Marketing Mix in Ports
Logistics Management Due Date: Word Count: Abstract This essay investigates the Port of Long Beach (POLL) with the aim of identifying the business and marketing environment and ascertaining its major marketing opportunities, threats, strengths and weaknesses.
Based upon this internal and external environmental evaluation, the up’s of the extended marketing mix are analyses in relation to Poll’s current marketing strategy - Marketing Mix in Ports introduction. Finally, suggestions on how Improvements to Poll’s marketing strategy, with specific reference to the analysis of he extended marketing mix are proposed and the impacts of such suggestions are detailed. Research comprised of academic literature, Industry Journals, reports and websites In relation to the organization Itself and Its affiliates.
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What was found was that the Port of Long Beach’s key marketing strategies were based upon environmental stewardship, community, Industry and government relations, Infrastructure and transportation, trade and commerce and organizational effectiveness. It was also recognized that the marketing strategy that POLL employ Is highly sophisticated, covering all facets of the extended marketing mix. Poll’s facilitating effective delivery of service to their major customers, East Asia, which accounts for 90% of its throughput.
POLL was analyses and segmented according the up’s of the extended marketing mix. Its key marketing strategies included environmental stewardship, community, industry and government relations, infrastructure and transportation, trade and commerce organizational effectiveness. POLL have focused this strategy, in conjunction with partnerships on their customer base, primarily East Asia which accounts for 90% of trade and also consumers within its local hinterland. Finally, changes to Port of Long Beach’s marketing strategy are put forth and also the potential impacts of such changes are detailed.
Table of Contents Abstract Contents Price Process Evidence Introduction ii Table of iii Introduction 1 Task 1 1 Task 2 3 Product 4 4 Promotion 5 People 5 6 Physical 6 Task 3 7 Conclusion 8 References 10 The rise of globalization and subsequent increased freight volumes has required seaports to become customer-focus oriented, proactive and adaptive in a highly competitive freight market, encouraging trade facilitation both within the port wrought its logistics and supply chain and internationally (Cannon 2004), (Cannon 2008), (Strategic Plan 2009).
It follows then that seaport marketing must also develop and adapt in order to create value and also customer satisfaction. This essay will investigate the Port of Long Beach’s (POLL) overall business from a marketing perspective, profiling the industry, the markets within the industry, its customers, this evaluation, the up’s of the extended marketing mix are analyses in relation to Poll’s current marketing strategy. Finally, suggestions on how improvements to Poll’s marketing strategy, with specific reference to the analysis of the extended marketing mix are proposed and the impacts of such suggestions are detailed.
Task 1 Summaries key organizational and marketing information from your Assignment 1 Case Report, in order to provide the context for your response to Questions 2 and 3 below. Pollinator & Khakis (2011) suggests that When shippers are confident about the volumes of cargo they will need to move or they feel that transport is of too great strategic importance, they may decide to take the shipping risk themselves’. Whilst POLL do possess fully automated facilities, they do not do so in partnership with any major shipping lines.
The absence of any major partnership agreements has left the door open for POLL to sign such agreements with Orient Overseas Container Line (COOL) and Mediterranean Shipping Co (MASC.), ensuring that the majority of all cargo owned by MASC., COOL and their alliance partners will now pass through Poll’s terminals and not Poll’s (Porter 2013). The impact of the partnerships has been immediately reflected through a 10. 1 percent increase in container throughput in the second quarter of 2013, which simultaneously saw a 9. Percent decrease from POLL (Canada, California Ports Grow West Coast Market Share 2013).
Newly developed on- dock rail facilities, gray chassis pool and Green Port Gateway have greatly improved the ports competitiveness and efficiency whilst allowing for greater network connectivity through to east U. S. As far as the Ohio River (Port of Long Beach), (UNCLAD 2013). Kettle, Brown, Burton, Deans & Armstrong (2013, p. 243) states ‘Business buyers are influenced heavily by factors in the current and expected economic environment’. This statement has never been more evident than in hipping following the Global Financial Crisis (SGF) in 2008/2009 and more recently the European debt sovereign crisis.
Subsequent austerity measures have seen a shift in trade routes from Asia to Europe now heading to the west coast of the U. S. , placing POLL and POLL in primary position to receive increased volumes of cargo (UNCLAD 2012). POLL is aware of its impact on the environment and have answered with their award winning Green Port Policy, which seeks to reduce and eliminate the pollution generated by the port. POLL wish to not only be the busiest and most efficient port in North America, but also an environmental innovator and leader (Port of Long Beach 2013).
Critically evaluate the marketing mix of your chosen organization, using relevant marketing theory. The advent of globalization and the subsequent increase in seaport competition has required seaports to differentiate their product through the provision of value-added services and continually evolving marketing strategies (Cannon 2004). Port of Long Beach’s key marketing strategies were based upon environmental stewardship, community, industry and government relations, infrastructure and transportation, read and commerce and organizational effectiveness (Port of Long Beach 2013).
PRODUCT The product of a port can be separated into its core product and its actual product (Kettle, Brown, Burton, Deans & Armstrong 2013). POLL seeks to create value and competitive advantage through its complex and highly integrated service offering, enabled through its cargo handling services and value-added services. POLL possess both dedicated container and bulk cargo terminals, with supply chain capabilities that allow network access as far as the Ohio River.
Network connectivity is enabled pacifically through on-dock rail, across 10 piers and 80 berths that are serviced by 66 post-Panamas gantry cranes, allowing for efficient transshipment and storage of cargoes. Channel and berth depth have been deepened in order to accommodate many of the larger container vessels capable of carrying 13,000 TIES. POLL encourages trade facilitation through its harbor services, tug/towing, piloting, consulates, marine surveyors, U. S. Customs, freight forwarders, customer brokers, and shipping agents.
Supporting services such as waste disposal, medical facilities, tortes and bunkering are also available. Additionally, POLL provides value-added services such as cold storage and bonded warehousing (Port of Long Beach 2013), (Strategic Plan 2009). PLACE Place of the product involves company logistics and marketing activities concerned with delivering the company’s service. A ports location is imperative to its ability to attract and retain customers. POLL is situated in the heart of the most populous extensive hinterland access, allowing it to be served by 140 shipping lines with connections to 217 seaports.
Poll’s location and network connectivity allows for the shiest chance of frequency, reliability, profitability and relative convenience. High traffic volumes of its major competitor and harbor neighbor, POLL, results in increased traffic flows and congestion that would otherwise belong to POLL, however POLL is able to reduce this effect as five of Poll’s container terminals are connected with on-dock rail facilities, that increase the efficiency of traffic flow and reach of the port past the immediate through to the extended hinterland in the east U.
S. (Cannon 2008), (Kettle, Brown, Burton, Deans & Armstrong 2013) (Port of Long Beach 2013), Strategic Update 2009). PRICE Price is the amount of money the customer has to pay to obtain the product (Kettle, Brown, Burton, Deans & Armstrong 2013). It is difficult to compare port tariffs among ports accurately because of diversity in their systems and regulations, the existence of pricing by long-standing agreements and the influence of the exchange rate. This is indicative Poll’s Tariff No. , which continually states that tariffs and charges are assessed in accordance with and based upon each and every of the limitations, agreements, covenants and conditions set forth’. POLL, however, does adopt a mix of efficiency pricing and relationship pricing, as each strategy is specifically applied to the type of customer and relationship. Efficiency pricing applies to customers requiring the lowest available prices. This pricing strategy is more applicable to short-term transactional based customers. Relationship pricing is offered to those that are either profitable in the long-term or have the clear potential to grow.
Port charges encompass navigation, berth and cargo operational services, all of which are either based on size of ship, time in port or size/volume of cargo. Other business related costs include real estate, licensing and management services incurred from or by port-related services (Berry & Hydra 1996), (ESCAPE 2002), (Port of Long Beach 2013) PROMOTION Promoting a port is suggested as being a means of communicating with current and potential customers, with its purpose being to raise awareness of what the port offers and to influence customer attitudes and behavior towards the port (Bernard 1995), (Somers and De Wiled 1997).
POLL seeks to promote itself through the development of a positive brand image, conveying network connectivity, sailing frequency, liability, service quality and professional management (Branch 1998), (Port of Long Beach 2013). POLL has formed partnerships with leading European and Asian shipping companies, each of which are part of shipping alliances that allows it to promote its services globally (Porter 2013). POLL further promotes itself through its website, annual reports and strategic plans, outlining its clear directive for the future, one that balance their role as a facilitator of international trade with our strong partnership.
PEOPLE Cannon (2008) states ‘Establishing a relationship with a customer and building loyalty emperies two parts, the initial marketing to attract the right relationship over time so that the financial and other objectives of both parties are achieved. ‘ It follows then that marketing communications play an important role in customer relationship management. POLL have a clear focus on employing talented and motivated people, with the aim to empower them at all levels that encourages them to develop and enhance the relationship in order to maintain customers. Gumminess 1994), PROCESS Customers migrate to other service providers when the process is poorly managed and lets them down (Kettle, Brown, Burton, Deans & Armstrong 2013). In order to lessen the risk of losing competitive advantage, customer relationship management within ports has evolved into the development of partnerships. Decisions by POLL marketing and management are indicative of this evolution with the recent contractual arrangements with COOL and the subsequent development of Terminal Operating Shipping Lines (TOSS).
Vertical integration allows COOL to exert market power through upstream or downstream integration, whilst POLL benefit from the resultant higher volumes of cargo and technologically advance cargo systems, improving service delivery (Bishop 2009) (Porter 2013). PHYSICAL EVIDENCE Services are mostly intangible. Thus the meaning of other tools and techniques used in marketing is important as customer tend to rely on physical cues to help them evaluate the product before they buy it (Kettle, Brown, Burton, Deans & Armstrong 2013) (Marketing Teacher 2013).
POLL and the local government have both invested heavily in regards to the internal and external environments resulting in aesthetically pleasing views both inward and outward from the port. Restaurants, tourist shops, parks, bikes and public transport facilities lie directly adjacent and opposite POLL, increasing the ports community integration and acceptance. Such external projects, matched with modern, sophisticated internal infrastructure projects are becoming increasingly attractive to all stakeholders and customers, as POLL leads the way in efficiency and environmental stewardship, both domestically and internationally.
How could your chosen organization improve their marketing mix in view of the evaluation you conducted and the strategies you recommended in your Case Report? Whilst POLL have invested heavily in their own employees and long-term customers, it seems that they could do more in relation to the greater public. The greater public, whilst benefiting from increased trade volumes, efficiency, environmental standards and community-friendly amenities, are not utilized in their full capacity. Increasing public involvement within the port has many benefits and repercussions, should issues arise.
Cannon (2008) propounds that port developments are hampered by community concerns and the need for environmental performance, which is mirrored by Giuliani & O’Brien (2008) who state that citizen concerns about ports environmental impacts shape public policy, which can lead to policy intervention and increased costs or loss of customers. Increased involvement allows the public to take a vested interest in the operations of the port, boosting public perception, thus allowing for greater public investment and increased brand image, greatly reducing the potential for public backlash should negative publicity in regards to the port arises.
The development fully automated facility in conjunction with private investors, MASC., COOL and their alliance partners, could discourage competing shipping lines, not involved in such alliances from investing in POLL, and in some instances lead to discriminatory treatment. Bishop (2009), states ‘Ports and ocean carriers may also get onto conflict because of resource scarcities, for instance when dedicated terminals are allocated to a single shipping line, hence pushing other carriers to operate via ports elsewhere’.
POLL could adjust their strategy in relation to such firms by taking them from transactional based customer and developing customer relationships. Whilst this strategy may not be applicable to all smaller sized shippers, it is through the development of relationships with medium to larger sized shipping lines, not a part of shipping alliances, where POLL could increase market share whilst at the same time decrease POI-As competitive advantage. The U. S. Has replaced Europe in relations to exports, however the increased volumes can have both a positive and negative effect on hinterland connections with the rest of the U.
S. The development of infrastructure and processes within the port are only as effective as its network connections with the hinterland. Ensuring network inevitably improve its perceived port efficiency to an Asian, global and domestic markets that demand it. Although rising cargo volumes can create congestion within the vast networks connecting POLL with its hinterland, an opportunity lies within to market to major injecting intermediate and multimedia firms.
Forming alliances or partnerships with such firms could secure reliability through the supply chain into the future and in turn reduce costs to importers, increases perceived reliability in the Asian market and also increases appeal and potential for importers to utilities the facilities POLL has to offer. The promotion of high efficiency and reliability to the East Asian consumer base that accounts for 90 percent of Poll’s container throughput could prove the difference in perceived competitive advantage, resulting in cargo volumes transferring from POLL to POLL. Conclusion
The Port of Long Beach and the way in which the extended marketing mix have shaped its marketing strategy has been analyses. POLL was found to be in a highly competitive environment, specifically due to the close proximity of its larger rival, POLL. In order to regain competitive ground, POLL have entered into partnerships through the signing off long-term lease with a major shipping line COOL and allowed further private investment from MASC., in order to achieve better economies of scale, improved operational efficiency and better asset utilization to sure up profitability.
This matched with newly developed, environmentally sustainable infrastructure, will enhance its capability to capitalist on shifting trade routes from Asia to the U. S. Then the marketing strategy of POLL was analyses and segmented according the up’s of the extended marketing mix. Its key marketing strategies included environmental stewardship, community, industry and government relations, infrastructure and transportation, trade and commerce organizational effectiveness.
POLL have focused this strategy on their customer base, primarily East Asia which accounts for 90% of trade and also consumers within its local hinterland. The up’s; product, place, price, rumination, people, process and physical evidence were individually analyses with specific reference to POLL and its stakeholders including its customer base and POI-A. Lastly, three suggestions as to how POLL could improve aspects of their marketing mix in view of the evaluation conducted are provided.