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1 ICT SYSTEMS MARKETING PLAN by Ladan Mehrabi Graduate Diploma in Business Administration, Simon Fraser University, 2006 Bachelors Degree in Electronics Engineering, Tehran Azad University, 2001 PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION In the Faculty of Business Administration Ladan Mehrabi, 2009 SIMON FRASER UNIVERSITY Summer 2009 All rights reserved. However, in accordance with the Copyright Act of Canada, this work may be reproduced, without authorization, under the conditions for Fair Dealing. Therefore, limited reproduction of this work for the purposes of private study, research, criticism, review and news reporting is likely to be in accordance with the law, particularly if cited appropriately.

2 Approval Name: Degree: Title of Project: Ladan Mehrabi Master of Business Administration ICT Systems Marketing Plan Supervisory Committee: Dr. Michael Parent Senior Supervisor Associate Professor Faculty of Business Administration Dr. Neil R. Abramson Second Reader Associate Professor of Strategy Faculty of Business Administration Date Approved: ii

3 Abstract This thesis is a marketing plan for ICT Systems to help the company increase its sales and market share. This paper examines the current status of the organization to determine measurable financial and marketing objectives for the year In this plan, we analyse the market and competitors as well as the internal capabilities of ICT Systems. Market analysis helps ICT Systems to determine its primary and secondary target markets. It would also help the company to determine whether or not product development is required. Careful analysis of the company s internal resources as well as its external environment helps ICT Systems to find opportunities and prevent threats. The marketing objectives of this plan are clearly defined. Tactical marketing programs including product, pricing, distribution, and promotion tactics are planned to achieve the objectives of this plan. The implementation plan section covers the timeline and tasks of people responsible for executing the plan. iii

4 Acknowledgements Thank you to my husband, Arash, who supported, provided information, and encouraged me to complete this work. I would like to dedicate this thesis to him. Also, I would like to extend my acknowledgements to all my MBA professors and my supervisor Dr. Michael Parent who taught, inspired, and made the completion of this work possible. iv

5 Table of Contents Approval...ii Abstract... iii Acknowledgements...iv Table of Contents...v List of Figures...vii List of Tables... viii 1: Purpose and Background...1 2: Situational Analysis Current Product Analysis Networking Solutions and Products Consulting and Professional Services Managed Services Pricing Distribution Promotion Target Market Analysis Economic Environment Competitors Analysis Competitor A Competitor B Competitor D Competitor C Large Telcos (Bell and Telus) Key Competitive Differentiators Five Forces Analysis Rivalry Among Existing Competitors Threat of Entry Threat of Substitutes Power of Suppliers Power of Customers Key Success Factors Relationship with Customers Relationship with Suppliers Technical Expertise Reputation Financial Analysis Summary of Current Situation ICT Systems SWOT Analysis...30 v

6 3: Marketing Strategy and Objectives Marketing Strategy Market Penetration Strategy Product Development Strategy Financial Objectives Marketing Objectives : Tactical Marketing Programs Target Market Tactics Product Tactics Remote Network Management and Monitoring Services Network Device Coverage (Cisco Smart Care System) WebEx TelePresence Pricing Tactics Professional Services and Consulting: Product Resale Solutions Pricing Options and Terms Distribution Tactics Promotion Tactics Personal Selling Website Events/ Seminars Web Advertising E-Newsletter Campaigns Co-branded Call Centre Campaigns Market Research Tactics : Marketing Budget...64 Spending Requirements : Performance Analysis : Implementation Plan...68 List of References...70 Works Consulted:...70 Websites Consulted:...70 vi

7 List of Figures Figure 1: Revenue Breakdown...29 vii

8 List of Tables Table 1 - Competitors' strength and weakness analysis...19 Table 2 - Current Revenues Breakdown...29 Table 3 - Current Revenues Breakdown...66 Table 4 Implementation tasks and timelines...69 viii

9 1: Purpose and Background The purpose of this marketing plan is to be used as a yearly review and planning document to continue growth of ICT Systems existing products. This plan includes specific financial and marketing objectives that are set to achieve in the year ICT Systems - founded in is a small information and communication technology solution provider for enterprise, medium and small businesses. ICT Systems founders have taken their expertise and experiences from successful and fast growing organizations and offer that wealth of knowledge to their clients. Over its short existence, ICT Systems has achieved significant growth in terms of both revenue and the number of people employed. The company currently employs eight employees, each having many years of experience in the areas of networking, security, wireless, and IP Telephony. ICT Systems is a certified premier partner and a value added reseller of Cisco Systems, a leading-edge telecommunication equipment provider. This partnership has been improved over the years of its existence. ICT Systems is also partner with other major vendors like IMB, HP, WebEx, RSA, WebSense, and VMware. Today 97% of ICT Systems revenue is generated from selling Cisco Systems technologies, products, and solutions. The company intends to increase its share of the market from selling other vendors products and service, but the whole focus and purpose of this plan is on Cisco Systems products and not the other vendors. 1

10 2: Situational Analysis 2.1 Current Product Analysis ICT Systems offers Information Communication Technology solutions, products, and professional consulting services to business customers. Currently the company categorizes its products/services under the following portfolios: Networking Solutions and Products ICT Systems Networking Solutions and Products portfolio is designed for businesses of all sizes that want to use Information Technology as a strategic tool to increase the profitability of their business. Businesses today strive to increase operational efficiency and employees productivity. ICT Systems networking solutions help businesses to gain competitive advantage over their rivals by increasing their operational efficiency and employees productivity. ICT Systems provides customized and unique solutions to its business customers to meet their businesses needs whether the need is implementing a new technology such as IP Telephony or just simply upgrading the security of their networking systems. In other words, ICT Systems offers its wealth of knowledge and expertise in the area of networking to its customers to help them to increase the profitability of their business. ICT Systems offers each client a unique and customized networking solution. The project normally starts by ICT Systems experienced employees analysing the client s business challenge and recommending a solution that improves the bottom line of the 2

11 client s business. ICT Systems always makes sure that the IT strategy of their clients is aligned with their business strategy. In some cases, in order to implement a solution, the client needs to purchase networking infrastructure equipments that ICT Systems sells. There are also cases, in which a client needs to only purchase and implement equipment and no network design is required. In these cases, the transaction would simply be a product resale. Even though ICT Systems is partnered with several vendors, the company mainly focuses on reselling Cisco Systems products and majority of its business comes from implementing and reselling Cisco Systems various products and solutions. These include: Networking Systems A central network connects all local and remote employees and provides them with access to the same business applications and services. ICT Systems networking solutions using core networking functions including routing, switching, security, and WAN enables organizations to communicate securely across the Internet with their employees as well as their customers from anywhere. This manageable central network helps to reduce businesses operating expenses Collaboration The worldwide trend towards globalization, virtualization, and mobility requires organizations specially enterprises to have a reliable communication network on which employees from various locations can communicate effectively and securely to accelerate decision-making. ICT Systems utilizes Cisco Unified Communication technologies such as IP Telephony to help its clients to streamline and accelerate their communication 3

12 process to increase productivity and gain competitive advantage through speed. In addition, using Cisco WebEx software, ICT Systems helps its clients to increase their employees productivity through effective real-time online communication Security Today s businesses require a secure network to protect their data as well as their customers data, defend against botnets, and comply with regulations. ICT Systems design a trusted infrastructure for its clients to protect their business against disruptions Wireless and Mobility Using Cisco wireless technology, ICT Systems helps its clients to increase mobility of their business and their employees. The mobility solution creates a reliable wireless network that empowers mobile workers by enabling them to have real-time data access Data Center ICT Systems data center solutions helps business customers to build and manage a reliable date center using Cisco switching products Consulting and Professional Services ICT Systems offers consulting and professional services to those clients who already have an IT department in their organizations but lack specific expertise. ICT Systems has extensive experience and in-depth knowledge of many networking technologies and solutions something that not too many clients or even other resellers and service providers have. Therefore, ICT Systems provides clients that need subject 4

13 matter expertise in the area of networking with knowledge and expertise required to design their network. ICT Systems also assist with clients IT operation and provides support. In addition, ICT Systems offers professional and consulting services to help to implement products acquired from other sources. For example, in many occasions, customers purchase products from large Telcos such as Telus or Bell. These Telcos usually lack to provide strong support and implementation services. Therefore, customers choose to hire ICT Systems to help them with implementation. A typical engagement is either under a Statement of Work (SoW) framework where pricing is estimated based on tasks that need to be completed and amount of work required, or simply an hourly charge basis Managed Services ICT System offers managed services to clients who want to outsource a network support or operation function. Under this model a contract is signed that outlines the service provided to the customer and the level of response expected from ICT Systems. These contracts are usually based on certain hours of services for a monthly cost Pricing Consulting Services The pricing for consulting services is usually predetermined based on what market bears and what competitors charge. In some circumstances a different rate may be offered taking into consideration parameters such as the length of engagement, skill set of consultants, or expertise level required for the job. 5

14 Product Resale Pricing on the product resale is determined on a case-by-case basis and is a factor of many parameters including cost, market, deal size, and profit margin. Products costs can vary based on product line, target market, and current promotions and programs offered by the vendor. There is usually a predefined discount off the list price offered to resellers such as ICT Systems. There are also additional incentives and promotions offered that could affect the discount level ICT Systems receives from its suppliers. ICT Systems general pricing strategy is not to sell solely on price because the service offering is much differentiated and not price sensitive. However, when it comes to only product resale transactions where subject matter expertise and professional services not required, there are special considerations given to market prices and what other resellers offer in terms of pricing and discounts. There is some flexibility on pricing for larger deals, as there is usually a bigger competition. Also, since the dollar amount of margins higher, it may allow for lower percentage in margin. i.e. a deviation from target margin percentage may be allowed if the overall profit is still within reasonable range. ICT Systems considers the competition and cost while setting prices. However, the prices should always provide a healthy profit margin to ensure overall profitability of the company Distribution ICT Systems uses a direct channel of distribution to provide information and communication technology solutions to its customers. The direct channel of distribution using a promotional method of direct selling provides an opportunity for ICT Systems to differentiate its offerings. Each one-on-one interaction between the sales 6

15 person/consultant and the potential customer would allow ICT Systems to learn about the customer business needs and provide a tailored solution to solve the client s problem and help the bottom line of their business. This could also provide ICT Systems with an opportunity to offer complementary products or services to its customers and generate revenue from multiple offerings Promotion Currently ICT Systems promotes its products or services through the following promotional activities: Personal Selling ICT Systems engages in personal selling activities to sell products or services to its prospects as well as existing clients. The personal selling process involves narrowing down and analyzing the lead list to identify potential customers or prospects, identifying who influences the purchasing decision, preparing sales call, understanding the customer s business to be able to provide solutions and solve problems, preparing presentation, creating interest by making sales presentation, and finally closing the sale. The company has recently hired a mid-level sales person to increase its number of customers. The sales person performs sales duties as well as little marketing function such as creating collaterals and etc. ICT Systems sales management and process still needs a lot of development and improvement Partner Referral ICT Systems enjoys a very good reputation as a high skills set qualified company with all of its partners specially Cisco Systems. Therefore, many of the customers are 7

16 referred by Cisco Systems. Being a premier partner, ICT Systems leverages referrals from Cisco Systems as an integral part of how it conducts business Customer Referral/ Word of Mouth ICT Systems continues to strengthen its relationship with its customers and use its track record of success as a reference to obtain new projects from its existing customers and attract new customers. The company s good reputation with its clients has provided a great opportunity for ICT Systems to be referred to new prospects through its existing clients Partnership/ Alliances ICT Systems strength in skills and expertise of its consultants is a weakness of its bigger competitors that have a much bigger customer base and sales force but sometimes lack on project delivery. This represents an opportunity for ICT Systems to work with other companies who offer similar services and provide consulting services for their projects. In other words, these competitors use ICT Systems knowledge and expertise in implementation and project delivery as a complement service to their products Website ICT Systems website is being used as a promotional tool to provide information, create interests, and allow product comparison. The website has been created four years ago and has not been updated since. Unfortunately, the company does not have resources to constantly monitor and update its website information. The website design and its content is outdated and not a good representation of the brand. The website needs 8

17 improvement and constant content update. This problem will be addressed later in the planning section Public Relation Currently ICT Systems does not engage in any PR activities itself nor has it been employed any PR organizations to work for the company. However, the company has managed to obtain free publicity through its strong relationship with its major vendors/partners such as Cisco Systems. ICT Systems has been recently mentioned in one of the press released that was published by Cisco on May 25, ICT needs to leverage these opportunities to increase its brand awareness and its reputation as a boutique style high skills set company Web 2.0 ICT Systems has recently started to have a presence on social media networking sites such as Twitter. The company also has its own blog, which is updated by the sales employee. There are still a lot of room for advancement in this area, which we will discuss later in the planning section Campaigns Utilizing Cisco Systems partners marketing resources, ICT Systems coordinated with the marketing campaign manager at Cisco to launch two marketing campaigns for the company. The purpose of these campaigns are to generate leads using Cisco s call centre. The campaigns resulted in few leads in the small business market but none of these leads have been turned into real buyers yet. ICT s Account Manager is in the process of following up on the leads generated form the second campaign. Therefore, it is 9

18 early to judge the success of the second campaign. The first campaign did not lead to any deal because there were no sales employees at the time to follow up with the leads Customer Collaterals Over the past six months, ICT has created few customer collaterals and brochures. The main purpose of these brochures is to be used as an informative tool to introduce ICT Systems to potential customers. No result has been reported Marketing Over the past months, ICT Systems has used marketing as an acquisition tool to send s to its database of sales leads to invite them to learn more about ICT Systems and their offerings. No result has been reported yet. 2.2 Target Market Analysis ICT Systems uses a segmentation approach to reach its targeted customers. ICT s customers are businesses who have offices in Vancouver that are categorized into two segments: small business and medium sized and enterprise/large-sized business segments. The number of people employed by an organization defines the size of its business. Small to mid-sized businesses normally have less than 500 employees while enterprise businesses have more than 500 employees. Majority of ICT s current customers are in the enterprise segment while small to mid-sized business segment represent a growth potential. 10

19 Enterprise or large businesses usually have their own IT function in house; they need ICT Systems consultants expertise when they have a special project and shortage of experienced staff to do the project. Some small to medium sized businesses do not have their own IT function while others have less than one or two IT staff, who are not specialized. These businesses tend to outsource their IT function because they want to focus on their core competencies. According to a study by IDC, improving productivity and increasing operational efficiency is one of SMB s top priorities. This finding also reveals that a large percentage of senior executives in Canadian SMBs hold a positive view regarding Information Communication Technology (ICT) and its value to their organizations. Business decision makers believe spending in ICT will improve their operational efficiency. Nevertheless, SMBs do not invest in hiring full time IT staff. IDC reports that almost 50% of Canadian SMBs have two or less full-time equivalent IT staff on their payroll. Internal and external drivers will push SMBs to increase their ICT investments. External drivers like a need to remain competitive will play an important role in influencing SMBs Information and Communication Technology buying behaviour. Also, internal drivers such as business growth and productivity/efficiency improvement will play an important role in SMBs ICT adoption process. Furthermore, SMBs usually want managed service because they do not have the staff dedicated to Network maintenance. Therefore, they rank system management as their first priority. Also, the need for efficiency is one of SMBs top concerns. Furthermore, a survey conducted by IDC in September and October of 2008 of about 200 firms in the small to medium sized business reveals that standard segmentation 11

20 of SMBs by size or industry is limited when it comes to targeted-prospecting. Filtering SMBs according to their attitudes towards Information and Communication Technology is very important in short listing prospects. Not all SMBs have the same attitude towards IDC. Only limited percentage of companies operating in the SMB market are leading edge when it comes to ICT. These companies usually have higher ICT budgets and revenue and budget growth expectations though They strongly believe that ICT is a strategic tool and are not afraid to invest in new technologies. They invest in ICT to manage cost and drive revenue. The internal divers that encourage SMBs to invest in ICT are a believe that technologies like Internet can transform their business, a need to concentrate on their core business while outsourcing their IT management, and a need to be flexible by decentralizing IT. External drivers are a need to be competitive in the market place, grow revenue, and be more efficient to manage costs better. SMBs are increasing their software and service spending while decreasing their hardware spending. Cost saving is the most important driver of spending on ICT, and companies will only spend on ICT during recession to reduce their costs and increase their efficiency. Therefore, it is important that ICT Systems target the right segment of SMBs to maximize its return on marketing and sales dollar spending. The company should carefully look at potential buyers characteristics and their attitudes towards IT to short list prospects that are more likely to buy. Enterprise needs, on the other hand, are slightly different from SMBs needs. Enterprise businesses know that they should align their Information Technology strategy with their overall business strategy. To keep pace with the rapidly changing today s 12

21 business environment, enterprise businesses know that they have to invest in ICT solutions. Investment in ICT solutions will help enterprise businesses to reduce their operational costs, unlock their employees potential, understand their customers needs truly, outpace their competition, and make a transition to a borderless enterprise. According to study by Forester, enterprises IT departments are working towards better alignment with other strategic business areas. IT spending will continue to be stable in all areas but special emphasis will be given to security, information management, and storage hardware. Enterprise decision makers would like to see ICT as a strategic tool that enables them to differentiate themselves from their competitors. They want to integrate technology into their core functional business segments to enable their business and their employees to be more efficient and productive. They want to invest in technology to improve the efficiency of their organization in order to achieve cost reduction. Therefore, they are looking for solutions that are financially feasible with a healthy return on investment (ROI). According to a study by Forester, enterprise businesses spend 70% of their time and effort on day-to-day maintenance and support of their IT systems. As the result, they do not find enough time and resources to invest in strategic planning and using their IT as a strategic tool. This represents a good opportunity for them to outsource some part of their IT function. IT outsourcing for enterprise does not mean to loose control of their systems 100%. It means that they could outsource all or part of their systems to those who master those areas. Forester defines this type of outsourcing as strategic right sourcing. In this model, IT professionals determine which functions they should hand over to service 13

22 providers and which function of their systems they operate themselves. This means giving each job to those who are the best at running those functions efficiently. This strategic model when implemented property could reduce IT costs significantly and free up the time of IT staff to focus on strategic planning. This is why today more and more businesses realize a need to outsource day-to-day maintenance of their IT systems. Strategic right sourcing drives greater IT efficiency. We will discuss how ICT Systems plans to capitalize on this need of enterprise businesses by offering network management services. In the IT market, there is a trend towards green IT. Even though sustainability projects have fallen down the priority list in 2009 due to economic downturn, most firms have continued to engage in green IT to take advantage of cost cutting opportunities it presents (Elis Min, 2009). IT equipment recycling and PC power management has been adopted by companies but little consideration is given to energy consumption. Research shows that enterprise is doing a better job at implementing green IT initiatives while SMB to mid market businesses are still behind. The main motivating factor that encourages organizations to engage in sustainability activities is the cost saving that produces. Today customers are looking for quality in services and products as well as financial visibility. Green IT is important but not yet mission critical. Economic downturn hampered the green initiatives considerations. However, providers can still promote sustainable offerings playing the cost saving message. 2.3 Economic Environment According to a study by IDC Canada, during recession Canada s economic health rests on SMB market because this is the segment that delivers the largest growth and 14

23 creates the most jobs. Even though SMB segment does not make the news, it is the backbone of the economy. IDC Canada believes that the health of SMBs will likely determine whether Canada can recover from economic downturn. A research study by IDC reveals that recession has stimulated demand for Information Communication Technology outsourcing. This study estimates the demand for outsourcing will continue to increase through end of In the economic downturn, outsourcing is seen as one of the best ways to attain sustained cost reduction. Companies cut costs by reducing internal IT spending and their number of full time IT staff. They want to redirect all their assets to core activities that prove to be beneficial to long-term efficiency of their operation. Therefore, they increase their spending budget on outsourcing because they want to concentrate on their strategic core activities. IDC research study shows that outsourcing demand increases significantly more in larger enterprise than smaller ones. 28% of large enterprises intend to outsource some of their IT functions versus 14% of smaller enterprises. Organizations expect their IT provider to be flexible and innovative and implement solutions that build a more efficient organization both short term and long term. Large enterprises even go as far as hiring third party advisors to review and judge the quality of vendors RFPs. And, they have a tendency towards multi-sourcing, hiring different vendors and IT providers. This shows that it is very important for ICT Systems to send a consistent and well though proposal to its prospects and leave no room for error. We will discuss messaging under the promotion tactic section of this plan. Another strategy that organizations use to cut cost during economy turndown is contract renewal. Companies see the IT contract renewal as a way 15

24 to save costs. They believe they can save costs by 15% to 20% through contract renewals such as adding or deleting scopes or term extensions. Outsourcing demand is driven as part of clients cost reduction strategy and expected to increase through late 2009 and through IT outsourcing demand expected to increase even more post recession. The reason is that companies want to apply their efficiency learning through depression in their future strategic business model and gain long-term benefits. This represents a good opportunity for ICT Systems to leverage its managed service offerings. We will discuss how ICT intends to improve and expand its managed services portfolio under the future product tactics section. 2.4 Competitors Analysis There are many Information and Communication Technology solution providers and hardware vendors serving Greater Vancouver area market. Giant telcos, small startup companies, and major networking infrastructure vendors all share the market. ICT Systems main competitors serving the same market are companies like Competitor A, Competitor B, Competitor C, and Competitor D. Telcos such as Bell Canada and Telus provide some of ICT Systems services, and infrastructure equipment providers like Nortel and Mitel are Cisco s main competitors. However, for the purpose of this plan, we only focus on analysing the direct competitors Competitor A Using Cisco technologies, Competitor A offers a complete set of ICT solutions for businesses. No pricing information is available. Competitor A is the fist IT provider in 16

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