Strategic Marketing-Case Study
Outline
1 Executive summary
2 Part 1: Analysis of past marketing related problem or opportunity within case study.
3 Part 2: Critique of the course of action taken at that time.
4 Part 3: Recommendations for future action.
5 Interdependencies and reflection
EXECUTIVE SUMMARY
The analysis is based on Vertu, which is the leading company in the luxury phone market. Based on the analysis, the identified opportunity is market segmentation initiatives adopted while entering the market. Through marketing segmentation initiatives, Vertu offered value based products on the identified consumer behaviours, characteristics, and needs. Through segmentation initiatives, Vertu enjoys the first mover advantages, high market share, an increase in demand, increased competition coupled by increase in sales and profits. Besides, segmentation initiatives have promoted business value and brand equity which accelerates cash flows to its shareholders. The company applied marketing orientation coupled by value-based marketing activities to realise the expectations of the targeted customers. To achieve customer orientation, Vertu provided quality products, customer value, and customer service through service proposition. To stimulate high demand for the products, Vertu offered higher levels of utility to consumer, supported with high prices. To capitalize on the marketing initiative taken to promote segmentation initiatives, the proposed approach is to improve on its marketing mix.
Part 1: Analysis of a significant past opportunity
The past marketing related opportunity identified in the case study of Vertu, is market segmentation initiatives adopted while entering the market. Segmentation is described as the process used by a company to divide the targeted markets into unique and distinctive groups based on consumer behaviours, characteristics, and needs (Dibb & Simkin 2010). Through this market process, a company offers value based on the identified consumer behaviours, characteristics, and needs. The major segmentation variables adopted in marketing are demographical, geographic, behavioral, and psychographic.
With regard to Vertu as indicated in the case study, the market segmentation initiatives form the past opportunity that impacted the company positively. The company identified and selected the key variables necessary to segment the market for luxury phones (Wyner, 2005). The company saw the opportunity to provide high-end and expensive phones to customers and people in high social status positions to provide extraordinary and expensive luxury phones with unique experience. Concentrated targeting strategy was adopted by, Nokia through Vertu to reach the identified market segment (Pride, Hughes & Kapoor 2010). As such, the segmentation activity was to target a small niche of concentrated customers, with closer related needs, behaviours, and characteristics.
Based on the segmentation variables, Vertu employs geographic, demographical, psychographic, and behavioral variables. For instance, in regard to psychographic variables, Vertu segmented its market based on lifestyles, motives, and lifestyles. For example, Vertu targets special VIP parties’, events, and celebrity endorsements, on addition to people of expensive lifestyle coupled with unique taste of handsets. On geographic variables, Vertu segmented regions with fine accessories and high-end products such as Asia, Middle East, and Europe (Thomas 2013). Majority of the Vertu’s luxury phones are sold in private suites in the major cities of the world such as Tokyo, Paris, London, and New York (Pride et al. 2010). On behavioral variable, factors such as benefit expectation, price sensitivity, end user, and brand loyalty were considered in the segmentation process. For example, Vertu phones are never about technology by quality, experience, and craftsmanship (Thomas 2013). The consumers have high income and purchasing power to spend over 4,000 Euros on a single handset. As such, Vertu targeted affluent consumers, with high expectations on quality of products. All Vertu’s handsets have the best encryption protection that guards the information of the user making them attractive to the affluent consumers.
Impacts of Segmentation Initiatives on Vertu
The segmentation activities employed by Vertu have impacted the company positively. For example, the company still enjoys the first mover advantages as its closer competitors such as Goldvish, Mobiado, and Gresso have not been able to compete favourably. Through its segmentation activities, Vertu has planned to increase its boutique stores, as a result of an increased demand. For example, currently the organization has around 350,000 customers from all over the world (O'Reilly 2013). Additionally, the company has continued to enjoy increased competition coupled by increase in sales and profits. In ‘Vertu seeks a broader market for luxe Smartphones and new audio accessories’, Bien Perez observes that Vertu’s annual sales are estimated to be €300 million (HK$3.2 billion) (Perez 2013). The implication made is that through segmentation activities, Vertu has improved its sales. Having intensified its operations to target Smartphone users, the company has increased its market share by enticing a new generation of affluent mobile phone consumers. Thus, segmentation initiatives employed by Vertu have not only increased the sales, but also increased its market share and international presence.
In the book Handbook of Market Segmentation, Weinstein (2004) has listed the major benefits associated with a successful segmentation analysis, and one of them is meeting the demands and needs of the marketplace. Through segmentation initiatives, Vertu has met the needs of the luxury phone market since for the last 12 years; the organization has been providing products that meet consumer preferences. Vertu mixes quality, functionality, and craftsmanship to provide an experience to the end users, thus satisfying the needs of the market. Consequently, the company has realized customer satisfaction, and in turn, making profits (Weinstein 2004). Moreover, Vertu has created a competitive advantage in the mobile phone industry as a whole, because through segmentation initiatives, it has identified a group of consumers that it can easily satisfy its wants and needs over its competitors (Weinstein 2004). As such, Vertu has remained the market leader in the luxury mobile phone market.
Since segmentation is not one time affair as described by Palmer and Miller (2004), Vertu through its marketing initiatives has continued to increase its market share by targeting affluent consumers interested in unique smartphones. As part of the segmentation initiatives, business value and brand equity have been developed, which accelerates cash flows (Payne & Holt 2001).
Overview of the organisation (SWOT analysis)
Vertu is a Luxury mobile phone brand, that concentrates on the benefits and quality of product features. The company was established 14 years ago to provide phones in the untapped market segment. The company designs high end phones that are made for specific segment of consumers interested in not just owning a phone, but possessing a phone that is unique from what the masses have. Under this segment, Vertu has targeted high net worth, social status seeking, with a demanding, and international lifestyle customers, who prefer finer things with a handmade touch. The targeted consumers according to the CEO, Massimiliano Pogliani, never acquire ordinary things in their whole lives, but instead go for exceptional products. Seeing the opportunity, Vertu sought to provide products which were of high quality. So far, Vertu is the leader in the luxury mobile phone market. The company has always bridged the existing gap between technology and luxury in the phone industry.
Upon its launch, Vertu has undertaken various segmentation initiatives as a part of its marketing strategy to increase its presence in the phone industry. As indicated in the case study, the London-based boutique company, Vertu has continued to develop high-end phones such as the Vertu Ti. The Vertu Ti costs five times more than the highest priced mass market Smartphone, with a starting price of €4000. The major attributes associated with Vertu products is the experience they provide to consumers and the superior craftsmanship used to make each of the phones.
Part 2: Critical analysis of the past course of action
In response to the opportunity, Vertu had to develop value-based marketing activities to realise the expectations of the targeted customers. In this context, a market orientation approach was employed. As such, Vertu focused on understanding the wants and the needs of the customer segments in the luxury phone market, and ensuring that its phones meet consumer needs (Doyle 2002).
Figure 1: Market orientation
