Marketing - Launching a New Vacuum Cleaner in the UK Market - Report Example

Marketing Executive summary The report highlights the marketing plan for a new product, which is an innovative vacuum cleaner. The marketing plan isprepared for Eureka Forbes so that they can capture new United Kingdom (UK) market. The customers of vacuum cleaners are huge in the UK. Thus, Eureka Forbes has decided to launch a new vacuum cleaner in the UK market, which will be in form of robot. The robotic vacuum cleaner will be given specific instruction for the accomplishment of particular cleaning work. The marketing audit of the company is carried in order to understand whether the product will be successful in the market or not. However, the marketing audit indicates the fact that the product will be successful in the UK market. Table of Contents Executive summary 2 Table of Contents 3 Introduction 5 Rationale of choosing the scenario 5 Findings 6 External environment 6 Porter’s Five Forces 6 PEST analysis 8 Political 8 Economical 9 Social 9 Technological 10 Internal environment 10 Sales 10 Market shares 11 Cost 11 SWOT analysis 11 Conclusions 12 Recommendations 12 Reference List 13 Introduction In the present competitive business world, it is very important to understand the wants and desires of customers as they are the main consumers of the products or services that is offered by the companies operating worldwide. The needs of the customers vary to a large extent and that is the main reason why companies implement different marketing activities to market their products and attract the attention of the customers. Apart from marketing activities, the companies also devote their quality to innovate new products to address higher number of customers and customize their needs (Kirkup, 2011). As a Marketing manager of Eureka Forbes, the main aim is to prepare a marketing plan for launch of a new product, which is a Eureka Forbes Motion Sync Pet robotic vacuum cleaner. It is a new product which rests on developed and innovate technology. The technology defines the work of the vacuum cleaners and will help the customers to clean their household properly. The marketing plan consist marketing audit along with the recommendations and assumptions that are relevant for the product launch. The marketing plan is prepared for fulfilling demands of the households in the United Kingdom (UK). Hence, the marketing audit is prepared with respect to market of the UK. The product has an elegant look with a twisted body detached by wheels. After considering lack of enough space in the small apartments in UK, Eureka Forbes have planned to launch a new vacuum cleaner in the market (Adler, 2010). Rationale of choosing the scenario The rationale for choosing launching a new product (robotic vacuum cleaner) in the UK as it is needed in the market. The prevalence of small apartments in the UK has encouraged the company to launch the new vacuum cleaner, which will support the customers to clean their households easily (Onkvisit and Shaw, 2004). New products not only cater to the needs of a market but also give emphasis whether the product will sustain in the long term or not. It is evident that the Motion Sync Pet robotic vacuum cleaner is very much needed in the UK as the majority of the households have pets and do not have the time to clean each and every corner of the house properly; the vacuum cleaner will work automatically when instructions are given and it cleans every corner of the house perfectly and there is no need to change the bags as it is self- sustaining product (DeWit and Meyer, 2004; Office of National Statistics, 2013). Findings In order to access the success of the product a marketing audit is performed so as to identify whether the product is needed in the market. The marketing audit highlights the analysis of external environment of the UK and internal environment of the company. Finally, a SWOT analysis is prepared highlighting the key issues that can be encountered by Eureka Forbes in the UK in order launch the new product (Rugman, 2009). External environment The external environment can be analysed through Porter’s Five Forces and PEST analysis whereas the analysis of internal environment is carried out by emphasising on the internal factors of the company which will affect the launch of the new product in the new market of the UK. Porter’s Five Forces Porter’s five forces model is used to access the power of an individual in a particular market. The model helps to understand the strength and weakness of the company in the competitive industry (Wheelen and Hunger, 2011). Power of suppliers: The suppliers in this industry in the UK are limited as the products are exported from outside UK. Thus the supplier concentration is low and there is a requirement of trusted suppliers, which can support the business of Eureka Forbes in the UK. The switching cost of this industry is also low as there is limited number of companies in the UK to provide the type of vacuum cleaners that is offered by Eureka Forbes. As there are limited suppliers of raw material of vacuum cleaners, the bargaining power of the suppliers are higher. This may affect business of Eureka Forbes’ new product as the price of the product will increase as the manufacturing cost rises (Stacey, 2007; Williams and Cutis, 2012; Witcher and Chau, 2010). Power of Buyers: There are many brands in the UK, which sells vacuum cleaner to the customers such as Samsung and Videocon. These provide higher power to the customers to switch to new options and get a wide range of products. However, the competitive environment does not only depend on the companies but also on the customers. The purchasing power of the households in UK has declined during recession and as a result the purchasing power of the same had declined drastically affecting the sales of the companies. Thus, it can be depicted that if the economy of the UK encounters such a situation again then the companies will encounter drastic decline in sales (Cohen, 2004; Porter, 2008). With the decrease in spending power of the customers, Eureka Forbes will encounter decrease in sales of the new product in the UK market as it is specialised product with a higher price. Thus, the bargaining power of the customers does not only dependent on the number of companies prevalent in the market but it is also dependent on the spending power of the buyers (Freeman, 2010; Samsung, 2014). In the UK, the household appliances market is underdeveloped as compared to that of the United States (US). Thus, it can be portrayed that growth in the appliance industry is not up to the mark as it is in the US and thus the sales have reduced over the years. However, Eureka Forbes can test the market by introducing this new product (Ahlstrom and Burton, 2009; Wilson, 2010). Threat of new entrants: It is noticed that the threat of new entrants are lower in this kind of industry as the big brands buy and sell the products in bulk. In such a condition, Eureka Forbes will succeed in the market by innovating a new product and penetrate the larger part of the UK market (Campbell, 2009). Threat of Substitutes: The main advantage of this industry in the UK is that there is no direct substitute for the product. However, the households can use brooms for cleaning their houses. Hence, Motion Sync Pet robotic vacuum cleaner will be successful in the UK market as the households gets little time to clan their house properly as they have to work. The robotic vacuum cleaner will enable the households to clean their houses easily without wasting their precious time (Porter, 2008). Competitive rivalry: The threat for competitive rivalry is high in this industry as the business giants such as Samsung has reined the market for the past few years. However, the innovative product is new to the market which is the main unique selling proposition (USP) for Eureka Forbes (Cherunilam, 2010; Schultz and Gordon, 2011). PEST analysis Political The marketing decision in any company is affected by the changes in political environment. It consist the governmental agencies and pressure from the individual groups, which are prominent in society. It also takes into account the association between the government agencies and political parties. In 2009, the UK had to confront a series of uncertainties as a result of rise in payment of taxes to cut the consumer spending (Linder, 2006). However, these difficulties had been overcome by the households in UK and the slow recovery of the economy is also a good sign for the companies in the UK. The threats on the economy have considerably affected the sales of the company as the consumer spending has declined due to the decrease in the disposable income. The houses appliances markets are also affected by the decline in the disposable income of the households of UK. Thus, it can be portrayed that the Eureka Forbes can encounter different political issues in the UK market. Economical The main economic factors that are dominant in the house appliances industry are purchasing or purchasing power of the consumers. These factors are dependent on the sudden uncertainties in economy such as recession and inflation that have the ability to sink the consumer spending. Thus, Eureka Forbes should focus on the consumer spending capacity and price its products accordingly so that even the uncertainties cannot affect the sales to a great extent (Pride and Ferrell, 2004). Social The social facets in the external marketing environment highlight the values of the individuals dwelling in the UK and also depict individual perceptions. The customers forms the central position in every market and thus the companies maintain comfortable relationship with them and. The companies are bound to give respect to the cultural and social values o the customers in order to satisfy them. The advancement in technologies has led to the rise of new electronic inventions. The usage of vacuum cleaners has increased over the five years in the UK (Priem and Butler, 2001). Affluent consumers are observed to purchase multiple vacuum cleaners, which increases their status. With the increase in level of employment in the UK, the spending levels of consumers have also heightened that has improved the sales of vacuum cleaners. Thus, it can be predicted that new product of Eureka Forbes will capture greater part of the elite market and even the middle class as the demand for vacuum cleaners are high (Kapil, 2011). Technological The technological environment changes dramatically and forces the companies to adopt new technologies that will help to build as comprehensive system. It is observed that the technological development pertaining to vacuum cleaners market is underdeveloped compared to that of the US. Hence, the new initiative and technological development in vacuum cleaners of Eureka Forbes will be a success in such a market. Hence, it can be portrayed that the technological environment will favour the sales of the new product of Eureka Forbes. Internal environment The internal environment comprises description of sales, market shares and cost of the company in manufacturing and selling the new product (Nelson, 1999). Sales The sales of Eureka Forbes are expected to increase in the UK as the new product will capture majority of the market. UK is an untapped market for Eureka Forbes pertaining to the sales of vacuum cleaners. Thus, it will be good opportunity for the company to penetrate new market with innovative products, which can increase the comfort of households (Johnson, Whittington and Scholes, 2011). Market shares The market share of Samsung is high compared to other companies, which dominate in the house appliances sector. Thus, it is evident that Eureka Forbes will have to capture greater market share. Cost The cost of manufacturing of the products will increase according to the availability of the raw materials. SWOT analysis Strength Increase in usage level of vacuum cleaners in the UK. Wide availability of market in the UK. Innovative product Weakness Subject to market uncertainties as the consumer spending decrease. Limited number of suppliers Opportunity Demand for vacuum cleaners have increased over the years in the UK Develop new market in the UK Presence of suppliers of raw materials Threat Recession or any uncertainty in the economy. Conclusions Thus, it can be concluded that the launch if the new vacuum cleaner will be success in the UK market, which is an untapped market for Eureka Forbes. The external and internal environment of the company suggests that the launch of new product will be a success for the company. There are various issues that be encountered by the company in launching the product in the UK market but Eureka Forbes has to overcome the situation. Recommendations The main issues that can be encountered by the company in the UK are depicted below along with the recommendations: Issues Recommendations Recessions can affect the business or sales of the company as the purchasing power of the consumers decrease to a great extent. The company should set moderate price to the product so that the sales does not decrease drastically at times of uncertainty. Technological difficulties can affect the sales of the company. The company will have to adopt the changes very fast so as to make their business profitable in the UK. Reference List Adler, M., 2010. A study of marketing and online marketing tools which improve online success. Munich: GRIN Verlag. Ahlstrom, D. and Burton, G. D., 2009. International management: Strategy and culture in the emerging world. Connecticut: Cengage Learning. Campbell, D., 2009. International joint ventures. Aan Den Rijn: Kluwer Law International. Cherunilam, F., 2010. International business: Text and Cases. New Delhi: PHI Learning. 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. DeWit, B. and Meyer, R., 2004. Strategy: Process, Content, Context: an international perspective. Connecticut: Thomson Learning. Freeman, R. E., 2010. Strategic management: A stakeholder approach. Cambridge: Cambridge University Press. Johnson, G., Whittington, R., and Scholes, K., 2011. Exploring  Strategy: Text and Cases. New Jersey: FT/Prentice Hall. Kapil, S. 2011. Financial Management. New Jersey: Pearson Education Inc. Kirkup, J., 2011. Household Spending Power Suffers Biggest Drop in 34 Years. [online] Available at: < http://www.telegraph.co.uk/finance/personalfinance/8604540/Household-spending-power-suffers-biggest-drop-in-34-years.html > [Accessed 25 August 2014]. Linder, J. C., 2006. Does innovation drive profitable growth? New  metrics for a complete picture. 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