Introduction
A market strategy in allows an organization to focus its resources to the most profitable of opportunities with the objective of maintaining and increasing sales and gain a competitive edge as against other similar or alternative competitor organizations. They are therefore a fundamental tool in every organization in as far as achievement of the market objectives is concerned. (Gupta and Lehmann 2005, p70-77)
Background
The retail establishment specialized on the sale of electronic products majority of which were computers and communication devices such as cell phones. The retail outlet has a turnover of $50000 and has wide and characteristically differentiated market. There are numerous similar stores that sell alternative or similar electronic products and therefore the market environment is highly aggressive and competitive.
The establishment has a reliable supply source and is therefore able to cut on warehousing costs that are otherwise incurred by other retailers. It also has a resourceful labor force that is employed on a permanent basis hence reducing the unpredictability of casual and on demand labor.
It has also managed to cut on its management overheads by implementing an impress system that has increased the level of accountability and reduced wastage. The establishment has also invested heavily in surveillance technology that has ensured that there is little or no loss from theft of products from the shelves. It has also allowed them to stock high value equipment, which is not available in other retail shops.
The retail establishment has also partnered with an advertising company that purchases their products at discounted prices in return for constant and frequent advertising. This has ensured that the establishment acquires new markets every day and maintains leadership in the current market.
Generic marketing strategy
The internal and external factors in the establishment have led the manager to implement a cost leadership strategy. The strategy is motivated by the ability to cut down on costs and maintain a profit margin even at these low costs. The retile shop offers low prices on small value products. It also maintains leadership in the high value products by offering them at the same price as all others but with warranties of varying periods.
Segmentation strategy
Market segmentation is segregating the customer base into groups of similar interests or needs (Goldstein 2007, pp 2-30). The electronics market has a complicated need base and therefore presents a great challenge in as far as segmentation is concerned. The establishment has therefore segmented the customers by the price.
This therefore means that there are two main categories of customers, these who buy low value products and those who buy high value products. Low value products are those whose price is below $2000 awhile the high value products are those whose value is above $2000. These customers receive different treatment in as far as price and discounts are concerned.
Recommendation and implementation
The marketing and market segmentation strategies fall just in line with the position of the establishment in as far as internal and external factors are concerned. The strategy therefore is just convenient for the business as it is in the short run. The organization however has the opportunity to explore more avenues by either altering or improving the current strategy.
The market segmentation strategy should include a third category of customers who purchase products valued between $ 2000 and $10000. The current strategy allows a discount to low vale products since these products require little or no repair after purchase. The high value products on the other hand attract a warranty in the alternative of a discount due to their nature and disposable life.
The customer is therefore more likely to go for a product with a warranty as opposed to that with a discount. However the consumers of products whose value is between $ 2000 and $10000 are at the point of indifference and will therefore either go for a product with a warranty or a product with a discount whichever is more beneficial. This means that the establishment looses a considerable number of customers.
The alternative approach would be to grant this third category of customers a partial discount and a partial warranty. This ensures that the customers benefit either way.
Conclusion
The organization ha effectively managed t implement the cost leadership strategy and has a good chance at improving its market segmentation. Implementation of the alterative strategy will increase the consumer base as well as increase the sales revenue.
References
Gupta, S. and Lehmann, R. (2005). Managing Customers as Investments: The Strategic Value of Customers in the Long Run. Upper Saddle River, NJ: Pearson Education/Wharton School Publishing, pages 70-77.
Goldstein, D. (2007). “What is Customer Segmentation?” New York, NY. Retrieved from http://www.mindofmarketing.net/2007/05/customer-segmentation-why-exactly-does.html