Application of Marketing Theories to Practice

Introduction

This report shows the different field of businesses and the methods that our company was using in SimVenture comparing with theories.

Marketing and Sales

Our company’s main marketing tool was advertising but we were using different like direct marketing, exhibitions and our website. However, digital marketing is limited only to website in the game, although this is getting more popular these days (Pittsburgh Post-Gazzette, 2006). Digital marketing defined by Jobber, 2007: “The application of digital technologies that form channels to market (the Internet, mobile communications, interactive television and wireless) to achieve corporate goal through meeting and exceeding customer need better than the competition.” Digital marketing is almost completely missing from the game, it is only limited to website. Network theory studies relationships of all sorts, whether between people, animals or things. Social network analysis is an overlapping tool for learning about patterns that develop within social networks and how they influence behaviour. Digital marketing channels such as Facebook, Twitter, Foursquare and Instagram are useful in this regard, as they allow marketers to listen to what consumers are saying, and they allow marketers to leverage the power of influential users to spread messages throughout their networks (Harvard Business Review, 2006.). Generational marketing theory holds that consumers born of the same generation — defined as a 20-year period — have common attitudes and behaviours because of shared experiences that influenced their childhoods and shaped their views of the world. The relevance of generational theory to digital marketing is primarily in the ways in which each generation communicates and the online places where marketers can reach them (Zickuhr, 2010.). The customer research in the game is only limited to where the customers heard about but nothing who they are (age, gender, education, etc.). All in all the game had good opportunities in traditional marketing channels like direct marketing and advertisement but digital marketing part is really limited which makes it less realistic.

Operations

Efficient operations management is a key element to make a company successful. Without supply network a company cannot exist. A supply network perspective means setting an operation in the context of all the other operations with which it interact some of which are its suppliers and its customers. Materials, parts, other information, ideas and network of customer-supplier relationships formed by all these operations (Slack, Chambers, Johnston, 2004.). The supply network view can also help in decision making about the design. The design activity in operations has one overriding objective: to provide products, services and processes which will satisfy the operation’s customers. During the game our company used ‘Just in time’ method for the production because if there was more order then our organisation was able to produce then we contracted some out when it was financially possible. Furthermore, in the meanwhile of last year in the game, all of our production was contracted out because the four employees weren’t enough to build the product and to handle other task that were essential to run the company at the same time. High dependency theory is one of the explanation of the ‘Just in Time’ approach to operations management. With high inventories insulating each stage in the production process, the dependency of the stages on one another was low. Take away the inventory and heir mutual dependency increases. The ‘Just in Time’ practice of empowering ‘shopfloor’ staff makes the organisation dependent on their actions (Slack, Chambers, Johnston, 2004.). However, this theory perfectly suits with SimVenture, thus it is realistically show the opportunities and limitations of ‘Just in Time’ delivery and production because in the first year when financially it was not a possibility to contract out some of the production we bumped into some limitations according to the ‘Just in Time’ manufacture technique.

Finance

All investments carry with them some degree of risk. In the financial world, individuals, professional money managers, financial institutions, and many others encounter and must deal with risk. Investors can either accept or try to mitigate the risk in investment decision-making (Baker & Filbeck, 2015.).

However, the game is limited to only two choice of grants and family and bank loans. Decision parameters are: amount, period, interest rate. The game also offers an opportunity to set bank overdraft which can be really useful especially in the beginning of the game when the company has to buy the products’ component and has to wait until the clients paying. The payback period can be up to 3 months.

According to Deakins and Freel (2009) our company’s stage of finance is at young stage, due to we paid back our only £3000 loan from friends and family, although the company is owed 100% by the founders. Business angels capital, internet crowd funding

Michael Jensen and William Meckling, in ‘Theory of the firm: management behavior, agency costs and ownership structure’ (1976), note that ‘agency costs arise in any situation involving cooperative effort’ and that, as the firm is essentially ‘a nexus for a set of contracting relationships among individuals’, agency problems are endemic to it. Their analysis focuses on how agency problems can help to explain such questions as:

• The degree to which a firm is financed by debt or equity;
• Why firms in some industries are usually owner-operated;
• Why firms would voluntarily supply shareholders and lenders with accounting reports and have them independently audited.

The last point is of most interest for our purposes. Essentially, firms will voluntarily provide shareholders and lenders with independently audited accounting reports because this reduces the monitoring costs associated with contractual relationships with these parties. In the game there is opportunity to make the finance reports in house or to ask an agency to do it for extra costs per each months.

Setting up the right price for the product is a key element for running a successful company. Our gross profit per unit is 43% of the whole price which is around average in this industry (Stefan, 2015.).

Organisation and growth

“SimVenture is a game which is run on a managerialist philosophy not an enterprising one” (Grant, 2015.). Theories of the small business life cycle have been heavily criticised in recent years for being reductionist and ‘speculatively normative’, relying on formalistic, deductive approaches rather than inductive heuristic methods (Gibb and Davies, 1990). In particular, it is the ‘deterministic assumption that all firms grow through a series of predictable series of preordained stages’ (Merz et al, 1994; p49). Small business growth is characterised by a number of predictable, discrete and consistent stages (Churchill and Lewis, 1983; Hanks et al., 1994; Kazanjian, 1988; Steinmetz, 1969). These stages are sequential in nature and occur as a hierarchical progression not easily reversed (Dodge and Robbins, 1992; Quinn and Cameron, 1983). An important aspect of theorising on the organisational life cycle is that many stage models of small business growth can be conceptualised as ‘metamorphosis’ models (d’Amboise and Muldowney, 1988; Kazanjian, 1988), where the fundamental transition from one stage of growth to another requires considerable change. However, in SimVenture when the firm moved to a bigger office and purchased new equipment for the company the efficiency of the company have been developed to a higher level that also meant that the company is growing. The life cycle literature emphasises that such periodic crises have an important role to play in the development of both the organisation and the individual. (Dodge and Robbins, 1992.). Hiring more employees and train them to be professional in different business fields is also a great method to rise the organisation to a higher level. Upon interpretation, it seems that entrepreneurs have to develop new behaviours and learn to think in radically different ways as a result of managing developmental crises (Greiner, 1972). As Greiner (1972) states, ‘these periods of tension provide the pressure, ideas, and awareness that afford a platform for change and the introduction of new practices’ . From this viewpoint, a key assumption behind life cycle theorising is that for a small business to grow, the owner-manager must adapt and modify their perceptions and actions as a result of these discontinuous events in order to facilitate organisational growth. For instance, in the game when the company was financially able to advertise not only in printed media but use the more expensive although more efficient TV and Radio as a marketing channel, the number of orders rising exponentially. That caused profit and sales growth which helped to increment the firm to a higher level as it displayed in the Figure 1.1 below.

Figure 1.1

Even though such statements indicate a fundamental process of personal learning and development on behalf of the owner-manager, most life cycle theorists do not address this issue in any significant depth. On the other hand, there are opportunities for training and learning for the owner as well, and it is also developing the skills during the game. The important point to draw from this significant recognition is that learning to become an effective small business owner is not always simple, or inevitable for that matter (Burns and Harrison, 1989).

Leadership

Entrepreneurs and small business owners are very different because entrepreneurship can be distinguished from small business ownership by a venture strategy oriented toward growth and innovation (Grant, 2015.). Using Team Role theory the word ‘shape’ indicates to us ‘shaper’, whilst the word ‘vision’ implies ‘plant’. Looking at leadership using Handy’s definition is interesting for vision is certainly important to leadership, but does it have to be unique to an individual? Where it is unique to an individual with a drive to enact it such as a ‘Shaper’, strong Solo leadership is likely to prevail. Vision alternatively may be ‘borrowed’ by a ‘Shaper’ who treats it as a product of the self and similarly will adopt a Solo leadership style. Many organisations have rewarded Solo leadership behaviour by promoting individuals to management and leadership positions, for such individuals have met past organisational needs (Handy, 1992.).