MMK325 – Strategic Marketing

CASE STUDY 1 – INTERFACE: PRIZE-WINNING, SUSTAINABLE MODULAR FLOORING 

  1. Identification and justification of the main issues

1.1 The company’s mission and products need to reflect the core values of the business 

The mission of the business is about inventing and producing sustainable, bringing sustainability to the environment. Modular carpet products that businesses are trading need to be competitive in the market by demonstrating features that counter the product characteristics offered by competitors. At the same time, Interface products also need to show attractive features to customers. The problem here is that Interface is encountering many goals to match its sustainability commitment. The goals that businesses set for modular carpet require that the production process needs to go through many stages in which businesses will not be able to avoid the non-sustainable production process.

1.2 Sustainability always ultimately raise overall costs

This can be a long discussion on debates related to business sustainability. Obviously, the saving of resources will make it difficult for businesses to source for the production chain. For example, when the enterprise is implementing the circular economy model, the enterprise needs to have more equipment and machines to support waste recycling to become an input material to be re-produced or produced for another cycle (Kalmykova, et al., 2018; Ghisellini, et al., 2016). This means that the firm’s production costs increase and this goes against the definition of sustainable production.

  1. Comments on effective alternative solutions

2.1 The company’s mission and products need to reflect the core values ​​that the business currently has

First, enterprises focus on the production process as the solutions for this issue. The testing on the supply chain process helps the business to control the details of the product and the stages that the product has gone through for the public on the market. The control of the process helps the business to detect the jobs that are flawed or do not meet the mission standards that the company has set out so that there will be appropriate adjustments. But in contrast, the detailed monitoring affects the time budget of the business, such as the allocation of human resources to monitor each stage of the production process.

Aside from that, the business also has recycled action with flooring and used carpet. Recycling helps to reduce the impact of waste on the environment (Afzal, et al., 2019; Arora, et al., 2018). Therefore, to correlate with the corporate mission, this strategic plan helps businesses build a sustainable corporate image with the environment and at the same time, gain the interest from the partner customers.

2.2 Sustainability always ultimately raise overall costs

To solve this problem, Ray Anderson stated the key is innovation. Innovation is considered a useful strategy for businesses to continuously maintain positive performance and find more useful solutions to improve business performance (Zein, et al., 2019; Wiese, et al., 2015). For Interface in particular and other businesses in general, obviously, finding useful innovative solutions will help businesses develop better while saving financial and human resources. production time operations (Arora, et al., 2018). IKEA, Toyota, and Ford are successful businesses in leveraging innovation to become successful.

However, in order to find out the most suitable production solution for the enterprise, of course, the enterprise needs to go through many experimental processes to conclude the most effective process (Reed, 2015). This also makes businesses have to invest a large part of financial resources, human resources as well as time. Anyway, with a streamlined improvement process, businesses will achieve more than they have to invest.

  1. Proposed the best solution, justification and its implementation plan

The best solution for the problems outlined above is the solution of reexamining from top to bottom of the business model. Obviously, businesses will encounter time consuming problems reviewing their production activities. But if we do not discuss that most highlighted negative factor, it can be said that reviewing the whole enterprise will help the management board to recognize the strengths and weaknesses of the production apparatus (Zott & Amit, 2017). To ensure the business keeps on the right track of sustainability, it is essential to do this stage because there will be knots of production lines where the business goes against its commitment to sustainability. Based on that, management can plan the next plan after reexamining the whole business model activity. This could also be considered a high-level decision making where the management team needs to find out the strategic development to apply the solution to the operation of the organization (Reed, 2015).

CASE 1 DISCUSSION QUESTION

  1. What product category best matches carpeting, convenience good, shopping product, or specialty product? Does the company’s sustainability program influence your answer? If so, how? If not, why not?

Since the company focuses and invests on the sustainable program, the business determined that this program will create brand awareness for its customers in brand identity – Interface’s carpet is environmentally friendly. Therefore, a specialty product is a product category best matched with carpeting because this is an enterprise product that wants to focus on creating a name in the market and target a special customer group, an enterprise and has interest in the sustainable product (Reed, 2015; Fetscherin, et al., 2014).

  1. Explain how the core product, the packaging, and the auxiliary dimensions of carpeting produced in a sustainable fashion might create a marketing advantage for Interface.

The above factors create a competitive advantage for the business based on the competitive price factor, the rug products have a durable standard, stain resistance and at the same time target two target customers consumers and businesses (Ledwith & o’dwyer, 2008; Hosseini, et al., 2018; Reed, 2015).

  1. Where is carpeting in the product life cycle? Using product cycle theory, where would sustainable modular carpet products fit? (You may visit www.interfaceglobal.com to help prepare an answer.)

Based on the product life cycle theory (Reed, 2015), the carpeting product of the enterprise is at maturity. Besides, the sustainable modular carpet product is in the introduction and growth stage because it is in the new innovative production process of the business and is being viewed by the market.

  1. What product support services would be crucial for Interface?

Product warranty service is an important operating service that Interface needs to operate to assist customers and business partners with taking care of products (Fetscherin, et al., 2014). Because the number of products that Interface provides to customers is usually a large quantity, customers want to have carpet maintenance service if the carpet has been used over a period of time. At the same time, with the sustainable operation of the business, customers will be willing to re-supply the carpet for the business to serve recycling activities if the business has a recycling service.

  1. Should the marketing team at Interface seek to build and enhance brand awareness? If so, how? If not, why not?

Yes. Brand awareness through sustainable programs is the competitive power of businesses (Aaker, 1991). Carpet is a product that can be traded by other businesses, so reinforcing a sustainable brand image and enhancing brand awareness from customers is a smart strategy that Interface’s marketing team should focus on to create competition for products in the market.

  1. How could Interface’s sustainability program generate brand loyalty or brand equity, especially when the brand is less-well-known than other carpet manufacturers?

Sustainable production trend of enterprises becomes a strong point in the marketing strategy of enterprises. Building a brand loyalty should target customers who care about the environment and eco-friendly products. A marketing strategy to promote a sustainable production process is a way of promoting an effective and different brand image to other competitors (Reed, 2015).

 

CASE STUDY 2 – AROMABABY

  1. Identification and justification of the main issues

1.1 Buyers become confuse with the “green” brands in the market

For the current marketing market, many businesses use the term “green” to label their products and introduce their products that are natural and healthy. However, the truth is that not 100% of the product’s ingredients are derived from nature because during the manufacturing process, the product will have to undergo refining and processing processes to produce the final product. The presence of additional ingredients is inevitable during the manufacturing process. Therefore, the labeling of benign natural products has become popular and difficult to control in the market. The origin of the product is from nature, but after the process, the product changes the material, which will cause degradation compared to the “green” commitment from the business. Purchasing psychology of customers will be confused by the promotion of healthy products, not causing allergies. Taking advantage of this, businesses intentionally introduce products of “green” origin to attract customers (Khandelwal, et al., 2019).

1.2 Customers become more aware of organic products

Consumers realize more and more chemical interference with the products they use every day. That is why the market now has the appearance and spread more widely by organic products. Today’s shoppers are more and more likely to return to personal care products made from natural ingredients (Khandelwal, et al., 2019). This trend changes the trend of manufacturing products to target this customer market. This is a social factor about consumer health concerns, having an impact on the business strategy of the business.

  1. Comments on effective alternative solutions

2.1 Buyers become confuse with the “green” brands in the market

In order to overcome this problem of customers when they want to target customers, businesses need to start from the stage that affects the most basic of customers, that is, health care and trust with products. Aromababy has found and targeted their customers who have the ability to pay (premium pricing strategy) and have high demand for products derived from natural and benign. Apparently, Aromababy influenced and won the trust of customers because owner Catherine Cervasio was a former mother and she understood the customer’s concern (Aromababy – Australia’s First Organic Baby Skincare Range, 2016). At the same time, customers believe in Aromababy’s products thanks to the celebrity endorsement marketing strategy. Overall, Aromababy has many advantages because its owner has publicity skills when working with media and this sets Aromababy apart from the competition. Therefore, although there are many “green” brands in the market, Aromababy always makes a difference and does not create confusion for customers.

2.2 Customers become more aware of organic products

As discussed above, the customer’s awareness of the product belongs to the macro trend that affects the business activities. Obviously, when life becomes more modern and complete, people arise with more diverse needs. Marketers need to capture this feature as mentioned in Maslow’s pyramid theory of needs (Mawere, et al., 2016). Therefore, in the context of health concerns, people not only focus on eating healthier with less fat and doing more scientific activities, but they also pay attention to care products outside the body. Natural products are more concerned. Especially on the product packages introduced are “natural”, “organic”, “100% organic”, etc. all attract the attention of consumers (Khandelwal, et al., 2019).

For businesses, marketers can take this as an advantage so that they can research new products to match market trends. However, product research and development still need to go hand in hand with corporate ethics to make sure that the “green” mark truly reflects internal quality.

  1. Proposed the best solution, justification and its implementation plan

The most appropriate issue for identified problems is that the marketing needs to be accompanied by the real quality of the product. It is true that marketing helps products to be widely known in the market and recognized by customers (Reed, 2015). Especially in the context of consumer interest in natural products, and emerging products from competitors, marketing strategies need to exploit testimonials from people already using the product to generate confidence from consumers about the product (Adam & Hussain, 2017). Marketing strategy should not only target people with an interest in healthy products, but should also target broader markets by creating product images that appeal to different audiences (Badi, 2018). In general, consumers have concerns about general health care products. Impact on this issue, most products in the healthcare category are likely to appeal to the target audience. So, what sets Aromababy apart is its natural ingredients and the commitment that the product is really “green” (ingredients and product packaging).

CASE 2 DISCUSSING QUESTION

  1. Why do you think Aromababy is successful? In your answer, conduct research, critically evaluate, and apply, strategic management theories to Aromababy (i.e. contingency theory, portfolio theory, core competence and management by values, etc.).

The success of Aromababy comes from an effective marketing strategy in which businesses take advantage of customers’ health care trends; the trend of loving “green” products; testimonials from reputable customers. Businesses succeed by gaining customers’ trust with the products and with the Aromababy brand. Besides, businesses are also successful with the management by values ​​strategy. While other businesses create an external image of providing “green” products, but the core product does not reflect the name, Aromababy does business with corporate ethical standards. This strategy works for businesses that want to manage risk effectively in complex business environments, allowing businesses to respond differently to their competitors and make a difference (Dolan & García, 2002).

  1. Find two examples of “green” marketing (e.g. social media, television ad, magazine ad etc.). Explore the claims made in the ads and determine whether the companies are guilty of greenwashing.

Reynolds American (Natural American Spirit cigarettes) advertises their cigarettes as eco-friendly: using reusable ingredients in a marketing strategy; saving 280,000 hand towels in 2010, using 100% wind energy since 2008 but the fact that Campaign for Tobacco-Free Kids has accused this business of greenwashing by the harmful effects of tobacco smoke on the lips. school and for the health of those around you. Therefore, it can be seen that the production process is environmentally friendly does not mean that the product is the same (Epperson, et al., 2018).

McDonald’s uses paper straws to reduce the amount of plastic straws that go into the environment, but nevertheless, the cups it uses are plastic cups, and that hasn’t changed the company’s efforts towards a sustainable environment (BBC News, 2019).

  1. What modifications to the marketing mix do you think Aromababy might have to make in order to perform well in overseas markets?

Aromababy products should be more clearly described on the product description label. Clarity in product origin, production method, human resource extraction, etc. are things that need to be shown to the customer to generate confidence in the product. Obviously, customers have no desire to use the product on people when the product is made by exploiting the human resources of children or the ingredients are not in line with what is advertised (Khandelwal, et al., 2019). Greenwashing is easy to see if the production process and related resources go against the “green” commitment (e.g., plastic packaging). In short, at oversea markets, Aromababy needs a more detailed description of products on their labels in order to win customers’ interest and trust.

  1. Apply Porter’s five force model to the organic skincare market.

Porter's five force model

To describe the competitive force of organic skincare market in the market, we can see the factors of competitors, threats of new entrants, power of suppliers at high level and the rest at low and medium level.

In the organic skincare market, businesses not only compete with competitors in the same segment, but also with skincare companies manufactured from chemicals. Therefore, businesses in the organic skincare market have high competition with their competitors

The organic market in general becomes more attractive and it easily attracts new players. In general, the increasing demand from customers creates the conditions for other businesses to form business products that satisfy customers’ desires.

Buyers are faced with many choices for this market. However, for businesses that really have ethical standards in doing business in this area, businesses have the right to dominate the market and at this moment the power of buyers is low.

Organic skincare products are less replaced by other products. So, the threats of substitutes in this market are low.

Suppliers of organic ingredients have an advantage in the market over supply and price. When the trend of consuming organic goods becomes more popular, raw materials become scarce, creating a power to dominate the market of suppliers.

 

 

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