January 6, 2010

MARKETING STRATEGIES OF CREATIVE TECHNOLOGIES ON ITS EXPANSION TO DIGITAL CONSUMERS PRODUCTS

INTRODUCTION

 

 

            Creative Technologies Ltd is a digital technology company based in Singapore. Known as the brainchild behind the SoundBlaster sound card for personal computers, Creative Technologies is now trying its luck on digital consumer products such as digital audio players and digital cameras. The situation for company with those product lines however, is different from what the SoundBlaster has given them. Because the SoundBlaster has revolutionized the way a personal computer sound, it gave the company the prestige it needed to uplift its brand internationally. But with the case of digital consumer products, it is different in a sense that the company markets new product lines that were not innovated by them. In those product lines, they have strong competitors such as strong Japanese brands in the digital audio player and digital camera lines. This situation is both a challenge and a threat to the company. Japanese digital consumer product brands such as Sony, Toshiba, Canon, and Nikon to name a few, have already established a strong global presence and have already made their mark on the respective product lines they represent. Because of this case, it is imperative that Creative Technologies create an effective marketing scheme so as to subdue the pressure of competing with stronger brands internationally. In an internet news article, it was revealed that Singaporean analysts believe that "Creative is still at a disadvantage to the Japanese companies, who have a headstart in the field and a huge marketing war chest" (Bink and Hoffman, 2006). It is yet to be seen on whether Creative Technologies can be a force to reckon with in the digital consumer products industry.

 

            Research is required in relation to the current product line expansion of Creative Technologies in order to determine its strengths and weaknesses in the digital consumer product industry. In the digital audio player market, competition heats up as Apple's IPod leads the way with 30.2% of the combined HDD and Flash-based portable audio player market (In-Stat, 2006). The forecast is that the industry's unit shipment will grow to over 36 million in 2007 (PR Newswire, 2003). Similarly, the digital camera market is also in a recent boom. Being led by international brands such as Canon, Sony, Olympus, Fuji, and Kodak, it is expected to have a growth rate of 82 million units in 2008 (InforTrends, 2006). Creative Technologies made a decision to join the bandwagon but the question is, to what expense? According to Mr. Shimida, the general manager of Sony Marketing in Japan, manufacturing in digital appliances should be approached differently because it has a different characteristic compared to other manufacturing products (Fujitsu Limited, 2005). Mr. Shimida elaborated that the key to success in digital appliances manufacturing is not fast charge volume production with quick turn-around sales, but instead should be a carefully planned with exact demand prediction (Fujitsu Limited, 2005). Not only production, but marketing can also be tricky as consumers are largely segmented because of the different marketing mix strategies utilized by different brands. Another factor that may play a part in Creative's expansion is its partnership, acquisitions and joint ventures with other companies. However, since Creative is already a veteran in terms of production and partnerships (as recently, Creative is backed up by IT giant Microsoft), it may boil down straight to how the company will introduce its new brand names to new consumer segments.

 

            Gardner et al (2000) argued that the marketing of high technology is different compared to marketing of other products. In their research, they provided the following conclusion: "The market environment for high technology products, compared to that for low technology, was identified with the earlier stage of the industry life cycle, greater degree of turbulence, higher product differentiation, higher market growth rate, shorter expected life cycle, more visible future for technology, easier entry into the market, more diverse suppliers, and higher level of consumer involvement in purchase decisions. Such market characteristics had significant impact on marketing strategies of high technology products, resulting in increased number of sales people and channel intermediaries, more R&D investment, increased importance of product warranties, and a relatively higher price". In other words, such marketing strategies are typical to companies manufacturing and selling high technology products. However, one definite problem for Creative would be going head to head with the marketing strategies of brand giants. Although Creative has already made a name for itself, it was in a different product line and not on digital equipments. To elaborate, a consumer might prefer to buy a Sony or and Ipod digital audio player than a Zen player (Creative Technology Brand) because they are more familiar with those brands. Creative Technologies will basically have the opportunity to excel in their new product investments if they outplay the top brands in terms of marketing.

 

PROBLEM STATEMENT

 

 

            The researcher proposes to explore the marketing strategies used by Creative Technologies in their specific product lines such as the Zen mp3 players and their lines of digital cameras. Because Creative has not been a pioneer developer of such products, they may be problems in competing with other bigger brands in those product lines mentioned. Therefore, there is a need to explore the marketing strategies being used by Creative Technologies so as there may be an opportunity to analyze the strengths and weaknesses of those marketing strategies. Doing so will help greatly in increasing the company's opportunity to excel in mp3 player and digital camera product lines.

 

            The study will explore the following research questions:

 

1.         How does Creative Technology Ltd adjust its marketing strategy from marketing the SoundBlaster soundcard to marketing digital consumer products such as mp3 players and digital cameras?

2.         What are the marketing mediums they use in promoting those products?

3.         How do they anticipate competition from other brands and what marketing strategies did they implement in anticipation to that competition?

4.         How does Creative Technology utilize the marketing mix (place, price, product, promotion) on those products to their advantage?

5.         What are the strengths and weaknesses of their marketing strategies on those product lines?

PURPOSE OF THE STUDY

 

The purpose of the study, after being able to determine the marketing strategies of Creative Technology Ltd on their new product lines such as the Zen mp3 player and the digital cameras, is to determine the strengths and weaknesses of their strategies and to provide effective recommendations that the company can actually consider.

This study may also open the opportunity to discover the marketing strategies of companies that shifts to other product lines after the success of a specific one. In the case of Creative, its phenomenal success on the SoundBlaster has leveraged its brand to a different level but also increased its competition with other brands (Creative Technology Ltd, 2006). However, signs of success have already been evident on Creative's expansion. Although its brand names are second-best, those brands have already won numerous awards that the company can be proud of. The more recent and notable awards include the G4techTV "Best of CES" award for three consecutive years in 2003, 2004 and 2005 for the Creative Prodikeys, Zen Portable Media Center and the Zen Micro Photo, and the Ziff Davis Media "Best of DigitalLife 2004" award for the Zen Micro - an MP3 player (Creative Technology Ltd, 2006). These are awards are indications that although competition is difficult, Creative brands have managed to make their stand among the rest.

AIMS AND OBJECTIVES

 

The aim of the study is to explore the marketing strategies of Creative Technology on Zen mp3s and digital cameras. In doing so, a case study of the marketing strategies of the firm will be conducted.

The following are the objectives of the study:

 

 

1.                  To interview Creative Technology managers and determine the types of marketing approach they utilize and how they use the marketing mix to their advantage.

2.                  To conduct a review on related literatures about international marketing strategies, digital entertainment products, and company competitors.

3.                  To analyze the case study and formulate conclusion and recommendations.

LIMITATIONS

 

Creative Technology is a corporation that requires permits and schedule of appointments for research such as this.  The study is limited only to how much extent does Creative will allow the researcher to know about the marketing strategies of the company. It is still unsure if the strategies are confidential, a thorough explanation on the purpose of the study and letter for permission will be developed to convince the company.

The study is limited also to descriptive research only, meaning it will just acquire facts about the marketing strategies of the company on those products, and not develop of look for relationships among causal variables. The fact that it will be a case study also limits it to interpretative analysis only. It will not conduct any statistical analysis of any kind.

In terms of depth of professional knowledge, the background of the researcher on management and marketing theories will guide the researcher's control on its flow. Simple theories such as the 4ps of marketing and theories of consumer behaviour will help the researcher understand the strategies of the company. On the other hand, theories on marketing digital technologies still needed to be researched and understood further, which may be included in the study's review of related literature.

Communication with the managers of Creative will not be limited only to the interview questions, but also, the researcher will ensure to ask questions for clarification of information informally.

The ethical consideration that will be observed on the other hand is ensuring the confidentiality of respondents' personal information or if they wish, their participation in the study.

METHODS AND PROCEDURES

A descriptive approach will be used in the study since all of its objectives are to obtain attainable facts and not to compare causal variables. A descriptive research is limited only in presenting facts concerning the nature and status of a situation, as it exists at the time of the study (Creswell, 1994). It is also concerned with relationships and practices that exist, beliefs and processes that are ongoing, effects that are being felt, or trends that are developing. (Best, 1970) In addition, such approach tries to describe present conditions, events or systems based on the impressions or reactions of the respondents of the research (Creswell, 1994).

Data Collection

 

            Data or information will be collated through conducting a case study on the company. It is a suitable strategy since it involves empirical investigation of a specific contemporary phenomenon within its real life context with the utilisation of various sources of evidence. In this strategy, considerable ability is involved in generating answers to the research questions of why, what and how. Data collection methods applicable in this approach include questionnaires, interviews, observation, and documentary analysis (Robson, 2002; Saunders et al, 2003).

Data Analysis

 

Data will be analyzed using qualitative data analysis. Qualitative data analysis will be used to analyze the data in the study. The four steps of analytical process will be followed: categorization; 'unitising' data; recognizing relationships and developing categories; and developing and testing hypothesis to reach conclusion (Saunders et al, 2003).

In the study, strategies of Creative will be categorized based on the four marketing mix –product, place, price and promotion. Data will be unitized in a sense that each category will be analyzed to develop a single conclusion for the study. Relationships of each categories will be linked together to formulate a hypothesis that can be further explored. Then, the current problem of determining the strength and weaknesses of the company will be resolved.

TIMELINE

 

            The Gantt chart below shows the estimated time the research will be completed:

 

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

 

1

  2

3

4

5

6

7

8

9

10

11

12

 

Problem

Identification

 

 

 

 

 

 

 

 

 

 

 

 

 

Literature

Review

 

 

 

 

 

 

 

 

 

 

 

 

 

Research

Design

 

 

 

 

 

 

 

 

 

 

 

 

 

Choice of

Methodology

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

Sources

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

Collection

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

Writing up

Draft

 

 

 

 

 

 

 

 

 

 

 

 

 

Editing

 

 

 

 

 

 

 

 

 

 

 

 

 

Final

Document

 

 

 

 

 

 

 

 

 

 

 

 

 

Binding of

Document

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Timetable Gantt chart

 

 

 

 

 

 

 

References:

 

Bink, S. and Hoffman, R. 2006. No Title (online). Available at: http://bink.nu/Home.bink [Accessed: 02/11/06].

 

Best, J.W. 1970. Research in Education, 2nd Ed. Englewood Cliffs, N.J.: Prentice Hall, Inc.

 

Creswell, J.W. 1994. Research design. Qualitative and quantitative approaches. Thousand Oaks, California: Sage.

 

Fujitsu Limited 2005. Sony Marketing (Japan) Inc. Customer Service. Fujitsu Limited Business Strategy and Planning (online). Available at: www.fujitsu.com [Accessed: 02/11/06].

 

Gardner, D.M., Johnson, F., Lee, M. and Wilkinson, I. 2000. A contingency approach to marketing high technology products. European Journal of Marketing, 34 (9/10), 1053-1077

 

InfoTrends 2003. Digital camera sales to near 53 million in 2004 (online). Available at: http://www.dpreview.com/news/0311/03111901infotrends53mil.asp [Accessed: 02/11/06].

 

In-Stat 2005. Booming Digital Audio Player Market Tops $4.5 Billion (online). Available at: http://www.instat.com/newmk.asp?ID=1367 [Accessed: 02/11/06].

PRNewswire 2003. Creative Technology Announces Fourth Quarter and Fiscal Year 2003 Results. PRNewswire, 8/5/2003

Robson, C. 2002. Real World Research, 2nd Ed. Oxford: Blackwell.

Saunders, M., Lewis, P. and Thornhill, A. 2003. Research Methods for Business Students, 3rd Ed. London: Prentice Hall Financial Times.


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