Principles of Entrepreneurship - Coursework Example

Principles of Entrepreneurship Executive Summary The report intends to describe how a firm which is operated by a leading Philanthropist along with entrepreneur can enter or penetrate into its existing market i.e. the United Kingdom market with a new innovative Smart TV. The report provides a brief analysis about the situation prevalent within the UK market in relation to the demand for Smart TV’s. Moreover, it provides a brief understanding about the existing competitors in the market and how the firm should determine its sales and marketing strategy along with distribution. It also looks at the allocation of resources for the firm, value proposition for the customers, different price points, elements of resource based view along with Customer Acquisition Cost (CAC) and customers’ Lifetime Value (LTV) as well as the overall strategy application for the firm. Table of Contents Executive Summary 2 Introduction 4 Analysis/Findings/Discussions 5 Situational Analysis 6 Existing Competitors 6 Value Proposition 7 Different Price Points 8 Resource Allocation 8 Sales and Marketing 9 Operations and Distribution 10 Entry Strategy 10 Elements of Resource Based View/Market Based View 11 CAC and LTV As Well As the Overall Strategy Application 11 Conclusion and Recommendations 12 References 13 Introduction Smart TV which is also known as connected TV is incorporated with internet features that provide the users a better experience. The features of Smart TV’s include video streaming, video on demand along with web browsing. Smart TV’s enables the users to share music, movies, photos and other multimedia files. These TV’s have entered the market since two years which provides a complete package of entertainment to the users like Youtube, Netflix, iPlayer along with various other applications that add up to the features of the smart TV’s. Besides, along with smart TV’s it has been observed that there has been a growth in the smart TV devices like PVR’s, TV adapters and Blu Ray players, that provide accessibility to internet services through TV. There are some Smart TV’s which are wireless enabled for using the internet services (KCOM Group PLC, 2014). It has been viewed that over the past few years the habit of watching TV has changed significantly. TV viewers often do not find enough time or interest to watch shows provided by the broadcasters anymore as there has been an emergence of a wide range of solutions pertaining to entertainment which enables the users to watch those shows that they desire to watch. The objective of the report involves determining the prevailing market scenario in the United Kingdom for a new smart TV manufacturing firm and developing a set of strategies to enter into the market. In addition, it has been observed that there is downward trend regarding the sales of TV’s in the UK. Analysis/Findings/Discussions Market Research Evidence From a recent research done by Informa Telecoms & Media, it can be affirmed that UK retailers have been unable to provide adequate knowledge to their customers’ regarding the advantages and specifications of the product that has been introduced in the market. Informa provides estimation that only 35% of TV sold in the UK last year (2011) is smart TV’s. Even though, internet connectivity has been the default technology that is used in smart TV’s, there is no rise in the demand of these products. According to a study conducted in various UK’s top retail TV providers, it has been revealed that most of the retailers are not properly skilled and equipped enough to sell these TV’s. The main reason behind this is that most of the stores do not have any internet connection due to which the customers that approach the stores with the intention of buying the products change their willingness. This is owing to the fact that the customers are unable to access the functions of various applications installed in the TV, which can only be used if there is an internet connection. Moreover, there is unavailability of store section for the customers and the staffs involved in selling are not trained properly. While market retailers are providing satisfactory and interactive experiences to the customers buying Smartphones and Tablets, there has been no improvement made to enhance the experience of TV buyers. Sales staff mostly focuses on the TV’s size and qualitative aspect while recommending the products required for customers. However, the customers are not provided a complete knowledge about the applications present in the TV as these stores often do not have any internet connection (Ladbrook, 2012). Situational Analysis According to the Idate’s research on the prospect of TV, the growth for the demand for TVs will be much lower in the UK as compared to other developing nations. In accordance with the prediction made, it was idealized that the annual growth for TV on an average will be 1.6% from the year 2013 to 2025. If a new firm has to enter the market, the firm should be able to redefine and set a unique strategy of distribution model pertaining to TV products. Moreover, the prevailing market scenario in the UK has revealed that live viewing has been surpassed by on-demand viewing. In addition, demand for Smart TV’s has been relatively quite low in the UK. In addition, as per the study, 15% of customers in the UK are expected to purchase smart TV’s manufactured by Samsung and LG (Paoli-Lebailly, 2013). Existing Competitors In the UK, there are numerous companies that produce and market their products. If a new firm has to penetrate the market of the UK, it has to face severe competition from the companies such as Samsung, LG, Panasonic, Sony and Toshiba. It is highly recommended that the new firm uses various techniques and strategies to enter the competitive market. The largest market share in the UK for smart TV is covered by the Korean giants that offer TV shipments and occupies almost 26% of the entire market. Samsung is also one of the largest market share holders in the UK, but due to the increase in competition Samsung has been adding various features in its TV sets. It has also been viewed that the Korean giants have been investing more particularly on kits for software development which provide a scope for different developers to install these applications on the TV sets. These kits may include gaming programs such as Angry Birds and learning software such as discovery channel, because of which there are in excess of 1400 applications obtainable for these Smart TV’s (Campos, 2013). Value Proposition Value proposition is considered as a solution to the problems of the customers. The key value proposition for a new smart TV manufacturer would be its newness if the product is newly introduced to the market. Newness may be considered as a value proposition when new technology is introduced with the product. This would be an innovative way of entering into the market as it is very unique in nature. In addition, a value proposition for a business firm with a new smart TV would be performance. This includes performance of a product which has better features along with unmatchable speed. Design and usability also is a value proposition for the customers because if the firm enters a competitive market where the customers have many choices, they would opt for a product that has better design and is easy to use. Thus, if a new entrant wants to grow in the UK, it must focus on various designs of the product based upon customer requirements. The product design should be done in such a manner that it attracts the customers. However, only design would not attract the customers because if a product has a good design but is difficult to use, the customers might opt for a product which is easier to use. Therefore, it is very important for a new entrant to design its product along with its ease of access that provides excellence in its operations and satisfies the customers (Plan to Start, Inc, 2013). Different Price Points A business firm to enter into the market of the UK must make sure that the pricing policy of the firm is equivalent or lesser than the existing competitors with more features and designs. It is highly recommended that the company prices its products based upon the features and specifications provided. Therefore, it can price a 39 inch full HD Smart LED TV under 350 Pounds which would be lesser than the other competitors and would attract the customers in buying the product. However, the price of a 32 inch LED TV should be less than 210 Pounds. If the company is also manufacturing a 40 inch Smart TV, it should price the product not more than 500 Pounds. A 22 inch smart TV should be priced not more than 200 Pounds, whereas a 28 inch Smart TV should be less than 250 Pounds. The above pricing points have been made by keeping the Samsung Smart TV products into consideration. Besides, low pricing cannot be the only strategy for the new entrant. The firm must also focus on providing various offers to its customers along with required services to maintain its brand loyalty (Argos Limited, 2014). Resource Allocation Resource allocation is the process of using the resources in an economic manner. It is very important for a business firm to allocate its resources in order to achieve an optimum utilisation of resources which would lead to the reduction in the cost of manufacturing the product. A customer gets attracted to the product if the cost of the product is relatively lesser and has more features inbuilt. It is considered that there are four resources which include land, labour, capital and raw material. Initially, a business firm must focus on deciding its location for producing its products. This decision is very important as all the other factors of resources are directly dependent on it. After the location is decided, the firm must determine whether the labour in the particular place is skilled enough to the assigned task. It must also focus on the employees of the firm who are directly responsible for the management of resources. Capital or investment is also considered as a vital resource that brings in raw material for producing the desired product, which decides the production capacity of the firm and enables it to operate as per the requirement. Sales and Marketing For a new firm entering into the competitive market of the UK, it is very important to focus on its sales and marketing strategy to survive in the market. It is worth mentioning that effective marketing is a vital element to boost sales of the organisation. The firm should have a marketing strategy that is driven by the sales objective. These objectives would involve that the products developed meets the customers’ expectation and their satisfaction would be a prospect for developing brand loyalty that would directly boost the sales. However, it is very important to understand the customers regarding when, where and how they buy the products which would allow the firm to identify the appropriate channels and sales strategies. Moreover, it is very important for the firm to recruit sales personnel who are skilled enough to sale the product. The sales manager of the firm should be motivating and have a right attitude to advice the sales personnel so that they understand the plan along with the approach the customers accordingly. Furthermore, the firm should prepare a sales budget to track the performance of sales and forecast the flow of cash in the firm and accordingly reward the sales personnel depending on their success (The Marketing Donut, 2013). Operations and Distribution When a new firm decides to move ahead with offering Smart TV’s in a competitive market such as UK, it is highly recommended for the firm to design a network for distribution. If the design of the distribution is not appropriate then it would negatively impact the firm’s profitability. A new firm to operate in the UK must carefully design its distribution network as the existing companies have already designed their network which makes it very difficult for the new entrant to survive in the market. In terms of operations, the firm should aim to provide distinct services from its competitors, which should include efficient after-sales service and customer complaints and grievances handling. To build a suitable market position, the firm must segment its target market based upon the requirements and operate effectively on the segmented target market (Neuwirth, 2012). Entry Strategy The firm in order to build a market entry strategy must focus on a particular suitable timing for its entry. In order to create a brand image, a firm must have patience because promotion takes a lot of time, money along with effort. Brand names of the firm do not tend to appear overnight. In effective promotion, large amount of investment is required. It is considered very important for a new firm to determine the entry strategy for penetrating the market which provides access to the resources that involves distribution networks and access to various raw materials. The firm also should focus on the political situation of the country while designing its entry strategy because once the firm enters into the market, it should ensure that the policies and rules of the government are supportive for the functioning of the business firm. The entry strategy of the firm should also focus on the improvement of the society and provide welfare to the people in the area it’s planning to function which would help the firm to sustain and survive in the competitive market of the UK (Lymbersky, 2008). Elements of Resource Based View/Market Based View The resource based view or market based view is an approach wherein the assets with certain features would lead to viable advantage as these resources might not be moveable among firms, but this approach would not provide any advantage if it is not operationalized appropriately. In order to operationalize this approach, there are five steps which include, firstly listing of valued resources based on the collected data form the environment. Secondly, the firm should design a rough sketch of the resource charts wherein the resources can be estimated and managed. After the second step is completed, the firm must draw a resource map which defines the overall system of resources. The fourth step includes identification of strategic plans and management policies for resources which provide an understanding of how to make the decision that would directly affect the use of resources. The last step involves developing a system model which creates a relationship between the resources, scale of change and managerial policies for further improvement (Ford & Mahieu, 1998). CAC and LTV As Well As the Overall Strategy Application The firm entering the market of the UK must uphold a continuous improvement of their procedures and strategies which depend upon the firm’s efficiency and scalability. The sales process of the firm should be continuously adjusted to analyse the potential of the business and its customers. After determining the potential value of the customers, it will enable the firm in adjusting strategy for customer acquisition and price a feasible Customer Acquisition Cost (CAC). Depending on the firm, CAC can help in determining the use of public relations with an effective promotion through media. However, customers’ lifetime value (LTV) can be used by the firm to find out the average revenue of the customer and their lifetime along with the annual cost. It is highly considered for the firm to focus on the LTV for its new innovative Smart TV which must meet or surpass CAC to maintain sustainability of the firm (Petri, n.d.). Conclusion and Recommendations From the analysis of the market situation in the UK, it has been observed there has been relatively low growth related demand of TV in comparison with certain nations in the world. The key constraints faced by UK retailers for not being able to attain greater recognition include lack of proper skills and unavailability of required features. The new firm entering into the UK’s market must ensure that its timing for entry is quite appropriate. It can be recommended that the firm in its existing UK market should intend to ensure enactment of proper distribution network along with focusing on preparing a sales strategy based on its target customers. In order to ensure its unique presence the firm can concentrate upon augmenting its brand image. Furthermore, the product designed by the firm must package its offerings in such a way wherein the customers get attracted to the product due to its packaging process. In order to reach a wider market, the firm can develop a website, make press releases for its range of products and use social media as a marketing tool. References Argos Limited. (2014). Televisions (23 products). Retrieved from http://www.argos.co.uk/static/Browse/ID72/33017148/c_1/1%7Ccategory_root%7CTechnology%7C33006169/c_2/2%7C33006169%7CTelevisions+and+accessories%7C33008651/c_3/3%7Ccat_33008651%7CTelevisions%7C33017148/r_001/5%7CBrands%7CSamsung%7C1.htm Campos, A. (2013). How these companies plan to win the smart TV industry. Retrieved from http://www.fool.com/investing/general/2013/11/06/how-and-when-smart-tv-will-change-your-living-room.aspx Ford, D.N. & Mahieu, L.A. (1998). Operationalising the resource-based view of the firm. International system dynamics conference, pp. 1-16. KCOM Group PLC. (2014). Smart devices explained. Retrieved from http://www.kc.co.uk/home/connect/smart-devices-explained/ Ladbrook, A. (2012). The UK high street fails to push Smart TVs to consumers. Retrieved from http://www.nmk.co.uk/article/2012/2/13/the-uk-high-street-fails-to-push-smart-tvs-to-consumers Lymbersky, C. (2008). Market Entry Strategies: Text, Cases and Readings in Market Entry Management. Christoph Lymbersky. Neuwirth, B. (2012). Marketing channel strategies in rural emerging markets. Kellogg school of management, pp. 1-36. Paoli-Lebailly, P. (2013). Idate report predicts soaring on-demand market as live TV struggles. Retrieved from http://www.rapidtvnews.com/index.php/2013092629965/idate-report-envisages-three-scenarios-for-tv-in-2025.html Petri, K. (n.d.). Business planning for CAC & LTV. Retrieved from http://keithpetri.com/2012/12/31/business-planning-for-cac-ltv/#.UvmtfGKSxy0 Plan to Start, Inc. (2013).10 Value proposition examples. Retrieved from http://plantostart.com/10-value-proposition-examples/ The Marketing Donut. (2013). Sales and distribution. Retrieved from http://www.marketingdonut.co.uk/marketing/sales Read More