Positioning Strategies In A Mature Marketplace - Case Study Example

Bindle Market Analysis Student’s Name Institution Course Instructor Date of Submission Industry overview and product description According to Rose (2007), Australia is at present both 19th largest importer and exporter in the world. It is also the 12th biggest economy in the world. The Australian dollar has, over the past two years, floated near parity with U.S. dollar. However, it has currently fallen to nearly 0.9 per U.S. dollar. Inflation rate hovers around 2.5%, and it is expected to be contained at that level. There are signs of upturns in gift-giving businesses although the levels of consumer spending appear to have remained relatively average for long. Importantly, online business activities have risen by nearly 27% compared to the 0.4% increase in the traditional retail business sales (IBIS World 2016) The Australian gift and home-ware industry is diverse and competitive. It is composed of numerous small to medium, specialized gift-giving businesses struggling for market share with larger merchandisers. However, major players include the Brandconnect, Gifts Australia, RedBalloon, and Bindle among others. In terms of growth, the industry can be described to be at a mature stage of its life cycle, and the heightened, aggressive retail climate has seen many companies resort to consolidation as means to expand their market shares. According to IBIS World (2016), specialty gift products accounts for nearly 35% to 45% of all gifts sales in Australia, with the balance made up via supermarkets, departmental stores, and other retail businesses. Niche operators also aim to establish themselves within the market by stocking novelty or specialized products (De Brito, Carbone & Blanquart 2008). This move is a value addition which can result in elevated profit margins to online gift providers like Bindle. Additionally, an increase in the strength of Australian dollar has boosted demand for online retail businesses, specifically for imports. This has subjected many companies with a new challenge since consumers get products directly from the manufacturers to evade paying higher prices. Bindle is an Australian company that deals in a boutique gifts business (Bindle 2016). The company was founded in 2012 with a mission to impress consumers through superior styles, designs, quality, and presentation. It is committed to supporting and celebrating local growers and designers. Packaged with exceptional styles, Bindle gifts boxes are designed around particular occasions and concepts. Every occasion is accompanied with its own bindle and the choice of products to be included within a given bindle is sought carefully. The Corporation provides a diverse range of tailored and specialty gift products. These include gift hampers, loyalty gifts, event gifts, baby gifts, bespoke gifts, wedding & event favors, birthday and occasional gifts, settlement gifts as well as corporate gifts. The company’ corporate gift-giving service has been in a way to assuage stress linked to gift purchases for clients and employees. Based on the projection of industrial growth over the four years through 2019-20, the company hopes to expand its market share by introducing a new product. The company bases its decision the BCG matrix analysis which is indicative of a strong portfolio within the Australia markets (Teryima & Aondona 2014). The increased market growth rate is suggestive of more earnings which can translate into profits. Therefore, to maintain or expand future market share, Bindle has to invest. Micro and macro-environmental analysis Micro-environment These are factors or conditions within the organization (Bindle) determining how it operates although it has the ability to control them directly (Dockalikova & Klozikova 2014). They include the company itself, suppliers, customers, intermediaries, and publics. Consumers Consumers of Bindle products cut across all populations, ages, and races. From the consumer reviews, it evident that most Bindle customers are satisfied with the quality of their products, packaging, and their overall services. Based on this, the company is in a better position to expand their market share since many consumers have confided in their services. Employees Bindle has focused and the well-trained employee who work towards to achieve the company’s mission of impressing consumers through quality and stylish products. This gives the organization an upper hand laying down its expansion strategies. Suppliers The company sources raw materials from different suppliers. However, it faces the problem regular price increment and differentiation among different suppliers. As much as it aims to make more profits, producers keep changing the prices of their raw making it difficult to determine end results consistent. The should, therefore, look for consistent suppliers with whom it can establish a good business relationship for better outcomes. Company itself This includes the company structure and culture. It is based on the culture of quality, unique, stylish products accustomed to Australian consumers’ demand. this has enabled the company to stand out as an exceptional brand in the Australia’s gift and homewares industry. Structurally, Bindle stores are managed through a top-down approach where top managers give orders to the operational managers. This has allowed smooth floor of activities throughout the organization’s units. Macro-environmental analysis Bindle’s business operation is not only within the background of its products but through entire Australian business environment. Macro-environments are the external factors (such as political, socio-cultural, competition, economy, demography) over which an organization do not have a direct control and affects its operation. Legal-political Australia is a democratic country govern laws. Any amendments to laws such as the Trades Practice Act affect business operations. There are strict rules and regulations on health and safety. Strict laws and standards also exist regarding business advertising and marketing. However, gift-providing allowed is allowed with the context of laws as long as it obeys them. Cultural Most Australians are conscious of their health and weight. Most consumers value their leisure time which they usually spend with special refreshing gifts such as ice cream, especially ladies. Demographic A large number of Australian populations are aging, and more women are in the workforce. Therefore, most of the company’s gifts should aim at winning the adult populations not sidelining the youths and children since this the huge bulk of population with heightened potential. Technological There are new production techniques which improve products’ quality. Australia has also adopted advanced packaging technology with machines automated to design and manufacture goods. The company can tap this technology to facilitate it expansion bid. Most important is the real-time processing of marketing information which has lately become possible with customization of product offerings. Natural Since nature has been supportive of business activities, a number of concerns for the environment have recently come up. The clearest is the concern of government and other non-governmental bodies about the environmental pollution, ozone layer and diminishing natural resources such as oil, timber, coal, and rubber (Business Environment 2011). This suggests that Bindle has to play socially responsible by adopting green methods of production to avoid causing harm to the environment. Through this, the company will always remain on good terms with both the government and the non-governmental environmental bodies. Economics Australia’s economy is very large and ranks 12th among the world’s biggest economies. However, youth employment has for long period lagged behind. The Australian dollar has, over the past two years, floated near parity with U.S. dollar. However, it has currently fallen to nearly 0.9 per U.S. dollar. Inflation rate hovers around 2.5%, and it is expected to be contained at that level. There are signs of upturns in gift-giving businesses although the levels of consumer spending appear to have remained relatively average for long. This may suggest good prospects for Bindle’s business expansion. Competitor analysis Bindle is not a single player in the Australia’s gift providing business. It battles out with other companies such as RedBalloon, Brandconnect and Gifts Australia which are already well established in the market (Kurutz 2015). These companies’ specialty gift products such as gift cards, wedding gifts and event gifts which nearly similar to the Bindle. This suggests that the organization has to develop a powerful brand and strong marketing strategy to be able to outplay these companies. Market segmentation In a consumer market, market segmentation is critical to development a workable marketing strategy. As explained in Venter, Wright, and Dibb (2015), the business success of a company’s investment or market entry is highly dependent on how in divides its target market components. That is, the choice of the market segment to sell its products. A market segment is an appropriate strategy used by a company or entrepreneur to understand the consumer behaviors as well as the specific needs (Dolnicar, & Leisch 2014). Since the major goal of Bindle is to launch either a modified or new product into the market, market segmentation would help it develop a niche through which it can expand its market share. Based on the profitability indices, review of distribution channels, the cost of production, possible pricing strategies and a comparative analysis of various segments, Bindle’s target markets consists of the following groups. The baby boom generation, the affluent individuals, generation A and generation B. The baby boom generation is composed of married people aged 35-60, homeowners, college educated, are always at home and have a household income of between $50, 0000 and $80, 000. The affluent are those aged 30-45 and have a household income of $95, 000 and above. Currently, this population represents more minorities and women than before. Generation A is made up of individuals aged 24-38, literate, married with children, love spending leisure with their families and is climbing the corporate ladder. Generation B, on the other hands, are mainly youths aged 10-24 who ethnically diverse and shows upward growth in spending power. This group is presumed to have enough disposable income to afford the companies gifts and luxuries. Market segmentation bases Geographic segmentation Demographic Segmentation Psychographic segmentation Socio-economic segmentation States Cities Regions Age Sex Occupation Education Income Religion Culture Lifestyle Personality Motives Product knowledge Rich Poor Rural Urban Literate Illiterate Women are the principal consumers of most Bindle products representing nearly 65% and currently there is an anticipation of a growth rate of 5% (Kurutz 2015). This suggests that the company needs to increase it production level by adopting new technological trends in production. By customer base, Bindle’s customer base is represented as follows: 34% Baby Boomers, 26 % Affluent, 24% Generation A, and 16% Generation B. Ethnically 70% whites, 20% Asians, 10% Aboriginal and others. Who is Bindle primary customer? Primarily female Literate Homeowner Middle to upper class Aged between 25 and 60 years Favorites splurges are shopping, fashion, and traveling Enjoys spending leisure time with family and friends Influenced by style, quality, uniqueness, brand and reputation of a product and the seller Market Analysis Pie Market targeting and Customer Profile From the market segmentation, the Baby Boomers led with the highest percentage of sales of 34 percent and based on the market analysis pie; they take the largest share. This suggests that the Baby Boom generation should be the target market of Bindle its bid to expand. Therefore, considering this situation, it is substantial enough for Bindle to enter the market. The growth rate of 5 percent is also promising with the Baby Boomers generation. This growth may translate in an increase in the future marginal profit margins. The main aims of a business venture are maximized profits, reduce costs of production and expansion. This segment, therefore, is in line with the company’s primary aims. Based on the distributional channels and networking, Bindle will have to incur promotional costs before it conducts test marketing will give it a feedback on the efficacy of its promotional strategy. The initial costs of market introduction may be high since many potential consumers are still unaware of the product’s existence. However, the process will be quick and faster since most Baby Boomers lives in urban regions and cities. Another, advantage of targeting this segment is the fact that most established firms operating within this industry have for long remained dormant on this particular, putting the focus on Generation A, which is composed of the youths. Company’ internal financial assessment shows that it has the capability to invest and compete effectively in this segment, hence, the need to invest. Therefore, Bindle customer profile will as follows: Primarily female, Literate ,Income earning ranging between $ 50,000-80,000, Middle to upper class, Aged between 25 and 60 years, Lives in cities and urban regions, Favorites splurges are shopping, fashion and traveling, enjoys spending leisure time with family and friends and is influenced by style, quality, uniqueness, brand and reputation of a product and the seller. Differentiation and Positioning The gift-giving business market in Australia is extremely competitive. Bindle, therefore, has to formulate new and unique ways of creating exceptional product identities. This may involve the incorporation of attributes such as price, quality, and packaging into a product to facilitated the prospective consumer to perceive it as outstanding and desirable. Bindle is known for quality and stylish products packaged in exotic wrappers. However, for its new product, the company will use different styles to differentiate and position the product in the market. First, the company hopes to use the “the extra-large” unique characteristics. This strategy convinces the consumers into buying with the perception that they get something more they expected, thus, giving the product another distinct functionality. It is this functionality that gives the product a competitive edge against other products. This strategy is very effective with chocolates, ice cream among other range of gift. Secondly, the second strategy would be branding. Under this technique, the product is given a strong, distinct brand name that separates it from all other products in the market (Joselyn 2012). The name has to uphold the Bindle’s long-standing brand in the gift and homewares industry. Third technique positioning and differentiation strategy would be through introductory pricing. Under this technique, the product is not charged at the introductory stage although there are additional services as such as free home-delivery are provided. These extra services lure the consumers into buying the product. Niche offers is also an important method of positioning and differentiation Bindle can adopt. Under this strategy, the company would be charged with the duty to find a special niche within the target market that is different from the known mass-market products. Conclusion and Implication for marketing Bindle is a gift selling company based in Melbourne, Australia. In its bid to expand its business operation by increasing the market share, the company desires to develop or modify an existing product to place in the market. This report, therefore, mainly aims to analyze Bindle marketing environment to establish whether it would be viable to invest. The BCG matrix analysis shows good prospects for company’s investment since there is anticipation that Gift and Homewares industry in Australia is likely to grow shortly. The both macro and micro- environmental analysis are suggestive of good prospects for the company’s investment and expansion bid. Macro-environment environmental analysis encompassed factors such as legal-political, natural, natural, demographic, economy and competitors. Micro-environmental analysis on the other hands focused on the company, customers, publics, and suppliers. Based on the market segmentation, the baby boom generation and the affluent population aged 25-60 gives a promising target market for the company. These populations show a projected increment of 5 percent. This is indicative a possible profits generation company’s forthcoming financial calendar. As new product line of production, therefore, the company needs to start producing ice-cream product. From the marketing analysis, ice cream gift market has not been explored by many gift providing companies suggesting a potential gap of investment. Although a number beverage companies exist, they do not offer ice cream product in the form of gifts or specialties. This calls for a powerful branding and packaging strategy to enable Bindle to outplay other beverage companies with long history of establishment in the market. References Binddle.2016. Bindle. Web retrieved from http://bindle.com.au/pages/corporate Business Environment' 2011, Australia Food & Drink Report, 4, pp. 12-28, Business Source De Brito, M.P., Carbone, V. and Blanquart, C.M., 2008. Towards a sustainable fashion retail supply chain in Europe: Organisation and performance. International Journal of Production Economics, 114(2), pp.534-553. 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