Environmental analysis embraces the changes in environmental factors that affect the demand and consumption pattern among the consumers. One of the most noticeable changes in the Asian markets is the significant decline in demand for smart phones. However, most consumers in the market are shifting to new models in the market. Changes in the household segment will provide more marketing opportunities, especially the growing population of the youths in Asia.
The youths have also developed a desire to use internet services due to the influence of social media. Therefore, Iclassic stands the chance to perform better in Asian markets since it has been developed using a new technology. The demand of phone products may still grow in Asian markets due to the anticipated changes in demographic patterns. Initiatives taken by the government to boost the development of trade in the region have enhanced the growth of business in low-end company segments.
The initiatives will foster trade development in low-end and high-end market segments. However, the government tends to impose tighter regulations for the phone market to ensure that consumers are protected from exploitative pricing strategies and dangerous products. The government regulates the operations of phone producing companies in the country to ensure that they adhere to environmental regulations.
There are also significant changes in the economy within the Asian region. The region is currently experiencing significant growth in the GDP. It has good economic policies that foster the development of trade and especially the technological sector. The other important environmental aspect is the technology. The technological environment in Asia is highly developed in most parts of the region. The product will experience stiff competition from the areas that have technological advancement.
Analysis of Competition
The direct competitors that will compete with the product in the market are U-phone X and One Wave. The competitors have similar features and performance capabilities. They have unique selling points of long battery life, compactness, design, high quality photos, and superior video performance. The various strategies of the competitors are exhibited in the framework table shown below
The market segments in this case include low-end household segments and high-end companies segments. The competitors in the segment will respond by developing similar features similar to Iclassic. For instance, One Wave and U-phone X have a classic design. The two products have compactness 80 and 85 respectively.
They also have an extended battery life of 90 and 77. Threat of new entrants is another problem that will affect the performance of the product. The new entrants in the market offer similar features and have new technology which may influence the consumers in the companies segment. The competitive vulnerability in this case is based on product features such as compactness, long battery life, video, camera, and security, and pricing. These elements attract the consumers in both segments.
Based on the above competitive approaches, Iclassic intends to adopt a competitive position that is directed towards the market niche. The product will target the market based on consumer requirements. Iclassic will be targeted at the consumers in low-end and high-end market segments.
The preferred consumers in the low-end market segments include households where the youths and adults in early middle age will be the target consumers. The market niche position will be applied to develop quality products with desired features that can meet the needs and wants of the consumers in the market.
Consumer Behavior
The first target market for the product is the low-end market segment. The consumer behavior in this segment is mainly guided by price since they are price sensitive. Prior to product launching, the organization conducted a market research, which revealed that the consumers in this segment prefer features such as security, quality video features, camera, and quality photos. The consumers in this segment are looking for a product with good features and are reasonably priced.
The other segment is high-end segment, which comprises of businesses and companies. Information from the research revealed that the consumers in this segment like a product with extra features. The element of price was not an issue as it was in the lower-segment. With regards to symbolic needs, customers associate Iclassic with high social status.
The design and color choices are important in conveying the tastes and preferences of the consumers. The product has good texture and shape that enables the consumers to develop a positive self-esteem. The product embraces all demographic elements in consumer composition. It satisfies the needs of all consumers in different cultural groups.
Decision making process among the consumers who use Iclassic product involves identification of needs. The needs in this case entail compactness, video, camera, touch screen features, and long battery life. The next stage after need identification is information search. The stage involves searching for information about the product from catalogs, product adverts, online sources, trade journals, magazines, and visiting the company’s websites.
Evaluation and selection entail identification of the product features. In this phase the consumers evaluate their features of the product and compare them with similar products in the market. The stage involves an assessment of product qualities and performance capabilities. During the evaluation phase the consumers identify desirable elements such as reliability, convenience, and durability. Moreover, the ultimate factor that drives the consumers to purchase the product is price of the product.
Consumers evaluate features such as performance and compare them with the market price. Another vital element in the consumer decision making process is the choice of store. The consumers prefer business premises that are well organized and have good interior designs. The store represents the ‘place’ aspect, which is very important in marketing. Consumers also prefer business locations that are properly arranged and are conducive for business transactions.
Post purchases evaluation during the decision making process involves identifying how the consumer attains satisfaction from the product. The evaluation process should also include other factors that may lead the consumer to develop a negative perception after using the product.
Level of involvement in the decision making process is determined by the processes involved and the consumers’ interests. Consumers also assess the level of economic significance associated with the product. Iclassic consumers prefer the product since it has superior design and compactness.
However, most consumers of the product are affected by income status. Purchase decision therefore affects their financial position. With regards to physical and social requirements, the consumers prefer the product due to the perceived improvement in social economic status. The type of decision making in this case involves limited decision making process since the product is not purchased on a continuous basis. An ideal mobile phone can be used by a rational consumer for a period of at least six months.
Objectives
The market growth in household segment is expected to be 51%. The market growth in the companies segment will be 51%. The same case applies to the companies in the same segment. The organization intends to increase the market share in round 5. The company also intends to increase the level of sales in both segments during round 5. Iclassic will enable the organization to attain several marketing objectives.
The product is intended to enable the company increase its sales revenues in the Asian region. With regards to financial objectives, the product will enable the company to increase its sale margin since the product will attract low variable cost due to investment in R&D in round 5.
To achieve the above objectives the organization will rely on product differentiation and competitive pricing approach. Differentiation will be attained by adding new features into the products. The organization also intends to establish reliable and effective distribution channels. Based on the sales forecast information, the organization intends to increase actual market share in household segment from 12.7% in round 4 to 14% in round 5.
The market share in companies segment will be increased from 11% to 12.5% in round 5. The estimated market size is 3,154 which therefore translate to 441 in the household segments. The estimated market size in companies segment is 1,577 and the estimated coverage is 197.
The negative growth in high-end segments will be improved in round 5 since the company intends to increase the level of market share by 9% in the household segments and 6.9% in the companies segment. The organization will increase the contribution in the four segments. Contribution margin in low-end household segment will increase from $ 14794 to $ 30405. The margin in low-end companies segment will increase from $ 6394 to $ 13582. The product mix in this entails the price of the Iclassic, the premises, and the people.
Positioning, Targeting, and Segmentation
According to geographic segmentation, the Asian markets can be categorized into four main segments. The region comprises of two consumer segments and two corporate segments. Both segments can also be divided into high-end and low-end segments. In Asia, consumers in both segments are mainly guided by the pricing approach adopted by the company. However, the customers in the high-end segment tend to prefer extra features of the product compared to the price.
The consumers are looking for new technologies to satisfy their mobile and computing needs. The company adopts a multiple target approach to target the market segments, which include low and high end market segments. The low-end market segments entail the household dimension.
Under this dimension, the organization targets individual consumers, families, and groups. The company has to develop products that meet the needs of different categories of consumers under this dimension. For instance, among the groups there are youths who may prefer a classic product due its superior video and camera qualities. Iclassic will occupy a significant position among the consumers mind.
The positioning is based on the performance of the product. The position strategy in this case will therefore be based on the product performance and price. Iclassic will attract low price to enable the organization achieve the desired market share.
The strategy will be aimed at creating significant disparities between Iclassic and other rival products such as U-niverse and Tele-Alo brands. The positioning statement in this case is to portray Iclassic as a superior mobile phone that will outmatch other rivals products by enabling consumers to experience compactness, longer battery life, and good navigation capabilities.
Product Strategy
Iclassic product will have three main levels. At the core level, the product will enable the consumers to communicate easily. At the actual, the product has superior design and shape that will be felt when touched. The augment level we offer two years warranty to the consumers. The level will also entail consumer information on how to use the product. Iclassic was developed to improve consumers’ experience on video, display features, design and battery life.
The brand name was chosen to enable the consumers associate the product with superior performance. The relationship between the names of the product with its superior performance is essential in communicating its superiority over rival products. In round 5 all the features will be improved to enhance performance. For instance, compactness and battery life will be increased from105 to 110. However, compactness alone will be raised to 80. Other features such as video, premium display, and security will also be improved.
In around 5, Iclassic will use its brand name as a branding strategy to achieve a competitive edge in the market. The position of the product in the BCG matrix is a question mark since it is a growing product with low market share and more opportunities for growth. The strategy for the product in this case will entail investing in product promotion and marketing research to increase its market share.
Continuous investment in R&D will enable the organization to improve the performance of the product. According to the sales forecast report, the organization will increase the market share slightly above the current 51% in household and 51% in companies segment. The product is in the growth stage of the product lifecycle and targets the growing demand in low-end household and companies segment.
Pricing Strategy
The pricing strategy for the product will be based on price reduction to attract customers in the market. In round 4 the product was sold at a price of $ 299, which was way above the price offered by U-niverse. The competitor offers a price of $ 202 to the same market segments. In round 2 the company used cost based pricing. The organization will reduce the price without reducing the margin before major expenses.
The unit margin in round 4 was significantly higher. However, in round 5 the company will spend more funds in R&D. The company will reduce the variable cost to ensure that the margin in round 5 is manageable.
In round 5 the price will be reduced from $ 299 to $ 240 in order to attain the marginal price of $ 69. It is also cognizant to note that spending in R&D will enable the organization to reduce the variable cost. The product had the biggest share in round 1,2,3,4 because the investment in R&D was significantly higher compared to the competitors in the market.
Marketing Communications Strategy
The communications strategy in this case will be at aimed improving product awareness in the different market segments. Another important element in the achievement of the objectives is the analysis of the market promotion data. The company intends to spend 35% of the contribution margin on promoting low-end market segments.
The segment is easily influenced by promotion. 17% of the margin will be spent on promoting the companies segment. However, 13% will be spent on high-end household segments and 10% in high-end companies segment. The segment is less sensitive to promotion compared to the low-end segment.
Distribution Strategy
According to the sales distribution records, the organization should ensure channel investment to enhance the performance of the distribution channels. The company will pursue channel investment that will entail personal selling and other activities aimed at improving the performance of the product. The company intends to provide improved performance of various channels through advertising. The household appliances will also attract more investments in the second around.
The investment in department stores will be reduced due to low performance compared to other channels. After promotion the organization will spend 25% of the total margin that will allocated to the three major channels based on their performance. For instance, the organization will spend 50% of the margin on specialty stores.
It will also spend 30% of the margin on household applicant store. The household applicant constitutes more than 45% of the market share. The company will spend 20% of the margin in department stores which constitutes 40% of the market share. Based on the distribution channel, the level of market exposure to be applied in this case entails intensive exposure since the product will be sold through various outlets in the channel.