MARKETING MANAGEMENT

Think Outside The Box

Dr. Yahya Alavi www.alavi.ac

SWOT ANALYSIS TOYOTA

Strengths.

New investment by Toyota in factories in the US and China saw 2005 profits rise, against the worldwide motor industry trend. Net profits rose 0.8% to 1.17 trillion yen ($11bn; 5.85bn), while sales were 7.3% higher at 18.55 trillion yen. Commentators argue that this is because the company has the right mix of products for the markets that it serve s. This is an example of very focused segmentation, targeting and positioning in a number of countries.
In 2003 Toyota knocked its rivals Ford into third spot, to become the World's second largest carmaker with 6.78 million units. The company is still behind rivals General Motors with 8.59 million units in the same period. Its strong industry position is based upon a number of factors including a diversified prod uct range, highly targeted marketing and a commitment to lean manufacturing and quality. The company makes a large range of vehicles for both private customers and comm ercial organizations, from the small Yaris to large trucks. The company uses marketing techniques to identify and satisfy customer needs. Its brand is a household name. The comp any also maximizes profit through efficient manufacturing approaches (e.g. Total Quality Management). Weaknesses Being big has its own problems. The World market for cars is in a condition of over supply and so car manufacturers need to m ake sure that it is their models that consumers want. Toyota markets most of its products in the US and in Japan. Therefore it is exposed to fluctuating economic and political con ditions those markets. Perhaps that is why the company is beginning to shift its attentions to the emerging Chinese market. Movements in exchange rates could see the already narrow margins in the car market being reduced. The company needs to keep producing cars in order to retain its operational efficiency. Car plants represent a huge investmen t in expensive fixed costs, as well as the high costs of training and retaining labor. So if the car market experiences a down turn, the company could see over capapacity. If on the other hand the car market experiences an upturn, then the company may miss out on potential sales due to under capacity i.e. it takes time to accommodate. This is a typical proble m with high volume car manufacturing. Opportunities. Lexus and Toyota now have a reputation for manufacturing environmentally friendly vehicles. Lexus has RX 400h hybrid, and Toyota has it Prius. Both are based upon advance technologies developed by the organization. Rocketing oil prices have seen sales of the new hybrid vehicles increase. Toyota has also sold on its technology to other motor manufacturers, for example Ford has bought into the technology for its new Explorer SUV Hybrid. Such moves can only firm up T oyota's interest and investment in hybrid R&D. Toyota is to target the 'urban youth' market. The company has launched its new Aygo, which is targeted at the streetwise youth market and captures (or attempts to) the nature of dance and DJ culture in a very competitive segment. The vehicle itself is a unique convertible, with models extending at thei r rear! The narrow segment is notorious for it narrow margins and difficulties for branding. Threats. Product recalls are always a problem for vehicle manufacturers. In 2005 the company had to recall 880,00 sports utility vehicles and pick up trucks due to faulty front suspension systems. Toyota did not g ive details of how much the recall would cost. The majority of affected vehicles were sold in the US, while the rest were sold in Japan, Europe and Australia. As with any car manufacturer, Toyota faces tremendous competitive rivalry in the car market. Competition is increasing almost daily, with new entrants coming into the market from China, South Korea and new plants in Eastern Europe. The company is also exposed to any movement in the price of raw material s such as rubber, steel and fuel. The key economies in the Pacific, the US and Europe also experience slow downs. These economic factors are potential threats for Toyo ta.

SWOT ANALYSIS YAHOO!

Strengths. Yahoo!'s Overture is a tremendously profitable Internet advertising business. It focuses on affiliate advertising for large a dvertising accounts, in the same way as Google's Adsense programme. This is an important income stream for Yahoo!. Yahoo! has over 350 million users of its services and solutions. This makes it a very powerful marketing company, with a very well known brand. S ome reports indicate that is it is the most popular website in the World. A key long-term strength is Yahoo!'s international business presence. As the Internet expands and it is adopted by more nations the opportunities for Internet brands begin to emerge. Yahoo! is well placed to take advantage of these opportunities with its strategic business units in Asia, Europe and Australia. The Yahoo! Directory is an original source of structured information. It has built over the last decade, and unlike mainstrea m search engines, its content is moderated (i.e. sites are vetted before their inclusion). Weaknesses. Differentiation is difficult for Yahoo!. Almost all of its packaged services are available from other sources.
(i) Search facilities are available on MSN and Google. (ii) Free E-mail accounts are available from Hotmail (MSN) or G-Mail (Google), and many, many others. (iii) New is available from CNN or the BBC. (iv) Shopping is available everywhere on the Internet. Google has Froogle.

Online advertising is a new income stream for organizations such as MSN, Yahoo! and Goggle. Yes, today they are very, very pr ofitable. However, as technology develops and new unforeseen advertising media emerge, the future is uncertain for these income streams. This is a weakness for Yahoo! and its competitors . Another income stream that has been key to Yahoo! is derived from its partnerships with telecommunication providers. For exam ple, you buy an Internet connection package from your local telephone company, and it includes a fee-based Yahoo! package including e-mail accounts, user support and other added value services. If e ver this channel is changed or removed, the income stream would be affected. Opportunities The international market is a huge opportunity for Yahoo!. Yahoo!, Microsoft and Google are busy carving niches and taking ov er businesses in are around the Greater China Region. China has over 1,200,000,000 citizens. Other economies, such as India, also offer tremendous growth potential. The Development of the Yahoo! Directory has potential for new business and income streams. Two thirds of organizations in Ohmae's Triad (Europe, Japan and the USA) are Small Medium Enterprises (SME'). SME's are potential directory advertisers. Mobile technologies offer another opportunity for Yahoo!. Today we access the Internet using personal computers. Tomorrow pho nes, televisions, personal organisers, music players and computers will merge and morph. The mobile devices of the future will need services and solutions. Yahoo! would be well placed to provide ma ny of them. Threats. The biggest threat for all web-based organization is competition. Huge profits attract investors, innovators and entrepreneurs. Dotcom fever has not gone away, it is now more focused on profit delivery. All of Yahoo!'s key services have competitors such as AOL, Google and many others. International, culture specific competitors could affect Yahoo! in the future, unless strategic alliances are forged. China h as developed its own search engines, as has India. Why should the World use USA based companies such as Yahoo!? There needs to be a series of substantial competitive advantages to see the business rema in as an international brand. Look at what has been learned from the global car industry, or electronics industry.

SWOT ANALYSIS DELL

Strengths. Dell is the World's largest PC maker. Profits for the 3 months to July 2005 were in excess of $1 billion US, representing a g rowth of around 28%. For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard). The Dell brand is one of the best known and renowned computer brands in the World. Dell cuts out the retailer and supplies directly to the customers. It uses information technology, and Customer Relationship Management (CRM) approaches to capture data on its loyal consumers. So a customer selects a generic PC model, and then adds items and upgrades until the PC is kitted out to the customer's own specification. Components are made by suppliers, never by Dell. PC's are assembled using relatively cheap labour. You can even keep track of your delivery by contacting customer services, based in India. The finished goods are then dropped off with the customer by courier. Dell has total command of the supply chain. Weaknesses. The company has such a huge range of products and components from many suppliers from a plethora of countries, that there is the occasional product recall that can cause Dell some embarrassment. In 2004 Dell had to recall 4.4 million laptop adapters because of a fear that they could overheat, causin g electric shocks or fires. Dell is a computer maker, not a compute manufacturer. It buys from a group of concentrated hi -tech component manufacturers. Whilst this is a tremendous advantage in terms of business operations, allowing Dell to focus on marketing and logistics, the company is reliant on a few large suppliers, and to an extent is locked in for periods of time (i.e. unable to switch supply dues to the lack of large suppliers in the World). Opportunities. Kevin Rollins replaced Michael Dell in 2004 as Dell's Chief Executive Officer. Dell remained the company's Chairman. Despite founder Dell's massive success, new blood and a change in management thinking could lead the company into a new, even more profitable period. Dell was born in 1965, and foun ded Dell in 1984 with $1000 whilst studying at the University of Texas. He became the youngest Fortune 500 CEO in 1992, and will be a tough act to follow. Dell is pursuing a diversification strategy by introducing many new products to its range. This initially has meant good such as peripherals including printers and toners, but now also included LCD televisions and other non-computing goods. So Dell compete against iPod and other consumer electronics brands. Dell is making and selling low-cost, low-price computers to PC retailers in the United States. The PC's are unbranded and should not be recognised as being Dell when the consumer makes a purchase. Rebranding and rebadging for retailers, although a departure for Dell, gives the company new market segments to attack with the associated marketing c osts. Threats. The single biggest problem for Dell is the competitive rivalry that exists in the PC market globally. As with all profitable brands, retaliation from competitors and new entrants to the market pose potential threats. Dell sources from Far Eastern nations where labour costs remain low, but there is nothing stopping competitors doing the same - even sourcing the same or similar components from the same or similar suppliers. Remember, Dell is a PC maker, not a PC manufacturer. Dell, being global in its marketing and operations, is exposed to fluctuations in the World currency markets. Although it is a very lean organization, orders do have to be placed some time ahead due to their size or value. Changes in exchange rates could leave the company exposed to potential loses in parts of its supply chain.

SWOT ANALYSIS EBAY

Strengths. eBay is the leading global brand for online auctions. The company is a giant marketplace used by more than 100 million people to buy and sell all manner of things to each other. Pierre Omidyar, a French entrepreneur, was just 28 when he sat down over a long holiday weekend to write the original computer code for wha t eventually became an Internet megabrand. The brand has grown tremendously over the decade or so since its conception. The company exploits the benefits of Customer Relationship Management (CRM). Buyers and sellers register with the company and data is collected by eBay on individuals. This is the Business-to- Consumer (B2C) side of their business. However the strong customer relationships are founded on a Consumer -to-Consumer (C2C) business model, where strong interrelationships occurs, for example where buyers and sellers leave feedback for each other, and whereby awards are given t o the most genuine of eBayers. The term 'eBay' has become a generic term for online auctions. Other companies with such a strong position include Hoover for vacuum cleaners, and Google for search engines. Today it is common to hear that someone is 'ebaying' or is an 'eBayer,' or that someone is going 'to eBay.'

Weaknesses.
The organizations works tremendously hard to overcome fraud. However, the eBay model does leave itself open to a number of fr audulent activities. Often the company deals with such activities very quickly. Fraud includes counterfeit goods being marketed to unsuspecting (and suspecting!) eBayers. Other forms of theft could include the redistribution of stolen goods. It should be pointed out that fraud and theft are problems with individuals, not eBay. The weakness is that unscrupulous individ uals can exploit the C2C business model. As with many technology companies, systems breakdowns could disturb the trading activities of eBay. In the past both eBay and its payment brand Paypal have encountered shutdowns and outages. As technology improves such a weakness is less and less of an issue. Opportunities. Acquisitions provide new business strategy opportunities. eBay has agreed to buy online telephone company Skype Technologies in a deal reported to be worth $2.6 billion. Skype's software lets PC users talk to each other for free and make cut -price calls to mobiles and landlines. eBay has been buying up firms - including payment system PayPal - in an effort to increase the number of services it offers to consumers and keep its profits growing. New and emerging markets provide opportunities (Market Development). Countries include China and India. There, consumers are becoming richer and have more leisure time than previous generations. Aspirating consumers are a growing segment in many developing nations. There are also still opportunities in current markets (Market Penetration). Western Europe and the USA still have many potent ial consumers that have yet to discover the benefits of online auctions. Remember products have life cycles that eventually come to an end, and such products are ideal for selling and buyi ng on eBay. Threats.

As with many of the global Internet brands, success attracts competition. International competitors competing in their domest ic markets may have the cultural experience that could give them a competitive advantage over eBay. In fact eBay has found that it has met with other USA -based Internet companies when trading overseas. For example, Yahoo! dominates the Japanese market.
Attack by illegal practices is a threat. As with weaknesses above, the brand is attacked by unscrupulous individuals. For exa mple e-mails are sent to unsuspecting eBayers pretending to come from eBay. Logos and the design of the pages look authentic. However they are designed so that you input private informa tion that the thieves can use to take passwords and identifications. -so beware! Some costs cannot be controlled by eBay. For example delivery charges and credit card charges. If fuel prices were to rise, t he cost is passed on to the consumer in terms of delivery and postal fees. This could make the overall cost of an auctioned item too expensive. Similarly, if a credit card company such as Visa or Mastercard imposed a charge for online transaction, the total cost of the same items would increase with similar consequences.

SWOT ANALYSIS MCDONALD'S

Strengths McDonald's has been a thriving business since 1955 and 20 of the top 50 corporate staff employees started as a restaurant level employee. In addition, 67,000 McDonalds restaurant managers and assistant managers were promoted from restaurant staff. Fortune Magazine 2005 listed McDonald's as the "Best Place to Work for Minorities." McDonalds invests more than $ 1 billion annually in training its staff, and every year more than 250,000 employees graduate from McDonald's training facility, Hamburger University. The business is ranked number one in Fortune Magazine's 2008 list of most admired food service companies. One of the world's most recognizable logos (the Golden Arches) and spokes character (Ronald McDonald the clown). According to the Packard Children's Hospital's Center for Healthy Weight children age 3 to 5 were given food in the McDonalds packaging and then given the same food without the packaging, and they preferred the food in the McDonald's packagi ng every single time. McDonalds is a community oriented, socially responsible company. They run Ronald McDonald House facilities, which provide roo m and board, food and sibling support at a cost of only $ 10 a day for families with children needing extensive hospital care. Ronald McDonald Houses are located in more than 259 local communities worldwide, and Ronald McDonald Care Mobile programs offers cost effective medical, dental and education ser vices to children. They also sponsor Olympic athletes. They are a global company operating more than 23,500 restaurants in 109 countries. By being spread out in different regions, this gives them the ability to weather economic fluctuations which are l ocalized by country. They can also operate effectively in an economic downturn due to the social need to seek out comfort foods. They successfully and easily adapt their global restaurants to appeal to the cultural differences. For example, they serve la mb burgers in India and in the Middle East, they provide separate entrances for families and single women. Approximately 85% of McDonald's restaurant businesses world -wide are owned and operated by franchisees. All franchisees are independent, full -time operators and McDonald's was named Entrepreneur's number -one franchise in 1997. They have global locations in all major airports, and cities, along the highways, tourist locations, theme parks and inside Wal -Mart. They have an efficient, assembly line style of food preparation. In addition they have a systemization and duplication of all their food prep processes in every restaurant. McDonald's uses only 100% pure USDA inspected beef, no fillers or additives. Additionally the produce is farm fresh. McDonald's serves 100% farm raised chicken no fillers or additives and only grade -A eggs. McDonald's foods are purchased from only certified and inspected suppliers. McDonalds works closely with ranchers, growers and suppliers to ensure food qual ity and freshness. McDonalds only serves name brand processed items such as Dannon Yogurt, Kraft Cheese, Nestle Chocolate, Dasani Water, Newman's Own Salad Dressings, Heinz Ketchup, Minute Maid Juice. McDonald's takes food safety very seriously. More than 2000 inspections checks are performed at every stage of the food process. McDonalds are required to run through 72 safety protocols every day to ensure the food is maintained in a clean contaminate free environment. . McDonald's was the first restaurant of its type to provide consumers with nutrition information. Nutrition information is p rinted on all packaging and more recently added to the McDonald's Internet site. McDonalds offers salads, fruit, roasted chicken, bottled water and other low fat and calorie conscious alternatives. Weaknesses Their test marketing for pizza failed to yield a substantial product. Leaving them much less able to compete with fast food p izza chains. High employee turnover in their restaurants leads to more money being spent on training. They have yet to capitalize on the trend towards organic foods. McDonald's have problems with fluctuations in operating and net profits which ultimately impact investor relations. Operating profit was $3,984 million (2005) $4,433 million (2006) and $3,879 million (2007). Net profits were $2,602 million (2005), $3,544 million (2006) and $2,395 million (2007). Opportunities In today's health conscious societies the introduction of a healthy hamburger is a great opportunity. They would be the first QSR (Quick Service Restaurant) to have FDA approval on marketing a low fat low calorie hamburger with low calorie combo alternatives. Currently McDonald's and its competition health choice items do not include hamburgers. They have industrial, Formica restaurant settings; they could provide more upscale restaurant settings, like the one they hav e in New York City on Broadway, to appeal to a more upscale target market. Provide optional allergen free food items, such as gluten free and peanut free. In 2008 the business directed efforts at the breakfast, chicken, beverage and convenience categories. For example, hot specialist cof fees not only secure sales, but also mean that restaurants get increasing numbers of customer visits. In 2009 McDonald's saw the full benefits of a venture into beverages. Threats They are a benchmark for creating "cradle to grave" marketing. They entice children as young as one year old into their resta urants with special meals, toys, playgrounds and popular movie character tie -ins. Children grow up eating and enjoying McDonalds and then continue into adulthood. They have been criticized by many parent advocate groups for their marketing prac tices towards children which are seen as marginally ethical. They have been sued multiple times for having "unhealthy" food, allegedly with addictive additives, contributing to the obesi ty epidemic in America. In 2004, Michael Spulock filmed the documentary Super Size Me, where he went on an all McDonalds diet for 30 days and wound up getting cirrhosis of the liver. This documentary was a direct attack on the QSR industry as a whole and bla med them for America's obesity epidemic. Due in part to the documentary, McDonalds no longer pushes the super size option at the dive thru window. Any contamination of the food supply, especially e -coli. Major competitors, like Burger King, Starbucks, Taco Bell, Wendy's, KFC and any mid -range sit-down restaurants.

SWOT ANALYSIS NIKE, INC.

Strengths.
Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war withou t bullets.' Nike has a healthy dislike of is competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the games. Nike did not. However Nike spons ored the top athletes and gained valuable coverage. Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This makes a very lean organization. N ike is strong at research and development, as is evidenced by its evolving and innovative product range. They then manufacture wherever they can produce hi gh quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike w ill move production. Nike is a global brand. It is the number one sports brand in the World. Its famous 'Swoosh' is instantly recognisable, and Phil Knight even has it tattooed on his ankle. Weaknesses. The organization does have a diversified range of sports products. However, the income of the business is still heavily depen dent upon its share of the footwear market. This may leave it vulnerable if for any reason its market share erodes. The retail sector is very price sensitive. Nike does have its own retailer in Nike Town. However, most of its income is deriv ed from selling into retailers. Retailers tend to offer a very similar experience to the consumer. Can you tell one sports retailer from another? So margins tend to ge t squeezed as retailers try to pass some of the low price competition pressure onto Nike. Opportunities. Product development offers Nike many opportunities. The brand is fiercely defended by its owners whom truly believe that Nike is not a fashion brand. However, like it or not, consumers that wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture especially, Nike is a fashion brand. This creates its own opportunities, since product could become unfashionable before it wears out i.e. consumers need t o replace shoes. There is also the opportunity to develop products such as sport wear, sunglasses and jewellery. Such high value items do tend to have associated with them, high profits. The business could also be developed internationally, building upon its strong global brand recognition. There are many marke ts that have the disposable income to spend on high value sports goods. For example, emerging markets such as China and India have a new richer generation of co nsumers. There are also global marketing events that can be utilised to support the brand such as the World Cup (soccer) and The Olympics.

Threats.
Nike is exposed to the international nature of trade. It buys and sells in different currencies and so costs and margins are not stable over long periods of time. Such an exposure could mean that Nike may be manufacturing and/or selling at a loss. This is an issue that faces all global brands . The market for sports shoes and garments is very competitive. The model developed by Phil Knight in his Stamford Business Sch ool days (high value branded product manufactured at a low cost) is now commonly used and to an extent is no longer a basis for sustainable competitive ad vantage. Competitors are developing alternative brands to take away Nike's market share. As discussed above in weaknesses, the retail sector is becoming price competitive. This ultimately means that consumers are s hopping around for a better deal. So if one store charges a price for a pair of sports shoes, the consumer could go to the store along the street to compare pr ices for the exactly the same item, and buy the cheaper of the two. Such consumer price sensitivity is a potential external threat to Nike.