Summary
The evolution of information technology is an important development in South Africa. Moreover, emphasis on globalisation has further increased demand for information technology in the country. South Africa is an emerging economy and is the most developed in the continent. The country has established markets and well-built infrastructures. In addition, South Africa is a major investment hub because of low labour cost and market accessibility. Given this scenario, it is expected for IT product manufacturers to penetrate the area.
There are several changes in the current structures that lead to the notion that selling computers will be a profitable business. Students have are exposed to the necessity of gaining information at their convenience. Professionals have recognised the need have access to current trends in markets. Executives also value the presence of computers in particular laptops. The trends suggest that the demand for laptops in South Africa will increase. Further research will prove that the South African market is opening and possible boom in the laptop industry will happen in the long run.
Selling laptops in South Africa is a huge challenge for any firm. But the rewards provided appear to compensate for the expected risks. There are some important aspects of the products that need to be highlighted. The quality of the laptops is the primary concern of the company. Moreover, the cost will be lower than products produced by established laptop makers. The laptops will also use the best parts from top notch suppliers. It is imperative for the company to ensure that the laptops will be competitive in a strong market.
Industry Assessment
Porter (1980) introduced the concept of five forces that seeks to analyse the competition in an industry. Based on the model, there are four forces that have to be assessed to determine the condition of the fifth force (McGahan, 2004). The threat of new entrants shows the openness of the market to new laptop producers. The current situation suggests that more players will come into the market. The demand for laptops in the market remains high and will entice more makers to invest.
The emergence and threat of substitutes is a major concern for industry players. Mobile phones and smart phones have controlled some segments catered by laptop manufacturers. The continuous surge of mobile phones is an obstacle that laptop makers need to hurdle. The bargaining power of the buyers determines the capacity of consumers to acquire laptops. In addition, the aspect illustrates the behaviour of customers in relation to laptops. South Africa boosts the highest income per household in Africa. In addition, the market has been receptive of products related to IT.
The bargaining power of the suppliers ensures to maintain the high quality of laptops produced by the company. The industry boosts diverse suppliers. As stated, laptops are highly dependent on the parts provided by the suppliers. In addition, the suppliers also provided enhancements in the marketability of the laptops. The descriptions rate the substitutes as the main source of competition. The increased number of players also strengthens the market. The market for laptops is regarded as one of the most competitive.
Product Description
There are three laptop components that have to be explained. These include the hardware, software, and peripherals. The hardware will be built by the company using various parts from suppliers. Laptops will be custom made and comes in different sizes. The screens can be change from 12” to 17”. The other parts are similar to most laptops sold in the market. Memory is standard 80GB and other specifications are dependent on the clients. The operating system to be used will be supplied by Microsoft.
Aside from Microsoft OS, the company will also include AV software and licensed MS Office installer. Clients can request the company to make the laptop Vista ready. The semiconductors to be used for the laptops will come from Intel. The motherboard will be built by Asus. The other parts of the laptop will be manufactured by the company. Peripherals include built-in mice and web camera. This is included to make the laptops more interactive. The laptop is also provided with a heavy duty battery. This means that the gadget can be used in prolonged hours even without electricity connection.
As for the price, the laptop will be one of the lowest priced in the market. Basic laptops start at $500. Then the price goes up as specifications are added. There are three product classifications that need to be provided. Safari GT is the basic, Safari GTX is designed for professionals, and Safari GT3000 is for company executives. Safari GT, Safari GTX, and Safari 3000 come in black and silver colours. White Safari GTX and red Safari GT3000 are limited edition models priced at higher values.
Product Quality Assurance
The manufacturing scheme of the company revolves around the concept popularised by Dell Inc. The emphasis on quality is being outlined by the method used in producing computers. For the company the procedure is simple: reduce the cost of productions, treat suppliers as partners, load the laptops with top of the line software, and ship the laptops within 5 days. The company considers the role of consumers in this process. Quality is important in building the reputation of the company as a laptop maker.
In selling the product, the company will create prototype models for display. The procedure starts with the order slip being provided to customers. With the order slip, clients are asked to give the specifications of their desired computers. After the orders are secured, the company will start assembling the laptops. In this process, the storage and handling hazards of the laptops are lessened. After quality has been checked, the finished products are delivered to the clients. The company includes the transportation cost to the laptop price to reduce the delivery hassles.
Supplier Partnership
One of the best ways to be efficient in production is to create partnerships out of firms that produce products related to computers. The company believes that suppliers provide advantages for the products. Using the parts of computers made by partner suppliers adds to the quality of the computer. Most of the suppliers included by the company are leaders of the industry. For instance, the software used is provided by Microsoft. The chips that are in the laptop came from Intel. The use of products produced by suppliers eliminates the production cost and helps on the promotion of the computer. When these suppliers are conspicuous in the laptops, clients will know that quality is assured.
The partnership with suppliers ensures that the company is accorded with ample resources. Since suppliers are committed to supply certain volume of products, shortage of parts will be prevented. Aside from the parts, suppliers often partake in the research and development of new products. This decision will reduce the company’s cost in making laptop models. The partnership also allows the company to gain access of suppliers’ technology. That knowledge will allow the company to enhance production capacity.
Customers Service
Aside from quality and low-cost laptops, the company has a consumer service networks to add convenience to customers. There are two segments that operate as consumer service provider. The first cluster involves direct customer interaction. These personnel are in-charge of handling orders. In addition, client service is provided to customers who queries on the laptops. Interaction is essential in ensuring strong relationships with customers.
The other part of the customer service network involves technical and other assistance. These personnel handle the after sales services provided by the company. Clients who have problems with their Safari GT laptops can contact technical service for questions. The network is can be accessed through phone calls. The technical service team also assists the clients in installing software and using their laptops.
Distribution Scheme
The process of product dissemination is provided in the company’s supply chain. The end goal of this strategy is to ensure that laptops are delivered to clients at fast times. Since the products are new to the market, the distribution strategy will be handled by the company. Instead of commissioning retailers, the company will establish a distribution network. There are several reasons that justify this move. The company is decided on limiting the risks of laptops being mishandled by retailers. In addition, price of laptops tend to increase as retailers put mark-ups and gains.
In maintaining the inventory, the company will use the process developed at Toyota Motors. The scheme eliminates excessive stocks of laptops. Instead, only the parts of the laptop will be stored (Juran, 1974). Once orders are secured, laptops are built and subsequently tested. In addition, the finished products are directly shipped. This lessens the distribution time and ensures fast transactions. Unlike establishing retail stores, clients tend to wait when the retailers run out of stock. Through direct communication with the company, the orders are assured and delivered within the specified date.
The company strictly follows a first-in first-out policy. Laptops assembled first will be delivered first. The shipping process involves scrutiny and meticulous handling. Company personnel are assigned in shipments to regularly check the quality. In the delivery process, secured vehicles are used. Laptops are placed in well-built package to ensure quality. When the laptops are received, company personnel will provide contact numbers for queries.
Marketing Objectives
Marketing audit is considered as a vital component of marketing processes. Brownlie (1993) stated that it is the initial stage in undertaking managerial initiatives in marketing. The focal point of the marketing audit is its design which ultimately determines the process in performing such method. Marketing audit is a systematic and comprehensive approach that evaluates the marketing initiatives of the company. This is manifested to identify possible problems in the company, personnel, and marketing activities. The information gained from this activity contributes in moulding the marketing plan.
Market targeting is an important objective that needs to be included in the process. There are three target segments that the company plans to penetrate. The students will benefit from these low-cost laptops. Professionals will also be enticed by the interactive options included in the laptops. Moreover, company executives are provided with alternatives to improve their processes. These three segments are the most important for the company. Most of the promotional and selling activities will be done using the three groups as reference.
Market positioning refers to the perceptions developed in the minds of the target market. The process entails the image creation of the brand that will banner the laptops (Trout and Rivkin, 1996). Positioning is purely procedural and relies on the completion of stages before making further improvements. The company plans to make Safari GT as the brand that provides value for money. The model will exist as a low-cost option that is boosted with quality and top notch laptop features.
Combining the different aspects associated to marketing is vital to the company. The development of marketing mix entails strategies that are design to ensure consistency in the quality of performance (Culliton, 1948). The first aspect that has to be considered is the price of the product. Despite the high quality of inputs used by the company, the prices of the laptops have to be competitive. The company has to devise better strategies to reach the lower echelon of the society. That means increase in demand and the possibility of extending the market beyond the current targets.
There are several promotional activities that have to be considered. Display centres have to portray the values and aspirations of the company. Since the name of the product is Safari, the company can design as centre built on actual Safari. This will provide a good impression to the clients. Even in Safari, the company’s laptops will be highly effective. Before the product is unveiled, the company has to conduct some road shows in schools and companies. This is vital because the company’s target segments are staying in these institutions.
The role of the marketing department is critical in this process. Their ideas are important in defining the success of the laptops. As expected, initial initiatives are subject to changes. Marketing plans have to be flexible to accommodate the uncertainties in the market. Most important, the marketing team has to constantly monitor the success of their programs. Evaluation results are crucial in making further promotions. The results of these marketing objectives will provide the saleability aspect the laptops need. Hence the marketing team has to step up and be accorded with sufficient support.
Copyright Policy
There are two important strategies that the company will use to ensure that only authentic Safari GT laptops are sold in the market. The initial process involves application of patent license from the South African government. This will prevent outsiders from copying the laptops. In addition, the company will also apply for patents in the US and Europe. This is to ensure that the uniqueness of the product is maintained solely by the company. With the ongoing piracy issues, the company is prepared with concrete protection plans.
The other strategy that the company will use was discussed in the early section. This entails direct sales and elimination of retail stores. In this manner, the company can assure the clients are authentic GT laptops are provided. The company advises interested customers to contact company hotlines for orders. In addition, the customer service network can provide guidelines as to the quality of the products. Customers are directed to report computer shops that sell Safari GT laptops without authorisation.
The Use of Media
The company recognises the power of media a vehicle in introducing the product to the public. The primary purpose of media outlets is to advertise the Safari GT laptops. Since the products are in the penetration process, massive print and broadcast reminders will be initiated. The company has provided ample funds to include Safari GT laptops in leading newspapers. In addition, the laptops will be advertised by huge television networks. The initial advertisement plans involves primetime placements and billboards.
When the products are distributed, majority of the advertising initiatives will shift to the Internet. The company maintains the need to reduce cost; hence the Internet is a possible option. Moreover, most of the segments targeted by the company have Internet access. This means that the Safari GT laptops will be exposed to intended markets. Online advertising is also cheaper than the print and television. The shift will allow the company to save and at the same time connect with targeted market segments.
Market Introduction
The process of introducing the laptops in the market of South Africa is divided in three phases. The initial part involves road shows to be conducted by the company. When the Board has decided to pursue on this expansion, the company will draft a plan for the shows. A total of 6 shows will be conducted before the next phase. These shows will be held in 3 colleges and 3 firms. The company will select 2 schools and 2 companies and Johannesburg. One firm and one university will be selected in Pretoria.
After the road shows have been completed, the company will provide showrooms in malls. The target of the company is to spread 12 showrooms in the stated cities. Company personnel will man the showrooms to provide assistance and accept advance orders. After the 200th advance order is obtained, the company will schedule a final introduction date. The ordered laptops will be delivered and the selling will start. Showrooms will be upgraded and the customer networks will be activated. During the introduction date, at least 100 units will be available in each showroom.
Test Markets
The company uses set criteria to determine the test markets for the products. In terms of location, the company has identified market size as the primary determinant. Aside from market size, accessibility to vital government agencies is necessary. The company also considers infrastructures as aspect affecting test markets. Moreover, the company includes the presence of relevant industries as major contributor. Given all these aspects, the company has opted to start the penetration in Johannesburg and Pretoria.
The other markets were the products will be tested involves students, professionals and executives. These three groups cover the most demand for laptops in the market. Students require laptops to aid in their studies and other educational activities. Professionals consider laptops as gadgets that provide leisure and enjoyment. Executives, meanwhile use laptops to organise their meetings and store relevant files. Aside from the demand, these three groups are financially equipped to acquire laptops.
Future Expansions
As soon as success is documented, plans for expansion will roll out. The company will be deliberate when it comes to moving to other markets in South Africa. The company uses the same metrics provided in identifying the test markets. With such circumstances, the company will head to Cape Town after Johannesburg and Pretoria are served. When it comes to segments, the public sector appears to be a viable option. The company intends to participate in biddings held by government agencies that require laptops.
Budget and Sales Forecast
The budget for the investment is allocated to three major segments. These include production, sales and promotion, and research and development. The Production division is allocated with the highest portion covering at least 65% of the budget. There are departments that are part of the production division. The budget is used for the acquisition of materials and machineries. Some parts of the production budget are used for the personnel. The workforce comprise of the production team, client and technical service, and administrative.
The sales and promotion team is accorded with 25% of the total budget. But this rate will be reduced and transferred to other segments. The target of the company is to limit promotion expense to 10%. The budget for this division is used in making the product known. The budget for research and development starts at 10%. But this will go up as excess funds for advertising are channelled to R&D. After the promotional activities are completed, the budget for R&D will increase to 20%. In addition, the budget provided for the production segment will also go up to 70%.
Sales figures are hard to predict. The company intends to break even after 2 years of selling the laptops in the South African market. In the early months, the company targets to sell at least 5 units per location in a day. In the two locations, the company will target 18,000 to 20,000 units in one year. The figures will increase as targets are met. The company plans to realise a 15% gains on investment by the 5th year of market existence. When these goals are met, the expansion will continue to other locations near South Africa.
References
Brownlie, D., (1993), Marketing Intelligence and Planning, “The marketing audit: A methodology and explanation,”.
Culliton, J., (1948), The Management of Marketing Cost, Boston: Harvard University – Graduate School of Business Administration.
Juran, J., (1974), The Quality Control Handbook 3rd Edition, New York: McGraw Hill.
McGahan, A., (2004), How Industries Evolve – Principles of Achieving and Sustaining Superior Performance, Boston: Harvard Business School Press.
Porter, M., (1980), Competitive Advantage: Techniques for Analyzing Industries and Competitors, New York: Free Press.
Trout, J. and Rivkin, S., (1996), The New Positioning: The Latest on the World’s Number 1 Business Strategy, New York: McGraw Hill.