Accenture is a global management consulting, technology services and outsourcing company. It boasts of a unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies,. The main aim of the company is to collaborate with clients to help them become high-performance businesses and governments. Thus this company is a good company for study. Here I am analyzing their market strategy and how they could increase their customer base round the world. Keller, K (1998)
Competitor Analysis
One of the major competitors of Accenture is IBM company. The financial and company statistic of both have been compared below. Both are into similar business and specially compete in the area of consultancy to key corporate clients.
DIRECT COMPETITOR COMPARISON
ACN
Pvt1
Pvt2
IBM
Industry
Market Cap:
27.28B
N/A
N/A
167.26B
111.07M
Employees:
176,000
N/A
N/A
410,830
810
Rev. Growth (ttm):
-11.20%
N/A
N/A
0.80%
16.10%
Revenue (ttm):
22.45B
N/A
N/A
95.76B
192.40M
Gross Margin (ttm):
30.01%
N/A
N/A
45.73%
36.21%
EBITDA (ttm):
3.32B
N/A
N/A
23.66B
12.47M
Oper. Margins (ttm):
12.59%
N/A
N/A
19.49%
6.97%
Net Income (ttm):
1.55B
N/A
N/A
13.43B
N/A
EPS (ttm):
2.375
N/A
N/A
10.009
0.12
PE (ttm):
18.03
N/A
N/A
12.86
18.81
PEG (ttm):
1.16
N/A
N/A
1.3
1.06
PS (ttm):
1.22
N/A
N/A
1.75
0.83
Pvt1= Deloitte Consulting LLP(privately held)
Pvt2= HP Enterprise Services(privately held)
IBM= International Business Machines Corp.
Industry= Management Services
Direct customer contact has made Accenture one of the most successful companies of the1990s “Accenture is following the strategy of what called “Direct business Model”. The meaning of their model is -It is actually get to have a relationship with the customer, and that creates valuable information, which, in turn, allows them to leverage their relationships with both supplier and customers. Along with that information with technology, and they have the infrastructure to revolutionize the fundamental business models of major global components. Keller, K (1998)
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Accenture’ competitive strategies are “speed to market; superior customer services; a dynamic commitment to producing consistently high quality, custom-made systems that provide the highest performance and the relevant technology to their customers; and an early exploitation of the Internet. The company’s extraordinary growth and profitability en route to becoming the second largest consultants in the world. Accenture used different marketing strategies to sell there services around the world making them the most successful company in the world.
Through its build-to-order manufacturing capability, Accenture has been able to cut many of the risks of the business. The company can persists on lower inventories and take advantage of price cuts more quickly than competitors. Selling service directly to customers also reduces costs by eliminating dealer markup. Brooks, I and Weatherston, J. (1997)
Market Analysis
Accenture’s pinnacle to market leadership is the result of a persistent focus on delivering the best customer experience by straight away selling products and services online and through catalogs.They put a great deal of emphasis on understanding what drives the customer satisfaction, whether it was response times on the telephone, quality of products, valuable features, or the ease of experience in using the product. Engaging the entire company – from service providing to sales to support staff – in the process of understanding customer requirements became is a constant focus of management, energy, training, and employee education.Accenture Computer Corp. has used the Internet to trim costs and boost sales, both of which were becoming increasingly difficult to do in the saturated consultancy market of the late 1990s. It made possible for customers who previously had placed custom orders via the telephone to place them on Accenture’s Web site. Customers selected configuration options, get price quotes, and order both single and multiple systems. The site also allowed purchasers to view their order status, and it offered support services to Accenture owners. Given below is how Accenture has been operating in the market in the year 2009 .
Environmental Analysis
Accenture helps organizations create and implement breakthrough operational and transformational solutions. This is critical for any company today. There are many environmental factors which become crucial in the environment in which Accenture is operating. The economical environment has a crucial impact on consumer behaviour. This factor becomes all the more relevant t in the recession period. Security of a good job and a regular income to spend on goods are factors that effect consumer behaviour. Marketing and advertising do influence consumers in helping them to purchase a particular product or service. Brassington, F and Pettitt, S, (2000),
Peoples social class will also effect their behaviour. The role of society is critical. Be it the profession based influence like Actors, Doctors, engineers, low grade staff, and mothers and fathers also effect the purchase decision. Also being parents affects consumers’ buying habits based on the age of the children, the nature of job .Say if you are a highly paid official you could buy consultancy more easily than a lower class of corporate consumer. Also many other characters influence the consumer buying decision. The person’s personality be it extrovert (out going and spends on luxury and fun) and introvert traits (keeps to themselves and purchases with online or mail order) again has an impact on the types of purchases made. Brassington, F and Pettitt, S, (2000),
Customer Analysis
One study which is vital when studying the consumers of Accenture are the reference groups in the corporate clientele. Reference groups are close groups of people consumers may look up towards to that have an impact on consumer behaviour. They could be celebrities like Brad Pitt or your immediate family members. Other influential people like Opinion leaders are those people that you look up to as you honor their views and judgments and these views may impact consumer decisions. Also the type of consumer need of Accenture consumers can be explained by the motivation theory of Maslow.
Abraham Maslow hierarchy of needs theory was targeted to explain what motivated individuals in life to achieve. This was explained in the form of a hierarchy. He explains that consumers aim to meet basic psychological needs of hunger and thirst. When this has been fulfilled they then go up to the next stage of the hierarchy, safety needs, here their key needs are job security ,home security and the emphasis that an income will be available to them regularly. Booms, B.H. and Bitner, M.J. (1981)
Social needs come in the third level of the hierarchy, the need to attachment to someone ,to be loved is a normal human desire and people do work for this belonging. Esteem need is the ext in the hierarchy and means the need for status and recognition among peers in the society, status of people, the recognition to have a good job title and be known are all needs that add to the symbol of status.
Self-actualization or the realization that an individual has reached his potential in life is the top most in the need pyramid. The need of self-actualisation is critical to the individual, as he only know when he has reached the point of self-fulfillment.
This concept helps an Accenture trying to sell a product or service to a consumer. it is known to all that marketing is about fulfilling needs and providing benefits, Maslows need concept suggests that needs differ as move along our path of striving for self-actualisation. Accenture customers are also looking for the status and self esteem need to be fulfilled among the higher class purchasing services . Maslows concept is useful for firms as it helps to understand and work for consumer needs and wants.
Internal Analysis
Accenture’s corporate philosophy is elite and quite different from many a companies. The same has helped it form a goodwill among prospective customers. Below are the core elements of the Soul of Accenture as they state their corporate culture summary heading:
Customers:
They believe in creating loyal customers by providing a superior experience at a great value. They are committed to direct relationships, providing the best products and services based on standards-based technology, and outperforming the competition with value and a superior customer experience. Blythe, J. (2001)
The Accenture Team:
They believe our continued success lies in teamwork and the opportunity each team member has to learn, develop and grow. They are committed to being a meritocracy, and to developing, retaining and attracting the best people, reflective of our worldwide marketplace.
Direct Relationships:
They believe in being direct in all they do. They are committed to behaving ethically; responding to customer needs in a timely and reasonable manner; fostering open communications and building effective relationships with customers, partners, suppliers and each other; and operating without inefficient hierarchy and bureaucracy.
Global Citizenship: Booms, B.H. and Bitner, M.J. (1981)
They believe in participating responsibly in the global marketplace. They are committed to understanding and respecting the laws, values and cultures wherever they do business; profitably growing in all markets; promoting a healthy business climate globally; and contributing positively in every community they call home, both personally and organizationally.
Winning:
They have a passion for winning in everything they do. They are committed to operational excellence, superior customer experience, leading in the global markets they serve, being known as a great company and great place to work, and providing superior shareholder value over time. Blythe, J. (2001)
(Source Accenture.com)
SWOT analysis:
Strengths:
One of the best consultancy providers.
It has been more than fifty years in the market.
A wide range of coverage in corporate clientele areas..
Promotions are very strong and effective
Weakness:
Pricing is a little high
Has a premium range of services
Customers service is to be worked upon
Opportunities:
Wide world wide coverage .
USP is the hold of loyal consumers
Provide new services for new corporate companies
Growing consultancy services
Prominence in the mind of the key consumers
Recovery from recession of the customers. Baker, M. (2000)
Threats:
Recession, has decrease disposable income in people
Other competitors like IBM.
Changing mindset of customers
Lack of loyalty of brand among this segment consumers.
Marketing Plan Phase 2 (Objectives and Strategy Development)
:
Executive Summary
The strategic management literature is far from clear in explaining how firms choose to formulate strategy and implement it. Indeed, there are many different schools of strategic management that help to explain the manner in which firms engage in strategic decision-making and action. These include the design, planning, positioning, learning, entrepreneurial, cognitive, power, and cultural school, to name just a few. There is no right school of strategic management that should be followed, but different firms tend to subscribe to different schools depending on the industry in which they compete and the nature of the firm. The planning school is appropriate for such firms because of the nature of the industry in which they compete. At the same time, significant investments are required to back up any strategic or tactical decision made by such companies. In addition, the futures of the consultancy companies are highly changeable and unknown, with factors such as prices fluctuating greatly. As a result, these firms tend to adopt principals from the planning school of strategy because these help the firm to focus on the external environment in which it competes and devising strategies based on such an environment. As such, when examining what guides the strategy of a firm like Accenture, it is also important to examine the school of strategic management that best explains its choice of strategy. In Accenture’s case, this is the positioning school, as discussed next. Brassington Frances and Pettitt Stephen (2006)
Marketing Objectives
The positioning school of strategic management views the strategy process as an analytical one in nature . Whilst many scholars have written about this school, the dominant proponent has been Porter (1980, 1985). In this regard, the purpose of firm strategy is to establish a position within the industry that is profitable. According to Porter (1980, 1985) this requires a firm to examine the industry within which it competes in terms of the five forces: the intensity of the rivalry amongst competing firms, the threat of substitute products and services, the threat of new entrants, and the relative bargaining power of buyers and suppliers. On this basis, it is possible for firms to select on of three generic strategies – overall low cost, differentiation or focus – that help it to capitalise on a position within the industry that provides for above-average industry profitability. In order to know which of these strategies is the most appropriate for a firm, it is necessary to look at its various parts. In this respect, taking a broader and deeper picture of the firm is important in understanding the context within which it competes because as Porter (1980, 1985) notes: “competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering, and supporting its product” . As such, the value chain is an important way of assessing the Accenture primary activities – its inbound logistics, operations, outbound logistics, marketing and sales, and service – as well as its support activities – firm infrastructure, human resources management, technology development, and procurement – and assess areas of independence and mutual dependence.
Accenture is a low cost provider, but also manages to use its design of the supply chain to provide a differentiated offering. The estimated earning od Accenture as doen by analyst has been shown in the table below:
Earnings Est
Current Qtr
Feb-10
Next Qtr
May-10
Current Year
Aug-10
Next Year
Aug-11
Avg. Estimate
0.61
0.71
2.70
3.01
No. of Analysts
19
18
21
20
Low Estimate
0.59
0.67
2.61
2.78
High Estimate
0.68
0.75
2.79
3.26
Year Ago EPS
0.63
0.68
2.68
2.70
Targeting and Positioning
Segmentation: Accenture concentrating on upper-end customers. They have different segments and different USPs. While there are many possible avenues to exploit in terms of sales opportunities for these companies, the market is highly segmented in such a way that it is important for Accenture to engage in target marketing. This is the point where the particular companies must decide whether they will individually follow a niche market or a full-line strategy. Accenture thus caters to a vast market that too individually. Brassington Frances and Pettitt Stephen (2006)
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Branding: Accenture is a well known brand. Although its sales have been falling but it has been one of the key players in the consultancy market. Its name and use of service is associated with many a known names in its market. It is the leading brand in the world, with a focus on performance and international presence.
Positioning analysis: Accenture sees positioning as a key factor in growing the brand in developing markets of Asia like China, Korea, and Malaysia. Moreover, Accenture already had marketing tie-ups in Asian market segments.
Competition: While Accenture build product lines and marketing campaigns the major competition is from IBM. Thus the promotion strategies of these two companies being similar, the joint advertising and promotion cost are sure to be reduced as of their independent cost. They can target a wide range of segments which includes consultancy and solutions for the corporate client. While both these brands make use of a differentiation strategy to attract its customers, IBM concentrates its efforts on a broad cost strategy approach. The differentiation strategy of the Accenture can be seen in action by examining the various productions of this company. In looking towards the future, the company seems to place into a position to steadily increase its market share and brand value to better compete in the consultancy business and to help in transformations of clients. Hoyer, W.D. and MacInnis, D.J. (2001)
Segmentation: Accenture can now really focus on premium service full of design and innovation-the kind of service people with too much money like to buy. Accenture have their own USPs.
Growth Strategies (if the objectives set refer to growth/improvement of current position)
BCG analysis
Here I would say that Accenture is in the cash cow position. Thus it should now harvest its product that is the Accenture company should now stop investing money in mass promotions of Accenture and wait for the right time for the market to take up dynamism. Hoyer, W.D. and MacInnis, D.J. (2001)
Thus it is suggested that Accenture should not just get back and wait for this cash cow to give returns. It has been listed as a cash cow because the amount of revenue which can come from this product is now saturates. Another strategy that it can follow is that it should make this brand and launch it in the Asian market where recession hasn’t taken such a big toll. There it can be launched as a question mark and will need high amount of promotions and distribution to be established in a new country. This is a strategy that Accenture should take on to survive in a global market like that of today. This is by far the only way in which it can cover up the market saturation the company has reached at present.
Ansoffs Matrix:
According to the Ansoffs Matrix there are four major strategies that Accenture can follow. However the strategy that is recommended is Product /service development. This strategy is recommended for Accenture as they have still got basic problems with their product that is differentiation form competitors.. This is to be improved. Aaker, D and Joachimsthaler, E (2000)
Innovation in technology needs to be added to these products to bring in more business in the current markets. Global Customer wants value for money that is cheaper prices and good quality. Also in this field new technology and luring the customer with the same is very important a suggested to Accenture.
PESTLE Analysis
PESTLE Analysis or survey of the marketing environment include history of firm, macro/micro factors that are relevant including a stakeholder analysis
. It is critical to understand the toothpaste too through these points of strategy. This classification distinguishes between:
Political factors. These refer to government policy such as the degree of intervention in the economy. What goods and services does a government want to provide? The liberalization by the government has of course helped out the business in consultancy companies to survive in recession too.
Economic factors. These include interest rates, taxation changes, economic growth, inflation and exchange rates. These include
higher interest rates may deter investment because it costs more a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency
inflation may provoke higher wage demands from employees and raise costs
higher national income growth may boost demand for a firm’s products
It is seen in recession times that many delegate have been shown the pink slip.. But the same phenomenon has also lead those who could start purchasing this product to deter and not buy it due to the conservative nature that has seeped in the consumer after recession round the world specially to the consultancy business sector..
Social factors. Changes in social trends can impact on the demand for a firm’s products and the availability and willingness of individuals to work. For example the consumer of the Accenture service may vary form one country to another.
Technological factors: new technologies create new products and new processes. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. As far as Accenture is concerned, it will have to incorporate these in its portfolio of services too for the ease of the customers.
Environmental factors: environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and FMCG. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider.
Legal factors: these are related to the legal environment in which firms operate. In recent years world has been many significant legal changes that have affected firms’ behaviour. Legal changes in a country can affect a firm’s costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the likelihood of customers buying the good or using the service).Thus the same are critical in the analysis of Accenture. Aaker, David and Joachimsthaler, E. (1999).
Selection of Competitive Advantage
As far as the competitive advantages is concerned Accenture has to work on the following areas in 2010
The company is loosing its growth in the market
The company is apprehensive to spread to other countries
The stress of the company has always been consultancy no other service
The company has priced its product at a very high price as compared to the near competitors.
Also the fact that competitors like IBM are present in the market ,it becomes all the more important to bring up a very strong competitive advantages. Accenture should do this by a good supply chain management across the world. Understanding the strategic choices of Accenture is important in supply chain management (SCM) because it helps to establish the focus on the company’s activities. Indeed, SCM reflects “the management of the interconnections of organizations that relate to each other through upstream and downstream linkages between the processes that produce value to the ultimate consumer in the form of products and services”. SCM is a critical component of this.
Through SCM Accenture can examine ways of being more efficient, especially for an overall low cost strategy, and well as adding more value to end customers, important for a differentiated strategy. In the case of Accenture that adopt an overall low cost strategy, the goal is to increase sales volume whilst also reducing unit costs because this helps to improve the margin achieved by the firm. Over time, a firm can capitalise on economic of scale through investment in infrastructure, as well as learning curve effects and perhaps more effective purchasing decisions, supply chain efficiencies and better logistics management. When adopting such a strategy, it may also be pertinent to not simply optimise individual links within the supply chain, but examine how efficiencies can be made across the supply network since it can easily be possible for a distant supplier in the supply network to disrupt the entire supply chain . Nonetheless, many efficiencies are likely to be found in the immediate supply chain because the firm has greater control over this part of the supply network .
Marketing Mix Programme
As far as the pricing of Accenture is concerned ,it is little on the premium side. As compared to IBM it should reduce its prizing to competitive level. Whilst controlling costs is still important, focus is placed on the Accenture intangible assets and its ability to leverage these within the value chain.
Product wise Accenture has a good range of services to offer backed up by a good customer care. More so it could forward integrate to technology making in various fields to expand business and profits. In the case of Accenture pursuing a differentiated strategy, these aim to focus on those aspects of their products or service provision that add most value in the eyes of the consumer.
A critical component of this strategy is to understand which parts of the supply network should be kept in-house and which should be outsourced, or perhaps even acquired. In-house activities are those that add greatest value to the firm and where its has particular competence, whilst the outsourcing of supply chain activities should take place for more peripheral activities within a Accenture value chain.
In reality, just as Accenture do not always follow one of the three generic strategies, but a hybrid corporate strategy, so should they look for a hybrid approach to business. The key point, however, is that there is alignment between Accenture corporate strategy and its marketing mix approach
Theory building in MARKETING MIX based strategic research has focused on two areas: international marketing mix management (MARKETING MIX) and decision-making in stock management. MARKETING MIX research has focused on the potentially virtuous and vicious cycles that are evident in Accenture . The overall analysis of this is that Accenture were generally facing reinforcing loops that led to either successful or unsuccessful MARKETING MIX. One of the major issues in MARKETING MIX is service management, with the general problem that individuals do not understand the feedback mechanisms that lead to failure in the marketing system. Accenture tend to focus on inventory management, demand amplification, marketing mix re-engineering, and marketing mix design .This work is particularly appropriate to the bullwhip effect and the marketing mix redesign that has been taking place at Accenture .
The notion of the bullwhip effect in marketing mix which is followed by Accenture came from work by Procter & Gamble, a fast-moving consumer goods (FMCG) company that had a large, complex international marketing mix. During the process of managing their marketing mix, the company noticed that as information went up the marketing mix, the distortion of that information increased. The market negative effect is the term used to describe this effect. It results from a lack of synchronization between members of a marketing mix, which is amplified the greater the number of members and the larger the number of defaults in the slae system linkages through which information passes. The problems that Accenture face is that since supply characteristics do not match demand characteristics, inventory starts to accumulate at the different stages of the marketing mix. Accenture is striving with the problem of delivery and supply and demand mismatch since 2004. Marketing mix management is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer.
A marketing mix is the group of organizations, people, technology, information and resources consisted in transferring the product or good from the producer to the end consumer.. Supply chain helps in the marketing mix in moving the raw material to the manufacturer , the final good or ready product to the wholesaler and from their to the consumer..
It is important to have glance at the component of the marketing mix management to understand the relevance of integration planning and management of the same.
. There are six key elements of the company that are critical to any business:
• Production
• Supply
• Inventory
• Location
• Transportation, and
• Information.
Accenture try to deal with the dangers of the marketing defaults through the forecasting of demand. This is important because demand is rarely stable. Such variability often means that Accenture need to keep a degree of safety stock; effectively an inventory buffer. The further up the supply chain towards raw material producer, the greater the observed demand, and therefore the greater the safety stock that is required. When demand rises in a given period, downstream suppliers increase their orders, whilst during falling demand, the converse occurs. Since fluctuations in demand are more pronounced up the supply chain, this increases the size of the oscillations faced through the supply chain. This is something that Accenture has to manage. No consumer should go unattended.
There are a number of factors that contribute to the negative marketing mix effect. First, forecast errors can easily occur simply because Accenture are unaware how demand many change over time. Even for goods that have a common demand pattern there can be instances where demand suddenly changes because of unknown factors. Second, there can be an overreaction to backlogs in supply of service by the company.
In the diagram below of the company’s supply chain; the arrows are for supplier-relationship management, internal SCM and customer-relationship management .
A supply chain starts with ecological and biological regulation of natural resources. This is then taken on to supply of raw material, many production links before one moves to several layers of storage facilities of various size and remote geographical locations. Then on it finally reaches the consumer. Here the service to be delivered although is the price which also has to be followed up for customer care after sale. Thus this as a whole can improve the sales of the company to bring in an effective marketing mix strategy for Accenture.
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