Marketing: Gravity Lights Product - Case Study Example

Marketing Executive Summary The product chosen is gravity lights; the rationale for this choice is because it addresses the existing market needs in a unique way. Gravity lights provide an alternative source of power especially in places with limited access to power. Unlike other alternatives, gravity lights work absolutely independently. The source of light comes as a result of conversion of mechanical energy to electrical energy. The life cycle of the product is also expected to be long because of its uniqueness and usability. This analysis covers a number of aspects that will be faced while making the product launch. The analysis of the product life cycle gives a clear picture of the expectations of the product in the market. Various stages will see changes in sales volumes and hence the need for strategies that will aim at maximizing the income from the sales. New economic markets, organizational structures, market plans and market audits provide an in-depth glimpse of the potential activities in the new market venture. Table of Contents Introduction 3 Product 3 Mission statement 3 Product life cycle 3 Establishment stage 3 Growth stage 4 Maturity stage 4 Decline stage 4 Stage of the new product 5 New market entry 6 Pioneer strategy 7 Growth strategies 8 Shake-out, mature and declining strategies 9 New economy markets 11 Organisation structures 11 Marketing plans 12 Cost benefit analysis 13 Contingency plans 14 Marketing metrics and marketing audit 15 Marketing audit 15 Flowcharts 15 Conclusion 17 Introduction Product The chosen product is gravity lights, a product that provides alternative source of energy especially to individuals in remote areas or energy sensitive people who prefer saving energy by using alternatives which consumes less from the atmosphere and emits almost no harmful gaseous to the atmosphere. Gravity lights work by converting mechanical energy to electrical energy and uses the energy for about 30 minutes. A small load needs to be placed for only about 30 seconds for the lights to be on for 30 minutes. Mission statement The aim of this analysis is to create effective market strategies that will ensure the success of the new product in the market. Product life cycle Establishment stage This is the first stage of the product life cycle which is mainly characterized by introduction of the product to the target market. At this stage, monopoly can be created depending on the usability of the product to its customers. Most firms normally attract losses at this stage; this is especially evident if the product belongs to a new class of products. The users are not normally aware of the product and its usage, in order to gain a place in the market; companies invest on information dissemination strategies or promotional strategies in order for the product to be known. This stage is mainly characterized by low competition, loses and limited or no profit at all (Hellriegel, & Slocum, 2007, p.34). Growth stage This is the second stage of the product life cycle, it comes with acceptance of the innovation in the market and profit as a result of increased sales starts flowing. In the event that monopoly exists, companies can commence experimenting with new ideas and innovation in order to ensure maintenance of sales growth. At this stage, companies can introduce new and effective products in the market in order to create a lasting image about the product class Hielkema, 2012, p.36).This will also play an important role as the competitors try to copy and improve the product. Maturity stage At this stage, the sales start to slow down as the product has achieved its acceptance in the market. Most new firms will try to become innovative by developing similar products in order to compete with the existing product. Since there are a number of companies now in the market with similar product, competition for customers increases tremendously. As a result of competition, the product profit declines and hence marking the beginning of maturity stage. Decline stage This stage is the last stage in the product life cycle and is market with declined rates of sales. This is because many companies are now in the market, a factor that makes it hard for all the existing and new entrants to maintain sustainability in terms of sales levels. At this stage, the efficiency of the company plays an important role as well as the product class, the market at this stage may perceive the product as old and hence not in demand at all (Hollenbeck & John, 2006, p.534). All these stages are necessary but may vary subject to the product, competitors and other external factors such as taxes. (Knowles, 2011). Stage of the new product The new product is essentially at the establishment stage because it is still a new product and limited numbers of customers are actually aware of the product and its usability. The product requires effective promotional strategies in order for the target market niche to be aware of the product. New market entry Since gravity lights are a new product line in the energy sector, two strategies are imperative at this stage, cost reduction and new product line. It will be essential to ensure the reduction of the cost incurred in setting up a new market for the product. The rationale for this is mainly because the product is new and hence at the establishment stage in its life cycle market with no profits and increased cost of promoting the product in the market. In order to ensure that the cost is reduced, cheap and free marketing strategies will be chosen (I-Fei Liao, 2009, p.23). The product will be marketed online and back links created towards camping and caravan sites in Australia. The product will also be promoted in areas with large caravan and camping sites like Yarra Valley & Dandenong ranges, Daylesford & Macedon ranges among others. The main advantage about the product that will further decrease the cost is the manufacturing materials easily available and cheap. Strategic partnership with parks and camping sites managers will be important as it will reduce the cost of marketing the product. Gravity lights are a unique line of products aimed at helping the camper and other people in remote areas access an alternative source of light without much hustle at it would be with other products such as wind energy which requires poles, direction of wind among others, solar energy requires batteries and sun. Other rechargeable sources of light will demand presence of electricity which is a main problem in remote areas. The usability and effectiveness of gravity lights will be relied on while making a market entry (Kapferer, 2002, p.46). Since it is new and unique, it has increased chances of getting started in the new market without an obstacle. Despite the early challenges of new market entry and product growth phases, the product is predicted to have massive sale volumes as at the growth and maturity stages of its life cycle. Competitors will also face challenges in creating the product and commencing marketing strategies. Pioneer strategy Since the product is new in the market, the strategy which will be employed in this case is pioneer strategy. In pioneer strategy, two strategies will be employed, mass market and skimming strategy. The rationale for employing mass market is because the market is still unexploited with better alternatives of energy which are better than the proposed Gravity lights idea, the available options such as mantle lamps and torches require alternative sources of light such as electricity in order to function effectively. On the contrary, gravity lights do not require any alternative source of power, in this sense it means that this new product will have more advantages than the available sources of power; this is a factor that will greatly enhance the market its market and hence attracting a mass market availability before competition from similar products begins (Keller, 2001, p.15). Skimming strategy as a pioneer will work effectively in this case because the product is new and unique. It provides more advantages and hence setting a relatively higher price tag as the product is launched in the market will be important. In this sense, the price range for the product depending on the LED light quality and size will range from USD $ 30-50. This will also target a large customer base hence increasing the profits as a result. The profit margin will help in compensating for the advertisement and other promotional costs as well as the overall cost of the product manufacture and distribution (Wang, 2005, p.23). The price at the maturity stage when competitors have emerged will be reduced to $20 or less depending on the model and the market situation. Growth strategies As identified, since the product is a market leader, the growth strategy that will be employed is market expansion and flanker. The rationale for the choice is because the market base for the product is generally wide and hence the needs to tap in before other competitors with similar product emerge. More so, besides the potential locations such as camping sites and Caravans in Australia, other segment of people may also require the product, such segments include people who like unique products, people living in remote areas where power fluctuations are common, people living in potential flood areas as well as people who like saving energy in their homes. Market expansion will be achieved by tapping on all these identified market segments in order to increase sales and enhance effective market expansion process (Keller, 2003, p.67). As a result of the profits gained, thorough promotional strategies including media and other expensive advertising options will be employed in order to encourage market growth within the initial target market. Flanker brand will also be employed in order to ensure market sustainability as well as increase of the market niche. Flanker brands will be employed in this case by the extension of the existing brand in order to create another similar product that will be important in increasing the market share. Gravity lights with extension that are able to charge cell phones will be essential in this case. The concept in this case will be to increase the value of the product in order to boost sales volumes. Packaging strategies such as sizes, as well as the different models of the product will be introduced with an aim of attracting the customer to the product. Marketing of these different brands will be done in order to provide the clientele with a wide variety of products to choose from (Malhotra, 2006, p.35). Shake-out, mature and declining strategies In the shake-out stage, the profits are expected to be high because market entry is still new and hence less competitors in the marketplace. With fewer competitors, the sales volumes in the target market are expected to be high. In the mature stage, some few competitors are expected to have entered the market, with increased competition the profits are expected to be moderate or low. In the last stage, the decline stage, the profits are expected to be low and the need for other products of value added services are evident. There are strategic options for the three stages, firstly in the shake-up stage, there is need to gain competitive advantage, this will be achieved by highlighting the main advantages of the product over other products available in the market. In this case, gravity lights are useful at night camps and caravans because they do not need alternative sources of power to light it. In fact, the belongings of an individual can provide the needed mechanical energy in order for the product to produce a light source which can last at least 30 minutes before requiring additional load. This is easy and most of all free, with strong LED lights, the family in camp will be able to enjoy the light without struggling. In the promotion strategies, these key advantages will be emphasised and repeated in order to paint a picture in the minds of the consumers. The other strategic option available at this stage is the option of increasing the market share (Randall, Karl & Jonathan, 2003, p.17). This will be achieved by creating strategic partners with camp and caravan owners and guides, by doing so, the product information will be disseminated to the right people and hence saving on the cost of marketing as well as increasing the market niche. Other potential markets such as remote areas; market segment with passion for energy conservation will also be contacted in order to increase the market share. In the mature stage, there are two strategic options available market expansion and extended usage. Since at this stage, the sales volumes are expected to decline or remain constant, it is imperative to increase the market share. This will be achieved by increasing the promotional strategies and emphasising on key aspects of the product. The promotional strategies will include direct sales and marketing, strategic partnership with providers of camp materials and owners or managers of camping sites in Australia. At this stage, it will be essential to ensure that the products are adequately provided in the market in order to take advantage of sales volumes. The other strategic option available is extending the product usage. This will mainly include addition of new features such as gang switches, outlet sockets which will allow the users to charge their electrical devices easily. Addition of energy reserve and usage will also be important in dealing with new market entrants (Robbins, & Judge, 2008, p.45). In the last stage, there are two options available, harvesting and maintenance of the market niche. Harvesting will involve securing the profits for alternative businesses or increase of value added services in the products. At this stage, maintaining a substantial market niche will also be worth ensuring in order to keep up with the market pressure. Maintaining the market niche with growing competition will be difficult but with increased promotional strategies and strategic partnership, a substantial market will be secured. New economy markets In the modern world, a number of digital products have been developed, internet applications have also emerged due to ease of the design platforms. The evolution in the customer behavior has also impacted on how businesses behave. The modern day customer has a lot of information access as compared to the same person five decades ago. The customer choice has therefore been shaped by the availability of options and adequate information through online channels. These changes have also altered customer service and support mechanism available (Zirpoli, 2008, p.12). The emergence of digital applications which allow easy marketing of the products to a large customer base will came in handy in the marketing of gravity lights. There are thousands of online platforms like ebay and Amazon which allows marketing of products online. There are also applications like banners which allow the product to be marketed in specific areas and specific sites. This will be important in the marketing of gravity lights online. The available platforms will make it easier to market the products (Hatten, 2011, p.263). Besides online marketing platforms, enhancing customer service and support will be particularly important in marketing gravity lights throughout its market niche. Considering that competitive advantage is gained through effective service delivery, it will be important for the product to be provided together with customer service and support. Customer sensitivity is important because increased customer satisfaction means that the sales volumes will go up and hence increasing profits. Organisation structures Marketing management will be an essential component in the introduction of gravity lights into the market, the rationale for this is because the product is a new line and hence the need for an effective marketing team. As noted by Griffin & Moorhead (2011, p.70) a three tier marketing management will be applied; the first team will be responsible for creating an effective marketing strategy which will first consider the market situation, the customer behaviour and identification of the target market segment. The second team will be responsible for critical analysis of the target market, the potential of the target market as well as segmentation according to customer behaviour. The third team will be responsible for marketing the product to the target customer. Marketing will involve online marketing strategies, seeking strategic partnership with camp managers, camp tent sellers and others. This team will also conduct direct marketing through holding promotions and getting personal touch with the customer. The three teams will coordinate and work together in order for them to address the challenges that they face as a team. More so, the success of the team means that the profits as a result of the sales volume will increase and hence prolonging the life cycle of the product in the market (Wefald, Andrew Reichard, Rebecca & Serrano Shawn 2011, p.521). Marketing plans Strengths Weaknesses i. The product is new in the market and hence it has more value. ii. The uniqueness of the product allows it to stand out in the market niche. iii. Gravity lights function independently as compared to other light sources and hence no extra cost to use it. i. The product is still new and hence subject to customer acceptance. ii. Financial cost of production and marketing are limiting. iii. The product can be damaged by overloading. iv. The light duration time is also limited as compared to other alternative sources. Opportunities Threats i. The product has a potential to be used in many market segments besides the intended. ii. The product can be sold outside Australia, especially in developing countries which lack access to reliable source of power. iii. Gravity lights can be enhanced by adding more value in order to ensure maintenance of the market share. i. There are other substitutes in the market. ii. There is potential for competitors to coy and produce the product in mass and hence confusing the customers. iii. Potential for further innovative sources of light are there and hence threatening the life cycle of the product. Cost benefit analysis The cost benefit analysis of Gravity lights is done based on the cost of production, cost of marketing and distribution and the expected profit from the product per unit. Cost of production per unit ($) 10 Cost of marketing and distribution per unit ($) 2 Total cost per unit ($) 12 Sale of product per unit ($) 35 Expected net profit per unit ($) 23 Number of units expected to be sold 100,000 Expected profits 2,300,000 As evident, the expected profits as a result of the sales are high and hence justifying the need of the project launch. Contingency plans This is an important step that will be done before the product is launched in the market. Based on the cost –benefit analysis, the expected profits may not be achieved as a result of other unexpected outcomes such as failure of the product to impress the target market, increased marketing and promotional strategies, early entrants of new competitors among others. In this case, it would be necessary to have a contingency plan that will cater for this eventuality. Firstly, if the product fails to impress the target market, the other option would be to market it oversees especially in developing countries where the production cost will be lower and the market niche will be much larger (Tanzi, 2011, p.121). In the event that the cost of marketing and promotion are high, the price per unit will be increased to cover for the expense, market skimming will work effectively in this case. In the event that new competitors enter the market in the early unexpected time, personalized marketing strategies will be fostered as well as relying on patenting the product (Egal, 2012, p.23). Marketing metrics and marketing audit Based on the SMART objectives, it is evident that the product is specific in terms of uniqueness, it is measurable in terms of its market progress, and the goals are attainable, relevant and time-bound. Based on this, the sales volumes especially at the shake-out and mature stages are expected to be high. This is linked with customer satisfaction level expected as a result of the uniqueness of the product and its usability. Gravity lights are not only unique but also provide extra advantages to its users by emitting light almost for free, this s not the case in other alternative sources of light which mostly require commercial power availability to charge them (Walker, 2011, p.34). Marketing audit Gravity lights will be audited based on two main marketing audit options, the market environment audit and strategy audit. The market environment audit will consider aspects such as the success of the product in the market, this will include consideration of the existing competition, customer behaviour and other challenges experienced while launching the product in the market. The strategy audit will consider the level of success of the marketing strategies adapted, the challenges faced in the process and what could be improved (Agarwal & Rao, 2000, p.1). The key aim of the marketing audit is to establish the success level of the product versus the expected success level based on the marketing strategies employed when launching the product in the market. Flowcharts Product life cycle New Market entry – As pioneer Growth stage – as market leader Shake-out stage Mature stage Declining stage New economy markets Organisation structure Marketing plans Marketing metrics Marketing audit Conclusion As discussed in this analysis, the product (Gravity lights) is expected to perform well in its market niche because of two key considerations. Firstly, the product is new and unique, it offers alternative source of light better than the existing products. The marketing strategies which will be employed are also expected to yield positive results. The product is expected to undergo the product life cycle phases. In these phases, there are strategic plan available in order to ensure increased profits, market share and maintenance of the niche. A cost analysis and contingency plan also provide further evidence of the need for the project as well as what can be done if the planned strategies do not work. References Agarwal, M.K., & Rao, V.R. 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