Strategic marketing options

Abstract

Over the last four years Palabora vermiculite ore body has shown a decline in courser grades fractions (large and medium). Process improvements were implemented to increase recovery rates in all grades. The increase courser grades recoveries currently have no significant impact on the production output for these grades. The increase in recovery rates of finer grades resulted in a surplus production of superfine and micron and is currently stockpiled on site. With the decline in coarser grades, PV is unable to satisfy market demand for coarser grades. In order for PV to stay ahead of competition and to further enhance the company’s position as the market leader in today’s changing environment, this research will indeed outline the key issues PV should consider for future business. In this research, relevant data from within the PV markets were gathered which included qualitative and quantitative data. Qualitative research was selected due to its ability to allow respondents to speak freely about the chosen subject and its ability to obtain the widest possible responses. The aim of this research was to determine if strategic marketing options will grow the sales of finer grade vermiculite. The objectives that were looked at were: • To determine why the customers prefer coarser grades. • To investigate potential alternative uses for finer grades. • To determine how the finer grades can be marketed to current users of coarser grades. Definite boundaries exist with in the research study due to geographical displacement in the majority of vermiculite consumers across the world. The problematic issue of supplier and customer loyalty in an intense competitive industry has proved to have inherited barriers to competitor specific information, thus the reliance on secondary data with regards to competitor’s mining capability, crude production and competitive advantages. From analysis of data collected, the following observations were made: • There is a consistent perception that the specific grade been used is critical to an application. • Only 27% of PV’s customer base is currently doing R&D. This is mainly in refractory and construction industries. • Customer indicated that they are not flexible on product qualities i.e. screen sizing and yield. This indicates that to market finer grades in coarser grade markets will require R&D and marketing on the part of PV. For PV to increase its finer grades sales they need to adopt a new or change their existing marketing strategy. PV management needs to consider the following: • Different price strategies can be adopted for different situations i.e.: o Penetration pricing - The price charged for products is set artificially low in order to gain market share. Once this is achieved, the price is increased. (local and Asia markets) o Value pricing - This approach is used where external factors such as recession or increased competition force companies to provide 'value' products to retain sales. (Europe and American markets) • To develop alternative uses for finer grades vermiculite PV needs to engage in R&D. Management needs to be well informed about the marketplace and in particular customers who are more likely to envision realistic and meaningful new product ideas. Consistent market understanding best comes from formal processes designed to generate market intelligence and not from merely ad-hoc interactions with the marketplace (Flint, 2002: 306).