In its operation, the firm will be faced by intense competition from two main private limited firms which include Full Lace Wigs Company and Ace Hair & Wig Company.
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Full Lace Wigs Company
In its operation, Full Lace Wigs Company have managed to develop an effective market position. This is evident in the fact that the firm has incorporated the concept of product differentiation. Full Lace Wigs Company specializes in manufacturing wigs for individuals experiencing hair loss as a result of medical reasons. In addition, the firm has targeted fashion conscious customers.
In order to attain this, the firm has incorporated the concept of product diversification in order to meet customer requirements. Some of the firm’s top brands include Revlon, Raquel Welch, Amore and TressAllure. A variety of wigs are made to ensure that they fit different types of hair. The firm also has an effective marketing strategy.
This is evident from the fact that the firm has integrated the concept of online marketing. In addition, the firm has a relatively low pricing strategy which makes consumers to consider the firm’s products to be fair. The firm’s strength also lies in its distribution network which is well established.
Despite its strength, the firm is currently experiencing financial challenges. This has resulted from a reduction in the firm’s annual profit. According to Manta Media Incorporation (2010, para. 1), the firm’s annual profit for the year ending 2009 was less than 500,000 US dollars. In addition, the firm does not have sufficient human resource base. This limits its efficiency of operation. Currently the firm’s total human resource base is 4 employees. With regard to distribution, the firm operates in only one location thus limiting its market share.
Ace Hair & Wig Company
In its operation, Ace Hair and Wig Company have been in operation for eleven years. As a result, the firm has also been able to develop its financial stability.
However, the firm does not have enough employees. The firm operates as a sole proprietorship which thus limiting its capacity to develop its expertise. Similar to The Wig Company, the firm operates in only one location which limits its market share
Threats and opportunities
Both firms are faced with a challenge with regard to securing suppliers for the raw materials (Hair Goods Industry, 2009). This may limit the firms’ operation efficiency. In their operation, both firms have been negatively affected by the economic recession. For example, the firm’s effectiveness and efficiency in conducting market research has been hampered
Considering the lucrative nature of the industry, a large number of new entrants are venturing into the market (Hair Goods Industry, 2009). This presents a threat to the firm’s existence and level of profitability.
Despite the recession, there is a high probability of the market rebounding. This arises from the fact that consumers are increasingly becoming fashion conscious in relation to hair style.
Growth in information technology presents an opportunity for the firms to increase their size of market share. This can be achieved through incorporation of electronic commerce such as online marketing.
The firm’s management team has appreciated the fact that differentiation is one of the ways through which the firm can attain an effective market position. In order to achieve this, the firm will differentiate its products on the basis of design and material. Decision to integrate design in the differentiation strategy arose from realization of the fact that individuals heads are of different shapes.
As a result, the firm will be able to customize its products hence meeting the customer’s demands. Product differentiation will also be achieved through the raw materials used. Both natural and synthetic hairs will be used in designing the wigs. As a result, the firm will be able to address the customers’ tastes.
In order to create effective market awareness, the firm will utilize both traditional and emerging market communication strategies. Traditional mediums which will be used include use of print media, television and radio. In addition, the firm will make use of emerging social networking tools such as face book, twitter, blogs, wikis and you tube.
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Strategy –market leader
In its operation, Unique Thinking Cap intends to be established as a market leader by increasing its market share. In order to achieve this, the firm will integrate the concept of product innovation. Continuous competitor and consumer market research will be conducted to determine the market trend.
Through innovation, the firm will be able to design and develop new wigs which appeal the customers. This arises from the fact that the information obtained from the market will be used in designing and developing the wigs. The resultant effect is that customers will obtain a high level of utility.
In its operation, Unique Thinking Cap will be affected by various environmental issues with regard to the political, economic, social, technological and legal environment.
In an effort to stimulate the economy from the current economic recession, the US government is encouraging domestic investment. This is achieved through creation of a stable political environment which is conducive for firm’s operation.
Over the past few years, US have experienced a stable economic growth. As a result, there has been an increment in the rate of consumer spending. Despite the fact that the recession has led into a decline in consumer spending on luxuries, the wig industry has not been affected.
As a result of the high rate of technological innovation, the firm will be able to improve its marketing capability. This will be achieved through incorporation of electronic commerce in its operation. This will enhance the firm’s online marketing capability considering the fact that consumers are integrating technology in their purchasing patterns.
In their operation, firms are increasingly being required to operate in a social responsible manner. This arises from the fact that failure to operate social responsibly can negatively affect the firm’s publicity. In their purchasing patterns, consumers become loyal to firms which operate social responsibly.
In an effort to minimize environmental pollution, the US government has formulated laws aimed at attaining environmental sustainability. The laws require firms to minimize their various forms of pollution such as air pollution. In order to achieve this, firms are being required to incorporate green technology in their operation.
Due to the lucrative nature of the industry, there is a large number of firms entering the industry. This resultant effect will be a reduction in the firm’s level of profitability. Changes in consumer tastes and preferences with regard to consumer products such as wigs will also affect the firm’s performance. In order to avert this firm, the will incorporate the concept of product innovation. This will conduct continuous market research so as to ensure that the product moves with changes in the market.
Hair Goods Industry. (2009). Wigs and hair industry in the news. Web.
Manta Media Incorporation. (2010). Ace Wigs. Web.