Essay: Analysis Of Ansoff & BCG Matrix In Service Industry.

Critically analyze and evaluate the two theoretical model. models are bcg matrix and ansoff matrix?

A competitive marketing strategy has become one of the key functionality in enhancing the business performance. A potential marketing portfolio provides the right path to manage the organisational vision and mission by employing both a strategic management and a marketing process as well. The integration between these models leads to higher competitiveness in the market place (Belz and Peattie, 2012). This scenario becomes more crucial in the service organisations, where the customer demands and other demographic variable are getting fluctuated rapidly. Thus, a strategic management could help in allocating right resources to implement organisational plans and policies for achieving changing business demands of the service industry. On the other hand, a marketing management can help the service firms focusing on the practical application of the marketing techniques. The marketing management can help the modern day service sector organisations, meeting the composition of customer demand, so that the organisational objectives can be met.  Considering these aspects, the present essay has discussed different models of service industries such as ‘Ansoff model’, 4P and BCG matrix and a relationship has been drawn between these two aspects. Gradually, an analysis has been made regarding the application of the theories and concepts of the service market considering a range of different business situations.

Market diversification and fast competitiveness have enforced the contemporary organisations to formulate the strategic management process, so that long term organisational goals can be managed by employing a planning, auditing, and assessing the necessary business elements.  A strategic management necessitates the commitment to the strategic planning, which helps the modern day organisations setting goals to take an adequate decision and initiating the actions to produce the desired goals (Wernick and Von Glinow, 2012). On the contrary, the marketing management is considered as a business discipline which mainly focused on the implementation of marketing techniques and the management of the marketing resources. In other words, marketing management is accountable to influence the timing and composition of the customer demands and needs in a manner, so that the organisational objectives can be met.

Considering the present market scenario of the service sector, the customer demand and the market innovativeness is rapidly changing. As a result, the organisations are expiring changes within the firm (Kim and Hyun, 2011). In order to manage flexibility in the change process, the leaders in the hospitality or service sector employs a strategic management tool, so that problem solving capabilities can be formed across all hierarchical levels. Eventually, the change process can be overcome employing optimum communication across all stakeholders. Comparing the statistical data on the revenue in the service sector, it can be stated that service sector firm’s competitive positioning has been improved by 35% by following Ansoff matrix (journal.sbm.itb.ac.id, 2016). The reason behind this usage is due to the rapidly shifting of the managerial behaviour and approaches to respond against the changes in the external operating system. Firms like Costa Coffee, Starbucks, etc. have been found following Ansoff matrix, to make a strong empirical support and linkage between the formalised strategic planning and the optimal financial success of the business organisation (Merritt, 2010). The four elements of the Ansoff matrix such as market development, diversification, market penetration and product development plans have helped the service sector firms identifying the market risk of its product and services (see appendix, exhibit 2). Considering the example of hospitality firm Hilton Hotel, the market penetration has been found safe among the four options. However, the service development of Hilton hotel has been found risky as per the Ansoff model and the upper level managers suggested not to introduce other luxury units while operating its business in China (journal.sbm.itb.ac.id, 2016). The Ansoff matrix helped to identify the riskiest option for Hilton hotel and the strategic management has been made based upon the market penetration and the market development scenarios (www.hotels.uk.com/Hilton-Hotels, 2016).

Ansoff matrix and strategic management in the service industry

On the other hand, the internal and external market analysis can be considered as the core significance of marketing management tool. It helps the service sector firms to prioritise more on the strengths, to meet global challenges and identifying weakness so that it can be further improved (journal.sbm.itb.ac.id, 2016). The SWOT analysis of Hilton hotel has projected that the significant investment in the digital marketing and promotional activities, which has helped the firm becoming a unique accommodation destination for the international guests (see appendix, exhibit 3). However, to manage the global competition majority of the marketers in the hotel industry are cutting the room rates daily basis, which has been identified as the major weakness of JW Marriott (Kaewmungkoon and Ussahawanitchakit, 2014). The opportunity for the JW Marriott hotel is its tie ups with the international travel agents. This agreement could provide higher business revenue to the JW Marriott hotel in the future. Finally, new market entrants have been analysed as the major threats. Thus, it has been identified that the marketing management tool can be a vital agenda for the current marketers operating in the global business environment.

Thus analysing the significance of the strategic management and marketing management, it can be derived that marketing management can be formulated based upon the strategic planning initiated by the organisation. The resource management, financial management, budgetary constraints and the expenditure allotment all depend upon how the leaders are initiating strategic planning across the firm. Thus, a potential marketing plan can be implemented if the firm utilises a potential strategic management tool within its business operation.

The utilisation of the strategic management and marketing concept has been found excessive, in the contemporary service sector organisations. In this context, Bolton et al. (2011) stated that the product market external characteristics and its alignment with the business strategy & resources help the leaders to exploit future profit potential of the service sector. BCG matrix helps to find the product positioning within the business portfolio. How much investment in which business unit could become effective, is analysed by using a BCG matrix (see appendix, exhibit 1). Some marketers prefer to use BCG matrix for analysing the market portfolio and formulating the strategic management process as well. However, 4P model is extensively used by the global marketers operating in the service sectors (Dominici, 2009). The combination of product, price, place and promotion elements of 4P helps the hotel industry to find the right marketplace, the service and luxury offerings, discount offerings and the promotion techniques that could best suited for the chosen area. The marketing mix element place contributes significantly to manage the brand sustainability. The hospitality and travel outlook is changing rapidly and customers are searching for flexible location considering the expenditures, natural beauty and the cultural aspects as well. However, the brand promotion over the social media and moderate hotel charge against a premium quality service help to attract large pool of customers towards a brand. Thus, the hoteliers could generate higher brand awareness by using the marketing mix concept while offering global hospitality services.

Marketing management and BCG matrix in the service industry

Considering the case of ‘JW Marriott hotel’, the marketing management has enabled the firm doing extreme PR events and social media promotions for generating higher awareness in the global environment. The luxury services, restaurant services, accommodation and the tie ups with the tourism firms have provided extreme hike to its business profitability. Busch et al. (2007) indicated that the 4P model has enabled JW Marriott hotel identifying actual market demand and current tradition of the global hospitality sector. Thus, higher market sustainability has been experienced by the firm. Although the concepts between strategic management and marketing management differs a lot, managing long term sustainability has been considered the core similarity between these two models (Dominici, 2009). The BCG matrix and 4P both have helped JW Marriott hotel managing its long term sustainability in terms of both the loyalty and the organisational growth as well (www.marriott.com/jw-marriott/travel.mi, 2016).

However, due to the globalisation and raid changes in the customer demand, analysing external market forces have become crucial agenda for the global organisation. In this context, Yin (2016) stated that the Ansoff matrix is only useful for the business which solely compete based upon the market pull.  The 4P model has also prioritised on generating the market attractiveness and does not consider the strategic planning process. Furthermore, it fails to consider the all elements impact on the market competitiveness. Due to this issue, the majority of the service market players such as JW Marriott Hotel have adopted the utilization of BCG Matrix for examining the portfolio of the firm. According to this matrix, the business unit which has a dominant position will be stated as the cash cow and star position (Wernick and Von Glinow, 2012).The weakest position is dog.

Considering the services of ‘JW Marriott hotel’, the accommodation and luxury services have been found incurring higher investment, at the same time, providing greater revenue as well. Analysing the star element of BCG matrix has helped the firm focusing more on the accommodation and luxury units as compared to other services. ‘JW Marriott hotel’ has selected the criteria to examine the hotel industry and determined the key factors need and made the business plot to attain greater market survival. In this process, ‘JW Marriott hotel’ has experienced higher market value in its accommodation and luxury service sector. The management also considered the luxury segment as the question mark that is starting from the beginning how the JW Marriott hotel is executing higher competitiveness across the UK hospitality sector.

Conclusion

Similarly, the restaurant services of ‘JW Marriott hotel’ have been found growing extensively against the lesser investment in the brands portfolio. Thus, the BCG matrix has helped JW Marriott hotel continuing the investment in its restaurant segment to capture higher market competitiveness across the UK luxury hotel services (journal.sbm.itb.ac.id, 2016). Contrary to this, the spa services of JW Marriott hotel has been found  unsatisfactory to the guests, which has been closed by the hotel in some areas considering the outcome of the BCG matrix placed over a few global branches. Market analysts have suggested that a successful strategic management can be established by analysing both external and internal market environment. As Ansoff matrix fails to draw the external market analysis, the majority of the service sector firms are shifting towards the external market analysis scenario, so that portfolio can be made considering the future and sustainability can be managed.

Although the service sectors are booming and predicting national economic growth of more than 75%, the customer loyalty index has been found lesser in nature. This is mainly due to the existence of vast differences between the product and the service. Kim et al. (2015) identified that products are tangible in nature, while services are intangible and the majority of the customer issue comes due to service issues. Past studies have revealed that a services marketing model (SHIPO) can be used to identify the customer issues in the service sector (Lovelock et al. 2009). SHIPO model describes the reasons for the customer issue such as simultaneity, heterogeneity, intangibility, perishability and ownership. The customer issue mainly generates due to the tangibility and intangibility factor. Due to this, product orientated marketing attains greater success rather than service oriented marketing. Product is a tangible element, while the service is an intangible element.

It has been observed that different customer perceives different value for varied products and service offerings. This model helps the service sector organisations identifying the core issues of the customers. Thus, customer satisfaction management becomes easier to the marketers. The customer service and satisfaction issue can be mitigated by using extended marketing mix model, which has been described below. Considering the hospitality firm JW Marriott hotel, it has been observed that simultaneity issue occurs when the customers ask for room services and at the same time the staff is engaged in another room.  This issue can be resolved by using the process element of 7P model, which would help JW Marriott hotel serving all customers as and when required. The second issue is the heterogeneity factor, which has occurred due to the lack of standardised approaches within the customer service department, accounts issue and branding difficulties. Thus, this problem can be mitigated using the product factor of 7P model, which could help the firm producing customised services for varied guest coming from different global regions. According to the SHIPO model, the Intangibility and perishability are considered as other two service problems in the JW Marriott hotel (Wernick and Von Glinow, 2012). Thus, the price and people elements of 7P model can be focused so that customers can become more satisfied with the discounted offerings and the outstanding customer services. However, Moussetis (2011) argued that lack of trial or the ownership issue is another major issue experienced by the JW Marriott hotel. It has been identified that the overall charges and services are higher in JW Marriott hotel. However, the customer complaints of the JW Marriott hotel indicate that customers are not receiving at per services against the money paid for the services. Thus, the physical evidence factor of 7P model can be utilised to provide a service picture to the customers so that the potential mindset can be generated. Eventually, the service issues can be minimised and the firm JW Marriott hotel can receive higher competitiveness in the global hospitality sector.

Conclusion:

The present essay analyses that the strategic and marketing management both executes vital role in balancing the contingency planning and organisational higher market share in the global environment. It has been assessed that BCG matrix can be an effective model in the strategic management and planning process. On the other hand, the 4P and the SWOT analysis have been identified as the core agenda to improve the market competitiveness of the service sector market players. A directly proportional relationship has been established between the strategic management tool and the marketing management parameter. Finally, a SHIPO model has been discussed to identify the present lacking of the hospitality firms and effective recommendations have been made to improve the present brand value of the global hospitality organisations.

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