The organisation I have chosen to analyse is a company that offers a service in the Electrical, Instrumentation and Construction fields. The company's core business is concentrated in the mining industry.
1 Company Overview
Wade Walker was formed in Johannesburg in 1981 and offers a combination of multi disciplinary capabilities and construction skills. The company has established itself as a leading Electrical and Instrumentation contractor in South Africa as well as in the rest of Africa. Wade Walker has a proven track record in major project implementation, mainly in the mining industry and has completed projects in twenty six African countries. The company has offices in several African countries, namely Botswana, Zambia, Ghana and the Democratic Republic of Congo.
As a leading contractor in its field Wade Walker offers both Greenfields (New) and Brownfield's (Existing) installation services. Wade Walker's contracts are usually re measureable unit rates based using either the FIDIC or NEC terms of contract. Wade Walker also offer lump sum and cost plus type contracts. Wade Walker's capabilities include project management, detailed design, procurement and logistical support.
In Feb 2007 Murray and Roberts, South Africa's leading engineering and contracting group acquired 80% of Wade Walker and in Feb 2009 acquired the final 20%. This acquisition will give Wade Walker all the financial backing required to acquire their own companies and in turn will help Murray and Roberts comply with their global corporate model to acquire critical mass.
Wade Walker has an executive committee consisting of six white males and 1 white female. Wade Walker will continue to manage company, reporting to the Murray and Roberts board on a monthly basis.
Wade Walker have recently secured a 3 year contract for all electrical works at all of the Gautrain stations and tunnels.
2 SWOT Analysis
The above analysis should enable us to determine what variables will have an effect on the success or failure of the business. Potential Internal strengths and weaknesses have been looked at as well as external opportunities and threats.
The following Ansoff Matrix will help us determine new opportunities and assess which services we should be targeting to sell into which markets.
3 Ansoff Market Matrix
4 Market Segmentation
Definition: Segmentation is dividing the market into groups of individual markets with similar wants or needs.
In this case Market segmentation would be business to business type. This is more complex than consumer segmentation for the following reasons.
o Business to business marketers address a much smaller number of customers who are very much larger.
o Personal relationships are of critical importance in business to business markets and one has to develop personal relationships with clients to be successful.
In general there are five factors for segmenting the business market.
o Segmentation by commodity (Usage Rate)
o Segmentation by organisational type (Industry)
o Segmentation by organisational demographics
o Segmentation by region. (Geographically)
o Segmentation by usage rate.
o By decision maker
The graph below shows work completed in the various commodity sections of the market over the last two years. This could also be interpreted as what percentage of the different commodities used Electrical and Instrumentation services. It is believed that this will change over the next year as work in the coal Industry should increase. The construction of two new coal fired power stations will require additional coal resources resulting in an increase of coal separation plants being built in the mining industry. Wade Walker are already a well respected contractor in all these markets and will continue to follow existing practices to ensure they remain so in the future. (To be discussed under positioning) The services offered by Wade Walker is the same for all commodity products and no benefit would be gained by targeting a specific commodity.
In the mining and service industry it is the versatile commodity market that dictates what commodity will be mined. I have indicated the split of projects completed as per commodity over the past year.
I have segmented the market Geographically as indicated in the graph below. As you can see the majority of projects in the industry took place in the SADAC region last year. Once again it is not ideal for Wade Walker to select a specific target market from this information where segmentation by region is also really dictated mainly by commodity price.
This graph indicates segmentation by Industry/organisational type over the last year
The previous graph shows the Electrical and Instrumentation projects completed per Industry. I would like to discuss segmentation per industry as this is the area where I feel we could truly identify a target market. Different segments can have different industry requirements therefore making some more attractive than others. The core skills required are the same but there are subtle different requirements for different sectors.
By segmenting in this manner Wade Walker are able to determine how much of their business was performed in which industry and also be able to determine which markets they would like to target. I have looked at the various sectors of the market and identified what proportion of work is performed in these sectors.
5 Sector Analysis
When segmenting the market by organisation type we have come up with the following analysis.
Environmental sector , Building Sector and Other sector each comprise as 5% of the work performed in the industry. On close examination of this sector it is realised that the building sector should increase slightly with the Gautrain coming on line as shops and hotels will be built around stations. It is t believed that the Environmental Sector will not increase in size over the next few years.
The Energy and Infrastructure sectors each comprise of 10% of the market. Infrastructure has increased over the past year due to the Gautrain Project and Energy will increase over the next few years due to the energy crisis in the country and the building of Medupi and Kusile Power stations.
If we look at the Industrial and mining segments the feeling is there will be no great change in the amount of work in these markets. Wade Walker are fairly well entrenched in the mining industry which comprises of 45% of the Industry. Industrial type work compromises of 20% of the market. Wade Walker do little or no work in this sector.
6 Target Market Strategy
The first step is to define your target market - choose which segments you want to address ,identify groups of similar clients, and implement the relevant marketing strategies to improve your business.
After analysing the market segmentation by commodity it was realised that the nature of the product offered is the same to all industries. If we were to market based on this commodity segmentation we would follow the undifferentiated strategy accompanied by product differentiation and market our services to all players producing those commodities. The advantages of this strategy is that it does not involve high costs but by using this method the company is competing with the rest of the market.
When segmenting the market geographically we would also follow the undifferentiated strategy combined with product differentiation and market our services to all players in all areas. Should the company decide to seriously offer services into the international (Australian or American) markets we would follow a similar strategy.
When analysing the market segmentation by Industry our approach would be completely different. In this case our we would use the multiple segment strategy.
Here we have identified the Industrial and energy sectors as two sectors where Wade Walker as a company would like to increase their market share.
The thinking behind this strategy is that that will be a large increase in work in these sectors. (The construction of Kusile and Medupi power stations) and additional infrastructure surrounding the Gautrain rapid rail system.
In the case of segmentation by identifying the decision makers Wade Walker have developed personal relationships with all their existing clients and in this area segmentation would be multiple segmentation and all markets would be targeted. (All clients )
7 Positioning - Creating a market niche for a service using traditional marketing strategies
Wade Walker are at present the largest E&I contractor in SA. From the target market strategy above Wade Walker have identified and targeted two segments each of which is subject to positioning. From the perceptual map below Wade walker will be able to consider the best marketing mix suitable for the service offered. Because Wade Walker are offering a service and not a product there are a few questions that need to be asked.
o What value do clients get from my services?
o Are they better off from doing business with me? And Why ?
o What makes my services different?
A positioning analysis will help a business understand how customers see their market. This is very important when all of your competitors offer a similar service.
The above perceptual map indicates where Wade Walkers clients perceive them to be in relation to their competitors.
From the above map we can establish that Wade Walkers clients perceive them as a company that offer a high quality service for a fairly competitive price.
What value do clients get from my services?
o Clients get a professional and personal service.
o Each project is managed by a competent project manager.
o Wade Walker strive to complete projects on time and within budget.
o A company that wants to build relationships with their clients
Are they better off from doing business with me? And Why ?
o Good value for money.
o WW are a contractor that wants to maintain a sustainable relationship.
o Wade Walker have core compliment of motivated permanent staff members to ensure quality and professional service.
What makes my services different?
o Wade Walker have a zero tolerance policy regarding safety and quality.
o Highly qualified and motivated staff.
o Innovative installation methods.
o Internal logistics department for transporting of materials to site.
8 Different positioning strategies or themes
The following positioning themes could be used by Wade Walker as a marketing strategy.
o Attribute positioning: - YES Focus on the attributes of the company.
o Benefit positioning:- Yes Focus on of the benefits to the customer.
o Use/application positioning: Maybe Claim the service as best in some applications.
o User positioning: YES Focus on the most experienced in the mining industry.
o Competitor positioning: No Service offered is similar to that of the competitors
o Product category positioning: No Service offered is similar to that of the competitors
o Quality/Price positioning: YES Claim best value for price.
9 Four major positioning errors
I have listed four major errors that firms make when positioning their companies.
Under positioning: This is when the market only has a vague idea of the product or of the services offered.
Over positioning: This is when only a small group of customers can relate to the product or services offered.
Confused positioning: Clients don't understand the product or service as it claims too many benefits or it changes the claim too often.
Doubtful positioning: The product has been positioned in such a way that clients don't belive in what has been claimed about the product or the service.
10 Positioning Statement.
Wade Walker is dedicated to providing a professional and excellent standard of service and workmanship to all clients and prospective clients in our field of activity, constantly striving to improve through self appraisal and technology advances.
11 Positioning Strategy for Wade Walker.
Wade Walkers strategy for the 3 year look ahead would be to entrench itself in the market. Wade Walker will position themselves by the following positioning strategies.
o Attribute positioning: Focus on the attributes of the company.
o Benefit positioning Focus on of the benefits to the customer.
o Use/application positioning: Claim the service as best in some applications.
o User positioning: Focus on the most experienced in the mining industry.
o Quality/Price positioning: Claim best value for price.
Wade Walker plan to expand into the Industrial and Energy Markets. Although the services offered are similar there are subtle differences. Procedures regarding Quality and Safety are more stringent than in the mining Industry and Wade Walker may have to prove their commitment to safety and quality to expand into these markets.
Because Wade Walker is a service orientated company using business to business marketing the company does not have a slogan. As previously mentioned the number of clients is much smaller but the size of the clients are much larger. I therefore feel that the current mission statement is sufficient to get the message across. This statement is quoted in all tenders submitted.
I agree with the strategy to remain entrenched. I don't believe there is the opportunity to re position itself in the market nor is there the requirement or opportunity to find a new position in the marketplace. Should Wade Walker decide to follow the Murray and Roberts strategy of new acquisitions there would be the opportunity to find a new position in the marketplace but this would require a new and different Segment and positioning Analyses.
To conclude , Wade walker are well positioned in the Market and should follow the strategy to remain entrenched. There is the opportunity to expand as indicated in the SWOT analysis The way forward would be to target new markets, namely Industrial and Energy markets. Wade walker have previously only targeted the Mining industry.
Lamb, h.M.d.B.T. (2008) Marketing - Third edition. Caprtown: Oxford University Press.