Marketing Mix to Promote a Product in Shaving Industry - Term Paper Example

Shaving Industry Name of Student Seminar Tutor Date of Submission Word count: 2008 Executive Summary The shaving industry is very demanding especially when a new product is being introduced. The Porters Five Forces analysis shows that the industry is very demanding when it comes to resource allocation and strategic management. The customers have a bargaining power, but the suppliers do not have bargaining power. The industry is difficult for new entrants because of the amount of resources required. Threat of substitution is also another major issue because the customers can change the brand easily while established rivals can become more competitive especially when it comes to mergers. The marketing mix discusses how the product will be introduced, customer engagement, the price of the product and how the customers can access the product. Table of Contents Table of Contents 3 1.0 Introduction and background 4 2.0 Porters Five Forces 4 2.1 Threat of Substitution 4 2.2 Threat from Established Rivals 5 2.3 Threat from New Entrants 5 2.4 Bargaining Power of Suppliers 5 2.5 Bargaining Power of Customers 6 3.0 Marketing Mix and Reasons (4Ps) 6 3.1 Product 6 3.2 Place 6 3.3 Promotion 7 3.4 Price 7 4.0 Threats and Solutions 8 5.0 Conclusion 8 6.0 References 9 1.0 Introduction and background The grooming market has numerous products that are aimed at fulfilling the requirements of different customers. The male customers require shaving products that fulfill their divergent expectations. The shaving style and the nature of skin are not the same, and it is important to develop products that satisfy these varied customer requirements. The shaving industry is very competitive and requires immense resources to start and operate the business. Additional resources are required for marketing and engaging with the customers. In exporting the products to a new market, it is important to understand the dynamics to ensure development of appropriate model to penetrate the market. The aim of this paper is to discuss Porters Five Forces in the perspective of shaving industry. The paper further discusses the marketing mix of the new product, and threats that may arise and its relevant solutions. 2.0 Porters Five Forces The Porters Five Forces enables organizations to analyze situations and forces that influence the industry through analyzing microenvironment, determining the competitive intensity in determining whether the industry is profitable or not profitable (Ahlstrom and Bruton 2009). From the five forces, two are ‘vertical’, which are bargaining power of the customers and bargaining power of the suppliers. The other three are ‘horizontal’ and include threat from new entrants, threat from established rivals and threat of substitution (Hill and Jones, 2007). Organizations employ Porters Five Forces with the aim of determining the appropriate strategy to enter the market and challenges that should be addressed in advance (Hill and Jones, 2009). 2.1 Threat of Substitution Threats from substation involve analyzing different factors that include costs of switching to a different product, willingness of customer’s to substitute, price and relative quality (Hill and Jones, 2007). Some of the substitutes in the shaving industry include option of not shaving, depilatories, traditional razors and electric razors (McGuigan, Moyer and Harris, 2010). The electric razors are fading in popularity because the younger consumers prefer wet shaving products and, therefore, electric razors have not future. The traditional razors are fading because of threats and dangerous nature of its blades (Ahlstrom and Bruton 2009). Depilatories are creams that are used to remove hair from the skin surfaces and provide a smoother ‘shaving’ compared to use of physical components such as electronic razors. The problem with this strategy is slow, expensive and irritation nature of the completed shaving process (Hill and Jones, 2009). Not shaving is also another substitute and has become common in the industry. Numerous celebrities are not clean shaving, and this affects the market (Hill and Jones, 2007). This aspect can be managed through advertisements where customers are advised that it is not social to walk around without shaving. 2.2 Threat from Established Rivals The intensity of competition is based on some crucial factors (Ahlstrom and Bruton 2009). The factors include exit barriers, strategic objectives, and degree of differentiation, industry cost, and structure of competition. The shaving industry is currently unattractive because of aggressive and powerful competitors who are ready to invest to stay in the market because exit is not an alternative (Hill and Jones, 2007). These challenges contribute to frequent conflicts among the manufacturers in terms of innovation disputes, advertising disputes, price wars and other litigation factors that increase the cost in the industry (Hill and Jones, 2009). Brand loyalty and innovative research and development allow organizations with strong resources to make advances in technology and differentiation resulting in getting the advantage (McGuigan, Moyer and Harris, 2010). Therefore, the threats among the established rivals are immersed since each rival aims to unset the other. 2.3 Threat from New Entrants The new entrants to the shaving industry are based on some factors. The factors include government regulations, existing members’ reaction, brand loyalty, customer switching costs, investment requirements and economies of scale (Ahlstrom and Bruton 2009). The shaving industry is based on loyalty and consumers buy products that they have initially used. The shaving industry can be seen from the perspective of oligopoly whereby new entrants will be required to compete with developed brands (Hill and Jones, 2007). Some companies use technology enhancements, distribution channels and economies of scale advantages to counter competition (McGuigan, Moyer and Harris, 2010). Also investing in the industry requires immense resources both setting the business and exiting from the business. It is also difficult to secure finance and other resources that are crucial to the success of the business (Hill and Jones, 2009). Therefore, it is very difficult for a new entrant to penetrate the market (Reid and Bojanic, 2009). 2.4 Bargaining Power of Suppliers The bargaining power of suppliers is premised on numerous factors that include switching supplier costs, integration of suppliers into industry, backward integration, supplier branding, and concentration of suppliers and profitability of suppliers (Ahlstrom and Bruton 2009). The situation between the suppliers and organization is win-win because it is easier to switch suppliers (Hill and Jones, 2007). The suppliers also have little power because the companies present their expectations, and the supplier should customize the products and services based on company’s specifications (Hill and Jones, 2009). The power of the company influences the price of raw materials since the cost of the raw materials is very low (McGuigan, Moyer and Harris, 2010). 2.5 Bargaining Power of Customers The customers bargaining power is dependent on customers switching power, both forward and backward integration in the industry, profitability of companies, unique selling opportunities, differentiation of the products and concentration of competition (Ahlstrom and Bruton 2009). The selling outlets and distribution chains plays an important role in influencing the bargaining power of the customer (Hill and Jones, 2007). The customers power also increase because of the undifferentiated nature of the products and retailer’s costs (Hill and Jones, 2009). Therefore, the customers are price sensitive. Moreover, the customers are not ready to invest more in innovative products and easiness of migration also gives the customers advantage (McGuigan, Moyer and Harris, 2010). Therefore, the consumers have immense power over the operations of the industry (Leadley and Forsyth, 2004). 3.0 Marketing Mix and Reasons (4Ps) 3.1 Product The product is shaving equipment that has a razor that is made with three blades. The purpose of the three blades is to improve the shaving experience (Ahlstrom and Bruton 2009). The blade will be replaced after three shavings to create value for money (Hill and Jones, 2009). The packaging of the product will have a blue color to indicate soothing, image of water dripping indicating wet shave and the design of the package itself should trigger the ego of men (Hill and Jones, 2007). Men are defined by their ego and touching their ego makes them react to the stimulus change. The packaging will be of a design of Porsche so that when the customer uses the product or purchase the product will relate the product with the Porsche car. This approach will ensure more products are bought, and revenues generated for the company (McGuigan, Moyer and Harris, 2010). 3.2 Place The target market is educated and young customers (McGuigan, Moyer and Harris, 2010). The distribution channels should factor into consideration to this target group and other groups that may be interested. The supermarkets and convenience stores should be used to sell the product to the customers (Ahlstrom and Bruton 2009). The channel is effective for different demographic and is applicable to different situations. Another approach is the use of online channels (Hill and Jones, 2007). The customers can purchase the product from online portals, and this strategy is important because the customer will be educated on the product. Educating about the product creates a positive relation that can improve loyalty with the customers. Shaving product is standard and is not similar to shoes or clothes that require different sizes (Hill and Jones, 2009). The standard nature of the shaving product makes it convenient for online sale. Online platform form also expands the market because it is easier to sell to customers in different countries and deliver the product to the nearest store or at home. Therefore, an online platform will improve sales of the shaving equipment. 3.3 Promotion The promotional strategy aims to define the way a business reaches and communicates with the target market. Promotion is engaging with the consumers regarding the product offering (Hill and Jones, 2007). The channel used and symbols enables effective engagement with consumers, and the consumers can relate the product with certain features (Ahlstrom and Bruton 2009). For example, using celebrities such as athletes and actors allows the consumers to link the product with the celebrity. In addition, media will be used to engage the customers. Both traditional approaches and modern approaches will be employed in engaging the consumers (Hill and Jones, 2009). The traditional approach will be used in television, radio, magazines and newspapers in engaging with the customers. The modern method is use of digital media that include social media in creating an avenue in which consumers can obtain information regarding a product and be able to provide a review (McGuigan, Moyer and Harris, 2010). 3.4 Price The price strategy brings into consideration numerous factors that include product positioning, self-perception, and competition, demand and inputs costs. In determining the price, the quality of the product plays an important role (Ahlstrom and Bruton 2009). The pricing strategy that will be employed is mark up where the entire production costs are considered and a small margin is included as a markup, which will translates as profit (Hill and Jones, 2007). Price is an integral component in determining whether customers will make a decision towards purchasing the product, and the price should also reflect the environment and economies (McGuigan, Moyer and Harris, 2010). Hence, mark up strategy will be appropriate for the new product (Hill and Jones, 2009). 4.0 Threats and Solutions The following are the threats and solutions to two common problems that are associated with the industry: Growth in substitutes – alternatives in shaving industry are numerous ranging from the option of shaving to the option of not shaving (Kemmer and Boden, 2012). Other companies are entering the market with unique and innovative products such as the use of gels and creams (Ahlstrom and Bruton 2009). The cream has numerous benefits but also challenges (Hill and Jones, 2007). The growth of substitute products threatens the businesses in the market but advertisement and creating awareness of importance of shaving and staying with a specific brand should be used as platform for engaging the consumers (McGuigan, Moyer and Harris, 2010). Customers should be encouraged to remain loyal and use the word of mouth to engage other customers to purchase the products. Competition – existing competitors and new competitors are increasingly introducing new strategies and methods to sustain competition (Bowman and Gatignon, 2010). Competition is unavoidable, and it is crucial to introduce new measures to address the issue (Ahlstrom and Bruton 2009). This can be achieved through continuous research and development to ensure the product competes with products that are available in the market (Hill and Jones, 2007). In addition, production lines and logistics should be reviewed to reduce production costs so that the company can transfer the benefits to the customers. Since shaving equipments or components are disposals daily, it is important to sell the product cheaply to maintain the customers (Hill and Jones, 2009). Customers will not be able to avoid expensive products and hence customers will be attracted to cheaper products (McGuigan, Moyer and Harris, 2010). 5.0 Conclusion The shaving industry is very competitive because of the amount of resources that are required to fulfill operational requirements. The Porters Five Forces shows that threats of entrants are low because of heavy investments and brand loyalty. The customers have a higher barging power because they can choose easy substitutes while the suppliers are disadvantaged because the companies determine what is required. The companies can also change the suppliers easily because the raw materials are easily available. The marketing mix brings into consideration the approaches used to create the product, promote the product, place, and price of the products. 6.0 References Ahlstrom, D, and Bruton, G 2009, International Management: Strategy and Culture in the Emerging World, London, Cengage Learning. Bowman, D, and Gatignon, H 2010, Market Response and Marketing Mix Models: Trends and Research Opportunities, New York, Now Publishers. Hill, C, and Jones, G 2007, Strategic Management: An Integrated Approach, London, Cengage Learning. Hill, C, and Jones, G 2009, Strategic Management Theory: An Integrated Approach, London, Cengage Publishers. Kemmer, M, and Boden, A 2012, “Price” as one Parameter in the Marketing Mix, London, GRIN Verlag. Leadley, P, and Forsyth, P 2004, Marketing: Essential Principles, New Realities, New York, Kogan Page Publishers. McGuigan, J, Moyer, R, and Harris, F 2010, Managerial Economics: Applications, Strategy and Tactics, London, Cengage Learning. Reid, R, and Bojanic, D 2009, Hospitality Marketing Management, New York: John Wiley and Sons. Read More