Strategic Alignment and New Product Development Kaffel Ltd

Question: Discuss about the Strategic Alignment and New Product Development for Kaffel Ltd? Answer: Introduction Kaffel Ltd, an office furniture provider, which is too much engaged with quality improvement of their products through the enhancement of production unit. Recently, this organization has become sales oriented and has increased the number of stores to increase direct sales. Previously, this organization was dealing with B2B sales of their furniture products and their clients were mainly the corporate sectors. At present, the organization has thought of increasing their sales to direct customers and therefore it requires new marketing executive, as it does not have any proper structure and information of marketing. The organization does not have any idea of marketing and sales and therefore, the marketing executive will help the organization to build up the sales in future. Elements of Marketing Process The major elements of marketing process are given below. Environment Scanning The first approach that an organization has to take for its sales expansion is environment scanning (Dholakia 2015). Environmental scanning includes both macro and microenvironment scanning. According to French (2015), in macro environment, broader aspects of environment are considered such as organizational competitors, customers, political environment, society, community, and economical factors. On the other hand, Jarvinen and Taiminen (2015) pointed out that in microenvironment, organizations internal potentialities are considered such as financial factors, investors, suppliers, directors capability, shareholders and other operational units. With the environment scanning, an organization is able to identify its weakness and strengths and identify potential opportunities that will be helpful for its growth. Marketing Strategy Environmental scanning is followed by segmentation, targeting and positioning (STP). This procedure helps an organization to identify the types of consumers present in the society who will be satisfied by its products (French 2015). Therefore, the complete prospective customer base is segregated into several segments according to psychographic and demographic factors. After segmentation, targeting the segments is considered, which identifies the ways by which disintegrated customer segments can be targeted. Finally, positioning is the method by which an organization is able to reach out its consumers. Positioning defines the way by which an organization selects the appropriate location through which the products can be sold (Lagarde 2015). Marketing Tactics After the target market is established, marketing mix is considered, which is a more prcised method of marketing (O'Shaughnessy 2015). Therefore, four elements are considered in marketing mix, which are product, price, place and promotion. In product factor, the designing and features of the product is selected. In price factor, pricing strategy is identified such as price penetrating or price skimming, over which the revenue is determined by the organization. In place factor, appropriate location is selected where maximum sales will take place and finally, promotion factor will determine the approaches that will be effective for the sales of particular product such as online discount coupons (Solomon 2014). Monitoring and Control After the marketing strategies are successfully implemented, organizations need to monitor and control the business flow according to the strategies so that business process is not deviated (Hollensen 2015). Several surveys and reports are required to be generated so that business is controlled in future and projected outcome satisfies the organization. Figure 1: Marketing process elements (Source: Papadopoulos and Heslop 2014) Benefits and costs Responsiveness, constant improvement and costs are the three pillars (Blank 2013), which will help Kaffel Ltd. to grow its business. Through responsiveness, Kaffel Ltd. will be able to orient its business and will be able to stay ahead of the competitors. This will help the organization to form the products that will not only satisfy customer demand but also produce products in timely manner. Kaffel Ltd. will need to enhance its business by constant improvement, which will be promoted by culture of experimentation. The organization will need to improve and explore products and services to adapt to future and current needs of the customers. Finally, costs consist of significant improvement by collecting database and customer data analyzing. Kaffel Ltd. will require constant product modification so that ongoing investment in product iterations and new equipment is followed in future. Environmental Analysis Macro Environmental Analysis PESTLE Analysis Politics Kaffel Ltd. needs to identify the present political scenario of the locality where the sales will be initiated, from where it will be able to understand the business feasibility Economic Nations economy, per capita income and inflation will impact the pricing strategy and sales enhancement of the organization Social Organization needs to identify the communities surrounding the market and how much the society can impact on sales enhancement as intercommunity persuasion hampers the buying behavior of consumers Technology Technological aspects such as influence of digital media and communication technique with consumers will determine the business progress in a more efficient way Legal The organization needs to fulfill the manufacturing legalities and compliance from government so that it gets the license of B2C sales Environment Eco-friendly manufacturing technique and packaging has to be oriented so that least impact on the environment is sustained Table 1: PESTLE Analysis (Source: Galician 2013) Micro Environmental Analysis Company Kaffel Ltd. is trying to expand its sales by starting B2C sales through direct marketing. Therefore, the organization has to develop the structured marketing department. This will consist of marketing executive, sales executive, store managers, lead creators, customer service department and data analysts (Bendoly, Bharadwaj and Bharadwaj 2012). Therefore, Kaffel Ltd. needs to increase the number of employees in sales department. Suppliers The number of suppliers is limited for the organization at present as only similar types of corporate sector products are sold in the market. Therefore, the number of suppliers has to be increased and even the relationship with them has to be sustained over years so that enough discounts are received (Stark 2015). This will reduce the price of furniture than its competitors resulting in more sales. Intermediates For an organization that is increasing its product portfolio, needs to increase the number of market intermediaries, which will lead to maximum sales (Boone and Kurtz 2013). Kaffel Ltd. needs to follow the chain of wholesalers, retailers and even online sales intermediaries. Finally, feedback has to be achieved from the intermediaries. Customers A huge range of customer of Kaffel Ltd. is at present available for B2B sales. The clients are mostly covering office sectors. With the increase in products for direct casual consumers, target market has to be set up by the organization where new consumer base will include household sector (Slater, Mohr and Sengupta 2014). Competitors With product diversification, substitute products from competitors affect the sales. Thus, Kaffel Ltd. needs to set a benchmark of the top competitor in the market and adopt sales strategy to enhance sales. Investors For growth of business, financial support is required, which will be entrusted by investors. Clear idea of objective and return on investment has to be declared to the investors so that they will get the motive of investment, which will in turn support the creation of budget (Christopher, Payne and Ballantyne 2013). Figure 2: Microenvironment Analysis (Source: Yadav and Pavlou 2014) STP Analysis According to Morgan (2012), in segmentation, organization needs to identify the types of segments available in the society such as psychographic and demographic factors. After selecting segments, appropriate target customers are to be selected from the communities by integrating parts of segments. Finally, positioning is the way by which products are placed in the market so that consumers are instantly attracted. Kaffel Ltd. needs to identify the consumer segments and finally place their products. B2B and B2C STP Analysis Segmentation B2B Office sectors In-house organizations Manufacturing based organizations B2C Monthly Income level from $168 to $ 1667 Both male and female gender Age group from 5 to 90 Education level from low to high Targeting B2B IT organization BPOs and KPOs Consultancy firms Clinics Seminar halls B2C Casual consumers Household sector Premium lifestyle consumers Frequent travelers Positioning B2B Direct call Leaflets Hoardings and banners B2C Online sales Supermalls Retail stores Table 2: STP Analysis for Kaffel Ltd (Source: Author) Buying behavior Concept For new products in the market, sales will gradually increase, as consumers will initially taste the items with respect to price and quality and finally if they are satisfied, sales will be increased (Yannopoulos, Auh and Menguc 2012). Thus, the organization needs to keep the price lower and achieve more market intermediaries. Consumer buying behavior is the total of consumer intention, attitude, behavior and decisions. Buying intention can be raised by advertisements and product awareness, which will increase the positive attitude of consumers to buy the product (Lovelock, Patterson and Wirtz 2014). Finally, consumers will take the decision in buying the product if they feel that the product satisfies their needs. Moreover, buying behavior is satisfied by similar needs among the communities and even word of mouth. Thus, for Kaffel Ltd, price has to be kept lower and more advertisements are to be initiated so that sales are enhanced. Marketing Mix Product According to Morgan, Katsikeas and Vorhies (2012), product is the initial element of marketing mix. The features of the product are selected and new diversification factors are added to the product. The designing and unique factors of a product are identified, which will be different from the competitors. The product categories and the number of diversification ranges are identified, after which pricing element is considered. Therefore, Kaffel Ltd. needs to diversify its products in both B2B and B2C categories. For B2C consumers, the classified product categories need to be increased in volume, which are having more than three features on one product, so that price factor is justified for direct consumers. Price According to Cui, Lui and Guo (2012), price of a product can be only determined according to the features and quality of the designed product. On the other hand, Bharadwaj et al. (2013) pointed out that pricing completely depends on available competitors in the market. Acur, Kandemir and Boer (2012) pointed out that price penetration and price-skimming strategies will help in achieving required revenues for an organization for a certain period. Therefore, the organization needs to follow competitive pricing strategy for B2B products and price penetration strategy for B2C products. In this way, the organization can achieve more unit sales, and thereby increase brand awareness. Place According to Kozlenkova, Samaha and Palmatier (2014), right location selection will catch the maximum amount of consumer. Sales can be increased only when consumer gets to know about the existence of the product and after that, they will match the preference with the features of the product. Locations such as supermarket, e-commerce, official website and retail stores attract the consumers. The distribution strategy for the organization will include both lead generation and personalized selling for B2C clients and retail chain for B2C consumers, which will involve all the market intermediaries. Promotion According to Perreault Jr, Cannon and McCarthy (2013), online sales promotion is the best way to reduce the cost of advertisement and achieve maximum consumer attraction. On the other hand, Eggert, Thiesbrummel and Deutscher (2015) pointed out that newspapers, commercials and banners help in getting the maximum response from consumers. Thus, the main motive of promotional activities is to reach out to maximum consumers. Promotional strategy for Kaffel Ltd. will include social media platform, which will include discounts, coupons and flash sale for B2C consumers and for B2B consumers, discounts will be awarded in bulk orders. Additional Elements The additional elements of the marketing mix are process, physical evidence and people, among which people selection is the most important. People include directors, consumers, financial heads and other stakeholders. Morgan (2012) opined that process would include operational changes and changes in production lines for designing of new products. For Kaffel Ltd. the physical evidence factor will include virtual representation of product in the official website, which will attract all types of consumers. The people will include top executives such as directors and customer service as well as lead generators. Consumers and investors are the vital stakeholders for Kaffel Ltd. Figure 3: Marketing Mix Elements (Source: Boone and Kurtz 2013) Marketing Mix for B2C (Economic Range) Product Kaffel Ltd. needs to increase the number of products and therefore has to follow product diversification strategy. Organization has many office furniture products but for each of the target markets, new product category has to be created. Range of products must include hybrid categories. Many customizable furniture products are available in the market (Stark 2015), and thus, the organization needs to design such products that have integrated electrical flexibility such as bed with lighting facility, sofa with sensor technology that will indicate the weight of the user. Moreover, hundred percent recyclable seats and single seat gliders need to be included. For household consumers, certain beds, which can be folded and adjusted in limited space, have to be designed. Such beds will be for frequent travelers. Price An organization that is expanding needs to limit the price so that consumers can taste the products quality (Christopher, Payne and Ballantyne 2013). It is very sure that consumers love to experience quality and can compromise price and therefore it is an opportunity for the organization to include premium pricing. Still Kaffel needs to follow price penetration strategy for the first year so that it can catch hold of the market. Amount of risk will be less if price is lowered, which will help in achieving consumer attraction, and according to demand, new products can be designed. Place/Distribution For Kaffel, distribution strategy is the main element of marketing mix. Initially the organization had a good response from business sectors and therefore bulk sale used to happen. For an organization that shifts its target market, needs to increase the unit sales of each of the product category so that market attention is achieved from all sectors (Acur, Kandemir and Boer 2012). This can be only initiated by increasing distribution channel. The best option is to increase franchise and new contracts with the retail sector as market intermediaries will be reduced leading to price reduction. Moreover, online sales using e-commerce and websites will help in showing the feedback, demand and preference of consumers in future. Promotion For introduction of new products in the market, promotional activities will help in achieving highest consumer attraction (Gmelin and Seuring 2014). Promotional activities will include discounts and sales for B2C consumers through social media sites. This will reduce the cost of sales and all target consumers can access simultaneously same product information. Thus, the promotional activities will include social media marketing, discounts and coupons through own website, and marketing agency compliance. Additional Elements Three additional elements of marketing mix are process, people and physical evidence. Process element will include the designing of new furniture. Kaffel will require batch processing with the increase in demand. The key people of the organization will include board of directors, marketing executive, sales managers, financial accountant, store manager, customer service executive, operational manager and human resource manager. Physical evidence will be created by the organization in terms of design and reliability. Virtual representation of the products will need to be included in the websites, which will enhance consumer attraction. Figure 4: Marketing Mix Elements (Source: Author) Marketing Mix for B2B (Premium Range) Product The furniture products were already present in the market and therefore, the organization needs to include new customized products. As described in the economy class, hybrid products needs to be included, therefore price of the products are comparatively lower. In case of B2B sales, the quality factor has to be maintained and therefore, customized furniture will include sofa, chairs, tables, seminar room furniture, design furniture. Hybrid chairs with accurate fusion between ergonomics standards and aesthetics for corporate sectors has to be included. Moreover, for product diversification, sales manager has to visit the offices so identify the most required furniture that will both fit the structures and room capacity, giving a royal feeling. Price The price of the premium products will be relative higher than the economy class. The pricing strategy will include competitive pricing. Moreover, for customized service the price will be based on the clients requirement. In this way, the organization will be able to maintain a good relationship with its clients. On the other hand, the bulk furniture such as cabins, tables, chairs and related designs will be supplied in bulk. The price of such products will be less than the competitors as bulk order will be initiated. Promotion Promotion strategies will include lead generation through contracts. The sales person will have the best knowledge of discounts. Direct mails will be dropped to the existing and new prospective clients who are new in the corporate sectors. Aggressive promotion will not be required. Place The products will be generally placed in the corporate sectors. There are a lot of buildings that gives rent to corporate offices. These promoters will be approached with lucrative offers and new contracts will be generated. Moreover, the own website is the ultimate destination, where an album will be created through which the client-organization will be able to view the virtual images of the products. Additional Elements The process will include line production and order based operation. The people will include corporate clients, investors, suppliers, promoters, contractors, operational manager, sales manager and marketing executive. Physical evidence will be ensured by giving the view of products from the official websites. Conclusion Kaffel Ltd. initially was having just the B2B business and with the help of new marketing strategies, the organization will be surely able to increase the sales in B2C department. Thus, it can be identified that there are a lot of differences in between the two target segments. In B2B business, the amount of sakes was limited as the only target customer was corporate sector. With the B2C business, more consumer segments such as casual consumers, frequent travelers, household consumers and even consumers of lowest income will be able to buy the products. The pricing strategy was initially competitive and thus premium products were the only range of products. With the B2C business, both premium and non-premium products can be sold. Thus, the amount of sales will be increased. Moreover, as the organization will follow demand-oriented production, hence the amount of risk will be low. It must also be said that the organizations brand awareness will increase with the increase in unit sales . Therefore, this organization will surely stand out as the prominent player in the market leading to new competition. International market is quite different from domestic market as the range of consumers and their preference are quite different from domestic market. This is an opportunity for the organization as it will be able to expand its product diversification even further in future. Moreover, with expanded sales, the organization will be able to change the pricing strategy in future and compete with new markets. Brand awareness and success from domestic market will create a scope of product sales in international market and therefore, Kaffel Ltd. will be able to expand its business even further in future. Reference List Acur, N., Kandemir, D. and Boer, H., 2012. Strategic alignment and new product development: drivers and performance effects.Journal of Product Innovation Management,29(2), pp.304-318. Bendoly, E., Bharadwaj, A. and Bharadwaj, S., 2012. 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