In this highly competitive market companies need a cutting edge to achieve revenue growth as well as establish them as the leader in quality service. The pressure is building up on firms to add value to their products and services and provide evidence- based advantage to their clients and customers.
Thoughtworks, a global IT consultancy firm had covered a lot of milestones during it life of eleven years but still the president of Thoughtworks felt that it has not yet reached the desired target and hasn’t undergone the mega growth necessary to establish itself as the champion in the IT industry. It had started off with its operations limited to only United States but it continued its expansion and went on to become a global company. In spite of its remarkable growth, it still wasn’t included in the category of the leaders of the IT industry. It has lacked in its ability to execute and thus is still among niche players. Apart from this another problem that can be identified is that brand awareness of Thoughtworks hasn’t been created mainly because of limited marketing budget. Being a small firm in comparison to its competitors it cannot even spend excessively on advertising and promotions.
Background and problems
Thoughtworks wanted to create a global image for itself in an industry where it faced extreme competition from global brands like Accenture and IBM. Although it wasn’t a large scale firm yet it wanted to win large scale projects and clients which were already customers of the global brands.
The most crucial issue that Thoughtworks is currently being faced with is how to create a brand image for Thoughtworks such that it becomes recognized by the ‘big fishes’ in the IT industry and also how such clients can be convinced to accept its services rather than demanding the services of its competitors. After eleven years of existence Thoughtworks can no longer afford being the second best, it wants to make it to the top and pose a competition to the other firms for once rather than being at the receiving end of competition.
Thoughtworks although had a large and growing number of clients and customers but they mostly brought small projects for the company and most of its clients were from Global 1000. it had worked for very few large companies and for those that it worked brought huge revenue for the IT company.
The kinds of projects Thoughtworks has command over are the system integration projects as well as custom applications. It competed in these two areas and not software implementation because that does not require much skill and innovative strategies. Its recruitment process involved extreme scrutiny of every applicant for the sole purpose of appointing only the best and not settling for anything less. This scrutinized procedure was adopted so that Thoughtworks can pride itself on providing such IT solutions that stand out.
Thoughtworks has to face competition from not just one side but rather from three sides where in-house IT staff is the competition to IT consultancy firms. Offshore development firms also posed a major competition since they had a cost advantage over the local IT firms usually in terms of technical expertise. Apart from this the major players in the IT industry like IBM, Accenture are an obvious competition to Thoughtworks.
To achieve that target the marketing department had to start working immediately and come up with new strategies to position their company and also to determine their main target market which was decided to be high risk taking firms and organizations who are the early adopters of new technology and are eager to dive into risky projects.
To win in this competitive environment where everyone is out to cut the throat of the other, Thoughtworks needs to position its firm in such a manner that it is uniquely distinguished from its competitor firms.
One major problem facing the entire IT industry is that many companies and organizations have the belief that referring to external IT consultants is just an addition to cost and will generate the same results as those produced by the in-house IT staff if they are given the same task. Such thinking needs to be changed and awareness about the importance of IT solutions needs to be emphasized.
Target market and assumptions
The target market of Thoughtworks would be comprised of big companies who are likely to be successful or are entrepreneur firms rather than small, not so successful firms since they will prefer taking safe and guaranteed decisions rather than plunging head-on in to risk and uncertainty. Such firms are likely to be focused on innovations and creativity. They would always be on the lookout for something new.
Firms which have a stable establishment and a sufficient revenue growth are likely to be a part of this category since they would now be looking to explore wider horizons. Such firms have the prime objective of dong something unique and different. Making profits is usually their second priority and not the first. Employee of such organizations are extremely motivated and dedicated to what they do. They are empowered to think out of the box and take necessary decisions themselves without consulting the upper staff. Apart from the above mentioned factors there are some others as well that are typical of type A companies:
Motivation to achieve: such firms are extremely competitive with a sheer will to win and a desire to achieve in everything they do. They don’t believe in standing second or third, their only aim is to come first in everything they do. Companies with clearly defined goals and a desire to achieve the company vision are originally dedicated to their mission objectives. Nonconformity: high risk taking firms generally do not follow trends rather they set their own aims and objectives.
Marketing research to validate the assumptions
A market research of the Type A companies will be conducted to determine whether the proposed assumptions regarding them are true or not. A survey can be carried out for the population of entrepreneurial firms and companies which are high risk takers and a sample can be obtained for such firms. These sampled firms can be made to fill out questionnaires that will answer questions regarding proactiveness, risk-taking abilities and innovativeness as well as the motivational factors.
Apart from this personal interviews can also be conducted with the relevant department heads at such firms where they can be asked if they have taken any prior decisions that involved high risk factors and also if they consider accepting the services of a new entrant in the market or rather prefer sticking to their previous , reliable IT consultant.
In case they do consider any new entrants in the field then the success of the task managed by the new firm can be determined.
Positioning is all about creating perceptions in the customers mind. How we want the consumer to perceive our firm and our product in relation to our competitors is how we position ourselves.
Firstly Thoughtworks needs to focus and intensify its services only in those fields which our representative of the aforementioned target market. For this purpose it should cut down on providing services to the retail and energy sector which are a rather ‘safe bet’. it needs to focus primarily on the financial and banking sectors, insurance, mortgages etc which are high risk takers and are willing adopt technological changes. This will allow Thoughtworks to be perceived by consumers as a company that excels in providing only innovative solutions and IT infrastructure and has no room for the mediocre IT programs and software solutions. It needs to bring new ideas, concepts and strategies to the forefront and allow for flexibility within the organization. employee empowerment is absolutely necessary for a firm dealing with innovation because creativity cannot be learned and if new ideas flow in from all four sides there is a higher probability of providing innovative solutions to the clients.
A website can be designed for Thoughtworks which would also include testimonials from clients who have availed its services and have been satisfied. This would serve to build a brand image for Thoughtworks but would require adequate funds.
Past history of Thoughtworks has shown that maintaining amiable relations with clients led to more opportunities for the company mostly through word of mouth so it needs to emphasize on its belief in building long term relations with its clients. This would reflect positively on the company image and would open new doors of opportunities in the form of more challenging and prospecting projects.
It should position itself as the IT firm solely relying on the agile development methodology and this will allow cutting down on defects in the software as well as reducing the deployment time. It should use innovation and creativity in its advertising campaigns in order to reflect the same characteristics in its services as well.
Customers should perceive Thoughtworks as the trend maker in the IT industry rather than the trend follower. To create such a perception Thoughtworks will have to be a little selective in taking up projects- selecting only those which offer a challenge and an opportunity to prove its capabilities and technical expertise.
It needs to uphold its image of intense recruitment procedure that filters out only the most able and qualified people for the job and this will eventually build a perception of quality assurance in the mind of clients.
The positioning needs to be such that ,clients perceive it as one of the most reliable and effective outsourcing IT firms and this would ultimately put an end to in-house IT staff and thereby cut down on competition for Thoughtworks. But this form of positioning will require an immense amount of marketing budget for promotional campaigns and advertising efforts if media is used as the main source for branding. But since the target is restricted to firms and organizations internet can be used to promote the brand of Thoughtworks where e-mails can be sent to potential clients to inform them about the skills and technical abilities of Thoughtworks.
The positioning strategy should also take into account the factor that there is a wide difference between in-house technical staff and the technical expertise working at Thoughtworks. This is due to the screening procedure which the IT analysts at Thoughtworks have to undergo to become a part of the company. This difference emphasizes on the belief of Thoughtworks in staff quality and capabilities.
It should offer an incentive to its customers and justify that why is Thoughtworks better than any of its competitors. What makes it special and different from the rest? It can provide a cost incentive to its potential clients whereby it can avail cost reductions by using the resources from countries where it is cheaper but this should be done without any compromise on quality. Timely deliveries of service and quality assurance are important factors that should be emphasized in the positioning strategy.
No matter which positioning strategy is adopted there are certain questions that need to be kept in mind like are there enough resources available, what position is currently owned and which position is desired and most importantly are the actions and steps supporting the positioning objective that has been set.
Another alternative can be to change the target market from Type A to Type B if revenue generation and profit maximization is the main focus. Because if Thoughtworks just aims to provide services to the Type A category than it would be working for just 30% of the companies and thereby would be compromising on its revenue. On the other hand, if Type B is the preferred target market than Thoughtworks would be aiming to be the sole provider of IT solutions to 60% of the firms and in the process would be investing on the goal of revenue growth which would even allow for a more extravagant marketing campaign and promotional activities to create brand awareness and recognition. This Type B category would also allow for innovation to be used in services but any unproven technology won’t be acceptable to such a target market so the level of innovation and creativity on part of Thoughtworks would be comparatively lower.
One other alternative can be to target the Type C segment of the population where the companies would be reluctant to try any new technology and would prefer the mediocre means of IT solutions. This alternative is no way feasible to Thoughtworks because firstly it comprises of only 10% of the population which means a drastic compromise of revenue and secondly it will take away all chance of growth and expansion because Thoughtworks would no longer be having any USP (unique selling proposition) ,with a minimal level of innovation.
1. Association, A. M. (1996). Marketing Wars. Crain’s Detroit Business , 1-8.
2. Etzel, M. J., Walker, B. J., Walker, S., ; Stanton, W. J. (2000). Marketing. New York: McGraw-Hill Education.
3. Generic Marketing Flowcharts. (n.d.). Retrieved October 2, 2008, from Marketing Flowcharts: http://www.marketing-und-vertrieb-international.com/en/services/flow-chart-of-assistance.htm
1(Generic Marketing Flowcharts, 2008)
The companies and organizations in the market segment are divided into four groups:
Early adopter – like to try something new
Pragmatists – will be willing to adopt new technology only if it provides the answers to their problems.
Conservatives – avoid new technology.
Laggards – are the last to try something new.
Thoughtworks target market will be located in the early adopters which will be comprising of firms willing to accept new technology and take risks with the intention of achieving potential rewards if it’s successful.
If innovativeness is assumed as the first variable and quality assurance as the second variable then Thoughtworks would like to position itself in the 1st box.