The Creation of a Successful Brand in the Market - Term Paper Example

Report Seminar Word Count Table of Contents Executive Summary ……………………………………………………………… 3 Introduction ……………………………………………………………………… 4 Porter’s Five Forces Model …………………………………………………….. 5 Threat of New Entrants into the Industry ……………………………. 5 Bargaining Power of Customers ………………………………………. 6 Bargaining Power of Suppliers ………………………………………... 6 Threat of Substitutes …………………………………………………… 7 Competitive Rivalry ……………………………………………………. 7 The 4Ps Marketing Mix ………………………………………………………... 8 Threats Expected ………………………………………………………………. 8 Conclusion ………………………………………………………………………. 9 Bibliography ……………………………………………………………………. 10 Executive Summary When starting a new business or when one needs to introduce a new product into the market, it is important to do a market analysis that will establish the nature of the specific market. There are aspects of the market that will determine whether the product will sell successfully or it will receive a cold reception that can ruin its venture. In this report, the idea is to have an entry into the male grooming industry in the shaving sector. Therefore, since this is like a new product that is entering the market as the services offered should be new and unique in a way that will draw the existing customers in the market to the specific services. Therefore, using the Porter’s Five Forces Model, the essay shall look at the threat of the new product or service into the market, the bargain power of buyers, threat of substitute products and services, bargaining power of suppliers, and rivalry among existing competitors to understand the industry dynamics. Second, another important aspect of the market that can be understood will be through the four P components of the marketing mix. They include product, price, place, and promotion. Under product, we shall look at factors such as product variety, quality, design, features, brand name, packaging, sizes, services, warranties, and returns. Under price, issues discussed will include list price, discounts, allowances, payment periods, and credit returns, under promotion we shall look at sales promotion, advertising, public relations, and direct marketing. Lastly, looking at place, we shall look at channels, coverage, assortments, locations, inventory, and transport. This analysis should help in understanding the market and knowing what can be done to increase its sales or in the creation of a successful brand in the market. Introduction This new company wants to introduce a new product into the shaving industry. Therefore, this report will be an intensive analysis of the market using the Porter’s Five Forces Model and the 4Ps Marketing Mix to know whether the idea is feasible. The two major brands in the shaving industry include the King of Shaves, and The Dollar Shave Club. To create a successful brand in the market which has been done by these two companies, there a number of questions that need to be asked. The first one is who is being targeted by the new product. Who will form the major consumer base? In short this aims at addressing who the customer is. Failure to adequately define the market as far as the customer targeted is concerned often leads to poor performance. Venture failure is associated with such drawbacks when one introduces a new product into the market without analysing the kid of reception the product or service will receive. The second aspect that market analysis will help establish is the ‘what’ question. This aims at establishing what is being offered to the customer. The new product should have some features that will make the customers to abandon their known products and use the new one that has been introduced into the market. This is commonly referred to as the customer value proposition (John-son et al. 2008). Using it, one looks at the company’s group of products and services and wht value they have to the customer. Third is the ‘how’ question. Every new product aims at building and distributing value proposition. Therefore, it is important to establish how a product will master the processes and also the activities that ensure success in this line. This will also involve utilizing the resources available and workforce to achieve the goals set. The fourth dimension looks at or establishes why the business model is viable. This will now incorporate the revenue model therefore looking at aspects such as cost structure, and applied revenue mechanisms in ensuring that the company returns are high. Therefore, this work will use various approaches to analyse the market and address the four key questions that must be answered to ensure brand success in the already existing market. Porter’s Five Forces Model This model developed by Michael Porter is a popular instrument used for estimating the business dynamics and important aspects such as competition and market desirability. When a new product is to be launched into the market like in this situation, it is important to do an analysis of the market and the industry and therefore establish the new product’s competitive advantage over the existing brands. Planning is crucial in the business environment and so using this non-complicated model many important factors are unearthed giving the new product or service a competitive advantage banking on the flaws of the existing brands. Threat of New Entrants into the Industry The idea of new entrants into the market leads to an intensified competition as the number of available customers or willing buyers is divided among the various producers. In the shaving industry, or in the establishment of a new product in such an industry, one looks at the barriers to entry which determine whether a new product will be easily introduced into the market or not. Looking at the shaving industry, King of Shaves has been the iconic name over the years since its inception in 1993. It has commanded the industry with various men grooming products with new entrants finding it hard it establish themselves in the market. However, the easy entry of the Dollar shave club in 2012 served to show that the barrier to entry is not significant in the market. Therefore, considering that, it will be easy to introduce our product in the market as long as the product strikes a unique interest to the available market. On top of that, the market is widening and so there are many new buyers who can be lured into buying the new products. The level of a threat in such a market will be established by factors such as economies of scale, the requirements to invest into the specific market, brand loyalty, and government regulations. In this specific industry, the most significant force is brand loyalty. Customers will stick to one brand since this is matter involving their health which they cannot gamble with. Using this explanation, such an industry will be tough for a new product to make an entry. The brands already in the market utilize an efficient usage of economies of scale advantages to push out new entrants. Therefore, to introduce a new product as in our case, it is important to come up with striking features that will attract new customers such as the entry of the Dollar Shave Club into the industry. New products are not enough into the market (Gassmann, Frankenberger & Csik, n.d.). There are other things that need to be done to ensure that the sales will be higher. Bargaining Power of Customers There are a number of factors that determine the bargaining power of customers. They include the nature of the industry in terms of competition, uniqueness of the products and selling strategies, and the cost of a customer switching from one competitor to the other. In the shaving razor industry, one of the important things to note is that the customers possess strong bargaining power. This power is also growing. There is stiff competition in terms of products in this industry with each company trying to make better sales than the other. This calls for extra effort to design and produce unique products that will draw more buyers. In 2008 for instance, the King of Shaves introduced a four blade shaving razor that drew many buyers to it. Bargaining Power of Suppliers This is also called the negotiating power of suppliers. It will be determined by the number of suppliers in the industry, the brands availed by the suppliers, buyers’ level of importance, and switching supplier costs (Emmerich, 2014). In the shaving industry, the bargaining power of suppliers is low. King of Shaves and the Dollar Shave Club manufacturer their own products. In the supply of raw materials which is an important factor, the suppliers are still abundant and so they will have little or less significant bargaining power. This is advantageous to the competitors in the industry. Threat of Substitute Products In the shaving industry, the threat of substitute products into the market is determined by a number of factors. They include; - relative quality and price, whether the customers are willing to change or substitute the product, and the costs that will be involved when switching on to the new product. The major substitute comes from the use of shaving creams which have received a warm reception in the market. To address that as a potential source of competition, the shaving industries have also come up with shaving creams that serve as well as the razors. This has addressed the problem. Competitive Rivalry What is important as far as competitive rivalry is concerned is the number and ability of the potential competitors. In this situation there are a number of competitors and considering the brand loyalty in the shaving industry, it will be tough to secure a strong customer base. However, as indicated earlier, creating a brand is important in the industry. This can be done through the introduction of products with new or advanced features that will strike the potential buyers and make them substitute the ones they are using for the new ones. This product will therefore have to show unique features if it will be successful in the market. Mainly to capitalize on that, one addresses the limitations of the already existing brands. The 4Ps Marketing Mix A company may not utilize its full potential in terms of success in the industry if it fails to create a successful mix of production of the right product at the right price and place, and done through the right promotional channels such as advertisement to reach the customers. The four P’s stand for product, price, place and promotion. Let’s see how this matters as far as the success of the new product in the shaving industry is concerned. The product should be introduced with features that will offer a given solution to the customers (Chand, n.d). There are competitors already in the market offering the services so to make a grand entry into the market one must ensure that a new and more appealing solution is offered to the buyers or the consumers of the product or service. The second aspect involves price. The price should be realistic and giving value to the consumers. It is normal to introduce a product that has a very high price in the market and still make reasonable sales. A good example is the case of Apple products which are valued highly yet due to brand personality, they have been able to stand out against cheap and more available products. The third aspect to look at is place. If the consumers cannot have access to the product it will be as good as not produced. Therefore, the company must ensure that there are good plans to ensure that the product is taken to the consumers. Lastly, promotion offers information to the customers. Marketing the product involves addressing all the aspects to create a good link between the four and hence edge out the players already in the industry. Threats Expected As indicated earlier while looking at the Porter’s Five Forces in this industry, the customer bargaining power is high. There are many competitors and so it is tricky introducing a product in terms of quality and price. To address the problem, the only way to go about it is to introduce products that have great features that will be appealing to the customers. The already established brands in the industry have an upper hand when it comes to competition but again using the 4P’s marketing mix it is possible to break the deadlock. This can be done by having products that are so customized to address the needs of the users, ensuring those products reach the consumers and using the right promotional channels. Advertising is an important tool in marketing and changing the consumers’ attitudes towards a given product. It’s through promotion that the consumers realize what they have been missing and therefore product substitution will be possible. Another problem that may be encountered looking at the analysis one above is competition from competitors. This will be solved by the reception the product will receive in the market. That will be enhanced using the 4P marketing mix making the product available to the consumers both in value and availability and also ensuring the quality is okay. Conclusion In conclusion, to have an entry into this industry there are various factors that need to be considered to offer competition to the already existing brands. The entry of a new product in the industry is easy looking at the barriers of entry and the ease of entry of The Dollar Shave Club in 2012. Therefore, as the 4P market mix for business success stipulate in satisfying the needs of customers, the new product should address a specific limitation in the existing products to earn a reasonable consumer base. The price should give value to the users with the product being a household name in terms of availability. Lastly, to change the attitude of the consumers and hence promote the sales of the product, right promotional channels need to be employed. The strategic planning process involves analysis, planning, implementation, and control (Arons, & Waalewijn, 1999). Bibliography Arons, H. S. & Waalewijn, P. (1999). A Knowledge base Representing Porter’s Five Forces Model. Available at. Chand, S. (n.d.). Marketing Mix: Product, price, Place, and Promotion (4Ps). Marketing. Available at. Emmerich, G. (18 Aug, 2014). Porter’s Five Forces Model. Strategy Framework. Available at. Gassmann, O., Frankenberger, K. & Csik, M. (n.d.). The St. Gallen Business Model navigator. University of St. Gallen. Johnson, M.W., Christensen, C.M., Kagermann, H. (2008). Reinventing Your Business Model. Harvard Business Review, 86(12). Read More