Entrepreneurship and Innovation at Soup E-Duper - Case Study Example

?Entrepreneurship and Innovation Table of Contents Introduction 3 Part One: Analysis of the Chinese Marketplace 4 External Business Environment 4 Income Level 5 Competitor Analysis 6 Part Two: Manufacturing Soup E-Duper in China 6 Part Three: Business Plan 8 Marketing Mix 4Ps 9 References 14 Bibliography 16 Introduction Marketing plan is often regarded as an essential and effective set of practices needed to be conducted by any organization in terms of generating value to the customers along with ensuring proper communication and delivery of the products and/or services in a defined marketplace. A well-structured marketing plan is also regarded as quite beneficial to manage a feasible relationship with the clients in ways that offer profit assistance for both the organization and its stakeholders (Teece, 2010). Based on this context, the discussion in this paper will focus on developing a marketing plan for a small appliance company, i.e. Dragons Inc. in the Chinese market. Dragons Inc. operates as a group of entrepreneurs which significantly focuses on delivering advanced products to the market. With the concept of innovation, The Presto! Soup E-duper is one of the recently developed kitchen appliances of the organization which involves multi tasking facilities including mixing, blending as well as crocking capacity. The organization manufactures its innovative products which facilitate the customers to obtain new experiences of technological advancements and preparing tasty as well as health food items in a lesser time and in a cost-convenient way. The Soup E-Duper will be produced by Kitch-in-Zinc Plc, especially to target the new customer segments in the Chinese market. Therefore, the paper intends to prepare a viability report of Soup E-Duper in the Chinese market by considering the major factors of the marketplace, product and manufacturing issues that might to be faced by the organization. Moreover, the discussion of the report will further focus on developing an effective business plan for the organization to successfully operate Soup E-duper in the Chinese market. Part One: Analysis of the Chinese Marketplace External Business Environment The business environment in China can be identified as sustainable for foreign companies which are mostly related with manufacturing industries, or tourism or education sectors. For instance, the current political and economic environment of the nation depicts the elements to be in favour of companies which attempt to set-up its manufacturing operations within the country with the belief that it would increase job opportunities for the Chinese community and simultaneously facilitate the growth of the overall economy. Furthermore, China also encourages foreign investment from companies which belong to the nations aligned through World Trade Organisation (WTO) and other treaties with the economy (Yueh, 2012). Notably, as it can be identified that the product intended to be manufactured in China, i.e. Soup E-Duper, is patented by a UK based entrepreneurial group, Dragon Inc. and also manufactured by another European firm Kitch-in-Zinc Plc, the business plan can attain greater benefits even in relation to legal obligations. Furthermore, as the economic conditions prevailing within the Chinese market can be observed as growing with stability, it can be affirmed that the marketing prospects of the business plan can also be expected to yield better returns as per the expectations of the investors, including Dragon Inc. and Kitch-in-Zinc Plc. It is worth mentioning in this regard that with the growing GDP of the economy, which is currently recorded as 7.8%, the lifestyle preferences are also enhancing within the Chinese community (Yao, 2012). This can further be attributed as a positive aspect for the successful accomplishment of the objectives considered in this business plan. The offered product, i.e. the Soup E-Duper allows enhanced lifestyle to its customers rendering the facilities of easy blending, mixing, and processing through crock pot. It is also intended to be offered with the facility of portability along with quality assurance which shall be quite beneficial in addressing the growing needs and conveniences of the customers in the Chinese economic context. Additionally, it is worth mentioning in this context that the economy has also been witnessing a rapid growth within its technology industry which in turn has been quite beneficial in generating huge marker demand for technologically advanced products such as Soup E-Duper, especially in the small appliances market (Culpan & Edwards, 2013). Income Level According to the present economic conditions of China, it can be recognised that the country has rapidly transformed its economic standing which incorporates increasing GDP rate, household income along with per capita income and other macroeconomic factors. Moreover, the country has achieved a significant growth on its economic development due to its proper utilization of democratic coalitions within the People’s Republic of China (Yinghong, 2011). According to the present day context, the per capita income of the country is USD 8,400 which was previously recognized USD 7,700 in the year 2010. The household income rate of the people is also developing which has been witnessed 15% of total population have increased 10% of their income during the year 2008 (CIA, 2012). Competitor Analysis The small appliances market of China involves a large number of companies including both domestic and international brands (Reuters, 2012). As per the present scenario, the household product market of China is merely identified to be more competitive in relation to involving technological advancements and additional features within the products. With this concern, the chargeable facility of Soup E-Duper shall render a competitive advantage for the manufacturers to achieve a substantial proportion of Chinese small appliances market share. Moreover, the multi functioning effectiveness along with quality of Soup E-Duper can also be considered as a major advantage in the Chinese small appliances market. In addition, the design of Soup E-Duper can further be stated as a major advantage which is more convenient for the users to carry to any place even when travelling. Part Two: Manufacturing Soup E-Duper in China The business plan considered in this context emphasises on the manufacturing and marketing of the product, i.e. “The Presto! Soup E-duper”, in the Chinese marketplace. Hence, it is quite likely that the intended business plan and its sustainability will depend largely upon the political, economic and socio-cultural aspects of the Chinese manufacturing industry, concerning foreign investments. As can be observed from the analysis conducted in the above section, it can be stated that China is currently implementing policies in order to rejuvenate its manufacturing industry as a primary attempt to generate greater job opportunities within the economy and facilitate other industries with advantaged logistics and supply chain assistance. Hence, it can be considered in this regard that the plan to set-up the manufacturing operations of the product in China will be less challenging being favoured by the economic, political, socio-cultural as well as other external environmental factors persisting within the targeted marketplace. However, concerning the primary financial requirements of the entities in partnership to manufacture and distribute the product in the Chinese market, an initial planning of the manufacturing activities has been developed. The expected costs to be incurred when conducting manufacturing operations in the Chinese economy have been illustrated in the figure below. Table 1: Estimation of Manufacturing Costs Required for Manufacturing 1000 Units Manufacturing Costs Amount in ? Raw Materials Costs (Per 1000 Units) Motor 500 Plastic 250 Control Panels 50 Packaging 1,000 Total Cost of Raw Materials 1,800 Other Cost Variables Staff Cost (? 10 per hour*3) [total 3 staffs will be hired) 999 Fixed Cost 50,000 Total Cost 54,599 As can be observed from the above table and estimated costs, the initial manufacturing cost for producing at least 1000 units of Soup E-Duper, it will cost Kitch-in-Zinc around ?54,599. This cost is likely to be more during the initial phase when the company will also require providing 20% profit to Dragons Inc. Hence, ?10,920 of the profit earned by Kitch-in-Zinc needs to be shared with Dragons, which further increases the net worth of the investments required to ?65,519 for the production of 1000 units of Soup E-Duper. It is worth mentioning in this context that these estimations are likely to have significant impacts upon the pricing strategies of the business plan which has been discussion in the following section. Part Three: Business Plan The marketing strategies of an organization can be referred as one of the major and fundamental steps in order to achieve organizational goals and growth related objectives taking into account the various aspects related with the structure, size and behaviour of the market. Taking these variables into account, the marketing plan in this document attempts to outline the intended pricing policies, marketing budgets along with distribution strategies of its produced goods and/or services according to the needs and the requirement of the targeted customers. Additionally, the presented marketing plan also intends to illustrate the anticipated long-run profits and sales plans along with developing appropriate marketing mix strategies throughout its business operations (Kotler and Keller, 2006). From the perspective of the Soup E-Duper in the Chinese market, the marketing strategies of the Dragons Inc. will be highly focused on, by utilizing the framework of 4Ps marketing mix which ensures the appropriate identification of the needs and the desires of the market facilitating the marketers to execute effective business strategies including price and promotion related activities. Marketing Mix 4Ps Product Product can be considered as one of the major elements for an organisation through which it gains its brand identification as well as a sustainable position within the marketplace. According to the present scenario of household appliances in the Chinese market, it can be observed that business organisations are highly focused on technological advancements to create competitive advantages through differentiation (Kotler and Keller, 2006). Therefore, it is highly important for Kitch-in-Zinc Plc to invest advanced technological aspects while producing Soup E-Duper for the Chinese consumers. In the context of producing advanced and highly effective products in the market, the manufacturing unit of the organisation must need to evaluate the performances, ease of use as well as design of Soup E-Duper. Moreover, it is also important for the organisation to maintain effective technical specifications, in comparison to its competitors in the targeted market, when designing of the products in order to build a sustainable position in the Chinese small appliances household products market. The product will be included with multi tasking facilities which will enable the users to avail easy use through its technical elements including power, speed setting, capacity of the blender as well as capacity of the motor. The Soup E-Duper mixing, blending as well as grinding solution will also help its users to prepare various types of food items including soups, fruit juices, milk shakes, dry and paste of spices as well as grinding various types of vegetables. In addition, Soup E-Duper will also have substantial benefits on its power consuming sectors. The blender machine will be included with the feature of chargeable facility which could render an advantage to the user to carry the product when travelling for picnics or any other occasion. Price The pricing strategies for Soup E-Duper will principally be focused on penetration pricing strategy where the product will be launched with a lower price while entering to the market relative to the existing competition in the Chinese kitchen appliances industry. The penetration pricing strategy for Soup- E-Duper will be designed to obtain substantial number of market shares with the virtues of a low pricing strategy in its initial phase which will enable the organization to persuade a large number of buyers within a short span of time. As can be observed from the above presented table 1, Kitch-in-Zinc primarily requires ?65,519 for manufacturing 1000 units of Soup E-Duper in Chinese market with a capacity of manufacturing 10 units of the product in every 20 minutes. In addition, the organisation will further need to include other expenses such as transportation costs, marketing and advertisement costs along with taxation and other legal costs in the Chinese market which will raise the manufacturing and marketing cost of the product by a substantial extent. The manufacturing operations will further include other expenses such as transportation costs, marketing and advertisement costs along with taxation and other legal charges to deliver final product into the market. Therefore, the price of 1000 units of Soup E-Duper can be estimated to increase with an additional ?2000, including all the expenses to place the product to the final consumers. Hence, the total expenses will be around ?67,519 for 1000 units of Soup E-Duper in the Chinese market. Therefore, to produce one unit of Soup E-Duper, Kitch-in-Zinc will have to incur a cost of ?67.52 approximately. Owing to this particular aspect, to maintain a sustainable profit margin in its China based manufacturing operations, the organisation will require fixing the selling price of the product as higher than the cost of production, i.e. ?67.52 with due consideration towards the spending power of the targeted consumers. This can be further stated as suitable to the spending power of the Chinese middle income group consumers rendering competitive benefits to the organisation. Promotions Promotion strategies of the products and/or services of an organization are considered to be quite crucial when communicating about various aspects related to the offered commodity such as, price and availability along with content of the commodities to its prospective consumers. From the perspective of Soup E-Duper in the Chinese market, the promotional strategies will be focused on offering additional benefits such as extra blending jars as well as required kitchen materials including knives. Moreover, the promotional strategies for Soup E-Duper will further incorporate offering discounts to its customers during the festive seasons and other occasional periods such as the Chinese New Year. These types of promotional strategies will facilitate to accomplish a larger number of target audiences for the product in the Chinese market. The organisation will also take the advantages of various media channels including technology magazines and internet in the Chinese society to reach the targeted customers. Place Place can be considered as one of the major constituents for the marketers in terms of acquiring a large number of its targeted customers along with increasing the growth of the organization. In keeping with the emerging growth of Chinese small appliances market, the place or location of the organisations can be observed to extensively affect the sales of the products. Therefore, the place for Soup E-Duper will be focused on targeting the middle income group segments in different places of the Chinese market, especially in the metropolitan cities of the nation. Later the product shall also emphasise on the middle income groups in other semi-urban areas of China to ensure competitive advantages through brand recognition and sustainability. Targeting middle class consumers for Soup E-Duper will be more effective owing to the fact that a large number of middle income group consumers are available in the Chinese market. Conclusion The rapid economic growth as well as boosting annual income of the Chinese population is one of the major factors for the global organization to extend its offering to China. Moreover, the country also deciphers a favourable business environment which can reward greater flexibility in the nation’s legal concerns significantly encouraging global brands to operate their business operations. In addition, the government of China also facilitates effective policies for the global firms in terms of manufacturing operations and distributing them to different Chinese markets. With this regard, it can be stated that the business opportunities in the Chinese market considerably offers on higher profit for Dragons Inc. to produce and distribute Soup E-Duper to the middle level consumers of the country. Therefore, the aforementioned business strategies for Soup E-Duper will be effective for Dragons Inc to achieve competitive advantages in the Chinese household appliances market. Furthermore, the penetration pricing strategy can also provide substantial benefits when launching Soup E-Duper to accomplish a larger number of customers in the Chinese small appliances market. References CIA, 2012. Economy Overview. The World Fact Book. [Online] Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html [Accessed January 08, 2013]. 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