Choosing the correct business development strategy is an important factor in launching and maintaining a business and a company. According to Lafley and Martin (2013) and Hunter (2018), the strategic choice should be based on the analysis of the beneficial ways to implement the strategy. In this case, the winning strategy is formulated by the purposes of the company, namely to generate profit by adapting to current conditions of the importance of ecofriendly methods. Thereby, considering the task of entering the gas and oil market, one will focus on wind energy which will promote active support from the government, articulating the winning strategy.
The company is a medium-sized organization with 300 employees and several departments. The report will be based on the scenario displayed in Appendix 1, formulating the capabilities to generate energy without pollution and an eco-friendly management system. Developing customer value implies a clear objective statement (Prior, 2021). Thereby, the report aims to develop strategic options for the company, identify and recommend one strategy, and develop the value proposition and marketing strategy. The model will be based on the B2B type, considering the size of the company and production opportunity.
Potential Market Opportunities
The scenario the company is considering entering is formulated by the main principles of a value proposition. It implies the model which offers benefits to key stakeholders (Baaij, 2018). Thereby, given the company’s approach, which is correlated with today’s demands for environmental improvement, the scenario assumes active state support. It can be articulated by financial support, legislative framework, and the provision of resources and technology. In other words, it includes actions that contribute to the development of the eco-friendly principle and the company as a whole. In particular, it is argued by common goals with the state and the world community in the aspect of combating the problem of the environment.
Market segmentation is a necessary process for business development. It includes various targeting concepts, and given the B2B model in the current case, the appropriate ones will be selected. Thus, segmentation according to the operational attribute, namely technology, status and order volume of consumers, will be the effective one (Rego, 2020). It is constituted by the fact that the company will cooperate with other organizations and businesses. In this regard, it is necessary to group customers by status, namely the size and turnover of the company. In addition, one has to take into account the technology and order volume from companies in order to calculate the operating performance.
Identifying market segments is part of the customer value framing. According to Weinstein and Johnson (2020) and Weinstein (2018), segmenting promotes better organizing outcomes and consumer value development. In this case, business market variables such as technologies, status and order capacity will be applied. Thus, the first segment of the market is medium-sized retail companies that support the eco-friendly direction. Accordingly, the technologies used are formulated by eco-friendly strategies, and the volume of the order is average, that is, not exceeding the average productivity of the company. The second segment implies a large organization both at home and abroad, supporting the eco-friendly direction.
|Criteria||Segment 1||Segment 2|
|Degree of Competition||Low||High|
Table 1. The table shows different assessment criteria of the market segments
To determine which segment is more suitable, it is necessary to profile them using several segmentation variables. Thus, as demonstrated in Table 1, the size of the first segment is an average company, and the size of the second segment is formulated by a large organization whose demand may exceed supply. The growth rating is about the same for both segments as both support the growing trend of the eco-friendly principle. The profit potential is higher in the first segment, which is formulated by the last factor, namely competitiveness. The first option is less competitive since the companies are not so large and have a greater market variability. Thus, the first segment is more potentially profitable for the current case, which may be concluded by validating them applying relevant segmentation variables.
The relative attractiveness of each market segment is formulated by the business possibilities and downsides. Speaking about the first segment, namely medium-sized retailers, the benefit lies in the variability of the business offer. The evidence validating the emergence of this market segment is articulated by the direct connection between business success and appropriate size of market. In addition, small companies have more chances for profitable cooperation due to the need for development (Inghels, 2020). However, the main issue is that retailers are interested in the minimum price for products, so one cannot raise the price above a certain threshold.
The second segment is formulated by a large organization at home or abroad. Based on this, the downside is increased competition due to the popularity of the company. In addition, big business has the ability to exert pressure and insist on favorable conditions for them. However, a large company has more financial capacity to purchase products at higher prices. Despite this, the first segment is the best option for the company in the current case.
The evidence supporting the statement that the second segment is inappropriate in this case is formulated by the customer value and marketing strategies fundamentals. To generate profit and achieve successful development of the organization, it is necessary to provide an environment in which all aspects formulate a benefit (Taylor, 2021). Thus, given the unfavorable aspects articulated by the second segment, it is inappropriate. Besides, a large company as a market segment option and its features formulate the evidence of the emergency in this case.
Developing the Competitive/Winning Strategy
Identifying the proper competitive strategy is an essential factor in maintaining a business. There are many concepts related to the development of a strategy for the company, but the most relevant in this case is the one developed by Porter. Thus, given the choice of market segment, namely the many medium-sized companies, the differentiation of parameters is appropriate (Hiriyappa, 2018). Moreover, the choice of this strategy correlates with the five forces model indicated in Appendix 1. Namely, the main advantage is taking into account the requirements for an eco-friendly model and assistance from the state.
However, there are alternative competitiveness strategies that can be useful in some cases. For example, reducing production costs and benefiting from lower costs than competitors (Sahaf, 2018). This strategy would be more appropriate if the second market segment was chosen, which is formulated by the sales of one large organization. It is connected with the fact that, in this case, one does not have to take into account the different requirements of companies. Thus, the management has the opportunity to set up a certain production algorithm based on cost reduction. In addition, the chosen strategy includes a focus on one market segment, excluding industry-wide selling.
Proposed Value Proposition
Before creating the value propositions, one need to analyze the customer profile. In this case, it is articulated by the management of the company purchasing the product. Thus, jobs are framed by people on high positions on medium-sized companies or large abroad organization. Working with several companies means the threat of insufficient orders, which is pains. In turn, customer profile gain involve the possibility to generate profit due to profitable conditions of collaborating.
A company’s value proposition is a determining factor in development and success. It includes building a core that makes the client realize that the company is superior to other companies (Milani, 2019). It should be articulated in a clear way that is unique to the company. It may be a pricing policy, a unique service, a technology, a development, or an approach. In any case, competitors should not have this aspect, besides, it should be implemented in a quality manner (Petersdorff, 2018). Finally, this factor can be the basis for marketing activities. In other words, by advertising a product, one can claim its value proposition by attracting potential customers.
Thus, the company’s first alternative value proposition is the production of a quality energy product with minimal environmental impact. Despite the fact that many companies are reformatting to harmless production due to the growing trend of eco-friendly strategies, in the current case, it will be on a larger scale. In other words, the company’s activities will be formulated with record low rates of pollution or harm to the environment. Moreover, it will not affect the quality of products in any way which articulates a unique offer.
It will be possible to achieve taking into account the most probable scenario of the development of events indicated in Appendix 1. Namely, the active support of the state to help the greener energy. In this way, the customer receives quality products without any negative impact on the environment, which will greatly increase customer recognition. This is articulated by the fact that there is a growing trend to give preference to options that can offer more eco-friendly operating principles.
Besides, such a value proposition correlates with fundamental concepts of jobs. Thus, according to Sharma (2020) and Klehe (2018), the principle of work is the most profitable exchange of any actions for a monetary reward. Thus, the company can offer the most beneficial option for purchasing energy with a potential benefit in the future. It is because green energy is valuable, besides, more and more companies are reformatting their production to be eco-friendly. Adapting to change and following trends is essential not only for today’s business activity but also for the future.
Identifying pains and gains promote visualizing of the essential factor in business, such as a balanced offer. Gains articulate the benefits and positive aspects expected by the client that will satisfy one and increase the likelihood of accepting the value of the proposition (Weizgraeber et al., 2021). Pains formulate all the downsides that the client may experience, such as risks, negative emotions, and problems associated with the product (Clifton et al., 2021). Thus, a balanced supply is a situation in which pains do not exceed gains. In other words, the benefits that the client can get from interacting with the company must compensate or exceed the potential negative aspects.
Thus, the pains for the selected target market, namely medium-sized retailers, are formulated by a potentially low level of compliance with customer expectations. This is due to the fact that a large number of companies have a variety of needs, and in some cases, it can be problematic to consider everything. However, the gains that are formulated to produce a profitable, high quality and trending product outweigh the downsides. Besides, according to Pride and Ferrell (2018) and Hooley et al. (2020), active focusing helps to consider many factors related to business success. Pain relievers and gain creators are constituted by beneficial offers on the market and unique services.
The company’s second alternative value proposition is the use of household resources. For companies in the oil and gas industry, this aspect is important as it articulates financial independence and benefits. In addition, it is beneficial not only for the organization but also for the state since the resources of the state are used, and the economy is improved. Further, the use of domestic resources allows the country to generate profits since the costs of procurement and transportation are not necessary. Moreover, together with the use of green energy, namely wind turbines, it articulates a benefit for the business and a significant profit.
This value proposition and the needs of the target market correlate with the basic principles of job concepts. According to Claes (2018) and Hujo (2020), the utilization of domestic resources for the oil and gas industry formulates a beneficial option. As it was mentioned before, the core notion of the job concept is to apply the profitable option as much as possible. In addition, it is worth noting that the use of domestic resources is beneficial in terms of related industries (Speight, 2019). In other words, to use home resources, you must also use transport infrastructure. Further, taking into account the use of wind energy, the IT department will also be involved. Thus, it formulates a profit generation not only for the current company but also for the associated infrastructures.
Although there are various gains of using domestic resources related to the target market, one may experience some pains. First of all, gains are argued, as already indicated above, by financial benefits for many stakeholders. In addition, given that household resources will be used, the cost of processing them will be lower. Thus, one can offer customers a lower price, which formulates the main gain. However, it is worth noting that the use of household resources can lead to the depletion of stocks.
In the future, this may lead to significant pain for the target market, namely price increases due to shortages. That is, in this case, the main gain can turn into a pain, which formulates the importance of calculating the use of household resources. To do this, it is necessary to calculate the productive capacity and the time for which there will be enough resources (Okpanachi, 2021). Depending on this, one can set up a balanced use and combine it with the purchase of raw materials.
Considering that the company is going to enter the gas and oil industry, respectively, the company needs to produce the corresponding products. As already indicated, the target market is formulated by several medium-sized retailers. Thus, the product will be delivered to these companies and then sold in other segments. It should be noted that in case of successful promotion of the company, the manufactured products can be expanded (Chandler, 2018). For example, the company will be able to produce not only gas or oil products but also some technological tools. This may include transportation systems, processing tools, or natural resource extraction systems.
It is worth noting that, as already identified, the main payoff for the target market could be a price increase due to scarcity in the event of resource depletion. In this case, pain relievers involve the use of special reserves in order to save time for developing strategies for adapting to the problem. According to Basile et al. (2019) and Noreng (2021), it may include the use of backup systems, the search for new deposits, or the development of a system for purchasing resources. Accordingly, gain creators involve the above features related to the cheapness of products associated with the use of domestic resources. In addition, this includes the implementation of strategies to improve the impact on the environment. Namely, the use of green energy and eco-friendly principles and the integration of customers into this trend through the purchase of products.
Considering all the above aspects, it is worth noting that the first value proposition is more beneficial for the company. First of all, this is due to the significance of the pain that may arise indicated in the second value proposition. Namely, the depletion of resources, shortages and a significant increase in prices. This will lead to the fact that customers will switch to more profitable offer options, that is, to competitors. Thus, the company will not have the option to continue to exist since one cannot lower prices and win back customers. Accordingly, without customers, products will accumulate and will not be implemented, which will lead to failures in all mechanisms of the organization, including related infrastructures. As a result, stagnation and bankruptcy will come, and the company will either cease to exist or be absorbed by competitors.
Moreover, the first value proposition, that is, the production of products with minimal harm to the environment, is financially safer. As already indicated, the state will support this strategy in every possible way in order to promote green energy. This may include both resources and financial and technological support. That is, in case of unforeseen circumstances that interfere with or threaten the company’s activities, the state can help level this problem. In addition, this may include a financial cushion in case of a crisis or other financial difficulties. Thereby, the first value proposition is more appropriate in the current case.
Communicating the Value Proposition
Product positioning is an integral part of business development, which includes the development of a positioning map in relation to competitors. According to Lerman (2018) and Tybout and Calkins (2019), the main advantages of positioning are the ability to identify key product benefits and correlate them in relation to customers. Further, one can find a competitive advantage even when the market changes (Waller, 2020). In addition, it allows you to reinforce the brand name and products, create an effective promotion strategy and attract various target market groups and customers (Tiffany, 2021). Finally, it enhances competitive strength and can serve as the basis for new product launches.
There are several product positioning strategies, each of which has its own characteristics in a particular area. The first strategy is to create an association of the company’s products with specific benefits. Further, one can create an association of products with either high quality or low cost, which formulates a competitive advantage. There is a strategy to convince customers that the company’s products are better than those of competitors through special marketing moves. Finally, one can create an association with a unique use of the company’s products. This is articulated by the implementation of narrowly focused products, the niches of which are occupied by a few companies or not occupied at all.
For successful product positioning, it is necessary to develop a method for visualizing the position of competitors. The positioning map allows you to display all the important aspects of the position of competitors and compare them with your own (Baack, 2018). In addition, on the basis of the map, one has the ability to analyze possible threats coming from unfavourable positioning (Boone and Kurtz, 2021). In such a case, using the analysis of the position map, one can develop strategies for levelling threats and methods for implementing these strategies. It is also useful from a future planning perspective. So, based on the analysis of the positioning map, one can take into account all the downsides and benefits of the current position and lay them on the basis of company development planning.
It is worth remembering that the main task of the positioning map is to display the position of the product from the perspective of the client. When designing a map, there are several key factors to consider that need to be displayed. According to Kirschen and Strbac (2018) and Trivedi (2019), the main factor is the reason why it is profitable for the customer to buy this particular product. This can be articulated by low price compared to competitors, better quality, unique use, or benefits in use. In addition, when developing a map, it is necessary to take into account a significant number of existing positions that may already be occupied. In this case, it will not be something new and will not bring the desired result in attracting new customers. That is, the structure must be unique and have a competitive advantage due to the above factors.
In this case, taking into account the target market and the direction of the eco-friendly strategy, which is argued by the additional support of the state, it is necessary to focus on product quality. That is, the chosen strategy will be formulated with more significant production costs and better production. It should also be taken into account that we are talking about the gas and oil industry, where quality plays a key role. Given the specifics of the industry, customers will prefer a higher quality product, as this has an impact on many infrastructures. Speaking about the position of competitors, which may consist of lower production costs, this position is a winning one.
In addition, when developing a positioning map, it is necessary to take into account a possible gap in positioning. Chen (2020) and Mogaji (2021) state that it is articulated as an empty spot on the map between the company and competitors that can be filled with a competitive advantage. In other words, this is a niche that, depending on the factor, is not filled or filled by a few companies. In the current case, this can be argued by companies with an average pricing policy. Or companies that are also reformatted to an eco-friendly strategy. With the help of a gap, one has the opportunity to either choose a different strategy or fill it with their own competitive advantage.
Marketing Mix to Support the Positioning Stance
For a clearer understanding of the positioning strategy, it is necessary to analyze an essential factor in the aspect of marketing. According to Ray and Yin (2019) and Rajagopal (2019), marketing strategies implies a long-term approach to the strategic development of the company, the purpose of which is to achieve a competitive advantage. Soundaian (2019) and Adhikari (2018) state that marketing mix strategies have similar aims, however, it implies price, product, place, and promotion as well. Thus, in this case, the product is a quality gas and oil product, and the place is formulated by the company.
The pricing policy is argued by the high quality of products at the expense of state support. Finally, the promotion includes a carefully crafted value proposition, namely quality products with the implementation of eco-friendly strategies. Analyzing it more deeply, one should mention that in this case the positioning of the company, namely the eco-friendly direction formulate the winning strategy for the company. It is articulated by the appropriate environment for this strategy and positive reaction of the stakeholders.
To conclude, the company specializes in the production of gas and oil products using an eco-friendly strategy. Due to this, the state will actively support the company in order to influence the development of green energy. The main competitive advantage is the high quality of products and not an overpriced pricing policy, which can be achieved with the support of the state. Moreover, a market segment characterized by a few medium-sized retailers will be used. The eco-friendly strategy formulates adapting to the situation of pollution problems and following trends.
The potential success of a business-level strategy lies in creating an association with customers about high-quality products. It will lead to an influx of new customers since quality is a key aspect in this area. The investments required for the organization include the cost of installing and upgrading power plants to harness the power of the wind, and the cost of rent, salaries, and equipment.
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