Essential Case Facts
Mitalio Software Inc. mainly deals in the manufacture of business process software, with the company’s main customer base being drawn from the manufacturing, banking, healthcare, as well as insurance and the financial services sectors (Zero 1). Mitalio had opted to expand its business portfolio by focusing its business idea on the manufacture of new software, the Business Process Management even as competition and dynamism in the industry grows. Mitalio’s marketing strategy of lead generation, as well as brand visibility, was failing to achieve the intended objectives of the company because of the changing business and market structure.
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However, the firm’s software products faced the challenge of implementation (Zero 1). The salespeople had to be involved extensively to educate customers and eventually develop the need for acquisition amongst customers. In particular, the marketing efforts targeted offering education to potential customers and generating new opportunities for making sales. The market focus for the firm was international, with regional offices being maintained in Germany, the United Kingdom, France, Hong Kong, and Spain.
The marketing team was failing in its objectives and goals because of the immense competitive challenges that the firm was facing and the rigid organizational framework that Mitalio had adopted. The overall marketing spending at Mitalio was beyond the industry’s benchmark average of between 2 and 5 percent. Mitalio’s marketing spending was around 7 percent. The company also registered a poor marketing productivity for each of its 65 employees in the marketing department (Zero 2). The complex decision-making process at organizations when it comes to software acquisition made it a huge challenge for Mitalio’s operations. It implied that the firm had to wait for long before selling, even after it had involved itself in numerous lead-generation marketing processes.
Major Issues Faced by Mitalio
Difficulty in implementation
The software products designed by the company were difficult to implement. Although Mitalio had various software models in the market, it was difficult for customers to determine the right ones that they needed. This means the firm, through its sales team, had to undertake extensive customer education to generate sales. This was challenging to the firm because it was an expensive venture to organize for such consultative selling opportunities. Equally, it implied that the firm had to continue training clients even after acquisition to enable the effective use of the software.
Ineffective marketing team
Mitalio’s marketing team was mostly ineffective in its performance. The marketing productivity for every employee deployed in the marketing department was less compared to the performance of other competing firms. Thus, while the firm spent a huge amount of its revenue on supporting marketing activities, the revenue returns were limited. This reduced the competitive capability of the firm in the overall software market.
Alternative Paths of Action
Design single unit programs
Single unit programs will address the challenge of difficulty in implementation because buyers will not require greater understanding before deciding to buy. Unlike modules, single-unit programs will need very limited, or sometimes no training sessions by the company’s sales force. In essence, Mitalio will cut down on the sales cost that it incurs while conducting user trainings. It will also reduce the long buy time.
Single unit software will be expensive compared to the modules currently being sold by the firm. This will discourage buyers from acquiring software products designed by the company, which will, in turn, affect its revenues. Additionally, single-unit software lacks the flexibility that modules have. Clients may only require a software module that operates in a certain section or department and not an entire unit that focuses on the entire organization.
Adopt indirect marketing strategy
Mitalio will reduce its high marketing cost because the marketing activities will be carried out mainly by third-party players such as wholesalers or distributors. This will also enable the firm to improve on its profitability because it will reduce its current workforce in the marketing department, currently numbering 65, to a sizeable figure. This move will see the high salary figure and other benefits paid out as remuneration to this workforce being saved and, instead, channeled towards supporting other worthy causes (Joshi 63).
An indirect marketing strategy will lower the closing opportunity for Mitalio. Buyers will not have that important close interaction that is useful in convincing their buy decision since there will be no presence of company sales force (Joshi 63). Sales will also more likely to get affected because software products are technical and require technical support to be offered by the marketing personnel to assist buyers to make the right decisions. In the absence of such a service, buyers will opt to seek assistance from sales teams representing other software vendors in the market and shun Mitalio software.
Mitalio should consider designing single unit software as the main focus of the business, while only designing modules based on customization. This will increase the business potential for the firm in the sense that it will be serving the mass market through the single unit software while narrowing down to customization where customers only require a particular module. Thus, the modules will only be designed according to the exact specifications of particular buyers.
Rationale for the Recommendation
Mitalio is currently spending more on funding its marketing activities, yet the average return from individual sales force representatives is lower than the company’s main rivals. By focusing its attention on the design of single-unit software, the firm will not need to maintain a huge sales force team like it is currently doing. The number of 65 sales force team that is currently maintained can be trimmed to 20 only in case the focus shifts to single unit software design.
The buying process is currently complex in the market because of a lack of understanding on the part of customers. Most corporate bodies that require software products are not able to determine the right module that they require. This affects the buy time because consumers require greater assurance before they can make a decision. However, with the focus being on single unit software, it is easier for the firm through its sales force team to convince buyers to acquire a single unit rather than go for the modules. The reduction in training time need in single unit software purchases compared to modules will be significant in enabling Mitalio to cut down on its marketing expenditure. There is also a likelihood that the firm will not encounter compatibility issues and challenges when it resorts to single unit software compared to modules.
The marketing activities and strategies of a particular firm often affect its ability to compete with other industry players in the market. The objective of the firm must always be the main aspect of consideration when determining the marketing strategy to be adopted.
Business strategies and decisions employed by market competitors must always be checked closely to inform of the decisions that a firm can take as a counteractive measure. However, competitors’ decisions and strategies must never derail a firm from focusing on its strategy. Fear and panic just because your competitor has adopted a certain approach will only end up derailing the firm from its intended course of action.
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Business organizations must continuously explore and adopt measures that ensure the buy time of their products or services is limited. Customers may sometimes, especially where technical decisions are involved, lack the appropriate knowledge about whatever they intend to buy. The company must ensure it speeds up the buy decision by working out an agreeable solution.
Statement about the Connection of the Concepts
Mitalio’s poor performance in marketing was mainly influenced by the leadership development marketing strategy that the company employed. This strategy affected business because the sales force team was spending more time attempting to educate users rather than in instigating sales.
Mitalio panicked over BEA Systems acquisition of Fuego to a point of trying to alter its operations as a means of counteracting the anticipated market effects. Mitalio’s management focused more on lead generation, instead of pursuing thought leadership. This never improved the company’s effectiveness.
Although purchase decisions were complex in the case of Mitalio and its corporate customers, the company never seemed to seek for solutions to address the situation. Instead, it pursued with its rigid marketing practices that only ended up increasing the operation costs, while reducing its profitability.
Joshi, Amit Madhav. “The Direct, Indirect and Feedback Effects of Marketing Actions.” Order No. 3196363 University of California, Los Angeles, 2005. Print.
Zerio, John. “Mitalio Software.” Thunderbird School of Management (2007): 1-15. Print.