Executive Summary
The need for a geographical business growth informs the adoption of a market dominance strategy by Prius Electronics. The transition in the management of this family owned enterprise has necessitated the deepening of its hold on the high end market.
The strategy relies on the spending power of the said market segment. On its part, the potential for growth relies on the huge profits expected from the application of the market dominance policy. The company’s focus on the high end niche guarantees significant return on investment since the profit margins of such products are usually high.
The selected market plan also has the potential to increase the returns of each of the shareholders. Such increments are possible since growth in profits is likely to trigger expansion into other geographical areas in the country.
A Marketing Plan for Prius Electronics
Background Information
Prius Electronics is a family-owned business founded in 1990. The company was started by the family members as an outlet for second hand electronic items like television sets and radios.
However, the need for diversification made the organization shift from second hand material to electronic products that were brand new (Thorpe & Morgan, 2007). Today, the company has five branches in several parts of the Illinois State in the United States of America.
Prius Electronics markets itself as a supplier of authentic and high-tech electronic items. The products are aimed at enabling the clients cope with the dynamics associated with the technological world. According to Morgan and Hunt (2002), a company seeking to gain competitive advantage over its peers should strive for uniqueness.
The company has its headquarters in Chicago. However, its presence is felt in 15 other towns within Illinois. Among others, it has operations in Addison, Barrington, Auburn, Bloomingdale, and Aurora. Shaw (2012) argues that proximity to customers is an effective marketing strategy. Most of the outlets are located within a 3 mile radius of residential areas.
The company is both a wholesaler and a retailer of electronic material. The products range from television sets, computers, cameras, phones, and other home appliances.
The company has a 3 year warranty policy for all the products sold. It is the only outlet in Illinois that offers clients such a policy. Such a plan is expected to increase sales and other earnings in the organization (Paswan, Blanckson & Guzman, 2011).
In this paper, the marketing plan adopted by the company is analyzed. Among others, an environmental analysis of the company is conducted. In the analysis, competitive, economic, political, legal, technological, and sociocultural forces are reviewed. In addition, the primary and secondary target markets are identified.
An Environmental Analysis of Prius Electronics
Overview
As aforementioned, the entity was founded as a distributor of electronic appliances for home and office use. Over the years, it has grown to become a marketer of the latest brands of electronic equipment. Presently, the company is undergoing a leadership transition.
The current chief executive officer is about to hand over the company to his son, given that it is a family-run organization.
The transition creates the need for a marketing plan meant to take the company into the future (Paswan et al., 2011). As such, it is important to understand the business environment in terms of the competitive, economic, and political forces.
Competitive Forces
Intense competition in the electronics business requires companies to make their presence known to the consumers. Companies are expected to engage in advertising as part of their marketing strategy (Morgan & Hunt, 2002).
Today, the American market is characterized by a myriad of different types of advertisements from prominent electronics companies. The scenario is what leads to the stiff competition in the electronic industry in Illinois and the greater American market.
Competition is usually skewed to favor some parties depending on the category of the commodities sold (Shaw, 2012). In the case of Prius, competition in the low-end products segment is extremely high. Such products are those whose price is less than $100.
However, the same products might cost more than $100 due to added features. Such a scenario leads to what is referred to as a high-end product. An example is in the iPhone series of products, where there is a 5s and a 5c. The latter is low end, while the former is high end. Competition in this case arises due to the affordability aspect.
Economic Forces
According to Paswan et al. (2011), the economic situation in a country has a ripple effect on the operation of businesses. Similarly, the prevailing harsh economic situation in the American economy has forced many companies to cut costs on such issues as promotions.
The most significant budget cuts in this perspective are in the mainstream advertising platforms like newspapers and television.
Nonetheless, companies are still relying on promotional activities in a bid to advertise their services. A survey conducted in the American market indicates that many companies are taking to specialty advertising. The same is aimed at ensuring brand visibility despite the promotional budget cuts.
The new form of marketing is mostly done by large companies that can afford to allocate funds to such ventures. Slow economic recovery witnessed in America implies that many companies will rely on specialty advertising. The objective is to receive value for the funds spent creating awareness for products and services (Shaw, 2012).
Political Forces
According to Shaw (2012), the political situation in a country has an effect on the performance of businesses operating there. Today, the high handedness witnessed in the House of Representatives has the possibility to ruin businesses in the country.
For instance, the recent government shutdown resulted in decreased sales in small businesses operating in various industries. The effects of such policies and political realities are not restricted to the small businesses. For example, they have the potential to negatively affect the operations of large businesses like Samsung Electronics.
Legal Forces
The specialty advertising referred to earlier is characterized by the distribution of goods to potential customers through mails (Morgan & Hunt, 2002). Many clients have lodged complaints regarding the mail sent to them, regarding it as junk.
Companies like Prius Electrical are less affected by the problems associated by these types of mails. Promotional correspondence affects the clients who had not placed orders for the products more than it affects those who have already expressed their interest to acquire the item.
There needs to be a legal framework aimed at regulating such forms of advertisement. However, since this appears to be the most preferred form of marketing plan in such economic situations, many companies are likely to ignore any legal implications associated with it.
For example, large companies will most likely opt to continue sending the mail since they can afford to absorb the consequences.
Technological Forces
The technology world is changing at a very high pace. New products are launched almost on a daily basis. Morgan and Hunt (2002) suggest that emerging trends are forcing manufacturers to change the specialization of appliances. An example is in the television market segment.
Consumers and producers are shifting to flat screen television sets. The new television sets are accompanied by new modifications to enhance the quality of their signal.
Manufacturers are constantly developing televisions with higher definitions to improve the quality of pictures received. It is important for companies to increase their sales before a new version of an appliance is launched.
Socio-Cultural Factors
The need to increase household incomes implies that customers will spend most of their time working and less on leisure. They will most likely spend money on appliances that are capable of making their work easier (Morgan & Hunt, 2002). An example of such a scenario is evident in the sale of mobile phones.
Clients will definitely prefer a mobile phone that has many applications. Such applications include those used in taking photos and organizing one’s diary. As a result, electronic outlets will be forced to stock such commodities to meet the customer’s demands.
Markets
Market Tiers
There are two tiers of markets in which products are sold (Shaw, 2012). The choice of a particular tier depends on the type of commodities sold by a company. The two are the primary and secondary markets. The marketing plan of a company is expected to respond to its markets. Prius Electronics is operating in the two types of markets.
Primary Market
According to Paswan et al. (2011), the primary market is the bedrock from which a company gets most of its revenues. Earlier, this paper established that there is high competition in the less costly commodities’ market. The management at Prius Electronics wants to avoid stiff competition by targeting the high end market.
Persons or organizations that can comfortably purchase electronics worth $5000 per week are the company’s primary market. Identification of this segment is inspired by the need for niche differentiation to increase profits.
Given the dynamic nature of electronic appliances, it follows that a company dealing in the same will be required to offload its products before a new version is introduced in the market.
Over the past decade, Prius Electronics has relied on the high end market to ensure high sales volumes. Moving forward, the company needs to expand its space within this primary market.
Secondary Market
It is the second tier in a market. It is used to supplement the revenues generated by the company from the main market (Morgan & Hunt, 2002). Prius Electronics uses the low-end buyers as its secondary market. The niche comprises of commodities whose shelf life is rarely affected by the entry of a new product. In such cases, home appliances like iron boxes and blenders are reasonably priced to attract the low end buyers.
Branding Strategy
Logo and Name
Slogan
“Making life easier”
Brand Extension
Introducing the very latest Super High Definition curved television
Performance Analysis
The performance analysis is based on the need to increase each of the metrics per year. The objectives are as follows:
- Quantitative
- To increase market share by 75%
- To increase website visitors by 60%
- To increase the customer value by 65%
- To increase the rate of growth by 70%
- Qualitative
- Developing the company brand
- Improving the company’s image
- Enhancing awareness of the company
- making relevant considerations
SWOT and Needs Analysis
Strengths
The company has adopted the market differentiation strategy evident in the primary and secondary markets. Such a strategy is one of its strengths. In addition, Prius Electronics have adopted the specialty advertising strategy, which makes it possible to maintain a small number of employees.
Such a manageable number means that the company can afford to allocate resources to support the marketing strategy despite slow economic growth (Shaw, 2012). Further, the organization has created a working relationship with manufactures and distributors of the products.
The same helps to maintain the high quality of the goods sold. Consumers in the primary market places second orders at a very high rate. Such a rate affirms that the quality of services delivered is satisfactory. Clients inform their friends and other people of the high quality of products, increasing the number of new clients by 6% per month.
Weaknesses
By virtue of being a family business, Prius Electronics have adopted a centralized management hierarchy. The structure lacks a managerial backup. In such circumstances, Shaw (2012) suggests that there is a limited knowledge base in the company.
The operations of such a company are threatened in the event that the leadership is incapacitated. The dynamic nature of electronic appliances adds to these weaknesses.
Opportunities
According to Morgan and Hunt (2002), annual expenditure on advertisements in America stood at $130 billion in 2012. The figure is expected to grow in subsequent years.
Analysts estimate that a quarter of the budget is spent on specialty advertising. Prius is a company keen on the said advertising platform. The figures indicate an opportunity that the company can exploit to increase growth.
Threats
The major threat to electronics is the constant change in their specialization. Morgan & Hunt (2002) indicates that with the dawn of the internet age customers are keen on smart technology.
The high end market, in particular, is keen o the said appliances. However, owing to the limited numbers of their high end market coupled with the aforementioned dynamism, a threat of low sales volumes looms.
The Market Dominance Strategy
As aforementioned, the transition in the company informs the need to increase profit margins. Consequently, the company requires a marketing strategy that will increase profitability and share holder returns (Shaw, 2012). Going forward, the said strategy will boost growth. More specifically the company will take a niche approach into this strategy.
Over the next five years, the company intends to develop a niche in the high end market segmentation. Morgan & Hunt (2002) posits that electronics are luxury products and the said market has the best purchasing power.
The five year time frame is sufficient as the company seeks to go national. According to their forecast, their marketing activities will primarily target the said niche and the proposed timeframe is sufficient.
Positioning Statement
Prius Electronics is h leading electronics distributor in Illinois. We pride ourselves in the sale of authentic appliances for the home and office respectively. The state of the art quality of our products enables their fast application. We offer competitive prices and to those who make electronic purchases, a considerable discount is made.
Consumer Behavior
Shaw (2012) argues that a marketing plan ought to respond to their clients’ behavior in the market. As aforementioned the high end products usually have a short shelf life before a new product is introduced with advanced specifications.
Such clients are therefore keen on having the latest electronics. Consequently, the company is forced to ensure they are fully stocked with the latest models.
References
Morgan, E., & Hunt, S. (2002). Determining marketing strategy: A cybernetic systems approach to scenario planning. European Journal of Marketing, 36(4), 450-478.
Paswan, K., Blanckson, C., & Guzman, F. (2011). Relationalism in marketing channels and marketing strategy. European Journal of Marketing, 45(3), 311-333.
Shaw, E. (2012). Marketing strategy: From the origin of the concept to the development of a conceptual framework. Journal of Historical Research in Marketing, 4(1), 30-55.
Thorpe, R., & Morgan, R. (2007). In pursuit of the ideal approach to successful marketing strategy implementation. European Journal of Marketing, 41(5/6), 659-677.