AirBar Plans to Penetrate the Hong Kong Market - Business Plan Example

Business Plan for AirBar in Hong Kong Name 1. Executive Summary This is a business plan for AirBar which plans to penetrate the Hong Kong (HK) market. The Hong Kong technology and PC peripheral industry is in the boom due to several incentives. Neonode develops optical interactive sensing technology such as AirBar. The product is subject to supplier power, consumer powers, threat of subsidy, competition rivalry and threat of new entrants but has an innovative value proposition based on newness, brand, customization, price, design and performance. Its organization entails the system manager, administrative and general manager. The plan also addresses the sustainability issues which include energy and pollution control together with, schedule, risks, problems and necessary assumptions. Contents 1.Executive Summary 2 2.Industry & Neonode Inc. 4 3.Marketing Analysis 5 a.Porter’s Five Forces 5 i.Threat of new entrants 6 ii.Threat for substitute product 6 iii.Bargaining Power of Buyers 6 iv.Bargaining Power of Suppliers 7 v.Rivalry among Existing Competitors 7 b.Using the VPC model 8 i.Value Proposition 9 c.Customer Segment 10 4.Marketing Plan 10 a.Price 10 b.Product 11 c.Promotion 11 d.Place 11 5.Operation Plan 12 a.Management and operational summary 12 b.Organizational structure in Hong Kong 12 c.Manufacturing and Facilities 13 6.Sustainability & Impact 13 a.Energy Conservation 13 b.Green buildings 13 c.Growing population 13 d.Increased focus on innovation 14 7.Overall Schedule 14 8.Risk, Problem & Assumption 15 a.Risks 15 b.Problems 16 c.Assumptions 17 9.Conclusion 17 References 18 2. Industry & Neonode Inc. The technology industry in Hong Kong focuses in the commercialization and application of innovative products, systems and industrial engineering. There are several local and overseas technological enterprises which actively which undertake innovation-led activities. Its US players who are already in the Market include Texas Instruments, IBM and Nvidia. The R&D expenditure in this business sector amounts US$1 billion while the total innovation-related expenditure in the business sector which amounts to US$2.2 billion annually. The industry places a considerable emphasis on advances in mass entrepreneurship, encouraging technological innovation and development of new industries in a bid to inject new vigor to the economy. Hong Kong has a conducive business environment which has a strong intellectual property rights and a wide range of professional service providers. Neonode Inc. is a technology company which licenses and develops optical interactive sensing technology. The company develops this technology for a wide range of devices such as e-readers, tablets, mobile phones, monitors, PC devices, printers and automotive systems. AIRBAR is a trademark of Neonode Inc. AirBar is a product of Neonode which projects an invisible light on the surface of your display which makes it possible to touch the screen and thus, interact with Windows 8 and 10 gestures. You can use anything to touch considering that the light field reacts to any disturbance. 3. Marketing Analysis a. Porter’s Five Forces i. Threat of new entrants There is a moderate threat of new entrants to the HK technology industry. This is considering the fact that there are more than 600 technology companies and approximately 13000 technological talents. The increasing investment on R&D on technology makes the threat more real considering that Hong Kong has companies from China, Germany, Netherlands, Japan and South Korea among many others. This level of threat is due to heavy internet usage which makes it easier to enter the industry. What moderates this threat as it concerns AirBar is the fact that there is scarcity of resources and expertise to build this technology in HK. Although the company can easily enter the market, the company may not last very long since technology can be copied. ii. Threat for substitute product There is a high threat for substitute product for HK for this MacBook Air product. Another close substitute for this product is the Tobii’s set-it-and-forget-it magnetic mounting bar. The touch screen types of MacBook and HP can substitute this device. What gives it a competitive advantage however, is that you don’t have to use some special stylus or your fingers as it needs anything which can up the light field. However, this threat gives the company that opportunity to work as hard so as to sustain it. iii. Bargaining Power of Buyers There is a high bargaining power of buyers considering that individuals and groups can influence the price and features required in the product. Needless to say, there are many laptop types which have touch inbuilt-touch screen functionality. The internet has given the customers more options to choose from. AirBar should create value to promote customer concentration along with its side. Each buyer is important to the company and there is a low cost for them to switch to a new product. iv. Bargaining Power of Suppliers For the sake of AirBar, there are several suppliers to choose from and hence, lower prices are demanded. There are several suppliers making USB devices or providing components necessary for its construction. The internet gives AirBar access to many suppliers and hence, driving down costs. The suppliers are at position to sell directly to the customers considering that AirBar integrates many technologies which cannot be sold independently. Its market plan strategizes on price, place, product and promotion. v. Rivalry among Existing Competitors There is a moderate degree of competition among firms selling the same product. There are few competitors and AirBar is not readily obtainable. This is because product differentiation and focus on a single consumer segment has reduced the ruinous effect of perfect competition. However, internet has made it easier for competitors from any part of the world compete with AirBar. b. Using the VPC model i. Value Proposition AirBar satisfies an entirely new set of needs that customers previously didn’t perceive because there was no similar offering. There were provisions for making MacBooks which were originally non-touch to be touch. Now, customers can swipe down while browsing. AirBar has a commendable performance. It’s a simple, slim USB peripheral that attaches to the bezel of a laptop. Once you’ve plugged it in to a USB port AirBar blankets your display with “an invisible light field,” which Neonode refers to as “zForce AIR technology.” You can touch with your finger, or with gloves, and even with a banana. Customers need to touch because people trained to touch things. AirBar is the world’s first plug-and-touch solution that turns the screen of your MacBook Air notebook into a touch screen. Whenever you want to touch you can do it. AirBar tailors its operations to the needs of MacBook users. Though Neonode also markets a 13.3-inch and 14-inch AirBar for PCs, the company said that they’ll begin shipping in March along with the new MacBook Air edition. Neonode plans to extend AirBar compatibility to additional MacBook models and PC sizes within the first half of 2017, the company said. AirBar is meant to operate in Apple's Inc. which is very popular. Apple is associated with superior performance and quality. It is a brand which has a wide clientale and hence, AirBar which benefit from this existing state of the market. AirBar is a device whose price is meant to save money. The standard price for a 13.3 inch is about $99 which is way cheaper. Similar screen with an integrated touch screen can be up by $30. Customers will feel that they have value for their money. AirBar has a superior design which helps promotes its value. You dont have to unscrew anything in your PC in order to fix it. It has magnets which attach to the bezel of the PC. AirBar’s 13.3-inch model even features brushed aluminum to match the MacBook Air’s color scheme c. Customer Segment College and university students Company executives Business Managers Government parastatals Home owners 4. Marketing Plan a. Price The company will use promotional pricing and which will have aspects of market penetration pricing. Prices will be differentiated according to the screen size of the MacBook. The company will place a price of AirBar and its associated services in its website and promotional materials. Evidence show that in HK, promotional content which bear price information whether banners or text ads, attract high response and conversion rates. Most of the Hong Kong customers use price as the defining criterion and hence, AirBar will do itself no favors by hiding it. There will be discounts, rebates for distributors and online payment methods. b. Product Neonode Inc. will capitalize in the strength of the AirBar. The product brings touch-screen experience to older versions of MacBook. Its uniqueness is based the idea that you can use any obstruction to make selections on the screens. The product will not include costly features which the customer will not use. Customers will be pleased with its glossy and slick. The product will be continually innovated to increase its compatibility beyond the current three versions of MacBook. c. Promotion It is here that internet will take center stage. Neonode will use search engine optimization due to the heavy internet usage among Hong Kong residents. Social media advertising and pay-per-click advertisements will be utilized due to its cost-effectiveness. Hence, the company will ensure that AirBar has enough images, a better video and clearly visible forums where questions are asked. The company will ensure that it keeps updated with the trends in social networks of HK. It will be prudent to create profiles in several social media resources with considerable involvement in its activities such as commenting, adding friends and group engagement. d. Place The product will be sold through online merchants and brick-and-mortar retailers. A website will be created for the product in Hong Kong with an online store whereby one can order, view and pay for the product. AirBar brick-and-motor retailers will be strategically located to offer exclusive, selective and intensive distribution. Inventory will be re-ordered when the product numbers fall below 1000 where they will be shipped and stored in warehouses in HK. 5. Operation Plan a. Management and operational summary AirBar will provide the HK business community quality technological solutions, professional technical support together with unparalleled customer service. The company will earn fair profit for its stakeholders by embracing ethical business practices. The company will purpose to increase sales modestly and steadily in the second and third years, maintain just-in-time inventory levels, maintain a midrange gross margin throughout the entire operation and achieve healthy earnings in its operations. Neonode will manage the business by implanting and adjusting the basics of a Balanced Scorecard amongst customer satisfaction, employee learning and growth, internal business processes, financial goals and results. It will adopt a customer and market focused sales paradigm. It will also build and maintain strategic alliances with its manufacturers and industry related partners in HK. b. Organizational structure in Hong Kong General Manager – Oversee all operations with primary responsibilities for marketing and sales. He/she will spend most of the time in the field assisting account managers and maintenance of client relationship. Administrative manager – Oversee all administrative functions which entail manufacturer, vendor, HR, banking and inventory relations. The office will respond to customer issues and follow ups. Systems Manager – Oversee all services including development, systems training, customer support, carry-in service, service call response and prioritization and agreements. Will be assisted by systems engineers and technicians. c. Manufacturing and Facilities The company will continue manufacturing AirBar in US and shipping it to HK as it establishes bases in HK. Neonode will rent spaces for warehouses in Hong Kong where it will be rented on a month to month basis until relocation is viable. Meanwhile, the company will do market research to establish suppliers and potential of outsourcing production to HK. 6. Sustainability & Impact a. Energy Conservation AirBar is known not to cause any reduction in the performance in of the PC nor cause any drainage to the battery. This implies that the technology lays greater emphasis on the conservation of energy. The product uses readily available materials such as silicon plates and plastic covers in its construction. The product can be recycled and it is compact to ensure that fewer materials are used. It is only 2 inch. b. Green buildings The warehouses will be green buildings with rooftop plants. 60 watts bulbs will be used during the night and natural ventilations will be used during the night for lighting purposes. The facility will consume renewable energy from solar power too. c. Growing population Its population is currently at an approximate figure of 7.07 million and is projected to shoot up to 8.47 million by 2041. There are so many expatriates and Chinese families moving in to settle in the city. This will increase the demand of the AirBar products and hence, making its production sustainable. d. Increased focus on innovation HK has strengthened technological integration capabilities by importing technology from abroad. Innovation is sustainable. AirBar offers advanced technologies targeted by HK market now. Tax concession policies are being improved and at the same time preferential treatment is being expanded for accelerated depreciation of fixed assets for purposes of encouraging enterprises and introduction of new technology. 7. Overall Schedule         Market Research 4/25/2017 4/20/2017 -5 Hiring of Staff 5/22/2017 5/30/2017 8 Manufacturing 6/3/2017 7/28/2017 55 Launch 8/8/2017 8/9/2017 1 Social Media advertsing 8/10/2017 8/30/2017 20 Website development 9/3/2017 9/28/2017 25 Physical promotion 9/29/2017 10/15/2017 16 Leasing of Property 10/20/2017 11/20/2017 31 Ordering 11/22/2017 11/24/2017 2 Shipment and Inspection 11/27/2017 1/28/2018 62 sales 2/11/2018 8/11/2018 181 Review and Reporting 8/15/2018 8/16/2018 1         8. Risk, Problem & Assumption a. Risks The current developments and favorable demographics in Asia and the emerging markets, regulatory developments meant to liberalize financial systems, and the benefits of disruptive technologies will all favor significant growth in Hong Kong management industry. However, making profits might not be so straightforward. The economic turmoil brought on by the China’s structural transition and the one-off events such as Brexit threaten to thrust this globalized economy into a deep recession. It turns out that the disruptive technologies which promise so much will be expensive. Some futurists have forecasted that they would put active managers out of job. And, it is common knowledge that HK has varied culture, languages and regulations which present their own sets of challenges. The spending patterns in the Hong Kong is predicted to change. Shifts will bring about a reduction in the consumption of the peripheral devices. Customers would prefer purchasing in-built products which makes them more appealing and somehow convenient. The flooding of counterfeits will hinder the credibility and the performance of Neonode in this market. There has been reported some reports on sluggish performance of the retail sector. Due to the large investment in media advertising and the general use of internet for most of its operations, Neonode will face common threats of cyber security. This especially to the billing department which is prone to fraud. Therefore, vigilance should be increased as it concerns the access of information, authentication and authorization. b. Problems Any device doesn’t solve all the problems and hence, customers find problems here and there. First of all, you can’t attach it to any display and turn it into a touch screen. The device only works for some screen sizes such as 15.6 inch laptops. And, being non-biometric, any object which accidentally move over the light field can cause screen selections. This can be an inconvenience. There is the fact that its thickness which can cause problems to its performance. For one, one it is 2-inch and hence, you can’t close it with your laptop as it can dislocate the screen. Therefore, efforts should be done to make it slim. Customers have experienced price disparities which make them gripe. For instance, some instances have been noted that the 15.6-inch can go for the $69 whereas the 13.3 inch can go for $99. Sluggish performance have been noted for the 25.6 inch as compared to the 13.3 inch. Another pertinent issue is the length USB cord which is currently 9-inch. This proves to be problematic for the laptops which do not have the USB ports on the right flange of laptop. This short cord comes as a disadvantage for the desktop computers with considerably wide distance between the monitor and the ports. c. Assumptions The HK continues to be under the sovereignty of People’s Republic of China but enjoy high autonomy in economic and trade affairs. The capitalist system is continued and common law legal system is perpetuated according to HK constitution. Hong Kong residents have rights to industrial actions, assembly, association, press and publication, and speech. In this case, there is no restriction by the government on internet access. Hong Kong still maintain healthy trade relations with USA in the advent of Trumph administration. There is continued economic growth in the Hong Kong in the opposite direction. The demand is expected to hold up. There is reduced bribery and corruption by the action of the Independent Commission against Corruption in Hong Kong. The intellectual property laws are upheld. There is reduced terrorism and organized crime. 9. Conclusion The expansion to the Hong Kong market by Neonode using the AirBar product is a very nice venture. This technology industry and PC peripheral is doing well in Hong Kong. The company has to compete with technologies which use eye-control. The market analysis of Hong Kong using the porter’s five forces indicate amazing opportunities for AirBar. The medium supplier and consumer power together will relatively lower threat of new entrants makes it viable to enter the market. This marketing plan provides insights on how the organization will be in terms of the requisite offices. AirBar has considerable eminent features which makes it sell to the Hong Kong MacBook users. Sustainability is very key to the success of business in Hong Kong. The most important point to note is in the fact that the company targets at creating value to the Hong Kong clients. In that respect, and the indicated assumptions, business prosperity is guaranteed. References Goi, C.L., 2009. A review of marketing mix: 4Ps or more?. International journal of marketing studies, 1(1), p.2. Humphreys, P.K., Shiu, W.K. and Chan, F.T.S., 2001. Collaborative buyer-supplier relationships in Hong Kong manufacturing firms. Supply Chain Management: An International Journal, 6(4), pp.152-162. Lawrence, C., 2016). Marketing strategies in Hong Kong’s new retail landscape: online, offline, or both? http://hongkongbusiness.hk/media-marketing/commentary/marketing-strategies-in-hong-kong%E2%80%99s-new-retail-landscape-online-offline-o#sthash.VBq1nzRd.dpuf Lee, M., 2015. AirBar is a USB device that adds a touchscreen to laptops. Geek.com http://www.geek.com/chips/airbar-is-a-usb-device-that-adds-a-touchscreen-to-laptops-1642729/ Mark, H., 2016. Neonode AirBar review: Transform your plain-Jane display into a 'touchscreen,' for just $69. PCWorld. http://www.pcworld.com/article/3151438/peripherals/neonode-airbar-review-transform-your-plain-jane-display-into-a-touchscreen-for-just-69.html Mark, H., 2017. Thanks to Neonode's AirBar, the MacBook Air has a touchscreen—kind of. Macworld. http://www.macworld.com/article/3154174/hardware/thanks-to-neonodes-airbar-the-macbook-air-has-a-touchscreenkind-of.html Raj, S., 2012. What can Hong Kong teach China about urban sustainability? GreenBiz. https://www.greenbiz.com/news/2012/12/04hong-kong-china-sustainability Research HKTDC, 2017. Technology Industry in Hong Kong. http://hong-kong-economy-research.hktdc.com/business-news/article/Hong-Kong-Industry-Profiles/Technology-Industry-in-Hong-Kong/hkip/en/1/1X000000/1X09U6YK.htm Read More