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Fly Buys New Zealand – Case Study Solution

Fly Buys New Zealand – Case Study Solution – OverviewFly Buys New Zealand - Case Study Solution

Fly Buys is a very famous loyalty program in New Zealand. With more than 2.4 million members, this program is one of the best loyalty program of world. This program is quite unique and based on very innovative marketing strategy. Members of this program get points when they do their routine shopping of specific products. They continue to accumulate those points and after reaching certain amount, they can get rewards for those points. Fly Buys have more than 50 partners and members can utilize their points in purchasing products of these partners. (Fly Buys, 2015)

Chris Lamer opted marketing strategy of brand extension or stretching a brand. This paper will analyze his approach. Moreover, this paper will discuss key marketing issues and their implications. Furthermore, paper will discuss positive and negative aspects of given marketing strategies. In the end, a possible alternative strategy will be discussed.

Marketing Issues and their Implications

Loyalty Programs are introduced to ensure loyal customers are entertained and retained. Moreover, another goal of such programs is to ensure that customers repurchase from same company. Such programs also attract new customers. Furthermore, such programs also help in getting back churned customers. These programs are also helpful in making long and everlasting relations with customers. However, several marketing issues related with these programs are also identified. If there is less preparation behind such program, it could lead to a disaster for business of the company. The major issue with loyalty program is although customer can use points to get free products but company have to pay for that product. In other words, a free product for customer will cost something to company. So, careful strategy is required to ensure that company doesn’t have to bear loss.

Many believe that such programs can decrease the brand growth of a company. Similarly, such programs can affect other advertising campaigns of company. Moreover, it becomes difficult to convince customers to buy products at normal prices. Although Fly Buys is quite popular in New Zealand, similar other programs face another challenge which is only small loyalty cards are being used. So, unused loyalty cards are obviously a loss for company. Another issue with this strategy is cheapening of the brand value. Loyalty program provides customer discount which can make customer think that real value of that product is cheap.

Positive and Negative aspects of Current Strategies

There are several positive and negative aspects of given strategies.

Launching a new brand

Launching a new brand has several positive and negative aspects. Launching a new brand is a tough challenge. If brand gets popular than it is great otherwise it is disastrous for company. It is witnessed that majority of new brands fail to attract customers. There are several reasons behind this. Lack of preparation, lack of market understanding, lack of knowledge of customer’s choices and inability to understand market trends are few reasons. It is important that management must be fully prepared before launching a new brand. They must be ready to negotiate with any possible situation. Moreover, it is also important that company must be prepared to meet demands if brand gets popular. Similarly, lack of understanding of customer’s choices is also a big reason of failure of a new brand. It is important to understand customer’s choices and market trends before launching a new brand. Furthermore, it is also important to provide necessary education to customers regarding the new newly launched brand. An effective advertisement campaign can help a lot in this cause. If a company manages to take care of these things than it is highly unlikely that brand will fail. So, success of new brand will help the overall business of the company.

Market Penetration

Market Penetration is commonly used business strategy. When a company wishes to launch a product which is already present in market, they adopt this strategy. There are several positives and negatives attached with strategy. An obvious positive aspect and outcome of this strategy is it will help company in expanding its business. This strategy is very helpful if a company wishes to expand its customer base. Another positive aspect of this strategy is it give company a competitive edge and advantage over its competitors. Unfortunately, there is other side of the picture. A prominent negative aspect of this strategy is it could be disastrous for the company if competitors reduce the prices of same product. Low profit margin, unsatisfactory results and missed opportunities are other negative aspects of this strategy. Obviously, when company keeps the prices of its products low it will reduce the profit margin. However, if company manages to decrease manufacturing costs then it would not be a problem. Similarly, if a company opts this strategy, it is possible that it will miss many business opportunities. (Meyer & Thu Tran, 2006)

Brand Extension

Brand extension or brand stretching is considered as most old and most used business strategy. Brand extension is using the name of already established and well reputed company to launch a new brand. Companies use their already established brand name to launch a new product in a new category. There are several advantages of disadvantages of this marketing strategy. Usually, companies adopt this strategy because it is comparatively less risky and inexpensive. Companies have to work less to increase customer’s awareness. Moreover, customers are most likely to know and use products of already established brand. Enhancement of brand visibility and lower cost are also advantages of adopting brand extension strategy. Unfortunately, there are several negative aspects of this strategy. Analyst believe that dilution of company’s image is a huge disadvantage. Moreover, it is also expected that customer’s will have different opinion regarding the main brand after the launch of new product/brand. So, it is important that newly launch brand do a good job. If newly launched brand fails then image of main brand will also get effected. (Pepall & Richards, 2002)

Option 2: Market Penetration, a better option for Fly Buys  

Chris Lamer selection option of brand extension but his approach has several repercussions. A better and feasible alternative to his approach is market penetration. This strategy should be picked because of huge expected benefits and advantages. One of the advantages attached with this strategy is it help the company to quickly diffuse its products in the market. Fly Buys need quick adoption by customers and this strategy could prove vital. Moreover, this strategy can impress and attract more customers as compared to strategy of Chris Lamer. Those customers can act as advocated of Fly Buys and it will help the company expanding its business quickly. So, it is most likely that Fly Buys will get faster and rapid, growth and expansion, and attract huge crowds in limited time span. Moreover, this strategy will surely give Fly Buys an economic and competitive advantage over its competitors and rivals. An important feature of this strategy is it targets a broad market. However, this positive aspects was not available with the strategy of Chris Lamer. This strategy demands careful planning and organized execution. There are several approaches which can be used to make this strategy work. Expanded reach, price penetration, versatile and huge advertisement campaign are few things which can make this strategy a success.

Conclusion

It can be concluded that the given strategy has several advantages over the strategy of Chris Lamer. It is most likely that this strategy will work and it will provide huge business advantage to Fly Buys. Moreover, there are limited drawbacks of this strategy which can be easily avoided if careful planning and execution is performed. So, it can be said that considering flaws in the strategy of Chris Lamer, given strategy is much better and there are more chances that it will work.

Also study: Wesfarmers Strategic Management Project Report

References:

Fly Buys. (2015). Retrieved from https://www.loyalty.co.nz: https://www.loyalty.co.nz/aboutus/flybuys/

Pepall, L. M., & Richards, D. (2002). The Simple Economics of Brand Stretching. The Journal of Business.

Schneider, J., & Hall, J. (2011). Why Most Product Launches Fail.

Meyer, K. E., & Thu Tran, Y. T. (2006). Market Penetration and Acquisition Strategies for Emerging Economies. Long Range Planning, 177-197.