i) Introduction
Dematic is a global leader in intelligent logistic and material handling support for firms all over the globe, it produces logistics equipment such as conveyor systems, storage systems, palleting systems, transportation systems and others products, as well as supports and installation services for its clients.
Dematic has subsidiaries all over the world from the USA to the Far East and originally was started up in Germany in 1819 and has evolved from then through takeovers and name changes to become current day Dematic.
Firstly We need to understand what is meant by the term ‘entrepreneurial marketing’ Sonny Nwankwo and Tunji Gbadamosi state that “EM (entrepreneurial marketing) describes marketing activities with an entrepreneurial mind-set, irrespective of age or size” (Sonny Nwankwo and Tunji Gbadamosi, 2011, 13). This is what business’s do to make them stand out from their competition and how new ideas and thinking out of the box benefit its business marketing aims.
Applying Entrepreneurial Marketing to Dematic as a business we need to look at the EM construct by Schindenhutte and use this to analyse the entrepreneurial strategies implemented by Dematic LTD in the logistics industry.
ii) Seven dimensions and strategic implications
According to Alain fayolle “the product or service itself may or may not be new or unique but value must somehow be infused by the entrepreneur by securing securing and allocating the necessary skills and resources” (Alain Fayolle, 2007, 44)
Staff are encouraged to promote trust and cultivate a good relationship with their clients, such as project managers are actively encouraged to befriend their clients so that they can have a more open and better communicative relationship which allows Dematic to provide a better and more well-rounded service and helps the customer relationship management (CRM) part of EM.
A part of value creation for Dematic would be their design process of the logistics equipment they provide and install. The fully customise each different job they do not just initial design and installation but they customise every from from the language the machines use to the transportation methods they use to move each unit in a wearhouse.
Social media adds value to the business as it creates a closer relationship between clients and business, as adopted by Dematic, although in Dematics case it has underutilised social media in terms of it hasn’t promoted these features of its marketing plan which it could do to promote better relationships between itself and clients as well as keep them up-to-date with news on the business.
Dematic use Co-creation at the core of its value creation strategies as it tries to develop its products and services combined with its client business requirements to provide each with a end product that meets all their requirements.
They also provide after sale services to upgrade, modernize and maintain their products installed. All of these methods are to improve the quality and a service of Dematic.
Innovation goals have been set according to the employee within the business “we set a target of a profit of 20% on any contract we take up and we set a time limit depending on the contract size” (appendix 4) Dematic use service dominant logic as this suits their core competances skills and knowledge that give them a competitive advantage
Within the business there is risk in the price of the product because the price is customised and co-created in the process of negotiating the work contract. The risks with the price are that it can change when the circumstances of the contract chance e.g. As a redesign of any of the products Dematic provide may not meet requirements. “The ability to capture customer needs and to tailor provided solutions accordingly in the business to business space – in particular for increasingly “servitizing” business. This is a growing importance of customer intimacy is driven by fast development” (francois habryn, 2012, abstract) Other threats such as the system that Dematic install may cost more to install through subsidiary firms that change the prices which dematic employ.
Dematic place a big emphasis on promotion and community relationships, as their clients tend to be repeat business they try and build a relationship with clients after the job has been completed as well as before with them taking clients out for meals and client activity days as an after job relationship building strategy which is can be construed as gurilla marketing as its not in direct competition with competitors in the market. This is high risk as if there is limited business then if you make a mistake in that relationship it can a large effect on the business’s trade and also is a large cost to the business.
The relationship with competitors is a risk also because Dematic try to avoid price wars with competitors, this limits the business opportunities because they do not want to compete directly with their competitors which will strengthen their threat.
As dematic have a good idea of who their target market is already they see business community communication as key as it is what they base their business model around, co creation and value adding though understanding what their client community need
Threats to community happiness with the company are reputational risk such as work not being completed on time or not doing what it is designed to do which is a risk with customisation.
Key to Dematics business plan as they state on their website “As business leaders are well aware, innovation is a major competitive driver. Dematic recognizes this and continually strives to deliver innovative solutions that lead to a competitive advantage.” (http://www.dematic.com/innovation) Dematic have over the years it has existed created new systems to suit the customer needs such as Automated Storage and Retrieval Systems, pick and put systems, sortation systems and other systems that suit customers’ requirements.
Innovation within dematic is a large part of their business marketing strategy not just with products but their innovations cover solutions to problems that are unique to a customer such as spacing within wear housing and logistical transport all over the world.
Dematic don’t just supply the equipment and system solution but are also active in teaching and creating solutions for other companies to use and going round the globe running seminars that help provide customer communities with extra help with customer questions, such as closing the supply chain gaps, better logistical time management and others areas of the business. These create good opportunities for marketing as it shows how the company sees the future issues and its solutions it can provide customers.
As Dematic is a global brand it has the option of where it would like to conduct business but it doesn’t have the option of where in the countries it chooses to operate so its solutions to customers needs to be innovative and creative to meet those requirements. Dematics orientation is toward more to service their customer but they also see creativeness and innovation as a key aspect of their business and use this in their marketing plan as it is a competitive advantage.
The leadership of Dematic actively encourage the strategic and cultural alignment of dematic to that of innovation though interaction with the customers and they also look at outside sources through lectures and seminars, Dematic could still utilise more external sources for influences on their innovation policies such as looking at similar industries for products they use that could be beneficial to their product range
Customer intimacy is very important for Dematic as this is the way it creates builds an idea of the requirements of their customers. They customer meetings to co create, customise and ultimately add value to their end product and service though customer interaction.
Dematic use community for customer relationship management through weekly customer meetings where the two project management teams from Dematic and the client company to discuss the project and potential problems that will arise from the job. They use this time to co create solutions for issues that have come up during the previous week.
Dematic promote single sourcing which is good relations between the two management teams so that it builds a good image of the company for their customer thus creating opportunity for repeat business.
Customer intimacy is vital for price because good relationships between the customer and dematic means that they could be given a better price for a job and also when dispute erupted clients are less likely to go to financial fines for work uncompleted. Customer intimacy also allows for an insight into the customer needs and allows for innovative ideas to identify and solve customer needs. Consumer insight is critical to the Dematic business plan as they heavily rely on this as a main source of information for market research and their main source of innovation and value creation ideas comes from building a relationship between Dematic and the customer. This could be cutting themselves off from potentially very good information sources from external sources such as other business’s that are involved in the market or from getting new technologies from the science research industries for example neuroscience and Nano technologies to help with the picking process within warehousing sites
“firms must strike a balance between innovation activities between pioneering initiatives that lead the market and quick, creative adaptation to changes in market circumstances” (Harold P. welsch, 2004,99)
Dematic look at companies they work with currently to look at for new opportunities for the business to make sales aswell as innovation. They also use innovation to provide the opportunity to provide after contract completion services such as maintenance jobs.They use their customised needs to develop new ideas that can be generalised and installed on every job they have which is an opportunity as It adds to the core competitances and creates opportunities through unique ideas. They look to modify and improve not sure product but current structures of the logistics chain they install to optimise they process and always look at modifying and improving their service and products. As they are always looking at new ways of working and changes in knowledge or market changes such as the economic downturn or new technologies they look to be at the leading edge of these new innovations to keep a competitive advantage a head of the unexpected.
Dematics main marketing strategy is creativing value through innovation and customisation and to do this they have to be at the front looking for new opportunities not just within their current market to provide a good service and keep competitive advantage but also they need to look at entering new markets.
You define proactive marketing as “proactive marketing may resolve consumer problems as it strives for greater rewards in an open market system” (A.coskun samli, 1992, 111)
Dematic use procativeness to actively go out and find co creative solutions for companies, this could involve new or adaptations of old products. Dematic don’t look out for underground innovation as it is a Business to business enterprise so the main innovation is orientated toward providing the customer with a solution to their unique problems, although dematic do encourage innovativeness from their workforce and contractors. They have sales representatives that are reactive and well as proactive in the sales environment.
Dematic do promote themselves to their target market but the weakness is they are scared to upset the balance between them and their competitors and they are worried about a price war, they need to expand their target market and be more proactive in looking for different market that suits their core competences which is high tech logistics, they could target more construction supply orientated markets such as CAT then their current more service orientated current customers such and ASDA and NEXT and look to provide construction firms with logistical equipment. They could also target more government projects for defence as they have looked at doing small work for the minister of defence before
Dematic has the process in place to support innovation thinking and has a flexible approach to each customer as each contract is unique so the each innovative idea can be implemented to each different client as they need and they have a flexible approach to staff as they are not tied down to a single project so are able to go between different project and provide their skills and the structure within the business supports this. Dematic has settled on the strategy of innovation within their market and have set a system and structure to allow Disciplined implementation of this strategy as they see it as the way to keep competitive advantage over their competitors without directly confronting them.
Resource leveraging can “also described by William D. Bygrave et al as “both traditional and non-traditional market research can be used to assess opportunity. Often entreprenuers do not conduct extensive marketing research because time and resource constraints, however entrepreneurs can over come some of these constraints by being creative in collecting information” (William D. Bygrave et al, 2009 ,86)
Some of these resources Dematic use already existing resources like core competences and skills already within the business to create new ideas which have to be first understood, from the management teams right down to the bottom of the business staff structure, each member of staff could be used to innovate new technology ideas or bring in new and better service techniques to keep competitive advantage. Dematic try and utilise people core skills as much as possible but they don’t try and build focus groups and cultivate new ideas as much as they could which needs to be addressed and new internal research and development plans need to be put in place.
As well as looking externally for new innovative ideas for the business they use core competences for new markets they have identified “because of resource constraints, identifying appropriate target market early on is critical” ( William D. Bygrave et al, 2009 ,88) they can get straight into that new market they have expanded into. Dematic use their own research methods such as one on one interviews and focus groups with existing customers as way of creating new ideas as well as meeting the customer demands when assessing where mistakes have been made when adding value to the service. This also gives a Industry foresight as to where the industry is potentially going and where to get infront of the competitors with the projection of trends within the industry market. Resource leveraging also allows for better budgeting as this can be a treat if not properly controlled. Long term capacity for sustainable innovation, Dematic is Looking at budget restrictions within the business they have set out a budget that takes in projected trends and current innovational thinking that is “ feasible in the long term to benefit the company and allow Dematic to keep market share” ( Neil Dolby project manager, 2012 appendix 5).
iii) ICON matrix
The ICON Matrix (appendix 1) is used to establish and place an organisations Entrepreneurial marketing focus. The ICON matrix has four headings: follower, interact isolate and shaper
In order to place Dematic on the ICON matrix I conducted a questionnaire (appendix 2) with an employee to identify the key attributes of Dematic and I also got them to place the Dematic on the ICON matrix according to what they believe to be correct which the employee is quoted as saying “I believe we are in the interact section of the ICON matrix as we try to interact with customers as much as possible because it gives a good potential to add value to the business and give us a competitive advantage” (appendix 3)
Dematic’s focus is firmly on innovation, customisation and value adding to keep its competitive advantage, this leads Dematic to be searching for new ways to serve the customer and innovate its service and products to meet the requirements of the customers to keep customers long haul as traditional pricing competition won’t work as they try to avoid pricing wars with competition and instead focus on brand loyalty through innovation and customer relationships, this is reinforced by the questionnaire (appendix 2) as it is clear that they are looking at building relationships to keep competitive advantage and the best way to do this is improve service as well as innovation within the company.
iv) Conclusion
after conducting my research into Dematic I have found many attributes and aspects of the business that are very entrepreneurial and show the Dematic think outside the box, although in some aspects of the business Dematic has limited its own reach within the market to avoid direct competition with its competitors it has used entrepreneurial marketing and innovation to conduct more gorilla marketing campaigns within its existing market share. The advantage of Dematic according to marc Longman
“it should be noted that traditional marketing frameworks narrows the managers vision” (marc longman, 2011,9) and they have used entrepreneurial marketing to look at new and different ways to innovate and therefore keep competitive advantage.
As Dematic is a interacter within the ICON matrix Dematic tend to allow the companies it works with shape its innovation and therefore entrepreneurial ideas as they are the main source of information, this is a weakness of the company as it relies way to much on one source of information and needs to expand its research and development and stay ahead of their competitors whilst also looking to transfer their core competences to new markets and expand the companies reach, they need to evolve to keep competitive as a business for example they could move into working with the government in their logistical needs for the Ministry of defence or other government contract of which they have experience in already.
Considering all this information and research I have come to the conclusion that Dematic has Entrepreneurship at the heart of its business strategy from value creation to research of the next market trend, taking this into account they still have areas to improve especially if they want to grow as a business and for their strategy customer service is a vital part of their business as well as expansion and therefore need to keep these areas improving to keep and expand current and new markets.
By Andrew Dolby
v) Bibliography
- Entrepreneurship Marketing: Principles and Practice of Sme Marketing By Sonny Nwankwo and Tunji Gbadamos
- http://www.dematic.com/innovation
- Customer intimacy analytics by François Habryn
- Entrepreneurship and New Value Creation: The Dynamic of the Entrepreneurial Process by Alain Fayolle
- Social Responsibility in Marketing: A Proactive and Profitable Marketing Management Strategy by A. coskun samli
- Entrepreneurial Marketing:
A Guide for Startups & Companies With Growth Ambitions
- The Portable MBA in Entrepreneurship by William D. Bygrave and Andrew Zacharakis
- Entrepreneurship: The Way Ahead by Harold P. Welsch
vi) References
- Sonny Nwankwo and Tunji Gbadamosi, 2011, 13
- http://www.dematic.com/innovation
- François Habryn, 2012, abstract
- Alain Fayolle, 2007 ,44
- A.coskun samli, 1992, 111
- marc longman, 2011,9
- William D. Bygrave et al, 2009 ,88
- William D. Bygrave et al, 2009 ,86
- Harold P. Welsch, 2004 ,99
Andy Dolby 