Salesand Marketing Management
Salesand Marketing Management
Mostcorporations are faced with the issue of offering a range of productsin the market, whilst simultaneously sustaining the same in order toattain economies of scale (Krishnan& Ulrich,2001). However, companies have realized that addressing the problemis vital to succeed in the current time. Those in the industrialsector including electronics, computer and automotive among othershave implemented the notion of modularity. It entails creating amultifaceted product from minute subsystems, which can also functionjointly as a whole unit. Corporations in other sectors have alsoadopted product development with the need of enlarging their productportfolio. Having a broader market outlook allows effectivecompetition, particularly in the current time that is characterizedby heightened rivalry between companies (Ernst, 2002). Continuousdevelopment, as well as the introduction of novel products is anessential determinant of enhanced performance. The current paperinvestigates a case study of Carlson Companies, Inc. A hospitalityand travel organization has greatly adopted vertical integration. Thepaper provides a review of literature on product and productdevelopment, and analyzes the case with reference to the elements ofproduct development.
Literatureon product development has persistently focused on the majoringredients for the success of corporations. The majority of theinternal and external aspects, which are engaged in productdevelopment, as well as the boundaries between them, are some of thekey areas of research (Ebrahim,Ahmed & Taha,2010). According to O’Neill& Mattila(2010), the interface between research and development (R&D), andmarketing and clients has been explored. Additionally, the functionplayed by suppliers in ensuring the success of a company throughproduct development has also been investigated. As explained byBrucks,Zeithaml &Naylor (2000)the purchasing role concerning the engagement of the suppliers andcertain management responsibilities that have an impact on theproduct has been a key area of research. Introducing new products inthe market, while ensuring continuous development of existing ones,is a major factor considered by most companies that want to thrive inthe already competitive business environment (Jiang,Dev & Rao,2000). In spite of the fact that novel products are known to open upnovel opportunities for corporations, the jeopardy linked to suchdevelopments should not be overlooked. Some empirical studies havepointed out the increased failure levels of novel products,particularly in consumer markets (Dev,Brown & Zhou, 2007).
Accordingto Dev(2009), creating a strong brand is significant for any business as itoffers an edge in the highly competitive business environment.Branding helps in distinguishing the products offered by a certaincompany from the offering of others. According to dev et al. (2009),the hotel industry has increasingly adopted the notion of branding asa major element of the marketing strategy. Such branding hasparticularly focused on widespread brand segmentation. The majorityof corporations have established a wide array of brands with theintention of serving different market segments. Examples ofcorporations offering several product tiers encompass Choice HotelInternational, formerly known as Quality International that wasestablished in 1981, Marriott, Accor, Starwood and Hilton (Jing,de Ruyter &Wetzels,2008). As explained by Brucks, Zeithaml & Naylor (2000), thesegmentation strategy is founded on the ideology that a brand nameprovides tangibility to that which is not tangible. It offers atechnique of generating a certain quality of products by providingclients with vital information regarding a company’s products aswell as services. With reference to this, the value of the brand isfounded on knowledge among guests concerning the brand, opinion onits quality, as well as customer satisfaction (Rao,Agarwal & Dahlhoff,2004). According to O’Neill& Xiao (2006), branding promotes brand loyalty by offering morevalue to corporations and their visitors. This explains theoutstanding growth evidenced in the hotel industry as far as brandingis concerned.
Incorporatingthe mother company name on individual brands is also termed as animportant aspect in marketing. According to O’Neill& Xiao (2006),most companies integrate their corporate name on the majority oftheir brands. Such companies encompass Marriott International, whileothers such as Choice Hotel International and Starwood use ahouse-of-brands approach (Wynstraet al., 2001). The employment of both strategies is also evident in anumber of companies including Wyndham and Hilton, but it relies onthe nature of their brands.
Anotherapproach to product development is the use of logos. Differentcorporations embrace diverse approaches to logos while classifyinginformation for their product brands (Peter & Olson, 2005).Example of such a company include Choice Hotel International, whichemploys the same and regular logo designs for its various brandsincluding Sleep Inn, Comfort Suites, and Clarion Brands. The kind ofapproach concurrently differentiates the brands, classifies them asbeing a component of an integrated corporation while distinguishingthem from their rivals (Prasad & Dev, 2000). This kind ofdifferentiation, with a strongly established brand provides companieswith a competitive advantage over their rivals.
Asevidenced by Kim & Kim (2004), branding is important as itcreates value for visitors, by guaranteeing them of the standardizedquality level. It helps in creating a range of loyal clients, whichin turn contributes to reduced price elasticity, premium pricing, aswell as brand development. Other benefits include enhancing the valueof shareholders, implying that corporation with strong brandssucceeds in the financial market. Though is vital for management toacknowledge the impacts of a brand on the market value of a hotel,additional benefits linked to a brand, including customer loyalty andsatisfaction, must be put into consideration. This enables therelevant parties evaluate effectively the total value of a company’sbrand.
Accordingto Tatikonda & Rosenthal (2000), product development helps inregenerating a business. Therefore, product development approachesshould include the entire aspects of bringing a novel product to themarket. They encompass testing new ideas, choosing the targetcustomers, and financing. Product development helps companies respondto the needs of customers considering that they keep on changing. Toensure effective product development, various approaches includingcustomer surveys and the assessment of customer complaints mayfacilitate the strategy. Wynstra, Axelsson & Van Weele(2000) put forth that ensuring the product development approach isclient focused provides companies with a strong competitiveadvantage. Considering that it is impossible and cost-ineffective todevelop products which would meet the needs of every client, thecost-effective way entails identifying common needs and developingproducts for the same.
Whilebringing a new product to the market, Dev et al. (2009) proposes thathaving a broader understanding about client needs, nature of themarket, as well as the competitive environment are top notch factorstowards the success of a company. Quality, cost as well as time arethe key variables driving the needs of clients. Focused on thesevariables, corporations develop constant strategies and approaches toeffectively meet the requirements of their customers. The result isincreased market share and revenues.
CriticalAnalysis of the Case in Relation to the Elements of the ProductDevelopment that have been used by Carlson Companies Inc.
Carlsoncompanies Inc. is among the most highly vertically integratedcompanies around the globe. It is a hospitality and travelcorporation with numerous subsidiaries serving in the serviceindustry. In the year 2000, such subsidiaries encompassed hotels,restaurant brands, a cruise line, travel agencies, relationshipmarketing organization, vacation ownership as well as lifestylecommunities. In this regard, Carlson takes part both in travel tradeand supplier side of the hospitality industry. The company has threekey parts encompassing Carlson Marketing Group, Carlson WagonlitTravel and Carlson Hospitality Worldwide. The company aims atbecoming the market leader in all its subsidiaries.
Verticalintegration can either be forward or backward. It is thought as themost riskiest approaches in business as it entails engaging inactivities that are dissimilar from the main business (Akgun et al.,2007). The majority of corporations prefer adopting verticalintegration strategy in order to triumph over both local andinternational rivalry, which is becoming increasingly extreme in thecurrent time. By implementing the strategy, Carlson Companies Inc. isable to rise above the bottlenecks associated with operation chain,while satisfying the different requirements of individual clients.The company has expanded the business scope exhibited by theprovision of different products in the market. In my opinion, Carlsonsuccessfully implemented the integration model due to a number ofreasons. To start with, the company has established itself well inthe market, besides gaining customer loyalty. It has been evidencedthat Carlson is market and customer driven, and is committed todistinction while accomplishing its mission. Customer loyalty is oneof the key factors resulting in the growth and success of a company.Another success factor is the establishment of top-notch brands(Akgun, Lynn &Yilmaz , 2006). Integration strategy has thecapability of satisfying the general demands of clients, whileenhancing competitive advantage. Having different firms under oneparent company can help the former in creating a big brand, as in thecase of Carlson. The company’s subsidiaries have been able toestablish brands that have prevailed well in the market. Throughintegration, Carlson Inc. has obtained increased market power, givingit more influence in the entire industry. Such brands not only ensurecustomer loyalty, but also attract new customers as well asreferrals. This results in the growth of customer base, the mostimportant asset in an organization.
Capitalizingon and integrating resources organically is another factor forCarlson’s success. It includes informationization that is believedto support integration. Capitalizing on technological and scientificadvancement is core in improving management efficacy.
Itis clear that since its establishment, Carlson Companies Inc. hasfocused entirely on product development. This is evidenced by thefact that the company has been able to develop a range of products,which provides a wider customer base. As evidenced in the case, thecompany is both a supplier as well as a travel intermediary. Throughits range of restaurants, hotels, and cruises, Carlson is able tomeet the requirements of its many customers. In addition, itsinvestment in travel trade intermediary, offering such services asincentive travel and travel agencies implies that the company hascompletely exhausted the hospitality as far as investment isconcerned.
Brandingis a key element of product development. Research has evidenced thatcompanies with strong brands emerge successful in the market(Atuahene-Gima,2003). Theyobtain a competitive edge that puts them in a better positioncompared with their rivals. Carlson Companies Inc. has been able toestablish strong brands in the market that has enabled the company tobecome the market leader. For instance, Carlson Hospitality Worldwidehas evidenced speedy growth worldwide and is among the premier in thelodging industry. By the year 2000, the group had already establishedover 600 hotels present in 53 states. It is one of the biggestlodging chains in North America and among the premier in brandsegmentation. Some of its properties encompass Radisson Hotels,Radisson Suites, Radisson Plaza Hotels, Radisson Resorts and RegentInternational Hotels among others. From this it is evident thatCarlson, with its various groups, has adopted the branding strategyas a key marketing approach. Hotel branding is beneficial in manyways. For instance, brand extension provides financial benefits tocompanies in that it results in increased revenues, as well as lowmarketing costs. The use of “Radisson” as a single brand namehelps customers recognize the company products. This implies that themarketing costs involved to market different brands are reduced,owing to the reason that customers are already conversant with thesame.
Customersare also able to access a range of products under a single dependablebrand name. Establishing a strong brand creates value for a company(Badrinarayanan& Arnett, 2008).For Carlson, its brand image, awareness, loyalty, as well asperceived equity are the basis of the clients founded brand equity.Improved performance and marketing effectiveness are other factorsthat give rise to brand equity. Carlson case evidences that theCarlson Hospitality Worldwide Group believes on the significance ofmarketing research in making various decisions related to marketing.
Thevertical integration of Carlson Companies Inc. is evident from thecase study. The company controls the supply chain, while thedifferent groups provide a different service or product. Providing amix of products and services is aimed to satisfy the requirements ofall the clients. Vertical integration at Carlson is evidenced fromthe manner in which the company has been able to develop differentbrands.
Ina nutshell, companies that are vertically integrated generally reaphuge benefits. Such benefits encompass reduced production costs aswell as the creation of economies of scale (González& Palacios, 2002).Such corporations also attain cost effectiveness as they are able tocontrol quality, offering the best to their customers. This isimportant considering that most customers prefer quality products inspite of prices (Bramwell& Rudd,2014). Carlson Companies Inc. has exhibited this, proving to be amongthe largest corporation in the globe, particularly due to itsvertical integration.
WillCarlson Companies be able to Maintain a Competitive Advantage Basedon "Product Development" if other Companies Match theOffering?
Althoughcompetition is deemed healthy, failing to come up with strategies toaddress the same could be detrimental (Krishnan& Ulrich, 2001). Competitionhelps companies endeavor at being the best and distinguish themselvesfrom their rivals in order to retain a large customer base. Carlsonhas a competitive advantage founded on product development. However,it is true to say that if other companies match the offering,competition will stiffen in the market. Nevertheless, Carlson haswould be able to maintain its competitive advantage based on variousreasons. To start with, the company has established itself well inthe market. This has been evidenced by the creation of strong brandsthat has been able to succeed in the market. For instance, CarlsonHospitality Worldwide is one of the most established lodgingcompanies in North America. With over 600 hotels in differentcountries, it is certain that the company has strong foundations thathave made it to expand internationally. Additionally, Carlson hasinvested heavily in marketing research. As evidenced from the casestudy, marketing decisions are founded on market research. Accordingto research, marketing is an important tool for any company (Conlin,2007). Through marketing campaigns, corporations are able to reachwider market, while making their products known to their targetmarket. This helps in establishing a wider customer base that isloyal.
Innovativeproduct development is key in keeping ahead of the competitors (Oba& Chan-Olmstead,2006). It means that though such competitors enter the market withsimilar products, a company with innovative products is able todifferentiate itself. The success of a corporation is stronglyfounded on the distinctiveness of the product. These encompasstechnical features as well as product functions. Though serviceoffering may be the same, the manner in which the same is provided iswhat distinguishes a company from the rest. For instance, Radisson, abrand of Carlson Hospitality Worldwide believes in the significanceof offering quality service. In order to achieve this, it endeavorsin training its employees, offering skills building and holding teammeetings. These ensure that employees have the desired skills andmotivation to serve customers better. People in an organization playa significant role in helping a company maintain its competitiveadvantage, and for Carlson, this is evidenced.
CarlsonCompanies have been able to respond speedily to the dynamicrequirements and expectations of its customers. Offering a range ofdifferent products all under one company implies that the company hasbeen able to identify the common needs of its clients. These factorshave enabled Carlson to secure a competitive advantage, both locallyand internationally.
TheMain Points Identified in the Literature Review with the RealityExperienced at Carlson Companies Inc and Apparent Gaps
Itis apparent that the case of Carlson Companies is consistent with theliterature discussed in the paper. Certainly, the company hasinvested in expanding its products range as well as brandsegmentation. According to O’Neill& Mattila(2010), the interface between research and development (R&D), andmarketing and clients has been explored. Research is a major factorthat should be considered by companies that want to succeed in themarket. From the case study, Carlson engages in marketing research,which acts as the major foundation for it marketing decisions. Thecompany believes that investing in research helps in obtaining awider reach in the market. As a result, the same assists in creatinga customer base that is loyal to the company. Introducing newproducts in the market, while ensuring continuous development ofexisting ones, is a major factor considered by most companies thatwant to thrive in the already competitive business environment(Jiang,Dev & Rao,2000). This is the case of Carlson, which has expanded its productrange, by being both a supplier and travel intermediary. The companyhas various subsidiaries including hotels, restaurants, cruises, andtravel agencies among others. Through these, Carlson is able to meetthe needs of its customers by providing different products under thesame umbrella.
Anotheraspect discussed in the review is branding. According to Dev (2009),creating a strong brand is significant for any business as it offersan edge in the highly competitive business environment. Brandinghelps in distinguishing the products offered by a certain companyfrom the offering of others. According to dev et al. (2009), thehotel industry has increasingly adopted the notion of branding as amajor element of the marketing strategy. Such branding hasparticularly focused on widespread brand segmentation. The majorityof corporations have established a wide array of brands with theintention of serving different market segments. Carlson Companies hascreated strong brands, which have made them emerge successful in thehospitality industry. Through brand segmentation, the company hasbeen able to offer distinctive products and services, which evidentlyhave helped Carlson be among the most successful corporations aroundthe globe.
Ithas been evidenced that branding is important as it creates value forvisitors, by guaranteeing them of the standardized quality level. Ithelps in creating a range of loyal clients, which in turn contributesto reduced price elasticity, premium pricing, as well as branddevelopment. Other benefits include enhancing the value ofshareholders, implying that corporation with strong brands succeedsin the financial market. For Carlson, brand segmentation is probablythe most important success factors that have made it have its currentglobal presence. Carlson Hospitality Worldwide, one of the company’sbrands has been able to establish itself well in the market. Itspeedy global growth can be linked to the establishment of variousproperties including hotels, suites and restaurants among others.
CarlsonCompanies Inc. is among the most highly vertically integratedcorporations around the globe. The company has a wide array ofsubsidiaries ach offering different but related products or services.It has a range of aspects of the hospitality and travel industryincluding hotels, restaurants, travel agencies and cruises amongothers. With reference to product and product development, CarlsonCompanies has emerged successful, providing a wide array of productsin order to meet the needs of its customers. It has secured acompetitive advantage in terms of product development, while thebrand segmentation cannot be ignored. This, together with extensivemarket research and innovative products helps Carlson stay ahead ofits rivals. Indeed, the company has a high probability of becomingthe market leader in its industry, thus meeting its long-lastingobjective. Its positioning is also ideal for further expansion andgrowth.
Akgun,A. E, Byrne, J. C, Lynn, G. S. Keskin, H. (2007). New productdevelopment in turbulent environments: Impact of improvisation andunlearning on new product performance. J.Eng. Technol. Manage,24: 203–230.
Akgun,A. E., Lynn, G.S. & Yilmaz, C. (2006). Learning process in newproduct development teams and effects on product success: Asociocognitive perspective. Ind.Marketing Manage,35: 210 – 224.
Atuahene-Gima,K. (2003). The effects of centrifugal and centripetal forces onproduct development speed and quality: how does problem solvingmatter? Acad.Manage. J.,46: 359-373.
Badrinarayanan,V. & Arnett, D. B. (2008). Effective virtual new productdevelopment teams: an integrated framework. J.Bus. Ind. Marketing,23: 242-248.
Bramwell,G. R. (2014). Courtauldsand the Hosiery & Knitwear Industry. Lancaster, PA: Carnegie.
Brucks,M., V. Zeithaml, and G. Naylor. (2000). Price and brand name asindicators of quality dimensions for consumer durables. Journalof the Academy of Marketing Science28 (3): 359–74.
Dev,C., J. Brown, and K. Z. Zhou.(2007). Global brand expansion: How toselect a market entry strategy. CornellHospitality Quarterly48 (1): 13-27.
Dev,C., K. Z. Zhou, J. Brown, and S. Agarwal. (2009). Customerorientation or competitor orientation: Which marketing strategy has ahigher payoff for hotel brands? CornellHospitality Quarterly50:19-28.
Ebrahim,N. A., Ahmed, S. & Taha, Z. (2010). SMEs Virtual Research andDevelopment (R&D) Teams and New Product Development: A LiteratureReview. International Journal of the Physical Sciences, 5(7):916-930.
Ernst,H. (2002). Success factors of new product development: a review ofthe empirical literature. InternationalJournal of Management Reviews,4(1): 1–40.
González,F. J. M. & Palacios, T. M. B. (2002). The effect of new productdevelopment techniques on new product success in Spanish firms.Ind. Marketing Manage,31: 261-271.
Jiang,W., C. Dev, & V. Rao. (2002). Brand extension and customerloyalty: Evidence from the lodging industry. CornellHotel and Restaurant Administration Quarterly43 (4): 5–16.
Jing,L., K. de Ruyter, and M. Wetzels. 2008. Consumer responses tovertical service line extensions. Journalof Retailing84 (3): 268-80.
Conlin,J. R. (2007). Vertical Integration," in TheAmerican Past: A Survey of American History,p. 457, Belmont, CA:Thompson Wadsworth.
Kim,W. G. & Kim, H. B. (2004). Measuring customer-based restaurantbrand equity: Investigating the relationship between brand equity andfirms’ performance. CornellHotel and Restaurant Administration Quarterly 45(2): 115-31.
Krishnan,V. & Ulrich, K. T. (2001). Product development decisions: Areview of the literature. ManagementScience,47(1): 1-21.
O’Neill,J. W. & Mattila, A. S. (2010). Hotel brand strategy. CornellHospitality Quarterly51(1): 27-34.
O’Neill,J. W. &Q. Xiao.(2006). The role of brand affiliation in hotelmarket value. CornellHotel and Restaurant Administration Quarterly47 (3):210-23.
Oba,G. & Chan-Olmstead, S. (2006). Self-Dealing or MarketTransaction?: An Exploratory Study of Vertical Integration in theU.S. Television Syndication Market. Journalof Media Economics19(2): 99-118.
Peter,J. P. & Olson, J. C. (2005). Consumerbehavior & marketing strategy.New York: McGraw-Hill/Irwin.
Prasad,K. & Dev, C. (2000). Measuring hotel brand equity: Acustomer-centric framework for assessing performance. CornellHotel and Restaurant Administration Quarterly41 (3): 22–31.
Rao,V. R., Agarwal, M. & Dahlhoff, D. (2004). How is manifestedbranding strategy related to the intangible value of a corporation?Journalof Marketing68:126-41.
Tatikonda,M. V. & Rosenthal, S. R., (2000). Technology novelty, projectcomplexity, and Product Development Project Execution Success: adeeper look at task uncertainty in product innovation. IEEETransactions on Engineering Management,47(1)74-87.
Wynstra,F., Axelsson, B. &Van Weele, A. J. (2000). Driving and EnablingFactors for Purchasing Involvement in Product Development’,EuropeanJournal of Purchasing and Supply Management,6(2): 129-141.
Wynstra,F., Van Weele, A. & Weggeman, M. (2001). Managing supplierinvolvement in product development: three critical issues. EuropeanManagement Journal,19(2): 157-167.