Cotag International is a small technology-led business.

It was created in 1978 by John

Falck an electronics engineer and two other small businessmen. In the beginning, Cotag

specialized in the design and manufacture of active radio frequency transponder systems.

Then, Cotag quickly developed its first product which is an anti-shoplifting device that helps

detect shoplifters; this device is special as there is a low incidence of false alarms. Cotag has

since shipped 1000 complete systems, and then it starts working so hard on its marketing and

commercial skills so as to take the lead in the worldwide information technology field. The

company’s newest product is named after the company "Cotag". It is a system based on

miniature identification tags containing a custom-built chip programmed with a unique code

or identity; which is read or validated when it passes through a reading device and then the

information is transmitted to a computer for storage or action. This system can be used where

immediate knowledge of the position and identity of a mobile or immobile object is crucial

for reducing costs, improving service levels and for the sake of control and safety. It can also

be used in product automation, materials handling, vehicle and personnel identification and

agricultural applications such as livestock management. For the company to develop and

grow, it had to undergo different changes in order to keep up with the market fast changing

environment. This pushed Cotag to take several actions related to changing its direction to

gain an edge over competitors and increase its profit margins.

So, what are the reasons behind creating this new direction? And how did the newly hired

director change Cotag’s strategy and why? What are the market challenges that faced the

company? And what future strategy can be undertaken to reduce the impact of these

challenges and to better help the company enhance its position in the marketplace?

The founder of Cotag International “John falck” managed to launch his first product which is

an “anti-shoplifting device”. However, while launching his newly developed product the so

called “Cotag”; he faced some difficulties during the trial period. These difficulties were

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mainly related to the poor marketing capability and the absence of an efficient and reliable

strategy to attract a larger market segment, communicate the added value of the product and

therefore increase the company's market share. For this purpose, Falck and his team took a

bold strategic decision which is altering the company’s direction by recruiting Evans who is a

Harvard MBA holder, with a successful and rich background in consultancy and past

experience as a managing director in a highly ranked IT company “IBM”.

Evans believed that having a marketing strategy is vital; it can be the life or death of a

business. Without one, the efforts to attract customers are likely to be haphazard and

inefficient. Therefore, the creation of a marketing strategy is decisive for the survival of any

business as it helps it make sure that its products and services meet customers' needs better

than competitors. Additionally, it plays an important role in developing long-term and

profitable relationships with those customers and helps to identify whole new markets that the

company can successfully target. Thus, Evans found it crucial to introduce a new market

strategy resulting from his belief that the company would grow and prosper by being a low-

cost provider of parts of larger systems rather than selling entire systems. The abrupt switch in

the scope of Cotag’s activities was a proof of the success of Evans’s strategy which resulted

in increasing sales of the marketing rights for the security retailing system. Moreover, this

strategic decision led to profitable achievements such as cost reduction; it also generated extra

revenues that were later invested in further development of the company.

Evans’s strategy also aimed at extending the life cycle of the product through overcoming the

development and growth stages which are the most critical of the product’s life cycle. As in

these phases, the product is still an infant and it requires a lot of cash to grow and be able to

stand on its own feet. Moreover, in these phases competition represents a high threat and there

is a serious risk of loosing market position in the increasing harsh competitive pressure of

other firms operating in the same field. Thus, the main purpose of Evans was to take the

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product to a safer stage that is maturity and expands it as longer as possible, since it is the

most beneficial stage of the product’s life cycle where the company gains the customer’s

reliance on its product, increase profitability by maintaining efficiency through producing

higher volume with the use of fewer costs.

What's more, Evans used a strategic planning technique PESTEL analysis which is a tool for

understanding the "big picture" of the external environment where the company is operating

and the opportunities and threats that lie within it. Since by understanding the environment the

company can seize the opportunities and minimize costs; plus PESTEL analysis are also used

for reviewing the strategy or position, the direction of the company, and the marketing

proposition or idea. By carrying out this analysis, Evans was able to identify the threat of

having other rivals producing an identical product which will be costly to Cotag. Thus, he

bought a licence to protect Cotag's products from being copied and this was a beneficial

decision which led to money-spinning sales of the marketing rights to other security retailers.

In addition to this, the PESTEL analysis helped Evans identify the technological lead that the

company has over competitors and therefore tries to find ways to sustain it.

Although Evans changed Cotag’s strategy, there were some challenges that remained to be

considered a threat to the company’s continuous success and survival. One of these challenges

was the need of cash to fund the marketing push which is a promotional strategy; that makes

use of the company's sales force and trade promotion activities to create consumer demand for

a product. It is geared toward the company's marketing and distribution channels to entice

them in promoting the company's product. This type of marketing can rarely be seen by

consumers, when it is directed to the distributors. It might include wholesale discounts,

kickbacks, bonuses, and other types of support. It's all designed to have the retailer promote

the company's product to the end users over different products. Another kind of push

marketing is taking over, that is the referral and word of mouth marketing which is based on

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encouraging happy customers to spread the word to their friends and families or through

making ads that are controversial, cheeky, or downright shocking.

All these make it obvious, that there is an urge to increase the capital employed.Thus to rise

cash, Evans made a presentation at the financial forum to look for a new investor among

several. Promising to meet the future shareholder’s expectations, Evans managed to get an

offer from three British investors among whom both he and falck chose one with the same

market orientation due to its effects on performance. As it raises effectiveness and gives the

company a sustainable competitive advantage which is learning faster than other competitors

since market orientation implies organizational learning. What's more, the greater the

company is market-oriented, the greater its return on investment, sales growth, new-product

success, and customer retention are. Thus the choice of this investor was a wise strategic

decision.

The other challenge was the fear to collapse because of the harsh competition of huge

multinationals. Since the competitive advantage that Cotag has “technological lead” is hard to

be sustained and might fade away because of the fast changing IT environment; therefore the

company needs to keep up to date so as to maintain having an edge over competition. In

addition, Cotag might face the challenge of competitive rivalry since competitors might

introduce a complete electronic package into the market which may result in the loss of

Cotag’s market share.

Cotag has always been able to attract a wide range of customers, however, this development

had been threatened by some challenges that if not dealt with might take away its

technological lead and reduce its market share.

The company should therefore set up action plan to follow in order to maintain its position.

The marketing department should elaborate a strategic plan in accordance with the different

variables of actions. Most companies ignore the function of marketing. Its crucial role is well

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shown with the decrease of demand as compared to the supply.

Through peering up with the chosen British investor, the company would be able to raise

capital and enhance its financial situation. This capital can be used to wipe off its debts; as a

matter of fact this would allow future loans approval from financial institutions.

After paying off its creditors, Cotag International can then employ its cash in undertaking

market studies to be better informed about the changing customer needs. Once Cotag builds a

partnership with the British investor, Evan should consider renaming the company in order to

benefit from future loans.

In conducting a market study, Evan should depend on the following:

• Provide a better training to internal and external sales force.

• In-depth analysis of the customers’ needs and desires by arranging for group

meetings, conducting individual questionnaires and documentary researches

(analysing existing sources)

• Expand its target market internationally by promoting its brand in other countries

through advertisements.

• Extend its services and enhance the different elements affecting the delivery of

services.

• Reconsider producing a complete electronic package to avoid loosing its market

share. To keep focussed the company can adopt an outsourcing method so it can

offer good quality since offering a complete package would be time-consuming.

• Adopt a strategy of loyalty by retaining existing clients, strengthening relations

with its customers, improving quality, modernising the product by introducing new

technology, satisfying the basic needs of the customers that is the need to have the

package as a whole and then look into the secondary needs that is producing extra

options to keep it up to date.

The managed and outsourced service can be attractive to the company in the long run and

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would allow it to maintain its competitive advantage over competitors. The company should
consider building global channels in countries that can be advantageous to it while at the same
time keep more focus on the domestic market.

The strategy can be bolstered by an active marketing campaign of direct mail, print and

online-advertising.

At the corporate level, when considering renaming the company, the new name should reflect

the brand services and products the company offers so it can help them in strengthening their

position and build name recognition in the marketplace.

As mentioned, the company should also take actions to provide additional funding for the

company growth. Cotag should conclude arrangements with concurrent private placements.

Notes associated with these placements can be converted into shares of the company’s

common stock. This would greatly enhance the company’s working capital position. This

conversion would eliminate the company’s debts.

In addition to the funding provided by the future financing arrangements, Cotag should

remain vigilant over expenditures.

The company have a powerful product, and should also have a highly skilled team in place to

execute its future strategy. This team should be completely committed to the goals of

providing industry leadership, achieving consistent growth and reaching profitability as soon

as possible.

By implementing this future strategy, cotag will enhance its position in the market, increase

its profit margins and expand its market share.