Brand Positioning: Strategies for Competitive Advantage - Essay Example

Brand Positioning: Strategies for Competitive Advantage Executive Summary The growing demand for vacuum cleaner in the world market is due to the rise in the awareness towards maintaining proper hygiene and also for the increases in the standard of living of the people. Development of new technologies and the improvement in the efficiency of vacuum cleaners may influence the demand for the products among the households. It has been observed that the robotic vacuum cleaner is the fastest growing segment in the global market. The high price of these products acts as the main barrier in the market growth of the product. The new brand has developed a high quality product with cost effective technology and thus aims to capture the market by adopting the super value strategy to offer superior quality products at relatively low price. Thus, the brand will be able to capture the growing market in the United States and also the emerging economies. Thus, it is expected that the new brand will be able to earn high revenue and gain profits after spending a major portion on the promotional activities. Segmentation Approach The market for vacuum cleaner is mainly driven by the growing awareness about maintaining proper hygiene and the rising standard of living of the citizens. The global market for vacuum cleaners is segmented along the type of products and the specific regions. The market can also be segmented along the retail selling price above USD 200 and below USD 200. The new brand in this industry located in the United States which focuses mainly on robotic vacuum cleaners segments its consumers according to the social class (Euromonitor, 2015). Thus, consumers can be divided into three social classes: the lower level, the middle level and the upper level. The products offered to the different segments differ from each other based on their performances and price. Needs by segment The demand for robotic vacuum cleaners is increasing particularly among persons who are allergic to dust and the pet owners. The hectic lifestyle of the present world and the application of modern technology have created a need for products like the robot vacuum cleaner. The new brand offers different types of robotic vacuum cleaner depending on the nature of use and the purchasing power of the consumers. The brand provides different types of cleaners for outside and inside of a home, for cleaning the pool or a gutter. The products designed for cleaning the interior of the house are targeted at the low income consumers. The pool cleaner and other outside cleaning devices are made for the middle and the high income groups (SmallBizConnect, 2015). Segment Potential Though the robotic vacuum cleaners are expensive and thus the investment for the consumers are high, they view it as money saving because the product helps them to save valuable time and also avoid the costly cleaning services. Apart from their cleaning ability, some models are designed to perform tasks such as mopping and UV sterilization. The ease of access, increased performance and reliability and cost effective cleaning solutions attract all the consumer segments. Analysis of Current and Potential Competitors The robotic vacuum cleaners have attained significant success in the domestic robot market. One of the largest market players in the domestic segment, iRobot Corporation has sold 6 million units of its robot named “Roomba” between its release in 2002 and 2010. About 2.5 million personal and service robots have been sold in 2011, which is 15% more than the number in 2010 (Euromonitor, 2015). This indicates a rising trend in the use of robotic machines in households and their growing impact on the lives of human beings. Companies which focused on the production of the robotic vacuum cleaners experienced the highest increase in the number of unit sales. Neato Robotics had an increase of more than 6% in sales followed by iRobot Roomba, but with higher market share than the former. Moreover, various small and medium manufacturers have entered the market of vacuum cleaner and thus the competition for the new brand will be high in the American market. Environmental Analysis Technology The robotic vacuum cleaner operates in the same manner as the usual vacuum cleaners, but in order to avoid the human involvement in the cleaning process, self-navigation systems are incorporated within the products. At first the cleaning machines determines their cleaning route by mapping the space to measure the size of the room with the help of laser scanner of an infrared signal. During the cleaning process, the machines identify hindrances with the assistance of bumpers in their front. Several models of the robotic vacuum cleaners have more than one brush to increase the particle suction capacity of the machines. However, some designs also possess side brushes to facilitate edge and corner cleaning. The mechanism of robotic vacuum cleaners includes the power system, cleaning arrangement, batteries and programming software. Society The robotic vacuum cleaner minimizes the energy consumption of the society given the increase in mass demand for energy and the rising dependence of society on energy. In order to provide more benefit to the consumers and to the society, companies in this market is determinate to launch robotic vacuum cleaners which can operate independently without the help of the power grid. These products also help to maintain a healthy environment by providing innovative products for cleaning the pools and gutters. The government of the countries can also collaborate with these companies to develop products to clean the society as a whole. Industry The manufacturing for robotic vacuum cleaners is the fastest growing segment globally at present. The rising awareness about a dust-free and hygienic environment and the convenience offered by the products are expected to stimulate the demand for residential robotic vacuum cleaners. However, the low customer awareness, acceptance of innovative product compare to traditional vacuum cleaners in the emerging markets and high prices are some of the factors that may adversely affect the market growth of the robotic vacuum cleaners. Marketing Plan Description of the Market Opportunity Description of Need The rise in the awareness of people towards maintaining a clean environment easily has lead to the increase in the use of robotic vacuum cleaners globally. Also, the comfort and convenience of using the products attracts the consumers, but the high price of the products has hampered its demand to a large extent. Thus, the new brand needs to make the products available to the customers at a relatively low price than its competitors in order to explore the opportunities in the growing market. Discussion of Market Potential The companies which act as market players in the home appliances sector gains most of the profits from the robotic vacuum cleaners they present in the market. The household vacuum cleaners market is expected to achieve USD 14 million by 2018 according to a report published by Transparency Market Research. The market growth is also expected to increase due to the rise in disposable income in the households, introduction of energy efficient and eco-friendly technology and the small sized apartments. Thus, the market for residential robotic vacuum cleaners is having immense potential to be explored at present. Description of Product Concept The new brand aims at fulfilling the needs of the customers by offering better quality, performance and service compared to the normal products that the existing brands offer. The new product is designed to minimize the energy consumption of the consumers by increasing the capacity of the batteries installed in the systems. It must be also equipped with excellent navigation systems to execute its functions efficiently. This will provide satisfaction to the customers and also save time for performing other tasks than the cleaning of the households. Product Strategy Description of product The product has slim design to reach the hedges and corners of a room where the other designs cannot reach. It also has extra long brushes to clean the edges and corners of a space and two stage cleaning system to absorb dust from the surroundings. The product is also equipped with laser sensors than infrared sensors to detect the route of the cleaning process. The new product also takes less time to get charged and the one button use of the system makes its operation easier for the consumers (Kim et al., 2015). Objectives for Product The objective for launching the new product is to explore the immense potential of the market for robotic vacuum cleaner both in the domestic as well as in the global market. Features and Benefits The product is also equipped with laser sensors than infrared sensors to detect the route of the cleaning process. The new product also takes less time to get charged and the one button use of the system makes its operation easier for the consumers. Product Quality Strategy The new brand adopts the super value strategy by offering high quality products at lowest prices. For this purpose, the new brand has invested much in the research and development of cost effective technologies and thus it aims to capture the growing market by offering the product at low prices than its customers. This is because the high prices of the robot vacuum cleaners available in the market acts as a barrier in the expansion of demand for the product (Sengupta, 2005). Product Service Strategy The new brand also plans to develop a network of service centers with trained customer service personnel to provide high quality services to the customers. This will help the brand to enhance customer satisfaction and to develop customer loyalty. Competitive positioning of product The new brand must build an image of their brand in the minds of the customers and make them aware of their quality of services and create the demand for their products by applying various marketing mixes in the targeted segments. It must position its products as a high quality model which is affordable and accessible to all the consumers. Estimated Costs The cost of robotic vacuum cleaners is usually more than USD 500 per unit in the US market. Thus, the new brand must target to develop a pricing strategy which will be lower than the prevailing per unit costs. Pricing Strategy Basic Price Strategy Skimming vs. Penetration: The new brand chooses to adopt the price penetration strategy than the price skimming strategy. This is because it aims target price sensitive consumers and thus sells to the whole market without differentiating. It also focuses on volume of sales rather than the profit margin and tries to achieve economies of scale that will make entry to the market a difficult task for other manufacturers. Cost Plus: The new brand also adopts the cost plus pricing in order to recover the costs it has incurred to conduct research and development for introducing new technologies. Competitor Issues The market for robotic vacuum cleaners is very much attractive to producers but the cost of research and development for incorporating innovative technologies also involves huge costs. Thus, the threat of new entrants is moderate in this industry. However, there are big market players dominating the sector along with a number of small manufactures. Thus, the competition in the segment of robotic vacuum cleaners is high. Distribution Strategy Channels used to distribute the product The new product may be distributed using both direct and indirect channels of distribution. It can be distributed keeping in mind the customer convenience. An increasing number of consumers are using the internet to purchase the required goods to save their time and the cost of travelling. Thus, the new brand must focus on distributing and advertising its product with the help of eCommerce and also promote offline selling by setting up retail stores. Channel co-marketing and relationships The new brand must also partner with the existing market players to share technology and thus promote its products using the brand name of partners. Costs The cost associated with developing the distribution channel is huge and thus needs to be managed efficiently. Competitor issues The company must also conduct extensive research on the distribution strategy of its competitors and then establish its network according to the market conditions. Marketing Communication and Promotional Strategy Overall promotional objectives The overall promotional objective of the company must be specific, measurable, achievable, reasonable and time oriented. The brand must also manage its promotional expenses efficiently and effectively in order to utilize the maximum benefits from the activities (Webster, 1984).  Advertising Companies advertise to provide the targeted segment with information, persuade them to avail its services and remind them about its existence by repeating the key messages. Advertisement is expensive and the company must plan its budget for implementing the plan within the specified time period (Stone, 2001). Since it is a new brand the enterprise must invest largely in conducting vigorous advertisement campaigns. Personal Selling Sales programs: Sales programs need to be conducted but in the later stage of the marketing plan since, recruiting sales representative and training them to learn about the product is time consuming. Incentives: The company must provide various incentives to the customers while promoting the product through personal selling. This will allow the sales representative to attract the attention of the customers towards the newly launched product and also increase the sales of the company. Sales support: The enterprise must also set up a sales support team to administer the sales operations carried out by the sales persons and coordinate their work in order to gain the maximum benefits from the promotional activities (Kotler, 2008). Sales Promotions Sales promotion is the process of providing several attractive offers to the customers to gain their attention towards the services of the company (Cravens & Piercy, 2008). As the company is launching a new product in the market, it must extensively use sales promotions as an effective tool in increasing awareness about its services among the public. For example, the new brand can offer attractive discounts and offers during the initial stage of introducing the product in the market (Hawkins & Mothersbaugh, 2009). Program Costs The various promotional activities like advertising and direct selling involves a huge amount of costs and the company must plan its budget to avoid any monetary restriction. Competitor issues The brand must also conduct research to get information about the marketing strategies of the competitors in the segment of robotic vacuum cleaners. Technological Issues Trends It has been observed that the sale of traditional vacuum cleaners has been stagnant in the market of the United States and that of the robotic vacuum cleaners have been rising steadily over the years (Euromonitor, 2015). Also, the population of the developed countries is ageing as they are characterized by a low birth and death rate. As a result, the popularity of devices which can do the essential household chores such as cleaning and dusting the floors are gaining popularity in the developed markets. These products act as necessary goods to the people rather than luxury products and thus consumers are willing to invest in such items (South China Morning Post Publishers Ltd, 2015). Import on Product Offering The new product is equipped to perform way better than the existing vacuum cleaners. This is due to the advancement in the field of robotics that allows the enterprises to incorporate cost effective technologies in the products. This in turn gives opportunity to the new brand to offer high quality products to consumers at affordable prices. Financials Sales Volume Forecast The sales volume of the new brand has been forecasted to be rising over the months since the lower price and the high quality of the product will attract the attention of the consumers. Marketing and Service Provision costs Marketing and Service Provision Costs Costs ( in USD) Advertisement   Television Advertising 100000 Print Media Advertisement 5000 Social Media Advertisement 5000 Public Relations 4000 Direct Marketing   Telephone 5000 Email 3000 Sales Promotion   Discount and Offers 50000 Personal Selling 70000 Training Costs 50000 Service Costs 50000 Estimated Income The price of the product is estimated at USD 300 based on the market research conducted on the price charged by its competitors and also to cover the costs of research and development and other associated costs. The estimated income per month is shown in the following table: Table of Contents Segmentation Approach 1 Needs by segment 2 Segment Potential 2 Analysis of Current and Potential Competitors 2 Environmental Analysis 3 Technology 3 Society 4 Industry 4 Marketing Plan 4 Description of Need 4 Discussion of Market Potential 5 Description of Product Concept 5 Description of product 5 Objectives for Product 6 Features and Benefits 6 Product Quality Strategy 6 Product Service Strategy 6 Competitive positioning of product 7 Estimated Costs 7 Pricing Strategy 7 Basic Price Strategy 7 Competitor Issues 8 Distribution Strategy 8 Channels used to distribute the product 8 Channel co-marketing and relationships 8 Costs 8 Competitor issues 9 Marketing Communication and Promotional Strategy 9 Overall promotional objectives 9 Advertising 9 Personal Selling 9 Sales Promotions 10 Program Costs 10 Competitor issues 10 Technological Issues 10 Trends 10 Import on Product Offering 11 Financials 12 Sales Volume Forecast 12 12 Marketing and Service Provision costs 12 13 Estimated Income 13 References Cravens, D. & Piercy, N. F. (2008). Strategic marketing. New York: McGraw-Hill. Euromonitor. (2015). Vacuum Cleaners in the US. Retrieved June 26, 2015, from http://www.euromonitor.com/vacuum-cleaners-in-the-us/report Hawkins, D. & Mothersbaugh, D. (2009). Consumer behavior building marketing strategy. New York: McGraw-Hill. Kim, J. H., Yang, W., Jo, J., Sincak, P. & Myung, H. (2015). Robot Intelligence Technology and Applications 3: Results from the 3rd International Conference on Robot Intelligence Technology and Applications. Berlin: Springer. Kotler, P. (2008). Principles of marketing. New Delhi: Pearson Education India. Sengupta, S. (2005). Brand positioning: Strategies for competitive advantage. Noida:Tata McGraw-Hill Education. SmallBizConnect. (2015). Market Analysis. Retrieved June 26, 2015, from http://toolkit.smallbiz.nsw.gov.au/part/3/10/49 South China Morning Post Publishers Ltd. (2015). Thank the rich for driving technology trends that will benefit us. 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