Currently, Maratec is using a traditional model of marketing, which is not fully supporting the needs of the company as it strives for growth. By adopting e-marketing, further growth would be made possible and the issues identified would be addressed.

Price – Maratec uses cost plus pricing, which may cause some lost sales, as the cost is unknown at the time of agreement with the customer. The use of the external procurement company and the procurement of small orders of specific materials is likely to increase the costs and therefore lead to higher prices. Whilst high prices are not necessarily a problem, the inability to set the price when negotiating with the customer is not ideal.

The use of e-marketing will require Maratec to be more specific with regards to pricing. Although it may display a ‘contact us for price’ instruction online, it would need to be able to provide a price within a reasonable time. Should it introduce e-procurement (see part b), then price links could be introduced to make this quicker.

E-marketing could be used to offer special discounts on large orders, or on pricing for a subsequent item of furniture, following a previous order.

Promotion – Maratec’s current promotion model may work for a small company, but if the company wants to grow, then this is a crucial area for change. The current method of promotion is limited. The use of expensive brochures means that all potential customers see the same products, and the company only produces a new brochure very year. E-marketing allows individualisation, or personalised marketing. The website could record visitors’ click patterns and use targeted promotion based on the patterns detected. For example, if a potential customer browses tables and chairs, then Maratec could send them an email focused on these products.

The reach of promotion is also limited, either to those who have an acquaintance with an owner of a Maratec piece of furniture, or those who attend certain exhibitions. Whilst Maratec has a focused differentiation strategy, this may be appropriate. However, Maratec is looking to increase its sales, including an expansion of segments, to reach corporate clients. Online promotion may be a good way to make initial contact with these potential customers.

Place – As Maratec produces bespoke furniture, it does not make sense to have many showrooms as each piece of furniture displayed only exhibits the style of Maratec and is not for sale. To open further stores would lead to high additional costs. However, by using e-marketing, the market reach is as wide as Maratec choose to make it; global clients could purchase products, on the condition that Maratec will support transactions from that country and will provide shipping to that destination.

Processes – Many of the processes, excluding the actual production of the furniture, could benefit from the use of e-marketing techniques. The clients’ designs could be uploaded and progress shown when the client logs in to their own account. This would make the update process much smoother and overcome the difficulties of a client visiting the manufacturing plant. Maratec could post videos of the production process if required.

Details of the materials sourced and the expected date of completion could be stored and updated as appropriate. Corporate clients could have access to re-order screens, allowing them to place orders for duplicates of its previously produced products.

Physical evidence – This is critical to Maratec’s success. As items are bespoke, there is no finished product to view before purchase. Therefore evidence of previous successes is important. Images of items may be placed on the website. This will help with visualisation for clients, as more images can be uploaded than in a traditional brochure. Maratec could also post evidence of the quality, in the form of quality standards awarded, and supplier quality statuses. Additionally, the word-of-mouth promotion may be extended through physical evidence, with customer reviews posted on the site.

If Maratec uses advanced manufacturing techniques such as computer aided design and manufacturing, the clients’ designs could be transformed into 3-D images, which again would assist with visualisation and ensure that enquiries are converted into actual orders.

Procurement involves the sourcing of suppliers and forming of agreements with them, enabling purchasing of the right quality materials, whilst ensuring that the time and price are right for the company. This is not currently carried out by Maratec, who chooses to use a specialist procurement company instead.

Principles of e-procurement

E-procurement makes use of electronic forms of communication to simplify the entire production process. It relies upon connections between suppliers’ and purchasers’ systems, enabling automated transactions.

The focus is on getting the entire procurement process right: materials are delivered in the right quantity and quality, at the right price, from the right seller and at the right time.

Most e-procurement systems require registration and login so that both supplier and buyer details are stored and both administrative (address, etc) and historical data are available.

E-procurement can be approached in a number of different ways. For example, in a B2B marketplace, suppliers and buyers trade through a third party site. The relationship, and contractual relationship, is with the third party, although buyers and suppliers may enter into regular trades. The third party sites usually focus on one industry, e.g. providing materials for the furniture trade. This would give Maratec access to many suppliers as needed for the growth of its business. This would be the closest to their current model, with the third party taking some of the procurement responsibility by providing appropriate suppliers in the marketplace.

An alternative approach suitable for Maratec could be buyer centric. Using this model, Maratec would have relationships with a number of individual suppliers. Systems would be integrated, and a procurement management system managed by Maratec allowing the selection of the best supplier for each requirement. This would also simplify management reporting, as the system would integrate with internal transactional systems, e.g. production control and accounting as well as internal reporting systems.

Benefits – There are many benefits of e-procurement, although not all would be applicable to Maratec. This would certainly pass the control of the procurement process to Maratec, who currently relies on a third party service. As Maratec uses specific materials for their products, it is important to have access to a wide choice of suppliers, as a specific piece may be difficult to find. Simultaneously, however, Maratec may build a relationship with a certain supplier, who may suggest certain raw materials as they become available

There should be obvious cost reductions, as this would cut out the middle-man and enable Maratec to shop around for the best price, regardless of location. It should also speed up the process as there will be no need for communication with the procurement company, and Maratec could select suppliers who are able to deliver within a specified date range, or who are pre-approved on the system as they meet quality and reliability standards.

Risks – It is suggested that a procurement manager will only be recruited should the decision to use e-procurement go ahead. This may be risky as the e-procurement decision could be made without expert advice of a procurement manager. The model and method of implementation may be flawed and the system unusable for Maratec’s purposes.

It is not known what agreement Maratec has with the procurement company currently being used. There may be a need to compensate the company for the cessation of the contract.

If implementation is successful, there are still risks. Maratec’s strategy requires quality materials in order to succeed. There is a danger that quality may be compromised if purchases can be made from any source, anywhere in the world. There is also the danger that deliveries may not be made on time. These two risks alone could eradicate all the benefits of e-procurement.

E-procurement should reduce the administrative burden of purchasing, but cannot replace the strategic requirements such as sourcing and negotiating with appropriate suppliers, to help meet Maratec’s strategic objectives.

Maratec will also need to consider data security. By making transactions online, it is possible that competitors may obtain access to their data, providing information about their strategy, products and customers.