The Lost Socks product may attract a high demand in the market, especially during winter. It is a persuasive innovation which is expected to be affordable to most shoppers. The fact that Lost Socks is a new entrant in the market explains why it should be priced lower than the competing substitutes. The following section of the essay explores a comprehensive competitor analysis, including direct and indirect competitor forces and the impact of substitute products for the new product.
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To begin with, the Lost Socks is highly likely to encounter the threat of substitutes in the market. Needless to say, there are a number of substitute products in the market that have been manufactured with the sole purpose of providing warmth during the cold seasons. In addition, companies that manufacture sweat pants like the Lost Socks are keen to capture the market in order to boost sales.
Hence, consumers have the option of buying either Lost Socks or other substitute sweat pants from competing for market rivals (Fahey 2002, p.5). According to Porter’s Five forces, competition intensity is mainly enhanced when substitutes threaten the existence and profitability of rival companies (Porter 1998, p.76). In the case of the Lost Socks product, stiff market competition in the production and marketing of sweat pants is expected to be a major barrier to entry. However, the manufacturer can counter this threat by offering a competitive price that is lower than that of the competitors.
The bargaining power of consumers is also another market factor that will propel the pace of competition in the process of marketing the Lost Socks product. If the product is of high quality and also designed with the tastes and preferences of buyers in mind, the seller will have a better bargaining ability compared to that of the buyers (Levis & Papageorgiou 2007, p.551). At this point, it is prudent to mention that demand is mainly driven by the tastes and preferences of consumers. In addition, the willingness and ability of consumers to make purchases are vital in the entire cycle of competition. The demand for the Lost Socks product can be triggered through a versatile marketing campaign. For example, the manufacturer can use the launching date of the product as a viable marketing opportunity. Other market rivals who deal in the same line of the product have already created various demand appeals for their targeted markets.
The manufacturer of the Lost Socks sweatpant can also manage the stiff market competition by deploying various effective channels of distribution. As a new entrant into the market, the Lost Socks product does not have any known distribution network (Porter 1998, p.80).
Unless the new product is transported and made available to buyers, the competitive ability of the company will be hampered. In the process of seeking and adopting strategic channels of distribution, the manufacturer should also consider the bargaining ability of suppliers. Affordable and effective channels of distribution can be instrumental in setting the right pace of competition in the new market. The latter also explains why the initial launch of the product should be accompanied by an adequate supply of the new product. Inadequate production at the initial phase of the product launch into the market may discourage buyers. In other words, the Lost Socks product should be made readily available in all the targeted markets (Fahey 2002, p.7).
Fahey, L. 2002, “Invented competitors: A new competitor analysis methodology”, Strategy & Leadership, vol. 30, no. 6, pp. 5-12. Web.
Levis, A.A. & Papageorgiou, L.G. 2007, “Active demand management for substitute products through price optimisation”, OR Spectrum, vol. 29, no. 4, pp. 551-552. Web.
Porter, M 1998, Competitive Strategy, Free Press, New York. Web.