Detailed Analysis of the Market Conditions for the Happy Christmas Company - Case Study Example

PART INTRODUCTION The Happy Christmas Company was founded in the year 1999 and is an independent company manufacturing and dealing in entertainment products category. Originally, the company dealt locally but with the increase in globalization and availability of cheaper resources, the company initiated exports of its products lately to U.S, and Europe. The company has been highly successful in attracting the international customers, worldwide and has successfully gained a prominent market in the entertainment goods industry. According to Peter Zetterberg, Operations Director, Home Products Trade Marketing Europe, “We can focus clearly on the needs of local markets, it does cause significant challenges. However, with 95% of the company’s sales outside of China, we can no longer think of ourselves as a Chinese company”. Since the last 10 years, HCC has grown swiftly, principally throughout an insistent policy of efficient management. However in the wake of the economic crisis and the following recession that has also hit the company steering its sales down by almost 50%, the company has been forced to lay down 50% of its employees, and the company is motivated to look towards new options and destinations. Russia and South America have been identified as new selling destinations for the company along with trying to profit margins in the highly competitive environment. However, the company is also trying to promote its products in the local Chinese markets. The next section presents a detailed analysis of the market conditions for the company, the opportunities and threats, the current position and management strategy of the company and the forces of change that are required to build a more efficient and successful organization. I choose to select the method of various analysis tools like SWOT, Porter analysis to study the above requirements and conditions for the company. SWOT ANALYSIS Strengths – 1. The company commands significant lead in many segments in the export sector of the Chinese industry for entertainment goods. It is also a well known international company and its products have been able to set their own brands in the international market up till now 2. The company has a flexible and customer oriented product history with a considerable development in the export sector as they have increased the market share by 3% to over 6% within the last two years. 3. The company products received good reviews from the countries where they have been launched and therefore have a good backup, (Doyle, 1977). Weakness – 1. There are a number of local manufacture competitors that exist in the market which have built up a stabilized business with the local as well as international customer. 2. The relatively high cost of the product in comparison to the local options that are easily available in the market is a strong point which in not in favor of the product. Opportunities – 1. Can shift the prices to lower limits in markets where the absence of other international brands cannot command or interfere in the market. 2. The arrival of new products by the company into smaller and newer markets can open up doors to many other business opportunities for the company. Threats – 1. High expectations from the suppliers and end users. 2. Presence of local manufactures may lead to a total wash out of the company products. 3. Customer expectations to rise with time which may lead to additional costs for the company. 4. Any failure of a particular product due to quality or any other issue in the international market may threaten the impression of the company in other worldwide markets. PORTER ANALYSIS Porter’s five forces analyze the strong points of a company. Traditionally, the analysis is used to take notice of new product launches, upgrading of business services, and appropriate balance of power. In case of Happy Christmas Company, the Five Forces Analysis determines the competitive power of the group. These are as follows: 1. Provider control: in this case, the power and control of the suppliers of HCC to drive the prices of the final product or services from the company is assessed. This is further affected by the uniqueness of the products that are supplied to the company by these providers or suppliers. As a rule, the lesser number of supplier’s, the less influence they have on your product prices. 2. Buyer Power: This issue is concerned with the power of buyers which have the capability to control the prices. In the case of Happy Christmas Company dealing in entertainment goods, the end buyer does not have much power to influence the product prices. The reason for this is that the cost of switching from the company’s products to some other company to the buyers / consumers is almost the same in this case. 3. Competitive Rivalry: There are a number of large multinational companies that are working in the same field as Happy Christmas Company. However, Happy Christmas Company has been able to leave an impression since a number of years and has been performing consistently. The company has strived to maintain it product quality, which ensures little competition from other companies, (Fiala, 2005). 4. Threat of Substitution: Since basically Happy Christmas Company is an Entertainment product company, the consumer does have a choice of opting for other number of companies present in the market. At some point in time, it might be possible for the end consumer to switch to a different company and the threat of substitution is very high in this field. 5. Threat of New Entry: the market position of Happy Christmas Company will also be affected by the entry of new companies. Although it is a huge financial stake for a company to enter into field, but subsequently, more of competitors will be a threat for the Happy Christmas Company in the long run. If the company has strong and durable barriers to entry, then it can surely preserve a favorable position and take fair advantage of it. Therefore, we see that it is important for the company to analyze Porter’s five forces, and to make a complete examination of the future investments. The analysis of Porter’s five forces helps to understand what the Happy Christmas Company can do in order to make a decent amount of profit and market share. FUTURE RECOMMNDATIONS This section will present the 4P model (product, price, place, and promotion) various marketing mix issues and other customer oriented strategic recommendations for the future development of the Happy Christmas Company. 4P Model Recommendation – Product -- Most of the times, marketing strategies do not pay enough attention to the Quality, delivery, brand and packaging of products that are targeted for capturing larger market share or entering new markets, (Jacobson, & Aaker, 2000). Improved quality of the product along with higher investment in research will drive the key brand to higher sales ratios in the long term. In the current scenario, with a large range of competitors in the industry, HCC in order to increase its market share should aim to attract more customers through attractive product features like packaging. Proper packaged products and environment friendly and authenticity marks and quality concern seals will definitely grab the customer attention in the market full of duplicate and lower quality products, (Goldfinger, 1987). Price - Pricing has been the most effective method to boost profits and increase market share. Studies show that a number of top notch companies managed to capture market share with increasing product prices. However, this was not true in the case of new entrants or products with low or no market share. HCC being a strong brand in some markets can afford to increase the product price and capture more consumer attention. However, the price hike needs to be accompanied by some added features that will attract the consumer like - better quality, attractive packaging, free personalized services etc. Place – This aspect concerns with the distribution channels through which the clients buy and receive the company products. To carry this task step forward, the company can shape up some market growth local groups and some local teams that perform as specialists on local patrons and vendors for the company distribution channels and units. The company distribution channels will be controlled according to the nature of products and areas work in unison with the market growth groups. The aim of these localized company distribution units is to shape up the advertising approach, strengthen the links with the local retailers and market promoters, and at the same time unlock new streams for product distribution. Promotion - The company in order to increase the market share can easily follow some promotional product programs like promotional literature and brochures, printed advertisements, advertising, providing verbal information about the product, seminars about company information and other products will add value to the product image and increase the market share for the company. Other Marketing Mix Solutions 1. Leadership –This mainly requires what are the plans that can be best fitted along with the company’s objective and at the same time generate enough enthusiasm amongst its employees. The leading process rests upon the shoulders of the company’s CEO, senior executives as well as the middle and the lower level groups, (Kotler, 2004). This part also needs the creation of an efficient staffing system, and identifying critical activities like research and studies, that are required. 2. Supply chain management – After realizing the loopholes of the company’s supply chain, the management can also decide to restructure the entire chain with the aim to help the managers to make faster and real time decisions, which the supply chain managers face constantly, (Kim, 2006). The basic aims and activities that are encompassed within a supply chain by the company’s management are resource collection, procurement, warehousing, transport management activities, co-ordination with partners, suppliers and most importantly – the customers. 3. Enhancing information and operational systems --An accurate and timely information and feedback support system is needed at every level before execution of any activity. At the same time, tracking of results and communication of these results allows for more practical solutions to be implemented. Personal contacts, reports and meetings to discuss customer data, employee data, operations data, retailer data and most important the financial data should taken up and analyzed. The companies can set down a number of support systems, (Samaddar, Nargundkar, & Darley, 2006). Online data systems, Intranets, Electronic emails and E-commerce systems are some of them. 4. Exploring new markets --The company can look into the markets of Russia and South America and start to invest in other new neighboring markets of Asia. Promotion of company’s products in these countries which do not have much high sales figures during Christmas can be a challenge. Very effective sales promotion strategies are needed by the company to enter into these markets. Also the management should consider taking off the shelves the non performing products of the company which will save added time and costs which can be diverted to new strategies and products, (Denton, 1999). 5. Employing IT advancements -- Heavy Investment in IT, information sharing concepts and good corporate culture with a strong focus on customer demand can certainly help Happy Christmas Company to enhance its sales figures by a significant margin. Inventory issues and uncertain forecasting have been often identified as major concerns in the entertainment product industry, (Bateman & Snell, 2004). Enabling of IT technologies to reduce these problems can also help HCC to cut down costs. CONCLUSION Definitely a strong marketing and selling strategy for Happy Christmas Company will help the company to set a market share, increase depreciating sales and also recover the costs involved. This will also assist the management with a tool to prepare a viable plan which emphasizes on elements to increase market share for the company in future as well. A well defined solution of marketing mix strategies will further help the management to place the resources at the accurate marketing constructs. Offering competitive service through the company’s sales force and implementation of promotional programs for the products will increase the publicity and ensure profits for the business. REFERENCES 1. Doyle, P. (1977). Marketing Management. Boston: Houghton Mifflin. 2. Ehrenberg, L. & England, T. (2000). Price management. Amsterdam: Elsevier Publishers. 3. Goldfinger, S.E. (1987). 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