Marketing Strategy In Emerging Markets: A Conceptual Framework

Executive Summary (KONE Plc.)

Describe about the Marketing Strategy in Emerging Markets for A Conceptual Framework?

This is a strategic Analysis of KONE Plc., which is one of the best Elevators and Escalators Company and currently is in the top four E&E companies. This report summarizes the core competencies of the company and does a competitive analysis of the company.

KONE is very much focused on its customers and believes in providing value to its customers. It also focuses on Employee Management (KONE Corporation, 2014).

KONE wants to achieve and EBIT rate of 16% and wants to move faster than the market and thus this paper analyzes KONE’s strategic approach as well as analyzes its strengths. Weaknesses, opportunities and threats in order to provide a strategy to utilize the strengths and opportunities and overcome the weaknesses and the threats.

KONE is one of the largest escalators and elevators building and services company in the world, which has been providing world-class elevators and escalators, automatic doors etc. to the world. KONE mainly focuses on providing its customers with the best “People Flow” experience that is to deliver solutions, which help people in moving swiftly, quickly and safely without having to wait for long durations (KONE Distributors, 2014). Thus it aims at making the lives of people easier with the increasing urbanization throughout the world.

Talking about the company objectives, as mentioned earlier, the company aims at providing the best people flow experience. The company tries to understand its’ customers’ needs and tries to provide them with the best of the services with this understanding.

The company mainly aims at achieving four major targets as mentioned below:

Providing best experience to its users and customers.
Serve all of its loyal customers
Making KONE a great place to work with.
Making profits in the industry.

When talking about KONE’s financial objectives, KONE is planning to grow at a rate faster than the rest of the escalator and elevator market and wants to achieve a 16% EBIT rate. The company as mentioned in the previous statement wants to grow faster than the rest of the market and it will do so by focusing on the market positioning and the pricing of its products and the services it provides (KONE Corporation, 2014).

The company also aims at the absolute EBIT growth over a longer period of time and wants to attain an EBIT rate of 16%. KONE is also planning in improved capital working rotation that in turn will increase the cash flow to KONE.

Thus KONE wants to develop rapidly and increase profits but also wants its customer to get the best of the experiences.

KONE is spread throughout the world. In the early 90s it was still in the Europe and the Americas but with the expansion of the company and the increasing globalization as well as the increasing competition in the home markets, KONE started expanding its business and global presence by opening it’s R&D centers and development site in the Asian market, mainly India and China by partnering with Toshiba (Feldmann and Olhager, 2008).

Mission Statement and Corporate Objectives of KONE

As of now KONE operates in more than 50 countries and have 400,000 customers worldwide and around 900,000 escalators and elevators operating under the name of KONE.

Let’s do a competitive as well as a Macro Economic Analysis for KONE.

Competitive Analysis:

There are many smaller firms and companies in the Escalator and elevator market. But the four major companies are:  KONE, Schindler, Otis and ThyssenKrupp Elevator.

1. Otis: Otis Elevators that is a subsidiary of United Technologies (UTC) is the world’s largest escalator and elevator supplier and corresponds to 1/5^th sales to UTC. Otis is present in over 200 countries and mainly provides services for managing, installing and servicing elevators and escalators. This is popular for its energy efficient elevators, which consume 75% less power than conventional elevators. And although based in the US only 20% of its sales are from the US (Bergen and Peteraf, 2002).

2. Schinddler Elevator is second in terms of the number of sales and the volume of escalators and is just behind Otis in Elevators. It mainly focuses on low, mid and high-rise buildings. It has a strong presence in the United States and has provided installations in several of the government buildings including the White House, Pentagon etc.

3. ThyssenKrupp Elevators has its presence throughout the world and operates in round 80 countries. Not only elevators but the company also deals in plant technology, marine technology, automotive, shipbuilding etc.

As can be seen from the above analysis that the other 3 companies are having a good presence and a good hold on the market and thus KONE may face some difficulties in expanding its business more.

Internal Analysis:

Core Competencies and the key factors for KONE’s success

KONE has been successful because of some of the things, which it does better than others. Below are they:

KONE has always been at the top when it comes to being eco-friendly and providing Eco-friendly production. The company has won the Sustainable Supplier of the year award once for being less pollutive and more eco-friendly than others in the year 2013 in Dubai. By using eco-friendly ways and elevator designs KONE has reduced 70% power consumption and thus it bagged the price.

Innovation is another Core competency of KONE. One of the best discoveries it did was that it produced KONO Eco-disk that helped in removing the elevator rooms and now we see elevators, which do not require elevator rooms. And thus, this is also termed as KONE mono space. KONE Ultra rope has also been one of the recent developments of the company (David, 2005). It uses super ultra-light-weight technology, which is coated with high-friction coating. This new rope is reported to last twice than the conventional ropes, reduces the energy consumption by 15 % and the reduces the masses by 60% and it is expected that the Ultra Rope will be installed in high buildings up to 1000 meters soon.

KONE has always been known to give value to its customers and its staff. Most of the companies tend to give values to its customers but tend to ignore the staff while there are others which are more concerned about sales but do not give much importance to the staff or the customers. And this is the field where KONE tops the list. It values its customers and tries to provide them with the best of the services. It also focuses on its staff. Employee Engagement along with Customer satisfaction and customer experience has been an important part of KONE’s competencies.

External Analysis

The key market segments that are served by KONE are as follows:

Residential Buildings: KONE elevators are in installed in residential homes and multi-towered buildings and flats etc. that are very helpful for the residents to reach to their floor easily and quickly. Also by providing the proper service and maintenance the lifetime of the elevators is increased.

Medical buildings and facilities: In medical buildings such as hospitals you need hygienic and spacy elevators so that the hospital beds and wheelchairs can easily be transported through them and also hygiene is important so that the patients are safe from infections (Bang, Joshi and Singh, 2015). And KONE pretty well understands this, thus it provides spacy and hygienic elevators for hospitals and maintains the hygiene by providing regular service to the elevators.

Public Transport and Airport: People flow can become a great problem in public transit places and Airports if the movement is not swift and safe and quick. Thus KONE provides quick and safe elevators and escalators to the public sector transit and also to public places such as the Airports.

Hotels: Multi-storied hotels are common these days and thus the need for elevators is a a must in Hotels. Since no hotel would like its customers to take the pain of walking through the stairs. Thus KONE provides elevators for Hotels of all sizes that can carry the visitor’s luggage, the visitors and at some places even their cars.

Retail Centers: Malls and retail centers also face high volume of people traffic and thus elevators and escalators are a necessity in such places. KONE provides elevators and escalators which are beautifully designed and at the same time fit well with the Mall’s or retail centers’ insides.

Office Building: KONE also provides elevators for office buildings, buildings from low-rise to skyscrapers, buildings of the likes of WTC. And thus it helps in efficient People Flow inside the offices.

Special Buildings: Special buildings such as cruise ships etc. require different types of elevators and escalators and also should consume less energy. KONE provides its products and services specialized for these special buildings etc.

All of the above mentioned would have been possible because of the extensive steps taken by the company so as to stay ahead of its competitors. We will analyze each of them:

Planning and Specification: KONE proper planning depending on the type of building, the expected people flow etc. and this gives them a good idea to start with. This is an important step in understanding the problem.

Solution Design: It uses technology and tools such as CAD to design the specifications, which again provides them with almost accurate dimensions and results for the elevators and escalators.

Project Management and Installation: KONE has an experienced project management team, which again is a plus point for the company (Gupta, Sahi and Chahal, 2013).

Construction time use solutions: KONE uses its own technology to transport the escalators and elevators that again reduces the cost if it was to be done by some third party.

Internal Analysis

Maintenance and Monitoring: KONE’s 24/7 customer care helps the users to file a complaint at any time and KONE monitors and maintains the escalators and elevators installed by it. Thereby, giving value to the customers.

Spare Parts: KONE also provides spare parts ad also imports parts from other which again helps in the expansion of the company.

Modernization of services: KONE has been using latest technology, which has reduced their power consumption by 70%, which makes them one of the most eco-friendly companies in the world.

KONE’s strategy should be to concentrate on the markets that are its main market areas. Looking at the image below we can see that China tops the list (highest new equipment sales market and provides 30% of the company’s revenue) followed by US (10%) and France.

And as seen from the chart above, the company should focus on New Equipment in its top performing countries such as China, US and France.

KONE should try and re-strategize based on the fact that which countries provide them with maximum revenue and in which fields and then they should try and dominate the market of each of the countries (Weinstein, 2006). And this is a strategic direction in which it should proceed which can be seen from the number of new equipment sales which the company s generating in China.

To implement the Digital Marketing Strategies in an efficient ways, first of all KONE needs to ask themselves and answer a few questions that are as follows:

Q1. Where are they as of now?

Answer: Among the top four leading elevators and escalators business companies

Q2: Where do they want to see themselves?

Answer: Want to be at the top and the best E&E Company worldwide.

Q3: How to get there at the top?

Answer: To get there, they need efficient digital and marketing campaign. Details about eh campaign, tactics followed etc. should also be mentioned along. The above can be achieved through the following:

STRATEGY: KONE’s strategy should be to provide the best of the services in the people flow areas mostly the urban areas. They should also be focused on being eco-friendly and state-of-the-art elevators and escalators. The company works to reach the strategic goals of providing the best of the services to its loyal customers.

OBJECTIVE: The objective here is to produce KONE as the world’s best and the first choice for elevators and escalators throughout the world (Ramaseshan, Ishak and Rabbanee, 2013). And KONE’s name should be at the top when talking about E&E in any part of the world.

GOAL: The main goal here will to increase the sales of KONE within the coming years. And these goals can be achieved by launching KONE CF campaign and KONE CD campaign that will help the company to achieve an EBIT rate of 16%. And both the strategies will help the people by providing them better facilities and people flow. It goes with the motto line of the company: “dedicated to enhance people flow”.

Strategic Marketing Framework

SMART: We want to achieve the EBIT rate of 16% and thus we need to act smartly in order to achieve that within the next 1-2 years.

As mentioned earlier about the KONE CF and the KONE CD strategies, we want to establish the company as the world’s CD (Compact Disk) and CF (compact flash) ensuring smooth people flow.

Our main strategy should be to establish KONE in the minds of the people by 2020 through the KONE CD and KONE CF campaigns (Morris, 2009).

As seen mostly the customers of KONE comprise of builders, architects, developers etc. and thus our campaign should be more focused on these people. And with time when we capture the minds of these people then general public won’t be much farther from our reach. 

To go ahead with the digital marketing strategy and the KONE CF plan, it should go like this:

KONE should install digital screens in its existing elevators installations giving information about KONE and its products. KONE should also install similar digital screens in strategic places such as public places, retails stores, malls etc. to increase awareness about KONE and its products.

Design a Mobile APP: These days smartphones have become a necessity for everybody and thus KONE should develop a mobile app through which users can send information to KONE about their elevators and escalators and complaints through the app.

Sensational Adverts: Specific worded lines for advertisements could be used on Televisions, Radio and newspapers etc. such as, “Today you could be travelling in an elevator or on an escalator build by us. Who we are? We are the world’s best E&E manufactures and service providers”.

Marketing on Social Networks: Internet has become a part and parcel of life these days for everyone, be it a teen or an old age person, everybody is connected to Internet these days. So advertising on the Internet is one of the best digital marketing strategies KONE could adopt. KONE can go for Google Ad words where they would be promoted by Google ads or can go for Facebook advertising, which again will boost their sales and awareness among people about KONE.

Website: KONE’s website should be monitored properly. When launching digital marketing people will certainly visit a company’s website, and thus the company should provide all the necessary information on its website in an easy way and in a way in which the user can easily find information for which he/she is looking for.

VIII. TOWS Matrix:

 

	External Opportunities 1.      Exponential growth in Australia and Asia 2.      R&D centres in many countries	External Threats 1.      Less market share in US 2.      Competition in most of the countries
Internal Strengths 1.      Values Employees 2.      Vast Resources 3.      Strong Acquisition Strategy	SO           (Maxi-Maxi)	ST           (Maxi-Mini)
Internal Weaknesses 1.      Reliance on European market	WO           (Mini-Maxi)	WT           (Mini-Mini)

 

SO: Considering the SO, the company should expand the market and through its R&D centers in different parts of the world, should develop products specifically for a particular market.

ST: The Company should try to increase the work force in the companies in which it is lagging behind others.

WO: The Company should try to overcome its reliance on European market and since it has R&D centers in different countries thus it should develop country specific or region specific products to gain market share in those countries and areas.

WT: As mentioned earlier the companies focus on the emerging markets such as China and India to overcome its reliance and increase manpower and design country and region specific products for particular countries and regions.

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