As cargo offers homogeneous product, shipping service, the primary target customers thus would be very much approached by the mass marketing approach. Mass marketing is when the needs of an entire market are relatively homogeneous. The marketing mix, therefore, consists of a single product, single price, single promotional program and single distribution system. Cargo will follow this approach with some flexibility in adjusting the theory to its strategy.
Cargo’s primary target market is car dealers in West Africa countries (Nigeria, Ghana, and Cameroon), car dealers in the Netherlands, with an extended range of customers including exporters from the Netherlands. The mass marketing then is demographically divided into Nigeria, Ghana, Cameroon and The Netherlands.
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The strategy however should have certain factors that ultimately will benefit Cargo over its competitors. Mass marketing indeed provides only one strategy mix to all target markets, yet it does not necessarily mean the strategy should not be differentiated against competitors and maybe against each target market, with Cargo would extensively put efforts to the African markets.
Cargo is not the market leader and it should not stay that way. Cargo should conquer the market share by being “different” from its competitors.
Cargo could initially start to develop one if its strengths, which in this case is the customer relations. This strength should be developed furthermore because it differentiates Cargo from its competitors. Main competitors of Cargo are larger enterprises with less interest in taking care of customers customized needs. This is an opportunity for Cargo to jump in. However, as this strength and the whole business (i.e. service) is intangible, Cargo should therefore emphasize and focus on the company’s image that is related with its sustainable competitive advantages (SCAs – e.g. customer relations).
The overall marketing strategy then is mass marketing with a strong element of the customer relationship. Two additional comments to the strategy are; first, whenever Cargo is about to launch the strategy, it should never forget the timeliness and the feasibility (skills, experience, resources, and strengths). Last, the strategy should be financially affordable as having financial resources to make it happen is very crucial.
As previously mentioned, Cargo’s product is actually service. The company offers service to ship goods from the Netherlands to West African countries. The real value of a product provides is derived from its ability to deliver benefits that enhance buyer’s situation. Taken from this statement, cargo should be able to realize that customers choose Cargo not only to have their goods shipped, but they are also expected to be safe to its end destination. Hence, the need to enhance the service’s package is important as well as crucial in retaining existing and attracting new customers.
Customer relationship management is the key in the enhancement of the service. Customers are likely to be satisfied if they are informed about the situation of the goods all the way before-shipping, the shipping period itself, and after-shipping service. This method may lead to the achievement of the differentiation strategy. In subsequent of the method, customization service is another option that can be taken into consideration.
Customization ideally is a major point in enhancing the service to customers as it is a way to match the specific needs of any customers. This option is likely to be successful if there is an agreement between Cargo and the customer about everything especially the aspect of payment. Customization needs extra cost to apply because logically it forces the company to treat the customer unique while on the other hand Cargo also has to provide standardized service to the remaining customers.
Price is a key issue in the marketing mix for service industry because it can be used to connote quality in advance of the purchase experience. Another competitive advantage Cargo possesses over its main competitors is the fact that the company offers fairly lower price to its customers.
This might be unsustainable enough to compete in the long run, as the cost might be going up each period and there will be other new entrants to the market who will offer a lower price than Cargo. Nevertheless, low price strategy now is needed if Cargo wants to stay competitive in the market while gaining loyal customers and increasing market share. The well-known theory says about the rule of 80/20 – 80% of a company’s revenue is generated from 20% of its customers. Thus, if only Cargo would emphasize on retaining the 20% customers, cost-saving could be implemented.
In contrast, price reflects the quality and prestige of the companies. Cargo has to be careful by not putting too low price only then it shows unreliability and low quality. Reliability is absolutely an essential aspect in shipping industry.
With regards to customization strategy, the turn off point for customers is that customization requires extra cash to implement. Therefore the price of customization service should be higher than the standardization one. The advantage of customization is that it in fact creates a sense of feeling of customers being treated exclusively by the company.
Ultimately, the pricing has to be correct so it can cover all the cost – including direct and indirect cost – while at the same time generating profit. The price offered can not be too low because it will frame an image of unreliability and low quality, even Cargo is actually not, and the price can not be too high in order to remain competitive. Customization price, on the other hand should be higher as this way can cover extra costs and enable cargo to create customer’s feeling of being treated exclusively.
Cargo should definitely stress and focus more on the promotion campaigns effort. So far, Cargo relies heavily on the positive word-of-mouth promotion. Although it is in a way efficient, but this method can not far reach the intended customers within the target markets.
Promotion is a tool to communicate the features and benefits of a product (i.e. service) to the target market. Using the AIDA strategy (Attention Interest Desire Action), enables Cargo to use the mass marketing to attract the attention and interest of the customers, and focuses on personal selling (more intact relationship) to gain customers’ desire and action, especially to those loyal customers (80/20 rule).
With financial resources are taken into account, Cargo should advertise its services through many mediums such as newspapers or those of electronic mediums. The advertisements however should be advertised both in Africa and the Netherlands, as these where the target markets are.
Since the development of building the website is suggested, Cargo could take the full use of the internet and its own websites to place advertisements. Advertisements on the internet such as internet banner and direct e-mail are cost effective.
No matter what the mediums are, Cargo is able to put its website address in to each advertisement. This way will create customer awareness that indeed Cargo has websites and all information can be found there.
Cargo should bear in mind that advertisements in Africa has to be more aggressive than in the Netherlands, as the demand of Cargo’s service is bigger there than in the Netherlands. Another important point in advertising is localization. It holds a crucial element for advertisements to be effective. For example of localization is the usage of local language. It is more effective to use the local language when advertising regionally. Using universal language can lead to many wrong perceptions of the message since there are cultural differences involved in perceiving the message.
The promotion has to match with the image Cargo wants the customers to perceive. The image should consist of the competitive advantages Cargo has over its competitors.
Another suggestion in relation to promotion is that Cargo should hold seminars/symposiums and make something out of it. For example is a long term agreement with car dealers to use Cargo’ service and in return they will receive special price.
Distribution is how easily and well the customers are served. Service distribution often requires multiple outlets to increase customer convenience. That is why, it is suggested that Cargo opens new offices in the West African countries. By opening new offices, the opportunity to grasp the market there is bigger. These new offices can act as branch offices to headquarter in the Netherlands.
Having offices that convenient to customers, besides increase the convenience, it also increases the reliability of the African customers – knowing they can have conversation with Cargo’s staffs face to face if anything should go wrong.
Unless the financial resources support the selective or even intensive distribution system, Cargo should use the exclusive distribution system. Opening sole merchant/office will cost less than opening several offices all at once.
It is true that distribution system has to be developed in a convenient manner, which means Cargo could offer the customers a system. The system is to pick the goods to be shipped and deliver them to the end destination. This system can be an add-value to the customers. Again, implementing this will create dilemma for the company because even though it adds value, it also adds cost (for example, Cargo needs to have truck to pick and deliver, Cargo needs to employ more people, etc.). Cargo could however charge extra cash to the customers, but the price charged should remain low in order to stay competitive.
Key customers and competitive reactions
The marketing strategy and the marketing mix Cargo implement most likely will receive feedbacks and reactions from customers and competitors. As there are new and improved services Cargo offers to its customers, such as customization and distribution system, will lead to nothing but increasing market share.
Customers are given more options and indeed it helps to make customers more loyal. With more aggressive correct promotional campaigns and more sophisticated distribution system, all of this could increase customer awareness and surely the image of Cargo. The benefits enable Cargo to become more competitive and grab substantial market share from its competitors.
Looking at the effort Cargo is putting in, competitors may not like it and to the threats Cargo spreads, they have nothing to do but to respond.