity based costing in manufacturing firms Activity based costing (ABC) is one of the most widely used method of costing and it allocates the overhead cost for the indirect costs through using the activities. ABC is a crucial aspect for reliable and accurate cost information for producing the true cost and presenting the financial data (Frazier, 2014). Implementation process, changes and applications under the ABC system are represented as a guide for better understanding of the ABC in the manufacturing firms. In most of the cases, the organization is unaware about the creation and origin of the costs that are involved in the manufacturing processes of the company. Further, they are not even concerned regarding the formation of the costing strategies. If the employees are aware about the benefits of proper costing that can save lot of money and contribute to the sustainability of the company, they will for sure try out for the better costing system (Balakrishnan, Labro Soderstrom, 2014). With the growth of business, the business executives become more concerned regarding the operational costs and are pressurised for increasing the strategies and profits. ABC system is there for so many years. It is identified that the ABC system improves the consistency for the information related to costs, better representation for the organizational cost and assists in producing true cost. Various manufacturing organizations use the activity based costing for the costing of the product, analysis of customers profitability, profitability analysis of product line and pricing of the products and services. The ABC system is the leading method for costing for producing the most accurate and reliable costing information for the manufacturing organizations (Simons, 2013). Knowing the strategy for the ABC is the crucial factors for getting better understanding of the costing system. The company can create better corporate focus and better strategy if the costs can be understood in better way. ABC refines the system of costing through focussing on the fundamental objects of cost and individual activities. The term activity is described as the unit, task or event with a particular purpose, for instance, distribution of products, operation of machines, setting-up of machines and designing the products (Saunders Cornett, 2014). To be stated in more simple way, ABS system is systematic use the effect and cost methods for for allocating the activity costs to the products, customers, services or any other objects of cost. Further, the ABC system is regarded as a tool for accounting that established the breakthrough role in the wide segment of cost and it can be applied in manufacturing or retail sector from the large corporations to sole proprietorship. Many managers and the accountants thinks that the inventory cost methods give accurate figures for cost, however, in practice this is not the case. The actual cost for any particular product is management better through calculation of the other associated costs (Mitra, 2016). Most of the companies are required to have better idea regarding the general costing for assuring the unified approach to the operations. Some benefits of ABC systems are Improve the business procedures: under the ABC systems, the procedures of the business assigns the overheads of the manufacturing processes on the basis of the cost driver of the products or the factors that are used for the generation of cost. Cost are assigned per product and the outcome clearly shows that which business are performing well and which are not and which one need to be improved. ABC system can be used to recognize the activities that are non-value added and assists in better allocation of overheads. It also contributes to regular improvement of the business procedures (Govindan, K., Khodaverdi, R., Jafarian, A. (2013). Recognize the wastes: ABC system takes into account the costs in the same way in which the production is performed and allows the business to understand better that where the overhead costs are going. Further, the overall services and products quality can be improved as the data from the ABC give the details regarding the cost and production issues that are required to be solved (Estampe et al., 2013). Data accuracy: reports shown as per the ABC systems are more accurate as compared to the traditional method. Further, the data obtained from the ABC system can be used for minimization of cost as the management are in better position to identify the products where most overheads are associated (DRURY, 2013). An organization can target the efforts into the methodology of ABC that will recognize the categories of costing in better way. Further the non-value added services are recognized in better way. However, there are some complex procedures involved in the manufacturing process where the application of ABC systems required in-depth knowledge. It is expected that the system will become simpler with the implementation and will become easier to execute. Irrespective of the benefits, the software and the systems shall be proved as user-friendly before implementation of the ABC systems. The ABC and the other improvements considerably enhance the ability of an organization to set its focus and respond to the requirements. It further reduces the complexities and minimizes the money and time in association with other benefits from the ABC systems. Activity-based costing for Coca-Cola Amatil Various costs are involved in the implementation of ABC system in CCA. These are: Direct cost It includes the labour cost and material cost as shown below Hypothetical direct cost for Coca-Cola Amatil Particulars Product A Product B Product C Total Produced and sold units 5,00,000 3,50,000 6,50,000 15,00,000 Selling price per unit $ 12 $ 8 $ 15 Direct material cost per unit $ 4 $ 3 $ 6 Direct labour cost per unit $ 3 $ 2 $ 4 Revenue from sales $ 60,00,000 $ 28,00,000 $ 97,50,000 $ 185,50,000 Direct costs Direct material cost $ 20,00,000 $ 10,50,000 $ 39,00,000 $ 69,50,000 Direct labour cost per unit $ 15,00,000 $ 7,00,000 $ 26,00,000 $ 48,00,000 Total direct costs $ 35,00,000 $ 17,50,000 $ 65,00,000 $ 117,50,000 Manufacturing overhead cost Manufacturing overhead costs are as follows: Purchase orders on the basis of number of purchase orders: $ 1200 per unit of cost drivers Product packaging on the basis of number of packages packed: $ 0.50 per unit of cost drivers Machine set up based on number of set-ups: $1000 per unit of cost drivers Machine calibration and testing based on number of tests: $ 200 per unit of cost drivers Cleaning and maintenance based on number of batch runs: $ 800 per unit of cost drivers Manufacturing overhead activities It includes the machine set-up costs, packaging of products cost, machine calibration and testing costs, machine cleaning and maintenance cost and order costs for material purchase Finanacial. Estimation of costs for the manufacturing overhead activities Cost drivers Activities Activity pool Activity units Unit cost Product A Product B Product C Total Cost Purchase orders No. of Purchase order $ 1,200.00 50 35 65 $ 1,80,000 Product packaging No. of packages packed $ 0.50 500000 350000 650000 $ 7,50,000 Machine set-up No. of set-ups $ 1,000.00 100 70 130 $ 3,00,000 Machine calibration testing No. of tests $ 200.00 750 500 1000 $ 4,50,000 Cleaning and maintenance No. of batch runs $ 800.00 150 100 175 $ 3,40,000 Total cost $ 20,20,000 Assigning the cost of the manufacturing overheads Allocation under ABC Activity pool Product A Cost per unit Product B Cost per unit Product C Cost per unit Purchase orders $ 60,000 0.12 $ 42,000 0.12 $ 78,000 0.12 Product packaging $ 2,50,000 0.5 $ 1,75,000 0.5 $ 3,25,000 0.5 Machine set-up $ 1,00,000 0.2 $ 70,000 0.2 $ 1,30,000 0.2 Machine calibration testing $ 1,50,000 0.3 $ 1,00,000 0.29 $ 2,00,000 0.31 Cleaning and maintenance $ 1,20,000 0.24 $ 80,000 0.23 $ 1,40,000 0.22 Total $ 6,80,000 $ 1.36 $ 4,67,000 $ 1.33 $ 8,73,000 $ 1.34 Bill of activities for each product Particulars Product A Product B Product C Produced and sold units 5,00,000 3,50,000 6,50,000 Selling price per unit $ 12 $ 8 $ 15 Direct cost per unit $ 7 $ 5 $ 10 Indirect cost per unit $ 1.36 $ 1.33 $ 1.34 Total Cost per unit $ 8.36 $ 6.33 $ 11.34 Gross profit per unit $ 3.64 $ 1.67 $ 3.66 Gross profit margin 30% 21% 24% It can be seen from the above table that the gross profit margin for product A, Product B and Product C is 30%, 21% and 24% respectively. It is identified that product A is more profitable as compared to the other two products and product B is the least profitable as the selling price for product B is the least and the direct cost and indirect cost are also high and that led to gross profit of only $ 1.67 per unit, which is least among the three products. Recommendation and conclusion It has been included from the above discussion that the ABC system contrasts with the traditional methods of allocation of overheads that assign the overheads using the arbitrary percentage of allocation whereas, the ABC system allocates the overheads based on the cost driver of each product. The ABC system can be used to recognize the individual profitable and unprofitable products, to recognize the actual cost of the product, so that the pricing strategy can be established and to reveal the unnecessary costs that can be eliminated. However, the ABC system requires the in-depth knowledge regarding the resources and activities that are allocated to overheads. Therefore, the experts shall be well versed with the ABC system. Further, cost drivers and the activities must be recognized properly to allocate the overheads in appropriate manner. Moreover, if the overhead cost is less for the company them implementation of ABC will not be fruitful as the implementation of ABC requires huge c ost. Although the implementation of ABC is not easy and simple, using ABC to trace the activity costs assist in development of better forecasting, better planning and better strategies. However, the most significant part of ABC is that it enables to save lots of money. For any business, the bottom line is to maximize the wealth of the shareholders. Therefore, if an organization has clearer picture for the costs of each activity, it will be in a better position to earn higher profits References Balakrishnan, R., Labro, E., Soderstrom, N. S. (2014). Cost structure and sticky costs.Journal of management accounting research,26(2), 91-116. Coca-Cola Amatil | Home. (2017). Ccamatil.com. Retrieved 13 May 2017, from https://www.ccamatil.com/ DRURY, C. M. (2013).Management and cost accounting. Springer. Estampe, D., Lamouri, S., Paris, J. L., Brahim-Djelloul, S. (2013). A framework for analysing supply chain performance evaluation models.International Journal of Production Economics,142(2), 247-258. Frazier, W. E. (2014). Metal additive manufacturing: a review.Journal of Materials Engineering and Performance,23(6), 1917-1928. Govindan, K., Khodaverdi, R., Jafarian, A. (2013). A fuzzy multi criteria approach for measuring sustainability performance of a supplier based on triple bottom line approach.Journal of Cleaner Production,47, 345-354. Hunger, J. D., Wheelen, T. L. (2014).Essentials of strategic management. Pearson. Kaplan, R. S., Atkinson, A. A. (2015).Advanced management accounting. PHI Learning. Kaplan, R., Anderson, S. R. (2013).Time-driven activity-based costing: a simpler and more powerful path to higher profits. Harvard business press. Mitra, A. (2016).Fundamentals of quality control and improvement. John Wiley Sons. Saunders, A., Cornett, M. M. (2014).Financial institutions management. McGraw-Hill Education,. Simons, R. (2013).Performance Measurement and Control Systems for Implementing Strategy Text and Cases: Pearson New International Edition. Pearson Higher Ed.
Friday, November 29, 2019
Poor brand image LÃ¢â¬â¢ Oreal Group is faced with a challenge in the introduction of two products in Netherlands. The two products include Belle Couleur and Synergie. LÃ¢â¬â¢Oreal Group sales have been on an upward trend as a result of the large size of market for cosmetic products. In France, its domestic market, the firm has witnessed a 10.2% growth in sales which is equivalent to 9.67 billion Euros (Mann 2010, 6).Advertising We will write a custom essay sample on LÃ¢â¬â¢Oreal Nederland B.V specifically for you for only $16.05 $11/page Learn More In its quest to attain its profit maximization objective, the firmÃ¢â¬â¢s management team has made a decision to venture the Dutch market. Introduction of the new product was to be undertaken by Laboratories Garnier which was its major competitor. Despite Laboratories Garnier being recognized in France prior to its acquisition, very few Dutch customers knew of the firmÃ¢â¬â¢s products. This arises f rom the fact that Laboratories Garnier had not established a strong brand image in Netherlands. The low brand image in the market limits the probability of the two products succeeding. In its decision to expand its operations within Netherlands, LÃ¢â¬â¢Oreal Group management team should conduct a comprehensive evaluation of the two products in order to determine the probability of success. The management team should undertake this by only introducing products with identifiable differential advantage in the market. LÃ¢â¬â¢Oreal Group management team is faced with a challenge on how to ensure that the product penetrate the market. Key issue The key issue facing the firm is lack of awareness of GarnierÃ¢â¬â¢s products through which the firm intends to introduce its products. In addition, the two products are facing stiff competition from other established competitors. The firm is faced with a challenge of attracting customers to purchase the new product. This arises from the fact that customers in the Dutch market feel attached to their traditional brands which makes them reluctant to try new beauty products. Competitors in the Dutch skin care market have a well established customer loyalty. The loyalty resulted from the effective distribution strategy adopted.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Personalized service is one of the ways through which firms in the beauty industry can create customer loyalty. In addition, some of the players in the industry are multinational and regional companies which are widely recognized in the market. In comparison to these firms, LÃ¢â¬â¢Oreal Group has a relatively low competitive advantage. According to Jones (2010, 359), the beauty industry is very competitive as a result of the high rate of innovation resulting from increased research and development. Lack of an effective market penetration and promotion strateg y poses a threat in the introduction of the two products. Evaluation If the firm does not formulate an effective market penetration strategy for its products, there is a high probability that the firm will perform poorly in terms of sales. The resultant effect is that its long term survival will be threatened. The Dutch market is feasible for the firm to introduce its products. One of the key factors which are enhancing the market feasibility is the demographic characteristics of the population. Aging is one of the factors which have contributed to an increment in the rate of consumption for anti-aging products (Patzer 2006, 47). A significant proportion of Dutch women are aging. There are projections that this trend will continue into the future. By 2020, it is estimated that the number of individuals aged 65 years and above of the total population will increase to 18% from its 2010 projection level of 14.9% (Schroots, Ballesteros and Rudinger1999, 83). Introduction of Synergie and Belle Couleur beauty products stands a high probability of success considering that they are anti-aging skin and hair products. This means that the two products are in line with the customer requirement. In addition, successful introduction of the two products in the Dutch market is paramount considering the shift in role amongst the female gender. Females are venturing in various careers leading into an increment in their disposable income. Increase in consumersÃ¢â¬â¢ disposable income results into an increment in consumer purchasing power (Lamb, Hair and McDaniel 2008, 365). Due to an upward shift in their disposable income, the Dutch women have increased their daily consumption for beauty products.Advertising We will write a custom essay sample on LÃ¢â¬â¢Oreal Nederland B.V specifically for you for only $16.05 $11/page Learn More This represents a significant shift in consumers purchasing behavior considering the fact that the Dutch women used t o purchase beauty products such as facial creams two times a year on average. Whilst the market feasibility for LÃ¢â¬â¢ Oreal Group in Netherlands is high, it is vital for the firmÃ¢â¬â¢s management team to consider the most effective way of introducing the two products in the market and also create market awareness effectively. Possible considerations Promotion plays an important role in the operation of a firm (Botha, Strydom and Brink 2005, 135). As a result, promotion strategy has been integrated as one of the key components of strategic marketing by firms in various economic sectors in their quest to attain their profit maximization objective. Through a well formulated promotional strategy, a firm is able to create awareness of its products and services to its prospective customers. Considering the reluctant nature of Dutch women to try new beauty products, developing an effective promotional strategy is paramount. This arises from the fact that increased awareness of the p roducts characteristics and benefits will play a significant role in creating customer confidence. There is a high probability of the products succeeding amongst the Dutch women considering the increment in demand for beauty products which have Ã¢â¬Å"naturalÃ¢â¬ characteristics. Considering the fact that Laboratories Garnier does not have a well developed brand image in Netherlands, it is vital for LÃ¢â¬â¢Oreal Group to consider developing a promotional strategy will enhance its product awareness. According to Strydom and Brink (2005, 135), product awareness is very important in the customersÃ¢â¬â¢ decision making process (Mills and Law 2005, 29). Product and service awareness plays a significant role in the consumers purchasing pattern. The more the consumers are aware of a product, the high the probability of them making a purchase. With regard to beauty products in Netherlands, their success in the market is directly related to their brand image. Therefore, if the brand i mage is low, there is a high probability that the product will not succeed. The fact that most Dutch women are not conversant with the product description of French beauty products underscores the importance of creating product awareness.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Apart from development of a product awareness strategy, it is also important for the firmÃ¢â¬â¢s management team to consider improving customer product loyalty. Customer loyalty will play a significant role in ensuring repeat purchase behavior of the customers. To create customer loyalty, it is vital for the firmÃ¢â¬â¢s management team to ensure that the research and development being undertaken results into development of beauty products which meet the market demand. Increment in the intensity of competitiveness within the retail environment presents a challenge to firms (Ranchhord and Maradi 2007, 77). This arises from the fact that competition leads into a reduction in customer switching cost (Egan and Thomas 1998, 68). Ranchhord and Maradi are of the opinion that customer loyalty is a fundamental issue in such a case. Considering the competitive nature of the beauty industry in Netherlands due to existence of other multinational companies such as Procter and Gamble Company, creation of customer loyalty is vital in the firmÃ¢â¬â¢s effort to position itself effectively in the market. The resultant effect is that the firm will be able to develop a high competitive advantage for it to survive in the market. Alternatives A number of alternatives could be considered to address the key issue: That LÃ¢â¬â¢Oreal Group faces a challenge in introducing its two beauty products (Synergie and Belle Colourie) as a result of poor brand image of Garnier. Considering the market feasibility in Netherlands beauty industry, LÃ¢â¬â¢Oreal Group should ensure that it capitalizes on the market opportunities presented and introduce the two products. In order to effectively penetrate the market, the firmÃ¢â¬â¢s management team should consider the following alternatives. The firm should not introduce the two products via Laboratories Garnier considering its low brand image in Netherlands. Alternatively, LÃ¢â¬â¢Oreal GroupÃ¢â¬â¢s management team should consider outsou rcing the services of well established marketing agencies in Netherlands. This will increase the probability of the customers accepting the product. Evaluation Undertaking product introduction process by itself is a wise decision for the firm to consider in is effort to penetrate the new market niche. This is due to the fact that the firm will develop an upper-edge in understanding the market dynamics. On the other hand, distributing the products via intermediaries will also be of benefit to the firm. This is due to the fact that the local agents will be conversant with the market. A comprehensive criterion should be used in selecting the intermediary to carry a firmÃ¢â¬â¢s product in the foreign market. According to Perner (2008, 3) selection of the firm to carry a firms product in its introduction phase is a key determinant in the productÃ¢â¬â¢s success or failure. Perner asserts that if the product is not amongst the firmÃ¢â¬â¢s preferred products, chances of the product s ucceeding are limited. Recommendations To ensure that introduction of the two products is successful; LÃ¢â¬â¢Oreal GroupÃ¢â¬â¢s management team should consider a number of issues. The firm should consider incorporating the concept of Integrated Marketing Communication (IMC) in an effort to create sustainable market awareness. Integrated marketing communication will ensure that there is effective and efficient creation of market awareness. This arises from the fact that both traditional and emerging market communication models are integrated (Kitchen and Pelsmacker 2004, 45). As a result, a considerable number of individual customers will be aware of the productÃ¢â¬â¢s market existence. Incorporation of IMC will ensure the customers access sufficient product information. Considering the fact that the product can be consumed by both the young and elderly consumers, integration of IMC will be effective in ensuring that the customers access the product information. Sufficient prod uct information will enable the firm to dispel any fears which the customers may have regarding its products. The resultant effect is that there will be increment in the customersÃ¢â¬â¢ level of confidence to enable them incorporate the new product in the process of making decisions regarding consumption of beauty products. In order to develop a repeat purchase behavior amongst the customers, LÃ¢â¬â¢Oreal Group management team should consider implementing Customer Relationship Management (CRM) in its operation. This will ensure that that all its operations are focused at ensuring that the customers attain a high level of satisfaction. The effect is that the firm will be able to attain customer inertia. This means that the probability of customers switching to other products will be minimized. To ensure maximization of the benefits associated with the CRM strategy, LÃ¢â¬â¢Oreal Group management team should consider implementing the CRM software. The software should be linked to the internet so as to enable it access customersÃ¢â¬â¢ feedback efficiently. CRM software will act as a link between the customers and the firmÃ¢â¬â¢s marketing team. This means that there is a high probability of marketing team understanding changes in customer product requirement. Depending on market feedback, it will be possible for the firm to conduct product innovations effectively to suite the customerÃ¢â¬â¢s requirements. Reference List Botha, Johan, Strydom, Johan and Brink, Annekie. 2005. Introduction to marketing. Chicago: Juta and Company Limited. Egan, Colin and Thomas, Michael. 1998. The CIM handbook of strategic marketing. New Jersey: Butterworth Heinemann. Jones, Geoffrey. 2010. Beauty imagined: A history of the global beauty industry. Oxford: Oxford University Press. Kitchen, Paul. and Pelsmacker, Peter. 2004. Integrated marketing communication: aÃ primer. London: Routledge. Lamb, Charles, Hair, Jones. and McDaniel, Collins. 2008. Essentials of marketing. Ne w York: Cengage Learning. Mann, Rebecca. 2010. The LÃ¢â¬â¢Oreal Group reports solid first-half sales.Ã https://www.moodiedavittreport.com/the-loreal-group-reports-solid-first-half-sales/ . Mills, Juline and Law, Rob. 2005. Handbook of consumer behavior: tourism and theÃ internet. London: Routledge. Patzer, Gordon. 2006. The power and paradox of physical attractiveness. London: Universal-Publishers. Perners, Lars. 2010. Introduction to marketing. Los Angeles: University of South California. Ranchod, Ashk and Marandi, Ebi. 2007. CIM coursebook 07/08 strategic marketing inÃ practice. New Jersey: Butterworth-Heinemann. Schroots, James, Ballesteros, Francis and Rudinger, Gerrad. 1999. Aging in Europe. Oxford: IOS Press. This essay on LÃ¢â¬â¢Oreal Nederland B.V was written and submitted by user Edward Sullivan to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.
Monday, November 25, 2019
Microsoft strategic alliance with Nokia Abstract Microsoft strategic alliance with Nokia , p39). This was the first major step that the new CEO took. The unexpected cooperation with the Microsoft Corporation elicited several debates regarding Nokia as well as about the general smartphones market (Schwarzinger, 2012, p.53). The IDC (International Data Corporation), which is a company for market analysis, and monitors the smartphones market, predicted that the Windows Phones would become the second largest provider of software for smartphones globally (Grant, R 2010, p. 31). The analysis and prediction is based on the strategic alliance between Nokia and Microsoft Corporation. Combined with the projected growth in the sales of smartphones and the predictions given by the ICD, then why is it that there was negative action by the financial market when he news of the two giant companies collaborating came out? This is one of the questions that many financial analysts have been asking themselves. This paper examines the strategic alliance between the two giant companies by eva luating their external and internal environments. It will also examine three different growth strategies and then select the most appropriate one. External Analysis The Five Forces Framework of Nokia The present competition that Nokia is facing in the phone industry has greatly affected its market share. However, it still holds a considerable share of the market in the industry that is ever changing. The microenvironment is the internal factors that affect the customers, staff, competitors and the shareholders (Henry, 2008, p.24). The five forces model is the most appropriate for the evaluation of the microenvironment of Nokia as it takes into consideration the clients, suppliers, competitors as well as the new entrants. The power of suppliers: moderate Although the company relies on its suppliers to provide equipment, there are numerous large manufacturers of equipment that they can turn to (Baron, 2008, p53). Currently, Microsoft is the supplier of software for the company and they have a high bargaining power together. In addition, the company is in a good position to bargain as well as negotiate with any mobile phone hardware producer because there are a large number of the suppliers of equipment, which are readily and easily accessible should their current suppliers attempt to ask for more money with them. Moreover, the alliance with the Microsoft Corporation is regarded as a coup for Nokia and not Microsoft. The Microsoft Corporation may have more power in the negotiation of price along with the share as the pact is of more significance to Nokia that the Microsoft Corporation. The power of buyers: high The customers have an increasing power because of increasing variety of alternatives available in the sector of mobile telecommunication. Majority of NokiaÃ¢â¬â¢s competitors also offer the same packages and the sector is very sensitive to matters like the prices with clients seeking the best value for their money. Majority of the customers are also tied into the long-lasting contracts and thus having to change from one mobile phone to another is hard and costly for consumers. The sector has a very competitive market that has a variety of choices, which makes the customers to have much power as they can choose to go to the various competitors of Nokia if they are not contented with what the company is providing. The threat of new entrants: low The market of mobile phone is well-established and a lucrative one, and there is a relatively low threat of new entrants, as the technology that is needed to rival the devices that are already existing is very advanced. This is something that cannot be achieved easily by any company. The barriers to entry into the market are very high, as any potential new entrants need a lot of investment in marketing and technology so that they can be in a position of challenging the companied that are already established (Hill, et al, 2009, p.53). The threat of any potential new entrants is not probable as the initial cost that is required to enter the industry is very high and requires a lot of investment in time to be in a position of competing against the organizations that are already established. Currently, Nokia has a 29 percent of the entire global mobile telecommunications market and for any new entrant to get a little bit of their market needs a long-term scheming or even products that are highly innovative as compared to any other seen in the market (McGuigan, et al 2010, p. 41). For this to be possible, the new competitor needs very high investment for marketing and RD, in order to get positive result. The threat of substitutes: Very low It is beyond reasonable doubt that mobile phones are an everyday essential in human beingÃ¢â¬â¢s lives presently and they would not find it easy to replace, as consumers will not be in a position of having constant contact when they are not near their houses, family members or even friends (Baron, 2008, p.53). Nonetheless, the consumers may make contacts with individuals through other forms of media like email address, home telephones and social networks. However, it will not be easy for people to keep in contact in their daily lives, as the forms of communication are not convenient. Contrary, smart phones come with several functions and specifications, meaning there are many substitutes offered that focus on just a single function. Presently, mobile phones are an everyday requirement in the lives of human beings because of the fundamental functions they are capable of performing and can all be found in a single handset. Only smart phones have the ability to make phone calls, send messages, and browse the internet in a single device. Another thing that makes them an extremely critical device to human beings is the fact that it enables them to communicate constantly and at any place. Thus, the threat of alternatives is very low because a mobile phone is not only for making calls or for sending messages but many some other functions. Without the mobile phones, people will find it very difficult to have a replacement, since it can provide a lot to them all in one device. People also rely on the mobile phones greatly and might not easily find an alternative that has the whole functions of a mobile handset. Competitive rivalry: low The competitors of Nokia turned to smartphones and androids early enough while Nokia delayed in releasing their first smart phones, and hence lagging behind competitors like Apple and HTC (Hahn, and Kibora, 2008, p. 12). Their strategic alliance with Microsoft, though offers some lifeline, still needs some time before catching up with the rest. There is high competition from big corporations like Blackberry, LG and Sony Erickson. The industry of mobile phone has very high rivalry and needs huge amounts of investment in marketing and the RB to be able to compete with the established companies (Stonehouse, et al, 2007, p.43). Nokia had a slow shift into the market of smartphone, and this has left them trailing their competitors. Therefore, there is extremely high competitive rivalry and the company needs to be alert of their rivalsÃ¢â¬â¢ threat on their business especially with the Apple iPhone and RIM BlackberryÃ¢â¬â¢s rising popularity. Competitive rivalry in the industry is the principal threat to the Nokia Company because they are seriously behind in the market of Smartphone and it really needs a lot of efforts to raise their market share. Internal Analysis SWOT Analysis SWOT analysis is the most appropriate tool for the strategic planning analysis by companiesÃ¢â¬â¢ management. It is a critical tool to the improvement of business because it embraced or followed the concept that success in the digital economy is the deployment of an incorporated value chain that extends beyond and across the business Saylor (McGuigan, et al 2010, p. 17). Nokia is a leading company in the mobile phones industry and its strategic alliance with Microsoft is expected to be a game changer. It is therefore important to look at the companyÃ¢â¬â¢s internal environment. Strengths Grant (2010, p.55) says that Nokia currently enjoying more that 32 percent market share in the mobile phone industry, and this is expected to even increase following the new pact with Microsoft as they will be provided with operating system affordably and sufficiently. Both Nokia and Microsoft are well respected and trusted brands as they have been there since the start of the mobile phones and have been able to retain the trust of customers. Now in their association with Microsoft, they have regained strength in the market of smartphone, as it is a pact that has brought together two giants in their respective sectors. Having a strong brand name is an advantage since it enhances consistency; however, it is no secret that their brand name has had some wavering and now considered promotion of brand (Grant, 2010, p.43). The alliance between the two companies also means that Nokia has a secure and steady supplier market in Microsoft, where there will be enough time to concentrate on inno vation, production and marketing. The company has a strong internal R+D. Nokia became one of the first companies to the market despite not dominating the market of Smartphone, the company became one of the because of their exceptional R+D program. The new chief executive officer has brought some new ideas to the organization and influenced its entire image. Weaknesses Nokia has had its market share drop from the end of the last year in the industry of Smartphone. They have not been able to realize that Smartphones are a way of life amongst the users currently, with support software for the mobile phones that are very low. These are in the forms of applications, contrary to Blackberry and Apple that both have their individual App World. Nokia has an insight of only building phones that are brick shaped, which gives them lack of prestige in the present market of (Smartphonen, 2011, p.35). There are weak subdivisions in the company; they own as well as manage the Symbian but have abandoned it and instead gone for the windows 7, meaning than Symbian is now making losses (Saylor, 2012, p.54). Opportunities The corporation has the chance of developing their own version of the App store OVI, since their new mobile phones are being launched and hopefully accepted in the market. The company also has an opportunity of developing more products with the Microsoft Corporation and explores more opportunities that might come up from the deal. Diverse self-sufficient and valuable portfolio; Microsoft could also do diversification of their immense portfolio and dispose parts of it that is not profitable in the probable future. Threats If further loss of the share of market for Nokia continues being lost to the other big producers of Smartphones, they would actually consider withdrawal from the industry of Smartphones. The industry of mobile phones is not different from that of fashion with a quite quick turnaround. Nokia are investing lots of funds in trying to have a successful penetration into the market. By the time they succeed in doing so, the market could possibly have again shifted and had another serious breakthrough into another kind of mobile phone (Saylor, 2012, p.57). With the mobile phones software in the present day industry being as critical as the hardware, it is important that the Microsoft Corporation do not have excessive power as if the novel devices are a great success. It would not be good for the Nokia Company if Microsoft chose to raise their price on the pact or even walk out of it all together. Issues and challenges facing the company The challenges for Microsoft and Nokia alliance are overwhelming. Microsoft has still not been able to rise above the minuscule share of the market in the United States or even globally, even despite joining forces with Nokia. The BlackberryÃ¢â¬â¢s implosion was actually the best chance for Microsoft to get hold of its market share, but that did not happen. The company has to put in a lot of effort to carve out its niche in a world that has been dominated by the Android and iOS (Saylor, 2012, p.59). Missing apps The Windows Phone still has the same old problem despite now being with more Nokia; that is the lack of a sufficient app ecosystem (Donner, and Steenson, 2008, p.35). Microsoft is not getting anything from Nokia in terms of software that was not already in the Windows Phone. This is because the strongest mobile software asset of Nokia, which is its maps business, was not part of the agreement. After more than three years into the deal, Windows Phone still does not have table stakes apps as such like the native customers of Instgram and YouTube. The stance in the tablets is excessively bleaker. The Windows RT, which is the version designed for tablets specifically, is a very big flop and the Window 8 applied on tablets has not done any better in the market. The iPhone has successfully turned mobile phones, together with business mobile phones into a wholly consumer business (Saylor, 2012, p.70). This has an implication that the acquisition of Nokia has dragged the Microsoft Corporatio n into a sector that it should have avoided as much as possible. In other words, Microsoft is not a good consumer organization. Still it is not easy to see what the new CEO who has a good record of accomplishment in the companies he worked before has brought into the Nokia Company. The Xbox Problem The Xbox is a one consumer bright spot of Microsoft. Even without taking into account, the XboxÃ¢â¬â¢s sunk cost and the fumbled Xbox OneÃ¢â¬â¢s release, the segment of Devices and Entertainment is too small, particularly in the profit share that cannot make any significant difference (Goggin, 2011, p.23). With very little expectation for immense growth in the game console and set top box industry, the Xbox is going to make no difference for the company. Reinforce success Every business requires reinforcement and mobile phone industry is no exception. Another area of power or strength is the web services, especially those serving business and not the ones that are consumer-facing. Although Microsoft is behind Google in several aspects, it is much ahead of Apple, which usually appears as having very little idea about the web services as it is much into the devices (Saylor, 2012, p.73). This is something the two companies have not taken advantage of, and they might realize it a little bit late if the other companies have realized their shortcomings and countered them accordingly. Brand image For any business to be successful in the market, brand image must be at its best because it is what consumers will be looking for. This is because everyone wants to consume a product they are well familiar with. For the Nokia Company, its brand image has dwindles constantly to a great deal such that people are no longer comfortable buying and using its products. This is something that might make it difficult for them to regain their initial status as the leading mobile phone maker, despite alliance with Microsoft (Saylor, 2012, p.79). They might pump in a lot of money in an attempt to save the situation but may as well flop if proper marketing and investment in technology is not done to win back its customers. If things do not work out for the company as expected, then it will be a big loss for Microsoft as it entered into a partnership with a company that was already going down. Generation of Strategic growth options Every section of an organization is affected by a marketing strategy. It is all about the use of everything at the businessÃ¢â¬â¢ disposal in creation of value for others. Customers are also included in this but workers as well as shareholders benefit. The marketing strategyÃ¢â¬â¢s major purpose is setting out the means by which the marketing objectives that are agreed are to be accomplished. One of the most appropriate ways to analyze the different strategies that can be used by an organization in growing the business is with the ANSOFF Matrix (Schwarzinger, 2012, p. 42). The model takes into account the opportunities of providing available and new products and services within the present and new markets together with the levels of risk that come with them. Below are possible three strategic options that can be employed by the company: Market penetration The aim of this strategy is selling products to a market that already exists. This has been proposed because Nokia has an already existing market even though it seems to be losing it at a higher rate. Market development This strategy refers to the completion of market development successfully (Hahn and Kibora, 2008). The method has been proposed because the Nokia Company appears to have lost touch with the huge client base that it enjoyed when it was performing still well. 5.3. Product development This section of the Ansoff matrix aims at being updated as regards the latest technology in the industry. The strategy has been proposed because the company appears to be lagging behind in terms of innovation, and this is where their competitors have fully taken advantage of to win the game (Kovvali, 2011, p.73). Evaluation of strategic growth options Market penetration The aim of this strategy is selling products to a market that already exists. Nokia has an already existing market even though it seems to be losing it at a higher rate. For the company to be able to achieve this, there are several things that needs to be done such as: changing the pricing plan; this should be done in a manner such that it is competitor or penetration based. Changing the pricing plan means that they will be reducing prices of their products in an attempt to attract more customers or even maintaining the existing ones. However, in doing so, the quality of the products must also be high as consumers do not only go for the price but they want to enjoy the value for their money. For the prices to be reduced as much as possible and to ensure sustainability, a lot of resources needs to be pumped in, which the company may also not be having, considering the financial crisis that it faced (Kovvali, 2011, p.63). Introduce discounting; the company can also introduce discountin g services whereby customers pay certain amount of money in buying a particular product or quantity. Starting up a different promotion campaign or considering changes on the present one; shifting from one campaign strategy to another or improving on the available one may also help the company in getting the message home, thus attracting more customers. 6.2. Market development This strategy refers to the completion of market development successfully. Nokia Company appears to have lost touch with the huge client base that it enjoyed when it was performing still well. The company has an option of penetrating or developing new markets that its products has not reached. This can be done through targeting a completely new client base and carrying out vigorous product promotions in order to attract them. Some other means through which this can be achieved is researching and selling the products to a different market segment in instances of poor market share and saturation (Kovvali, 2011, p.79). They can also change the periods that adverts are run on television and change the places in which the display of print adverts happen. This is the best way of ensuring that the products appeal to a completely new market. The company can also reduce the present prices of its products to help in attracting a wider range of clients. 6.3. Product development This section of the Ansoff matrix aims at being updated as regards the latest technology in the industry (Bull, 2007). The company appears to be lagging behind in terms of innovation, and this is where their competitors have fully taken advantage of to win the game. The mobile phone industry is just like fashion where trends come up each day and players in the market try to beat each other by being creative and innovation in an attempt to win the customers as much as possible. Companies like Samsung have rose to great heights due to their technological inventions and they are really doing well in the Smartphone market. They have been coming up with new applications that have been appealing to customers and that are why they are really selling (Kovvali, 2011, p. 34) Nokia should pump in a lot of cash and invest heavily in technology because it is the only way to succeed in the business. Description of selected strategy Product development The selected strategy for at Nokia is product development. Nearly everyone knows that this has been the biggest undoing of the company as they have not been able to keep up with the pace at which technology is growing. Just as said earlier, the mobile phone industry is just like fashion where trends come up each day and players in the market try to beat each other by being creative and innovation in an attempt to win the customers as much as possible. Therefore, the company has no option but to invest in technology if at all they are serious about regaining the lost market share. They should produce some high-tech products with a lot of features that fit specific market segment. With the strategic alliance with Microsoft, the company stands a good chance of recovering as this is an opportunity to get a source of finances that they require to keep up with the new technological development (Saylor, 2012, p.89). Microsoft is also known for its creativity and this alliance puts Nokia in a good position because they will be able to get the best operation systems that are updated to meet the current market requirements. Moreover, the alliance will enable the company to have a pool of new ideas as together two giants that have been leaders in their respective industries for several years. Conclusion It is no doubt that the alliance between Nokia and Microsoft is the best decision ever made by the management because it is a chance of recovering from the fall to try to catch up with the current industry leaders. Pundits see it as a major coup for Nokia, but Microsoft also stands to gain from the pact. Nokia should use this opportunity to venture fully into the Smartphone market by doing product development. They should invest heavily in technology and even employ more staff that can bring meaningful changes. The company has been doing well in the other growth strategies such as market penetration and market development, but has not been doing product development. From the evaluation of the growth strategies above, product development is the only one that has remained and it is the only way that the company can attempt so as to come closer to its competitors or even beat them in the market. The Smartphones market is still growing and there are several opportunities that are yet to be exploited and with Microsoft on board, it only needs proper strategies to conquer the market. However, if proper measures and strategies are not in place then the highly hyped alliance might as well be a waste of time and resources as other companies will continue steadily while Nokia continue to fall steadily. References Baron, N 2008, Ã¢â¬ËAdjusting the Volume: Technology and Multitasking in Discourse ControlÃ¢â¬â¢, in Katz, J. (Ed.) Handbook of Mobile Communication Studies, MIT Press, Cambridge, Mass, pp.177-94 Baron, N 2008, Always on: Language in an Online and Mobile World, Ã Oxford University Press,Ã New York. Batson-Savage, T 2007, Ã¢â¬ËÃ¢â¬ Hol Awn Mek a Answer Mi CellularÃ¢â¬ : Sex, Sexuality and the Cellular Phone in Urban JamaicaÃ¢â¬â¢, Continuum: Journal of Media and Cultural Studies, Vol.21, No.2, June, pp.239-52. Bull, M 2007, Sound Moves: Ipod Culture and Urban Experience, Routledge, London. Donner, J, and Steenson, M 2008, Beyond the Personal and Private: Modes of Mobile Phone Sharing in Urban India. In The Reconstruction of Space and Time: Mobile Communication Practices, edited by Scott Campbell and Rich Ling, 231Ã¢â¬â250. Piscataway, NJ: Transaction Publishers. Goggin, G 2011, Global Mobile Media, New York: Routledge. Grant, R 2010, Contemporary Strategy Analysis: Text Only. John Wiley and Sons. Hahn, H and Kibora, L 2008, The Domestication of the Mobile Phone: Oral Society and New ICT in Burkina Faso. Journal of Modern African Studes 46. Henry, A 2008, Understanding Strategic Management. Oxford University Press. Hill C. et al 2009, Strategic Management Theory: An Integrated Approach. Cengage Learning. Kovvali, G 2011, Cell phones are as carcinogenic as coffee. Journal of Carcinogenesis 10 (1): 18. McGuigan, J. et al 2010, Managerial Economics. Cengage Learning. Roy, D, 2011, Strategic Foresight and Porters Five Forces: Towards a Synthesis. GRIN Verlag. Saylor, M 2012, The Mobile Wave: How Mobile Intelligence Will Change Everything. Perseus Books/Vanguard Press. Schwarzinger, A 2012, Porters Five Forces Framework An Analysis of the Swiss TV-Broadcasting Industry. GRIN Verlag. Stonehouse, G. et al 2007, Global and Transnational Business: Strategy and Management. John Wiley and Sons.
Thursday, November 21, 2019
Germany and the Germans - Essay Example Many people are unable to determine whether Hitler is a Christian, Muslim or he does not belief in God due to some of his controversial conversations that were against Christianity religion. However, HitlerÃ¢â¬â¢s table talk varies because of varied extraneous sources and interpretations recorded in varied languages. Summary One of the aspects that Hitler in his private conversations talks about is the nature of God. He talks about the laws and nature that will guide people towards the progress path, but quotes that people will not know anything about these laws (Hitler et.al 4). The understandings of human beings cannot envisage of other plans and human being has only discovered in nature the wonderful ideas through worshipping the laws. Therefore, people have a feeling for the all-might, whom they call God, who is the control of the natural laws of the whole cosmos. Therefore, a priest who has always followed and abides by the natural laws threatens humanity that humankind will r eceive a punishment in case they fail to accept the creed that they impose to them. Therefore, it is an issue of custom and habit in case humanity follows the part of such creed. Hitler talks of Russians being atheism because they do not believe in God, but that does not necessarily mean that they are not able to face death. Secondly, HitlerÃ¢â¬â¢s table talks are also presented where he argues that National Socialism and religion cannot go hand in hand (Hitler, et.al 4). Therefore, the author argues Christians should not be persecuted in case the National Socialism is ruling. The ultimate solution to these is that the religion should be left to gulp down themselves without harassment and discrimination. The church should not be replaced by something else because that would be dreadful. For instance, in England, the church is governed by the state but in America, it is all an issue of conformism. The people of Germany have outstanding patience but there are other people who are ca pable of undertaking a revolution in the universe (Hitler et.al. 4). This could be better in case the Germany people would make the moral laws their governing principles in any action they take. Thirdly, Hitler talks about the issue of the rebirth of industries in Germany and the trade competition among the Germany and the British people. Hitler.et.al (11) argues the way Germany people work but they do not get the proper salary, which they deserve. Their capabilities are well recognized but the reality is that they live only by their work, which makes them a contempt object to the people whom they serve. This accounts as to why Germany people received little empathy during the Anglo-Saxon world just before the WWI. However, due to large population growth, the Germany people had to migrate and the issues of policy affairs in the state were incorporated in the labor cycle to safeguard those who were paid poorly. During the trade period, the form of production that were considered in G ermany included coal and steel in Germany industries. However, the England paid higher prices and the competition between Germany and England increased; thus England became a rich nation. The millionaires exploited the poor and they reaped a lot of fruits from the toil of other people. England flourished
Wednesday, November 20, 2019
Summary time,space, and the evolution of afro-america society - Term Paper Example Through the American Revolution, African cultures had been integrated into the Euro-American culture in the mid eighteenth century (46). The population of slaves ranged from 4-8 percent in different counties. Most Northern blacks worked in the countryside and a few labored in the rural industries. Iron masters were the largest employers of slaves in the industries and owned the largest number of slaves in the north. Most rural slaves worked in the farms tendering livestock and growing crops for export. These slaves lived on the farms and never worked in gangs (47). Some of the white farmers relied on indented servants to supplement farm labor since slaves were expensive. In trade centers, blacks worked as stock minders and herdsmen. Provisional trading required several slaves, which enabled them create a strong companionship compared to those working in the farms. Urban slaves worked as house servants and lived in back rooms, closets, and lofts (48). The interaction between the slaves and the white people led to a gradual cultural transformation. Those in the urban centers started participating in economic activities, and they adopted Christianity. New York slaves started acquiring property, while those in the rural areas continued living in poor
Monday, November 18, 2019
Marketing - Essay Example 3). E-commerce sites such as Amazon and Play.com are also sources of competitive threat as they provide the facilities for online purchasing. In online purchasing, the consumers have many of the same advantages when it comes to music downloading. Online purchasing offers greater ease of searching and convenience and the consumers can sample the products and read reviews. Online retailers also have the ability to offer a wider selection of titles than it is possible for a high street store like HMV. HMV has a solid platform from which to launch its new drive. As mentioned before, it has a high brand equity in the market. Therefore any initiatives are likely to be welcomed by the market as the consumers have trust in the brand (Kotter & Schlesinger, 2008, p. 138). The management of the company needs to formulate strategies which address the competitive threats from three sources: downloading, online purchasing and supermarkets. The supermarkets which are competing for the same market s hare are Asda, Tesco and Sainsbury. The management of HMV needs to consider the strengths of the competitors and formulate alternative strategies accordingly (Pearlson & Saunders, 2005, p. 19, Wang & Rode, 2010, p. 9). Therefore an industry analysis should be conducted (Pascale & Sternin, 2005, p. 73). The threat of new entrants is minimal because of the high competition. The threat of substitute products comes from online. These two threats combine to create a high threat of competitive rivalry. Buyers do have high bargaining power given the wide choice from online. For the same reasons the artists who provide the content have high bargaining power. Alternative strategic options According to Michael PorterÃ¢â¬â¢s theoretical model for strategy formulation, an organization has three competitive strategies available: cost minimization, differentiation and quick focus (Gosling & Mintzberg, 2004, p. 55). In the present context, differentiation is a viable option for HMV. The music an d entertainment retailing company can arrange to maintain a diverse product selection, thus reducing the competitive threat from online companies which are eroding the attractiveness of HMVÃ¢â¬â¢s business model by offering a wide selection of titles. Diverse product categories will also help to attract a greater number of market segments, thus enhancing the companyÃ¢â¬â¢s market exposure (Winfield & Hay, 1997, p. 55). For example, HMV could increase the range of portable digital products. As the popularity of online purchasing grows, so will the demand for portable digital technology. The range of games hardware and software can also be expanded. Nintendo technology has taken the market by storm. Therefore products in this category should be emphasized upon in implementing the differentiation strategy. The pricing structure could be changed to increase demand. HMV is facing competitive pressure from music downloading because downloading facilitates lower prices. However in modi fying the prices, HMV should not forget about maintaining its brand image. If the prices were too low, then it would begin to affect its brand image as the consumers would start to suspect the quality of the products which are priced at such a low level. In pricing its products, HMV has five strategies: skimming pricing, competition pricing, psychological pricing, premium pricing and cost-based pricing (Teece, Pisano & Shuen, 1997, p. 510, Ross & Perry, 2002, p. 121). If HMV were to implement the pricing option, then it would
Saturday, November 16, 2019
Marketing Analysis of Whale Watch Tourism Whale Watch- New ZealandÃ¢â¬â¢s Ultimate Marine Experience and the Nature-Tourism Market Question One Market Segmentation in the nature-tourism market can be defined as the process through which potential customers with similar needs and characteristics are grouped together so that a tourism organization can apply marketing strategies for the selected market segment efficiently (Oohlala, 2013). Segmentation also involves learning more about customers and making the heterogeneous market into a homogenous market (Bowker, 2014). Segmenting the New Zealand nature-tourism market is viable because it assists in understanding the needs and wants of customers, allocating marketing expenses efficiently, further developing products/services and developing marketing strategies more precisely (Grewal Levy, 2012). The two segments I will divide the domestic nature-tourism market are the: Ã¢â¬Å"Being ThereÃ¢â¬ and Ã¢â¬Å"Embracing LifeÃ¢â¬ segments. Comprising of over a quarter of New ZealandÃ¢â¬â¢s adult population, Ã¢â¬ËBeing ThereÃ¢â¬â¢ is definitely an identifiable segment which is large and old. A majority of this segment are aged 55 years or older. They havea female majority and a high percentage of people living alone. The segment can be found throughout all over in New Zealand meaning that it is substantial. Members of this segment have a strong interest in gardening and reading. They also have a positive interest in visiting natural/scenic locations, and are most likely to be a member of church or rotary group. Members of Ã¢â¬ËBeing ThereÃ¢â¬â¢ are motivated to travel by a yearning to spend time with people they love and appreciate natural/scenic locations. This segment is most interested in sightseeing, natural attractions and walking/hiking and meaning it is a responsive segment for the nature-tourism market. As this segment is relatively wealthy, money is less of a barrier to travel meaning that it is a profitable segment. There are many viable marketing channels that can be used to reach this segment which makes it reachable. These include: Major daily newspapers, special media (e.g. gardening channels/magazines/groups), affinity groups (churches, Rotary, other voluntary groups) are all channels that can be used to reach this market. Another segment for the New Zealand nature-tourism market makes up nearly a quarter of the adult population making it a substantial segment, Ã¢â¬ËLiving LifeÃ¢â¬â¢ shares a philosophy to live life to the fullest and embrace nature. This segment is identifiable with a majority of members being aged between 25 and 60 years old. This segment has a dominant family structure of couples with children. Members of Ã¢â¬ËLiving LifeÃ¢â¬â¢ can be found throughout all over New Zealand which enables the segment to be substantial. Members of this segment are most likely to have hobbies such as mountaineering, tramping, sight-seeing, boating and gardening at home. This segment is very responsive because vacations are important to them and they holiday frequently within New Zealand. When holidaying in New Zealand, they take part in their favourite activities with their children and partners, away from the pressures of daily life. The ideal holiday for Ã¢â¬ËLiving LifeÃ¢â¬â¢ is spending well-earned money on an above all family-friendly, and involves outdoor experiences, scenery and landscapes meaning it is a profitable segment which will spend money on nature-tourism. Key barriers to travel are the amount of annual leave available, work and family commitments. This segment is reachable through channels such as newspaper, media/online (e.g. golf, outdoor, boating, fishing), newspapers and fairs. Question Two In order to evaluate how Whale WatchingÃ¢â¬â¢s product is perceived by potential customers, it is vital to deconstruct the product into four different levels. This is called the Total Product Concept and we will use this model to deconstruct the product Whale Watch is offering, and evaluate how the company is positioned within the nature-tourism market. Firstly, the Core Product is the fundamental benefit that responds to a potential customerÃ¢â¬â¢s need or wants (Elliott, Rundle-Thiele Waller, 2010). For Whale Watch the core benefit for a customer would be being able to observe whales in their natural habitat. This could be for recreational or scientific and educational purposes depending on the motive of the customer. Secondly, the Expected Product is the relative factors that delivers the benefit which forms the core product and fulfil the customerÃ¢â¬â¢s most basic expectations (Elliott, Rundle-Thiele Waller, 2010), Whale Watch offers an exciting up-close encounter with the Giant Sperm Whale in their natural environment. In a typical Whale Watch tour, the customer can expect to encounter a wide variety of sea-life and birds. Vessels are crewed by an expert team who are experienced in interacting with the whales. Whale Watch ensures that passenger comfort and safety are always high priority. These are all expected features of the product/service Whale Watch is offering to customers. The Augmented Product offers a combination of benefits that is not a part of the basic level of needs for the customer. It is at the augmented product level where marketers are able to significantly differentiate their products/services from the competition (Elliott, Rundle-Thiele Waller, 2010). Whale Watch is New ZealandÃ¢â¬â¢s only vessel-based whale watching experience and the 95% success rate of trips at Whale Watch means that they guarantee an 80% refund and is an example of an augmented service that gives a competitive edge over other companies. Furthermore, it is based in Kaikoura, the Whale Watching capital of New Zealand which provides a unique experience over other locations. Whale Watch is committed to the care and protection of the environment and seeks to minimise waste, promote recycling, use eco-friendly product and minimise their impact on marine life (Whale Watch, 2013). These factors are important for customers who really care about then environment and are conce rned with conservation and the preservation of nature. All these special features and facilities are factors that would help customers to choose Whale Watch over other competitors. The Potential Product of the Product Concept Model comprises all possibilities that could become part of the expected or augmented product. This includes features that are being developed planned as well as features that have not yet been conceived (Elliott, Rundle-Thiele Waller, 2010). In the future, Whale Watch could offer new tours such as swimming with dolphins swimming with whales which would offer a unique, up-and-close, more personal experience. Whale Watch will need to do research on how to bring this programme to life and keep safety measures in mind. Whale Watch seems to be using a differentiation positioning strategies using conservation, nature preservation and a unique approach to attract customers. Whale WatchÃ¢â¬â¢s positioning statement is used to succinctly convey their philosophies and approach: Ã¢â¬Å"Whale Watch Kaikoura is New ZealandÃ¢â¬â¢s ultimate all year round nature experience offering visitors an exciting up-close encounter with The Giant Sperm WhaleÃ¢â¬ (Whale Watch, 2013). Ã¢â¬Å"We are visitors to the world of the whales and respect it as such at all times. As a Maori owned company, Whale Watch cherishes the twin values of hospitality to visitors and reverence for the natural worldÃ¢â¬ (Whale Watch, 2013). Question Three A service is an act or performance offered by one party to another. They are economic activities that create value and provide benefits for customers at specific times and places as a result of bringing desired change .One of the unique characteristics of a service is that it is inconsistent meaning the service provider cannot provide exactly the same service every time (Brown, 2008). Applying this to Whale WatchÃ¢â¬â¢s situation, because of the nature of their service, Whale Watch cannot guarantee the same Whale Watching experience to customers for every tour. Depending on seasonal variations or even the weather on a particular day, every trip will offer a different kind of experience. Customers are not guaranteed to be able to see a consistent number of whales and sea-life on every trip because Whale Watch has little control over this factor. In some seasons of the year, certain animals will not appear at all and on certain days no whales may be sighted at all. Because Whale Watch offers a conservative and completely nature-based experience it cannot Ã¢â¬Å"forceÃ¢â¬ a service and experience for the customer. In order to manage these challenges Whale Watch seems to have particular strategies to target and solve these challenges. Firstly, Whale Watch offers an 80% refund if a tour does not see a whale. Furthermore, Whale Watch staff constantly monitor the weather and respond professionally to any changes. This could a result in a tour being cancelled or safety restrictions placed on children or passengers with medical problems. This is because Whale Watch wants to promote passenger comfort and safety as their number one priority. Furthermore, Whale Watch would want to decrease the chances of a trip a day with bad weather conditions resulting in zero or minimal whale sightings. The on-board plasma screens display a virtual animated tour while the tour is actually taking place so customers will have a larger than life experience even though there may be inconsistency in actual whale and other sea-life sightings. Also, the professional guides and skippers are there in order to maintain consistency in a service with inconsistent characteristics. Whale Watch will make sure that the staff provide a high level of professional service with passenger safety and comfort as their number one priority. This is evident in their constant monitoring of weather and responding professionally.to any changes. Looking at Whale WatchÃ¢â¬â¢s philosophy and positioning statement, the company emphasizes that it is Maori owned which has a reverence for the natural environment and is dedicated to conservation, preservation and respect for wildlife. This is a factor that Whale Watch seems to be using to manage challenges of inconsistency of its services. Many customerÃ¢â¬â¢s especially nature-lovers and conservationists will respect the companyÃ¢â¬â¢s philosophies and understand the unavoidable, inconsistent nature of services that Whale Watch is offering. Word Count: 1590 References Grewal, D., Levy, M. (2013). Marketing (1st ed.). New York: McGraw Hill/Irwin. Oohlala, R. (2013). Tourism market segmentation. Slideshare.net. Retrieved from http://www.slideshare.net/reymarieoohlala/tourism-market-segmentation/ Whalewatch.co.nz. (2014). New Zealand Attractions | Kaikoura Whale Watching | Canterbury NZ. Retrieved from http://www.whalewatch.co.nz/ Brown, A. (2008). Alex Brown: teaching digital marketing and ending horse slaughter. Udel.edu. Retrieved from http://www.udel.edu/alex/index.html/ Bowker, M. (2014). Segmentation, targeting and positioning [PowerPoint slides]. Retrieved from https://cecil.auckland.ac.nz/