Marketing plan - Part 13 - Marketing Essay Example

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Wars and terrorism attacks that happened within the past two decades highlight the importance to have sustainable and strong defense system. Concerning the situation, there is an official statement from President Bush and its administration telling us that the U.S. plans to spend trillions of dollars for increasing military budget in order to increase and modernize the country’s military equipments such as weapons, defense system, attacking helicopter, stealth fighters and many more.

Concerning the development of defense system, in this paper, I would like to discuss about Northrop Grumman Corporation, a company that competes to deliver the latest defense system for the U.S and international military. In gulf war, one of Northrop Grumman war machines that came alive was the B-2 Stealth Bomber.

Within the past three years, the company has successfully recorded a positive revenue growth. This situation highlights the excellent performance of Northrop Grumman. In addition to the discussion of financial performance, in this paper, I will also discuss Corporation Strategy, SWOT, and 3C’s (Competitors, Company, and Customer) Analysis.

I.         Introduction

I.1       Need of Defense System

In the 20th century, there were two World Wars that ended in the terms of cold war, where superior countries at that time such as the U.S. and former Soviet were racing for developing the latest destructive weapons and intelligent systems to watch one another military movements. For decades, such race lead to World War III setting that fortunately had not happened.

However, while World War III does not happen, countries still faces massive destruction from terrorism attacks that occur in several countries like the U.S., Spain, and Morocco and from military aggression into countries in Middle East within the past two decades like happened in the Gulf War in 1990s.

The two settings coin the same situation that there is a great need of defense system for a country to protect its citizen from destruction. For example, the 9/11 tragedy that destroyed the two world trade center buildings was encouraging the U.S. government to increase the spending on military budget. The U.S. government spends too much on warfare. It is amazing to see the President Bush and its administration spent trillions of dollars for increasing military budget in order to increase and modernize the country’s military equipments such as weapons, defense system, attacking helicopter, stealth fighters and many more.

Concerning the development of defense system, in this paper, I would like to discuss about Northrop Grumman Corporation, a company that competes to deliver the latest defense system for the U.S and international military. In gulf war, one of Northrop Grumman war machines that came alive was the B-2 Stealth Bomber.

 

 

I.2       Company Profile: Northrop Grumman Corporation

Northrop Grumman Corporation (www.northropgrumman.com) is a well-known U.S. based global defense company. The company headquartered is in Los Angeles, California. The aims of Northrop is to provide a vast selection of products that fall into 8 main business categories; they are electronic systems, information technology, integrated systems, mission systems, Newport News, Ship Systems, Space Technology, and Technical Services.

To date, Northrop Grumman Company operates in 50 states in the U.S. and 25 countries worldwide. In total, there are about 125,000 employees of Northrop Grumman that serves the U.S. and international military needs for advanced defense system (Northrop Grumman Corporation, 2006a)

 

II.        Corporation Strategy

Basically, there are three kinds of strategic planning in corporations; they are goals and objectives, mission, and vision statements. In Northrop official website, in turns out, there are only two kinds of strategic planning: Vision and Goals.

 

II.1      Mission/Vision

Vision statement is basically a descriptive form and abstract in nature than that of mission statement which is likely to be more concrete and proscriptive. Therefore, a vision statement shows picture of ideal future outcomes which is characterized to provide clarity, description of the future, and driven by customer needs (“Strategic Planning”, 2006).

In notice that Northrop Grumman Corporation has a vision as following:

“To be the most trusted provider of systems and technologies that ensures the security and freedom of our nation and its allies. As the technology leader, we will define the future of defense—from undersea to outer space, and in cyberspace”

(Northrop Grumman Corporation, 2006c).

 

I notice that the above statement fulfills the criteria of being a good and effective vision statement since Northrop Grumman vision statement provides clarity about what to achieve, shows future description, and tells its customer’s needs (the U.S. and its allies).

 

II.3      Goals

In business world, we often encounter any differences between current and the future states, which further become a gap. In order to eliminate the gap, a company like Northrop must have a clear objectives and goals.

By definition, goals are statements, which are inexactly formulated and lack of specificity while objectives tend to come in exact form (“Strategic Planning”, 2006). The difference can be explained in following examples:

Goals: “I want to excel the sales target in 2006”

Objective: “I want to achieve $350 million of sales in 2006”.

 

Concerning the Northrop goals statement, basically the discussion can be divided into two categories: non-financial goals and financial goals.

 

II.3.1   Non Financial Goals

Concerning the non-financial goals, I notice in the official website of Northrop Grumman, there is no clear statement of what the company’s goals are. However, in the ‘About Us’ section, I see a statement that could be considered as the company’s goal: “become our customers’ partner of choice, our industry’s employer of choice, and our shareholders’ investment of choice”.

 

The above statement fulfills the criteria of being a goal since it comes in lacks specificity and it does not shows exact number like happens in usual objectives.

 

II.3.2   Financial Goals

In addition, Northrop Grumman also has financial goals especially relate to the investment goals as following:

To exceed the assumed actuarial rate of return over the long term within reasonable and prudent levels of risk
to preserve the real purchasing power of assets to meet future obligation
(Northrop Grumman Corporation, 2006d)

 

Similarly, Northrop’s financial goals also fulfills the criteria of being a goal since it comes in lacks specificity and it does not shows exact number like happens in usual objectives.

 

II.4      Core Competency and Sustainable Competitive Advantage

As a company that deals with defense system, Northrop Grumman continues enhancing its capability in strengthening its core competence in defense industry.  Initially, the company core competence is to provide four main services: Newport News, Ship Systems, Space Technology, and Technical Services.

Since the defense system continues strong demands, the company decides to enter four new businesses: electronic systems, information technology, integrated systems, and mission systems. In addition, the company also decided to exit its IT reseller business since the company sees the business does not fall into its main competences

(Northrop Grumman Corporation, 2006d)

 

III.      Situation Analysis

III.1    SWOT Analysis

Strength
The strength of Northrop Grumman is on its capabilities to strengthen its presence in defense industry by improving its core competence and eliminating its non-competitive business units. For example, the company decision to exit IT reseller business shows the ability of the company to focus on its main competence. In addition, the company is also capable of showing excellent financial performance. In 2004, for instances, the company achieved a 13-percent increase in revenue compared to previous year performance (Northrop Grumman Corporation, 2006d).

Weaknesses
In some project, it is found that Northrop Grumman proposal received the lowest rating. This is because the company was considered to exhibit a key weakness such as the company’s staffing levels were too low. In addition the company also strongly relies upon cross-utilization, cross-training and matrix methods of personnel to accomplish the contract tasks (Gamboa, 2003).

Threats
The business threat to Northrop Grumman is the fact that there are massive protests about the race of advancing mass destructive weapons. This situation threatens the Northrop Grumman since its main business relies on defense system.

Opportunities
Defense industry continues specializing into several technical specifications. This situation greatly influences Northrop Grumman in expanding its business. For example the existence of new programs such as America’s Shield provides Northrop Grumman with opportunities to develop a comprehensive and integrated border security system. In addition, President Bush also reveals that the 2006 budget calls for defense system account for $147 billion. This is a big opportunities for Northrop Grumman since its revenue in 2005 only accounted for $30 billion (Northrop Grumman Corporation, 2005).

 

III.2    3C’s: Competitors, Company, and Customer Analysis
III.2.1 Competitors

One of Northrop’s main competitors is Lockheed Martin, a company that deals with aeronautics and space systems with more than 130,000 employees in the U.S. and overseas. They have four kinds of customers: U.S. Department of Defense, Civil Government/Homeland Security, International customers, and Domestic Commercial.  In terms of achievement, this company is one of the best companies to have internship agreement with since it has specific guidelines on conducting internship. Therefore, any interns have opportunity to enhance their knowledge and skills in the company with sales record of US$31.8 billion and another US$76.9 Billion in the backlog.

 

III.2.2 Company

As a company, Northrop Grumman continues exhibiting the excellent performance in which they successfully maintain its eight core competences and eliminating a business unit (IT reseller business) in order to focus on its main energy in defense system. The company also keeps on distributing more cash flows to their shareholders.

 

III.2.3 Customer

Basically, the customer of Northrop is the U.S. DoD (Department of Defense) and the U.S. allies’ government. In much detail, the company’s customers can be divided into several main categories as following:

 

 

Figure 1          Northrop Customers

Source: Northrop Grumman Corporation. (2006). Annual Report 2005

 

IV.      Marketing Strategy

IV.1    Product Strategy

After quitting its IT Reseller business, at present, Northrop Grumman Corporation has eight main business categories; they are electronic systems, information technology, integrated systems, mission systems, Newport News, Ship Systems, Space Technology, and Technical Services. The company continues delivering the latest technology in defense system. If during the Gulf War, we are amazed by the active role of Northrop’s B-2 Stealth Bomber, currently the company also develops several new war machines such as intercontinental ballistic missile (ICBM), satellite, solid-state laser etc.

 

IV.2    Price Strategy

The company has gained benefits in pricing strategy since it has completed deals with U.S. government on steel purchase that become main raw material for several Northrop’s products such as ships.

Under such circumstances, Northrop is able to alleviate price risk due to volatility of steel price and is able to deliver competitive price to its customers, mainly the U.S. Department of Defense (DoD). In this manner, I notice that Northrop particularly offers fixed-price contracts in which the Northrop can estimate the costs based on its experience (Northrop Grumman Corporation, 2006d).

 

IV.3    Promotion Strategy

In natural setting, a company likes Northrop Grumman that has a clear target customer, Department of Defense, does not have to conduct massive high-cost advertising since the target market is in the company’s reach.

However, I notice that Northrop Grumman still conducts advertising campaigns, which aims at giving the readers or audiences the knowledge about what Northrop does and what kind of defense technologies Northrop Grumman is working on. Figure 2 shows an example of Northrop print ad that displays the role of Northrop Grumman in wars.

Figure 2          Northrop Grumman’s Print Ad

Source: (Northrop Grumman Corporation, 2006b)

 

IV.4    Place (Distribution) Strategy

Although defense products cannot freely sell into countries worldwide, Northrop Grumman manages to exist in key markets in 50 states in the U.S. and 25 countries worldwide. This vast point of presences shows the company’s commitment to reach its customers (Northrop Grumman Corporation, 2006a).

 

V.        Market-Product Focus

V.1      Marketing and Product Objectives

Figure 1 shows that International customers of Northrop only represent 5% of total revenue in 2005. Since Northrop has been expanded into 25 countries, the company goals should be to increase its revenue from international customers. Therefore, the company’s goals should be as following:

“To increase revenue of International customers segment from 5% in 2005 into 10% in 2008”

 

In order to serve its targeted international customers and existing local U.S. customers, Northrop Grumman set five strategies that are named “five key behaviors” as following:

1.     Live the Company Values

This move tells the customers that Northrop Grumman always spawn products that are carefully designed and manufactured. There are seven correlated values: Quality, Customer Satisfaction, Leadership, Integrity, People, and Suppliers.

2.     Focus on Operating Excellence

At this behavior, Northrop Grumman is committed to deliver program performance that encourage the take into account the full operating and financial potential of the company.

Act with Speed
dealing with international and local customers require unquestioned speed of services. Therefore, Northrop Grumman, as they evolve into bigger organizations, is committed to conduct operating excellence in a timely fashion while avoiding bureaucratic delays.
Communicate Openly
As multinational company, Northrop Grumman is needed to act as faster rate to resolve any bad feedbacks and maintain the good ones. In this situation, Northrop Grumman is driven to communicate any bad and good news to all members of companies (managements, employees, and stakeholders) since they believe the earlier they communicate a problem, the easier it is for the company to maintain its superiority

Collaborate across the Company
To ensure the competitiveness of Northrop’s product, the company set themselves as a learning organization where they encourage the information flow, sharing,  and exchange within members of organizations.

(Northrop Grumman Corporation, 2006c)

 

In 2005 annual report, it is found that Northrop Grumman’s marketing and product objectives are to achieve accomplishment in three areas: cost reduction, portfolio optimization, and business development.

The implementation of portfolio optimization is shown in the company’s strategy capitalize their core competences in order to win some outstanding contracts. In addition, objective to optimize the company’s portfolio is also shown in the company’s decision to quit IT reseller business since Northrop sees the reseller business does not fall into its main competences (Northrop Grumman Corporation, 2006d).

All of objectives are in line with the company mission to participate in many high-priority defense and non-defense technology program in the United Stated as well as in foreign countries (Northrop Grumman Corporation, 2006d).

 

V.2          Target Market

In order to achieve the designated goals, therefore, Northrop Grumman should strengthen its presence in international market by making agreement with government in the 25 countries under the auspices of U.S. government.

Since the market expansion is likely to be Government-to-Government, therefore, the main target market for Northrop in international market is government in the 25 countries. The selected customers are based on the criteria that Northrop Grumman only can sell its products to countries that ally with the U.S. government.

 

V.3          Points of Difference

Northrop Grumman’s products have been widely operated by the Department of Defense in the U.S for variety of purposes. Its products have shown unbelievable performance during the Gulf War, Iraq Aggression, and many others. The facts mark the excellence of Northrop Grumman’s products in the defense industry in the world.

 

V.4          Positioning

The company positioning is to provide innovative, high technology solutions for their customers by continuously develop the latest technology in weaponry etc. In addition, Northrop also positions itself as the main provider of high-tech weapon for the Department of Defense of the U.S. government.

 

VI.      Financial Data and Projections

VI.1    Financial Data

Within the past three years, the company has successfully recorded a positive revenue growth; Figure 3 shows the company financial performance since 2003.

Figure 3          Northrop Grumman Financial Performances 2003-2005

Source:  Northrop Grumman Corporation. (2006). Annual Report 2005

 

VI.2    Financial Data Projection

In addition, the increasing defense spending of U.S. Government has encouraged Northrop to set revenue target in 2006. The company reveals that revenue target in 2006 is $31 billion. Therefore, the projected revenues of Northrop will be as following

 
2003*
2004*
2005*
2006*
Revenue (in millions)
$26,396
$29,853
$30,721
$31,000
Year on Year Growth

13.10%
2.91%
0.91%
Figure 4          Northrop Grumman Financial Data and Projection 2004-2008

*Source:  Northrop Grumman Corporation. (2006). Annual Report 2005
VII.     Organization
Basically, Organizational Design composes of five elements as following:

1. Division of Labor à departmentalization and specialization

2. Unity of command à line of command

3. Authority and responsibility à line and staff authority; and authority of power

4. Spans of control à levels of control; design: centralization or decentralization

5. Contingency factors à environment and strategy and knowledge technology

(“Organizational Design”)

 

Below is the suggested organization design for marketing department of Northrop Grumman:

Marketing Communication and Promotion
Figure 5          Organization Design of Northrop Grumman’s Marketing Division

 

VIII.   Implementation Plan, Evaluation and Control
No
Communication

Activities
Budgets

(USD)
Time Schedule
Measure for Evaluation/Control
1
Customer Gathering (Product Presentation and Retention Program)
200,000
2006

New York; Feb (20-23)

Los Angeles ;April (19-20)

Washington; Oct (16-18)

Detroit; Dec (27-29)
§  The number of Audiences at the Customer Gathering (minimum 50 people per seminar-day)

§  Participants/Audience Feedbacks on product improvement

§  Post-seminar Sales Record/Achievement
3
Visiting Universities (Looking for talents and conducting research agreement)
35,000
MIT; March 22,

Texas University; July 28

Harvard University; Sept 20

Stanford University; Dec 14
5
Press Release
30,000
monthly
News Distributed into Media
6
Website Updates
20,000
Any time
Web sites updated once a changes/new activities occur
7
Year end Sale 30% off regular price)
Sales increased by 30% at minimum
November 8-13
Hard selling during festivals reach target
Figure 6          Marketing Tactics of Northrop Grumman

References

 

Gamboa, Anthony H. (2003). General Counsel Northrop Grumman Technical Services, Inc.; Raytheon Technical, B-291506; B-291506.2; B-291506.3; B-291506.4, January 14, 2003. Retrieved April 25, 2006 from http://www.pubklaw.com/rd/gao/2003/B-2915064.html

Kotler, Philip and Amstrong, Gery. (2006). Principles of Marketing. New Jersey

Kyle, Bobette. (2006). SWOT Analysis – Beyond the Text Book. Retrieved April 24, 2006 from http://www.websitemarketingplan.com/Arts/SWOT.htm

Northrop Grumman Corporation. (2006a). About Us. Retrieved April 24, 2006 from http://www.northropgrumman.com/about_us/about_us.html

—. (2006b). Corporate Advertising. Retrieved April 25, 2006 from http://www.northropgrumman.com/ads/ad_main.html

—. (2006c). Our Vision, Values and Behaviors. Retrieved April 25, 2006 from http://www.northropgrumman.com/values/index.html

—. (2006d). Northrop Grumman Corporation Annual Report 2005

—. (2005). Northrop Grumman Corporation Annual Report 2004

Organizational Design. Retrieved April 26, 2006 from http://choo.fis.utoronto.ca/FIS/Courses/LIS1230/OD1.html

Strategic Planning. (2006). Retrieved April 24, 2006 from http://www.answers.com/topic/strategic-planning

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