Market Analysis & Industry Analysis Tablet Market - Term Paper Example

Market Analysis & Industry Analysis This paper was a market analysis and industry analysis research that focused on a product which has been intended for the tablet market. Named the Slate, this is to be introduced as a tablet that comes to compete with two major forms of tablets on the current market. The first form of tablets is branded tablets, which come under the line of tablets produced by popular manufacturers such as Apple, Amazon, and Samsung. There is also what is known as consumer tablets, which come from lesser known manufacturers. From the market and industry analysis, it has been found that for the Slate to be regarded as a branded tablet, it is important that the right marketing plans are devised to ensure that the product becomes very successful in terms of sales. Fortunately, the tablet market continues to expand as the years go by. But together with this form of growth is the growing dynamism of consumers. This brings about the need to ensuring that the Slate will be focused on the right parameters of sale, which can ultimately be said to be the production of quality tablets. Contents ABSTRACT 2 List of Figures 3 List of Tables 4 OVERVIEW OF THE PAPER 4 PRODUCT CATEGORY 5 Size of market 5 Description of product 7 Pricing 10 Promotion 11 Distribution 12 MARKET SEGMENTATION 13 Key brands in product category 13 Geographic 14 Demographic 15 Psycho-graphics 15 Behavior 16 Product-positioning 17 Price 17 Quality 18 BRAND ANALYSIS 19 Advertisement of brands 19 Targeting within brands 19 Effectiveness of advertisements 20 References 20 List of Figures Figure 1: Market size according to tablet type 6 Figure 2: Market share of tablets by manufacturers 7 Figure 3: Worldwide tablet market share by screen size band 8 Figure 4: OS Market Share in name brand tablets 9 Figure 5: Brand Map 17 List of Tables Table 1: Dominant promotional spending 12 Table 2: Brand Matrix 13 OVERVIEW OF THE PAPER The globally competitive nature of the modern business environment makes it very relevant for companies to put in a lot of efforts into their marketing. This is because through marketing, they are presented with opportunities that make it possible for them to identify the right people within the competitive market who can be strategically presented with what the company has (Kotler and Keller, 2009). Marketing also sets the pace for companies to develop the best forms of strategic options that help in making them competitive as against their core competitors with whom they are in the same market with (Adcock, Halborg and Ross, 2001). With this said, it will be appreciated that marketing is a very broad and relatively generalized concept for any company. It is for this reason that aspects of marketing must be clearly defined in order to make the most of the concept. In this paper, two very important areas of marketing are focused and these are market analysis and industry analysis. Market and industry analysis can be said to be part of the overall research and development (R&D) component of marketing where companies get to study and understand their market and the industry within which they operate in a better way through critical evaluation of market and industry variables (Kotler and Keller, 2009). In this paper, some of the areas that are given include product category, market segmentation, competitors, and product positioning. PRODUCT CATEGORY The product under analysis is called Slate and is a type of tablet computer being targeted to be introduced unto the existing tablet market. Because is a detailed product category of the tablet industry where the Slate is expected to compete. Size of market According to the Tab Times (2014), there continues to be an increase in the number of people who use tablets in the United States (US) and across the globe as the years go by. This has led to a major expansion of the size of the tablet market. Using estimates for the beginning of the year, it was noted that there were as many as 70 million people who had installed base of name brand tablets in the US alone. By brand tablets, reference is being made to tablet devices that come from top manufacturing such as Apple, Microsoft, Samsung, and Amazon (Adcock, Halborg and Ross, 2001). At the global level, the size of the market is known to expand to reach an estimated 285 million users with installed base of name brand tablets. Another 200 million users are known to form the market size for consumer tablets, where consumer tablets are known to be those coming from lesser known manufacturers around the world. In figure 1, there is a graph that compares the global market size for brand tablets with consumer tablets. Figure 1: Market size according to tablet type From figure 1, it will be noted that the brand tablet market leads the consumer tablet market by almost 85 million users, which is 29.82%. This shows the dominance of top manufacturers over lesser known manufacturers of tablet computers. Below, there is a breakdown for the market share by manufacturers as of the second quarter of 2014. Figure 2: Market share of tablets by manufacturers Source: Needle (2014) From figure 2, it is seen that there are two major manufacturers dominating the tablet market and these are Apple and Samsung, which has 26.9% and 17.2% respectively. With their market share, these two manufacturers control and take greater share of the global and US based users discussed earlier. Description of product The Slate will be competing in the tablet industry as a whole but it is certainly among the consumer tablet market. Having said this, it will be very important for the product to be positioned in a manner that does not only compete with lesser known brands but those that are well known also. Through this, there will be a strategic approach to expanding the reach of the product and increasing its market share with time (Kotler and Keller, 2012). As far as tablets are concerned, there are two major concepts that describe them and these are screen sizes and operating system (OS). The product description is therefore given from this perspective, as this has been noted to influence sales greatly. For example, Needle (2014) pointed out that the most dominating screen sizes of tablets on the market are less than 8”, 8 to 11”, and 11” plus. Of these, there are has been different ranges of production units over the past 3 years and into the future. The graph below specifies the worldwide tablet market share by screen size band. Figure 3: Worldwide tablet market share by screen size band Source: Needle (2014) From figure 3, the indication that is given is that tablets that have been produced with screen sizes ranging from 8” to 11” have dominated the market since 2011. Those that go beyond 11” on the other hand have been less popular on the market, even though they are projected to grow in the future. As these grows, those less than 8” are also expected to decline. The notion that this builds about the consumer is that consumers are becoming more concerned with screen sizes whereby they are looking at devices that offer higher screen size band than their usual phones but not as large as their laptops or desktops. In terms of OS, it will be noted that there are two dominant OS which are iOS from Apple and Android from Google. These two are regarded as the commonly used in brand tablets. In terms of market share, the figure below elaborates how the two compete as of the end of 2013. Figure 4: OS Market Share in name brand tablets Source: Needle (2013) From figure 4, the dominance of Apple as a manufacturer has been reflected in the use of the company’s own OS in its iPad brand of tablets. This has 51% market share and is keenly followed by Android with 40% and others, which have 9%. For the Slate to compete well, it will certainly be necessary to look at screen size and OS that dominates the market. Pricing Pricing has been a major issue for the tablet industry since 2011. Writing on pricing as a marketing mix, Adcock, Halborg and Ross (2009) stressed that there are several factors that determines the price of the product but the most dominant among these are bargaining power of consumers and brand equity. Within the tablet industry, it has been said that all these two factors come to play because there are manufacturers who have constantly used their brand equity to sell tablets are higher prices and still dominated the market. A typical example of this is Apple and Samsung. There have also been times that bargaining power of consumers has forced manufacturers within the consumer sector of the tablet industry to sell at lower prices. On the whole however, the Tab Times (2014) noted that from 2010, prices have generally been lowered and this has had a positive impact on overall sales because a lot more people have been able to own tablets. For example the original iPad sold at $499 in 2010 but reduced significantly to $390 in 2013. As of the end of the second quarter of 2014, the average price of a tablet was $381 (Tab Times, 2014). It is interesting to note that within the period 2010 to 2014, one of the cheapest brand tablets was introduce by Amazon and was selling under $100. This means that prices do not always have to be higher if tablets are coming from branded manufacturer. Promotion Technology through the internet and the new media continues to dominate the world of branding and promotion and the tablet industry is no different in this regard (Kotler and Keller, 2012). This is because most manufacturers and sellers have used the internet through the new media to popularize their products and made them well known and appealing to customers. Two major platforms can be mentioned as far as the new media is concerned. These are company websites and social media networks, including YouTube. Through the idea of electronic commerce, most manufacturers have taken advantage of interactivity to create websites that makes it possible to learn and know about their products. More to this, the companies have had social media platforms where the public and customers interact with them about their products. Apart from these, the use of the electronic media including television and radio continues to be popular when it comes to promotion. It is very common to watch and listen to advertisements from these tablet manufacturers on television and radio. Also, the use of good old print media has not faded entirely even though its dominance and popularity has reduced. What is more, promotions have taken place via the use of billboards and the sponsorship of events and sporting clubs. One other dynamic trend that companies have approached promotion is by incorporating promotion into corporate social responsibilities (CSR). By so doing, they tend to force the public to recognize them by their deeds and replay the deed through the patronage of their products (Dev and Schultz, 2005). The table below gives a breakdown on the media use for the tablet industry as of the end of 2013. Table 1: Dominant promotional spending Type Spending for audiences Internet TV networks TV cable Print Magazines Print Newspapers Radio Billboards Sponsorship $27 million $365 million $252 million $83 million $3 million $56 million $3 million $57 million Source: Bagarin (2014) From table 1, it is seen that TV dominates promotion in terms of networks and cable. This is followed by print magazines and sponsorship. Radio also takes a substantial percentage. Even though the use of online promotion is very popular, its cost effectiveness gives a lower spending or audience. Distribution There are three major distribution channel strategies used in the tablet industry. The first of this is online distribution, which has been said to dominate the market since 2010 (Kerin, 2012). Through online distribution, customers visit the official website of manufacturers, interact with products listed on these websites, make purchases, and have their paid products shipped to them. This means has been noted by many analysts as the most efficient, cost effective, and convenient way to distribute tablets, especially as the market size expands and the need to be reachable increases (Adcock, Halborg and Ross, 2009). Another means is business to business distribution, whereby the manufacturers sell to corporate institutions whose line of business is directly connected to the use of tablet computers. A typical example of these is telecommunication companies. It is actually known that in some markets, the official sales right of some of these tablets are given to telecommunication companies who in turn sell to the general public in the markets in which they are found (Dev and Schultz, 2005). This however does not make the corporate businesses such as the telecommunication companies subsidiaries of the manufacturers. The last strategy is through the ordinary use of recognized franchises and retailers who buy in bulk from the manufacturers and stock the products in their own warehouses and sell to customers. Very lately also, most consumers have taken pride in walking into the shops of manufacturers and making direct purchases. MARKET SEGMENTATION Key brands in product category Even among top manufacturers, there are different brand of tablets that they produce. Any given brand is also made to focus on a specialized market segment. The matrix below analyses three key brands in the tablet market in such ways as contrast to each other in terms of segment bases or positioning. Table 2: Brand Matrix Brand Geographic Demographic Psycho-graphics Behavior iPad Air America Youth Social status interests Email Samsung Galaxy Tab S Europe Corporate people Heavy browsers Games Asus Fonepad 7 Asia Men T-commerce Phone calls Geographic Geographic location of customers and potential customers is a very important determinant of market success and must therefore be considered in any elaborate marketing plan. Writing on geographic location, Goldstein and Lee (2005) observed that people of different geographic location often have different needs and attitudes towards technological devices such tablet computers. With this noted, manufacturers can always focus on the need to targeting very specific geographic locations and inputting features of their tablets, things that meet the exact usage characteristic of the people within the location. From the matrix presented above for example, it can be noted that each of the three geographic locations namely America, Europe and Asia have very different demographic, psycho-graphic and behavior characteristics towards the tablet computer. For the Slate that is to be introduced therefore, geography will be very important in offering focus service. By focus service, reference is being made to the need to ensuring that people from all geographic locations will not be treated in the same way, or as having the same needs with the tablet computer. Rather than doing this, it will be important to ensure that each device that is shipped to specific geographic location have been incorporated with the most customer focused features as matches up the geographic characteristic of the place. Demographic Demographics are used in marketing to represent the most immediate physical characteristics of consumers. It is therefore common to have such characteristic features of consumers such as gender, age, occupation, and socio-status coming under the demographic identification of any typical marketing plan (Kerin, 2012). With this said, it can be note that the relative importance of demographics is that it helps marketers to identify their consumers by their physical characteristics. Christensen (1997) observed an interesting situation about demographics when it was said that demographic differences represent the single largest necessity deviations that exists among consumers. What this means is that when someone takes a variable such as gender, males and females are most likely to have two contrasting needs when it comes to the use of a tablet computer. Using another demographic variable such as age also, it is possible to argue that the youth would have an entirely opposing need for tablet computers from what the old age would have. With this noted, one cannot expect that the same approach to marketing can be taken when dealing with people from different demographic backgrounds. This is why McCarthy (2004) said that having a better understanding of the demographics of a market helps marketers to adopt the right marketing strategies that meet the divergent needs of all people within the market. Psycho-graphics Psycho-graphics have been explained to be a term that combines psychological attributes of consumers with their physical attributes in a well coordinated and jointed manner (Christensen, 1997). With this said, it is common to finding variables such as personality, values, opinions, attitudes, interests, and lifestyles being considered under psycho-graphics of any standard marketing plan (Mulhern, 2009). As far as the Slate and the larger tablet industry are concerned, psycho-graphics can be said to be a feature about the market that has a lot of relative importance. For example, an understanding of the psycho-graphics of a given market makes it possible to design the right pricing model for the marketing of tablets. For example, there can be a grade of tablets made, which are given customized and value-added features and rated in price as being high but only targeted for a group of consumers who are noted to exhibit high social class. Typical example of such group can be said to be celebrities, sports personalities, and politicians. It is common knowledge that people within such social class often prefer to possess limited edition of products with value-added qualities. Psycho-graphics therefore plays that role for knowing the consumer according to personality, values, opinions, attitudes, interests, and lifestyles. Goldstein and Lee (2005) advised that one of the best ways to make the most out of psycho-graphics is to combine its output features with geographic variable. This is because people from different geographic location are more likely to have different psycho-graphic characteristics. Behavior Once customers have made purchase of items, McCarthy (2004) observed that they would normally exhibit different attitudes towards the purchased products. This is what brings about the issue of behavior when designing a marketing plan. From the matrix prepared above, one gets the understanding that different buyers use tablets for different dominant purposes, helping to define the behavior of these people towards the device. For example, it is known that any typical tablet computer comes with features such as email, social media, phone call, text messaging, and or games. Even though it is normal that any buyer may use all of these features of the tablet at one point in time or the other, there are a group of buyers who may use some of these features more than others. The more shifted the use of particular features as against others, the more possible it is to associate the segment with a given behavior. Writing on the importance of behavior to the marketing plan, Mulhern (2009) indicated that it helps the marketers in selecting the best strategic option, especially in terms of differentiation strategic option. This is because in differentiation strategic option, manufacturers ensure that there are very specific provisions made to meet the behavior of a group of buyers. Product-positioning Figure 5: Brand Map Price Pricing is an important determinant in marketing. As far as pricing is concerned, there are numerous factors that determines how much a tablet computer will be sold for. Commonly, a company would look at its cost of production, brand equity, and purchasing power of consumers in placing the prices of its products. From the map above, it will be noted that the three different brands use different pricing segments. What is interesting is that the brand with the highest price, which the iPad Air has the largest market share, followed by Samsung Galaxy Tab S, which has the second highest price. The Asus Fonepad 7 with the lowest price has the lowest market share among the three brands. The indication that this gives is that pegging the prices of tablets very low will not automatically guarantee higher sales. It is not surprising that Knapp (2000) advised that marketers who want to the cost leadership strategic option to marketing must always be mindful of the need to consider other determinants of market success. Quality Very readily, the map produced above gives the indication that quality has a direct correlation with price, whereby brands that are of high quality are more likely to be expensive. One other factor that is very relevant is that the iPad Air which is considered to be of the highest quality has the largest market share and Asus Fonepad 7 which is lesser in quality has the lowest sales or market share among the three brands. By implication, the Slate would have to have a lot of focus for quality if it is to survive the market and be regarded as a high selling tablet computer. Very often, consumers will forego cost and buy high quality tablets knowing that such high quality tablets will be long lasting and will not require that they change their product very soon. The value that tablets offer to clients by way of quality must therefore not be underestimated for its impact on sales. BRAND ANALYSIS Advertisement of brands Each of the three brands that have been elaborated in this paper seems to have its own line of advertisement, aimed at clearly distinguishing its positioning. For example in the iPad Air video advert named ‘verse’, the product is made to focus on people from different occupational backgrounds but most certainly, one gets the idea or understanding that class matters in owning the product because of the line of professions featured in the advert. In the case of the Samsung Galaxy Tab S, the video advert looks more into personal relationships where the idea is created that owning the product is part of the everyday process of a person from conception to delivery. The Asus Fonepad 7 on the other hand focuses its advertisement on the functions and features of the product, including music, video, phone call, and messaging. The background of characters in the advert also gives the impression that the device is made for people of all classes. Targeting within brands By and large, each of the three products can be said to have achieved its targeted positioning in one way or the other through the advertisements. The one that can be said to have done this very well can however be said to be the Asus Fonepad 7. This is because from scene to scene in the advertisement, almost all the product’s salient features and functions were shown. As this was done, there was much emphasis placed on video calling and phone calling. This is because not all tablets come with the feature of phone calls and so the advertisement tried to create a positioning among users who would want to have an extra platform other than their mobile phones that can serve the purpose of making phone calls. In the advertisement of the Samsung Galaxy Tab S, not much was seen to be done in terms of positioning because it was difficult to associate the product with a particular group of person that forms a target market. The iPad on the other hand clearly sent its message on class. Effectiveness of advertisements To rate the advertisements according to their effectiveness, it would be said that the Asus Fonepad 7 advertisement was more focused on its target market than the others. Even without listening to the spoken message that accompanied the advertisement, it was possible to follow the plot of the advert and make very clear meaning on what was being put across. Meaning, Knapp (2000), emphasized on the importance of communication in marketing, where the target audience should be presented with a message that is very easy to accommodate and assimilate. Certainly, the same case cannot be made for the iPad Air and Samsung Galaxy Tab S because these were difficult to follow for their message. The deficiency in the message that the two had makes their advertisement less effective because it lacked the benefit that communication could add to them. References Adcock, D., Halborg A. and Ross C. (2001). 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