Commercialisation of a strategic government-owned military institute : a market orientated approach to the development of a marketing strategy for OTB test range

Wessels, P. G. W. (2005-12)

Thesis (MBA)--Stellenbosch University, 2005.

Thesis

ENGLISH ABSTRACT: OTB, a Division of Denel, is a multi purpose test range specialising in the in-flight testing of guided missile systems and aircraft. Originally established as a launch facility for an ambitious low earth orbit satellite programme, and with a secondary function to support the South African military industry, its raison d'etre stemmed from strategic military considerations. Changes in the political and economical scene, which started in the early nineties, led to the cancellation of the satellite programme and a dramatic downswing in the production of arms in South Africa. This rendered much of the capability of OTB redundant. Although the government signalled its desire to maintain access to the services of a test range in order to support an indigenous arms industry, OTB was structured as a division of Denel at its formation as a company operated for profit. This left OTB faced with the challenge to replace government grant funding with revenues earned in the market place. Furthermore, the drastically lower domestic military spending provided insufficient business to support a test range at the technological level required to serve the demands of modern weapons testing. In order to survive, OTB had to be successful in broadening its client base in a highly competitive commercial environment, a feat only possible with the implementation of an effective marketing strategy. The objective of this study is to formulate a marketing strategy for OTB based on a market orientated approach, bearing in mind that the task at hand is the marketing of a service. The study covers the relevant marketing theory in some depth and employs it as a basis to conduct a situational review followed by the development of an appropriate marketing mix and implementation plan. Even though the development of a marketing strategy for the test range produces some unique issues to address, the applicability and extent of coverage afforded by existing marketing theory suggest that OTB's circumstances show significant commonality with those encountered in other situations and therefore may find broader application. Some of the notable findings are: (1) the integrated marketing effort demanded by the market orientated approach; (2) the distinctive elements contained in the marketing mix of a service organisation; and (3) the possibility and need to retain a strategically founded market while developing a commercially driven market requiring particularly sharp market segmentation and distinctive strategies respectively.

AFRIKAANSE OPSOMMING: OTB, In Divisie van Denel, is 'n multi-aanwendbare toetsbaan wat spesialiseer in die in-vlug toetsing van geleide missiele en vliegtuie. Die toetsbaan is oorspronklik ontwikkel as 'n fasiliteit vir die lansering van lae aardbaan satelliete met, as sekondere funksie, die ondersteuning van die Suid-Afrikaanse militere industrie. Die aanvanklike bestaansreg van die fasiliteit was dus gesetel in militer-strategiese oorwegings. In die vroee neentigs het politieke en ekonomiese veranderinge wat aan die ontwikkel was gelei tot die kansellering van die satellietprogram en 'n drastiese afname in die produksie van krygstuig in Suid-Afrika. Die gevolg was 'n onaanvaarbare onderbenutting van die toetsbaanvermoens en -kapasiteit. Alhoewel die regering aangedui het dat dit van voornemens was om toegang tot 'n funksionerende toetsbaan te verseker ten einde die plaaslike militere industrie te ondersteun, is OTB met die stigting van Denel as 'n divisie daarvan gestruktureer met die doel om winsgewend te opereer. Dit het OTB gelaat met die uitdaging om 'n staatsbefondste begroting met 'n inkomste uit die kommersiele markte te vervang. Voorts het die dramatiese afname in die plaaslike militere spandering tot sodanige verlaging van inkomste uit hierdie bron gelei dat dit nie meer voldoende was om die toetsbaan op die verlangde tegnologiese vlak te onderhou nie. Ten einde te oorleef moes OTB sy klientebasis verbreed in 'n hoogs kompeterende kommersiele omgewing, 'n doelwit wat slegs haalbaar is met die implementering van 'n effektiewe bemarkingstrategie. Die doel van hierdie studie is die formulering van 'n bemarkingstrategie vir OTB gebaseer op 'n markgeorienteerde benadering met inagneming dat die taak voor hande die bemarking van 'n diens is. Die studie dek die relevante bemarkingsteorie tot 'n redelike mate en steun voorts daarop om 'n situasie analise, gevolg deur die ontwikkeling van 'n gepaste bemarkingsamesteliing (marketing mix) en implementeringsplan te ontwikkel. Selfs al lewer die ontwikkeling van 'n bemarkingsplan vir die toetsbaan sommige unieke aspekte op, dui die toepaslikheid van, en die mate waartoe die bestaande teorie die probleme aanspreek daarop dat OTB se omstandighede duidelike ooreenkomste toon met die wat reeds in ander situasies ondervind is. Die bevindinge hier mag dus wyer toepassing hê. Sommige van die noemenswaardige waarnemings is: (1) die geintegreerde bemarkingpoging wat deur die markgeorienteerde benadering vereis word; (2) die onderskeidende elemente wat in die bemarkingsamestelling (marketing mix) vir dienste voorkom; en (3) die moontlikheid en belangrikheid om 'n strategies gefundeerde mark te behou terwyl 'n kommersiele mark ontwikkel word met die skerp marksegmentering en spesifiek gerigte strategie wat per marksegment onderskeidelik nodig is.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/50297
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