Strategic Analysis of XYZ Company

Customized Strategy
  1. Vision and Mission

1) Mission

The mission of XYZ Company in marketing is to improve the world technology through the production and sale of its wide range of computer products. The company understands the needs of its customers in the world of ever changing technology. It therefore keeps improving its technology by producing and appropriately marketing new products with improved quality and efficiency. The company launches new products regularly to reflect the changing innovations and technical advancements in the world so that its customers can keep track of these advances in technology.

2) Vision

The vision of the company in marketing is to expand and become the market leader in the computer industry. The company aims at increasing its sales, expanding and subsequently increasing its market share, hence to become the market leader in the long run.

  1. Macro Analysis: PESTEL

The company is faced with external factors which may affect its marketing planning and operations. These factors include: Political, Economic, social, technological, environmental and legal factors. These factors affect the marketing activities and objectives of the company in different ways as shown below.

  1. Political/legal factors

There are various legal and political factors affecting the marketing of the new tablet style personal computer. One of these factors are the Free Trade Agreement (FTA) between Australia and the USA. This agreement was enforced in Australia in 2004. It was signed in May 2004 and approved by the US House of Representatives in July 2004 (Tridgell, 2004). Other Free Trade Agreements signed by Australia also include FTA with New Zealand (1983), Singapore (2003), Thailand (2005) and Chile (2009). This law allowed for free trade between USA and Australia and reduced barriers to trade. This affected the local manufacturers and users of computers in the Australian computer industry and boosted international trade in computer products by opening international markets.

The enactment of the Intellectual property law in May 2010 also affects the computer industry in Australia. By retaining the intellectual property rights, XYZ Company can develop software suited for its tablet style personal computer. This leads to heavier commercialization of its products and develops an innovation culture within the company. This leads to improved product quality and brand loyalty.

The Australian government is committed to the development of the manufacturing sector since Australia is highly reliant on commodities (Dixon and O’Mahoney, 2010). XYZ Company is a manufacturing company and is therefore in a good position to benefit from the government’s efforts to boost the manufacturing sector.

Australia is also enjoying a stable political environment. This is an essential factor in international business since a politically stable environment provides a good environment for business to be carried out harmoniously and smoothly. The Australian government under the leadership of Prime Minister Kevin Rudd is very stable and Australia is enjoying a good business relationship with other countries. For instance, there is a good external political relationship between Australia and New Zealand whereby the two countries are planning to make their relationship a one-domestic flight.

  1. Economic

Generally, Australia benefits from good macroeconomic fundamentals (Szalay, 2011. Businesses are benefiting from growth in the economy boosted by the flourishing of the country’s mining industry. The economy is largely rated as approximately $1.6 (GDP) and the country is ranked 13th worldwide in terms of nominal GDP (CIA World Factbook, 2012). As the overall economy grows, businesses boom and the computer and electronics industry also grow. Other sectors of the economy need computers in their operations and the growth of these sectors therefore form a basis of improved markets for computers. The growth in the economy of Australia is therefore a positive economic factor that will influence the marketing of XYZ’s new tablet-style personal computer.

The lending rate in Australia is also low compared to other countries while the savings interest rates are high; hence investors earn more returns on their financial investments. This is because rates of borrowing will be low and the interest earned in from savings are high. Since savings affect investments, higher interest on savings will lead to more funds for investments by XYZ Company. Australia’s economy is also largely dependent on commodities. The manufacturing industry is therefore well established for XYZ to engage in manufacturing of the new tablet-style personal computers.

The exchange rate for Australia is also favorable since it is becoming stronger against other currencies. For instance, the Australian dollar has not traded over 1.1080 against the US dollar showing that the currency is performing well. It is therefore favorable to engage in trade in the Australian market.

  1. Social

The development of the Australia’s social Inclusion Initiative in 2009 boosted the social standing of Australia in General. Through this initiative, a society is created in which every member of the society is valued, individual differences are treasured and the contribution of every member of the society appreciated. Australian Companies have a role to play in this initiative and each company is expected to uphold a social policy which enables it to care for the welfare of the society during its operations. XYZ being part of the Australian social circle as per the requirement of the Social Inclusion Initiative is thought to maintain a good social standing in Australian society while respecting the society’s interests while undertaking its marketing activities.

Personal Computers have been used inappropriately by the youth in Australia in the 21st century. Nowadays Australian youth like young people in other western countries use the internet in their personal computers to access pornographic materials, perpetuate cyber crime and waste a lot of time browsing the internet and playing computer games instead of engaging in productive activities.

  1. Technological

Technology is often subject to change. Technological issues are very dynamic with new systems and electronic components frequently replaced. Computers are technology-based electronics that face the highest dynamism and change. The introduction of personal computers in the recent past has been the main technological advancement in the Australian Computer industry. The personal computers are computers used by personal users for specific purposes as opposed to micro computers and other types of computers which may be connected to central computer systems to be operated by several people in a system.

Personal computers are now turning into tablets and smartphones in the Australian computer industry. The changing technology has necessitated the use of smaller electronic devices than the larger personal computers. This resulted in the introduction of tablets and smartphones into the Australian market. The development of smartphones and tablets has also prompted manufacturers of personal computers to design tablet-style personal computers.

  1. Market Analysis

The computer industry in Australia is characterized by competitive markets where prices are determined by forces of demand and supply. The customers of XYZ include service companies offering professional services, home-based workers who use computers to perform online jobs, students who do assignments using computer applications or those who submit assignments online and other members of public who need personal computers for entertainment and to perform personal tasks.

Purchases of personal computers are increasing in Australia. From the 2001 census of population and housing, it was indicated that the number of people who use personal computers at home doubled so said the Australian Bureau of Statistics. In 2000, more than half of the Australian population used home or personal computers. This trend was forecasted to improve in the next decade. This was actually proven to be the case and in 2011 more convenient gadgets including smartphones and tablets were developed which almost pushed the personal computers out of the market. These electronic devices are easy to carry and are effective in all computing aspects. Nowadays, many Australians are moving towards the purchase of these tablets and smartphones. It is forecasted that in the next 5 years personal computers may be phased out of the market by tablets and smart phones in Australian market. It is therefore necessary for XYZ Company to design a tablet-style personal computer so as to be at par with the changing consumer needs and purchasing trends.

The XYZ company is expected to compete and obtain a good standing in market share against its current market competitors. Technology analyst firms including IDC released a report in 2008 which indicated that the greatest market share of the personal computer industry is the Hewlett-Packard (HP) which controlled 21 per cent of the total market in 2008. This was followed by Dell which controlled 15 per cent of Australia’s personal computer market share. Acer came third with 13 per cent market. Apple’s market share was 5.3 percent but was considered the fastest growing company because its market share had risen from the previous’ year’s 3.8 per cent (Tung, 2008). IDC analyst Felipe Rego which confirms that a purchase of low-cost laptops (personal computers) was expected to rise in 2008 to 5 million and the 50 million were to be shipped by 2012.

  1. Competitor Analysis

XYZ Company operates in a competitive international market where many companies operate and sell personal computers every year. These companies include Hewlett-Packard (21 % market share in 2008), Dell (15%), Acer (13%) and Apple (5.3%). Other companies include Toshiba and Lenovo. The direct competitors of XYZ globally can be illustrated in the table below.

Direct Competitor Comparison  


Market Cap: 21.32B N/A 38.17B 8.18B 582.78B
Employees: 106,700 N/A 349,600 27,000 106.70K
Qtrly Rev Growth (yoy): -0.04 N/A -0.03 0.54 0.24
Revenue (ttm): 61.48B 21.39B1 124.04B 29.57B 148.81B
Gross Margin (ttm): 0.22 N/A 0.23 0.12 0.44
EBITDA (ttm): 5.06B N/A 14.73B 799.31M 55.82B
Operating Margin (ttm): 0.07 N/A 0.08 0.02 0.33
Net Income (ttm): 3.18B 514.20M1 5.23B 472.99M N/A
EPS (ttm): 1.75 N/A 2.57 0.92 42.55
P/E (ttm): 6.96 N/A 7.53 17.24 14.61
PEG (5 yr expected): 1.14 N/A 1.15 1.03 1.15
P/S (ttm): 0.35 N/A 0.31 0.30 3.92

Pvt1 = Acer Incorporated

HPQ = Hewlett-Packard Company

LNVGY = Lenovo Group Limited

Industry = Personal Computers

1 = As of 2010

Table 1: Direct competitor comparison (Yahoo, 2012)

Hewlett-Packard (HP)

HP being the most dominant PC manufacturer in Australia is the biggest competitor of XYZ fictional company in the real Australian market. It is the leader in Australian Personal Computer market in terms of market share. Its objectives are categorized into the following sections:

  • Customer loyalty: to provide highest-quality products, services and solutions and give more value to its customers so as to earn their respect and loyalty (HP, 2011). The success of the company depends on the increased customer loyalty. The company therefore listens to its customers so as to understand their needs and deliver products and services that meet those needs, hence customer loyalty is obtained.
  • Profit: the profitability objective is to achieve enough profit so as to finance the growth of the company, create value for its shareholders and provide resources which can be used to achieve other organizational objectives (HP, 2011).
  • Market leadership: to grow through continuous provision of useful and momentous products and services to its current market (including Australian PC market) and enter new areas that relies on and carry technologies, competencies and interests of customers (HP, 2011).
  • Growth: to consider change in the market as an opportunity for growth; to make use of its profits and ability to produce innovative goods, services and solutions that enable the customer to meet their needs (HP, 2011)

The weaknesses of the company include:

  • Their products are pre-build which means that they need extensive marketing in order to make back their money.
  • This means that HP also incurs a lot of costs in maintaining its large inventory. This can be turned into strength by XYZ. This can be done by reducing costs and increasing sales through use of appropriate marketing strategies.

The strengths of HP include:

  • Availability of products – most of HP’s products are delivered immediately after ordering (Jones, 2006). This can be adopted by XYZ so as to maintain its customer’s trust and loyalty.
  • Standardization of products – HP often tends to standardize parts within its models. For instance, there is a consistency in 100 NV516UT model builds (Jones, 2006). XYZ should adopt this strategy by standardizing its new tablet-style PC.
  • HP also has a wider portfolio of its product brands. For instance, an HP PC can be connected to an HP switch, server and storage unit. While Printers, keyboards, faxes, scanners, external HDs, UPS and the mouse are also available to customers in an HP portfolio.

HP is at a growing pace. One of its objectives is growth and that is manifested in the company’s activities which suggest the company’s growth aspiration. The company has been changing its technology as the market demands the need for change. For instance, since the invention of tablets and Smartphone, HP has initiated a new tablet model. This idea can been used to develop XYZ’s new tablet style PC.

Dell Inc. (DELL)

This is the second leading company in terms of market share in Australian Personal computer industry as at 2008. The Company’s strategies include:

  • To manufacture cost-efficient customized products in order to meet specific customer needs. The products are built with respect to orders.
  • Dell also builds a strong partnership with suppliers. It picks one or two suppliers of PC parts and components and then stands by them for as long as their relationship is bound by mutual advancement in technology, good performance, and provision of quality and low cost products.
  • Provision of customer service and technical support to customers.
  • Research and development driven by customer needs.
  • Development of new products and investment in portfolio of products.

The weaknesses of dell include:

  • Overdependence on manufacturers and suppliers of components and parts. This inhibits the innovation of the company. This can be used by XYZ as a lesson to engage in own-backward manufacturing of parts and components.
  • The parts of Dell machines are not fully standardized. For instance, Dell 50 Optiplex 960’s will not display consistency in its parts. The1gb RAM, hard drives and power supply may be from different manufacturers.

The strengths of Dell include:

  • Competitive products. It costs less to buy a Dell model than other companies in Australian PC market.
  • High quality and effective differentiation.
  • Customization of products. This is the most outstanding and advantageous strength of Dell.
  • Service and support provision to customers
  • Good corporate responsibility and citizenship in the PC market


  1. SWOT Analysis of XYZ

Positive factors                                                           Negative factors


  • Just-in-time manufacturing and customized brand build-up
  • Competitive pricing and cost strategy
  • Adaptability to changing technologies
  • Personal selling and direct customer contact
  • Standardization of products.


  • New in the market
  • Inadequate financial resources

  • Large quantity customization and expansion
  • Potential growth in new cities in Australia
  • Increased users of tablet-style Personal Computers in Australia and the expansion of Australia’s PC market

  • Stiff completion from companies such as IBM, HP, Dell, Acer, Toshiba, etc.
  • Emergence of new competitor strategies such as HP’s tablet
  •  Taxation by Australian Government


  1. Segmentation, Targeting and Positioning

6.1 Segmentation

In segmenting the Australian market, XYZ groups its customers into having similar characteristics. The Company considers the psychographic features of its consumers and further sub-divides or segments these customers into lifestyles and personality (Handlechner, 2008). Some sections of the consumers of XYZ’s products in Australia are the trend setters (Segment 1). They follow a given technology before other people. This is normally the case for university and college students who like new fashions, trends and technologies for prestige, ego, self-satisfaction and luxury. Other people in this category are the other members of the public who enjoy luxury and therefore like being associated with new trends and fashions.

The other segment of the Australian PC market is the conservative category (Segment 2). This section of consumers often prefers retaining traditional systems and institutions and is not supportive of change in the society (Levitt, 2006). Therefore, they seek to preserve their personal computers as they are and maintain stability and continuity in the market. This group may not be an appropriate segment of the market for XYZ’s new tablet-style PC because the new product is a result of the dynamism which conservatives oppose.

Another segment of the Australian Personal Computer market is also the Sophisticates (Segment 3). The sophisticated members of the society are those people who make things less natural or less simple. In the Australian PC market, this group seeks to make their computers more sophisticated; less simple and natural. This group includes the people who seek to change the current PCs to be more portable and unnaturally smaller.

  • Targeting

The targeting strategies to be used by XYZ are the differentiated strategy and the customized strategy. The diagrams below shows how the strategies are used to reach out at a target market for the company.

Differentiated Strategy

Differentiated Strategy

The diagrams show that the best marketing mix for trend setters (segment 1) is promotion, the best marketing mix for conservatives (segment 2) is pricing and the best marketing mix for sophisticates (segment 3) is the product.

Customized strategy

Customized Strategy

In this strategy Customer one is derived from segment 1, customer 2 from segment 2 and customer 3 from segment 3. Each customer’s needs are met through the most appropriate marketing mix depending on his/her market segment.

6.3 Positioning

This involves the company’s choice of the target market and the differential advantage. In our case, the best market position is to market in the universities and colleges so as to win the loyalty of customers in those institutions. This is in a quest to win the market segment 1. The University students are always considered trend setters in terms of Personal computers. They follow changing technologies always and set the pace for the other market segments.

The differential advantage is to provide a different marketing mix for each segment. The trend setters follow the change in technology before others. The best way to win them over is therefore just to promote the new tablet-style personal computer product though marketing and once the trend setters are aware of the product they follow the product’s trend. The conservatives are resistant to change. Therefore, the best way to win over this demographic is just to offer them a lower competitive price. Finally, the sophisticates prefer sophisticated products. The best marketing strategy that will win over them is therefore to offer a product that has sophisticated features. It is all about the product features for sophisticates.

  1. Marketing Objectives
  • Provide XYZ with a brand image that is driven towards gaining of a customer loyalty in the Australian Personal Computer market.
  • Convey relevant information about the new tablet-style personal computer; its product features, price, place, promotion and placement.
  • Boost the sales of the company and increase the sales volume through the introduction and sale of the new tablet-style personal computer in the Australian Personal computer market.
  1. The marketing Mix

8.1 Product

The new tablet-style personal computer is a small personal computer a little larger than a mobile phone. It is integrated into a flat touch screen instead of using a keyboard (Gilbert, 2011). It uses a virtual keyboard in writing. The following are the main benefits and functions of the tablet-style personal computer designed by XYZ.

Features Benefits
·         Touch user interface to enable the user navigate well and type easily using a virtual keyboard.

·         The tablet-style PC also enables the sensing of handwriting.

·         Resistive multi-touch screen hardware which allows for high-level preciseness and multi-operations.

·         Accelerometer which allows for detection of physical movement of the tablet-style PC.

·         Proximity sensors which control input into the PC.

·         Storage drive similar to those of any larger Personal Computers.

·         Wired connections which do not restrict motion since tablet-style PC are mobile.

·         WiFi wireless browsing to allow for internet access.

·         Communication and entertainment through e-mail and social media.

·          Allows for mobile phone functions such as video calling, text messaging, headset and speaker phone uses.

·         Video camera roles and photo viewing

·         Applications which can be easily downloaded for free.

·         Allows for music video and movie player roles.

·         Light in weight hence portable (0.5-1 kg)

·         Battery lasting period of 6-15 hours depending on pattern of usage.

·         Allows for E-book applications



  • Price

Since the company is not a leader but an entrant to the market, it will be a price taker in the market (Levitt, 2006). While trying to set prices that will enable it meet its marketing and corporate objectives, the company also considers the pricing of its competitors in the market. Prices set higher than the existing competitors will lead to little attraction of customers while lower prices will lead to less profitability or possible losses. The pricing will also consider legal factors such as taxation and tariffs. In order to provide lower prices than their competitors and win new customers, the company will have to minimize its costs.

The pricing objectives of the company include: Return on investment, maintenance of the market position, following competition, market penetration, short payback period, preventing new entry, winning customer loyalty, covering investment costs and increasing sales. These objectives are attained by the company through proper marketing strategies and offering the best competitive prices.

The pricing method to be used is the market oriented pricing whereby the prices are set at the perceived value of tablet PCs in the Australian PC market. This will consider such factors as marketing strategies, product line pricing, negotiation limits, political issues, costs, distributor effects, competition and value to customer.

The company’s pricing strategy is the use of differentiated pricing. The different segments of the market are offered different prices. For instance, segment 1 which includes trend setters are offered medium prices because they follow technology and will not go for cheaper products but more fashionable ones. Segment two on the other hand will be charged low prices because they are conservatives and only low prices can lure them to purchase new products. The third segment which comprises of sophisticate consumers and will therefore be charged higher prices since they are often associated with luxurious items and to them higher prices offer them more prestige and luxury. Only where feasible should lower prices be offered across segments. However, since the company is operating in a market dominated by competitors, the overall pricing of the company will be generally lower than that of competitors. This may not be favourable in search of profitability but it is a good short term strategy used now to earn money later after customer’s loyalty have been established sufficiently (Levitt, 2006). This is also necessary for exercising predation in pricing and creating barriers to entry.

  • Promotion

The promotional mix of XYZ is composed of elements which are inherently selected and integrated in synergy so as to suit specific audience, communication objectives and budget. The promotion mix involves cost of marketing which should be covered by prices, yet prices should contribute to profits. The promotional mix should therefore be financially feasible.

The specific promotional mix and the associated audience, budget and communication objectives are listed below.

Promotional Mix Target Audience Communication objective Annual Budgets
Advertising General public Create awareness about the existence of the new tablet-style PC brand. $10,230
Sales promotion PC wholesalers and retailers in the Australian PC market Increase consumer demand and stimulate market demand $11,150
Public relations General public To attract and retain customers and create customer loyalty $8,800
Exhibitions University and college Students To attract university and college students PC users $14,300
Direct marketing Personal Computer Retailers and household PC users in Australia To create customer loyalty $11,100
Sponsorship University and college students To attract university and college students PC users $20,000
Personal selling Domestic PC users Retain customers $12,000


  • Place

XYZ is committed to the distribution of products to the right place, at the right time and in the right quantity. This is targeted at meeting the convenience of the customer. The channel selected will be affected by the market factors, producer factors, product factors and competitive factors. Australian PC market is one which is more customer oriented. Therefore, consumer channels are more appropriate channels (Levitt, 2006). This includes direct selling to consumers or selling to wholesalers who in turn sell to retailers and retailers sell to consumers. Most competitors use industrial channels which involves the use of distributers and agents. However, XYZ prefers consumer channels so as to sell direct to wholesalers and retailers. This brings close contact between the company’s sales team and the customer, hence improving the customer loyalty.

The distribution intensity to be used is the intensive distribution intensity.

  1. Implementation and Control

The company will implement the strategies included in this marketing plan in a systematic and controlled manner so as to meet the sales and corporate objectives. The company sales and marketing team will use its competence and knowledge to market its products from September 1, 2012. This will begin with the company’s pricing whereby the marketing team will set the prices based on the criteria provided in the marketing plan. The next step is using promotional mix (starting with advertisement) so as to create awareness of the company’s new brand. The product’s features are explained in exhibitions, public relation meetings and through advertisements. Once this is done, the sales team then sets up the distribution channels and start to distribute the new tablet-style personal computers. The products will be distributed through direct selling to either wholesalers or retailers.

The headquarters of the distribution team will be based in Sydney but are divided into ten teams to distribute the products in ten major towns namely: Sydney, Melbourne, Brisbane, Perth, Adelaide, Gold Coast-Tweed, Newcastle, Canberra, Wollongong and Townsville. The distribution team will distribute the computers to institutions after seeking for the institution’s management consent and also to retail and wholesale PC shops in those towns. The sales records and revenues are sent to the headquarters at Sydney.

The control system of the company will include setting of performance standards for the sales team so as to enable them achieves the marketing objectives of the marketing team as illustrated in the marketing plan. Each of the members of the marketing team is allocated a responsibility to perform. The performance of the marketing team is then evaluated against standards. Rewards are given for the best performing members of the sales team so as to motivate them (Levitt, 2006). They can be praised, promoted and/or given monetary rewards. Those members of the sales team who go against the rules of the sales team are punished in a number of ways e.g. deductions of their remunerations and commissions. Corrective action is taken for any variance of the actual performance from the set standards.

There are certain barriers to this implementation process which include high cost, reward system incongruence, unquantifiable benefits, personal ambitions, saying without doing. To overcome these barriers the marketing team will be allocated enough funds to cover its marketing costs. The unquantifiable benefits such as improved brand image will be measured in terms of goodwill. The management will also encourage and advise the marketing team regularly on the need to avoid personal ambitions and pursue organizational goals as well as the significance of doing what we say. The reward system is also reviewed regularly to ensure that it is not biased and is provided to the best performing individuals in the sales team.


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