Cisco System has penetrated the global networking equipment industry since its inception in 1984 in San Francisco. The firm has positioned itself as the leading supplier of networking equipment globally. The company operates as a public limited firm. Its success has arisen from the integration of effective strategic management practices. Some of the strategic practices that the firm has incorporated entail the formation of strategic partnerships, acquisitions, and organic growth. In the late 20th century, the firm formed strategic partnerships with several firms such as US West, Sony, and Matsushita. These strategic partnerships have contributed to the development of in brand value. Moreover, the firm has acquired over 40 companies since its inception in addition to organic growth. In 2003, the firm acquired Linksys.
These strategies have contributed significantly to the firm’s global success. For example, the organic growth strategy has enabled the company to expand into individual markets. On the other side, partnerships have contributed to the development of competitive advantage regarding specific areas of technology. Similarly, acquisitions have enabled Cisco to develop long-term supply chain agreement (Pham and Pham 91). This paper entails a case study analysis of Cisco Systems. The purpose of the case study is to evaluate the factors that have fostered the company’s success. The evaluation mainly emphasizes the firm’s approach towards marketing. Subsequently, the paper details an analysis of the Cisco Systems’ marketing plan.
Cisco System market plan
The firm’s growth can be attributed to conditions prevailing in the networking equipment industry as illustrated by the PESTLE model below.
Political and legal environment
The networking equipment industry has greatly benefited from the development of legislations such as the Intellectual Property Rights [IPRs]. Subsequently, Cisco has been in a position to protect its new product inventions such as switchers, modems, routers, and platforms through patenting.
The adoption of open economic systems by different countries has made it possible for Cisco Systems to enter the global market successfully through internationalization. For example, during the 1990s, Cisco established international offices in France and London. The development of the stock market further made it possible for the company to achieve financial strength through increased market capitalization.
The company’s success has also been promoted by the increased consumption of technology products by consumers. This aspect has given the firm an opportunity to venture into the consumer market segment. The company has developed different solutions such as home entertainment solutions, wireless capabilities, music, and printing technologies. The growth in the consumption of technology products underscores the company’s resolve to connect the society through technology.
The increased adoption of technology by consumers has made the networking equipment industry very lucrative. Subsequently, the number of industry players has increased substantially. The explosive growth in the industry has made it possible for Cisco Systems to acquire other small firms, hence strengthening its product portfolio. For example, in the 1990s, the company acquired and integrated over 49 technology firms.
The internal and external environment influences a firm’s capacity to succeed in its respective industry. Therefore, it is critical for the management team to understand the internal and external environments. The SWOT model below illustrates a summary of the Cisco Systems’ internal and external environments.
|Strengths ||Weaknesses |
|Opportunities ||Threats |
Despite its ability to venture into the global networking equipment industry, Cisco System faces intense competition from several well-established global firms. Such firms include Microsoft Incorporation, Hewlett-Packard, and the International Business Machine [IBM]. These firms have diversified their product portfolio extensively, hence providing an opportunity to access substitute products.
In line with its commitment to maximize profitability, Cisco Systems has targeted both individual and industrial consumer market segments. The institutional customers are comprised of different institutional customers. Its market targeting has been achieved by considering the customers’ demographic, behavioral, and psychographic characteristics. On demographic segmentation, the company has considered the consumers’ income. On the other side, psychographic targeting deals with the consumers’ lifestyle. Specifically, the firm targets the technology-savvy customers. Conversely, the behavioral segmentation is concerned with the product benefit that the consumers intend to acquire by using its products.
Marketing mix strategies
Cisco Systems is focused on dominating the global networking equipment industry by providing different networking products. The company has integrated new product development as one of its strategic practices to achieve this goal. Subsequently, the firm has diversified its product portfolio as evidenced by the different product categories. The core product categories include networking devices [routers, switches], storage area network, optical networking, wireless devices, and voice over IP [VoIP].
Cisco System has adopted the usage-based pricing strategy (“Cisco” 4). Under this strategy, the pricing is based on the value that consumers receive by using its different products and services such as the Internet. Based on usage-based pricing, the company offers high-quality products, hence increasing the level of satisfaction (Albarran, Chan-Olmsted, and Wirth 438). This goal has been achieved by integrating the customers’ product requirements into its product innovation.
The amount of information on a product available in the market influences the likelihood of a firm to achieve its profit maximization goal. Thus, the significance of creating market awareness cannot be ignored. Since its inception, Cisco Systems has focused on creating market awareness. Subsequently, the firm has integrated different marketing communication approaches. Some of the core marketing communication methods used by the firm include advertising and public relations. In its advertising process, the company has integrated both broadcast and print mediums such as television and magazines.
The firm has also integrated public relations into its marketing communications. One of the ways through which it has achieved this goal is by giving sports stadiums the opportunity to create unique customer experiences. Using its digital technology, Cisco Systems has been facilitating outdoor advertising. The firm has transformed major stadiums in the US such as Miami Dolphins, Kansas City Royals, Dallas Cowboys, Toronto Blue Jays, and New York Yankees into interactive venues. The extent of interaction has further been achieved through the provision of video conferencing and telepresence technologies. This approach has made it possible for stadiums to create unique fan experience.
The digital displays in the stadiums using the HD flat-screens have made it possible for customers to experience more than the game; for example, viewing the local traffic trends. In addition to the above interactive marketing communications, Cisco Systems has integrated social networking platforms such as Facebook, Blogs, and Twitter. This move has made it possible for the firm to reach a large number of individual customers.
The firm distributes its products both directly and indirectly. Direct distribution is undertaken through its stores located in different countries. On the other hand, indirect distribution is achieved through contracted agents and distributors. One hundred and seventy (170) distributors facilitate the firm’s global distribution process (“Vars” par.4). These approaches have made the firm’s products accessible to the global market.
The case study shows that the Cisco Systems’ success in the global networking industry has arisen from the adoption of effective strategic management practices. For example, the continuous improvement in its growth and marketing practices has contributed to growth in its brand value.
Aaker, David. Brand portfolio strategy; creating relevance, differentiation, energy, leverage and clarity, Chichester: Simon and Schuster, 2009. Print.
Albarran, Alan, Sylvia Chan-Olmsted, and Michael Wirth. Handbook of media management and economics, New York: Routledge, 2006. Print.
Bannan, Karen. How Cisco used consumer-based marketing strategies to reach b-to-b clients 2010. Web
Pham, Tiffany, and, Andrew Pham. From business strategy to information technology roadmap; a practical guide for executives and board members, New York: CRC Press, 2013. Print.
Vars: Cisco talking up distributors’ strategic value to partners 2014. Web.