Tire Manufacturer Sabertooth Tires Inc.

Tire Manufacturer

Sabertooth Tires Inc. - Marketing Plan

Situation Analysis a. Internal Environment company's internal environment generally refers to three major features: resources, capabilities and core competencies. These features need to be clearly identified, developed and protected. Sabertooth possesses the following resources:

Sufficient and properly trained human resources. Sabertooth employees are highly motivated to excel and be creative at their workplace and are being accordingly remunerated. The workers are offered numerous incentives, bonuses, rewards and training programs, all these increasing the company's overall productivity. Furthermore, in the coming year, the manufacturer intends to increase the number of workers by 10 up to 15%.

Sufficient capital to invest in the new projects. After paying all taxes to the state, all employee wages, all debts to the company's providers, redistributing the profits to the shareholders, placing some funds into bank accounts and setting up the reserve requirement, Sabertooth was left with a total of $2.5 million to invest in producing and placing the new tires on the market.

Sufficient space to host the employees working on the project and also to store the manufactures products. Aside from the two buildings already dedicated to producing tires, Sabertooth has built a third facility, with two functioning stores, out of a total of five. The two stores will be officially opened on the first of November 2007.

Sufficient and updated technologies to be used in producing and distributing the tires. Sabertooth has recently purchased five assembling machines, milling machines, boring machines, electric machines, pneumatic machines and several other machine tools. In addition, the company has also acquired two more computers and software applications to assist the office work.

Sabertooth also possesses capabilities and core competencies that insure the success of the new tires, but these will be presented in the SWOT section.

b. External Environment

Sabertooth's external environment refers to its competitors, suppliers, the economic, socio-cultural, ecologic and legal backgrounds.

Sabertooth has two primary competitors: Charon Tires Inc. And Course Tire Ltd. All three tire manufacturers activate on the same area, produce similar products and address them to the same target market. Sabertooth hopes that the new tires will impress customers with their high quality and longer warranty and this would eventually lead to an increase in the company's market share.

Sabertooth intends to continue the cooperation with its long-term providers, Milestone LLP and John's Hardware Ltd. Along the years, both commodity suppliers have proven a high quality of the delivered products and services and currently, Sabertooth officials are developing a new contract to be signed between suppliers and producer.

The U.S. has a fruitful economy that encourages the development of small and middle size companies, including Sabertooth.

Sabertooth respects all norms of the United States Government and activates in full accordance with ecological, social and cultural norms. Furthermore, the machines recently purchased by the company are environment friendly.

c. SWOT Analysis

Internal Strengths:

Sabertooth possesses an intensive expertise in producing high quality tires;

Sabertooth is currenty producing a revolutionary product;

Sabertooth implements a good human resource management that motivates employees and increases productivity;

Sabertooth possesses an extremely capable and qualified marketing department, that has in the past successfully launched new products onto the market;

Sabertooth possesses high quality technologies that assist the manufacturing process;

Sabertooth's headquarters and buildings are strategically placed as they are located in highly industrialized areas and are easy to access by all means of transportation.

Internal Weaknesses:

the tire manufacturer seems to have reached its commercial maturity, heading towards decline, and needs to reinvent themselves;

Sabertooth has been producing the same goods since the beginning of their existence, products highly similar to those of competitors, therefore generating the weakness of undifferentiated items;

However most employees register satisfactory performances, the company encounters problems with their accounting department, without being able to get detailed and elaborated budgets in time.

External Opportunities:

Sabertooth is perceived by the external environment as a successful and trustworthy company: they have a good reputation;

the tire market is saturated by the same products and needs innovative ideas, hence the slogan "Reinventing the Wheel";

the current economy promotes the growth and development of small and middle-size companies such as Sabertooth;

the recent economic growth and the stabilization of the country's currency have persuaded investors to turn their attention towards national projects; as such, Sobetooth should encounter no difficulties in finding new investors;

the new products might lead the way to numerous other markets, permitting the manufacturer to address to a new target area;

also, due to globalization and market liberalization, the new improved tires could easily be placed onto international markets;

enlarging the customers palette would bring about increased profits;

In the new technological era, Sabertooth could begin promoting their products onto new markets, such as the Internet, or the online market.

External Threats:

the risk of not finding investors: however the current economy is stable, investors still fear economic crisis due to currency's depreciation in value, terrorist attacks or the ongoing real estate market crisis;

fierce competition from Charon Tires Inc. And Course Tire Ltd.

II. Marketing Objectives

Sabertooth goals are SMART objectives, meaning that they are: S - Specific statements, M - quantitatively Measurable and verifiable, a - agreed by all those involved, R - Realistic and achievable, T - Time related so that they can be achieved during a specified time period. Sabertooth SMART goals refer to the first year of selling the new tires and by the end of this period the company desires to:

totally cover the expenses made with the new project;

register a 25% increase of their market share;

register a 10% increase in net profits, and increase by 15% their total number of employees.

III. Marketing Strategies a. Target Markets

To clearly define their target market, Sabertooth used market segmentation procedures and based their conclusion on the following: the size of the current customer palette, customers' loyalty to Sabertooth products, existent competition on the tire markets, an estimate of their market growth based on the budgets and promotions adherent to the new tires and the profits the manufacturer expects to register from launching the new items.

According to these criteria, Sabertooth found their target audience to be formed of drivers of ages between 28 and 50 years and who register above medium incomes. The age 28 was selected based on the belief that younger drivers might not possess sufficient finances to purchase the tires, and the age 50 was selected based on the belief that older drivers might not be interested in high performance tires. Also, the above medium income was selected because of the slightly increased price of better quality products.

Sabertooth selected two primary market target strategies: single-segment strategy and product specialization strategy. The first strategy, the single segment, was chosen as it implies that the company aims their products not at the entire audience, but to a restricted market segment; in this case, the segment formed of 28 to 50-year-old drivers who register above medium incomes. This strategy is also suitable for Sabertooth, as they are a medium size company and their advertising, promotional and distribution resources are limited.

The second target market strategy, the product specialization, was chosen as it suits the concept of perfecting one product and then placing it on several markets. This might seem in contradiction with the first chosen strategy, but note that the selected segment is only the primary one, and does not exclude other potential markets.

In other words, Sabertooth Tires Inc. intends to specialize in producing high quality and long warranty tires and primarily address them to drivers of ages between 28 and 50, but also to other consumers.

b. Positioning the Product

Sabertooth will place their new products onto the market such that the audience perceives the higher quality of the new tires. Furthermore, the manufacturer's impeccable reputation and seriousness in previous engagements is the promise of a job well done.

In order to get the consumers' attention, the manufacturer will develop advertisements that point out the benefits of the product. The strategy used to create the advertisements is called by Attribute or by Benefit Strategy. The advertisements will focus on presenting the benefits of a 90,000 miles warranty and also on the new features of the Sabertooth tires, such as shorter stopping distances or smaller centrifugal growth. The slogan for the new tires is "Reinventing the Wheel." The advertisements will be aired on television channels, radio programs and will also take the form of fliers that will be handed out to citizens.

Aside from developing a strong advertising campaign, the manufacturer has to insure a good product placement by also paying close attention to product strategies, price strategies, promotion strategies and place, or distribution, strategies.

c. Product Strategies

The product strategies have been identified based on the "brand names, the tires' functionality and styling, their quality, safety, packaging, warranty, repairs and supports," and they are as follows:

the tires will be distributed under the trusted brand name of Sabertooth Tires;

their functionality is to protect the metal wheel and to ease vehicle transportation;

Sabertooth tires have a modern design and they offer a better sense of security on the road;

the tires have a higher quality than most tires currently available on the affiliated markets;

the items will be packed in sets of four, eight and twenty, in resistant cardboard boxes;

Sabertooth tires have a 90,000 miles warranty, during which time repairs and supports are free. After the warranty has expired, customers are encouraged to address their requests to the repair service within the company.

d. Pricing Strategies

In order to adopt the most appropriate pricing strategy, Sabertooth took into consideration the comparative advantages that differentiate their products from the competitors' products, the costs that needed to be covered, the profits that have to be registered and also the need to set an affordable price for the future clientele. In order to meet all these demands, the price has to be established based on a combination of three pricing strategies: Competitive Pricing, Cost Plus Mark-Up and the Bundling and Quantity Discounts.

The first strategy to implement regarding pricing is the Competitive Pricing. This strategy is used so that Sabertooth does not promote a considerably higher price than Charon Tires Inc. And Course Tire Ltd. And in order to insure the tires' competitiveness on the market.

The second strategy used to set the Sabertooth tires' prices is the Cost Plus Mark-Up. This strategy is useful because it insures the manufacturer that the established price will be sufficient to cover the expenses registered with the new items and will also generate profit.

Finally, the third strategy implemented in establishing the price is the Bundling and Quantity Discounts. This strategy increases customers' fidelity to Sabertooth and rewards it.

e. Promotion Strategies

To decide upon the suitable promotion strategies to implement, the marketing department at Sabertooth took into consideration the following criteria: advertising the tires onto three communication channels: television, radio and fliers; the allocated budget; the company's slogan, as well as the means of communication with the targeted market segment.

Based on these criteria, the marketing department felt it would be best for the company to approach promotions from both Pull as well as Push strategies. These two strategies imply that final customers, as well as retail sellers and other intermediaries would become better acknowledged with the product and generate an increase in the demand for Sabertooth tires.

f. Distribution Strategies

Before deciding upon the appropriate distribution strategy, Sabettoth marketing department looked at the available distribution channels, retail sellers and other intermediaries, intermediaries' and company's own capability to stock and transport the tires.

Based on the available distribution channels, Sabertooth chose to sell their products throughout indirect distribution to retailers. These retailers will be chosen based on the Selective Distribution strategy.

IV. Implementation Strategies a. Action Plans

The product strategies will be implemented within the company's own premises and will generally regard the production process. Employees will be suitably motivated and supervised in order to properly produce, handle, pack and repair the tires.

The Competitive Pricing strategy will be implemented by closely analyzing the prices promoted by Charon Tires Inc. And Course Tire Ltd. Sabertooth tires will be placed on the market at slightly higher prices to explain the better quality and the longer warranty period, but not high enough to be unaffordable and drive customers towards the competitors' products.

The Cost plus mark-up strategy will be implemented by closely analyzing the costs that have been registered with the manufacturing, promoting and distributing the tires and based on this costs, a price will be formed. The price will include both costs as well as remaining profits.

The Bundling and Quantity Discounts strategy will be implemented by offering long-time customers special discounts. Also, granted discounts will be the new customers who purchase larger quantities of Sabertooth tires.

Pull and Push promotion strategies will be implemented as follows:

The Pull strategy will familiarize final customers with the product. The final customers will then demand the product from retailers, who will be forced to buy the tires from the producer;

The Push strategy familiarizes retailers with the new tires. Retailers buy the products and resell them to the final customer.

The indirect distribution implies that the products will be sold to retailers, who will then resell the tires to the final customer. Further, the Selective Distribution strategy implies that only a certain number of retailers will be chosen to receive the new tires.

b. Budgets

Sabertooth allocated a total of $2.5 million for producing, promoting and distributing the new tires. The funds will be spent in the first year of production to cover expenditures as depicted in table 1.

Sabertooth Tires Inc. foresees that they will fully recover the expenses within the first year of selling the new tires onto the market, as they should register an income of $3.2 million, as depicted in table 2.

Table 1: Sabertooth expenditures

Running Costs:

Commodities Costs

Fixed Charges

Staff Costs

Storage Costs

Advertising Expenses

Promotional Expenditures

Distribution Costs

Other Expenditures

Table 2: Sabertooth incomes

Sales Revenues

Sponsoring Incomes

Other Incomes c. Timing/Schedules

The new Sabertooth tires will be placed onto the market starting with January 2008. The schedules for the three remaining months of 2007 and the entire year of 2008 are as presented below:

October 2007 is dedicated to beginning production of the tires; attracting investors and starting to develop the advertising campaign;