Type: Essay (any type) Service: Writing Pages: 3 pages / 825 words (Double spacing) Level: University Language: English (US) Topic: Sigma Marketing Case Analysis Subject: Marketing Sources: – Style: APA 6th edition Questions to answer
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Use the “How to Analyze a Case” document to guide your case analysis over Case #19 “Sigma Marketing: Strategic Marketing Adaptation” on page 515 of the textbook. Focus on the concepts in chapter 5. Provide APA-style citations for any resources used. Your document should follow the following formatting principles for business documents: 12 point font; single-spaced; use clear headings and minor headings to organize thoughts and analysis; embed tables, charts, or graphs in the text; provide a title page; and an APA-style reference page. Click the Grading rubric link to see the criteria I will use to assess your work and to compare your work to the rubric before submitting it. Case 19 Sigma Marketing: Strategic Marketing Adaptation* Synopsis: This case reviews the growth of a small, family-owned business, from a regional provider of generic printing services to a global provider of specialty advertising products and commercial printing services. Throughout its history, Sigma Marketing has exhibited the uncanny ability to understand market opportunities and to adapt its strategic focus accordingly. As its marketing environment changes, Sigma Marketing gathers information from existing and potential customers to develop the most effective marketing strategy possible. Even in the face of changing technology, communication, and advertising methods, Sigma Marketing has managed to reinvent its mindset and strategies in order to remain successful. Themes: Changing marketing environments, market opportunities, strategic focus, product strategy, direct marketing, promotion, personal selling, implementation, customer relationships, family-owned business In 1967, Don Sapit purchased a small printing company in Streator, Illinois, as a hands-off personal investment that would later grow into what is today a successful commercial printing business located in Orange Park (Jacksonville), Florida. Sigma Marketing has a unique identity that has evolved over the past 45 years from a small-town printing company to a marketing services company with a diverse, multinational clientele. Sigma’s marketing history is an excellent example of the strategic shift from a production orientation to a market orientation. Don Sapit was president of Weston Laboratories, a small research facility in Ottawa, 80 miles southwest of Chicago, when he had an opportunity to acquire Dayne Printing Company. Sapit had been a Dayne client for several years. When Dayne was on the verge of bankruptcy, Don bought the company as an investment while still focusing most of his day-to-day efforts on Weston Labs. The managers of Dayne at the time were willing to stay on and handle the operations with little outside help. Don felt that with the increased volume that Weston would provide, the operation could become profitable within a 12-month period. To enhance the corporate image, the name was changed to Sigma Press, Inc. A new sales manager was hired to focus on the sales aspect of the business, while Sapit took the position of absentee owner. Over the next few years, their efforts provided only minimal increases in sales volume. The business survived, but made little progress—typical results for an absentee-owned business. In addition, Sigma mainly focused on the production process and selling generic printing services. In spite of the slow progress, Sapit saw the potential for turning Sigma into a quality-oriented printing business that could make substantial gains against its local competition. The area served by the shop covered a radius of approximately 30 miles around the city of Streator and had a number of major manufacturing plants that were potential users of substantial quantities of printing. Unfortunately, most of these plants were headquartered in other cities and did not have authority for local purchasing of anything beyond the basic necessities required for daily plant operations. Although Sigma could do custom printing, the small firm did not have a unique niche other than its quality and service. The Desk Calendar: A Strategic Opportunity In seeking alternatives to improve sales, Sapit and Sigma’s staff developed an advertising desk pad calendar for distribution as a customer gift. Its purpose was to keep the Sigma name, phone number, and list of services in front of the customer as a constant reminder of its existence. It was freely offered to any customer thought to have sufficient volume potential to justify the expense of the calendar and its distribution costs. At the time, Sigma thought of the calendar as a promotional tool for its own business and did not consider the calendar as a product that could potentially differentiate the company and give it a competitive edge. One of the customers that received the calendar, Oak State Products, an Archway Cookie Bakery, asked whether Sigma could produce similar calendars for them with the Archway advertisement printed at the top. Sigma filled this initial order, and it proved popular with Archway’s customers. The next year, Archway asked whether the calendars could be produced with a color photo of the plant in the ad space. This version was so well received that Oak State recommended the use of the calendar as a marketing tool to other Archway Bakeries around the country. Sigma recognized that the opportunity for a new marketing strategy was developing. The small printer with a generic product identified an opportunity to expand its market beyond its small geographic service area. The sales volume realized from the calendar was not substantial, but Sapit saw in it a good possibility for a totally new marketing strategy, removed from the limitations imposed by Sigma’s present sales territory. Furthermore, he conceived a direct marketing effort that would permit sales penetration into a much larger geographical area than was practical to serve with Sigma’s limited sales staff. At this time, Weston Laboratories was sold and Sapit was forced to make a decision to leave the company due to philosophical differences with the new owners. Although Sigma was starting to show potential for very modest profitability and good growth, it was still just barely able to support itself. After a family council meeting in 1971, the decision was made to “tough it out.” Sapit chose to enter the Sigma operation on a full-time basis and to prove that it really could become a first-class operation based on a new marketing strategy. After coming aboard full time, Sapit assumed all marketing and management responsibilities himself. Previously, sales representatives had been making calls on a hit-or-miss basis with no real continuity. Sapit developed a general marketing strategy, which included defining specific sales territories and developing target markets and sales prospect databases. He also implemented a scheduled mailing program as part of the strategy. On the commercial printing side, a sample “job of the month” was sent to customers and prospects at regular intervals. On the calendar side, direct mail materials promoting the desk calendar to specific target markets were utilized. At that time, direct mail promotion of printing services was relatively unheard of in the printing industry. Most of Sigma’s competitors performed custom printing based on the needs and projects that the customer desired, and did not promote specific products. The advertising desk calendar was marketed on the theme of “constant exposure advertising.” It was given the product name “Salesbuilder,” which moved Sigma into the specialty advertising business. Each customer was offered a standard calendar format with an individual ad imprint customized to fit the needs of the company’s business. The imprint could contain line drawings, photos, product lists, or any special information necessary to convey the company’s message to customers. Sigma’s willingness to encourage attractive and creative designs received immediate attention and acceptance by customers. It set the company apart from the competition, which allowed only “four lines of block type, not to exceed 32 letters.” In effect, Sigma was at the forefront of a new specialty-advertising product. Within a year of Sapit’s entry into the business, total volume was up 50 percent; even more important, the response to the calendar marketing effort was starting to show real promise. As a result, Sigma was experiencing the need for additional capital to finance the growth. Capital was obtained through the private sale of one-third of the company to Sapit’s friend and colleague, who was a local attorney. The new investor was not involved in the daily operations of the business, but served as corporate secretary, legal counsel, board member, and advisor. The cash raised from the stock was used to help fund the day-to-day operations and expand accounts receivable resulting from the increased volume. By late 1972, Sigma’s commercial printing sales were gaining at a modest rate of increase, but calendar sales were increasing at a rate of 40 percent per year. It was becoming apparent that larger manufacturing facilities would be required in the immediate future or the sales efforts would have to be scaled back. The company purchased a more visible and accessible 5-acre site in Ottawa, Illinois, and constructed a new facility with a focus on improved production as well as image. Sapit decided to capitalize on the new visibility and image by changing the strategic emphasis of the business. Sigma Expands Its Strategy Over the next few years, Sigma’s strategy was oriented toward building a reputation for producing the most creative and highest quality printing in its service area, which had a 35- to 40-mile radius around Ottawa. Sapit anticipated that this new direction would give his firm a solid reputation as a quality printer, one that fully justified the higher prices it charged. Several of the larger local companies obtained permission from their corporate offices to procure their printing locally. The downstate division of Carson Pirie Scott & Company, a large department store chain, chose Sigma for the production of its catalogs. The new marketing strategy paid off, and total sales volume had increased 220 percent by 1976. Calendar sales increased slowly but steadily. Management wanted growth, but in an orderly and controlled manner. Management also wanted its growth to be more profitable than the industry average of approximately 5 percent on sales. It was becoming obvious that to be successful in the printing business, Sigma needed to specialize. After long and deliberate discussion during 1976, company management wrote a 3-year corporate plan. The corporate plan emphasized marketing, which at this time was considered unique for a small commercial printer. The marketing plan focused a major share of the sales and marketing effort on building a market for the “Salesbuilder” desk calendar. The target market consisted primarily of smaller corporate accounts, while the marketing program emphasized a quality product and advertising with an internal sales staff, direct marketing distribution, and a superior price point. Space advertising in sales and marketing-oriented publications created substantial numbers of inquiries, but sales levels did not follow. Direct mail, primarily to manufacturers, produced a much higher response and return on investment. Sigma had created a unique product that was very flexible in terms of unique designs, advertising messages, photographic techniques, and other special requirements. In short, “Salesbuilder” became a highly effective marketing tool. Within the next few calendar seasons, large accounts such as Serta Mattress, Domino Sugar, and Borden, Inc., were added to the list of satisfied customers. Reorder rates were very high, usually in the 88 to 90 percent range. Quantities ordered by individual companies tended to increase annually for 3 or 4 years and then level off. Total calendar sales had increased at a rate of approximately 40 percent per year during the 1976–1980 period, during which time commercial printing sales increased at a rate of about 15 percent annually. A Strategic Shift Because of the success of the new strategy, production capacity was being taxed. In 1979–1980, major capital commitments were made to add a new high-speed two-color press and to purchase, redesign, and rebuild a specialized collating machine to further automate calendar assembly, previously assembled by hand. This opened the way to mass marketing of the “Salesbuilder” calendar line. Direct mail techniques were improved to allow selection of prospects by SIC number and sales volume. A toll-free 1-800 number encouraged direct response by interested parties. Whenever possible, Sigma responded to inquiries by sending a sample calendar that contained advertising ideas related to the respondent’s line of business. The sample would be followed up with a personal phone call within 2 to 3 weeks. Calendar sales continued to improve until, by 1983, they represented 50 percent of total sales and approximately 75 percent of net profit. In spite of the success of the calendar marketing programs and attractive profit levels, Sapit was disturbed by trends in the printing industry that pointed toward a diminishing market and increased competition for the commercial segment, particularly in Sigma’s local Rust Belt area. Rapid development of new technology and high-speed equipment had caused industry-wide investments in new equipment well beyond immediate need, creating excess capacity. The result was cost cutting and reduced margins. Sigma’s management had for some time been considering selling the commercial portion of its business in favor of becoming an exclusive marketer of calendar products. Through its membership in the Printing Industry of Illinois, a buyer was found for the plant, equipment, and the goodwill of the commercial portion of the business. The buyer agreed to enter into a long-term contract to handle the majority of calendar production for Sigma, using the same plant and staff that had been handling the production for the previous 10 years. The sale was completed in June 1983. This signaled the strategic move from a company based on production to one based on marketing. Sigma’s management now found itself free of the daily problems of production and plant management and able to commit all its efforts to creating and marketing new calendar products. Sapit had a long-standing personal desire to move the business to the Sun Belt for the better weather and, more importantly, for the better business climate. In May 1985, Sigma’s corporate offices were moved to Orange Park, Florida. Concurrently, Sapit’s son, Mike, a graduate of Illinois State University in graphic arts management, joined the business. Strategic Refinements To take advantage of Sigma’s marketing expertise, the company took actions to expand its product line to include several additional personalized calendar items. The new items included a year-at-a-glance wall planning calendar, desk diary, pocket diary, and a smaller version of the original desk calendar. Sigma had built its calendar business on products that were basically “off-the-shelf” formats that could be imprinted with the customer’s advertising message. In the late 1980s and into the 1990s, Sigma began to see a growing demand for products that were totally customized not only in graphic design but in product specifications as well. Sigma’s management saw a market for a new line of “super customized” calendars targeted to medium-to-large corporations with a substantial customer base. These companies were service oriented with large advertising budgets, thus creating the potential for very large orders. The market was relatively small in terms of number of companies, but very large with respect to total sales potential. It would require a totally different marketing approach than previously utilized. Test advertisements for custom-designed calendars were run in Advertising Age and in several marketing trade journals. These advertisements appealed to larger corporate accounts. In addition, the Sigma sales staff became much more aggressive in searching out individual accounts that appeared to have high potential as customized calendar customers. Prospects were researched, and contacted by phone and mail, to determine the individual with the responsibility to specify and authorize this type of purchase. Unsolicited samples of several different customized products were sent via FedEx in order to attract attention. Each prospect was followed up by a phone call within a few days to confirm interest and provide additional information. The goal was to establish Sigma as a publisher of high-quality, creatively designed custom calendars. Initial response to the new marketing strategy was good, with indications that the blue chip companies could, in fact, be reached through this approach. To reach its growth goals, Sigma felt it had to be successful in this marketing strategy. This type of highly customized product design was very demanding on the creative staff. Because only 10 to 15 new accounts of this type could be handled each year, it was important that creative time be spent on high-potential accounts. The new strategy was successful in landing substantial orders from Nabisco, Fidelity Investments, and FedEx. Realizing that these blue chip companies were consumers, Sigma focused the entire organization on meeting five customer needs: (1) flexibility, (2) production of a quality product consistent with the client’s image and marketing goals, (3) personal service and attention from beginning to end, (4) fair pricing, and (5) timely, efficient fulfillment. Sigma’s Total Service Package With the blue chip accounts, Sigma realized that it had to be able to offer its products on a turnkey, or concept-through-fulfillment, basis. Many of these corporations wanted to use a calendar program, but were not able to devote staff, time, or expertise to such a project. Sigma offered the solution—handling the entire calendar promotion, including conception, design, production, and delivery—so that customers could devote their time to more productive efforts, confident that their calendar program was running smoothly and efficiently. They dubbed this the “Total Service Package.” In order to provide total service effectively, Sigma installed new computer equipment and programs to enable comprehensive order fulfillment for a variety of programs. Special shipping manifest programs were developed to simplify the handling of large quantities of drop shipments. From established customer lists or those generated through Sigma’s direct order programs, calendars could be shipped to as many as 20,000 locations for a single account. This was particularly helpful to accounts that had dealers or customers scattered across the country. The business grew rapidly from 1985 to 1990, and by 1991, Don and Mike Sapit saw a new opportunity to expand the business again. After carefully analyzing the characteristics of its buyers and their buying decisions, Sigma found new market opportunities. During its first 15 years in the promotional calendar business, Sigma focused on large companies that usually distributed their promotional calendars through their sales forces to customers. These companies usually supplied Sigma with the basic idea for their calendar promotion, including an imprint or art design for the firm’s individualized calendar. With its own computer order tracking and manifest system in place, Sigma was able to offer its customers and prospects an efficient and cost-saving order and distribution system. With a customer-supplied list, Sigma began marketing the calendars directly to the customer’s distributors. Flyers and samples were produced and mailed by Sigma. Orders were then returned directly to Sigma. This process allowed individual distributors or a single branch to include its own imprint on the calendar. A customer list may have over 10,000 names, and a single order may consist of over 1,000 different imprints. Because each customer has its own requirements, a staff member dedicated to personalized service is assigned to each customer. Sigma learned how its customers made decisions about specialty advertising purchases such as promotional calendars and then developed a program to satisfy the needs of purchasing agents and buyers in large organizations. The strategy was very successful, and during the 1990s, the company added prime accounts such as Milwaukee Electric Tool Corporation, Hoffman LaRoche, Inc., International Paper Company, and Nabisco Brands, Inc. An Emphasis on Implementation After focusing on the “Total Service Package” approach as its primary marketing strategy, Sigma experienced a large increase in corporate clientele with very specialized product and service requirements. The “Salesbuilder” orders that were the foundation of the business became secondary to “programs”—larger corporate accounts with networks of dealers, franchises, or sales representatives to place orders—as well as multiple products and services offered as part of their calendar promotion. Sigma’s reputation was bolstered by strong clientele references and testimonials. Companies were drawn to the custom calendar vendor known for high-quality products and a staff with tremendous flexibility and creativity. In an effort to distance itself from competitors, Sigma improved on the “Total Service Package,” which had become an important part of its marketing strategy. Customers were surveyed before and after they received the product, and large corporate account contacts received a visit from their account representative early in the year to review the previous year’s program and begin laying groundwork on the upcoming promotion. In addition, international promotions and shipping became important aspects of several large accounts. Account representatives began developing large corporate accounts by promoting multiple products, while some promotional items beyond calendars were produced in an effort to maintain exclusivity with a client. The company continued to add to its list of satisfied customers such prime accounts as Unisource, xpedx, Volvo Cars, Volvo Trucks, Ditch Witch, and Enterprise Leasing. Mega-accounts also came on board, such as Yellow Freight Systems (including all of its subsidiaries) and CNH, the parent company that brought along the business of its multiple operating divisions including Case IH/Case Construction and New Holland Agricultural/New Holland Construction. After many instances of being asked by corporate clients to include additional advertising products as companion pieces to their calendar program, management began to consider the viability of becoming an ASI (Advertising Specialty Institute) dealer distributor. The annual cost was acceptable, considering the cost savings to be realized in purchasing specialty items and specialized printing products wholesale through ASI vendors. Sigma became an ASI distributor in March of 2000, providing new and useful resources to enhance the calendar programs and meet specific needs of established customers. The ASI resources opened up new markets for additional business from many of their existing customers, without the need to aggressively sell the specialty promotions segment of business and without diluting the focus on calendar programs. Customer demand led to changes and the expansion of the sales and administrative areas, as well as the graphics department. A stronger focus on the service aspect of the business was a strategic move for the sales and administrative areas, resulting in the creation of a dedicated customer service department. Sigma also saw tremendous growth in its graphics capabilities—a response to the major technical changes in the printing industry itself, as well as the needs of its customers. Despite the additional staff and resources, the demand from program accounts was so great that the company was in danger of overselling its production capabilities. Recognizing that possibility, Sigma became more selective in its marketing efforts for program accounts. The company also began to reevaluate the potential of smaller, easy-to-produce, and profitable “Salesbuilder” calendar orders as a product to be marketed on their corporate e-commerce website, suitable for smaller companies that could not support a completely customized program. Linking Technology to the Marketing Program In the late 1980s and early 1990s, Sigma offered limited in-house design/layout services. Prior to desktop publishing, type was set, paste-ups were created, and film was shot manually on a camera. Graphic needs beyond the company’s capabilities were outsourced to service bureaus. Even though Sigma’s capabilities were limited, very few of its customers had complex needs or technologically capable marketing departments. With the onset of the digital age, Sigma’s technology was forced to change. Sigma’s prepress capabilities were transformed over a 10-year period. Graphics workstations became an integral part of the business, with increasing storage capacity and applications to handle larger and more complex files. In the mid-1990s, a digital image setter replaced the old camera and film technology. That evolved in less than 10 years to a direct-to-plate workflow with color management, digital color proofing, and multiplatform capability. Photos are now almost completely digital—scanning is becoming a thing of the past—and many customers have their own in-house design and graphics staff that work closely with Sigma’s graphics department. The sophisticated technology created the need for advanced training and continued education and upgrades. Sigma’s management has maintained a commitment to stay in the forefront of graphics technology through strong staffing and investment in equipment and software applications. The mid-1990s also ushered in the company’s Internet presence and online capabilities. A corporate identity on the Internet is absolutely essential in today’s marketplace, and Sigma has taken the additional steps to utilize the Internet for e-commerce, namely product promotion and ordering capabilities. Many of the company’s larger clients demand online ordering and communications with their networks in order to maintain their accounts. Upgrading technology on the administrative side has allowed the company to better serve its customers. A centralized file and information system has integrated many previously separate functions and increased flexibility among the staff. Sigma is now online with several transportation companies, making package tracking an easy task. The company has added many features with the improved technology, such as direct invoicing, credit card sales, digital faxing, and proofing online or via e-mail. Sigma’s Current and Future Marketing Strategy During Sigma’s expansion period, Don began to turn over the daily operations of the business to his son Mike. In early 1996, the transition was complete, with Mike in full charge of the business. Don has retired but remains chairman of the board, acting in an advisory capacity. Stock was purchased back from Don’s attorney/colleague who had invested in the company many years ago, and Sigma issued stock to key employees, creating a greater sense of ownership and commitment to the business. A major concern was to develop personnel strategies and a succession plan in the event of Mike’s death or disability. Key employees with long tenure will soon be considering retirement, and the skills held by management and key employees would need to be taught and transferred to newer employees. In 2007, a succession plan was developed for the company to ensure its continuation. In 2009, Jeff Sapit joined Sigma as marketing production manager, the third generation of his family to become involved in the business. Jeff has a different educational background focusing more on management and marketing. While his father Mike Sapit’s college education was in graphic arts—and initially he was much more concerned with operations and production—Jeff brings a perspective to the firm that differs from both his father and grandfather. Mike’s goal is to allow his son considerable freedom in contributing to the strategic plans on Sigma. Mike wants to allow Jeff to apply his education and experience in developing new products and expanding Sigma’s markets. Annual marketing meetings have been scheduled each year since 1991 for staff members to meet and review the past year, addressing and solving both internal and external problems. The meetings encourage teamwork, foster company loyalty, and increase employees’ knowledge about Sigma’s status in the marketplace. In addition to the business meetings, the company has also conducted a number of pleasure trips for employees (sometimes with their spouses and/or families) to promote stronger personal relationships and interaction. The employees have visited a number of resort complexes and major cities, and even sailed together on a cruise ship to the Caribbean. These events have contributed to a strong sense of community and teamwork among the employees. Sigma has constructed a diverse team of people with a wide range of skills, each playing a key role in the overall success of the company. Sapit believes that the knowledge and skills of his employees are an important part of what gives Sigma its edge. One of Sigma’s many strengths is the ability to understand market opportunities and to develop and continue to adapt its strategic focus. This ability has enabled the company to maintain a 90 percent repeat customer rate. As the environment changes, Sigma gathers information from existing and potential customers to develop the most effective marketing strategy. For example, as more companies became concerned about sustainability issues, particularly renewable resources, Sigma responded. In 2008, Sigma became a Chain-of-Custody (CoC) certified company with the Forest Stewardship Council (FSC)—a designation that ensures the integrity of the paper supply chain (forest to mill) by certifying that the paper used by Sigma comes from responsibly managed forests. The following year, the company became certified with the Sustainable Forestry Initiative (SFI) and the Program for the Endorsement of Forest Certification (PEFC). CoC certification was a response to the demands of Sigma’s customers and the company’s own desires to reduce its environmental impact. However, in 2015 Sigma determined that the certifications were unnecessary due to a lack of need by its clientele as well as its ability to utilize Sigma Graphic certifications. This allowed Sigma to keep costs down and save on internal administration resources. The latest recession led to changes for both Sigma and its competitors. It hit the customized calendar industry particularly hard as companies began to reduce their salesforces and cut their marketing budgets. The rising use of social media also led to a decrease in demand. More than 7 years later, the customized calendar industry has not fully recovered to prerecession levels, with many organizations opting to go with less-customized calendars to avoid spending as much money on elements such as photo shoots. Several of Sigma’s major competitors underwent mergers, reducing their sales staff in the process. This downsizing also impacted the customized calendar industry. Because many of Sigma’s customers are extremely loyal to the company, most stayed with the firm but decreased the volume of their orders due to the economic crunch. These changing environmental conditions have once again led Sigma to adapt its strategy. Sigma responded to these changes by focusing more on regular commercial printing services for the market. For instance, Sigma offers printing services for promotional materials such as letterhead, envelopes, business cards, three-part forms, and other general commercial needs. Within the last 3 years, Sigma has purchased two printing companies to expand its operations. These two acquired companies are used solely for production and have no retail walk-in. Sigma also made the decision to become more self-reliant by purchasing more equipment so the company could rely less on its vendors. This equipment consists of color digital laser prod
