A Basic Sample Marketing Plan Using ACER Computers
Understanding the importance and implementation of the marketing mix is often an understated area of business. The four P’s of the marketing mix: product, place, price, and promotion are a conceptual framework used to focus the direction of a marketing strategy to achieve the greatest degree of sales. This conceptual framework underpins the marketing process by not just focusing the strategy but also by giving order to the development of the marketing plan. This works in the following manner:
1. Product-identification, selection, and development of a product (niche or consumer need)
2. Price-determination of its price (what price will be profitable but also affordable and competitive)
3. Place-selection of a distribution channel to reach the customer’s place (how will the product be sold to customers i.e. stores, internet, etc…)
4. Promotion- development and implementation of a promotional strategy (how will the customer be made aware of the product)( Business Dictionary, 2011)
The easiest manner in which to understand the marketing mix and the manner in which the Four P’s interlace within the mix is to view realistic examples. There are many successful companies which owe much of their profit to the proper creation and utilization of the marketing mix. In the following example ACER Computers exemplifies this utilization and marketing process.
Since its founding, ACER Computers has achieved its goal of tearing down the barriers between culture and technology. ACER ranks №2 for total PCs and notebooks sold within the United States. Based in San Jose California, Silicon Valley, ACER Computers has grown profitable and sustainable through its Indirect Business Sales Model. This model has been instrumental to the company’s continuing growth in that expansion costs are limited to strategic partnerships with retail distributors. Because of ACER’s multi-brand approach, which effectively integrates ACER, Gateway, Dell, Texas Instruments and many other brands into its products creation, the company is able to remain profitable because of its lack of overhead with having to maintain manufacturing facilities, employees, and large sales forces. Under ACER’s current sales strategy, the ACER group purchases, through bid and contract, select numbers of computers, based upon consumer need. ACER then sells these units to its resellers at specific distribution points. Currently there are 7,000 distribution points confined to the United States and European Union.
This same plan has been successful due to the continued refinement of the marketing mix in association with selling strategies. Before 1995 this same plan was used to make ACER the top selling brand in Mexico and in many other countries (ACER, 2011). The purpose of this plan is to create a Global marketing strategy that began with the country of Mexico. ACER achieves this end through the establishment of distribution points and market needs. Because of lack of infrastructure in the rural areas of Mexico, ACER concentrated its development in cities specifically Mexico City (Carlton, 1995).
The marketing plan consisted of a detailed market mix analysis, and many other factors that could have advanced or hindered the development of ACER Computers in Mexico. Through this plan one could see the advantages and profitability for marketing in Mexico. This plan also served as a model for global expansion into other countries throughout the world.
The market needs in Mexico City included, laptop and desktop computers for business and personal applications. At the time, most companies often had only a single phone line and one computer. This made growth difficult to impossible, even if the company could afford more computers; they would lack the necessary lines to make use of them (Huang, 1995). Overall, a greater importation of less expensive computers was an eagerly received solution to many problems in business and government growth.
The objectives of the ACER marketing plan were to tap the undeserved computer market in Mexico City (Carlton, 1995). This would increase ACER’s presence in Mexico and would allow for further expansion throughout Latin America. The use of an indirect sales model would allow ACER to gain financially and expand its products without the overhead of storefronts. Because the computer market in Mexico City was poised for growth, ACER sets its goals to find qualified distributors in Mexico City (Carlton, 1995). It was the hope ACER to expand into the top six cities of Mexico across five years.
With the goal of setting up distribution points in the most lucrative and financially stable cities in Mexico the company hoped to drive down costs and gain a major market share in Mexico. The continued use of distributors would allow ACER Computers to bypass many legal and logistics barriers (Huang, 1994).
The entry strategy for ACER Computers into Mexico City was to hire Mexican consultants who are aware of the marketplace and understand the lay of the land. In this way ACER could find quality distributors and have them geographically spaced such as to gain the best market coverage. This allowed for cautious growth into the market place without taking huge risks. In order to assist with this strategy ACER created the following market mix (Huang, 1995).
1. The Product-The ACER Product is generic low priced PC’s including laptops and desktops. The computers are made by manufacturers and labeled with the ACER logo. This allows for inexpensive computers and for easier market penetration.
2. Pricing- With most of our components being manufactured in Asia and then being shipped to the US the cost for direct shipping of products to Mexico individually would be too high. The most logistically sound method would be to ship computers in bulk orders to the distributors in Mexico. With all costs accounted, the variance between the US cost and the Mexico cost allowed for substantial profit for the distributors and allowed them to be competitive with current computer systems being sold in Mexico. The pricing on these units is competitive because of the volume of product being ordered. ACER Computers is also left with a high degree of profit since the products did not require direct Tech Support.
3. Promotion- The largest promotion tool that ACER had with its distributors and end customers is price. The distributors were not able to refuse the profit incentive of selling ACER computers. Because there was also room in the pricing for discounts distributors were able to hold sales and become even more competitive in their market. Essentially, by giving cost advantage to the distributors these individual companies were able to promote the products for ACER which in turn reduced advertising costs within Mexico.
4. Place (Channels of Distribution)- Distributors and resellers have always been the channel of distribution for ACER products or more accurately the place of sale. This placement has been key in the effective global expansion plan of ACER Computers. Simply speaking, franchising is not an alternative for ACER. The cost of setting up new facilities would not allow for deep market penetration due to large overhead.
The Marketing plan for Mexico City allowed ACER computers to be poised for expansion further into Latin America and into many other areas of the world. With this flexible and uncomplicated marketing mix, ACER was positioned for global marketing in an efficient and cautious manner. As well, ACER would remain highly competitive. The ACER example, exemplifies the Four P’s and mark the importance with regard to the organization’s continued success. In the ACER plan one can see how companies that lack a strong marketing strategy might become imbalanced with competition. Often companies concentrate solely on product and promotion, and while these are important elements to the market mix, price and place should not be understated. In fact in this example, ACER shows how price and place were able to carry their products successfully. Had ACER attempted to enter the market from a storefront distribution method they would have been priced incorrectly and this would have placed them in the same disadvantage as other computer retailers. For these reasons the Four P’s need to be effectively used to create a successful marketing strategy. From this very effective marketing strategy one can see the importance and vital need for the utilization of the marketing mix.
Business Dictionary (2011) Definition: Marketing Retrieved from http://www.businessdictionary.com/definition/marketing.html(Achive)
Carlton, J. “Compaq and Acer Are Slashing Prices on Entry-Level PCs To Expand Market”, Wall Street Journal, November 17, 1995, p. A3.
CIA. (2010). Mexico. Retrieved from https://www.cia.gov/library/publications/the-worldfactbook/geos/mx.html
Huang, C. “Acer Group Plans Major Leap in PC Market,” Electronics, January 23, 1995, p. 13.
Huang, C. “Acer Aims at Latin America PC Market,” Electronics, July 25, 1994, p. 14