Discussion project
Zack1234
cc79da7056710c00ca1215f60cc5d2df.pptxStrategic Marketing Plan
Surface Watch: Completing the Surface Family
Strategic Marketing, MKTG525
Dr. Donna Falloon
Bobby Miller
1
Surface Watch
Greetings, I’m Bobby Miller and I will be presenting the strategic marketing plan for the new Microsoft Surface Watch.
1
Agenda
Portfolio Review
Porter’s Five Forces
SWOT Analysis
Market Analysis
Strategic Objectives
Environmental Issues
Action Programs
Budget and Breakeven-Point
Controls
References
2
Surface Watch
The agenda for this marketing plan includes a review of Microsoft’s current portfolio, a Porter’s five forces analysis, A SWOT analysis, a smartwatch market analysis, the Surface Watch strategic marketing objectives, environmental issues, action programs, the proposed Surface Watch budget, plan controls, and references.
2
Microsoft Portfolio Review
Technology company founded in 1975 by Bill Gates and Paul Allen
Three segment portfolio:
Productivity and business process - Office 365, LinkedIn, Dynamics 365
Intelligent cloud services - Azure, SQL Server, Visual Studio, Github
Personal computing - Windows, Surface, Xbox, Bing
Surface watch proposal:
Round out Surface family of products
Enhance existing Surface devices
Crowded smartwatch market where Microsoft excels
3
Microsoft Corporation is a technology company started in 1975 by Bill Gates and Paul Allen as they began modifying computer language for the first personal computers. Microsoft grew into a technology giant worth over $1 trillion based in Redmond, Washington. Microsoft's history includes the development of operating systems, office software, gaming systems, phone and computer hardware systems, and internet and media outlets (Hall & Zachary, 2020).
Microsoft Corporation's portfolio is grouped into three segments. The first segment is productivity and business processes, including Office 365, LinkedIn, and Dynamics 365. Segment two is the intelligent cloud services consisting of Azure, SQL Server, Visual Studio, and Github. Segment three is personal computing, including the Windows operating system, Surface and PC devices, Xbox and gaming services, and Bing search ("Segment," 2020).
Microsoft's Surface brand began with the Surface tablet in October 2012, which sparked many devices designed to redefine quality, craftsmanship, and dependability after Windows Vista's failure amid low-quality PC devices (Bott, 2012). The Surface device family includes laptops, tablets, and a phone. One technology product missing from this family of devices is the smartwatch. A Surface watch would round out the complete technology package as a complimentary accessory. Rubino (2019) states that current mobile culture relies heavily on wearable technology to acknowledge notifications, receive information, and make digital inputs on the go when a laptop, tablet, or even phone usage is inconvenient. A Surface watch would complement existing products, fill this device gap, and complete the Surface device family.
3
Porter’s Five Forces - Smartwatch Market
Smartwatch market competition is high
The threat of new smartwatch market entry is high
Smartwatch market supplier power is low
Smartwatch market buyer power is high
Smartwatch market substitution threat is high
4
The smartwatch market competition comprises many large technology corporations and many small companies, as the market is still maturing. Hartung (2015) states that Microsoft is traditionally a red ocean competitor and considers what needs to be done considering sales and market share to defeat the competition. Microsoft will need to capitalize on the Surface brand and market the Surface Watch as a redefinition of what a smartwatch should be in terms of quality and design to succeed in a red ocean market.
The current smartwatch market has few barriers to prevent or slow new companies from entry. It requires minimal investment of capital to get up and running. Microsoft will easily enter the market with the new Surface Watch. Still, it will need to quickly build brand loyalty and market the Surface family in a way that differentiates the product from the many rival products.
Supplier power was high when smartwatches were new to the market, but after a little over a decade of company and product launches, supplier power is now low, as there are many suppliers in the mix in many countries. Suppliers in the market have low power due to the mass proliferation of inputs for production.
Smartwatch customers are still in the middle of figuring out what a smartwatch should be, and there is no clear definition or example to set the standard. Buyer power is high as most buyers at the moment are considered early adopters who can switch easily to a different product. Buyers still have much say in which features need to be standard on the smartwatch, and companies must respond to those requirements.
Many substitutions are available for a smartwatch, including the many rival smartwatches on the market, smartphones, and other smart wearables. The market is currently saturated with smartwatches that are similar in design and capability. Switching products will be based on price, features, and compatibility with other devices.
4
Microsoft SWOT Analysis
5
Global market leader
Vast diversified product and service portfolio
Well established development community
Lack of mobile market presence
Weak browser and search
Software tied to the PC market
Strengths
Weaknesses
Smartphone market
Strategic partnerships
Cloud business expansion
Market rival competition
Technology shift
Cybersecurity
Opportunities
Threats
INTERNAL
EXTERNAL
Microsoft's strengths begin with acknowledging that the company is a global leader and one of the world's most successful companies. It is ranked in 2018 as number four in the world, with a market value near 1$ trillion. Another strength is the company's vast diversified portfolio. Microsoft's portfolio detailed earlier shows the company is invested in cloud services, computing and devices, software development, gaming, social media, the internet, and office productivity solutions. Microsoft's third strength is an abundance of research and development resources. The company has over 40,000 personnel engaged in research and development working on new technology, digital working environments, life experience enhancement, cloud computing, tools, devices, and software solutions.
Microsoft's weaknesses start with the company's lack of representation in the mobile market. Another weakness is Microsoft's internet browser and search capabilities lag behind the competition. The last weakness is the company's biggest software titles continue to be tied to the PC environment. The world will continue to evolve into a mobile and virtual environment.
Microsoft recognizes that the smartphone is a step into the future of technology. The smartphone market is another red ocean market filled with competition, which is precisely where Microsoft does best. Microsoft's partnership with Google and the embrace of Linux and Android are excellent ways Microsoft uses partnerships to seize opportunities. Partnerships with other companies can provide the market entry success the company needs. Hoover's (2020) states that close to three-quarters of Microsoft's profit comes from cloud services. This segment continues to grow and offer an opportunity for increased profit.
Competition among the top technology companies is fierce and unrelenting, which amounts to an enduring threat to Microsoft. Companies such as Google, Amazon, Apple, IBM, and Samsung are always there, attempting to get a more significant market share. Another threat is the continued technology shift to a mobile cloud environment and away from PCs. The last threat of cybersecurity is tied to the risk of operating in a networked environment. Hackers are always looking for ways to defeat Microsoft's security.
5
Smartwatch Market Analysis
Segmentation - target the customer segment that values and appreciates quality, design, innovative technology, and premium services over price.
Market size - 20 million watches sold for over $20 billion with 20% growth projected annually.
Market accessibility - No barriers, low cost, many suppliers.
Value created - supply the best of what customers expect with unique quality build and design.
6
The smartwatch segment planned for the Microsoft Surface Watch will target the customer segment that values and appreciates quality, design, innovative technology, and premium services over price. This same segmentation is the target for all Surface family products.
- The geographic segment variable will be customers in the United States and international markets located in mostly urban areas.
- The demographic segment variable will be both males and females between 20 and 50 years of age with a higher level of income than average and typically at the manager or executive level in the professional environment.
- The behavioral segment centers on customers loyal to the Microsoft brand or customers who wish to switch from a major competitor such as Apple.
- The psychographic segment will identify the customers in the middle to upper class who see themselves chasing success, exploring the world, and aspiring to greatness.
The smartwatch market size was just over 20 million smartwatches sold in 2019. The market value at that time was a little over $20 billion. The market is currently thriving and continues to expand despite recent economic hardships due to the Covid-19 pandemic. Smartwatch market projections show growth close to 20% compound annual growth rate (CAGR) every year with a projected total of close to $110 billion value by 2023.
The smartwatch market has no barriers to entry, costs little to enter, and has many suppliers for manufacturers. Smartwatch market accessibility will be favorable for Microsoft. Microsoft will benefit from its massive domestic and international brand recognition and established logistical chains to successfully reach target markets with new Surface-branded products.
Customers in the smartwatch market continue to discover features and new designs that change their definition of quality and value as manufacturers try new things. Microsoft will take the most popular ideas in the current smartwatch market and create value for the target customer through the Surface Watch by ensuring it embodies the best of what they expect with a surprisingly unique quality build and design.
6
Strategic Objectives
Marketing strategy (mix) - Product, price, promotion, and place
Positioning strategy - Medium-high premium product range
Product strategy - Bring Surface brand to smartwatch market
Pricing strategy - Value-added with price set medium-high
Distribution strategy - Wide distribution taking advantage of existing channels
Communication strategy - Direct mass-scale nonpersonal communication
7
Marketing strategy - Marketing mix:
Product - The Microsoft Surface Watch product is a high quality, uniquely designed wearable device that satisfies the customer demand for a Surface family complement to the existing computer, tablet, phone for capability enhancement. The product will come in several base colors, it will be built with fine materials and the latest technology, it will have access to the Google Play repository, and have the expected standard smartwatch features.
Price - The Surface watch will be considered a step up from most of the competition in terms of value and quality and will be priced accordingly as a premium product. The price will be set between mid-range and high but not the highest in the market. Customers will find the Surface Watch meets affordability criteria and costs less than the market leader with a similar quality product.
Promotion - The Surface Watch will be promoted as a mobile professional productivity enhancement device. It will be paired with other Surface products in a mobile business or professional setting to boost the active, productive lifestyle. Ad campaigns and product awareness will occur during major sporting events, on social media such as LinkedIn, through major technology media outlets, and alongside TV and streaming media sites.
Place - The company will use existing logistics chains to make the Surface Watch available in every domestic and international market where research shows it will be profitable. Microsoft will sell the Surface Watch through major retailers such as Best Buy, through online sellers such as Amazon, and its own Microsoft stores.
Positioning Strategy - The positioning strategy for the Microsoft Surface Watch is to move into the market as a medium-high premium product. The Surface Watch will differentiate itself from the rest of the market by using a quality Microsoft Surface style build and the Microsoft software ecosystem integration. The Surface Watch position will encourage customers to view the watch as the standard for what a smartwatch should be as a product, much like they do with the other Surface products in their respective markets.
Product Strategy - The strategy is to bring the Microsoft Surface brand to the smartwatch market. The Surface Watch product strategy is to incorporate all the top features, applications, operating system load, and services from the initial market analysis for the introduction of the product in the medium-high price range to capture and continually build market share with incremental improvements while sustaining growth longevity for the life of the product.
Pricing strategy - Microsoft will use a value-added approach for the Surface Watch market penetrating pricing strategy. The company will set prices for the new product in the medium-high range to crash the existing smartwatch red ocean market to take market share from the lower competitors based on quality, design, and differentiation. This strategy will place the Surface Watch in a price area not occupied by a significant competitor and enable the company to pull market share from lower-priced competitors and higher-priced competitors while also capturing part of the 20% yearly market expansion.
Distribution Strategy - Make the product available domestically and internationally for the target customer in as many locations as possible. The strategy's logistic aspect will consist of using Microsoft's established multi-channel distribution through online and in-store retailers. Microsoft will also have the Surface Watch on hand at its Microsoft stores to prominently display them with other Surface-branded products.
Communication Strategy - Microsoft's communication strategy will use domestic and international mass-scale nonpersonal promotional spaces such as technology shows, TV, social media, magazines, celebrity use, and major sporting events to reach to the target customer. The Surface watch will also feature in other Surface device advertisements to emphasize the product's ability to enhance the advertised device's capabilities.
7
Environmental Issues
Micro environmental issues:
Company - Teamwork mastery
Suppliers / Intermediaries - Well established and abundant
Competition - Apple and other smaller companies
Public - Continue to improve workplace diversity
Customers - Worldwide brand loyal
Macro environmental issues:
Demographics - Older generation adoption and remote workforce
Economy - Covid-19 economic impact
Natural - Microsoft’s 2030 environmental plan
Political / Cultural - Active social role in clear, justifiable, and genuine way
Technological - History of technological innovation and success
8
Micro environmental issues:
- Company - Microsoft is a large technology enterprise in the technology market, but it manages to work well as a team, even with its size and global footprint. The company designs and builds products in concert with the marketing team to keep the whole team on the same page
- Suppliers / Intermediaries - Microsoft's suppliers and intermediaries are well established and redundant. All intermediary stakeholders directly benefit from Microsoft's brand power and product popularity.
- Competition - Microsoft's main competitor is the Apple iWatch. Competition with lower competitors will not be an issue due to lower quality, less value, and fewer services.
- Public - One public issue Microsoft is working to improve is its human resource diversity statistics, which were publicized in 2018 as unbalanced with low minority and women workforce levels. The company's latest human resource efforts reflect the company's commitment to change for the better.
- Customers - Microsoft enjoys positive brand value among customers worldwide and has the benefit of millions of loyal customers.
Macro environmental issues:
- Demographics - The Surface Watch will enter a growing market due to older generations adopting technology and the newer generation's embrace of technology as the norm along with remote workforce expansion.
- Economy - The Covid-19 pandemic's effects on the world economy may cause concern for Microsoft's new Surface Watch as the market may not grow as forecasted.
- Natural - Microsoft has strong environmental messaging and embedded teams to help keep the company on track. Current initiatives for 2030 include becoming carbon neutral, water positive, and contributing zero waste.
- Political / Cultural - The company's policy is to take an active role in a clear, justifiable, and genuine way to the public and its shareholders. Microsoft promotes transparency, bipartisanship, digital transformation policy, artificial intelligence, and engagement to assist in political and cultural matters.
- Technological - Microsoft is known for creating some of the most innovative and advanced products in the world. This is due to the company's dedicated focus on having the right people, resources, tools, and platforms to produce the best technology in the market.
8
Action Programs
9
Microsoft's Surface Watch action programs will ramp the company up for product support, product promotion, product logistics, and product launch. The Microsoft Surface Watch launch event will occur virtually in April of 2021, one month before Microsoft's Windows 10 Build developer conference.
- Six months before the Surface Watch launch, Microsoft will distribute the Surface Watch application programming interface (API) to all developers along with documentation for the development of apps, features, and media. Microsoft will also finalize the product documentation, release notes, help files, troubleshooting guide, and frequently asked questions (FAQ) for publishing. The Surface team will complete and publish the Surface Watch brand guidelines that will include voice, tone, and consistency messaging.
- Four months before launch, Microsoft will finalize channel preparations for a unified promotional campaign. Microsoft will train distributors, retailers, and sales and customer service representatives on packaging, features, and specifications. The company will continue to develop joint key performance indicators (KPI) for product launch tracking. Microsoft will also finalize preparations for the Surface Watch launch and Surface Watch product webpages.
- Three months before launch, Microsoft will begin strategic product promotional material staging throughout its channels, on the website, and in Microsoft stores in preparation for the product launch. They will release an official product announcement through ads, social media, news releases, and websites. Celebrity endorsements will be used for releases at select high media traffic events. The company will begin launch event registrations and Surface Watch feedback collection.
- One month before launch, Microsoft will identify potential surge demand areas through launch event registrations, the product website, retailers, and Microsoft store feedback concerning anticipation for the new product and make last inventory adjustments. The company will release test products to credible expert reviewers to build product awareness and demand. Microsoft will release the final promotional material with additional information on the virtual digital launch event. Preorders will be available one month out from the launch event.
- The Surface Watch Launch event will take place virtually for registered attendees. Registration will be open for all and available until the end of the event. The event will consist of videos, a product intro by the Surface team, a live demonstration, words from the CEO, and live interactions with the Surface team. The product will be ready to fill orders.
9
Budget and Breakeven-Point
Value-based price point
Variable and fixed Costs
Strategic first year goal is 10% of the market
Break-even point occurs when 1.1 million units are sold at $440 million
10
Microsoft will be using a value-based pricing budget and will set unit prices at $399 per unit. This price point will place the Surface Watch between the Apple iWatch at $529 and the Fitbit Versa 3 at $229.
Watch variable costs are $220 per unit, allowing $180 for markup adjustments with wholesalers and retailers. Fixed costs will be a little less than 10% of the total budget at $200 million.
Microsoft's strategic goal is to gain 10% of the projected smartwatch market within the first year. The projected units sold from May 2021 through April 2022 are programmed to be 2.6 million. Microsoft's sales goal is to sell 216,700 Surface Watches per month to reach the 2.6-million-unit target and make a $268 million net profit.
Microsoft's projected break-even point occurs at five months in September of 2021, with 1.1 million units sold at $440 million.
10
Controls
Documentation and branding material
Surface Watch product website
Product training
Advertising and promotion
Launch event preparation
11
Microsoft will require marketing controls to be in place to help keep the market strategy on track, measure return on investment, and to help identify problems that need to be addressed in the marketing ramp up for the Surface Watch timeline. The controls are grouped by focus areas in the action programs, including documentation and branding material, website preparation, training, advertising and promotion, and launch event preparation. Each control focus group provides Microsoft with the ability to monitor and determine if the program is going as planned or if additional action is needed.
The first control group is the documentation group. Tracking status and providing weekly updates at a minimum will be required for documentation items issues which will be identified and planned for when identified. Microsoft will need to complete, verify, and ensure the Surface Watch API, product support package, and brand awareness guides are electronically distributed at six months to launch to give developers enough time to make apps, features, and media functions and to ensure Microsoft has enough time to make corrections and updates before training and product launch.
The Surface Watch website control group will require a Microsoft full-time experienced IT staff in place to manage the construction, update, and operation of the website by the four months to launch date. The website must be operational to ensure all stakeholders can access it. All messaging, content, and training updates must be completed before the one-month launch date. Content groups must notify IT of any issues not addressed in IT notification channels.
The Surface Watch training control group involves monitoring product training to ensure it is unified, correct, and complete before product launch. A training database will monitor all employees, distributors, and retailers to ensure completion is on track for one month before launch.
Another control group Microsoft will focus on is advertisement and promotion. The company must monitor and work with the customer and adjust accordingly to keep the messaging and brand-aligned through all media.
The last control group is the launch event controls. This group focuses on physical channel preparations, such as ensuring all promotional material and product inventory are on site and the virtual launch event preparedness. Channel reps will report inventory and promotional material levels in weekly update meetings. Launch event registration and customer feedback will be monitored to ensure messaging and brand effectiveness for review and adjustment.
11
Armstrong, G., & Kotler, P. (2018). Principles of Marketing (17th ed.). New York, NY: Pearson.
Bhasin, H. (2019). Marketing Mix Of iWatch - iWatch Marketing Mix and 4 P's of Marketing. Retrieved from https://www.marketing91.com/marketing-mix-iwatch/
Bott, E. (2012). What OEMs desperately need to learn from Microsoft's Surface. Retrieved from https://www.zdnet.com/article/what-oems-desperately-need-to-learn-from-microsofts-surface/
Environmental Sustainability – Microsoft CSR. (2020). Retrieved from https://www.microsoft.com/en-us/corporate-responsibility/sustainability
Global Smartwatch Market Research Report - Forecast to 2027: MRFR. (2020). Retrieved from https://www.marketresearchfuture.com/reports/smart-watch-market-967
Hall, M., & Zachary, G. P. (2020). Microsoft Corporation. Retrieved from https://www.britannica.com /topic/Microsoft-Corporation
Hartung, A. (2015). Surface 3 and Apple Watch - Red Oceans v Blue Oceans Strategy. Retrieved from https://www.forbes.com/sites/adamhartung/2015/04/02/surface-3-and-apple-watch-red-oceans-v-blue-oceans-strategy/
Hoover's, Inc. (2020). Microsoft Corporation: Company profile. Retrieved from https://search-proquest-com.devry.idm.oclc.org/docview/1860761611?accountid=44759
Lietz, E. (2020). Books [Digital image]. Retrieved from https://www.pngfuel.com/free-png/odaga
Microsoft Logo [Microsoft Logo]. (2012). Retrieved from https://commons.wikimedia.org/wiki/ File:Microsoft_logo_(2012).svg
Miller, B. (2020). Smart Watch Render [Smartwatch rendering].
Parker, B. (2019). Microsoft SWOT Analysis 2019. Retrieved from https://bstrategyhub.com/swot-analysis-of-microsoft/
Public policy engagement – Microsoft CSR. (2020). Retrieved from https://www.microsoft.com/en-us/corporate-responsibility/public-policy-engagement
Rubino, D. (2019). Why Microsoft needs a 'Surface Watch' to complement Surface Duo. Retrieved from https://www.windowscentral.com/3-reasons-why-microsoft-needs-surface-watch-surface-duo
Savov, V. (2017). Windows Phone was a glorious failure. Retrieved from https://www.theverge.com/2017/10/10/ 16452162/windows-phone-history-glorious-failure
Segment Information. (2020). Retrieved from https://www.microsoft.com/en-us/Investor/segment-information.aspx
Smartwatch Market Size, Share, Trends, Growth Drivers, Emerging Opportunities, Regional Analysis, Competitive Landscape, and Industry Forecast. (2020). Retrieved from https:// web.a.ebscohost.com.devry.idm.oclc.org/ehost/detail/detail
Tankovska, P. (2020). Smartwatch unit sales in the US 2016-2020. Retrieved from https://www.statista.com/statistics/381696/wearables-unit-sales-forecast-united-states-by-category/
References
‹#›
References:
12
