Industry Analysis - Key Opportunities and Threats within the UK - Essay Example

? Marketing Management Q1. Conduct an industry analysis to identify key opportunities and threats within the UK. The mobile phone industry of UK is currently witnessing a booming phase. Reports suggest that around 92% of the UK adults own a mobile phone which is one of the major factors contributing towards the colossal development of the industry (Clifton, 2012). However, the industry is also reaching an alarming stage due to the increasing level of saturation within the industry. The only positive factor among these negativities is the increased penetration level of the smart phones, which is helping the industry to embrace growth at a modest rate. According to a survey carried out by IBIS world, the profit margins of the industry will reduce by 1.5% over the next 5 years due to mounting competition among the providers. However, this has also led to the falling price of the phones. The company projects that UK mobile phone industry is expected to reach $3 Billion by the end of 2014. Furthermore, the development of new technologies such as, 4G services, the development of smart phones and the new applications, is also driving the industry (Adler, 2010). The UK mobile phone industry is characterised by high rates of market concentration and competition. Some of the key players of the industry are Vodafone, T-mobile, Virgin and O2 among others (Cohen, 2004). The industry will be analysed with the help of Porter’s five forces analysis and on the basis of that, a SWOT report will be prepared. The industry analysis is presented below: - Factor Analysis Resultant Bargaining Power of Buyers The bargaining power of buyers refers to the ability of the buyers to bargain and reduce the price. Reports have shown that the industry is growing at a robust rate and one of the reasons for this colossal growth is the enthusiasm among the buyers. However, due to the presence of a number of providers in the market, the buyers have the tendency to explore the other. This reduces the brand loyalty rate among the consumers. High Bargaining Power of Suppliers The bargaining power of suppliers refers to the ability of the suppliers to bargain and increase the manufacturing cost of the firm (Ferrell, 2006). The suppliers of raw materials for the mobile phone industry in UK is adequate in number and in most of the cases, these companies enter into a treaty with the suppliers which reduces their power to a great extent. Some of the key suppliers are Huawei and ZTE. Moderate Threat of New Entrant The threat of new entrant refers to the threat of a new player entering the industry, thereby increasing the level of competition. To start a telecom business in UK, one needs to go through a series of legal acts and moreover, acquiring spectrum rights is an apprehensive issue. Setting up of a telecom business also requires huge start up cost which often acts as a hindrance. Low Threat of Substitute The threat of substitutes refers to the extent to which substitute products can increase the competition within the industry and act as a potential threat to the firm. The substitutes of a mobile phone are tablets, land phones, palmtops and also, mini laptops to a certain extent, as it serves the core function of facilitating communication. These products are available throughout the country and in almost every outlet. However, due to the portable nature, mobile phone has its own set of customers. Moderate Threat of Competitors The threat of competitors is the level of competition within the industry. In the context of the mobile phone industry of UK, the industry is fiercely competitive due to the presence of a number of players. Some of the established players of this industry are Vodafone, T-mobile, Virgin and O2, among others. High On the basis of the outcome of the industry analysis, following is the set of strengths, weaknesses, opportunities and threats for Blackberry in UK market. The same is illustrated below in SWOT analysis framework. Furthermore, the subsequent section will also prioritise the opportunities by considering certain frameworks. Strengths High growth rate of the industry. Implementation of mobile internet accelerating the growth rate of industry. Weaknesses The mobile internet market is yet to reach its maturity stage. The industry is on its way to reach saturation. Opportunities Product diversification/development. Embedding new features and technologies such as, GPS and 4G. Rebranding and positioning mobile phones as multipurpose devices. Threats Intense Rivalry. Exploitation of mobile phone marketing often acts as a big blow to the firm. Rank Factor/Priority 1 Embedding new features and technologies such as, GPS and 4G. 2 Product diversification/development. 3 Rebranding and positioning mobile phones as multipurpose devices. Q2. Identify an appropriate segmentation and targeting strategy for a new Blackberry product. The analysis of the industry has clearly shown that it is heading towards the saturation stage and therefore, development of a new product or modifying its current features is an evident task. In the context of Blackberry, the company has a niche customer segment and mostly caters to business customers. The preloaded applications of the phone mostly support business activities and as a result of that, the company caters to a small market in comparison to other players. Hence, the new product suggested for Blackberry is a smart phone, mostly with multimedia and gaming features into it. This will allow the company to target young customers as well as customers who are not involved in the business world. This will also allow mass marketing for the company. However, at the same time, the company needs to do proper marketing and segmentation for better results (Dess, Lumpkin and Eisner, 2009). Market segmentation is a marketing strategy that helps in dividing the broad target market into small subsets of consumers, exhibiting similar kind of behaviour. Identification of these common needs allows the firm to design product or implement strategies accordingly. This mitigates the financial risk of the company to a great extent. The segmentation of the market can be done by considering several factors. Some of the common segmentation strategies used by the companies in order to segment their market for the products are as follows: - 1. Geographic Segmentation: - In this technique, companies mainly uses geographic location so as to segment their market. 2. Behavioural Segmentation: - The behavioural segmentation is the type of segmentation in which companies segment market on the behavioural patterns of the customers. 3. Demographic Segmentation: - In this type of segmentation, companies mainly consider a combination of few factors such as, age, sex, income level, life style and social class, among others. 4. Segmentation by Occasion: - In this type of segmentation, companies mainly considers the different occasions or depends upon those very occasions, so as to sell their products. For example, the demands for cakes are high during the Christmas period. 5. Segmentation by Benefits: - This is often referred to as the process of segmenting the market by considering the benefits sought by consumers. In the context of Blackberry, the segmentation strategy to be put into practise is segmentation by benefits. Consumers have varying demands and naturally, their expectations also differ to a great extent. The segmentation for the new product along with the existing ones is as follows: - Segments Products Benefits Sought/Target Segment 1 Existing Products of Blackberry The customers to be targeted are teen age customers who prefer surfing internet and playing games on multimedia interfaces. Segment 2 New Product of Blackberry The customers in these segments are the customers involved in business activities, but also like to surf internet as well as play games. Segment 3 New Product of Blackberry This product is only targeted towards the people involved in business activities. Once the segmentation strategy is identified, the next task is to ensure proper targeting strategy. Targeting is defined as the selection of potential customers to whom a company wants to market its product. Targeting strategy encompasses segmentation of the market, selecting the most potential one and determining the products and services that will be offered to each of the target segments. A targeting strategy needs to be adopted by Blackberry in order to market their new multi-media featured smart phone and the existing blackberry model. They need to pursue differentiated marketing strategy (Porter, 2008). In differentiation strategy, the company will have the option to offer separate products to each group members on the basis of their requirements. Moreover, each of the segments is targeted uniquely as it provides unique benefits to each of the segments as per their needs. Hence, these strategies are justified as it provides the company with the opportunity to fulfil the requirements of the customers, thereby increasing the scope of enhancing the level of customer satisfaction. Q3. Identify the positioning objective(s) of this new product and design a positioning strategy based on achieving this objective(s). The marketing strategy adopted by a firm is framed after taking several factors into account. This is because marketing is a broader term and includes several other aspects under it. One of the key activities in this aspect is the positioning strategy of the firm. Positioning is the strategy used by the firms as an effort to influence the perception of the consumers related to a brand in comparison to the perception of the competing products or brands. The objective is to ensure that the company achieves a unique, advantageous and clear position in the minds of the consumers. The principal rationale behind companies implementing this strategy is to stress and emphasize on the distinguishing features of the company’s brand in contrast with the other brands. With this approach, companies attempt to create an image for themselves which is either a premium image, luxurious image or utilitarian image. Apart from that, there are several other options by which a company can position itself. Studies have shown that once a brand is positioned, it becomes literally impossible to reposition the same without destroying the credibility it embraces (Kapil, 2011). In the context of Blackberry, the situation is such that other than repositioning itself, it will be extremely difficult for the company to achieve success and fulfil their objectives. The company is best known for offering products that meets the business requirements of the customers. Hence, it is positioned as a phone meant for businessmen. However, the new launch is aimed for the mass and is more commercial. Thus, the principal positioning objective for Blackberry is to ensure that people relate to the product of Blackberry as a phone that ‘suites everyone’s need and not meant solely for business activities’. Another positioning objective for Blackberry is to create an image, in the minds of the consumers, where the product is not meant only for higher income group. A notion persists in the market that users of Blackberry are offered social class and is only affordable for the rich people (Ferrell and Hartline, 2010). However, in reality, the product comes in an affordable rate, but due to inefficient communication, the product is failing to tap the other segments of the market. The reposition of the brand and positioning of the new product will be done in the following ways. Advertisement is probably the most common technique used by the companies to position their products. Hence, Blackberry must focus on the advertisements and should devise the strategy in a way that it reflects that the phone is not targeted to a single market rather it offers something special for everyone. The advertisement media must be television, social media, magazines and newspapers as each of the platforms has the ability to communicate with large audience base. Apart from advertisement, other promotional tools such as, public relations and traditional methods, can be also used. Q4. Using the product/service life-cycle model, outline appropriate marketing strategies for your new product, at each stage of its life-cycle. Every product or service passes through different stages and it is often termed as product life cycle. The product life cycle is characterized by four phases namely introduction, growth, maturity and decline. Each of this stage is characterized by certain features and aspects. (Henry, 2008). For example, the introduction stage is dubbed as low and slow stage in the entire phase. The growth stage is characterized by growth tendencies where the product starts to perform better and sales begin to rise (Hitt, Ireland and Hoskisson, 2010). Moreover, this stage is also considered as the most crucial stage for a brand to establish itself in the market place. The third stage is the maturity stage where market becomes saturated as it reaches its ultimate or peak position. The distribution channels become full and house demand which is satisfactory. This is the most relaxing state of a product, but ironically in this stage, the growth of the firm reduces to a great extent. The impact on the activities of the competitors is also large in this stage. Lastly, the decline stage arrives, which is the last and final stage of the product (Holmquist, 2012). In this stage, the market share along with the growth rate starts to decline at a robust rate, due to development of the new products and increasing intensity of competition. It is therefore imperative for the companies to devise the most appropriate marketing strategies for each stage so as to ensure that the growth rate and market share increases at a satisfactory pace. In the context of Blackberry, following are the strategies that can be pursued by the company: - Marketing Strategy at introduction stage: - This is the stage where the product needs to be under the limelight so as to ensure a better future. Hence, robust marketing efforts are needed in this stage. The new product from Blackberry must be promoted through various media such as, television, print media and PR activity, to create a long lasting impact (Johnson, Whittington and Scholes, 2011). Marketing strategy at growth stage: - In the second stage, it is expected that the product has gained acceptance in the market. However, gaining acceptance does not ensure consistent growth rate as the extent of pushing needs to be equal. In this stage, Blackberry must consider other advertisement forms to speed up the process. For example, PR activities, sponsorship and event hosting can be some of the wise options of this stage. Marketing strategy at maturity stage: - This is the most challenging stage for the marketers with their product. In this stage, the product has reached a stable position and therefore, the advertisement requirements can be reduced. Blackberry must reduce the advertisement budget in this stage and must invest more on research and development so as to find an option for sustaining its presence. Marketing Strategy at declining stage: - In this stage, the impact of advertisement is a matter of doubt because further new products enter the market which reduces its visibility. Hence, Blackberry must introduce new products or should modify the existing product(s) by adding new features to it. This will help the company to ensure effectiveness in operation. Q5. On what basis (competitive advantage) would the new Blackberry product compete in the market place in the long-run? The success of a product in the market place is greatly dependent on the extent to which it embraces competency (Pride and Ferrell, 2004). Competitive advantage, in simple terms, is defined as the firm’s advantage over its rivals. This allows the firm to enjoy greater profit margins and sales, lessen competition and increase loyalty of the customers (Rugman, 2009). Certain feature or factor provides a company with competitive edge over the rivals that drive the product towards glory. Hence, embracing competitive advantage is a key towards the success of a firm. In the case of Blackberry, the core competency of the firm will be the combination of multimedia features and business applications (Schultz and Gordon, 2011). Most of the products available in the market focuses only on one aspect i.e. they either posses multimedia information or business application. However, the fact is not that there are no phones in the market that comes with both of these sets of applications, but this phone will be available at an affordable price and at the same time, it will offer huge societal value. Hence, it can be stated that the competitive advantage for the new product of Blackberry will appear in the form of cost advantage, bundled features and societal value it offers. Reference List Adler, M., 2010. A Study of Marketing and Online Marketing Tools Which Improve Online Success. Munich: GRIN Verlag. Clifton, B., 2012. Advanced Web Metrics with Google Analytics. 3rd ed. New Jersey: Wiley Publishing. Cohen, W. A., 2004. The Art of the Strategist: 10 Essential Principles for Leading Your Company to Victory. New York: AMACOM Div American Mgmt Assn. Dess, G.G., Lumpkin, G.T., and Eisner, A., 2009. Strategic Management: Text and Cases. 3rd ed. New York: McGraw-Hill Education. Ferrell, O. C., 2006. Marketing Management. Connecticut: Cengage Learning. 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Schultz, H., and Gordon, J., 2011. Onward: How Starbucks Fought for Its Life without Losing Its Soul. New York: Rodale. Read More