1 What is 5C marketing framework?

5C marketing framework is a tool to analyze the situational forces that form the business environment. The analysis emphasizes micro and macro environmental factors that exert a strong influence on the organizations' business operations. Marketing managers can conduct the 5C analysis to timely identify the strengths and weaknesses in the internal environment, and possible risks and opportunities present in the external environment.

2 Application of the 5C model on Balanced Scorecard Report July-August 2011 Vol 13 No 4

2.1 Company

Some examples of the company related factors are given below:

2.1.1 Research and development

Balanced Scorecard Report July-August 2011 Vol 13 No 4 spends heavily on the research and development activities to preserve its leadership position in various product segments. Heavy investment in building the IT network, marketing, product design and process optimization supports the distribution and promotion strategies.

2.1.2 Culture

Balanced Scorecard Report July-August 2011 Vol 13 No 4 has a strong culture of process and product innovation. Top management supports the innovative and creative ideas, and employees are encouraged to participate in the problem solving process. The organizational culture supports the vision, mission and values.

2.1.3 Scale of production

Balanced Scorecard Report July-August 2011 Vol 13 No 4has a large scale of production, which enables the company to achieve the benefits of economies of scale. Large scale production enhances the competitive strength of the company and enables the company to produce better quality products at reduced costs.

2.1.4 SWOT-Balanced Scorecard Report July-August 2011 Vol 13 No 4

The SWOT analysis is an effective tool to analyze the company related factors. Application of this tool in Balanced Scorecard Report July-August 2011 Vol 13 No 4’ context involves identification of key strengths, weaknesses, opportunities and threats.

The following table presents the SWOT in the concisely summarized form:

2.2 Customers

Customer analysis mainly covers the following points:

2.2.1 Market segments

• Balanced Scorecard Report July-August 2011 Vol 13 No 4 targets both high end and low-end market segments.
• The organization's decision to choose broader and multiple segments have expanded the scope of opportunities.
• The targeted segments are expected to have a steady market growth rate in future.
• The primary customer segment of the Balanced Scorecard Report July-August 2011 Vol 13 No 4 is the family with children, which requires Balanced Scorecard Report July-August 2011 Vol 13 No 4 to do social, emotional and functional jobs to keep this market segment happy and satisfied. The functional job includes performing core operations, the social job includes providing augmented services to promote family and social gatherings, and emotional job includes showing concern and commitment to take care of customers.

2.2.2 Frequency and quantity of purchases

• The quantity and frequency of purchase in the targeted market are high, and both are favorable growth indicators for the organization.
• Balanced Scorecard Report July-August 2011 Vol 13 No 4 can adapt its marketing strategies according to changes in frequency and quantity by offering more discounts and family deals.

2.2.3 Brand loyalty

• Balanced Scorecard Report July-August 2011 Vol 13 No 4 operates in the low-involvement product category.
• Usually, developing brand loyalty in low-involvement markets is challenging compared to high-involvement markets as a lot of alternative options are available and psychological switching costs are also low.
• Balanced Scorecard Report July-August 2011 Vol 13 No 4 ’ customers are price sensitive. Their price sensitivity, changing tastes and preferences and high health consciousness requires Balanced Scorecard Report July-August 2011 Vol 13 No 4 to invest in customer research activities and closely monitor their attitude and consumption behavior.

2.2.4 Customer needs

• It is important to identify the critical customer desired features and incorporate them into marketing and advertising strategies.
• Customers changing attitudes towards healthy alternatives and prioritizing the quality over price also have important consequences for the organization.

2.3 Competitors

Porter five forces is a useful tool to conduct competitor analysis:

2.3.1 Bargaining power of buyers

• Strong bargaining power of buyers puts downward pressure on pricing and induces Balanced Scorecard Report July-August 2011 Vol 13 No 4 to offer the high quality product at discounted pricing.
• Strong bargaining power makes it easier for Balanced Scorecard Report July-August 2011 Vol 13 No 4 ’ customers to switch to other alternatives.
• There are three major reasons for strong buyer bargaining power:
  • High substitute availability.
  • A wide number of alternatives.
  • Low economic and psychological switching costs.

2.3.2 Bargaining power of suppliers

• Weak bargaining power of supplier makes it comparatively less important strategic issue for Balanced Scorecard Report July-August 2011 Vol 13 No 4 as suppliers cannot dictate the prices and have to accept the Balanced Scorecard Report July-August 2011 Vol 13 No 4 ’ terms and conditions.
• Three factors result in moderate to weak supplier power:
  • A large number of suppliers
  • High overall supply
  • Suppliers’ weak control over their distribution network

2.3.3 Competitive rivalry

• Currently, the rivalry among competitors is high, which makes it difficult for Balanced Scorecard Report July-August 2011 Vol 13 No 4 to achieve its market growth objectives.
• The product differentiation is low and setting the differentiation basis has become increasingly challenging.
• Intense competitive rivalry is a major reason for Balanced Scorecard Report July-August 2011 Vol 13 No 4 ’ declining profitability.

2.3.4 Threat of substitutes

• The technological advancement has raised the threat of substitutes for Balanced Scorecard Report July-August 2011 Vol 13 No 4 .
• Changing trends towards healthy products also raises the consequences of this threat for Balanced Scorecard Report July-August 2011 Vol 13 No 4 .
• Overall, the threat of substitutes is strong for the following reasons:
  • High performance/cost ratio of substitute products.
  • High availability of substitute products.
  • Low switching cost.

2.3.5 Threat of new entrants

• Balanced Scorecard Report July-August 2011 Vol 13 No 4 faces moderate new entrant threat, which means new entrants do not have a significant influence on Balanced Scorecard Report July-August 2011 Vol 13 No 4 ’ market share.
• High level marketing know-how with huge expenditure on marketing activities is required to enter the industry.
• Balanced Scorecard Report July-August 2011 Vol 13 No 4 faces a moderate threat of new entrants for the following reasons:
  • High brand development cost weakens the threat.
  • Low switching cost increases the threat.
  • High capital cost weakens the threat.

2.4 Collaborators

• An in-depth collaborator analysis requires Balanced Scorecard Report July-August 2011 Vol 13 No 4 to conduct a detailed value chain analysis and carefully consider the bargaining power of suppliers to explore the collaboration opportunities.
• Collaborators include the downstream and upstream value chain partners, business allies, community leaders, government and others. To choose the appropriate collaborator partners, Balanced Scorecard Report July-August 2011 Vol 13 No 4 needs to evaluate different value chain factors, like- value chain flexibility, efficiency, agility, revenue sharing among value chain partners and strengths and weaknesses of possible collaborators. The detailed collaborator analysis can allow Balanced Scorecard Report July-August 2011 Vol 13 No 4 to enhance and its supply chain efficiency and increase control over it through vertical integration.
• When operating at the international stage, multinational organizations like Balanced Scorecard Report July-August 2011 Vol 13 No 4 must understand the local preferences of their customers and make all decisions (ranging from production to marketing) accordingly.
• An agile and flexible supply chain can make collaboration easier for Balanced Scorecard Report July-August 2011 Vol 13 No 4 .
• Balanced Scorecard Report July-August 2011 Vol 13 No 4 has partnered with various collaborators that allowed the company to develop new product lines and enhance the product development and distribution process.
• It is important for Balanced Scorecard Report July-August 2011 Vol 13 No 4 to understand the behaviors, relationships, choices, purpose and context of collaborators to make the right decision. Some important points that must be integrated into the collaborator analysis are:
  • What is the business environment in which potential collaborators operate and what strategies they are using to play in the market?
  • What are their key strategic priorities and choices?
  • What are their internal and external communication mechanisms?
  • What are their key strengths and weaknesses, and what opportunities and threats external environment imposed on them?

2.5 Context

Balanced Scorecard Report July-August 2011 Vol 13 No 4 must understand the external environmental context in which it is operating to make the right business decisions and forecast the future. One important tool to understand business context is the PEST analysis.

2.5.1 Political Context

Understanding the political context requires Balanced Scorecard Report July-August 2011 Vol 13 No 4 to identify possible political issues such as labor or tax laws, changing trade regulations or legislative problems.

• The present governance system requires Balanced Scorecard Report July-August 2011 Vol 13 No 4 to study the changing government policies closely
• Presence in multiple markets increases the risk of political instability.
• The geo political risks have increased for Balanced Scorecard Report July-August 2011 Vol 13 No 4 due to recent developments in the global political scenario.

2.5.2 Social Context

Understanding the social context requires Balanced Scorecard Report July-August 2011 Vol 13 No 4 to analyze the major trends in culture, education and demographic patterns.

• A general rise in the health consciousness of customers imposes a risk to the Balanced Scorecard Report July-August 2011 Vol 13 No 4 .
• Population growth and rising low-end market segments offer opportunities to Balanced Scorecard Report July-August 2011 Vol 13 No 4
• The attitude towards migration in markets where Balanced Scorecard Report July-August 2011 Vol 13 No 4 is present requires the company to consider its impact on changing demographics carefully.

2.5.3 Economic Context

Understanding the economic context requires Balanced Scorecard Report July-August 2011 Vol 13 No 4 to identify major economic issues like growth in important economic indicators, changes in the labor costs and business cycle stages.

• Inflation exerts a strong impact on the pricing structure of Balanced Scorecard Report July-August 2011 Vol 13 No 4 .
• Presence in multiple markets requires marketing managers of Balanced Scorecard Report July-August 2011 Vol 13 No 4 to adapt their strategies according to consumer behavior, which is different during recession and boom.
• The downward market pressure and changes in customers’ purchasing power should also be considered to make effective marketing strategies.

2.5.4 Technological Context

Understanding the technological context requires Balanced Scorecard Report July-August 2011 Vol 13 No 4 to understand recent technological developments and their impact on the organization’s cost structure and other business operations.

• The entrance of new market players and their investment in research and development requires Balanced Scorecard Report July-August 2011 Vol 13 No 4 to protect their intellectual property rights.
• The technological advancement has shortened the product life cycles, requiring Balanced Scorecard Report July-August 2011 Vol 13 No 4 to enhance its value chain efficiency.
• Technological development has lowered production cost and increased the need to restructure the supply chain.

Overall, the purpose of understanding the context is to determine if any opportunities or risks are imposed by major external environmental forces.

3 Conclusion

Collecting the information about all 5 C elements (company, customers, competitors, collaborators and context) is a first step towards developing effective and informed marketing strategies. 5C analysis sets the foundation for developing a wise and well-defined marketing plan.