Sample Essay on Microsoft’s Marketing Strategy

Microsoft’s Marketing Strategy

Summary

Microsoft Corporation, commonly known as Microsoft, is a multinational company located in America with its headquarters in Redmond, Washington. It was founded in 1975 by Bill Gates and Paul Allen, and the primary aim was to see the development and sale of BASIC interpreters for Altair 8800 (Beyazitoglu 2). Microsoft grew and rose gradually, and years later, it dominated the global personal computer operating system market, and this began with the inception of MS-DOS in the 1980s that was followed by the globally accepted Microsoft Windows, which enjoys a significant market share up to date. The company focuses on the development, manufacture, licensing, provision of support, as well as the sale of personal computers, consumer electronics, computer software and hardware, and related services. The company is best known for the production and sale of software such as Microsoft Windows operating systems, Internet Explorer, Microsoft Office suite, and Edge web browsers (Beyazitoglu 4). It has also ventured into the production, distribution, and sale of flagship hardware products such as the Microsoft Surface tablet lineup and Xbox game consoles.

There is no doubt that Microsoft is the largest software producer worldwide by revenue and in fact one of the most valuable companies with its key competitors being Apple and Google (Musolf 6). In fact, for several years now, it has remained one of the largest producers and suppliers of computer software and hardware worldwide. The company is responsible for the provision of licenses as well as the sale of PC operating systems in the US and throughout the world. The fact that Microsoft has monopoly power in the market for personal computer operating systems is irrefutable and this is because almost 80 percent of Intel-based personal computers worldwide use Windows operating system.

The key people at Microsoft are Steve Ballmer (CEO), Brian Kevin Turner (COO), Bill Gates (Chairman), Ray Ozzie (CSA), and Craig Mundie (CRSO). As of December 2010, the Corporation had approximately 89,000 employees who have been integral in the achievement of its objectives. In 2010, the corporation’s revenue was $62.484 billion, with its operating in the same year standing at $ 24.098 billion in the same year. It also recorded a profit of $18.760 billion, total assets of $86.113 billion, and a total equity of $46.175 billion. Major challenges facing Microsoft are how to counteract stiff competition from key competitors in the computer hardware and software industries such as Apple and Google and how to increase its profits while making better use of resources available at its disposal.

An evaluation of Microsoft’s strategic focus and plan, which include a focus on its mission, goals, core competency, as well as well as sustainable competitive advantage serves as the foundation of its marketing plan. Its marketing plan also focuses on the market-product focus, which includes an analysis of the corporation’s marketing objective, target market, and positioning. Moreover, Microsoft’s marketing plan focuses on the marketing program embraced, and this includes an analysis of its product strategy, price strategy, promotion strategy, and place strategy. The focus of the plan is also to the corporation’s financial data and projections, plan to implement the marketing strategy, and plan to evaluate and control the marketing strategy. It should be noted that evaluation of the strategy helps determine whether the strategy has been successfully implemented or not.

Strategic plan and focus

Mission

Every organization has a mission statement, which guides organizational operations and activities. Microsoft Corporation has not been left behind when it comes to having a mission to guide its activities and operations. Its mission is to work with and to help people as well as business worldwide to realize their full potential. It is at the forefront of meeting and satisfying needs and demands of customers through the provision of quality and a broad range of computer software and hardware products and services (Axson 87). With this mission, Microsoft has achieved most of its set goals and objectives such as increased revenue generation and profitability over the years. The mission has also guided its fight against stiff competition in the global market from renowned companies such as Apple Inc and Google.

Vision

Microsoft, like every other organization, has a vision that guides its day-to-day operations and activities. Its first vision was to ensure that a PC is available in every home. However, this was changed to the current vision, which is to empower people through great software, at any time, on any device, and at any place. Through this vision, the corporation aims at getting every workstation running Microsoft’s software onto every desk and every home (Orcullo 171).

Goals

The change of leadership, which saw Satya Nadella take the position of CEO at Microsoft, resulted in a reexamination of the corporation’s goals. With the new leadership, Microsoft has three primary goals that are:

• To oversee the reinvention of business and productivity process
• To ensure that the intelligent cloud platform is built to better its operations and activities.
• To ensure that more personal computing is created.

The above are non-financial goals although the corporation also has financial goals which are as follows:

• To obtain more finances to enable the expansion of the corporation’s stores as well as better and increase distribution and sale of products and services.
• To record an annual increase in revenue, operating income, profit, total assets, and total equity

The achievement of these goals would see Microsoft surpass its close rivals such as Apple Inc in terms of revenue generation and profitability. It is argued that rivalry between Microsoft and Apple Inc was heightened in 2011, when for the first time in 20 years, Apple recorded higher profits and revenues than those of Microsoft, and thus, the effective implementation of the above goals would prevent an occurrence of the same for Microsoft.

Core competency and sustainable competitive advantage

Core competencies of a company are considered more significant than its core technologies, and they help differentiate one company strategically from another especially competitors. One of the primary purposes of core competency is that it helps indicate the structure of a particular organization. In this case, in respect of core competency, Microsoft can be divided into seven families of products including Window, Business Solutions, Servers, Developer tools, Windows Mobile, MSN, as well as Xbox Game Console and Games (Lacher et al 4). Microsoft has successfully developed core competencies in the delivery of right services at the right time, and this has been achieved through strengthening Information Technology as business-aligned organization that is strategically focused. Also, it has developed core competencies through the embrace of technological innovations. Today, Microsoft is renowned for mapping IT applications, operations, as well as infrastructures into sets of services that are consistent and that offer support to the company’s goals (Lacher et al 4). Besides, these operations, infrastructures and IT applications have helped the corporation in the elimination of service delay, service delays, process inefficiencies, as well as seizing opportunities to take a competitive lead through the application of innovative ways. There is no doubt that other companies especially its key competitors cannot imitate the core competencies of Microsoft, and this is because customers already have a perception of the benefits associated with a broad range of Microsoft products. Moreover, Microsoft has developed core competency as it currently has a partner network through which businesses can showcase their expertise.

A sustainable competitive advantage of Microsoft Corporation is that it has embraced technological innovation, and this is through the delivery of the right products and services at the right time by strengthening IT as a business aligned and strategically focused organization (Ward et al 191). Another sustainable competitive advantage of Microsoft is that it has a Microsoft Dynamics CRM online application, which enables it to use a strategy to source its methods. The application has helped the corporation in improving its sales management and planning through setting up teams and territories that ensure organizational efficiency. The CRM online application has also enabled the corporation to enhance the coordination of tracking leads within one centralized system as well as assign leads and tasks on the basis of predefined rules.

Market-product focus

Marketing Objectives

Microsoft Corporation has multiple marketing objectives, which if achieved, would make it one of the leading companies in terms of profitability and revenue generation worldwide. One of its marketing objectives is to develop network marketing, whose achievement relies on the compatibility of each Windows product with other window products. Through this objective, Microsoft aims at ensuring that customers’ Office documents can be opened on different computers as several people are using Microsoft (Lacher et al 5). Another marketing objective of Microsoft is to ensure regularity of product launches, whose achievement relies on its presence almost everywhere in markets such as music, computer peripherals, operating systems, gaming, Cloud computing, and mobile phone market. By ensuring regular launching of its products, Microsoft aims at giving tough competition to the existing players or forces in the already mentioned markets, and this will help build up the corporation’s deep markets. Besides, Microsoft’s marketing objective is to establish a follower strategy based on innovations. Currently, one of the problems with its follower strategy is that it has rarely come up with innovation to attract customers (Ward et al 193). This is highlighted by the similarity of some of its software such as Microsoft Office Suite from 2003 to 2010. In the software, except for the graphics, everything else is almost the same for the products produced from year to year.

Also, there is little innovation when it comes to its hardware launched periodically, as evident in the iPod launched in 2001 and Zune, which was launched in 2006. The other marketing objective of Microsoft Corporation is to provide customer-focused products and services, and this is highlighted by the availability of help from the corporation’s staff both offline and online. For instance, the corporation has made it easier for customers to rejuvenate crashed window programs and operating system, and through this, it aims at attracting more customers who will help it realize its profitability and revenue generation objectives. Moreover, Microsoft has the marketing objective of building brand equity, and this is despite the fact that today, it is among the top 10 companies worldwide with brand equity, an attribute of its different consumers and business to business products. However, it still focuses on improving its brand equity, which will enable it to become one of the trusted household names worldwide.

Target Market

Due to Microsoft’s broad range of products and services, it has managed to expand its target market. The primary target customers are corporations, government bodies, and agencies, as well as individual consumers. The corporation’s target market can further be divided into two segments, which are lower end buyers with small businesses that serve regional or local firms and upper-end customers or buyers, which include large corporations and individual consumers who treasure and value name reputation. Currently, Microsoft enjoys a significant global market share, and this is because alternatives or other options in the computer software and hardware industries are limited. In fact, the reputation and image of Microsoft have played an integral role in expanding the company’s market. Essentially, with products such as the Xbox game, Microsoft’s primary target is young teens and young adults, who fall among the next generation with the most money to spend on luxuries and unnecessary items rather than on necessities such as food, mortgage, and bills. Businesses are also among the primary target markets of Microsoft, and the latter has made the needs and demands of the business target market by producing Windows professional rather than windows home premium, which is meant for individual consumers. It is important to note that Microsoft focuses on mass market and distribution, and this underlines the fact that it has customers all over the world.

Positioning

Through brand positioning, companies or corporations are likely to achieve a return on investment (Ferrell and Michael 199). Microsoft has leveraged on myriads of positioning strategies to attract target customers. One of the positioning strategies used by Microsoft is that it has consistently used the same logo as well as product description in all marketing platforms. This is an insinuation that what customers see about the company on print and mass media platforms is what they see on social media platforms such as Twitter, Facebook, LinkedIn, YouTube, and on the corporation’s website. With this positioning strategy, Microsoft has succeeded in attracting more customers, and a subsequent return on its investments (Ferrell and Michael 199). Microsoft has also leveraged on the positioning strategy of ensuring that its product brands complement and support each other. This coupled with the fact that the corporation has ensured that users find their products easily in all platforms have seen Microsoft become one of the most valuable companies worldwide. It has also leveraged on price positioning, which has seen customers access its products and services at rather affordable prices. Through this, Microsoft has managed to make significant strides in terms of profitability and revenue generation, and thus remains more competitive as compared to Apple, which is its key competitor in the computer software and hardware industry.

Marketing Program

Product Strategy

Microsoft is a household name when it comes to the production and distribution of high-quality computer software and hardware products and services. One of Microsoft’s products is computer software, which is a collection of computer programs and related data (Lancaster and Frank 24). These programs are fundamental to the operation of computers as they give instructions on what should be done and what should not be done. Research indicates that 80 percent of Microsoft’s total revenue comes from the sale and distribution of computer software. It is the uniqueness and high quality of Microsoft’s computer software, which make them acceptable in the global market. Window Vista is one of Microsoft’s computer software, and with features such as performance information and tools, search, sleep, and resume, as well as Windows ReadyBoost, it gives the Microsoft a competitive advantage over rivals such as Apple. Microsoft is also renowned for one of its computer software products, Windows 7. The latter is used widely by individual consumers, organizations, and government agencies due to its unique features. With Windows 7, everyday tasks are made simpler. It enables a user to find a file, connect to a given network, and use Snap to arrange several windows side by side. Windows 7 also has other features such as fast sleep and resume, location aware printing, Internet TV, and play to, which have all helped give Microsoft a positive image when it comes to product strategy.

Another product from Microsoft, Windows XP, is an earlier version of Windows, and the fact that it gives users the freedom to do whatever they are interested in at home or work gives it an upper hand over other products from rival companies. Besides, Windows XP is simple, reliable, and secure, perspectives that underline the steps made by Microsoft when it comes to product strategy. Microsoft is also renowned for Windows Live, which provides a set of services and brings the online world together. It also helps users find the information they need and the people they care about. The fact that it has powerful protection also highlights the significant strides made by Microsoft in terms of product strategy (Lancaster and Frank 35). Other software products from Microsoft include Internet Explorer 8, which makes users’ browsing experience faster, easier, and safer, Windows Multipoint Server 2010, Windows Defender, and a wide range of business software including Microsoft Dynamics ERP & CRM, Cloud services, Bing Maps, Microsoft Amalga, Microsoft Forefront, Microsoft Office Live, Microsoft Online Services, and Windows Small Business Server (Shelly and Misty 525.

Price Strategy

One of the secrets behind Microsoft’s success is the fact that it leverages on sensitive pricing, which has ensured the attraction of customers. Recently, the corporation implemented a pricing strategy that would see it price subscriptions and licenses for software based on how and who uses them rather that charging them on a per-device basis. Another price strategy embraced by Microsoft is that which has seen it cut prices on numerous fronts for its products ranging from newfangled Internet services to flagship Windows and Office products (Lancaster and Frank 29). The embrace of this strategy by the corporation was aimed at counteracting the rising stiff competition in the global market coupled with the economic downturn. Although the move of lowering prices is often considered risky, Microsoft embraced the same with the hopes of increasing the sale of existing products while making fast headway with its new products such as Windows 8 and 10. The company also aimed at gaining substantive market share through the reduction of product prices. There is no doubt that the pricing strategies embraced by Microsoft have helped it gain significant market share in recent years surpassing its fiercest rivals such as Apple Company.

Promotion Strategy

Product and service promotion are vital for companies that aim at gaining market share, as well as increasing revenue generation and profitability. It is true that Microsoft has not been left behind when it comes to the promotion of its products and services. In fact, in recent years, Microsoft has not been shy in spending huge sums of money on advertising most of its products and services against the competition. In 2011 alone, Microsoft spent approximately $100 million to ensure that customers knew about one of its products, the Bing search engine (Thurrott and Rafael 909). Apparently, with the technological advancement witnessed in recent years, people are shifting to the use of Internet to access social media platforms, and this has seen Microsoft promote its products largely on social media platforms such as Twitter, Facebook, LinkedIn, and others. The corporation also has a website, which can be accessed by customers with the aim of knowing more about Microsoft’s products and services, and this is also one of the corporation’s promotional strategies. Moreover, Microsoft leverages on other platforms such as print and mass media to promote its products (Thurrott and Rafael 910). One of its products the Windows Phone has been promoted extensively through mass media and this has made most customers aware of its features and advantages.

Place strategy

Microsoft is a multinational company, and this means that its products and services are available to customers worldwide. It is located in countries such as Argentina, Australia, Brazil, China, Japan, North America, Singapore, South Africa, US, United Arab Emirates, UK, and several others. The corporation’s customers can have access to products and services in the mentioned locations. However, Microsoft leverages on online platforms such as its website to distribute its products to customers (Lancaster and Frank 35). In fact, most of its products such as the Microsoft Office Suite can be purchased through its website, a perspective that has helped the company gain competitive advantage.

Financial Data and Projections

It is argued that Microsoft Corporation is one of the most profitable companies worldwide having a significant competitive advantage over rival companies such as Apple and Google. In 1986, when Microsoft went public launching its initial public offering (IPO), it made a significant stride towards profitability. In 2011, Microsoft Corporation made total profits of $5.2 billion on revenues of $14.5 billion. This was the first time in 20years that Apple Inc surpassed Microsoft in terms of profits and revenues. Research indicates that in the same year, Apple Inc recorded profits of $6 billion on revenues of $24.7 billion. The fact that Apple surpassed Microsoft regarding profits and revenues in 2011 was attributed to a slowdown in PC sales as well as Microsoft’s losses in Online Services Division, which entails its search engine identified as Bing. On July 2012, Microsoft recorded its first ever quarterly loss, and this was despite recording record revenues in the same year. Its net loss for the 2012 fiscal year was approximate $492 billion. In 2014, Microsoft had a market capitalization of $314 billion, and with this, it was considered the 8th largest company worldwide in terms of market capitalization.

For the fiscal year ended June 2015, Microsoft recorded revenues of US$93,580 million, and this was an increase of 7.8 percent from the figure posted in the fiscal year 2014. Moreover, for the fiscal year 2015, the company’s operating margin was estimated at 19.2%, a significant drop from the 31.8% operating margin in fiscal year 2014. It should also be noted that Microsoft recorded a net margin of 13% in the fiscal year 2015, a drop from 25.4% net margin recorded in the fiscal year 2014. For the first quarter ended September 2015, Microsoft recorded revenues of US$20,379 million, and this was a significant decrease of 8.1% from the revenues recorded over the previous quarter. Microsoft’s financial performance from 2011-2015 is as follows.

Fig 1:  Microsoft Corporation, Performance Chart (2011-2015)

(Source: Global Data)

Microsoft Corporation’s financial projections of between 2010 and 2018 are as follows.

Fig. 2: Microsoft Corporation Financial projections (2010-2018)

(Source: http://www.4-traders.com/MICROSOFT-CORPORATION-4835/financials/)

Implementation Plan

Plan to implement the strategy

The implementation of Microsoft’s marketing strategy will leverage on three perspectives, which are the reexamination of the status quo, restructuring, and embracing innovation.

• Reexamination of status quo

The status quo implies that there is acceleration in the pace of change as the customers’ computer needs and demands also move beyond the PC towards other intelligent appliances and devices. As such, to remain competitive in the global market, the implementation of Microsoft’s marketing strategy will prompt it to overlook the status quo.

• Restructuring

This is one of the implementation strategies that help organizations, in this case, Microsoft, to get back to competitive and profitable ways. It is a perspective that happens late in the cycle, and as such, to implement the marketing strategy, Microsoft’s key stakeholders will be obliged to look inward into the corporation, abandon or do away with channels or lines that are not functional, and ensure that the corporation gets back to high potential and high-quality products.

• Embrace of innovation and new technology

To implement the corporation’s strategy, it will be imperative for the stakeholders involved to take leadership positions and initiative that will oversee the addition of something different. The different or new perspectives should create value and provide solutions to the current problems or challenges faced by the corporation.

Other implementation strategies that will be embraced are as follows:

• The creation of several marketing positions
• The development of a system of marketing information to oversee the patterns of product purchase and customer satisfaction
• Analysis and reporting of the results of surveys focusing on customer satisfaction
• Reestablishment of the objectives of the marketing team for Tesco’s next financial year

 

Evaluation and Control

Plan to evaluate and control the strategies

To evaluate and control the aforementioned implementation strategies, the corporation’s stakeholders will oversee the comparison of the actual as well as planned activities on a monthly basis after the strategies are implemented. Second, the project teams that will be created to oversee the implementation of the corporation’s strategies will have the responsibility of determining the necessary changes as well as operations during the implementation of the strategies identified above.

Works Cited

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Beyazitoglu, Fuat. Business Marketing – the Case of Microsoft. München: GRIN Verlag GmbH, 2010. Internet resource.

Ferrell, O C, and Michael D. Hartline. Marketing Strategy. Mason, Ohio: South-Western Cengage Learning, 2014. Print.

Lacher, Stefan, Florian Roth, David Schumacher, and Florian Keller. Business Report Microsoft Xbox. Marketing Concept and Strategy. Munich: GRIN Verlag GmbH, 2004. Internet resource.

Lancaster, Geoff, and Frank Withey. Marketing Fundamentals 2007-2008. Routledge, 2007.

Musolf, Nell. Story of Microsoft. Place of publication not identified: Jaico Publishing House, 2013. Print.

Orcullo, Norberto A. J. Fundamentals of Strtegic Management. Manila, Philippines: Rex Book Store, 2008. Print.

Shelly, Gary B, and Misty Vermaat. Discovering Computers: Fundamentals. Boston, Mass: Course Technology, Cengage Learning, 2008. Print.

Thurrott, Paul B, and Rafael Rivera. Windows 7 Secrets. Indianapolis, Ind: Wiley Pubilshing, 2009. Internet resource.

Ward, Keith,  Andrew Kakabadse, and Cliff Bowman. Designing World Class Corporate Strategies: Value-creating Roles for Corporate Centres. Routledge, 2005.