Environmental Context Analysis
Environmental context analysis takes into account the environmental aspects, which affect the demand of the product. In Europe and Asia there are changes in the environment that may affect the performance of iSporty LR. For instance, the two regions are currently experiencing a decline in the demand of smartphones.
Consequently this affects the demand in the high-end segments since consumers turn to new product models. Despite the changes, the demand in the low-end segments may increase to 100% due to population increase in Asia and Europe. There is possible increase in demand among the youths due to influence of social media.
It is cardinal to note that initiatives taken by the government to promote development of small and medium enterprises in Europe and Asia. Such initiatives will boost the demand in the low-end company segments.
The other factor that affects the marketing of the product is the response pattern towards advertisement and promotion initiatives. The response rate among the consumers in the household segments is higher compared to the corporate sector. This therefore makes it difficult to predict consumer behavior of consumers in the corporate sector. In addition, economic conditions in the two regions pose more threats especially in the case of a looming recession.
The interest rate in the market has declined and therefore indicates possibilities of economic recovery in Europe and Asia. Consequently the premium rates offered to the cell phone industry has greatly reduced, thus providing opportunities for financial access. The economic front, the two regions provide the best trade location. Social facet of environmental analysis is another important factor that should be considered in this evaluation. The two regions have different consumer groupings and segments that can be targeted.
Competitive Analysis
Competitive analysis seeks to identify the direct competitors that will affect the performance of iSporty LR. The results from the marketing research reveal that direct competitors of the product are U-phone, Spot, Tiger N101, and Shams. The competitive position adopted by these products is based on similarity of the features. iSporty LR was developed to offer compactness, quality design, long battery, affordable pricing, and extended warranty.
The same features are used by the competitors as the appropriate competitive position for the products. Moreover, the future moves of competitors may entail imitation of the product characteristics and features.
This may entail copying consumer likeable features such as video quality, premium display, and navigation capabilities. Areas of competition vulnerability may stem from effectiveness of the distributions channels and the marketing communication strategies. The strategies of the competitors can be analyzed in a framework table.
The threats of new entrants in the market in the low-end segment will pose more threats since the products will offer low pricing, which is the main selling point in this segment. The products will also focus on compactness, video, camera performance, and design. On the high-end segment the product will focus on extra features of the product such superior display, navigation, and extra memory.
This analysis is based on the marketing research information, which revealed that three products offered similar features. For example, Shams and U-Phone have different levels of similarity with regards to design, compactness, battery life, extra memory, security, navigation.
Shams and U-Phone offer a warranty of 36 months each while iSporty LR offers 24 months. The level of variable unit cost is almost equal for the three products. iSporty LR has variable unit cost of 154, while Shams has 163, and U-Phone has variable unit cost level of 193.
The organization will use the market leader competitive position. The position will be achieved by protecting the market share, investing in R&D to ensure continuous and sustainable innovation. The position will also be achieved by expanding the marketing share to raise the level of sales revenues and profitability.
Analysis of Consumer Behavior
Analysis of consumer behavior must embrace the market segments that will be involved. Different segments have different consumer derives that determine consumer behavior. iSporty will be sold in four main segments, which include low-end consumer segment, high-end consumer segments, low-end companies segment, and high-end companies segment. The consumers in these segments have different responses towards the product features.
For instance, the consumers in the low-end segments are price sensitive unlike those in the high-end segments who are influenced by the extra features of the product. The consumers also react differently towards promotion and pricing. The consumers in the low-end segments are more responsive towards product promotion compared to the consumers in the high-end segments.
However, there are significant disparities among the consumers with regards to geographical boundaries. For instance, the consumers in Europe prefer the sport design of the product. The household segment in the target market prefers video features, extra memory, and premium display.
The low-end company segment prefers security, video features, premiums display. This therefore gives us reason to add premium display into the product. Decision making process among the consumers is a procedure that starts with identification of needs. To achieve these needs the consumers will search for the information about the product. The next stage in the decision making process entails appraisal and selection that is based on the product features.
The consumers will appraise the qualities and features of the product. Elements such as efficiency and effectiveness of the product will be considered during the evaluation. In addition to these elements, the price of the product will also be considered by the consumers during the decision making process.
Consumers compare the performance of the product with the price offered by the organization. For instance, consumers in the corporate world tend to associate the price of the product with its qualities. Therefore, such consumers will be satisfied by adopting the value-based pricing method.
Business premises is another vital element that influence consumer decision making process. Most consumers prefer well store outlets that are properly built with good painting. The store outlet should communicate the brand of the company. For example, business customers prefer specialty stores while household consumers prefer household appliances and department stores. The organization will therefore properly design the stores to attract consumers and provide an ample business environment.
The store outlet should also embrace all the elements that influence consumer behavior such as space and configuration of various sections. Consumers also evaluate the product after the purchase transaction. Such assessment takes into account the post purchase services that the consumer gets from the organization. Customer feedback after using the product is very important in post evaluation. A company can use customer feedback to improve product performance to enhance customer satisfaction.
Engagement of consumers in the decision making process is determined by the features of the product and needs of the consumers. These elements therefore determine the level of engagement in the decision making process. Consumers who use iSporty LR product will evaluate the product due to its efficiency and effectiveness in sending text messages, long battery life, and enhanced video performance. Consumers consider all the economic utilities before purchasing the product.
However, it is cardinal to note consumer decision making process is heavily influenced by other factors such as income and employment status. Consumers from the household segment are likely to be affected by income patterns. The decision making approach to be adopted for this product will entail limited requirements in decision making.
A mobile phone is not consumed on a regular basis therefore consumers only make decision during the purchase. Unlike other habitual products such as foods and clothes, a mobile phone can be replaced at least every two years depending on the consumer requirements.
Marketing Objectives
According to the information provided by the company, iSporty LR product will enable the organization to realize its marketing objectives. Most objectives in this case are mainly measureable. For instance, the organization intends to increase the market share in market share in the low-end household segment and companies by 14% and 9% respectively.
The segments are the main target markets for the products that are responsive towards price and product promotion. 14% of the household market size will translate to 3,718 while 9% of the market size companies segment will translate to 1,475. Addition of new features into the product will improve the level of sales in the low-end household segment; hence increase the level of the market share.
The same case applies to the low-end companies segment where the current market share stands at 51%. Addition of new features into the product will improve the performance of the product and generate more sales revenues.
To attain these objectives, the company will employ different competitive strategies. The company will use its market leader approach to ensure price and product differentiation. Value-based pricing approach will be used to offer high quality products that have at affordable prices. The organization will also lower its prices in certain segments to attract more consumers for increased market share.
Analysis of these objectives highlights the connection between the company’s overall objectives and the marketing objectives for the product. Phonica intends to increase its market dominance in the two regions by offering high quality products. Increases in sales revenues will enable the organization to expand the market share in Asia and Europe.
This is also based on the fact the company was able to secure the highest share price compared to the competitors. The organization has managed to triple the share price to $ 21.53. The organization intends to take advantage of these opportunities to improve its product mix.
The financial objectives will include increasing the contribution margin in both market segments. The company intends to increase the margin in the low-end household segment from $ 15583 to $ 30572. In the high-end household the company intends to increase the margin from $ 4748 to $ 5409. The margin in the low-company segment will be increased from $ 3833 to $ 7781. These objectives fit into the overall objective of the firm as they will enable the organization to increase its market share.
Targeting, Positioning, and Segmentation
Targeting, positioning, and segmentation are the core components of marketing a plan, which determines the how an organization provides the right product to the right consumers in the right place. Phonica Company targets the consumers from the household and corporate sectors. The organization therefore develops products that meet the needs and wants of the consumers in these targeted segments.
With regards to segmentation, the geographical variable plays an important role in this segmentation. The organization segments the market according to the regions. It takes into account geographical elements that determine consumer behavior and purchase patterns. Psychographic variable is another important element since the product satisfies the symbolic needs of the consumers.
The symbolic need in this case is heavily associated with social status. Marketing positioning for the product will be based on its ability to meet the needs of the consumers. The position of the product on the mind of the consumers will therefore be based on its unique features, qualities, the prices offered by the organization.
Product Strategy
As product that will occupy a good competitive edge in the industry, iSporty LR will have all the required levels. The main function that relies at the core level is to improve customer experience through design, long battery life, and efficient text messaging capabilities.
The texture and color selections for the product will enable it to attain the actual level. The last level in the product is the augment level which entails the information provided by the customer after the purchase. The augment level also entails the desired values of the product, which influence consumer purchase.
The product is in the growth stage of the product life cycle. Although it has been launched in other rounds, the demand and the market share is still very low in the four segments. The name of the product was derived from its perfect features. The L.R. abbreviations in the name stand for Low Range.
The branding strategy that will be applied is market penetration since new features will be added into the product. According to the BCG matrix, the product is a question since it is still growing and expanding the market share. Addition of new features will help improve the performance of the product and increase the market share.
Pricing Strategy
The product will be priced using the cost based strategy. The pricing approach will be guide by the changes that will be made in round of product launch. Despite the inclusion of new features, the product will be sold at the original price of $ 220 in order to attract more customers. Phonica has the highest cumulative investment in R&D and therefore stands the better chance to reduce the variable cost.
The nature of the demand curve for the target market will be determined the consumption patterns in the low end segments. The demand of the product is likely to increase in the low-end segments due to continuous population growth of the segment.
Communication Strategy
The organization intends to increase investment in product advertising to increase the level of awareness. The consumers’ response to advertising is relatively higher compared to the response of the corporate sector. Promotion is also important in consumer marketing than business marketing. This is reflected in the contribution margin which stands at 35%. The response among the consumers in the high-end household segment is two times the response rate of consumers in the corporate segment with a figure of 13%.
The marketing communication mix that will be used for this product entails advertising through television, online media, and print media. The mix will also entail sponsorship, point of sale, direct marketing, public relations, sales promotion, personal selling, and organization of events and experiences.
Distribution Strategy
The company intends to spend 25% or $ 8,455 from the total margin after promotion in distribution. We will direct 50% of the fund in specialty stores to attract consumers in the business sector. We will also invest 30% of the fund on household appliances to attract the consumers in the household segments.
Finally, we will invest 20% of the fund in department stores. The investment will be guided by the levels of sales in all the segments. The level of market exposure will involve intensive intermediaries in the distribution channel. In this case, the product will be sold through wholesalers and retailers in both regions to enhance product accessibility to the consumers.