Conducting Situational Analysis of Richer Sounds - Assignment Example

?Richer sounds: Company Situational Analysis Executive summary Every company strives to operate effectivelyin the industry considering intensity of competition available in the market. Understanding therefore the core competencies and capabilities of the company is essential in formulation of strategies that will help attain a competitive advantage over the rest of the competitors. Analysis of the market trends and search of viable information about what the competitors are involved in is useful in making correct decisions which will ensue that the company sustains its operation while providing value to its customers. Conducting a situation analysis for the company is important since it will help in determining the strengths, weaknesses, opportunities and threats facing the company hence enabling it make informed decisions that will spearhead it to success. It involves understanding the main competitors of the firm and has a detailed analysis on how innovative they are, factors that affect them, how their products are perceive relative to your own and finding the niche markets that are not served. Segmenting the market is useful when a company needs to serve its customers efficiently since it enables pooling of needs of customers and finding the best way to satisfy them. Market segments can be identified based on demographic, psychographic, behavioral or geographical factors. It will therefore be easy for a company to formulate and implement position strategies that will help sell the product to potential customers. Table of Contents Executive summary 2 Table of Contents 3 Background 4 Company products 4 Situation analysis 4 Strength 5 Weakness 5 Opportunity 6 Threats 7 Customers 7 Main competitors 8 Market segments 8 Position strategies for the market segments 9 Reference List 11 Background Richer Sounds was established in 1978 by Julian Richer at a tender age of 19 years. Before this age, he begun the business at an age of 14 years where he specialized in buying and selling hi-fi separates music system. Under support of Vic Odden- a photographer retailer-made a start of a journey into the most successful retailer in UK. The retail received an award in 2002 being the best British-owned company that provides best working conditions for its workers. The company is operating at 52 stores in secondary high street locations in UK. Since its growth, the company has been able to invest in people schemes and in 2010, it received an award of the Best Retailer Award (Richer Sounds PLC, 2012). Within its operation, the company has kept providing value to its customers and requesting them to fill questionnaires regarding how best they have been served and performance quality of their products. The period 2009 to 2010, the company was able to realize a profit of 5 million pounds which was from a turnover of 160 million pounds. Company products Richer Sounds has become a national retail stores. The current demand in the market required Richer Sounds to provide most of the best latest flat-screen TVs, hi-fi, DVD and electrical appliances. Situation analysis Richer Sounds has placed much investment in product advertisement to reach its customers and increase its market share both in the existing market and its potential markets. The company has been able to make an analysis of its strength weakness, opportunities and strength to assess its position in the market and ability to serve its customers (Thompson and Martin, 2010). Strength Richer Sounds enjoys a long lasting characteristic of providing quality products and services as they keep the fun for their customers. Awarded as the best high street retailer, it remains to b the UK bets value hi-fi, home cinema and TV specialist. This makes them call their brands as the biggest with best prices. The company is organized in a way that it offers expert services to its customers. Its strength has been its brands of high quality hi-fi and electrical appliances which the customers have come to accept as best in satisfying their needs (Wood, 2005). This has enabled the company to create a niche for itself in the competitive market hence establishing over 52 outlets. Investment in advertising has enabled to reach customers in a way that they can make orders anywhere they are online and be offered after sale services. This has made it report a steady growth even in the current financial crisis. Its financial position has over the period been stable and due to the increase in the volume of sales, Richer Sounds is able to penetrate into markets and explore opportunities and support its future growth. Due to this the company is able to beat any online and in-store prices of major companies by a bigger margin. Prices are updated daily and have a constant arrival of new lines. Weakness The music world especially the machines Richer Sounds sells are constantly changing into more sophisticated ones every day. The company therefore has to keep up with the base of technology so that it does not get wiped out of the market. This has resulted in straining of the company resources to able to deliver what the customers specify. Most of the systems have become obsolete and hence being unable to be sold again. Since customers get what they want- and whose demands are fixed on the current technology-Richer Sounds finds it difficult to keep up with this. The company has to now cost cut so that they can realize profits. Their gross revenues have declined for a while because of the current rise in the level of intense competition provided by the supermarkets. The costs of maintaining the 52 stores have really increased due to the taxes levied on them. This also required an increase in the number of service providers leading to an increase in wages to be paid (Wood, 2005). The economic downturn has completely affected the operations of Richer Sounds to an extent that even the pre-tax profits have fallen from 2.79m pounds to 2.63m pounds. Opportunity Technological advancements have made individuals prefer what is more current and more advanced than the other previous machines. Richer Sounds has embraced this opportunity by ensuring that it provides its customers with the most sophisticated recent flat screens and other electrical appliances so that they would cut down the issue of returns and losing of customers due to lack of proper equipments required. The company is developing very fast by ensuring that they provide goods as per the specifications received from the customer feedbacks. The company has established good relationships with its suppliers. This makes them receive goods at a low price because of the bulk buying. This has been an opportunity of the company to be able to reduce its price lower than any electrical retailer in the market hence attracting customers due to the low prices which are updated daily (Wood 2005). Since the market has expanded as a result of investment in the advertising, the company is able to open several branches around the UK and currently has one franchise store in Northern Ireland. Threats The competition in the market for electrical has heightened requiring that certain strategies be employed to be able to combat the treat the company is exposed to. Every dealer in the market is conducting market research for expansion opportunities hence investing even more in advertisement. This has lead to a reduction in the market share since everyone is striving to bite from the same pie. Reduction in the number or existing customers at the moment when the company is experiencing high costs of operation could result to its downfall. Large companies like Currys offering the same line of products is casing such a great competition in that if Richer sounds does not lower its products and provide quality customer services, then there is a high possibility of being overtaken. The economic recessions and downturn in economic activities experienced in the market has threatened the company by reducing profits compared to other years (Mintel Group Ltd, 2009). This unpredicted changes shutter so many sections of operation of the company since expectations of such downturn of activities were un-anticipated (Thompson and Martin, 2010). Customers Richer Sounds customer are those in need of electrical appliances, Hi-fi, home cinema, LCD and plasma TV. The company has therefore grouped its customers depending on the age. The young below the age of 18 who have no income are given the products that are easy to purchase and use while the larger majority of the Richer Sounds customers are those above 18 and are able to achieve a certain level of income. The company targets these individuals since they are ready to furnish their houses, working places or even for business purposes. These are individuals who are well informed of the products they require their specifications and have detailed information regarding price and performance of the machines (Wrenn and Mansfield, 2006). Main competitors Every business has competition. It is therefore upon the company to ensure that it formulates and implement appropriate strategies to be able to secure opportunities in the market. This is through attainment of a competitive advantage that other firms in the marketing environment. Richer Sounds company main competitors include the online giant Amazon and the Currys. Curry sales a massive range of products which are completely similar with those of the Richer sounds. There mode of advertisement is good and quit competitive hence stand the same chance of attracting customers (Allen, 2012). Market segments Richer Sounds Company considers reaching out to a vast majority of its customers and providing value and satisfaction to them. Identifying potential customers and segmenting them into best bases which can be served has been one of the main strategies the company is using to remain competitive in the market. Once segmented, it is possible for the company to reach and satisfy the group since they have the same needs. The company segments its market on the base of demographic factors, psychographic, behavioristic, and geographic factors (Hassan and Craft, 2012). In considering demographic factors, the company determines the age group which dominates its buying. Most of the customers are adults hence the company puts in place enough resources to see that every product that may be required by the group is in stock. Also considered is the difference in income groups so that the prices they set on their products can be comfortable being handled by different income groups. Different individuals undertake different jobs hence the stock of the company considers providing different systems suitable for every comfort required for any job. Customers buy products due to several reasons. The company has invested in creating awareness to customers on how their products are different from others and even provided prices for comparison. The company attaches value on certain products in that they relate them to a certain standard of lifestyle (Webster, 1991). Customers are therefore able to select products based on their lifestyle and one that they prefer. Plasma TV and flat-screen are highly demanded by the customers. The company therefore has ensured that it provides bonus packages on this product and prices them in a way that will encourage purchase. Different benefits are sought for different reasons hence the company ensures that it is sensitive on the issue of price. Particular customers have a specific brand loyalty hence ensuring that the company provides essential information through various Medias is required. Behaviorist factors are therefore vital since they directly indicate the levels of purchase and the market trends. Firms require that for earning a return, there should be a market which is stable and large enough to support growth (Kleindl, 2006). Richer Sounds segments its customers also depending on population density and nearness to urban location. They locate their branches in the major UK streets to reach a large number of customers. Position strategies for the market segments Richer Sounds has greatly been recognized for its quality products which are of low prices compared to other outlets. The advertisements conducted through the internet on websites and other Medias like advertisement boards (Magrath, 1988). Therefore a distinctive position has been created in the minds of the customers that quality products at cheaper prices are available at Richer Sounds. The company has also assured customers that any product bought is covered and guaranteed to perform as specified. There are experts available to provide help and good customer care whenever it is required. Creation of good relationship is an important tool in creation of value and perception of the company in the minds of the customers (Magrath, 1988). This strategy has completely differentiated the company from other retailer stores hence securing a position for the company in the market. Reference List Allen, K. R. (2012). Launching New Ventures: An Entrepreneurial Approach. Mason, U.S.A: Cengage Learning. Hassan, S. S., and Craft, S. (2012). Examining world market segmentation and brand positioning strategies. Journal of Consumer Marketing, 29(5), pp.344-356. Kleindl, B. (2006). International Marketing. U.S.A: Cengage Learning. Magrath, A. J. (1988). Segmentation and differentiation positioning strategies are timeless. Marketing News, 22(22), pp.18-18. Mintel Group Ltd. (2009, March). Retail Review UK. Retrieved October 30, 2012, from Mintel: http://oxygen.mintel.com/display/445983/ Richer Sounds PLC. (2012). [Online] Available at: [Accessed 25 October 2012]. Smith, P. R., and Taylor, J. (2004). Marketing Communications: An Integrated Approach. Uniited Kingdom: Kogan Page Publishers. Thompson, J., and Martin, F. (2010). Strategic management. U.S.A: Cengage Learning EMEA. Webster, F. E., and Jr. (1991). Industrial Marketing Strategy. Canada: Wiley Publishers. Wood, M. B. (2005). Marketing Planning: Principles Into Practice. U.S.A: Financial Times/Prentice Hall. Wrenn, W. B., & Mansfield, P. (2006). Marketing Planning Guide. Biinghamton,NY: The Haworth Press Inc. Read More