Introduction
Roger Mills, a student at Western University wants to start an advertising business with the local small business owners in London, Ontario as his potential customers, to advertise with his new company. Mills firm is unique in that he will be advertising almost exclusively to university students, initially, those at Western. His idea is to make use of the back cover of laptops, which are ubiquitous at Western, and which are very often on public display: in the classroom, cafeteria, library, class and in the halls.
Marketing challenge for Kiai Marketing Group
Mills is a new entrant in the advertising sector in London, Ontario. He has to compete with better established advertisers such as the local newspapers such as the London Free Press, the largest newspaper in circulation, and the Windsor Star.
Another challenge for Mills will be convincing his targeted market that his unique advertising approach will work. While with the traditional advertising methods such as the newspaper pullouts, there are measured parameters of how many people might actually get to see the ad, Mills has to contend with the undetermined effectiveness of his advertising method, and building his brand identity from the ground up.
Performance matrix: how to get customers
London, Ontario is one of the largest cities in Canada with a population of slightly over 400, 000 (Janssen 2010, 3). Other than hosting some large companies such as Kellog, Lever Industrial and the Ford Motor Company, the enormous support that has been given to small businesses has seen the increase in the number of SMEs in the region. These small business owners are Mills targeted clientele. Because of their smaller budgets as compared to larger corporations, these smaller businesses have less to spend on advertising, one that would make the option provided by Mills more favorable in their stead.
Kiai’s marketing mix
Roger Mills has to advertise his advertising firm, and he has to choose a marketing mix that would be affordable yet effective in advertising the new service he has to offer. The major channels of advertising are the local newspapers like the LEP. The first consideration to determine how Roger Mills will do his advertising is this budget. Mills is working on a fixed capital-his savings- and there is no indication that he is going to seek outside financing before launching the product. The second consideration is his targeted market segment-the small-sized businesses in London- and what mode of advertisement will reach them most effectively. The best option then would be for Roger to carry out an intense advertising campaign to market his product in the four months before the launch through mainstream newspapers. This is because there is a higher propensity that small business owners will make a good percentage of newspaper readers living in London. However, this option might be too expensive, given that placing a half page ad in a weekday newspaper costs $1,441for one weekday.
A better option in terms of costs would be for Mills to identify the small businesses that would like to make use of his business, and make appointments to see them in person. The downside for this is that it would be very time consuming. However, the upsides are numerous. One, Mr. Mills would get the chance to explain the dynamics of his advertising business better than a hundred-word classified could. Two, unlike with newspaper ads, Mills would be assured that the message would be reaching home. Again, he might unwittingly be able to get feedback on how to improve his service just by interacting with his future customers. To crown it all, Mr. Mills would get a firsthand reaction to his product, and help gauge how successful it will be upon its launch. Mr. Mills could work with his team of ten students to on this so as to speed up the process.
Competitive advantage for Kiai Marketing
There are two major universities in London; Ontario. Ontario Western University alone has a population of over 30,000 students. Table one gives the projected number of views from the figures given in the case study
Total number of views daily= 720
Number of views monthly= 14400
Number of views in academic year= 115200
Mills should reconsider the number of team members he is willing to work with, so that his advertising may be effective. Given that there are 30,000 students, and ten team members, it means that each team member serves 3, 000 students. The businesses he hopes to represent may argue that their advertisements might end up being seen over and over again by the same students, because his representatives, no matter how socially active they are, tend to stick within the same circles. Thus, after a while there may be fewer and fewer unique viewers getting to see their ads.
A competitive advantage for Kiai Marketing is the interactive advertising (Janssen 2010, 4) offered by the team members, who as Mills explains in the case study will have to have an awareness of the product that is being advertised and talk about it to whoever approaches them with question. This is a feature that is not offered by other forms of advertising, so it puts Kiai Marketing one step ahead.
The fact that the advertisement will be in place for a duration of eight months is advantageous to Kiai’s customers. While papers charge on a pay per view basis, the view is probably once, and then the paper is done away with. For one to advertise in a newspaper they have to pay every time the advertisement is featured. However, with Kiai market, the advert will remain in the public domain for a much longer duration at lower pay per view charges.
Reaction of competition to Kiai Marketing’s coming on to the scene
Being able to directly advertise to college students has proved to be a challenge for marketers as the university administration has restrictions on traditional advertising methods such as billboards. and posters. Thus, the unique approach adopted by Mills will raise a furor amongst competitors. This is because businesses that want their products exposed to university students will be eager to work with Mr. Mills since the college age crowd is a very highly coveted market segment.
Mr. Mills has the advantageous position of there not being much the competition can do to sabotage his advertising strategy, given that the campus is a controlled environment, and his competition cannot change the rules on advertising rules or up him by intensifying their own advertising strategy. Short of copying what Mr. Mills is doing, the competition might have very little left to be done.
Analysis of the needs and wants of Kiai Marketing’s customers
Mills’ strategy is to target the medium-sized businesses in London, Ontario. These business owners normally deal in one branch and focus on marketing one type of franchise. Their clientele are locally based too. Thus, the advertising method that works best for them is one which is directed locally.
Mills’ advertising can be especially advantage to those small businesses in the locale that offer products and services to university students and staff. Taking the example of a bookshop that specializes in university course material. Such a business would get the larger bulk of his clientele from the university. If a business owner such as this would be approached by an advertiser who would get his product directly to the customer, and on a constant basis, there is little doubt that he would be willing to pay for the service.
What Kiaia’s customers need is an effective link between them and their customers, namely, the student community at local colleges like Western. Mills would provide the very much needed platform for such a service.
Threats and opportunities to Mills business venture
There are several threats facing Mills’ business as well as numerous opportunities. the first of these threats is that Mills’ is venturing onto un-trodden ground; these means that he has limited marks by which he can project his measure of success. He has to work hard to built his client base from the ground. Mr. Mills will not only have to introduce his services, but sell them as well to business owners who might be skeptical because its effectiveness has not been proven.
An opportunity for Kiai Marketing is the fact that it taps directly into the market segment that his clients want, that is, the university students.
Another opportunity for Kiai Marketing is the lack of competitors at the time of entry into the market. There are no other companies that offer the same advertising service that Kiai Marketing does; neither does the fledgling company face direct competition. Thus, in the beginning, the company will have sufficient grace period to get on its feet, and to learn along the way without having to contend with direct competition.
Definition of Kiai’s target market and highlights on why the target market
Why this market is most suitable to what Mills has to offer is because it is centralized, and Mills is in direct contact with the customers that the market segment is interested in. the small businesses whose client base is made up mostly of university students will find it an effective marketing strategy. Targeted advertising is more effective than untargeted mass advertising.
Pricing
Pricing will be one of the greater challenges for Mr. Mills, because his targeted market is middle sized businesses, and he has to keep his advertising rates down to match their needs. Furthermore, he is a new player on the market without the added advantage of brand recognition so he cannot afford to be too expensive. Add on to that the fact that he is offering a new product whose value has not been proven, and it means he has to do all in his power to keep his pricing down. As has been stated in the case study, the median pricing for adverts in the local newspapers are about $18.79. thus, Mills should focus on charging his clientele slightly less than this.
However, he has consider his own expenses and costs to see if it is possible. If Mills is to make ten laptop skins for the team members at the cost of $25 per skin, and pay each of the team members a wage of $50 weekly for 30 weeks, his running expenses would cumulate to $15,250, not counting his own salary. If Mr. Mills opted for a once a month advertisement in the each of the local papers an orientation week package, and posters to put up so as to promote Kiai marketing, it would cost him $44,160. There are other miscellaneous expenses that would come up in the course of running the business such as transport costs which shall be approximated to $5,000. This brings Roger Mills total expenditure in the projected eight month period to $64,410.
If Mills were to charge a pay per view that is slightly lower than the median offered by his competitors, say $10 per view, and with 115,200 views at the end of the eight month period, he would make a gross profit of $1,152,000. Even after taxes and other contingencies, Mr. Mills will make a comfortable profit.
Promotion and marketing of Kiai Marketing
Mills has to look into ways which he can effectively promote and market the business. Brand establishment is very important in determining whether a new product on the market is going to be a success or a flop. It is important that Mills formulate a marketing and promotion strategy that is effective while at the same time still within his budget. As has been suggested, that Mills first targeted client is the Western University Student Council, Mr. Mills can promote his idea to them by offering limited free advertising. This will work to his advantage on two levels; it will introduce the concept to the student body through a USC, a body they are already familiar with, and to which they accord attention so they will take note of the ads. Again, USC can make a longstanding client who will be a constant source of business in the future. However, Mills should be careful to avoid the misconception that the designed skins are an idea of the USC.
Conclusion
Starting a new company, especially one that offers a service or a product that is new in the market is a delicate affair that requires structured planning, projecting, thorough market research, sufficient capital, and at times, luck. Roger Mills is a young and ambitious entrepreneur who has seen an opportunity where others have not. It is a brilliant idea with lots of potential. What can make or break his idea is his delivery; can he convince the small business owners in London; Ontario that they need his services, he has to find a way to keep his costs down so as to offer his targeted market segment favorable pricing, develop parameters with which to measure the effectiveness of his advertising, and keep being innovative so that even if there is competition at some point in the future, he can still stay ahead of the game.
References
Janssen, Eric. Kiai Marketing Group. Ontario: Ivey Publishing, 2010.