BUS106 Case Study Analysis of KBC: Marketing Principles Assessment Answer
Perceptual map of KBC
Figure 1: Perceptual map of KBC
From the above image, it is clear that Riviera stays at the top in the perceptual map in terms of price and quality, as it manufactures luxurious boats and sells it at a higher price (Rivieraaustralia, 2020). Telwater is the largest and leading manufacturer of aluminium boats in Australia (Telwater 2020). Thus, it also makes high-quality boats and sells it for a higher price comparing to KBC. KBC faces tough competition from these two companies, as it manufactures boats with the help of local employees and local suppliers that increase the cost and so the price is.
SWOT analysis of KBC
- KBC has a long experience of operating in the boat building and repairing industry since 1961.
- The three different business divisions help the company generating more revenue and eliminates the threat of depending on one division.
- KBC is the market leader in the ‘medium vessels’ category.
- The repairing service offered by the company helps it gaining customer satisfaction.
- KBC does not apply technology-intensive techniques for manufacturing or offshoring production due to which, the price of the products is high from the competitors.
- The company uses advanced materials like carbon fibre and Kevlar that increase the cost and so the price.
- By applying advanced technology, KBC can manufacture advanced boats and offer them at a competitive price.
- Moreover, by using alternative materials or offshoring a part of the manufacturing process, KBC can also gain a competitive advantage by serving the price-sensitive customers effectively.
- Competition from different companies, which have grown substantially by providing low-priced alternatives leads to a declining market share of KBC.
- Growing unemployment rate and lessening purchasing power in the Australian economy have shifted consumer focus from expensive and luxurious products to less expensive and basic products that are affecting the sales of KBC negatively.
BCG matrix of KBC
Repair and maintenance service
Figure 2: BCG matrix of KBC
BCG matrix refers to a business planning tool that is used for displaying a brand portfolio. It helps to categorise the products based on their market share and growth rate (Madsen 2017). In the above image, repair and maintenance service of KBC is put in the question mark category, as currently, it generates 20% revenue of the company. However, this category helps the firm making satisfied customers. Thus, by investing in this category effectively and giving it a close consideration, in future, KBC can increase the service range by market penetration and can transform the repair and maintenance service into star products, as other big boat manufacturers do not offer such a service According to Kader and Hossain (2020), stars are the products that have high market share and high growth rate while cash cows are the products that need support for managing their present market share.
Medium vessels are the star product of KBC, as it generates maximum revenue for the company. Besides, the company is encouraging the growth of the category by innovating continuously. Small vessels come under the cash cow category, as currently, the market share is low due to competition. However, with the necessary investment and planning, KBC can turn this product into a star in the future.
Analysing strategic alternatives and recommendations for KBC
The Ansoff matrix helps business leaders and marketers a simple and quick way of thinking about the growing risks. The matrix talks about four growth strategies including market development, diversification market penetration and product development (Schawel and Billing 2018).
Product development emphasises on launching new products to the existing market. When the company has a strong understanding of the current market, it can innovate new products.
KBC innovates the products in the ‘medium vessels’ category continuously as per the changing needs of the customers and thus, it excels in this division. Thus, product development is a suitable strategy for the company by investing in R&D and using alternative materials for reducing the cost of production and so as the price. It can facilitate the firm gaining market share in Australia.
Market development refers to the strategy of selling existing products in new markets. It is a suitable strategy when the company knows that the customers in the new market are profitable (Filippov 2017). However, in the case of KBC, the neighbouring developing countries may not be a profitable option for the company to enter, as the cost of production in those countries is high and the foreign exchange rate is also not suitable.
Diversification concentrates on introducing new products into new markets. It is the riskiest strategy, as the company remains unknown about the success of the new products in the new markets. As KBC is currently facing competition and declining market share in Australia, focusing on the home country seems more important to the company rather than entering into new markets.
Market penetration focuses on driving sales of the existing products into the existing markets. It can be carried out in many ways for increasing market share in the existing market. It can be conducted by reducing prices, increasing distribution and promotional efforts or by acquiring a competitor in the market (Gurcaylilar-Yenidogan and Aksoy 2018). KBC can increase the market share of its 'small vessels' category by reducing the product price. In this product division, the company is mainly facing challenges due to the increasing market competition from three competitors, who are using alternative materials and advanced technology as well as outsourcing manufacturing for reducing the production cost and offering boats at a lower price. Therefore, by focusing on using the latest technology and alternative materials for making boats, KBC will be able to offer the boats at a reduced price and regain market share in this category. Thus, market penetration seems the most suitable strategy for KBC to implement. KBC needs developing products in the medium vessels category and reducing the price of the small vessels category for ensuring growth.