Discuss about the Strategic Integrated Marketing Communications.
Schwinn Bicycle Company was one of the earliest bicycle manufacturers in the world. It was incorporated by Ignaz Schwinn and his financial associate Adolph Arnold. After twenty years of its inception, the company became a leader in the industry owing to the technology and superior quality that they offered but the company was not able to grasp the changing demand of the consumers’ which was shifting from an ordinary cycle to a BMX and mountain bikes that resulted in decline of its sales. Furthermore, the tough competition from the competitors of Europe and Japan on technological front hampered the company’s sales to a great extent and led them towards bankruptcy (Karwatka, 2014). Based on the case study of Schwinn, the following factors can be highlighted as lesson that other companies from various industries can avoid while operating and to sustain in the long run of their business:
Consumer Behavior: Arnold, Schwinn and Company was a dominant player in the field of bicycle manufacturing. It achieved success through its product “Sting-Ray” which had some unique features like banana seat, high-rise handles, which was a huge hit in the early 1960s. The company’s sales began to decline in the 1970s as the company was less focused on identifying the changing consumer behavior which was moving away from a normal bicycle to road racing and touring bicycles (Solomon, 2014).
Lack of Research and Development: Moreover, the company did not emphasize on its research and development due to which it failed to develop products for the BMX market and it also overlooked the immensely growing mountain biking craze. Despite tough competition from the manufacturers of the Europe and Japan who consistently upgraded their technology and adopted new techniques through involvement in various professional bicycle races, Schwinn produced heavy and old-fashioned bicycles compared to the light-weight and trendy bicycles produced by other manufacturers (Christensen, 2013).
Extensive Investment: Further, Schwinn chose China and Taiwan for producing bicycles at competitive prices. Despite the fact that the suppliers produced high quality products at competitive prices, some unfortunate sourcing choices resulted in supply deficit, furious retailers and diminishing customers’ base which further resulted in decline of its market share from 25% in 1950s to 5% in 1992 before it went bankrupt. Further the company infused substantial amount of investment for training its employees in China after introducing its own manufacturing practices, though it enabled them to achieve high quality at lower cost but they still failed to sustain in the long run and became less competitive (Karwatka, 2014).
Following steps can be undertaken by the companies to strengthen their competitive position:
Innovation: The companies that are facing similar situations like Schwinn should make substantial investment in its product innovation and develop products that could create a competitive advantage for the company (Tassey, 2012).
Research and Development: In the current era, where technology is the main weapon to gain a competitive advantage, the companies should aim on improving its technological competence on a continuous basis to stay updated with the latest technology. Further, the companies should look out for new and innovative trends and more importantly they should patent their technology to protect it against piracy and plagiarism (Tassey, 2012).
Pricing: The companies should aim at becoming a low-cost manufacturer, which would enable them to give a tough competition to small businesses and discourage competition by offering prices which the competitors might not be capable of matching. If the companies are able to maintain their quality while offering economical product, then it would strengthen the competitive advantage further (Hollensen, 2015).
Understanding Consumer Behavior: Evaluating and analyzing consumer behavior on a continuous basis would help the companies in drawing a deep insight into the changing pattern in the needs and demands of the consumers and develop products that would meet their demands accordingly (Solomon, 2014).
The international strategies and essential components of global strategy applied in the case study are discussed below:
Outsourcing: The Schwinn Cycle Company went on to partner with low-cost manufacturers in the developing countries like Taiwan and China for due to the low wages of the labor. The company interviewed numerous prospective suppliers and secured the best into a long term agreement for manufacturing its products. The company then reconstructed its function to execute the final assembly and quality assessment in United States (Ivanov, Tsipoulanidis & Schönberger, J. (2017).
Local Manufacturing: The company soon started its own manufacturing plant in China. It implemented its own production techniques and trained its employees in China which helped them in achieving economies of scale and superior quality at comparatively lower price. The company continuously expanded its operations in China and very soon began to sell both high-end as well as low-end bicycles in the Chinese market. It also developed some cycles for the luxury segment which further helped the company to grow further (Ivanov, Tsipoulanidis & Schönberger, J. (2017).
Global Expansion: The company expanded its operations on a global level by setting up latest facilities in Brazil and Europe. It was done with the intention of meeting the growing demand for the cycles in the European countries as well as to give competition to the local manufacturers based in Europe and the Japanese manufacturers who sold their products in the European market. Initially the company was flourishing at very fast pace but suddenly it began to decline and lost its market share drastically. The decline in business was due to lack of research and development done by the company. The company rarely took into consideration the changing behavior of the consumers and the advanced technology used by the European and Japanese manufacturers gave the company a stiff competition on technological ground (Trapczynski & Wrona, 2013).
International Flavors and Fragrances (IFF) can adopt the following strategies to differentiate its products from its competitors and position with core base consumer product companies:
- Focus on Core Values: The company should focus on its core value of producing scents by using organic substances instead of artificial or chemical based agents which would make the company’s products stand out against its competitors(Kim & Wang, 2014).
- Product Innovation: The company which gives a greater emphasis on product innovation is always ahead in the competition. When some additional functions or features are attached to particular product, the company can demand a higher price or can defend its current price. The company can add features to its existing product through its own product development unit or by giving permit to other company to add some features. Some companies consider product innovation as their core business strategy (Becerra, Santaló & Silva, 2013).
- Packaging: Sometimes, everything it takes to rejuvenate and differentiate a product from the competitors is by changing the product packaging. The company can look for innovative techniques to create an appealing product packaging that can easily attract the customers towards it.
- Niche Marketing: The company should aim to sell its products in the niche market. As the company specializes in manufacturing fragrances including colognes and perfumes for end consumers, it can target the group of people who are fond of such products (Chun, 2015).
- Competitive Pricing: The company should adopt a competitive pricing strategy to gain an upper hand over its closest competitors. For that the company needs to make an analysis on the cost of manufacturing its products, customer analysis, competitors’ analysis, market research as well as SWOT analysis. The price should be such that it recovers all the costs included in manufacturing, advertising, shipping and many others.
- Value Addition: One of the most important factors that all companies take into consideration while differentiating their products in the current price motivated and products/services market is value addition to the product or service on the offering. Assuming that the company aims to sell its product through it official website as online shopping is the latest norm, it can create a value addition to its product by availing free home delivery of the product, free gift coupons. Further, the company can offer distinctive incentive schemes like money back guarantee or free membership as the customers these days always look for little additional push towards buying a product (Stark, 2015).
The company should definitely invest in marketing communication strategy that seeks to establish its identity among the consumers. Integrated marketing communication has become an integral part of every business. Companies that uses integrated marketing communications focuses on creating a uniform message through all channels it uses, which lowers the marketing cost of the company. Further, this kind of marketing strategy makes contact with greater mass of audience due to the multiplicity. Below are the numerous benefits that the company can derive by investing into marketing communication strategy:
Competitive Advantage: The company that invests in integrated marketing communication has a competitive advantage over its competitors as the marketing communication strategy helps the company to advertise and promote its brand to a larger audience (Blakeman, 2014).
Reduced Advertising and Marketing Costs: While a company invests in developing a marketing communication strategy, it also reduces it advertising and marketing costs as they aim to deliver a uniform message through all the channels they select for the communication.
Greater Reach: Integrated marketing communication strategy gives the company an advantage of reaching to a greater audience. For example: the company has its own Youtube channel where it launches all its latest commercials, it would reach a greater audience due to wide coverage of the internet across the world. Further, the company can promote its products through various social networking and micro-blogging sites like Twitter, Facebook, Instagram and Snapchat (Castronovo & Huang, 2012).
Improved Public Relations: Integrated marketing communication strategy gives the companies to enhance their public relations and escalate its public image through continuous engagement with the customers through direct interactions.
Creates Brand and Product Awareness: Marketing communication strategy helps a company helps in creating the brand and product awareness through various methods of marketing its products like direct selling, sales promotion, advertising (Percy, 2014).
Boost Liking towards the Products: Marketing communication strategy helps in encouraging the targeted customers towards liking the products of the company over the competitors’ products.
Product Trials: When a product is promoted through aggressive advertising and sales promotion, it encourages prospective new customers to try the products and thus the objective of attracting new customers is pursued by the company (Percy, 2014).
Identify Consumer Behavior:
Integrated marketing communication strategy not just helps the company in establishing its products in the market but it also helps in evaluating the changing behavior of the consumers and the changing pattern in the buying behavior of the consumers. Through assessment and analysis of consumer behavior, the company can develop products that would meet the changing demand of the existing customers as well as prospective new customers (Solomon, 2014).
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