A. Product Support of Mission Statement 4
Three-way consumer product classification system 4
Convenience Goods 4
Shopping Goods 4
Specialty Goods 4
B. Target Market 5
C. Analysis of Competitive Environment 5
Porter’s five force analysis of US small appliances market 5
New Entrants 5
D. SWOT Analysis 7
SWOT Analysis - Summary 9
E. Marketing Objectives 9
Product Objective 9
Place / Distribution Objective 9
Price Objective 9
Promotion Objective 9
F. Marketing Strategies 9
Innovation / product invention strategy 10
Pioneer Branding strategy 10
Product adaptation strategy 10
Cost leadership strategy 11
Product line pricing strategy 11
Product form pricing strategy 11
Place / Distribution 11
Online retailing strategy 11
Multi channel marketing strategy 12
Vertical marketing strategy 12
Advertising strategy 12
Online marketing strategy 12
Mobile marketing strategy 12
G. Tactics and Action Plan 13
H. Monitoring Procedures 14
Company G is a well-established firm that is highly regarded in the electronics market. Its mission statement is as follows:“We enable consumers to improve the quality and convenience of their lives by providing high-quality, innovative electronic solutions.”XG Smart phone Vision Control Eye Glasses is one of the top quality products developed by Company G with unique design features and extensive testing. The small appliance is manufactured at a low cost ensuring high quality at a low cost to the customers.
This report is developed to frame a marketing plan for this new small appliance product developed by the company to achieve a high profit potential in its product line in the market.
A. Product Support of Mission Statement
This small appliance supports the mission statement of Company G in offering a high quality innovative electronic solution improving the convenience and quality of the customer lives.
Three-way consumer product classification system
The consumer goods are classified commonly in to three areas including shopping, convenience and shopping goods.
These goods are mostly inexpensive and the customer purchases these products in a frequent manner. The customer has to do little effort in purchasing these products. Examples include milk, fast food, eggs etc. The product does not belong to this category as this appliance is not bought in a frequent manner by the customers.
These goods are costly and people research to arrive at a decision to buy shopping goods. Shopping goods include Fridge, cloths, Washing machine, furniture etc. XG Smart phone Vision Control Eye Glasses small appliance product belongs to the shopping goods category.
These goods have unique features and are mostly branded. There is no comparison here and to get the particular brand, customers are ready to travel places. Some of the examples of these goods include antique items, luxury cars etc. The product does not belong to this specialty goods category as this small appliance is not a luxury product but a technology device that can add value addition to the smart phone.
B. Target Market
The market for major electrical appliances started to decline in United States from the year 2007 with the great economic depression. Shipments of products rapidly declined. In order to revive this down ward market condition, a lot of reforms were introduced in the year 2009 with a federal funding of $300 million to all the states (U.S. Appliance Industry Statistical Review, 2011). This reform had good response and in the year 2010, shipments increased by 3 percent and there was a $1.3 billion consumer spending in the appliances industry. In the year 2011, the total sales of the appliance market rose to $31 billion with small appliances fueling the growth (U.S. Appliance Industry Statistical Review, 2011).
Some of the small appliances include dish washers, irons, microwaves, small appliances in kitchen, non cooking items, personal care appliances, heating appliances, large cooking appliances, air treatment appliances, food preparation appliances, small cooking appliances, heating appliances, refrigeration appliances, vacuum cleaners etc (Online Small Electrical Appliance Sales Market Research Report, 2013).
The name of the small appliance introduced by Company G is XG Smart phone Vision Control Eye Glasses. The company G mainly targets the United States Sub urban and Downtown locations. The product aims to target both male and female category of customers. The main target market of the product includes the people in the age group of 25 to 40 years using the smart phones to a great extent. The main focus is on teens with the maximum usage of the smart phones. C. Analysis of Competitive Environment
Porter’s five force analysis of US small appliances market
The threat of new entrants in the US small electrical appliances market is low. The opportunities for new entrants are very high. The entry in to small appliances market does not require a huge capital investment and resources instead Government is offering subsidies and tax discounts to encourage new players in this segment. According to Euro Monitor international report, 2013, the interest rates in United States are likely to rise in the next few years with the Government offering subsidies, tax deductions and low interest loans to home owner. This encourages investments and this trend forms an opportunity for the appliances market in United States. Company G can take advantage of this opportunity to introduce its XG Smart phone Vision Control Eye Glasses in to the small appliances market.
The future of the US appliances market is characterized by intense competition resulting in the decrease of the prices of the electrical products (Euro Monitor international report, 2013). The competition can see the companies giving large discounts to the consumers to get more market share. This is beneficial to the consumers. It is predicted that the competition is going to get more intense among the large electrical appliance companies.
The competition has intensified to a large extent in the premium electrical appliances market with the brands competing for their positions including the May Tag’s Jenn – Air, GE’s Profile, and Kenmore’s Elite etc. Chinese manufacturer Haier is also competing with the brands taking away a large proportion of the market share with its low priced products. There is also competition from the international players like Bosch, LG, and Samsung etc. in the appliances market.
The small appliances market is considered only as a commodity sector in United States according to Euromonitor International, 2013. The price war is very fierce in the small appliances sector with the retail giants like Walmart, Tesco, and Target etc. pricing the small appliances below $30. The small appliances segment is an emerging market with the introduction of new companies and novel products dominating this small appliances market. Company Gs Competitors are mainly Google and Sharper Image type companies that offer high tech appliances
Company G can take advantage of this position in the small appliances segment despite severe competition in the large appliances market. Hence the rivalry forces are in favor of Company G to market and sell its XG Smart phone Vision Control Eye Glasses in the small appliances market.
Recycling and reusing the products in an eco friendly manner is the growing trend in the small electrical appliances market. The Consumer Electronics Association (CEA) encourages eco friendly products development along with the partnership of United States government. This helps in increasing the recycling efforts to create new products in the small electrical appliances market. Disposing the old appliances has created a new market for retailing in the small appliances market. This has led to the creation of many new appliances from the old appliances. Recycled products form a substitute for the small appliances in the market.
Transformations are occurring in the energy sector with emphasis now shifting to solar energy and bio fuels which is a major threat to the electrical appliances sector as a whole. This trend could see the new products being developed in the solar power category which can be a replacement of the current electrical appliances.
Overall, the power of substitutes is high for Company G. This can be taken as a future trend and the company can focus on developing a XG Smart phone Vision Control Eye Glasses based on recycling and solar energy. Hence the substitutes give a long term focus for Company G to develop its variants of product.
According to the Euro Monitor International report, 2013, there is sharp rise in the American consumer spending in kitchen and laundry appliances. The domestic electrical appliances market also saw a steep rise in 2012 with the average house hold consumer spending on electrical appliances rising to $310 from $210. Purchasing kitchen based small appliances have now become a trend in the United States and has become a popular home improvement method. This statistic indicates that the buyers are going to increase and is favorable for company G to sell its XG Smart phone Vision Control Eye Glasses.
In the small appliances segment, the domination of brands is low with small manufacturers offering high quality and expensive products in the segment. The small appliances market is an emerging market characterized by new products and large number of innovations in the market. This offers huge opportunities for companies with innovative mind set to excel in the small appliances segment. The suppliers of the small appliances are mostly the same suppliers with large electrical appliances or the same companies can become suppliers to introduce a variant in the small appliances segment as in the case of Company G. The distribution channels of the small appliances include mostly the department stores and online stores. The suppliers and distribution channels are an added advantage to Company G to market and distribute its XG Smart phone Vision Control Eye Glasses aggressively.
As a result of the porter’s five force analysis, it is revealed that all forces are in favorable of Company G to market its XG Smart phone Vision Control Eye Glasses product to the customers. The power of substitutes is strong at this moment but this gives a long term orientation to company G to come up with the variants of the product.D. SWOT Analysis
Innovation remains the key in small appliances as seen in the consumer electronics show conducted in 2012. In the show a lot of small appliances developed to enhance the capabilities of the smart phone were displayed. Most of the products are innovative based on technology and life style of consumers. In the mature electronics market, the small appliances market has emerged with the strong sales of the small appliances in the show. Company G has this strength of innovation through its designers and engineers for developing XG Smart phone Vision Control Eye Glasses in a creative manner.
Company G aims to be the low cost producer in the small appliance industry with its unique production process. The company produces with a little waste of the raw materials and makes the production efficient which is a major strength for the company.
Finally, the Company G is established and the brands are identified in the market which is an added strength in marketing and distributing to the product in the small appliances market.
Company G has a low debt-to-equity ratio and a high credit rating. Debt financing is not utilized in a proper manner. This is a weakness considering financial management of the company.
The Company G is in need of new suppliers for the raw materials required to manufacture the XG Smart phone Vision Control Eye Glasses. The weakness here is that it takes times to manufacture the product as a result of suppliers and also the relationship with the new suppliers is at stake. Competitors can take advantage during this time.
The credit terms of Company G offers to intermediaries in their distribution channel are typical for their industry. This has to be enhanced for the new small appliance product.
The Country Report, 2013 indicates that the great recession facing United States forms one of the great opportunities for small appliances market. The great recession and the financial crisis of the United States have forced the baby boomers to stop spending on major aspects like marriages, babies etc. This encourages the baby boomers to buy small appliances in large numbers. The high unemployment in United States (Country Report, 2013) forms an opportunity for the small appliances market. The current generations hence avoids purchasing major appliances and prefer small appliances from the market. Instead of investing or buying new homes, people have started to repair their existing homes which are less expensive. This has given opportunity for the small appliances to be sold in large numbers.
Changing life style as a result of economic depression and slow recovery has seen people in United States partying in their homes as a means of cost cutting. The social circle is maintained by people by using their homes as places for dinner parties. This has changed the mind set of the people and a lot of small appliances are bought to decorate the living room, kitchens etc. to show off to their friends visiting their homes for parties. Hence this changing social trend gives a great opportunity for the growth of the small appliances in the United States.
Online retailing trends have increased over the recent years and offers huge opportunities to small appliances market. This has revolutionized the show rooming concept totally and companies have adopted internet strategies to get competitive advantage using up to date technology. Interactive online stores are the need of the hour with the buying patterns shifting to a large extent to the online world due to convenience and time aspect of the current generation of people. The growth of social media and social networking sites like Face book and Twitter has made people to take informed decisions online by reading testimonials of small appliances.
The substitutes of the products available in the market especially the Chinese substitutes is a major threat.
Recycling and reusing the old appliances have become a fashion these days among the Americans. This forms a big threat to the new XG small appliance as people avert buying new products.
The emergence of the solar products in the energy sector is a threat to the entire electrical products including this small appliance.
SWOT Analysis - Summary
Innovation and production process form the core competencies of Company G.
E. Marketing Objectives
Place / Distribution Objective
F. Marketing Strategies
A mix of product, price, Place / distribution and promotion strategies is apt to market the XG Smart phone Vision Control Eye Glasses in the target market to meet the marketing objectives and include the core competencies of the company to market the product. The appropriate marketing mix strategies are essential to successfully market the product in the market. The following are the marketing mix strategies that are proposed to be implemented to market XG Smart phone Vision Control Eye Glasses in the target market.
Considering the product, it is an innovation, one of the core competencies of Company G and hence emphasis must be given to it. Innovation is the key and must form a part of research and development of the Company G that will be prevalent in all three years of the plan. Branding strategy is essential to establish a strong brand name among the target market. The product brand must be recognized by the customers and company G must be a pioneer in selling the product. Finally in due course of time, the variants of product must be made altering the features according to the customer needs and preferences focusing on customization which is to be done on the third year of product launch. Hence the following product mix strategies are to be adopted to support the core competency of the company in order to achieve competitive advantage through innovation. The explanation is as follows
Innovation / product invention strategy
Innovation is one of the core competencies of Company G and this differentiation strategy that has to be adopted in the product category. The product invention is needed to come up with new value added features in the product. This forms the research and development aspect of Company G and the company must continually thrive to introduce many variants of the XG Smart phone Vision Control Eye Glasses in the target market. This strategy is to be adopted as this strategy reflects the core competency of the company G and meets the product objective stated above.
Pioneer Branding strategy
Company G must establish itself as a pioneer in the small appliances segment with the product. The brand must be promoted and recognized in the target market. The product XG Smart phone Vision Control Eye Glasses must be recognized in the target market and a stage must be reached where the customers search for the product by name and buy it. Branding strategy enables this and also there are high chances of existing customers recommending the product to their friends and family in the future as a result of this strategy. This strategy is to be adopted as company G must establish a position in the market and a brand is necessary for establishing this position. Also this strategy aims to achieve the product objective of establishing a position for Company G.
Product adaptation strategy
Company G must adapt the features of the product to cater to the needs of the different customer segments and this strategy is apt. The XG Smart phone Vision Control Eye Glasses must be adapted according to the tastes and preferences of different segment of the target market i.e. the product features must fulfill the expectations of college students and teens with the major smart phone usage. Similarly the product must be adapted to other customer segments based on their usage and expectations. This strategy must be implemented after the branding of the product is done. This strategy also helps in achieving the product objective of the Company in developing the product by adapting the features of the product that helps to establish a position in the market for Company G.
Considering pricing of the product, emphasis must be given to the production process another of the core competencies of Company G. The cost leadership strategy ensures that the production costs are kept low using the unique production process with minimum waste developed by Company G. The company must develop the same product at various levels to be sold in various target market by developing a product line pricing strategy. Following this the product form can be changed with different packaging and a product form pricing strategy must be adopted to sell the product to the respective target markets. Hence the following strategy mix needs to be adopted in alignment with the core competency to achieve competitive advantage through cost leadership. The explanation is as follows
Cost leadership strategy
Cost leadership or the production process is one of the core competencies of Company G and this strategy ensures low prices to customers. The production process of Company G has minimum waste of raw materials and this ensures low cost of production resulting in the low prices to the customers. The strategy helps to attain price leadership of the product for the company in the market. The cost leadership strategy is to be adopted as it aims in achieving the price objective of the product of low cost and low prices.
Product line pricing strategy
Company G must have separate product lines in the small appliances segment and prices must be fixed at different levels according to the product line. The product can be marketed in different markets at various prices. This strategy must be implemented after a year by pricing the same product at various levels based on quality. This product line pricing strategy aims to achieve the price objective of offering low prices to the target market by establishing various price levels for the same product in the product line.
Product form pricing strategy
This discrimination pricing strategy must be adopted by Company G to price the product according to the costs in the respective markets and packaging done accordingly. This pricing strategy must be done according to the target market i.e. country of operation and based on the packaging of the product. This strategy can also be used as a means of expanding the market share of the company G by introducing variants of the product with different prices in different markets. This has to be done after a year from the product launch.
This pricing strategy aims to achieve the price objective of offering low prices to the target market in their respective place of operation i.e. in United States, the product can be sold at $30, same product in Japan at $60 and $20 in Brazil with respective features and packaging but the company must ensure that in each market the product is marketed at a low price comparing other products. Hence this strategy forms an appropriate mix.
Place / Distribution
Considering the place aspect, emphasis must be given on reaching the product to the target market initially through multiple channels including online direct distribution meeting the Place objective. In the same time an online retailing strategy can be adopted as a direct form of distributing the product to the customer. Finally the Company must become self sufficient eliminating the intermediaries in the third year of operation using vertical integration. Hence the mix of the following strategies is apt for Company G. The explanation is as follows
Online retailing strategy
Company G must build a separate web site for its small appliances segment and use it to distribute the products. The website must be very interactive and all business transactions must be done through the website offering convenience to the customers. This online retailing strategy aims to achieve the Place objective of the product and needs to be implemented right in the first year of operation itself. The pictures, features and value additions of XG Smart phone Vision Control Eye Glasses must be made interactive in the website and distributed.
Multi channel marketing strategy
The product is in the initial growth stage and company must adopt multiple channels to distribute the product to reach the target market. This strategy has to be implemented aggressively in the first year to reach the product to the customers in all possible ways. This strategy also includes the online channel and distributing the products directly to the target market. Hence this strategy supports achieving the place objective of the product. Hence strategy must be included in the place mix of strategies.
Vertical marketing strategy
In the future, vertical marketing must be made with all intermediaries owned by the Company. This strategy enables the company to become self sufficient with full control on suppliers, intermediaries etc being operated by the company itself. This has to be done in third year. The vertical marketing strategy is the best direct form of distributing the product to the target customer and hence this aspect of the strategy makes it to support the place objective of the product in distributing the product directly to the target market.
Considering the promotion aspect, Company G must first advertise the product in the market using various media. Then an online marketing strategy must be adopted to promote the product online. Finally a mobile marketing strategy must be adopted as the product is related to smart phones. This mobile marketing strategy will directly promote the product among the smart phone users. Considering these cases, the following promotion strategy mix is apt to be applied at the same time through out the three years. The explanation is as follows
Initially the product has to be advertised in the market using the mass media channels. This is to create awareness about the product among the target market initially. Then advertising must be done to promote the product by giving discounts and gift vouchers to potential customers in the target market. This strategy helps to promote the product aggressively in the selected target market i.e. sub urban and down town regions in United States and achieves the promotion objective of the product.
Online marketing strategy
The social networking sites are very popular among the Smart phone users forming the target market of the product. Hence an online marketing strategy must be formulated to promote the product online to reach the internet users especially people using the social networking sites. The main promotion objective of the product is to promote the product among the smart phone lovers and this online marketing strategy focusing on social networking sites achieves the promotion objective by targeting the smart phone user characteristics and decision making trends.
Mobile marketing strategy
This strategy gives more focus and promotes the product directly among the smart phone users. This strategy promotes the product with the most potential customers of the product. This strategy helps the company to get potential customers in a fast manner and the company can send advertising messages to the smart phone users about the product. The mobile marketing strategy is apt to be considered as this aims to achieve the promotion objective of targeting the smart phone users in a direct manner to promote the product.
Each of the marketing mix strategies discussed above aim at achieving their respective marketing mix objectives. This makes the above strategies to be the perfect marketing mix for the selected product XG Smart phone Vision Control Eye Glasses. The explanation substantiating this fact has been detailed above.
G. Tactics and Action Plan
(Start date 1st of month, End date 30th or 31st of month)
The above table summarizes the entire tactical plan that aligns with the marketing mix objectives and strategies discussed earlier. The various set of actions include
Develop new products in small appliances: This task is continuous in all three years and is a research and development activity to develop various products in the small appliances like the XG glasses. Also research is done to add more features for this product.
Establish brand and positioning: This action is done to establish a position in the market for the Company G and the product.
Value addition: The product needs to be enhanced to suit the changing preferences of the target market through value addition.
Develop small appliance product line: This action is done to expand the market size of the company in the small appliance market.
Enhance current production process: This action is done to strengthen the core competency of the company.
Develop product variants: This is done to increase the number of products sold and expand the market share.
Website development and promotion: This is done as a means of direct distribution.
Supplier and intermediary network: This network is needed to distribute the products to customers.
Becoming self sufficient: This is done in the last stage with company taking full control of all intermediaries through company owned distribution network.
Creating awareness about the product: This is done to introduce the product in the market.
Promotion in Social networking sites: This is done to promote the product after identifying the main buying characteristics and influences of the target market.
Promotion to smart phone users directly: This action is done to promote and sell the product directly to the potential customers.
H. Monitoring Procedures
A balanced score card will be used to monitor all the actions above. Balanced scorecard is one of the effective ways of monitoring and measuring results of strategies. The tool consists of four main imperatives including financial, customer, internal business, and learning and growth perspectives (Becky Roberts, 2010).
Becky Roberts, 2010 discusses some of the measures for performance and monitoring in each perspective includes return on assets, market share, sales revenue, EPS, ROI etc. in the financial perspective. The financial perspective is not applicable to the marketing plan as no financial aspects are included in the tasks. Customer perspective includes measures like performance, cost, quality, service, timeliness etc. Internal business process measures include the various internal activities in meeting expectations of the customer. Learning and growth measures include innovation, time to market, product development, process improvement, work force training and development etc.
Balanced scorecard is industry renowned as a measurement and monitoring technique. The measurement can be quantified in terms of the four main perspectives of the balanced scorecard. Measurement is specific to a product and the measures are developed for monitoring based on the tactical plan tasks. Based on the above measures, the specific actions are grouped under each perspective of balanced scorecard along with the respective time line for monitoring the actions on a Quarterly basis with starting time as follows.
Specific monitoring measures
Quarterly reviews will be conducted on 1st week of corresponding months starting as indicated above till December 2017. In the learning and growth perspective, measures like time to market, number of new products, various improvements in production process, employee performance etc are considered for measurement. In the customer perspective, measures like cost of product, price of product, quality measurement, service measurement etc. are considered. Finally in the internal business process perspective measures like advertising effectiveness, website outcome, supplier, distribution network contribution, promotional outcome etc are considered.
These measures in each balanced scorecard perspective will be measured and monitored with progress recorded at the end of each quarterly review.
Becky Roberts. (2010). The Balanced Scorecard: Translating Strategy into Results, Catoctin Consulting, LLC
Country Report. (2013). Consumer Appliances in the US, Feb 2013 | Pages: 173
Online Small Electrical Appliance Sales Market Research Report. (2013), Online Retail Online Electronics, Computers & Appliances, IBIS world publication
U.S. Appliance Industry Statistical Review. (2011). Pharma Live Special reports, SKU: ENPP6519098, published July 1, 2011
Euro Monitor International report. (2013). Premium electrical appliances boom in the USA, Euro Monitor publication