Tomtom Marketing

2012 Final story Group 5 Rizwan Anwar Christian Visschedijk Irina Andreescu Yiwen Lu Tommy Pantic Jeroen van Miert 449418 469263 449425 459114 437979 450453 Executive summary The purpose of this report is to analyze TomToms internal and external environment and come up with a relevant unused dodge that could be implemented by TomTom in the near future. The external analysis concludes that TomTom is suffering from two factors one is an increasing (indirect) contestation in developing (PDA) consumer commercialises and second is a decreasing sales in their most important markets.As a result TomTom has started to shift its centre from the consumer market to the Automotive, Licensing and Business Solution markets. However, these markets lead not been adapted to compensate the declining sales in their Consumer market. A wide number of factors be currently at work in the internal situation. A restructering program, problems with the supply channels, a veer to sales marketing and distribution and a stress on growth on much promising atomic number 18as. Important factors from the SWOT analysis are that TomTom has a strong stigma image and good reputation. It is however really weak outside of Europe.Furthermore, there is growth potential in both Europe and North America. An important get out is the economic downturn. TomTom is quite a private-enterprise(a) bell it has however plenty of market share to gain and must growing this position. When comparing with its main competitor, TomTom has bowl over with its map coverage and financial position. A worry list has produced the fol emiting items Hardware problem issue Drive Space Error, Software system Including knowledgeability Error and Map Error and Rapidly growing for Smart phone trend, people would replace TomTom twisting by phone, people are fancy intimately Smart phone.Focus for the impudent strategy goes to the min-min strategy which is supported by collaborative strategy. This report deems thi s bracing purposed strategy well fit and feasible. Implementing the recent strategy requires TomTom to focus on the following HR related issues personal training and personal development and team cohesion and good internal conversation. A solid affirm system should be implemented on a global scale. Two important actions must be taken in coiffe to implement this new strategy Reallocate money from the European PND market to the new B2B market and reduce investments in non-European countries. Introduction Purpose The purpose of this report is to analyze TomToms internal and external environment and come up with a relevant new strategy that could be implemented by TomTom in the near future. background signal Over the past 5 years, the PND effort in primarily Europe and the USA has experienced signifi potbellyt pressures from a number of areas that have changed and continue to change the landscape of the PND industriousness (Ibis Report). The rise of the smartphones and other sub stitute convergences in the 2000s has arguably had the greatest impact on the PND exertion.This has been primarily due(p) to the ever-increasing influence of smartphones and innovative mathematical harvest-homes, which have made the PND industry less relevant in recent times. TomTom, and its main competitors Garmin and MiTAC, are trying to deem up with the incredibly fastmoving technological developments to stay combative. 2 Contents Executive summary 1 Introduction .. Purpose .. 2 Background .. 2 External analysis 1. Dominant economic features . 7 2. competitory forces 3. Driving forces and impact .. 10 Lifestyle of customers .. 10 Product innovation 10 4. TomTom NV, Strategic Group Mapping .. 1 5. Competition .. 12 Cobra Electronics stool . 12 Garmin Ltd. 13 MiTAC (navman,mio,Magellan,TYAN) . 3 Honorable mentions . 14 Conclusion .. 14 6. Key Performance Indicators .. 14 6. 1 The financial perspective 4 6. 2 The customer perspective.. 15 6. 3 The internal business pro cess perspective 15 6. 4 The innovation and learning perspective .. 15 6. 5 Business Balanced Scorecard 5 6. 5. 1. The financial perspective . 15 6. 5. 2. The customer perspective 15 6. 5. 3. The internal business process perspective . 16 6. 5. 4. The innovation and learning perspective 16 7.Industry outlook .. 16 Opportunities 16 Threats9 16 Conclusion 8 Internal analysis 1. How well is the social clubs present strategy working? .. 20 2. TomTom SWOT analysis .. 26 3 Strengths .. 26 Weaknesses 6 Opportunities . 26 Threats .. 26 Resource Strengths and competitive capabilities .. 27 Strong brand image, good reputation and high market share in European market .. 7 Resource missing capabilities or competitive deficiencies 27 External Market Opportunities 28 External Threats to Profitability .. 28 3. Are the companys prices and costs competitive? 29 4. s the company relatively stronger/weaker than key rivals .. 30 Market share . 30 Map data coverage 31 The ability to provide value added operate.. 1 Financial strength 31 Comparison 31 5. What strategic issues and problems ask burning attention of management? 32 Potential problems in China .. 2 Priority list .. 32 Crafting the new strategy 1. Summary . 35 1. 1 SWOT. 35 1. 2 Critical success factors .. .. 5 1. 3 Worry list . 36 1. 4 Objectives 36 3. TOWS. 36 3. 1 Matrix 6 3. 2 General strategy .. 38 3. 3 agonistic strategy . 38 Supplementing the new strategy . 39 Min-Min strategy 9 Collaborative strategy .. 40 Fit and feasibility . 40 Executing the new strategy 4 1. twist an organization with the competencies, capabilities, and resource strengths to execute a strategy successfully .. 2 1. 1 Staffing the organization . 42 1. 2 Building core competencies and competitive capabilities. 43 1. 3 Structuring the organization and work effort .. 43 2. Marshalling sufficient money and people behind the drive for strategy execution of instrument 44 3.Instituting policies and procedures that facilitate rath er than impede strategy execution . 45 4. Pushing for continuous improvement . 46 4. 1 Total Quality centering 46 4. 2 The Deming Cycle .. 46 5.Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently .. 47 6. act rewards directly to the achievement of strategic and financial targets and to good strategy execution.. 48 6. 1 Compensation .. 8 6. 2 Bonus programmes 48 6. 3 Benefits 49 7. Installing a corporate culture that promotes good strategy execution . 49 8. Exercising strong leadership to drive execution forward, keep improving on the details of execution, and achieve operating excellence as rapidly as feasible.. 0 9. Control . 52 Conclusion 53 Source list 55 5 2012 External analysis 7-9-2012 6 1. Dominant economic featuresThe TomTom Consumer Business Unit (one of the four units of TomTom) operates in the Consumers Electronic Industry, more specifically, Personal Navigation Devices (PND) industry. Before ta king a look at the competitive forces inwardly the industry it was decided to get a better thought of the industry in which the company operates. To this purpose the decision was made to use the Abell Model, which focuses on 3 different dimensions of the industry To whom are they selling (who are their customers) What are the customer needs that are satisfyingIn what way are the customers needs satisfied TomTom is targeting its PND towards drivers the idea behind the product is that it tries to identify the best preferred way of get from point A to B. What is meant by best preferred way is that different customers may have different ideas of what is the best route to take in order to achieve their goal (for example, some people prefer a highway route, whereas others would rather like the back pathways and as such they can entrap their PND to take into account their preferences). As mentioned before, TomToms PND is targeting drivers.What has not been mentioned is what sort of drivers and whether these drivers have a need for PNDs. The reason behind it is that for TomTom it does not matter. The business unit that is universe analyzed offers not only physical devices that can be attached to any driving machine, but it also offers the software behind the physical device to smartphones. This enables customers to use their own smartphones to navigate maps, find and change the route they are planning to take and whether or not they are driving a car. This raises the interrogate what are people exactly looking for when they are buying a PND?One of the staple needs of drivers is represented by a device to succor them navigate either through unknown roads, or knowingly busy roads people are interested in seeing and planning the road ahead. This also includes being warned of possible traffic jams, road blocks or detours. Behind this idea are three main requirements the availability of affordable devices, the affordability of data plans and maps, and last r eliability. As for the last dimension mentioned in the Abell model, how does the industry satisfy customer needs?One could refer to the life cycle of the glide systems products starting with basic gliding systems introduced by Etak in 1985, it was followed shortly by the introduction of commercialized GPS at the beginning of the 90s. All modern systems are based on these. at that places been a continuous technological development in PNDs, aligning them to the three customer demands the availability of affordable devices, the affordability of data plans/maps and the reliability of such devices. 7 The interesting trend nowadays in the PNDs market is the tendency towards device convergence 1.People tend to prefer to have navigation applications on their smartphone devices. This trend leads us to the conclusion that the PNDs industry has reached its maturity stage (in the industry life cycle) and depending on the near future success of the device convergence relating to navigation s ystems, may very well start its decline phase. 2. Competitive forces After defining the industry within which TomTom is operating, it is time to take a look at the competition levels within it. This is do in order to determine how attractive the industry currently is. To do this, the Porter 5 Forces model will be used.This model analyzes the industry from the competitions point of view, pays attention to the threat of new entrants, the availability of substitutes and the military force of both buyers and suppliers. Rivalry among competing sellers One of the most important factors behind the controversy among competing sellers is that the PND market is at the end of its maturity phase and has started its decline. Although this report is mainly focusing on the European market, it is important to keep in mind that the industry has been declining all over the world, especially in the developed countries (e. g. Europe and North Americas). source http//info300. net/tthomas2/Brief1. htm l) Although there are quite a few small competitors in the market, there are only a few that maintain the majority of the market share. TomTom is the market leader and its main competitor is Garmin, both in European market and in the North American market. check to gpsbusinessnews. com, TomTom PND marketshare grew in 2010 from 45% to 48% compared to the same period in 2009 within Europe, while in North America TomToms market share grew from 20% to 25% in the same year. 1 http//mycoordinates. org/pnd-vs- bustling-is-landscape-shifting/all/1/ 8 2007 visual acquired immune deficiency syndrome Threat of new entrants The PND and all the other GPS devices are mainly sold through the electronic retailers and websites that are well known and accessible to the new entrants. This influences the new entrants in two possible ways. Firstly is the ease of access to distribution channels, which would make this threat considerably high. Secondly is, in order to be able to compete with the main co mpetitors, you have to expect an increasing pressure on pricing policies. This could minimize the margins for the sold products, which could force smaller/new competitors out of the market.Furthermore, due to the main distribution channels being so well known and big, the main competitors on the market will have to compete with the low price/low quality products stream coming from China. Threat of substitutes The PND industry is highly threatened by handsets, such as smartphones and PADs. These come with a whole new set of Location Based Services applications of which some are detached of charge. Like we mentioned in the brief industry analysis of the PND market, theres a trend towards convergence of devices and this trend is fueled by customers desire to have one device to do the job, rather than having two devices.Bargaining power of suppliers Companies in the PND industry have a trend of vertically integrating in the supply chain. For example, TomTom makes its own software, does its own manufacturing and makes its own maps. Due to this aspect, we could conclude that the threat is of low immensity and thus irrelevant. Bargaining power of buyers At present, the buyers are inspecting/testing the new devices offering location based services. As the smartphones have yet to have compel themselves on the navigation market, we could say that for reliability and comfort of use they will return to the PNDs. 9Nevertheless, with predicted/expected future success of substitutes, the bargain power of the buyers with also increase and demand for a big product range will be high. Fierce price competition will also increase the buying power of customers and the product life cycle will grow shorter and shorter. This is currently the case with smartphones and other high-tech device. The price competition increases the pressure on manufacturers, and as such, increases the bargaining power of buyers. 3. Driving forces and impact These are the two driving forces which have t he biggest effect on TomTom 2.These driving forces will be analysed in order to visual aspect how they impact demand, profitability and competition. The two forces are Lifestyle and Product innovation. Lifestyle of customers With the rise of smartphones people have become aware that a phone can be used for more than estimable texting and calling. Smartphones have the possibility to make photos, play games, surf the internet and also (most relevant for TomTom) navigate. Most smartphones have location software as part of their standard software package. This software has been able to provide consumers with TomToms core product, which is getting a person from A to B.The impacts of this driving force are Demand Profitability Competition Demand for TomToms actual product has gone down, since people will use the free software on the phone instead of buying a PND 3. As a result of the actual demand decreasing, TomTom now also provides software for the smartphone. However, just providing the software is less profitable than the whole package (actual product) 4. Since companies have been able to start a company only providing software (also see product innovation) competition has gone up significantly. Product innovationThe rise in smartphones over the last years has made innovation a driving force in the PND market. Since customers in the past needed the whole navigation device, they now only need the software and a smartphone to have exactly the same. What can be seen in the PND market today is that there are companies that have been able to become very popular on certain phones by providing free software 5. Examples are Google Maps, Nokia Maps, NavFree and 2 Source http//bizcovering. com/business/top-ten-management-on-driving-forces-an-overview-of-whatdrives-the-world-to-the-future/ 3Source http//www. advfn. com/nasdaq/StockNews. asp? stocknews=GRMN&article=48539475 4 Source http//ereport. cfreport. com/tomtom/ar2011//1/ 5 Source http//www. gratissoftware. nu/grat is-navigatiesysteem-navigatie-software. php 10 Waze. These products are purely software based and are a form of industry/form competition, but they are key examples of how product innovation affects TomTom. Demand Profitability Competition Demand for the actual product goes down due to cheaper/better alternatives.To compete with free navigation/location software TomTom will need to lower its price or increase services as a way to increase its competitive advantage. Both ways will result in lower profitability. Companies that in the past were not city manager competitors of TomTom have been able to use innovation. An example is Google Maps, in the past people could only print directions, which was indirect competition but nothing TomTom had to be upset about. Nowadays, with the smartphone and internet people can use Google Maps in their car making it direct competition. 4. TomTom NV, Strategic Group MappingMarket Position of Rivals Tomtom NV is competing with its competitors in four business segments which are Automotive, Consumer, Licensing and business solutions. The company operates in almost all regions. The company has more than 15 direct and indirect competitors and more compeition is expected as the new navigation mobile technology is becoming very popular. The company has around 50% market share from Europe which means they make more than two-thirds of their revenue from this market. According to a recent report the company is facing a real challenge from Garmin Ltd, a Taiwan based GPS company.Garmin Ltd become a threat for Tomtom because of its low price products and currently it has 26% of market share in Europe. Garmin Ltd and Denso Corporation are competing with Tomtom in many countries by offering variety of electronics navigation products in automotive industry. In addition to that Cobra Electronics, HITT NV and MiTac are getting their foot accept in different markets by offering different products and services however possessing the diverse prod uct range in all sectors Tomtom have an upper hand on all competitors.In order to let off rival positions of Tomtom with comparison to other competitors different competitive characteristics can be described such as Product diversity, Number of Markets Served, Extent of branding, Pricing Policy and Distribution channels used. Below map explain the strategic position of the competitors. 11 TomTom NV Strategic Group Mapping 5. Competition In this chapter possible future steps of TomToms competitors will be discussed. This is done based on information found in annual reports and materials used at the stockholders meetings.The competitors have been analyzed based on four criteria future goals, Assumptions they hold of their selves and the industry, current strategy and their capabilities. Cobra Electronics Corporation approaching Goals Newer, younger demographics Expanded distribution Additional channels of trade Increasing Brand Equity Shift focus on smart phones Current strateg y A Develop or Die philosophy Assumptions Capabilities Very close connection with the schoolmaster driver fraternity Cobra Electronics Corporation is a leading communications company.It is a global company that is mainly focused on communication equipment such as Citizens Band radios, two-part radios and Marine electronics. They have recently introduced a strategy which they call Develop or Die. They desire to be a company driven my innovation. This reflected on the recent launch of products based on wireless solutions, specifically the mobile app products. 1 Choice of Professional Drivers The big competitive aspect of Cobra Electronics Corporation for TomTom is their professional driver product line. They focus mainly on navigation devices for professional drivers such as truck drivers, 2 aiding them in not only navigation but also tracking driving time and things such as load balancing. As of yet they have no plans to introduce navigation products for the consumer market. Garmi n Ltd. Future Goals Focus on vertical integration seeks to expand our role in the auto OEM market Assumptions Continue to expect PND market to decline driving boilers suit revenue declines in-line with prior expectations for the year with improving profitability throughout year Feels that integration with mobile products is the future Current strategy Win OEM opportunities with superior echnologies and global presence Focus on innovation, customer focus and vertical integration Capabilities Acquired NAVIGON and its Iphone and Android application Deep vertical integration Garmin is one of the leading providers of GPS enabled communication and information devices. Even though they are active in multiple industries such as marine and aviation the majority of their revenue is from the automotive/mobile division. In other words, a serious competitor for TomTom. It has a very high market share in North America, also responsible for 61. % of their follow revenue. They have recent ly acquired NAVIGON to not only boost their presence in Europe but also to gain a technological advantage, expanding their European central R&D capabilities. The acquisition also enables them to provide deeper integration with mobile phones, something they feel is the future. Another major focus for Garmin Ltd. is to focus in integrating their navigation software with car manufacturers. A demonstration of this is the opening of an office in the Detroit area in May 2011. MiTAC (navman,mio,Magellan,TYAN) Future Goals Company needs to incorporate product functions over a highly integrated platform to ensure consistency. Assumptions The future of GPS lies in its integration with cell phones, cameras and other mobile devices, and the introduction of value-added services. Current strategy MiTAC has appropriated at least 5% of its revenue for R&D spending in order to buttress its capacity in technologicalknow-how and product development meet with the best software and hardware vendors to ensure sufficient material supply for key hardware components. Capabilities