3. Marketing Plan
Executive Summary
The marketing plan forms the basis for Ryan Engineer’s goal to increase the market share for their
product. The analysis will outline the best strategies to follow for the achievement of the
company’s strategic goal.The marketing strategies will enable Ryan Engineering to reach a market
size that reflects the companies potential.
Ryan Engineering is a successful company which was started seven years ago. The marketing plan
has been commissioned because of the company’s planned advertising campaign.
Opportunities and threats were examined by carrying out a situation analysis.
SWOT Analysis
Strength
· expert knowledge
· on the way to cost leadership
· product of own design
· product lasts longer than average
product
· product depth (3 lifting capacities)
Weakness
· to high bank overdraft
· only 50% capacity used in new
factory
· no USP
· no web site
· high costs of direct labour
· to much staff
· outstanding payments to high
(78,500)
Opportunity
· economy recovers
· planed programmes like the
Limerick Regeneration Programme
· extensions: private medical sector
like the Bon Secure Group
· progression of the Beamish &
Crawford site in Cork
· alliance with CT Steel
· customizing of the product
· expansion
· Observe the procedure of public
sector bodies (Collusive Tendering)
EU Directive 2004/18/EC
Threat
· competitors like Hoist Equipment
Suppliers (Dunlavin, Co. Kildare),
Street Crane Company UK, Henan
Zhongxing Crane Machinery Co.,
Ltd. China
3
4. It is necessary to
· mount an advertising campaign that brings the customers attention to Ryan Engineering Ltd
· to improve the business relationship to the Office of Public Work
· to improve the business relationship to CT Steel
· to lower the costs of direct labour and materials
· to increase the Net Profit
· lower the bank overdraft
· increase the capacity of the new factory (only 50% of capacity are used)
· establish a web site on the internet
· make use of publicity (press releases)
- to attend exhibitions and trade fairs
· to use databases
· to have a clear Unique Selling Point
· consider to lay off staff
· to make sure that the outstanding payments will be made (Debtors: 78,500)
Target Market
The target market has been identified as steel suppliers, steel fabricators, constructors, engineering
plants, engineering supply houses, garages, workshops for loading machinery,
tenders from the OPW and large industrial developments.
Problems and Opportunities
The world wide recession had an influence on the construction sector and the output of smaller
fabricators and constructors. Opportunities are given because the economy slowly recovers and
there are same great projects planed (construction sector) like the Limerick recovery plan. An
opportunity is an alliance with CT Steel.
There were large orders (industrial developments) like the Blanchardstown Shopping Centre in
Dublin. The Blanchardstown Centre had its genesis in 1972 when Dublin County Council adopted a
development plan which provided for the development of three town centres to the West of Dublin,
one of these being at Blanchardstown. So a public body was involved. According to EU Directive
2004/18/EC collusive tendering is not allowed. Con-tracts above €25,000 have to be advertised (for
example: etenders.gov.ie). Maybe anti - competitive practices such as collusive tendering took
place. Collusion in tendering should be brought to the attention of the Competition Authority.
Marketing Strategy
According to Porter one of the three generic strategies should be used. The companies that attempt
to become the lowest-cost producers in an industry can be referred to as those following a cost
4
5. leadership strategy. When a company differentiates its products, it is often able to charge a premium
price for its products or services in the market. The focus strategy provides the company the
possibility to charge a premium price for superior quality (differentiation focus) or by offering a low
price product to a small and specialised group of buyers (cost focus). I have decided to choose a
hybrid strategy.
Modern approaches combine two or more of the classical strategies. Ryan Engineering should
combine the focus strategy and the cost leadership strategy.
Marketing Goals
The following marketing goals have been developed:
1. Focus on the production and selling of chain hoists (Focus)
2. Further differentiation
3. Achieve Cost Leadership
4. Customize product
5. Extending the product depth
Marketing Tactics
· developing new products to increase the product depth
· research about costs of direct labour to lower the costs
· establishing a web site
· make use of publicity
· create awareness
· advertising
Implementation and Control
Six main elements have to be considered:
· Internal communication and buy in
· Aligning structures and people
· Developing new resources
· Implementing appropriate systems and process
· Working through the communication to the market
· Monitoring and review
We will have an annual-plan control, a profitability control, an efficiency control and a strategic
control.
Conclusion
Based on the analysis, Ryan Engineering will be able to establish a profitable and innovative
product for the market. There is a good segment growth opportunity. After implementation of the
marketing plan, Ryan Engineering will reach increased market shares.
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7. INTRODUCTION
The company was founded by Joe Ryan seven years ago. The company offers precision
machining of light mechanical parts and chain hoists of own design. Ryan Engineering Ltd.
offers heavy hoists blocks that will probably last longer than five years. This is a competitive
advantage. Over the past year the growth was minimal so the company decided to engage
more in the production of chain hoists. Meanwhile the hoists present 50% of Ryan’s output.
Ryan now wants to expand and to increase its market share. The marketing plan has been
developed to support Ryan’s plans for the future.
Company History
The foundation of the company was 2004. Joe Ryan started the company by recruiting 38
former employees of a light engineering firm. Joe Ryan purchased some of the machinery at
very low prices.
Joe Ryan began his enterprise by concentrating on precision machining of of light mechanical
parts for machinery manufacturers on a jobbing basis.
Later Joe Ryan added a range of chain hoists of his own design.
7
8. Ryan Engineering got its first large order from CT Steel, a supplier of smaller steel firms and
constructors.
Ryan Engineering now purchases casting, bearings, gears, motors, chains and electrical gear
and then carries out the machining, assembling and finishing. Chain hoists now represent
nearly 50% of Ryan’s output.
The report examines the current situation of the company and makes recommendations which
will support the company’s success and expansion in the future.
SITUATION ANALYSIS
The macro environment
Political/Legal Environment
The Republic of Ireland is considered a stable government, as the system is a parliamentary
one. The Government of the 31st Dáil is the present Government of Ireland, formed after the
8
9. 2011 general election to Dáil Éireann on 25 February 2011. Fine Gael entered into
discussions with the Labour Party which culminated in a joint programme for the
government. Fine Gael is strongly in favour of the European Union.
Economic Environment
The economy of Ireland has been through a transformation the last decades and has evolved
from an agricultural focused economy to a recent knowledge economy. The knowledge
economy is now mainly based on services and high-tech industries, constrained on trade,
investment and industry. The financial crisis of 2008 affects the Irish economy severely as
any other economy.
Ireland joined the European Union in 1973, which is definitely favorable for business. Ireland
voted in favour of the Lisbon Treaty and Directive 2004/38/EC was implemented in Ireland
by the European Communities. This fact will open possibilities but also bring increased
responsibilities. European migrant workers are entitled to social welfare benefits after
working a certain time in Ireland. So the spending on social welfare benefits will grow in the
future, it already did from 2000 to 2008 (160% according to the National Recovery Plan
2011-2014, Table 3.2, page 55). This will have an impact of the amount of money the
government has to spend annually. The impact will result in an impact on the spending of the
OPW as an important customer of Ryan Engineering.
Ireland is a small open economy with vulnerability to global market shifts. The
External environment has and will cause considerable pressure on the Irish economy. As
outlined in the National Recovery Plan 2011-2014, the ratio of day-to-day expenditure as a
percentage Gross National Product (GNP) – has jumped from 28% during the boom years to
44% in 2010 – which is unsustainable. It is also noted that “since 2007, Ireland’s national
income (GNP) has fallen by 15% “ (National Recovery Plan 2011-2014, 1.1, The Economy in
2010, 1.1.1 Current Position, page 14) and Ireland’s tax revenues have reduced from over €47
billion to €31.5 billion and are now back to 2003 level. In these circumstances, the current
level of public spending is seen as unaffordable.
New dwelling construction activity has fallen the last years. The housing market in Ireland
has collapsed and with it the construction sector, large numbers of houses remain unoccupied
throughout Ireland as well as a large number of unfinished projects. The closure of one of
Ireland’s biggest architect firms Murray O’Laoire in April 2010 illustrates the serious
situation. On the other hand the planned recovery project for Limerick, the expansion plans of
the Bon Secure Group, the planed new building in Cork for Beamish etc will boost the
construction sector in the foreseeable future. Ryan Engineering was already involved in large
developments as the Blanchardstown Shopping Centre in Dublin. The mentioned projects
present new opportunities in this difficult times.
Micro Environment
The competitive environment
Customers
In the current economic climate new industrial developments will be rare. CT Steel is
specialised on smaller steel fabricators and constructors. The demand of these customers will
probably further decrease in the near future. CT Steel also supplies equipment to Northern
9
10. Ireland. The workloads of small and medium sized construction firms in Northern Ireland fell
again during the first quarter of 2011 (Federation of Master Builders, April 2011 News). In
regard to have the optimal marketing mix a marketing research will be necessary.
Competitors
Seven crane producers in the country. Hoists: Hoist Equipment Suppliers, Dunlavin, Co.
Kildare
Ireland
Ferrybridge Hire
Limited
NEW ROSS
Irish Crane &
Lifting Limited
CO KERRY
Irish Crane &
Lifting Limited
DUBLIN 24
Jackson Engineering CASTLEBAR
Red Rooster
Industrial UK
Limited
OLDMELDRUM
Farrell O'Brien
Engineering Limited
DUBLIN 12
Safe Lift Equipment
Limited
CO DUBLIN
UK: Street Crane Company UK
Importers: Henan Zhongxing Crane Machinery Co., Ltd. China.
Suppliers
Ryan Engineering is dependent on suppliers of motors, chains, electrical control gear, steel
parts and the appropriate gear. Changes in price would effect Ryan’s production costs.
Regulators
A manufacturer must establish an EC Declaration of Conformity according to Directive
2006/42/EC for products placed on the market from 29th December 2009 onwards. Almost
all machinery falls within the scope of the directive. The essential protection requirements
demand that machine manufacturers identify the hazards their products contain and assess the
risks these hazards present to users. Any risk identified must be reduced to as low a level as is
reasonably practicable.
Socio/Cultural Environment
The Irish economy expanded rapidly during the “Celtic Tiger” years (1997–2007) due to a
low corporate tax rate, low ECB (European Central Bank) interest rates. In 2007 the
10
11. expansion of credit and the “property bubble” weakened the “Celtic Tiger” and left him
behind as a wailing cat in 2008. The consumers mentality changed in general, although there
is a slow recovery the consumer is still very careful with spending money. This change of
mentality has still an impact on the construction industry and therefore an indirect impact on
companies like Ryan Engineering.
Strategic Alliances
Ryan Engineering should look for strategic alliances. A possible alliance could be an alliance
with CT Steel. An possible alliance starts with strategy development, partner assessment and
contract negotiation as well as alliance operation.
Conclusion
There are opportunities and threats as well. Ryan Engineering will have to improve its
strengths.
Business Environment Analysis (PEST)
Environment Opportunities Threats
Political Increasing legal
requirements in the EU: The
Machinery Directive
2006/42/EC
Economic Slow recovery
Projects in construction
sector
Recession
Social Advertising
Technological Fast rate of technological
change
Marketing strategy
I have decided to recommend a hybrid strategy. The focus strategy: Chain hoists already
represent 50% of Ryan Engineering’s output and chain hoists have the greater growth
potential (compared to the other activities of Ryan Engineering). So our priority should be the
production and selling of chain hoists. The Focus Strategy concentrates on a narrow segment
of the market and within the segment tries to achieve either a cost advantage or
differentiation.
We should concentrate on further differentiation. Joe Ryan has already designed chain hoists
according to his own expert knowledge. The designed chain hoists are a successful product.
That is why it is consequent to extend the degree of design work on the hoists.
Cost Leadership should be the second strategy approach. Combining two generic strategies
means not “Stuck-in-the-Middle” (Porter), we have to distinguish “Stuck-in-the-Middle”
strategies from hybrid strategies (2nd
international conference on business an economic
research [2nd
ICBER 2001], 1362, The application of cost, differentiation and hybrid strategy
in business operations: Will hybrid strategy become the new competitive strategy?). We have
to combine the costs and differentiation strategies in a balanced way. Hybrid strategies
address customer needs better and they are more difficult to imitate.
Product
11
12. The core:
Ryan Engineering produces chain hoists of their own design. The life span of the product is
longer than the life span of the average product.
Augmented Product
The Product may include a product warranty, service or/and installation.
Product Live Cycle
The product is in its phase of growth. Promotion is aimed at a broader audience.
Place
The product should be sold all over the Republic of Ireland. Northern Ireland could be a
further target market.
Price
For a lot of consumers, value and price are related. A chain hoist is a quality product qua
definition (The Machinery Directive 2006/42/EC). Being cheap is not the route to winning
market share. Offering a superior value is. Therefore Ryan Engineering should not lower the
price. According to the demand the company should consider to increase the price in the
future.
Promotion
Ryan Engineering should make use of the promotions mix.
· Advertising: In special magazines (like planed)
· Sales promotion: Push strategy to convince trade intermediary channel members to
"push" the product through the distribution channels to the ultimate consumer via
promotions and personal selling efforts. The company promotes the product through a
reseller who in turn promotes it to another reseller or the final consumer (CT Steel).
· Publicity: Press releases: Ryan Engineering exists seven years now, an article in
newspaper would be a good possibility to create further awareness for Ryan
Engineering
Advertising:
The proposed advertising schedule shows that Joe Ryan and Pat Behan decided to advertise
in five different special magazines. The costs would be almost 30,000 Euro. The company
should reconsider not to spend the whole net profit for the advertising campaign.
I recommend advertising only in two magazines. Ryan Engineering should advertise in the
“Industrial Equipment News” and the “Mechanical Handling” magazine.
The “Industrial Equipment News” appears twice monthly and has a circulation of 33,807. The
“Mechanical Handling” magazine is a special magazine at a reasonable price. For both
12
13. magazines we would need 13,152 Euro. The company would be able to spend money on sales
promotion and on development of a web site.
SWOT Analysis
Strength
· expert knowledge
· on the way to cost leadership
· product of own design
· product lasts longer than average
product
· product depth (3 lifting capacities)
Weakness
· to high bank overdraft
· only 50% capacity used in new
factory
· no USP
· no web site
· high costs of direct labour
· to much staff
· to much outstanding debts
Opportunity
· economy recovers
· planed recovery programmes like
Limerick
· expansion plans of the Bon Secure
Group
· further plans of the Beamish
Brewery
· alliance with CT Steel
· customizing of the product
· expansion
· Observe the produre of public
sector bodies (Collusive Tendering)
EU Directive 2004/18/EC
Threat
· competitors like Hoist Equipment
Suppliers (Dunlavin, Co. Kildare),
Street Crane Company UK, Henan
Zhongxing Crane Machinery Co.,
Ltd. China
Summary SWOT Analysis
The companies strength lies in its expert knowledge. Another strength is that the product is of
own design and lasts longer than the average product.
Ryan Engineering is able to offer a low price which enables the company to vary in price.
With eight crane producers in the country the degree of concentration in the industry is still
favourable for Ryan Engineering.
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14. The costs of material are within the usual percentage but the costs for direct labour should be
lower than 30%.
According to a study of 37 manufacturing industries, direct labour averaged only about 10%
of sales revenue.
(http://www.accountingformanagement.com/Manufacturing_and_nonmanufacturing_cost.ht
m).
It is necessary to
· mount an advertising campaign that brings the customers attention to Ryan
Engineering Ltd
· to improve the business relationship to the Office of Public Work
· to improve the business relationship to CT Steel
· to lower the costs of direct labour and materials
· to increase the Net Profit
· lower the bank overdraft (bank loan if necessary)
· increase the capacity of the new factory (only 50% of capacity are used)
· establish a web site on the internet
· make use of publicity (press releases)
- to attend exhibitions and trade fairs
· to use databases
· to have a clear Unique Selling Point
· consider to lay off staff
Implementation
To get the strategy implemented, our people have to understand what the strategy is, how it
affects them and then use their skills and expertise to help to implement the strategy. We need
to align structures and people to make sure the strategy will work. New resources have to be
developed in the company. We have to monitor and track the implementation of the new
strategy.
Control (according to Kotler)
Annual-plan control
• Sales analysis
•Market-share analysis
•Sales-to-expense ratios
•Financial analysis
•Market-based
Profitability control
• Product
•Territory
•Customer
• Segment
•Trade channel
•Order size
14
15. Efficiency control
• Sales force
•Advertising
•Sales promotion
•Distribution
Strategic Control
• Marketing audit
•Marketing excellence review
•Company ethical and social responsibility review
Finance
Joe Ryan decided to hire Christy Kane, Christy was appointed on a fixed salary of 20,000
Euro per annum. He will use a company car. The car will cost approximately10.000 per year.
The costs for the advertisement campaign would be 30,000 Euro. So we have additional costs
of 60,000 Euro per year. The net profit was 30,000 Euro. Ryan Engineering would have to
double the net profit in the next year to break even. The company should spend less money
on the advertisement (see Promotion, Advertising).
Ratios:
Financial ratios are useful indicators of a firm’s performance and financial situation. Most
ratios can be calculated from information provided by the financial statements.
Basic ratio analysis:
Current ratio
The current ratio is a financial ratio that measures whether or not a firm has enough resources
to pay its debts over the next twelve months. It compares a firm's current assets to its current
liabilities. It is expressed as:
Current ratio = Current Assets /Current Liabilities
Ryan Engineering has current assets of 193,000 Euro and current liabilities of 116,000 Euro
(Balance Sheet).
193,000/116,000 = 1.66
It means that for every Euro the company owes in the short term it has € 1.66 available in
assets that can be converted to cash in the short term. If current liabilities exceed current
assets (the current ratio is below 1), then the company may have problems meeting its short-
term obligations. In manufacturing figures between 1.1 to 1.6 are acceptable. The company
has a good current ratio.
Debit ratio
A debt ratio is a measure of a company's total debt to its total assets. The lower the dept ratio,
the less total debt the business has in comparison to its asset base. For good health, the total
debt ratio should be 1 or less.
15
16. Ryan Engineering has total debts of 184,000 (116,000 + 68,000) Euro and total assets of
232,000 Euro (147,500 + 84,500).
Debt ratio = total debts/total assets
184,000/232,000 = 0,79
The debt ratio is lower than 1. The company is in good health.
Profit margin
A profit margin is a ratio of profitability calculated as net income divided by revenues, or net
profits divided by sales. It measures how much out of every Euro of sales a company actually
keeps in earnings.
Ryan Engineering had 30,000 Euro net profit. The sales figure is 608,000.
30,000/608,000 = 0.05 = 5%
We would have to compare the last years profit margin with the above margin to see if the
companies profit margin has improved.
Summary
After analysing the internal and external environments and also the target market, I have
decided to propose a marketing strategy which will increase the market share of Ryan
Engineering.
Control mechanisms will take place to ensure the achievement of our goals.
When the marketing strategy is implemented, Ryan Engineering will be able to expand and
increase the market share.
Volker Krauleidis
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