Unit 4 – Marketing
1.“SheknewthatdemandforballbearingswasslowingdowninEurope,whereasitwas growingsubstantially in countriessuch asBrazil, China and India thatwere going throughaphaseofstrongindustrialization.From herresearch,shealsoconcluded that manufacturing in the twenty-first century would be accomplished in smaller, more flexiblefactories,insteadofthehugemoderniststructurestypicalofthe latenineteenth and twentiethcenturies”(line 76-82).Analysethe advantages and disadvantagesof
RDBtargeting overseas marketsforfuture salesgrowth.[6marks]
Consider any of the following:
Advantages
Increase customer base
Increased brand awareness
Spread risks – economic downturn in Europe may not be felt in other areas of world
Possible strategic alliance with overseas business to enter foreign market easier
Increased sales and profits
Economies of scale
Extend product life cycle in regions where it has not saturated market – demand for ball bearings in Europe is slowing down, but demand is growing substantially in China, India, and Brazil
Disadvantages
Success in one area of world does not guarantee success in another
Entry may be hindered by political/legal issues
Lack of intellectual property legislation to protect patents, etc
Costs involved
Social/cultural issues
There are huge opportunities for RDB to increase brand awareness, customer base, and revenue by targeting overseas marketing for future sales growth. Demand for ball bearings in Europe is slowing while it is growing substantially in China, India, and Brazil. RDB can sell ball bearings overseas to extend the product life cycle of ball bearings and spread the risk of operations by entering markets that are not facing the economic downturn that is impacting the European market.
On the other hand, targeting overseas markets does not come without risks. Entering foreign markets can be hindered by political and legal issues such as trade barriers or lack of legislation to protect RDB’s intellectual property. It can be very costly to set up a business overseas and success will be dependent on awareness and understanding of local culture. Anna states in the case (lines 84-86) that the RDB workforce needed a better cultural understanding of their customers. Research (most likely costly) must be conductedto understand international customers so that RDB can respect and appreciate cultural differences when dealing with foreign governments and potential stakeholders such as suppliers and potential customers.
Possibly a joint venture or strategic alliance with a local company in the foreign country may provide an advantage?
This maybe should have been an eight mark Q.
2. Define the termmarketresearch.(line 115)[2 marks]
Market research can be defined as marketing activities designed to discover opinions, beliefs, habits, and feelings of consumers so that wants and needs can be identified and met. It would help to determine the interest of potential business customers in RDB’s products. Will they purchase the ball bearings and at what price? What rival brands are currently purchased and what would be the best way to promote the brand?
Marketing research must be carried out to determine how well your brand will be received overseas. Anna felt that the RDB workforce did not have a good cultural understanding of its customers.
3. “Advertisingandpromotionwerelimitedtosometradejournalsandtradeshows.Anna thoughtthatthis should change. ShebelievedthatRDB shouldadvertisein a widerrange ofpublications,includinge-zines(online magazines)andprofessionalweb sites for industrialdesignandarchitecturalrobotics.She wantedtouseinformationand communication technology(ICT) to communicate to awiderrangeofexternal stakeholders.Thatway,RDBwouldcreatebrandawarenessinthedesigncommunity, andnotjustinthemanufacturingcommunity.The marketingdepartmentshouldstart carryingoutmarketresearch,bothprimaryandsecondary.”(line110-115) Analysethe role thatprimaryand secondary marketresearchcouldplay tocreatebrand awarenessforRDB. [5 marks]
Primary research (field research) is data gathered first-hand for the specific study at hand. It takes longer to collect and may be more expensive to come by as it does not currently exist. Secondary research (desk research) is existing data not specifically created for use in the study. It may be easier and less expensive to collect, but it may not be completely relevant to the study at hand.
4. HL ONLYWithreferencetoPorter’sFiveForcesmodel,evaluatethecompetitiveforcesaffectingRDB.[9 marks]
Porter’s Five Forces Analysis allows businesses to access factors affecting competition within an industry and identify areas that need strategic focus. The five forces include: Rivalry among competition, Threat from substitute products, Threat of new entrants, Bargaining power of suppliers, and Bargaining power of buyers.
Bargaining power of suppliers is not really addressed in the case so this force will not be evaluated.
RDB’s main rivals were UAB and FAB starting in the 1930s and later Japanese companies. RDB was able to maintain market share based on well-established reputation for high quality, but this may not continue into the future. With demand increasing for ball bearings in the BRIC countries, more companies are willing to expand into this new market. There is potential for great rivalry among competition.
Threat from substitute products exists from UAB and FIB as well as from any existing ball bearing manufacturers in the BRIC countries. As the increase in industrialization increases in these countries, more substitute products will become available as new companies enter the market. The threat of new entrants could become a crucial force due to the high demand for ball bearings in Brazil, China, and India.
The bargaining power of buyers will be high due to the increasing number of competitors who are willing to compete for their business and the increasing amount of substitute products available. Buyers tend to have more power when there are many suppliers in the industry and the products are standardized; this is the case in RDB’s situation.
Rivalry among competition will most likely be the most crucial force affecting RDB due to the high demand for ball bearings in the BRIC countries (particularly Brazil, India, and China) and opportunities available to those companies who are successful in this market. RDB will have to focus on a USP to develop a competitive edge against the rivals.
5.“Rebrandthecompany,changingitsnamefrom“RoyalDanishBearings”to“Green Bearings,anRDBCompany”(line147-148)Discusstheimportanceandrole ofre- brandingforRDB [7 marks]
Branding recap
Brand loyalty will help to sustain or increase market share and allow the firm to charge premium prices (consumer demand is less sensitive to price change). Successful brand development will help to extend product life cycles and will make it easier for a firm to introduce new products under the same brand. Brand loyalty may make it difficult for competitors to enter the market (tablets and the ipad)
Major brands rely on reputation/awareness to succeed internationally
- loyalty leads to increased sales
- others may switch to your brand
- well-developed brand can to lead to barriers to market entry
- helpful when developing/promoting new products
- all involve increasing sales/market share/ability to set prices/profit
Brand development is a long-term marketing strategy used to strengthen and build a brand image. Successful brand development leads to awareness of and, hopefully, preference for a given brand. Consumers should be loyal to the brand and purchase it over rival brands.
RDB is seen as a well-known, well-established, well-respected company that has maintained brandloyalty over the years. In response to Anna’s RDB 2020 strategic plan that includes‘first-mover advantage in terms of brand awareness and “green” practices,’Valdemar has suggested that the company be rebranded with a name change to “GreenBearings, an RDB Company.” Re-branding should be in the hopes of further differentiating RDB from rival companies and focusing on factors other than the high quality ball bearings that RDB produces. The name change would be in line with desired image of the company. Valdemar, however, suggests that “Green Bearings” (new company name) would be “green” in name only.
It is not well advised to change the name of a well-respected company that benefits from brand loyalty for Valdemar’s purposes. The new name suggests that RDB has concern for the environment and practices “green” manufacturing processes. It appears unethical to use the new name while the factories produce high pollution levels.
Even if RDB’s production practices were to become more “green,” success depends on the perception that RDB’s B2B customers that purchase ball bearings on a large scale are concerned that such a small component of finished product such as a car is produced using green technology. That is probably not the case in China.
RDB should use its well established brand name as an extension and possible create a subsidiary (possibly through joint venture or strategic alliance) that could use the suggested new name.
Marketing thoughts:
Can you product a position map for RDB
How does the proposed strategies fit into Ansoff matrix
If asked to develop a marketing plan in any exam Q (not just RDB), think about applying marketing mix, Ansoff matrix, Boston matrix, position map, five forces