Exceso Marketing Challenges

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Table of Contents

Executive Summary
Introduction
Problem Statement
Conclusion
Implementation
References

Executive Summary

Exceso has been experiencing a series of marketing challenges in competitive market. One of the main problems that this firm has been facing is that the production team do not have point-of-sale customer communication. This means that the team is unable to get to know what the customers think about their products.

For this reason, it becomes a challenge to design products that meet the changing customers’ tastes and preferences. There has also been a problem of making the firm’s products available at various outlet stores. The firm has over-concentrated on creating new overseas branches while ignoring the need to offer enough stock at the local market where its brand is strong.

In some stores, customers have complained that there is not enough stock of the firm’s products. The sales team has also proven to be part of Exceso’s recent problems. The team lacks motivation in their work. They prefer giving out excuses to the chief executive instead of coming up with tangible solutions.

To solve this problem, this firm needs to have a team of dedicated and competent employees who are able to understand the market forces and design operational strategies that are conscious of these external forces.

As presented in the case, the current workforce has been miscalculating its steps in the market, and they lack the drive to make them achieve good results. The firm should therefore, create a better workforce that would understand and be willing to meet the needs of the dynamic environmental factors.

Introduction

Exceso has been a prosperous firm that was able to meet customers’ needs in the market, making it develop a good image. According to Foss (2001), the current dynamic market forces pose many challenges to firms, and it is always important to understand these forces in order to develop plans that can manage them effectively. The recent operational activities of this firm demonstrates that it has lost its focus.

The firm is no longer operating at its optimum, and its products are conspicuously missing in some of the stores that had trusted it for many years.

This is a sign that Exceso is disappointing these distributors who will be forced to look for alternatives. It is clear from the case that these distributors are finding alternatives, and some of the shelves that were exclusively meant for Exceso products are currently being taken by products of rival firms.

According to analysis of the case presented of this firm, its main problem is caused by its reversed focus in its operations. Exceso has been successful in the market because it has always been focusing on delivering value to its customers. However, the focus has changed, and the firm is now determined to please the Wall Street.

It is trying to expand its operations to convince shareholders that the firm is expanding, and this has affected its ability to understand the market local needs. This research will focus on analyzing some of the problems faced by this firm, and how an appropriate solution can be hatched.

Problem Statement

Losing market share

Exceso has been the market leader in this industry in the local market, but the firm has is losing its market share at a very high rate to some of its competitors that were initially considered smaller.

Production unit working below its capacity

At the production unit, the firm has been producing below its capacity. This has been so because of breakdown of some of its machines.

Production unit operates without understanding market needs

The production department has been operating without any clear information from points-of-sale, especially from its trusted outlets. This means that it is unable to give products that are in line with the market needs (Butman, 2002). As Hommel (2012) notes, in the current market, tastes and preferences are constantly changing with the changes taking place in the environment.

Firms have the obligation to understand these changing environmental factors in order to come up with the most appropriate product that meets customers’ demand. Exceso do not have a clear plan that can enable it design the most appropriate products for the market.

Limited storage space

At the production plant, the firm has introduced three shifts as a way of increasing the volume of its output. The firm plans to manufacture 3000 cases of the product, a much higher capacity than it has been producing.

As Wendell reveals, the firm do not have a warehouse capacity to pack 3000 cases of the products the firm plans to produce, which would force them to seek for other alternative storage from other firms. This will cause a further financial strain to this firm (Ranchhod & Gurau, 2007).

Increased discount that reduces profitability

The firm has decided to offer discounts on its products as a way of improving its sales volume in the market. However, the discount the firm is offering as a way of managing market competition is too much to make it sustainable. The discount reduces the profitability of the firm, and this means that unless an alternative is determined, this firm cannot be sustainable with this new strategy.

Market growth below the forecasted rate

The chief executive officer, Mr. Foley told the Andrea, the analyst, that the firm would grow its sales at 9%, but while talking to Martin, the head of sales, He is told that this growth can only be at 3%. This means that the firm is not able to meet the demands of its shareholders who are getting worried about it.

The management is depending on the trust of the shareholders in order to increase their budget in the next quarter. However, the revelation that the sales growth can only be at 3% may make the shareholders reduce the budget of the firm during the board meetings, and this may affect the productivity of this firm even further.

Exceso’s products are not available in the market

Andrea has been able to discover that products of this firm are not adequately stocked in some of the retail outlets within this region. The eight-pack ClickZipPlus is missing in these stores, and the four-pack ClickZipPlus was inadequate. A cross-check of what other market competitors were offering reveal that these rival firms were consistent, and their products were readily available at lower costs.

The manager of this store tells Andrea that despite the good image that Exceso had in the market, its current trends may not be sustainable. This is an indication that the distributors, and even the customers, are slowly losing trust they had for this firm. Unless such a trend is changed, the firm could lose the lead in the market that it has been enjoying in the past.

Uncoordinated workforce

Another major problem that comes out is that this firm do not have clearly defined roles of employees at various departments. Vikas is a chief accountant at this firm. He has managed to secure new markets in Eastern Europe and China. One of the clients that he has struck a deal with is Regency Brands.

The problem is that he was able to discuss all the relevant issues that were to be discussed by the sales and marketing team, led by Martin. He has not been attending the meetings of the sales and marketing team and therefore, do not understand the strategies set out by this team.

Finding new clients for this firm is a positive move, but he should have let the right department to do the negotiation based on their planned forecast.

Focus is put on shareholders instead of customers

Exceso’s top management has been concerned with managing the reactions of its shareholders instead of focusing on customers’ needs. For this reason, the management has been coming up with strategies that are meant to satisfy the shareholders and win their confidence.

Going to overseas markets while the firm lacks the capacity

The move to look for overseas market is meant to convince shareholders that the firm is expanding its operations to the global market. However, this comes at a cost of ignoring the local market. This allows for smaller competitors to grow in the local market, creating a stiff competition in a region it had been able to develop trust with the customers.

Alternatives

The current strategy that this firm uses is bound to fail if it fails to find appropriate alternatives. The first and most important alternative strategy that this firm should implement is to focus on market needs instead of pleasing the shareholders. The management should design new approaches of understanding customers’ needs, especially at the points-of-sale.

The production unit should then design its products based on these needs. This way, it will be able to change with the changing market preferences. When implemented properly, this will make the firm successful, and the Wall Street will always be pleased by its success (Shankar, 2012).

Another major alternative strategy that this firm should consider using in the market is value strategy instead of discounting products. This firm is the market leader in this industry in the local market. Other firms will always trying to emulate its market strategy, especially when it comes to pricing.

In order to remain competitive, the management should consider offering high value products and charge premium prices. Customers will believe that the higher prices reflect the improved value. They will be convinced to buy the product at higher prices. This will increase sources of income for this firm to meet other operational needs.

The management should focus on the local market for some time, before considering going global. Exceso has won the trust of the local market, but it is yet to maximize the benefits of this trust. Before going to the Eastern Europe or China, it should ensure that its local branches are operating optimally. It should maximize its local market share acquisition in order to justify the need to go global.

This firm should also have a new human resource management strategy. The management should hire individuals with skills, talents, and passion to meet the changing market forces. Every employee should know his or her role, and avoid overlapping into others responsibilities because this may result into redundancy of their work.

Conclusion

The current strategies of Exceso cannot enable it succeed in the market. The management must stop focusing on ways of pleasing the shareholders at the expense of customers. There is only one way of pleasing the Wall Street, and that is by offering high value to customers at a cost that is favorable. This will help the firm create a pool of loyal customers, making the firm profitable.

The Wall Street will always be pleased when it realizes that a firm is profitable. It should also avoid attempts to go global at this early stage because this will jeopardize its ability to offer high value to its customers in both markets.

Finally, the management must recruit talented and highly skilled workforce, and motivate them in order to ensure that this firm remains competitive in the market. A motivated workforce will always have a better output as compared to the current team that is constantly looking for excuses in order to avoid work (Ferrell, 2014).

Implementation

The plan of action for the strategy change of this firm will start by the immediate refocus of the management from pleasing the shareholders, to understanding the market needs. The management should then hire the right workforce that will be able to meet the demands of the dynamic market. A section of this new team should form a market research team to understand the needs of the consumers in the market.

Their findings should be sent to the production unit, so that they can develop products that meet market demands. This information should also be sent to the top management so that it may factor it in when developing both the strategic and tactical plans for the firm.

On the other hand, the sales team should make regular round to all the current stores to ensure that this firm’s products are available and properly displayed at the shelves. This way, the firm will be able to regain its previous success in the market.

References

Butman, J. (2002). A Pain in the Supply Chain: HBR Case Study. Harvard Business Review, 5(1), 31-36.

Ferrell, O. (2014). Marketing strategy: Text and cases. Mason: South-Western Cengage Learning.

Foss, B. (2001). Successful customer relationship marketing: New thinking, new strategies, new tools for getting closer to your customers. London: Kogan Page.

Hommel, U. (2012). The strategic CFO: Creating value in a dynamic market environment. Berlin: Springer.

Ranchhod, A., & Gurau, C. (2007). Marketing strategies: A contemporary approach. Harlow: Financial Times Prentice Hall.

Shankar, V. (2012). Handbook of Marketing Strategy. Cheltenham: Edward Elgar Publishers.

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