Oracle provides the world’s most complete, open, and integrated business software and hardware systems, with more than 370,000 customers including 100 of the Fortune 100 representing a variety of sizes and industries in more than 145 countries around the globe. Oracle works in vision “Transform Your Business Systems and Drive Success”. This vision helps them in moving ahead along with customers. Currently Oracle is having more than 200 offices around the world and Headquartered in Redwood Shores, California, United States. The Employee headcount of oracle is crossed 105,000. (Oracle, 2011)
In 2009, oracle was having US$ 23.3 Billion in revenue and US$ 2.8 Billion was allotted to R&D division. Oracle is having more than 280,000 customers only for Oracle database. Also they are having more than 90000 customers and 65,000 customers for Oracle Fusion and Oracle Application Customers respectively. They are having 21,000 strategic partners around the world and 9,000 independent software venders.
Oracle is currently the third largest IT Company in the world. Its most popular product is Oracle database. It is involved in many projects like building database development tools, Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and Supply Chain Management (SCM). Oracle’s huge product line is able to cater for every IT needs of a client. Now after the acquisition of Sun, Oracle is the only company that can offer a client a complete one stop solution for application development. They can offer a front, middle and back end to the entire application development process. Due to the availability of Oracle’s open architecture and multiple operating system, it can provide clients with a huge advantage in comparison to their competitors. This advantage has given them the ability to an advantage of efficiency, scalability, high performance etc.
“Oracle’s commitment to innovation is driven by its unparalleled commitment to customer success. Customers, partners, and analysts recognize the comprehensiveness and strength of Oracle products and services, all developed using input from thousands of valued advisory board and Oracle user group customers. With a penchant for customer success, Oracle continues to deliver it all.”(Oracle, 2011)
Currently, Mr. Lawrence J. Ellison is driving the company as CEO and is the only founder out of three founders of Oracle corporations. Jeffrey O. Henley (Jeff Henley) is the Chairperson of Oracle Corporation. Mr. Mark V. Hurd and Ms.Safra A. Catz are the Presidents of the Oracle Corporation. (Oracle, 2011)
Oracle began its life in 1977 and was known as Software Development Laboratories (SDL). It was established by Larry Ellison, Bob Miner and Ed Oates. They had realized that there was no company at that point of time who had a commercial version of the relational database. SDL picked up a contract by the CIA to build a database program that was code named ‘Oracle’. SDL were able to finish their contract with the CIA ahead of time and used the rest of the time to develop the first Rational Database Management System (RDMBS).
In 1978, SDL changed its name to RSI or Relational Software Inc. in order to clarify what the company does so that there is no misconception. RSI that year built the first commercial RDMBS using the PDP-11 assembler language to run on the popular minicomputers. RSI’s competitor IBM was showcasing their prototype RDMBS and system R prototypes to potential customers. But the downside to IBM’s system R was that it would require a large IBM mainframe to run it while on the other hand Oracle was able to run its RDMBS on any smaller computers.
In 1979, RSI finally released their RDMBS product known as ‘Oracle’ commercially for the first time to the general public. Till then it was only available to a few government agencies.
Into the 1980’s Oracle came out with the 2nd version of Oracle which implemented SQL and was gaining popularity due to the ease of use and flexibility on what system it was able to run. The company grew in leaps and bounds during this period. Compatibility and portability were their number 1 factor for their popularity. In 1982, RSI finally changed its names to Oracle Corporation due to the immense popularity of their Oracle RDBMS.
In 1983, Oracle made one of the best compatibility change possible to the normal user. Their version 3 was now able to run right from mainframes to minicomputers to workstation PC’s. In short anything that was able to run a C compiler. And with every passing year they brought out new and better versions of Oracle.
In 1985, Oracles 5th version implemented the client server technology. This version changed the way people accessed their information. This version allowed the client to keep all their data in a neutral server which could be accessed from anywhere around the globe. This helped oracle in gaining grounds against their competitors as it reduced costs in the clients side.
After all the success in the past decade oracle saw their company face a loss for the first time in 1990 since their inception. Oracle had to layoff people to cut their losses. This resulted in a lot of changes in the managerial levels of the company. With the new management and a new outlook the company released Oracle 7 in 1992 with lots of new features, which turned the company’s losses into profits, and it was back in track reaping more profits. In the period between 1994 and 1997, Oracle acquired Digital Equipment Corporation and IRI software through which they got access to relational database and OLAP products. By this period Oracle was the leading company in the database industry.
After 2000, Oracle started entering into the application development and service industry. They started acquiring big companies like ‘PeopleSoft’, ‘i-Flex’, ‘Siebel systems’, ‘Agile Software Corporation’ etc. Oracle acquired companies that were already leaders in their own field of expertise. This way Oracle was able to enter into the field and be in the forefront from the get go.
In 2009, came one of the biggest acquisitions by Oracle. It was one of the most talked about acquisition of that time. Oracle acquired Sun Microsystems for £6.2 billion pounds. Oracle took over Sun’s computer software, development environment and information technology services which boosted their presence even more in the market. This acquisition of Sun made Oracle a one stop solution for all web application since they are having Java as a front and middle end and Database as a back end and Weblogic as a server. Oracle was able to provide everything a customer could possibly require for any application solution.
Market Orientation :
Oracle is a market oriented company. It is one of the leading companies in IT service and solution providers. The main aim of a market oriented company is to provide the best service to the customer and meet all its needs and requirements. A generic marketing model is shown below :
A company tries to improve and adapt to the customers needs and satisfy the customer. To deliver this aim the company needs to pay close attention to the service, both before and after sales.
The concept of market orientation is built on three pillars of: ƒ˜ Customer focus ƒ˜ Coordinated Marketing ƒ˜€ Profitability
Customer focus :
It is very important for a market oriented company to have a set core values and common ideologies that a customer can relate with. The customer always comes first and the company should have the ability to understand and respond to the requirements of the customer. The organizational structure of a company too should be in the same page as it marketing strategy as the company strategies keep changing with change in state of the market.
“Oracle’s commitment to innovation is driven by its unparalleled commitment to customer success. Customers, partners, and analysts recognize the comprehensiveness and strength of Oracle products and services, all developed using input from thousands of valued advisory board and Oracle user group customers. With a penchant for customer success, Oracle continues to deliver it all.” (ref g docs)
Coordinated marketing :
In order to successfully implement a marketing strategy, it is important for the company as a whole to understand that it is not just the marketing department that is responsible for the success of a campaign but other departments within the organization too is responsible for the success of a company.
It is essential for a company to keep its eye in the profits as well. Profits in both long and short term. A healthy profit margin allows managers to come up with innovative ideas that in turn can reap in more profits for the company. Oracle being one of the most profitable companies, it allows them to have the ability to be more innovative in trying to find more ways of making profit from their product. They recently did so by making Java a paid application, which earlier was a freeware. This brought in a lot of profits to the company.
“By combining pre packaged software with business intelligence capabilities and proven best planning practices, next-generation enterprise planning solutions
optimize business planning across the enterprise. With the right enterprise planning technology in place, you will be able to drive collaborative, integrated event-based planning at all levels of your organization and with all appropriate participants.” (ref pdf)
Oracle uses a three step planning model when it comes to enterprise solution:
â€¢ Strategic modeling.: It should have the ability to examine, assess, and choose strategic financial models, income statements, and cash flows and be able to run different scenarios
â€¢ Financial planning and forecasting : This planning environment should
have the ability to let you create, track, and monitor business plans and and make predictions in real time.
â€¢ Operational planning: It must have the ability to speed workforce, capital, and project planning across the enterprise and be able to provide real time awareness of the impacts of your resource allocation decisions.
Competitive Advantage :
Competitive advantage is termed as “The achievement of superior performance through differentiation to provide superior customer value or by managing achieve lowest delivered cost” (Jobber 2009: 914)
Looking at the competition that Oracle faces, their main competitor in the field of database is IBM’s DB2. The advantage that Oracle has over DB2 is that Oracle can work in a cross platform environment. Oracle’s SQL is very flexible and easier to understand as compared to DB2’s Sybase. Microsoft’s SQL server 2008 is another competitor in this field. Oracle has the upper hand in this as well cause the pricing point of Oracle is less than that of Microsoft’s SQL Server 2008. Oracle is also much more stable in respect to the other.
In the application development field, Oracle’s competitors are IBM’s WebSphere, JBOSS and Eclipse which are open source. WebSphere gets beaten in the market due to its astronomical price as compared to Oracle’s Weblogic even though it provides the same functionality. Although JBOSS is on a open source platform, it falters in the compatibility department. Eclispse is a freeware but its also its downfall as it does not integrate itself with the server. Hence it requires double the maintenance to keep it up and running.
After acquiring Sun Microsystem’s Java, Oracle turned Java into a licensed version which previously was a freeware. This acquisition turned out to be a huge advantage for Oracle as it increased its market share and due to licensing Java, Oracle made even more profits. Oracle now with Java commands a 48% market share. It dominates the entire application development market.
Oracle acquired ‘PeopleSoft’ in 2005 and ‘Siebel’ in 2006. Both of them were the leading solution providers in the filed of Human Resource Management application and Customer Relationship application. Both companies were the top companies in their respective fields before Oracle decided to acquire them. And now Oracle leads the market share in the HRM and CRM application field.
Overall after all these acquisitions and their own enhancements to their products gives Oracle a huge advantage over their competitors
Marketing Mix :
The 4P’s :
Oracle is the pioneer in Database industry. Over the last 30 years, Oracle has set new benchmarks in the Database field. Currently they are the world leaders in Database, Middleware, Applications and Server & Storage Systems. They are having a range of products in every layer of software industry like Front End, Middle layer and Back End. For the Front Layer and Middle Layer, they are having products like JRockit and Java which are one of the most used languages in the world. At the Back End, they Offer Oracle Database which is the most popular and a leader in Database.
In 1979, Oracle released their first version of RDBMS under their originally named company SDL. Soon they released a new version of oracle in which they implemented Structured Query Language (SQL) which is the most proper and easiest way of handling database. It gave an immense popularity to RDBMS which turned it in to a brand name. Soon they renamed the company name as Oracle Corporation to avoid all confusion with the company name in the market.
By 1983, Consumers started appreciating Oracle applications. Their uniqueness in handling database and flexibility of SLQ gave them the upper edge over the IBM databases. Also they got success in database because of its multi platform support. Oracle database was supporting all kind of operating system and hardware while IBM Database was working on just mainframes and large machines. People started opting for Oracle databases which increased oracle’s profit enormously.
For Oracle, this immense popularity opened new doors in business. They started developing and enhancing Oracle Database as well as new products like Discoverer. In 2000, Oracle Corporation introduced the 9th version of database called Oracle 9i. This is the most used version of database in the world. This version of database took them far ahead from the competitors like IBM DB2 and MS SQL SERVER. Also the brand name, after sales service and loyalty helped them in building the trust in customers.
On this trust, Oracle started entering in other fields of software application like HRM tools and Application Development Tools. They bought PeopleSoft in 2004 which gave them the access in HRM Tools development. The PeopleSoft’s product PeopleSoft v7.5 was the only HRM tool available in the market in 2004. PeopleSoft v7.5 was an automation of human resource management activities that helped its customers in managing employees and day-to-day HRM activities. The acquisitions of PeopleSoft made them the only company in the world to provide a HRM application.
In 2006, they entered in Customer Relationship Management market (CRM) by acquiring Siebel Systems. The Siebel’s Product ‘Siebel 99’ followed by ‘Siebel 6’ gave immense popularity to them. After it is was acquired by Oracle it became Oracle Siebel. This acquisition of Siebel proved to be very beneficial for oracle as it opened its door to the retail market, where they started selling CRM tools as well as Database through which they earned more profit.
In 2008, they bought a middleware software company named BEA systems, through which they got a very famous product called ‘Weblogic’, which works as a server and client for web applications. This is one of the best decisions that oracle took as the product was very popular when acquisition happened. Due to the Oracle’s Brand Name it became even more popular. Oracle started roaring in to the IT market taking down competitor’s products like IBM WebSphere, Sun’s Netbeans.
In 2010, the acquisition of Sun Microsystems by Oracle one of the biggest and most important acquisition Oracle had made till date. Sun Microsystems was known to be key leader in Computers, computer components, computer software, development environment and information technology services. Java was the most prominent product of Sun Microsystems, which was a freeware. Around 40% of application development in the world uses Java as coding language. Java’s portability always helped in making cross platform products. After acquisition, Oracle turned Java into a paid version which resulted in them making more profits out of it after enhancing it but it also gave negative effects as customer were used to a free version. That benefitted the competitors like Microsoft’s Dot Net and IBM mainframe in gaining customers. To attract the old customers then Oracle made the decision of publishing free version of Java. Oracle utilized this decision to build trust again in product like Java.
Oracle is known to support e-businesses by providing the best possible price. It uses a pricing system to provide customers and businesses with the best possible price and promotions. Their pricing strategies are able to meet almost all the needs and requirements of the customer and the situational demands of all the industries like services and high technology, etc. Oracle pricing system supports all the types of pricing strategies like cost oriented pricing, competitor oriented pricing and marketing oriented pricing.
Oracle pricing can perform the following functions :
Set a list price for an item or item hierarchy.
Set a list price based on volume breaks.
Set a list price/discounts
Define a formula to create a price relation.
Setup GSA prices.
Define pricing agreements.
Discounts from external sources.
Oracle database has around more than 32 different editions like the standard edition, enterprise edition, personal edition, etc. which differ according to the functionality of the user.
This advanced Oracle pricing engine is flexible and performs the necessary calculations and pricing for Oracle’s CRM and Order Management products. The pricing engine prepares a structure for the requested price. This engine submits the request for a price structure. This pricing structure forwards all the information with regards to the qualifiers and pricing attributes. Then the pricing engine selects the eligible price lists which fall other the requested categories. The pricing engine uses the forwarded qualifiers and attributes to select the appropriate price list. Then the pricing engine takes the chosen price list and applies them to the request structure. Then at last the pricing engine takes the final price list and applies the validated modifier to it to provide a modifiable option to the price list in terms of discounts and surcharges, coupons etc.
Setting up of a pricing list for the ‘oracle database’ hierarchy is done by the oracle pricing system. Oracle weblogic and Oracle JRockit products goes through the same procedure for the item hierarchy.
Oracle gives discounts and reduced pricing to companies who buy their products in bulk. They have a volume break where if a company buys an x amount of products then they will get a reduced price on the entire deal. Oracle has different contracts for different deals where a customer gets a price in accordance to what he buys. Oracle generally provides two types of licencing, namely ‘Named user plus’ and ‘Processor based’. Named user plus as the name suggests is a single licensed product based on the user name. And this kind of licencing is provided only for personal and lite editions which costs them £231 and £121 respectively. (https://shop.oracle.com/pls/ostore/f?p=ostore:2:0)
Processor based licensing works on a different fundamental. It takes into account all processors on a server. It recognises each core of a processor as a different user which becomes a huge advantage for the customer. This processor based licensing is not offered on the Personal and Lite versions of the database.
Oracle has its break even analysis when it provides the database to customers. The cost between the Processor and Named user plus licensing is 50 users per core. So if a company has more than 50 clients per processor then it is cheaper to go for a processor based licensing. And if the number of users are very small then it makes sense to go for the Named user plus licensing as it would be more cost effective.
In terms of pricing, Oracle’s single user license is available to a a client for £121 while its competitor IBM’s DB2 is priced at £135. Microsoft’s SQL server is priced at £1260 for a 5 user license while Oracle has priced its 5 user license at £1175. Oracle has priced its product very competitively in the market. It has managed to keep the pricing below the competitors price in almost every case. Oracle is also providing high quality after sales services.
The advertising department in Oracle follows a simple rule of working things out directly with the company and the clients. Oracle builds a relationship with the client by using their “human commercial methodology”. This provides oracle with the advantage of knowing the clients needs, likes and dislikes. This results in the client being happy as they interpret any step taken by oracle is taken in their favor. Oracle aims to keep their clients happy by providing the best services and after sales support. Their main aim is to keep this support at a constant level throughout the process life of the product. Oracle provides clients with cost effective measures like providing proposed clients with training sessions to help the clients adapt to the sql database system.
Oracle provides clients with a promotion called “Below Market Rates and Payments Spread Over Two Years” (http://www.oracle.com/us/products/financing/buy-now-promotion-324011.html)
This allows clients who cannot afford to buy the product at a one-go process to buy the product and pay over a period of 2 years. This helps clients who have budget limitations. The Buy now, Pay less promotion helps making IT affordable to the masses as it can provide small companies the opportunity to acquire the IT resource. As oracle has a finance wing in their company it makes the whole approval process for this promotions very fast and efficient.
Oracle also persuades direct marketing to attract customers. Direct marketing aims to be the joining factor between sellers and buyers with the main aim of persuading potential clients to invest in their product.
“Direct marketing is the distribution of the products, information and promotional benefits to target consumers through interactive communication in a way which that allows response to be measured” (pg 462 jobber)
Oracle uses telemarketing to promote their products and pull in new clients. In telemarketing a company contacts clients by phone and put in a pitch for their product as per their requirement. Oracle uses telemarketing to give huge discounts of upto 80% on products like sql, weblogic and JRockit if an existing client invests more on oracle for their future business requirements. It helps Oracle in gaining further grounds and cutting down on the competitors market share. Oracle also uses email as a marketing tool too to keep customers up to date with their new products and offerings as well as attracting new prospecting customers.
Oracle uses personal selling for promoting their CRM tools. Personal selling is done on a face to face level. This is done with the presence of a Oracle representative and the client. And according to the clients requirements the CRM tool is personalized to suit their needs.
Oracle also organizes events to launch and promote their new products. They arrange workshops and invite prospect clients to these events to familiarize them with the Oracle line of products. In the workshop they train the representatives of the clients company to teach how their product works and its ease of use with promotional guides and product experts from Oracle. These events act as a promotion tools for other companies who want to associate themselves with Oracle and promote their company in these events. Oracle offer banner and hoarding spaces for other companies in these events. The upside of this for Oracle is that it can show clients the numerous clients that are associated with them.
Placement under marketing mix involves all company activities that make the product available to the targeted customer (Kotler and Armstrong, 2004).
Based on various factors such as sales, communications and contractual considerations, various ways of making products available to customers can be used (Lazer, 1971).
While planning placement strategy under marketing mix analysis, companies consider six different channel decisions including choosing between direct access to customers or involving middlemen, choosing single or multiple channels of distributions, the length of the distribution channel, the types of intermediaries, the numbers of distributors, and which intermediary to use based on the quality and reputation (Proctor, 2000)
Placement refers to strategies that companies use to place their product. It takes into account how a customer perceives their product. The placement of product have to take into account the advantages of the product. Oracle uses Site Hub to decide on product placement strategies. The Site Hub analyses with all the data provided to it to find the best possible solution for product placement. Oracle has been successfully using this mode of implementation to enter into new and emerging markets. Oracle already has a base of 145 countries where it has invested in. It has reached at this level by managing to make sound decisions about entering into a place. Oracle conducts surveys to find out what the clients require and then proceed accordingly. It takes into account investment analysis, demographic trends and market analysis to decide on the future investments of the company.
Oracle has streamlined its processes in the recent to make product delivery more efficient. This streamlining has helped Oracle save money.
Oracle uses a business to business model for distribution of goods. The Producer (Oracle) sell their products either directly to the client or via an agent to the client. The longest B2B chain would be a product going from the producer to the agent then to the local distributors and finally to the client. This method of distribution has worked well for Oracle for many years now. Oracle have successfully managed to use this distributive channel to their advantage.
Market Analysis :
“In order to evaluate the nature of business environment and its strategic capability, an organization undertakes SWOT analysis which focuses on the Strengths, Weaknesses, Opportunities, and Threats facing the organization.” (Mullins 2010: 545)).
SWOT investigation is split up into two types, namely the Internal and the External factor. The Internal component comprises of Strengths and Weaknesses while the External component comprises of Opportunities and Threats from its competitors.
Oracle has a robust marketing strategy. Their main advantage is their superior product that is able to counter all the competitors’ products. Oracle has a huge market share over other companies. With the current growth Oracle is all set to become the 5th largest IT management company. With the current arsenal of products that Oracle has it has a huge advantage over the others. Oracle is the most leading company for Database. It literally has no competition in this field and now after the acquisition of Sun Microsystem it almost has a monopoly in the project development cycle. With more than 3 decades in the IT business, Oracle is considered to be one of the most stable companies that is reaping in profits year after year. Oracle has moved from strength to strength over the past 3 decades.
Considering the current position that Oracle is in, it needs to make sure that it doesn’t get complacent in its position. They need to forge ahead and come up with new and innovative ideas to grow. Although a few strategies of theirs have back fired. Like in the case of Java, which was a freeware but after the acquisition they enhanced it and changed it in to a paid version. This resulted in a loss of clients. They need to keep in mind the clients needs and aspirations from the company before making any large changes which might affect the companies client base.
Oracle is the number one company in Database and has a huge client base. This formidable position will help them increase their client base even further. After acquiring Sun Microsystem, Oracle has the opportunity of providing one stop solution for the development of any IT application. Oracle is focusing on the next wave of IT management solutions that will emphasize the opportunities to manage the business service life cycle rather than being limited to just the IT productions. They have a good opportunity in CRM and HRM tools to increase their revenues and customer base by focusing more on promoting these products.
One of Oracle’s threats are in their own marketing strategy. The choice to convert Java into a paid version back fired on them and they lost a lot of clients due to that. If they choose to ignore this and continue to sell Java as a licensed product then it might end up hurting Oracle in the long run as loyal customers might choose to move on to different products. In terms of competition for rivals, Microsoft’s Visual Dot Net is one of the main competitors for Oracle. As Visual Dot Net is a complete one stop solution for application developers it might eat into Oracle’s share if Oracle do not come up with a complete product for application development rather than promoting individual products to do the whole application development process.
The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy.
Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether its in new markets or existing products in new or existing markets.
The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy. These are described below:
Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets.
Oracle is bounded to increase their sales to increase their market share. Currently they are leaders in Database industry. Their pricing strategy, advertising is helping them to increase the market share. They are applying all techniques to get new customers from providing concessions to giving loan to the customers to buy products. Oracle is working hard on enhancing their existing products to be leader in market. Oracles products like Database, PeopleSoft, Siebel, Java and Weblogic is already hitting the market. Oracle’s marketing mix strategy is helping them in keeping top position in market.
Oracle’s other existing products like Oracle Golden Gate, Oracle Active Data Guard, Data Integrator enterprise Edition etc., has strategic product plan. Oracle Golden Gate
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