Accurate trace of company development path- There were many factors that contributed towards the success of the Lesney products. The Mattel Inc. of America also came into the market in the year 1968 and they introduced a very tempting product series that is the hot wheels. This range was very well accepted among the customers because it was very easy to use. It had a special kind of wheel that could easily run over the nylon for a long time without requiring any extra push (Austin & Pinkleton, 2015). This made it immensely popular among the customers.
Operational and manufacturing processes-These special toy cars were in introduced in the year 1968 and 1969 in the US and Britain respectively. However, Lesley was quick enough to grab this new idea and incorporate the same on their newly launched range of toy cars called the superfast range. However, it was really difficult to convert the matchbox series into this superfast series.
Competitive advantage(s)-They have also focused a lot on the tactical and the strategic parts of the business so that they could gain the maximum amount of share. They knew that some changes are required in the organizational setup. One of the important aspects of the Aaker model is to strategic brand analysis (Aaker & McLoughlin, 2014). In other words, they are to know about the current demands of the customers (Abrahams, 2016) . They will also have to do an in-depth analysis of the competitive firms existing in the market. Lesney toys did the same. They knew that the hot wheels range that has been launched by the Mattel Inc. will surely give them a very tough competition and that is what had actually happened. They carefully noticed the tactics that were being used by the competitive firm. In other words, they studied what new technology or innovation is being used by the competitive firm. So, it can be said that the Aakar model of management has really proved to be very important for the Lesney Company (Aaker & McLoughlin, 2014). It was only after studying their competitors closely and accurately that they got the idea of the special wheels that could be incorporated in their toy cars.
Product-market development programmes-This innovation really helped them to gain the customer satisfaction and it thus helped them to gain a good hold over the market (Erdem & Swait, 2016). It was also in the same year that they appointed new officials into their system thinking that they would help to improve the overall system and the working of the organization. They appointed four new officials as the Divisional Directors.
Financial criteria-Their products were accepted by all their clients and the sale increased considerably. It was for this reason that they also had a very good financial performance in the year 1968. Their financial performance was excellent. They made a huge profit as their newly launched product that is the hot wheels series had a huge sale and their profit margins reached 5.56.
Their product market development program was not implemented properly. This was because they did not take any initiative to do an in-depth market survey. They also did not appoint any R &D group that would help them to find out some very newer strategies for attracting the customers.
Product-market expansion-This financial performance was so good that they the Lesney Company was placed as the 3rd most successful business organization in the business growth league that was published in the Manchester Today magazine series.
What were Lesney’s deficiencies in the period up to 1968/9? [Again, you must use the relevant marketing strategy theory to diagnose the problems. Aaker’s Strategic Management Process Model is thus highly recommended as an analytical framework.]
External factors-The Lesney Company initially gained a good profit margin in the year 1968 to 1969 as their products were very well accepted by the customers all over the UK and Britain as well. The competitor firm is the Mattel Inc. kept on improving their business by bringing new and innovative technologies. So, they were successful in keeping up the huge impact on the toy market of Britain. However, they lost a good number of customers in the market of UK. One of the important aspects of the Aaker model is to focus on the brand-customer relationship (Chittoor, Kale, & Puranam, 2015). It is the prime duty of the organization to emphasize the relationship that they built with their customers. They have to make sure that they are satisfying their customers and maintaining all minds of transparency.
However, Lesney Company somehow failed in this particular aspect. They had set their aspirations at a very high limit. They also started overlooking the competition that was actually laying in-front of them. They were perhaps overconfident and could not accept the fact that they can be overthrown in the competition by any of their competitors. One of the major mistakes that they did was to underestimate the strength that was present in their competitors. They were not satisfied with the profit that they were already enjoying after the launch of the Hot Wheels range. They wanted to expand their business but their decision was taken on a very rash and a much-unplanned manner. They thought that starting a new business will hp to gain about 50 percent increased sales and would consequently result in a huge profit. However, it was not the case and they suffered a loss when they jumped onto Hot wheels Bandwagon. This was expected by the company that they will be able to increase their sales but what they received was just the opposite. Their sales were not up to the mark and they suffered a huge loss.
Internal factors-The other problem was that there was not at the good or concrete explanation given by the company at their board meetings. The explanation that was given was really very bleak and not transparent at all. The only explanation that was given by them was that their setback was mainly caused due to the lack of enough sales. The major reason is perhaps the lack of proper planning in their system. As per David Aakar’s strategic management model was to study about the extended identity of the organization. It was required for Lesney Company to analyze their products or the amount of capital that they would require for implementing their new plan and programs (Almeida, Kim, & Kim, 2015).
Marketing strategy- The Mattel Inc started using a new kind of packaging system which they termed as the blistering packaging system. It was a very good move to build a good rapport with the customers as it had a good amount of space at the back where they could leave a good message for the customers or even accept a feedback and a message from the customers. However the same was not possible for the toys that were sold in the form of the traditional matchbox packages. As a result of this the customers’ got a good reason to feel an increased connection with the other company that is with the Mattel Inc. Company. This can be one of the reasons for the customers to feel a greater affinity towards a brand that cares about their feedback and their opinion as well.
Tactical marketing mix action has not been taken properly because there were several loopholes in the planning and the organizational setup. They did not really plan their next move wisely and it resulted in a huge loss. It greatly affected their capital and they were running sort of cash. As a result of this, they could not undertake any such sales campaign methods or any promotional activities that could have helped them in increasing their sales.
Operational activities-Their operational activities were also very weak. They did not pay any attention in maintaining the originality of the products. There was also a problem in their operations and management. They could not give any proper explanation to the customers regarding their poor performance.
With reference to Question 2, what went wrong after 1968/9? To what extent were these Marketing issues and to what extent were they associated with other aspects of Lesney’s organizational setup?
Plausible diagnosis of underlying weaknesses-The Lesley Company suffered a huge loss in the year 1968 and in 1969. However, even after this period, their sufferings were not over. This is because they somehow started copying the products that were being launched by the best of the companies that were their competitors. As it is already known that they suffered a huge setback when one of their biggest competitors Mattel Inc started seizing the business. Lesley was spontaneous enough in learning and studying their competitors staying true to the Aajer strategic business model. However, they overlooked the fact of adding some diversification or innovative features to their imitated products.
Competitive analysis-Though they changed their Hot wheels range into the Superfast range but they could not really gain the attention of the customers through this approach. Apart from this, they even converted their king size range into a new range called the super kings. So the customers could not find any originality in the efforts of the Lesley Company.
Management culture-They also ignored some of the very important aspects of the Aaker strategic management process model. Some of the most important parts of this model are studying and implementing each and every aspect of the extended identity of a brand. One of the important aspects of this model is to see the brand as a person, a product, symbol and s an organization. However, they did not concentrate on making any products with their own expertise and knowledge. This is evident from the fact that whatever innovations or changes that Lesley was making were a copied version of the products (like the Rola Matics) of any other competing firms. Apart from this, whatever they produced had a poor strategy or a poor secrecy, which made it very easier for the other firms to copy them. A major part of their sale was being taken over by the other mega-sized retail chain stores. Nothing seemed to be in the favor of the Lesley Company.
The strategies taken by them were not really very flexible. This is because they just copied the HOT WHEELS series made by the Mattel Inc series. However the customers did not really like this idea of copying other brands.
Marketing strategy – quality
The quality degraded because Lesney Co. did not pay any attention towards the quality of the products. Everything they produced was just a copied replication of some products made by their competitors.
Marketing decision making processes- They did not take any decisions wisely. They were very harsh and took the decisions without predicting the after effects.
Market evolution – consumers
Consumers were very unhappy with the services provided by Lesney Company. This is because the products were very unconventional and was not well accepted by the customers. The other important reason is the customers did not feel any strong connection with the company as they never tried to collect any customer feedback unlike the Mattel Inc. Company
Market evolution – trade power
Their trade power was becoming weak day by day as their strategies were being copied by their competitors very easily. The growing dissatisfaction of the customers gradually earns a bad name on the world wide basis. This made their trade suffer a lot. As they started producing the unconventional types of toys they were being highly criticized by the customers on a worldwide basis.
They were also criticized for manufacturing toys that were not well accepted by people. Some of their products included the figure of Pee Wee Herman line in the United States, followed by the Freddy Kruger talking doll that was a figure from the horror series of the movie called Nightmare on Elm Street. This was not accepted by the customers because as per their opinion these toys hindered the religious principles and also created a fear among the children and would mislead the customers.
They did not keep any alternative sources that would give a backup of their products in case of any emergency. There were many natural disasters like the floods and fire that shut down their factories. They did not have any back up plans that would help them to recover faster.
Marketing vision & leadership
Though they tried to somehow make up for the losses they could not do so because there was a nationwide strike declared during that period. So, all their factories were shut down and the production was hampered. There was also a flood and a fire that ruined much of the products at the Rochford facility. The year 1979 brought them an even further loss when there was an economic crisis and they suffered from a condition called the stagflation. So, it is evident that they ignored one if the most important aspect of the Aaker strategic management model as they did not focus on the customer analysis part.
What key learning points or takeaways come out of the case that could be passed onto other companies today – specifically in New Zealand’s Small-Medium-sized Enterprise sector?
Plausible learning points for SME’s -The SMEs of New Zealand must be taking a strong lesson from this incident. They must not take the power of their competitors very lightly. They must make sure that they are bringing some of the other kind of originality in their products even if they are trying to copy something from their contenders (Corazza, 2016).
Practicality of lessons -They have to create a strong board of directors so that they can address all the issues and give very string explanations to the public whenever there are such situations.
Directly drawn from issues in the case- The other important lessons are that the SMEs must keep in mind their limited amount of capital and other resources. They must not make haste without making proper backup plans for meeting with the losses (Tanveer & Lodhi, 2016). While the shift from one kind of products to the other, they have to keep in mind that it can take them into a huge loss. Instead of making haste, they must be slow and steady enough while launching any new kinds of products they must do a thorough customer survey so that they have a clear idea about the mindset of the customers. They also have to make sure to carry on many customer survey campaigns so that they can take the feedback from the customers before taking any business decisions.
Value-added insights for this Question- So, the SMEs must be maintaining some originality in the products produced by the SMEs. They must not copy the products made by their competitors. Apart from this they must be having a strong board of directors and managers who will be able to give a proper explanation of the losses that are being suffered by them.
References
Aaker, D. A., & McLoughlin, D. (2014). Strategic market management: global perspectives. John Wiley & Sons.
Abrahams, D. (2016). Brand risk: adding risk literacy to brand management. Routledge.
Almeida, H., Kim, C. S., & Kim, H. B. (2015). Internal capital markets in business groups: Evidence from the Asian financial crisis. The Journal of Finance, 70(6), 2539-2586.
Austin, E. W., & Pinkleton, B. E. (2015). Strategic public relations management: Planning and managing effective communication campaigns. Routledge.
Chittoor, R., Kale, P., & Puranam, P. (2015). Business groups in developing capital markets: Towards a complementarity perspective. Strategic Management Journal, 36(9), 1277-1296.
Corazza, G. E. (2016). Potential originality and effectiveness: The dynamic definition of creativity. Creativity Research Journal, 28(3), 258-267.
Erdem, T., & Swait, J. (2016). The information-economics perspective on brand equity. Foundations and Trends® in Marketing, 10(1), 1-59.
Tanveer, Z., & Lodhi, R. N. (2016). The Effect of Brand Equity on Customer Satisfaction: An Empirical Study Based on David Aaker’s Brand Equity Model. IUP Journal of Brand Management, 13(3), 43.
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