What problem does this company face, and how is it proposing to deal with them

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Last updated: April 16, 2019

Drew’s Diaries Limited is a company that has been established for more than 100 years. The company’s reputation in this respect has been built up over many years. ”The company is renowned for its range of hand crafted leather bound corporate diaries which have been Drew’s trademark since the business was formed.” But recently, it has seen a considerable decline in net profit margins and steady deterioration of turnover and market share. ”They are currently facing a projected net loss for the first time in the company’s history, against an annual fall in turnover of 10% and an increasing cost base.

” In term of the case, there are several problems in the company:1) Product mixAs we know, Drew’s offers one of the most complete and varied product mixes on the market. There are more than 200 different types of diary produced. ‘We have diaries foe all tastes and occasions.

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‘ Says Peter Drew, the managing director of the company. Combined with the current downturn in trade due to intensifying competition, the product mix policy is causing severe profitability problems. ”They are currently facing a projected net loss for the first time in the company’s history, against an annual fall in turnover of 10% and an increasing cost base.” There is no doubt that the current company policy with regard to the product mix is costly to support.Given the problem, it might be tempting to suggest that the solutions should be based on offering a more restricted product range together with guarantee quality.

Alternatively, at the very least, perhaps one might be tempted to introduce a ‘budget’ range.2) Unsteady relationship with the retailersRelationship marketing draws attention to the importance of retaining as well as attracting customers with the emphasis being placed on the development of long-term relationships with existing customers.As a service company, customer loyalty and retention are very important to Drew’s.

However, there are more than 50 different retail networks for Drew’s and all these retailers are totally independent of Drew’s. Furthermore, as Peter said ‘we run a tight ship here. We’re in a bit of sticky patch at the moment.’To Drew’s, how does it maintain and develop the customer loyalty? There are three suggestions at he following:a) A detailed understanding of the customer needsA service provider may retain customers because the provider has demonstrated the ability to do a good job for the customer, based on through understanding of the needs of the customer.b) Special discount for previous customers or free merchandiseTO improve the customer loyalty, some special policies should be settled for the customers who purchase the service more than one time, such as discount plan.

Free merchandise is the method that it involves the offer of free merchandise in return for an agreed level of purchases, for instance buy 50 cases and get another two free.c) Quantity guaranteesThe basic function of the guarantee is to reduce the risk to consumers associated with the purchase decision, both before and after the event. For effective guarantee, Policy of the quantity guarantee of the company should be clearly identified.3) No formal marketing plan and research planMarketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.Marketing planning is the systematic process of assessing marketing opportunities and resources, determining marketing objectives and developing a plan for implementation and controlAccording to the case, there is no formal research plan in drew’s. But marketing research is particularly important for Drew’s, because of the way in which retailers act as a buffer between Drew’s and their end consumers.

If Drew’s is not to become isolated from market trends and changing preference, it is important that an accurate, reliable flow of information reaches the marketing decision maker. It might be very limiting if only feedback from the trade were used in making new product and marketing-mix decisions.There is no formal marketing plan in Drew’s and a formal planning process, which is managed by the Finance Director. Effective marketing planning stems from a marketing rather than financial orientation and, as such, needs to be based on detailed and up-to-date market analysis. This does not mean that financial control and performance are unimportant, but financial performance itself is determined by how market-oriented a company is. There is a lack of marketing orientation at Drew’s due to an over-emphasis on financial controls. In addition, and relate to this, there is a lack of market analysis, leading to lost opportunities and a lack of awareness of threats. So if Drew’s has a formal research plan and marketing plan, the problem discussed above will be solved.

4) Ignore competitionAs Peter Drew said: ”we don’t waste time and effort gathering lots of pointless information about our competitor are and what they are doing.”No organisation operates in isolation. The organisation is not free to development a business and marketing strategy without reference to the competitive environment. Competitors are an important factor that will influence the eventual success or failure of a business in any market. So it is very important to consider systematically a number of aspects of competitive behaviour.

Drew’s should set up a systematic competitor analysis to identify and understand the key elements of the competitors’ strategies, because ignore competition and the likelihood of being taken by surprise or of being caught out by a strong new product or a major attack on a loyal customer base is very great and can create severe problem.5) No advertisingPeter Drew has a strong error view about advertising that it is usually a waste of money. He thinks that the company has a tradition and reputation so it does not need to spend thousands of pounds on advertising. But advertising has many purpose over and above simply promoting a brand or an institution, including stimulating demand, combating competitor, supporting the field force, educating customers, increasing uses for a product, reminding and reinforce attitude, reducing sales fluctuations and conveying a brand’s positioning. Advertising is the most costly ingredient of the promotion mix, owing largely to high production and media expenses. Although expensive, on a per capita basis advertising’s costs are relatively low owing to the large numbers of viewers, listeners or readers.

Media selection can be very specifically related to the target audience. In the case of Drew’s, it is suggested that the main media vehicle should be television. It is expensive but it is the most cost-effective method of reaching the target audience on the basis of advertising exposure to target market. In addition, it is also suggested that the television advertising be supported by a planned campaign involving the following other media:* Direct MailDirect mail is printed advertising material delivered to a prospective customer’s or donor’s home or work address. Direct mail can generate orders, pre-sell prior to a sales call, qualify prospects for a sales call, and screen out non-prospect.

It requires careful planning, production expertise and an understanding of the target market.* NewspaperThe main role of newspapers for advertising is to communicate quickly and flexibly to a large audience. National daily papers, national Sunday papers and local daily or weekly papers between them offer a wide range of advertising opportunities and audience.

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