The current study presents a report to the board of directors of the firm Northampton Balloons Ltd regarding philosophy of the firm Northampton Balloons Ltd to satisfy needs of the customers and the current market orientation. The study at hand also examines the extent to which the company has succeeded in exploring and satisfying the requirements as well as desires of customers by means of product mix. Unlike past marketing stratagems that focused on establishing selling points for subsisting products, market orientation runs in reverse, trying to customize products to satisfy customer’s demand. In addition to this, this study also presents suggestions regarding enhancement of market orientation of the company and identified the financial implications for two identified sectors of the market. Moving further, this study also discusses in detail both the advantages as well as disadvantages of different sources of finance available to the company.
Market orientation is necessarily organization wide development of market intelligence pertaining to current and future needs of the customers, dissemination of intelligence across various departments, organization wide responsiveness to the needs of the customers (Appiah-Adu and Djokoto 2015).
Elements of Market Orientation: Market orientation refers to a business approach or else philosophy that concentrate on recognizing and satisfying the mentioned or hidden wants of customers (Lewrick et al. 2015).
Customer Concern throughout the business: As per the given case, Northampton Balloons also started its business as a manufacturer of hot air balloons. Thereafter, management of the company identified the concern of customers to have hot air balloons for promotional purposes. The company recognized about promotional hot air balloon market.
Customer choice criteria and match with marketing mix: product contains two different components namely tangible and intangible components (Sievers et al. 2016). Northampton Balloons as a retailer meets both the components of product as the intangible product (microlite aircraft and aircraft that necessarily weighs around 300 kg for particularly single seat plane and approximately 450 kg for a double seat) and satisfies various intangible components of a product (value of brand, satisfaction of customers and many others).
Segment by customer differences: There are specific set of customers for the promotional hot air balloons. Previously, product of the company had a targeted segment of customers that took in middle aged population and comparatively wealthy market of enthusiasts. The product of the company can be used as hot air balloons for promotions and can have a specific set of corporate customers. In addition to this, there are other segments that include flying enthusiasts who are excited about the microlite aircraft. However, as per the case study, it can be observed that there is absence of appropriate segmentation and positioning policy.
Invest in market research and tracking market changes: As per the given case study, Northampton Balloons conducted a superficial market research. The company eagerly entered the market of hot air balloons for promotions. Although initially the company earned profit, the sales figure began to dwindle after the first six months.
Welcoming change: Company Northampton Balloons focuses on the entire market and shows company’s attempt to become market oriented. Management of the company responds proactively to the needs, tastes as well as preferences of customers (Tomczak et al. 2018). Manufacturer of hot air balloons who previously used to carry six passengers modified the product as per alterations in needs of customers. After recognizing potential of the market for hot air balloons as a vehicle for promotion, management of the company started formulating as well as manufacturing hot air balloons for their clients in different shapes and sizes counting different kinds of clothing, cans, bottles, running shoes and many others. This can be referred to as a welcoming change and indicates towards market orientation of the company.
Trying to understand competition
Competitors too matter for market orientation (He et al. 2018). As per the given case, the company Northampton Balloons also have a number of competitors that are providing the same product and service. Also, the company stands third and fourth that deliver the greatest potential.
Marketing spend regarded as investment
An important feature of market driven business is the marketing research expend that can yield rich rewards by means of better understanding of the customers (Loe and Ferrell 2015). The company Northampton Balloons has also made some investments in undertaking innovative manufacturing exercises as well as modern technology for the purpose of ensuring efficacy. However a minimum threshold investment is necessary for marketing their product (for example, promotional budget that can be used for posters else wise sales promotion for attracting and retaining customers. Also, the company lacks in constructive and formal marketing planning. The effort for enhancement of sales has also been largely thoughtless and has depended hugely on word of mouth along with general interest generated by the special newspaper feature or else programme on television (Lee et al. 2015).
Innovation rewarded
Search for latent markets: The market for microlite aircraft can be said to be a latent market. There are basically many flying fanatics who either cannot afford an actual aircraft or else are attracted by the way in which microlite can help in recreating old days of flying. The company also serves only in Great Britain although the marketing license of the company covers numerous nations for which there is now firm evidence that a substantial sales potential subsists.
Responsive
In responsive form of market orientation, business firm has the need to concentrate on immediate needs of the customers and has the tendency to be market driven (Kiessling et al. 2016). The company Northampton Balloons has also changed its offerings and modified the same. According to the given case study, it can be hereby said that this approach of the company to marketing was to large extent reactive and there was inappropriate understanding of the purchasers’ motives or else focus of marketing effort.
Strive for competitive advantage:
In case of Northampton Balloons little or no effort is made to understand the needs of the purchasers and the offerings of other players in the market. Also, there is no effort intended to serve their customers better than the rivals.
Wants of the customers throughout the business need to be considered as paramount and the business concern have the need to alter its offerings in line with any alteration in preference of the customer.
Customer choice criteria are to have a promotional hot air balloon. Founded on comprehension of customers, a corporation has the need to develop a suitable marketing mix. Product is a significant component of marketing mix, without which the procedure of marketing mix cannot start off. Therefore, the product can be designed as per the choice of the customers. Core product is essentially the most significant aspect of the product (Frösén et al. 2016). Therefore, in order to differentiate product of the company Northampton Balloons it is important to differentiate the product from the other brand and need to have a bigger brand. This refers to creation of higher value that necessarily has input of both quantity as well as quality.
Analysis of data using regional analysis, product line analysis and other analysis can help Northampton Balloons to segment the market more effectually.
Therefore, the company could have invested money for the purpose of conducting adequate market research before starting its operations. The effort for enhancement of sales has also been largely thoughtless and a minimum threshold investment is necessary for marketing their product (for example, promotional budget that can be used for posters else wise sales promotion for attracting and retaining customers (Lim et al. 2017)
The company Northampton Balloons also have a number of competitors that are providing the same product and service. Competitors are also important for market orientation. Therefore, specific marketing orientation strategies with regard to understanding the competition need to be developed. Porter Forces Analysis can help the company in understanding its competitive position and subsequently develop strategy (Kasim et al. 2018).
In addition to this, company also requires higher inward investment for attainment for proactive approach to marketing. Also, as a marketing-orientated business concern that they need to make every effort for competitive advantage (Fang et al. 2014). Essentially, they intend to serve their customers better than the rivals.
The company also serves only in Great Britain although the marketing license of the company covers numerous nations for which there is now firm evidence that a substantial sales potential subsists. Therefore, management of the company can improve the market orientation by gaining knowledge regarding the latent markets and thereafter start operations in the identified markets.
Approach of the company’s to marketing can be considered to be largely reactive, attempts of venture by the company can be said to be extremely successful. The company developed a brand reputation both for superior quality and ingenious designs of the products. As mentioned in the case study, the management decided to sell a 51% stake in the corporation to inject a huge sum of cash into the corporation to finance future growth. However, this stake was purchased by a mini conglomerate that until recently has permitted Northampton to function without interference.
Borrowing as a source of finance:
Management of the company Northampton Balloons can consider borrowing as a viable option for acquirement of funds. By way of borrowing funds the company can acquire the advantages of:
– Flexibility: With regard to borrowings, the firm only has the need to worry about disbursement of the instalment payments on a regular basis (Tomczak et al. 2018). Essentially this can be regarded as a benefit over particularly overdrafts where the firm needs to pay the entire amount when the bank demands.
– Cost Effective: Borrowing of money can be considered to be feasible option when considered in terms of rate of interest. In terms of rate of interest, borrowed funds are normally the cheaper alternative as against overdrafts as well as credits (Lewrick et al. 2015).
– Retained Earnings: Whilst businesses that essentially issue equity for the purpose of raising capital generally provide a certain percentage of their profit to their shareholders of the firm, banks require borrowers to disburse only the principal amount along with interest amount on raised loan. This is in turn can help the business Northampton Balloons in retaining all the business profits.
– Tax Benefits: Amount of interest disbursed on the loan is necessarily a tax deductible expense. Therefore, this can also be cited as a specific advantage of borrowing money.
Disadvantages of borrowing money by Northampton Balloons
Stringent Requirements: As there are numerous banks that require some kind of collateral, different start-ups firms along with existing businesses that possess no assets can find it to be very difficult to get approval for the loan applications (Lewrick et al. 2015).
Burden of repayment: Loan borrower, specifically Northampton Balloons in this case has the need to disburse specific amounts on a periodic for repayment of the amounts borrowed (Lewrick et al. 2015). Essentially, the ones who fall behind on payment encounter the prospect of having their assets seized.
Irregular payment amounts: In case if the firm Northampton Balloons acquires a bank loan with a variable rate of interest, the specific rate alters with conditions of the market.
Investment as a source of finance: Investment can be considered to be the permanent solution to various financial requirements of a corporation. Main focus of the company is necessarily not necessarily financial management. Equity finance can deliver that leverage to management to persistently concentrate on satisfaction of core objectives. Essentially, this keeps firm’s management away from the problems of raising funds. As rightly indicated by Tomczak et al. (2018), with equity money from financiers, the owner of the firm can get relived of diverse pressures to satisfy the deadlines of fixed loan disbursements. Nevertheless, management does not have the need to quit control of the business and often has the requirement to consult with financiers when arriving at major decisions.
Advantages of equity
Low risk: Management of Northampton Balloons might face comparatively less risk with equity financing as it does not have any fixed monthly loan disbursements to make (Lee et al. 2015).
Credit Issues: In case if the company Northampton Balloons encounters credit issues, then in that case equity financing might perhaps be the only choice of acquirement of funds for specifically funding growth.
Flow of cash: Equity financing does not necessarily take money out of business. Contrarily, the disbursements for loan repayments involved in case of debt financing extract funds out of business, thereby decreasing the requisite money needed to fund growth of the company.
Long term arrangement and planning: Equity financiers necessarily do not anticipate getting an immediate return on amount invested (Lee et al. 2015). As such, these financiers have a broad view and have the capability to look beyond the short term and face the probability of losing the money in case of failure of business.
Profits as a source of finance: Profit earned by the firm can be considered to be a viable option of financing that can be utilized in different ways (Lim et al. 2017). In this case, Northampton Balloons can obtain the benefit of high retained earnings as a source of finance as this leads to enhancement in value of stock, assurance of corporate stability and providing finances for research as well as expansion without escalating corporate debt. Disadvantages of profit as a source of finance can be explained in context of inefficiency. The business concern is better off borrowing funds at a comparatively lower rate than the prevailing rate of interest. Another limitation of the retained profit as a source of finance is that there might be improper usage of finances (Fang et al. 2014). In case if the main purpose of utilization of retained earnings is not distinctly mentioned then in that case it might perhaps lead to excessive spending. In addition to this, this source might lead to over-capitalization. Furthermore, there is low rate of dividend and retained earning does not permit shareholders to take pleasure in full benefit of the real earnings of the firm Northampton Balloons.
Disadvantages of equity financing
Cost incurred: Equity financiers anticipate getting a return on their money (Fang et al. 2014). Business owner of the company Northampton Balloons need to be eager to share some of the profit’s of the corporation with partners of equity. The total amount of money paid to partners can be essentially higher than the rates of interest on particularly debt financing.
Loss of control: The owner of the firm Northampton Balloons has the need to give up certain control of the control when management takes on supplementary financiers. Basically, equity partners have the requirement to have a voice in arriving at a decision regarding the business, particularly the big decisions.
Capability of conflict: All the business partners shall not always agree at the time of making decisions (Ruizalba et al. 2014). In essence, these conflicts might perhaps erupt from diverse visions for the corporation and disagreements on styles of management.
Conclusion
The current study report presented to the board of directors of the firm Northampton Balloons Ltd helps in understanding philosophy of the firm Northampton Balloons Ltd to meet needs of the customers. The study at hand takes into consideration all the elements of market orientation and examines the extent to which the company has succeeded in satisfying the meeting needs of customers. In addition to this, this study also suggests ways of enhancing market orientation of the company and elucidated the financial implications for two identified sectors of the market. In the end this study also explains the advantages as well as disadvantages of different sources of finance available to the company.
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