The International Business Machine Corporation was established in 1911 as a Computer Tabulating Company. It changed its name to IBM in 1924. IBM largely deals in Hardware, Software, Consultancy, and Hosting services. IBM has had an extensive journey so far, having managed to stay in the market for almost a century now.
In the IBM case study, we shall talk about IBM’s marketing strategy, marketing mix, competitors’ analysis, BCG matrix, marketing campaigns, and social media marketing presence. So without further ado, let’s get started by getting to know the company a little better.
IBM is a multinational technology corporation that specialises in hardware, software, cloud-based services, and cognitive computing. It is headquartered in New York, United States, and has five strategic business units – Financing, Systems and Technology, Technology service, Business Services, and Software.
IBM is a top producer and manufacturer of computer software and hardware. It is also behind great innovations like:
- Automated Teller Machine (ATM)
- Floppy Disk
- Magnetic Strip Card
- Hard Disk Drive
- Relational Database
- UPC Barcode
- SQL Programming Language
- Dynamic Random Access Memory (DRAM)
IBM has consistently identified the upcoming technological needs and come up with innovative solutions that always leave a mark. Let’s start delving into IBM’s marketing efforts by first learning about its marketing mix.
IBM’s Marketing Mix
The marketing mix refers to a company’s range of tactics strategies, for promoting its product or service in the marketplace. Price, Product, Promotion, and Place are the four Ps that make up a traditional marketing mix. Following is IBM’s Marketing Mix:
IBM’s Product Strategy
IBM offers a diverse range of goods and services. Cognitive solutions, global business services, technology services & cloud platforms, systems, global financing, distributed computing, psychological registering, information and analysis, IT framework, and Internet of Things are some of IBM’s offerings. IBM’s Cloud Data Encryption Services (ICDES) is a one-of-a-kind solution that uses sophisticated technology to secure client data.
The Technology Services & Cloud Platforms product section also includes infrastructure services, technical support services, and integration tools. Global Finance also provides customer financing, industrial financing, and remanufacturing and remarketing facilities. The emphasis on these core product lines is reflected in IBM’s organisational structure. In the organisational structure of the company, each product line is represented as a division.
IBM’s Place Strategy
This part of the marketing mix identifies the channels, or places, by which IBM’s products are distributed. These locations have an impact on the company’s strategic success in targeting customers. In this case, IBM transacts with consumers and distributes its goods through the following networks:
- Official Website
- Business Partners
- Delivery Centers
- Warranty Service Providers
Customers can find useful information about IBM’s products on the company’s official website. The website is an easy way to connect with potential clients all over the world. Customers may also use the official website to build and pay for accounts to use the company’s cloud-based services. Business partners, on the other hand, are the company’s standard method of reaching its target market. Some of the company’s products, such as Global Process Services, are delivered via delivery centres. In addition, the company has warranty service providers for existing customers’ device repair and servicing needs.
IBM’s Pricing Strategy
For its information technology products, IBM uses the following pricing strategies:
- Market-oriented pricing strategy
- Value-based pricing strategy
The market-oriented pricing strategy aims to set prices that are comparable to current prices in the information technology industry for certain goods. For example, IBM’s online products, such as cloud platform services, are competitively priced, owing to the high level of competition and price sensitivity that other products in the cloud-based services market.
The value-based pricing approach, on the other hand, is seen in some of the company’s product lines. The aim of this strategy is to assess appropriate prices and price ranges based on how IBM’s goods are perceived and needed by customers. For example, the value-based pricing approach is used to price the company’s customised business machines for restaurant chains. This part of the marketing mix is influenced by the cost leadership strategy and the market penetration intensive strategy.
IBM’s Promotion Strategy
Following are the tools IBM uses for promotion:
- Advertising (primary)
- Direct marketing (primary)
- Sales promotion
- Personal selling
- Public relations
IBM’s products are primarily promoted through advertising. The business advertises in both print and online media, including famous news websites. Direct marketing, on the other hand, entails direct contact between a company and its corporate customers, especially when delivering new goods to existing customers. For example, IBM sends emails to companies who already use its systems and services about new products. Furthermore, sales promotion is used on occasion to maximise the company’s share of the information technology industry. Discounts and free trials, for example, are provided to entice more consumers to try out any of the company’s offerings, such as cloud-based services.
Personal selling is used to cater to the needs of individual consumers, such as those in small towns. This communication strategy is often used to promote direct marketing. Sponsorships of activities are a part of public relations. These promotional activities show that IBM relies heavily on advertisements, but also on other forms of communication for this part of the marketing mix.
The marketing mix, thus, shows the company’s comprehensive 4Ps strategy. Let us now quickly take a look at IBM’s competitors.
IBM works in an industry that has a huge number of competitors and constant entrants. Below are some of IBM’s biggest competitors:
- Hewlett-Packard (HP): Information and Technology Company in California
- Xerox: Producer and seller of print and digital products in Connecticut
- Accenture: Computer Services and Solutions Company in Dublin, Ireland
- Oracle: Advanced Technology Solutions in California
- DXC Technologies: Modernizing IT processes, ensuring system security, scalability, and cloud optimization
- Dell Technologies: Provides the latest computer and technology solutions
- ODM Direct: Provider of cloud services
- Inspur: Provider of cloud computing, big data, key application hosts, servers, storage, artificial intelligence, and ERP
As we can see from the above infographic from 2018, IBM has the highest share (9.2%) in the AI services industry amongst its biggest competitors worldwide. This shows us that IBM is on the right track and holds a huge chunk of market share, indicating its competitive success.
Now that we thoroughly understand the company, its business, and market position, let us finally get into its marketing strategy.
IBM’s Marketing Strategy
IBM’s marketing strategy includes significant investments in both conventional and online advertisements, as well as promotional budgets. All of which are used to keep prospective consumers informed about the company’s constantly changing product lines and to strengthen brand recognition. Equally significant is their track record of investing millions in hiring, building, and compensating one of the most experienced sales teams in the industry.
Talking about IBM’s STP (segmentation, targeting, and positioning) strategy, which is a huge part of a company’s marketing plans, IBM’s market segmentation variables include psychographic, spatial, and demographic factors. IBM employs a differentiated marketing strategy to target specific products and services available to their customers based on their needs. The company positions itself as an organisation that generates value for its stakeholders through the value distribution chain by employing a user benefit-based positioning strategy. IBM has always emphasised on differentiating themselves through their consistent value proposition and innovation.
Another analysis that helps in understanding a company and its success, is the BCG matrix. Let’s take a look at IBM’s BCG matrix.
IBM’s BCG Matrix
Boston Consulting Group’s (BCG) product standing matrix is also known as the growth-share matrix. It helps to know how the products are doing in the market and how they could be improved. The BCG matrix has 4 quadrants as shown in the picture below. The products in the star quadrant have high industrial growth and a high market share.
The products in the question mark quadrant have high industrial growth but low market share. The products in the cow quadrant have a high market share but low industry growth and in the end, the pet/dog quadrant has products with low market share and low market growth. After understanding what a BCG matrix stands for, let’s discuss IBM’s BCG matrix.
IBM offers different plans to simplify the various set of processes, with the help of its five Strategic Business Units (SBUs), as we’ve learnt before.
- The Technology services offer IT infrastructure and integrated technology services. It is in the Stars category in the BCG Matrix
- The Business segment deals in consulting and application management services. This also is in the Stars category in the BCG Matrix
- The other segments are still in the question mark category in the BCG Matrix as there is a lot of competition in these industries
A large part of a company’s marketing involves delivering successful marketing campaigns. Let us talk about some of IBM’s marketing campaigns.
IBM’s Marketing Campaigns
Over the many years of its long journey, IBM has produced an extensive number of marketing campaigns. In this segment, we talk about two of its most memorable ones.
IBM’s “Code and Response”
Earthquakes, floods, cyclones, etc, there are many cases of natural disasters around the world and similarly in South America. IBM hence wanted to create a center that deals with nature’s protection and security. Developers were selected from all over the country to take action and create creative solutions that help avoid damage. Community advocacy, open-source support, and innovation were the heart of the enterprise and the campaign. This campaign increased IBM’s brand awareness by 908 million people on World Humanitarian Day. With 100,000+ programmers from 156 nations, the campaign was a definitive success.
IBM’s “Smarter Planet”
The world is getting smarter with new technology and AI. Today, technology is a part of almost everything we do. IBM came up with its campaign “Smarter Planet” which had the same idea. Its vision was to make healthcare, retail, finance, transportation, cities, and other fields ‘smart’ and hence, better with digital technology.
Following are some of its Smarter Planet ads:
Following were the few results of this campaign:
- IBM worked with the Stockholm city authorities to design and implement a congestion-management system. Within 4 years, it substantially reduced traffic congestion at peak- and non-peak times, vehicle emissions, and driver delays; and increased the use of public transportation.
- IBM developed Syracuse University’s Green Data Centre (GDC). It aimed to use advanced techniques in buildings design and management, energy generation, cooling technologies, and IT system management. The GDC uses half the energy consumption from before and produces outstanding results.
- A telemedicine initiative was made to provide advanced healthcare to patients in rural Louisiana, whose access to healthcare services has been limited. It reduced duplicate testing by 93%.
These were two of IBM’s most successful campaigns that have brought about the exact outcomes they aimed to achieve. In the last segment of its blog, we shall discuss IBM’s social media marketing.
IBM’s Social Media Marketing Presence
It is imperative for a technology company to have an active digital presence. This not only aids its marketing efforts but also establishes a distinct brand image in the consumers’ minds. Let’s analyse IBM’s social media marketing presence.
- IBM has been an early user of social networking platforms, even before the spread of Twitter.
- IBM today has several Twitter accounts to serve different types of customers.
- The company is also very active on Facebook. Their primary page keeps posting general information and the latest news on IBM. The other pages talk about more general topics like social business and career development.
- IBM’s Instagram page highlights its creative imagination. It basically gives us a peek into the “behind the scenes” of the organization. Not only do they post gorgeous pictures showing their products and corporate culture, but also they post pictures of their different offices from all around the world. The audience is encouraged to caption the page’s photos and to give a message to their employees. This ensures interactive and engaging content.
- IBM has several YouTube channels, a Vine account, and a LinkedIn page. It has 37,000+ followers on Google+ and has a collection of Pinterest boards on topics like Women in Tech, Big Data, and IBM History.
Clearly, from IBM’s first encounter with social media to their crafty use of all the newest platforms and features today, IBM has carved its own unique presence in the social arena.
IBM is an organization centered around innovation, not only with its products but also with its marketing and organisational structures. It has correctly identified its target markets and worked to provide them with quality services. All in all, IBM has correctly identified the needs of the people and organizations, made breakthrough products accordingly, and marketed them in such a way that they’re doing exceptionally well even today.
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