Fabian Advertising

Topics: Net present value, Marketing, Investment Pages: 8 (2191 words) Published: August 12, 2013
1.Executive Summary

This report is commissioned to examine the new business strategies of Fabian Advertising. It draws attention to the facts that the sales revenue has been decreasing dramatically in recent years. The decrease in profits was because its clients have chosen its competitors’ services over theirs. As clients’ expectations and needs have changed, Fabian Advertising has to change to a new business mission - build. The company is in the high growth, low market share situation. Its competitive advantage is differentiation focus. It is targeting a niche and higher end market share. Its key success factors are “Customer Service”, “Innovation and Quality”, “Risk Management”, “Company Image and Reputation”, “Understand Your Client Needs” and “Know Your Competitors Well”. It uses “Activities Based Costing” for its cost allocation. It is selling premium services and products, so “Cost Plus Pricing” is more suitable than “Target Costing”. It uses net present value as capital budgeting technique. “Customer Profitability Analysis” is important, so it will know how to develop its marketing strategies. It is important for Fabian Advertising to create a new quality and time performance measurement using its competitors as their benchmark and further improve

2.Introduction to report

2.1Context
Fabian Advertising is an advertising agency. It is well known in creating short, simple and cost efficient television commercials for its clients. In recent years, Emil Fabian, the owner of the company discovered that profits of the company have decreased. The company can no longer attract clients like before. This was partly due to the change in customer characteristics. The demand in sophisticated, high quality advertisements has increased. Fabian Advertising needs to develop a new strategy to increase its market share. 2.2 Purpose

The aim of this report is to investigate new business strategies of Fabian Advertising. 2.3Definitions
2.3.1Definition: Competitive Advantage

Competitive advantage is a strategy that differentiates one company from the others. 2.3.2Definition: Key Success Factors
Key success factors are the most critical factors that possibly lead to the success of a company.

3.Discussion issues

3.1Business Mission of Fabian Advertising
Figure 11

There are four types of business mission. Build, Hold, Harvest and Divest. 1 •Build (Question mark)- On a high growth, low market share basis. Therefore, it is worthwhile to invest. To acquire market share, compete with competitors, penetrate into new market. 1 •Hold (Star)-On a high growth, high market share basis. To penetrate further into market, modify products, introduce new products. E.g:, Apple products. •Harvest (Cow)-On a low growth, high market share basis. To earn as much profits as possible from leftover market share, as demand for this particular service or product has become stagnant. At the same time, try to reduce cost to maximize profit. 1 •Divest (Dog)-On a low growth, low market share basis. To leave the business. If possible, sell the company to recover some losses and invest in a new business. 1

Fabian Advertising wants to target a niche and upper class market. It needs to build on its existing working equipment, staff expertise, client base and company image. 2

3.2Competitive Advantage of Fabian Advertising
Figure 2 3

Fabian Advertising is targeting on high end customers. To these customers, price is not the main concern. Their main concern is the quality of the product and service. In the Porter’s Generic Strategies, Fabian Advertising’s competitive advantage is differentiation focus. Narrow competitive scope is the niche market. Higher cost is referring to the high end customers. 4

3.3Key Success Factors of Fabian Advertising

Key success factors are important to a company growth. As for Fabian Advertising, below are the few key success factors which are...

References: 1. http://www.maxi-pedia.com/BCG+matrix+model
2. Schoemer Karl G 2009, Change is Your Competitive Advantage: Strategies for Adapting, Transforming, and Succeeding in the New Business Reality, Churchville, PA, U.S.A.
3. http://marketingteacher.com/lesson-store/lesson-generic-strategies.html
4. Harvard Business School Press 2009, Surviving Change: A Manager 's Guide: Essential Strategies For Managing In A Downturn, Philadelphia, PA, U.S.A.
5. http://www.ehow.com/list_6059731_examples-key-success-factors.html
6. David A. Aaker 2001a, Developing Business Strategies, 6 edition, Anaheim, CA, U.S.A
7. Winston Fletcher 2008a, Powers of Persuasion: The Inside Story of British Advertising 1951-2000, Guernsey, GY, United Kingdom
8. http://www.wpp.com/wpp/
9. Erik M. van Raaij, (2005a) “The strategic value of customer profitability analysis”, Marketing Intelligence & Planning, Vol.23 Issue:4, pp. 372-381
10. Anthony, R. N., and V. Govindarajan. 2004a McGraw Hill. P. 644
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