Place, Promotion and Price Strategies ZTE Computer Tablet Market Entry in the US - Research Paper Example

? Place, Promotion and Price Strategies ZTE Computer Tablet Market Entry in the US Introduction The computer tablet industry in the US continues to grow. By 2015, it is estimated that tablet users will grow from the present users of 26 million to 82.1 million market (Market Watch, 2011) To date, it is currently dominated by Apple Inc.’s Ipad 2 cornering around 75 percent of the total market share in September of 2011 leaving leaving only a 25 percent market share for its rivals (Huff Post, 2011). This is currently challenged by Amazon’s Kindle Fire whose recent performance in the market is predicted to dethrone Ipad’s leading position in the market. “According to leaked screenshots leaked by an Amazon source of its internal inventory management system Alaska, and published by Cult of Android, the Kindle Fire is on its way to outselling even the Apple iPad” (Barbara, 2011). Kindle Fire’s Tablet recent robust performance in the market is a positive development in marketing computer tablet in the US because it demonstrates that Apple’s Ipad is not invincible to the competition as initially perceived. This is an encouraging development for ZTE because it manifests that given with a right product and strategy mix, it is possible that ZTE can outsold Apple’s Ipad. This development tells that ZTE’s aggressive marketing objective in 2015 is realistic and doable. ZTE is not new in the U.S. market. It currently sells smartphones, feature phones, modems and devices within the U. S. market and has worked with U.S. carriers like AT&T Inc., Verizon Wireless, Sprint Nextel Corp. and T-Mobile USA (Khariff, 2011). In terms of brand recall, ZTE is no longer a stranger to American consumers. Such that when it introduces its tablet computers in the American market, it already has brand awareness where it can capitalize to gain more market share. ZTE Corporation is the second largest manufacturer of mobile phone gear in China. Being such, it has the advantage of scale to be able to sell its products at a lower cost. In contrast, Apple Inc is only the fourth selling computer brand in its own domestic market (America) dominating only the computer tablet market segment. This leading position is even currently threatened by Amazon’s Kindle Fire Tablet’s recent robust sales performance. ZTE also had a successful launch of its tablet outside the U.S., offering global tablet markets Google Android based tablets, like the one used in the Kindle Fire and Samsung Galaxy Tablet (Khariff, 2011). Considering these factors in competition, the possibility that ZTE’s inexpensive product offerings will establish them as the tablet PC market share leader by 2015 as predicted by TechGadgetWeb.com (2011). ZTE however has to employ the right marketing mix to successfully penetrate the US market and become a market share leader by 2015. To be able to employ the right marketing mix, it is necessary to elaborate the aspects of marketing mix which are; Table I Place Distribution and retail channels, online presence, geographic considerations, public appearances and performances (also an aspect of promotion), and delivery Promotion Marketing materials, initial offerings, social media /internet, press and PR, advertising, relationship marketing and public appearances and performances Price Market penetration goals, competition, customer buying power, regional and segment differences, current economic conditions (Source: www.businessmate.org) Place For ZTE to successfully enter the US market, ZTE has to capitalize on its existing marketing channels. Currently, it has a partnership with five majore carriers in the US that includes Verizon, the dominant US mobile phone carrier. Capitalizing on the existing network of this mobile phone carriers provides ZTE an easy penetration in US the market. The major carriers in the US has an established marketing network that makes it ideal for a new entrant like ZTE as a place of distribution for its products. ZTE’s exposure to Verizon and other mobile phone carriers’ customers does not only make ZTE’s computer tablet available to the network’s customers but also helps in establishing brand awareness to the product. In addtion with the partnership with major US mobile phone carriers, ZTE should also tap the retail channel that sell to a large number of computer tablets to unrelated customers. It will make ZTE computer tablets to become available to those who are not cellphone subscribers or to those existing mobile subscribers who would want to switch to ZTE’s computer tablet. It is also important that ZTE should have a direct channel of distribution and establish its own retail channel stores in the US market to make its presence felt. Its retail channel store can also serve as an after sales support that will help guarantee customer satisfaction. The retails stores can attend to any issues related with ZTE’s product which is critical especially when ZTE’s computer tablet is still in its introductory phase. In addition, retail stores can provide a desirable customer experience to its prospective clients that can encourage patronage and following in the US market. The internet should not be discounted as a place of distribution. Amazon has successfully marketed its Kindle Fire Tablet on their website that it received 50,000 preorders per day since its pre launch in the first week of October 2011 (eco). ZTE can take its cue from Amazon to use e-commerce as a place of distribution. The internet makes an ideal venue as a marketing channel because ZTE’s targeted customers are the ones who uses the internet. In addition, the overhead for selling online is very low. Promotion In positioning ZTE’s computer tablet in the market, it is critical for the company to convey the message that ZTE’s value is way above its price tag. Taking the lesson from Hewlett-Packard, consumer behavior revealed that it will respond to the product if the Customer Perceive Value (CPV) reconciles with the price. ZTE’s value proposition would be to offer functionality and design at a price which is way below the existing value proposition for increased marketability. The content of its promotion should convey the message that functionality and design does not have to come at a hefty price. Since ZTE’s computer tablet is new in the market, ZTE should optimize its communication mix not only to establish brand awareness, but also to be recognized as one of the players in the computer tablet industry. The right communication mix for ZTE’s computer tablet would be the extensive use of advertising, sales promotion and public relations. Advertising enables ZTE to reach a large and geographically dispersed consumers. It should utilize the print, broadcast and internet media to be able to reach a wider audience to establish and stick the brand in the consumers awareness. Sales promotion can also be utilized to encourage early purchase and mass purchase. Special discounts can be offerred to those who avails ZTE’s computer tablets early and another discount will be given to those buyers who will purchase in scale. ZTE should also be present in every computer events to make its presence felt. Events do not only provide exposure to ZTE’s computer tablets but it also affords the opportunity to showcase the capabilities of its product which could be possibly picked up by the media for a favorable third party review and possible endorsement. As earlier stated, ZTE should endeavor to forge partnership with US major mobile carriers to make its computer tablets to be among its product line not only for possible sales but also to expose the computer tablets to the carrier’s existing customers. In a way, this will serve as a free advertisement to ZTE computer tablets through partnership. Price Initially, it was thought thatconsumer’s preference appears to be the priciest tablet on the market which is the Ipad (Caulfield, 2011). The recent experience of Hewlett-Packard and Amazon’s Kindle Fire Tablet however prove that this is not the case. Consumers still respond to price according to Customer Perceive Value (CPV) of the product. With regard to Hewlett-Packard’s TouchPad, consumer perceived it not to be worth $499. Such, the TouchPad was a flop when it was first introduced in the market for lacking key features and sleek design. Consumers just did not perceive it to be worth its price that TouchPad have to slash its price at $99 to clean its inventory as it exits the market. The case of Kindle Fire Tablet also demonstrates how a strategically price computer tablet can encourage sales. Amazon knew that it cannot price the Kindle at $499 because consumers do not perceive it to be an equal of Ipad. Neither did Amazon price the Kindle Fire Tablet in the $200+ range knowing that a netbook which have a better feature than a Kindle can be had for $250. What it did was to price the Kindle Fire Tablet at $199, way below IPad and indirect netbook competitors. The result was phenomenal. In its first two weeks of pre-launch in October 2011, Kindle is already registering 50,000 preorders. At the rate that it is being gobbled by the consumer, it is very likely that Kindle Fire Tablet may just dethrone Ipad as a market leader in the computer tablet segment. When Apple created the computer tablet market with its IPad, it experience phenomenal growth that it became the dominant player because it created the market. Without competition and coupled with a positive brand, Apple was able to dictate the price of its Ipad. Ipad was and still is pricey that for a time, it was thought that computer tablets only caters to those who makes $100,000 annually who are willing to pay a price for convenience. Competition rode the trend on this new market and hastily created their own version of computer tablets. They priced their newly built computer tablets similar to Ipad just like what Hewlett-Packard did with its TouchPad. The result was disastrous for the company because there were few takers of the product (Eco). Research in Motion and other competitors shared similar fate which led the impression that IPad is invincible in the computer tablet market. What the competition did not realize however was that while they price their computer tablets similar to IPad thinking that consumers prefers the priciest tablet (considering that the demographics of computer tablet owners are 1those who make $100,000 annually), their product does not have the same functionality and design of Ipad and the consumers knows about it. Hewlett-Packard’s TouchPad was over-weight, underdeveloped and lacked key features like rear facing camera yet it was priced similar to Ipad, and as such, consumers did not pick up the product ending in disastrous sales performance (eco). It was lowered to $399 from its original price of $499 but still consumers did not respond because Customers Perceived Value (CPV) of the product is still lower than its new price tag. But when it slashed its price to a mere $99, it was able to sell its TouchPad faster than the Ipad. A three months worth of inventory was sold in just a day to evidence that market responds to price if CPV reconciles with its price tag. Design is also factor in terms of customer’s perceived value of the computer tablet. The Android tablets, Windows tablets and Research in Motion tablets are not necessarily technically inferior compared to the Ipad. In fact, many of Ipad’s competitors more than match its specifications. Only that it does not have the sleek and intuitive design of the Ipad so it cannot compete if it will price its computer tablets similar to Ipad. Amazon realized this. When it introduced its Kindle Fire Tablet which the enhanced version of Kindle, it was priced at a starting price tag of $199, not the Ipad price of $499. The $199 starting price was also strategically pegged in terms of pricing because the better featured, although bulkier netbooks can already be had at $250 (eco) so the Kindle Fire Tablet was priced below the netbook’s price. As a result, the Kindle Fire Tablet became a hit with consumers when the Tablet went on pre-sale on Amazon’s website on the first week of October 2011. Its preorders reached 50,000 unit a day and on its way to outsell IPad according to Amazon’s internal inventory system which was published by Cult of Android (Barbara, 2011). This new development in the computer tablet industry may result to Kindle Fire Tablet’s increased market share with a possiblity of dethroning Ipad as the market leader. When ZTE finally enters into the computer tablet market in the US, it may be possible that the Kindle Fire Tablet would be the market already given the rapid phase of its preorder sale in the computer tablet market. This development is favorable to ZTE because it proves that the computer tablet market responds to price which is a strong competitive advantage of ZTE. When consumers responds to price, ZTE is in a better position to compete either with Ipad or Kindle Fire Tablet because price is ZTE’s comparative advantage over its competitor due to its lower production cost (being made in China and has the advantage of scale being the number two largest manufacturer). When competition redounds to price, it is highly probable that ZTE will prevail and would be able to realize its marketing objective of being a dominant player in the computer tablet industry by 2015. Gleaning from this lesson from Hewlett-Packard’s TouchPad and Amazon’s Kindle Fire Tablet, ZTE omputer tablets should be priced equal or below Kindle Fire Tablet’s $199 without compromising features and design to become a serious contender for market leadership. It should also support its product with a strong customer service and apps availability which made made Apple’s Ipad to be a leader in the computer tablet market. This will guarantee customer satsifaction among its clients that would entrench ZTE’s position in the computer tablet industry by having a loyal customer base. Conclusion ZTE’s agressive marketing objective to become a leader in terms of market share in the computer tablet industry is possible. ZTE’s computer tablets have a lower overhead and can thus afford to market its price below the existing market leader, Ipad. The experience of Hewlett-Packard and Kindle Fire Tablet have shown that customers respond to price if the CPV reconciles with the product’s price tag. The Promotional aspect of the marketing mix has to properly convey an ideal value proposition to the customer where ZTE’s computer tablet will be perceived as a good buy at the price offered to the market. ZTE has already an existing partnership with the major mobile phone carriers in the US that the place or channel of distribution will not be an issue for the company for as long as it is able to communicate a favorable CPV. This marketing mix has to be supported by a good after sales support to ensure satisfaction among its users that will encourage not only patronage but also a strong following in the market which could gurantee’s ZTE’s competitiveness in the market. References: Caulfied, B. (2011). Counting Ipads, Apple is fourth biggest pc company. Forbes Magazine Huff Post Tech. (2011). Apple's tablet market share may top 75 percent in 2011. Retrieved from http://www.huffingtonpost.com/2011/11/07/ipad-market-share-2011_n_1080051.html Kharif, O. (2011). ZTE to Sell Tablet in U.S. Next Year to Challenge Apple, Amazon. Bloomberg BusinessWeek. Retrieved from http://www.businessweek.com/news/2011-11-09/zte-to-sell-tablet-in-u-s-next-year-to-challenge-apple-amazon.html N.V. (August 26, 2011). Tablet computers Difference Engine: Reality dawns. The Economist online. Retrieved from http://www.economist.com/node/21526663. TechGadgetWeb.com. (2011). ZTE Plans To Start Selling Tablets In US Market. TechGadget Web.com retrieved from http://www.techgadgetsweb.com/5531/zte-plans-start-selling-tablets-market Barbara (October 7, 2011). Kindle Fire Tablet Could be Biggest Tablet Seller. Topcomputertablets.com. retrieved at http://www.topcomputertablets.com/kindle-fire-tablet-could-be-biggest-tablet-seller/228943/ Read More