MARKSTRAT - UNITED KINDOM PDF

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Index Executive Summary ........................................................................................................ 3 1.

Brief years of the early years .................................................................................. 4

2.

Situation analysis ..................................................................................................... 6

2.1.

Market Enviorment ............................................................................................. 6

2.2.

Consumer Segments ............................................................................................ 7

1.1.

Competition Analysis .......................................................................................... 9

2.3.

Company............................................................................................................. 11

3.

Where do we want to go? The future of MEGAMIND ..................................... 13

3.1.

Long-term Strategy ........................................................................................... 13

3.2.

Short-Term ......................................................................................................... 14

4.

CONTIGENCY PLAN: ........................................................................................ 15

5.

Key Learnings: ...................................................................................................... 15

6.

Appendixes ............................................................................................................. 17

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Executive Summary

MEGAMIND is a company operating in the United Kingdom, and the aim of this report is to look back on past decisions, analyze the company’s present situation and make predictions and recommendations for the future. This firm has always looked over its customers, putting their needs first and adapting its whole business plan to them. Because, after all, a company can’t exist without clients. Firstly, a brief history from period 3 to 6 will introduce this report by explaining the strategies the firm opted for, as well as the evolution of its products. Further on, a more detailed analysis of the market environment will be provided regarding, as well as the behavior of the different consumer segments and competitors in the market. Lastly, the firm will recommend a short and long-term strategy for the future MEGAMIND’S marketeers so that they can keep up with the good work.

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1. Brief years of the early years In this section, information from period 3 to 6 will be provided in order to offer relevant information about MEGAMIND’s past, present and future strategies as well as its competitors’ steps that most influenced it. Before starting the analysis, it is important to refer that all consumers segments in United Kingdom have different needs and preferences 1, so MEGAMIND decided to target solely one segment for each brand in order to create value and serve consumers better by meeting their ideal values. This firm was the only one to adopt this strategy from the beginning, which allowed it to acquire an advantage over the competitors. MEGAMIND’s strategy consisted in targeting MOVE and MOST, its initial products, to the Professionals and Savers, respectively. This was due to the fact that both segments had great growth perspectives and the brands’ characteristics matched with the segments’ ideal values. Moreover, in period 3, MOOD was launched to target Shoppers since this was a segment with high growth potential. This way, MEGAMIND was the first company to have three in its Sonites’ portfolio, which led to a comfortable and stable position in the early years (appendix 1- value market share by Sonite). Still in period 3, TRIGGERS launched the first Vodite in the market, which was already expected since they had invested $9,5M in R&D for Vodites in the previous period (appendix 2-industry benchmarking period 2). It was also predicted that one of the other competitors, ROYAL or SNEAKY, would enter the Vodite market, targeting the Early Adopters. This way, MEGAMIND would be the third to enter the market, targeting the Followers’ segment, the one with the highest growth perspectives in the long-term. (appendix 3- Follower’s segment growth rate in period 4) TEIN’s launch shaped the competitive dynamic and set the pace in the United Kingdom since, just like previously predicted, SEEK followed them in period 4 and MEGA was launched in period 5, as well as RECORD. After being launched, MEGA was a success, gaining 29% of the Followers’ market share and contributing to the firm’s increase in SPI of 264. This was one of the proudest results for the firm, because it was the highest result in market share by consumer segment, even

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Book chapter six, Targeting Attractive Market Segments

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though there were 3 more competitors in the market targeting the followers (appendix 4Market share of Mega (followers) comparing with competitors in period 5.) In period 6, MOTION was launched in order to target the High Earners since it is a highend segment that wasn’t being tackled yet, which would guarantee a high net contribution. The introduction of this brand was a success, with 29% of market share achieved in the first year, establishing a solid position. However, MOTION’s success and the firms’ high overall market share for Sonites overshadowed the decline in their remaining Sonite brands. (appendix 5- Market share by the segment of MEGAMIND brands in Sonite market. Since the introduction of MEGA in the market, the company had to make sacrifices that consisted in a trade-off between properly investing in the Vodite and keeping up with all the competitors’ investments in Sonites. The decline of MOST was driven by the strong reaction of the competition, since a product with ideal characteristics and lowest price was launched by the competitor (TOSA). Alongside with the fact that MEGAMIND didn’t advertise the product’s price or economy in this period, while ROCK and TOSA did. In period 5, MOOD had a growth in market share due to an increase in the value allocated to advertising and commercial team on it, in which the main driver was for the company to have entered the Vodite market. In period 6, Move decreased market share due to the fact that the Tops competitor increased its commercial team, which allowed them to grow 21%. Secondly, both products increased their prices because the willingness to pay increased in this period, but the Tops had the closest price to the ideal value of this segment. (appendix 5- Market share by the segment of MEGAMIND brands in Sonite market.«MEGAMIND’s strategy was considered a success since the company managed to maintain a stable position, continuously increasing the SPI, remaining in second place. MEGA had a great contribution for this position whereas the Sonite market was decreasing slowly, but not so much because of MOTION´s launch. (appendix 6-Evolution of stock market from P3 to P6)

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2. Situation analysis 2.1.Market Enviorment Sonites Market Period 7 represented a turning point for the Sonites’ market since it was the first time that, other than the Explorers, the High Earners and Professionals’ segment sizes began to decrease meaning that their growth rates were declining (Appendix 7- Growth rates in Period 7). However, even with this phenomenon, the total sales both in volume and value increased due to the positive growth rates of the two largest segments: Savers and Shoppers. This was reflected by the company’s presence in the top 5 selling brands in terms of volume and value (Appendix 8- Total sales and top 5 sold brands in Period 7), with two brands in each category: MOVE and MOOD in terms of value, and MOST and MOOD in terms of volume. Moreover, in period 8, the tendencies that were mentioned above remained the same in terms of growth rates (Appendix 9- Growth Rate in Period 8 for Sonite). Nevertheless, even though the total amount of sales in volume and value increased (Appendix 10- Total sales and top 5 sold brands in Period 8), all of our 4 Sonites’ sales decreased in both terms. This may be explained by the fact that purchase intentions for these products have been decreasing period after period, mainly because the firm couldn’t keep up with the others’ advertising and commercial team expenses due to the firm’s extensive portfolio.

Vodites Market Regarding the Vodites’ market, period 7 was a landmark for MEGAMIND since, due to the beginning of the Sonites’ decline, it was when the firm realized that its future relied on the Vodites’ market due to its remarkable growth rate for the Followers segment. That was one of the main reasons why MEGA’s production increased so much from period 6 to 7 (appendix 11-Production of MEGA for P6 and P7). Moreover, MEGAMIND observed that SNEAKY underproduced its Vodite since their actual market share was way lower than their segment’s purchase intention Consequently, the demand that SEEK couldn’t satisfy was transferred to MEGA, which could be observed due to the fact that its market share was much higher than the purchase intention. This led to an unexpected increase in sales that this brand wasn’t able to keep up it. Combining the high growth rate

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for Followers with SNEAKY’s underproduction, MEGA observed a massive boost in sales by triplicating its value. This way, the brand became the market leader with an average total market share of 40% and 55% market share for the Followers’ segment. (appendix 12- Vodite market: Market share and purchase intention for follower’s segment) In period 8, the Followers’ segment kept on increasing a lot. In terms of sales, even though three other brands upgraded their products and MEGAMIND didn’t, this firm maintained the market leadership with almost the double of the previous period’s sales value. However, the competition will probably be fierce in the next periods since they are increasing their brand awareness, purchase intention and, consequently, market share. In terms of distribution channels, it was possible to observe in both markets a trend throughout the years consisting in the progressive decline in specialty stores’ preferences, a consequent increase in online shopping habits and a balance in the mass merchandising consumption (Appendix 13-Vodite’s shopping habits in Period 8).During this period the distribution channel-related trends have remained unaltered.

2.2.

Consumer Segments

As it has been mentioned before within the Sonites’ market, the company seeks to satisfy four types of consumers with specific needs and shopping habits. One of the main secrets of MEGAMIND's success has been the ability to identify those needs and fulfill them. In this chapter, each segments’ characteristics will be described. Savers: This segment is distinguished by the existence of individuals that are highly price sensitive. In the last two periods, they have maintained their willingness to pay lower, but have chosen products with poor performance and convenience tendentiously average (Appendix 14-Ideal Value evolution over the last 3 years for each segment of Sonite market, in terms of multidimensional scale.). For this reason, the majority (64%) make their purchases through mass merchandisers channels since they expect a lower service and consequently lower prices. The Savers currently hold the position of the largest segment of the market and have an expected growth of 12,2% for the next period, which makes it an attractive segment for

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future investments, despite being a low-profit segment. (Appendix 9- Growth Rate in Period 8 for Sonite). Shoppers: This segment is the most experienced in the market, as it makes a lot of purchases and extensively compares products, always looking for the best quality-price ratio. They aim for products of medium performance and convenience (appendix 14- Ideal Value evolution over the last 3 years for each segment of Sonite market, in terms of multidimensional scale ). Shoppers make their purchases mainly in mass merchandisers stores (41%). Despite this, in recent years, some of these consumers have adhered to online purchases (26%) not only because of comfort but also because of the ease of price comparison and product characteristics. This segment is the second largest in this market and is expected to increase 7,1% in the next period (Appendix 9- Growth Rate in Period 8 for Sonite). Despite this, they are willing to pay less for their products while at the same time demand better characteristics such as display and power (appendix 15- Value evolution over the last 3 years for each consumer segment of Sonite market, in terms of semantic scales ), a scenario that has caused some concern in keeping MOOD competitive in the market. Professionals: Despite being a declining segment, with a decrease of 8,2% next year, it still ranks as the third largest one. (Appendix 9- Growth Rate in Period 8 for Sonite). They aim for high quality, high performance and easy to use products, both for personal and professional use. They consider price to be an indicator of quality, leading to a high willingness to pay. Moreover, the demand for products with better characteristics (processing power and display) has increased over the last few periods (appendix 15Value evolution over the last 3 years for each consumer segment of Sonite market, in terms of semantic scales). Given their quality requirements, they choose to make their purchases in specialized stores (39%) because they want a high level of service and technical support. In recent years, the online channel has registered a higher demand from this segment, representing around 30% of sales. High Earners: This segment is characterized by having a high income and demanding products for personal use. They see these products as an opportunity to increase their social status and are willing to afford expensive products that offer good performance and convenience (appendix 14- Ideal Value evolution over the last 3 years for each segment

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of Sonite market, in terms of multidimensional scale ). Moreover, they purchase most of their products from specialized stores (44,16%) and online stores (33,07%). Even though this segment will decrease 3,1% in the next period (Appendix 9- Growth Rate in Period 8 for Sonite). its willingness to pay is growing, which increases its attractiveness, requiring special attention from MEGAMIND. In order to continue delivering products with perfect characteristics, MEGAMIND launched MEGA in the Vodite market, with characteristics that are in line with the Followers’ ideals. Followers: This segment is the largest one in the Vodite market and is estimated to grow 32.6% in the next period. It is a segment of high interest for MEGAMIND since, in the next 5 periods, it is expected to represent approximately 97% of this market. Appendix 16 Growth Rate in Period 8 for Vodite). These consumers generally have lower-than-average incomes and join the new market trends only after a large number of consumers have experienced it, meaning that they are influenced by the other segments. In terms of characteristics, they prefer economic products with medium autonomy and sophistication. In recent periods, they have reduced their willingness to pay and have demanded products with better resolution and more environmentally friendly. (falta appendix??) At the moment of purchase, most of them use the mass merchandizer (44%) and the online channel (32%). 1.1. Competition Analysis This company currently has three Sonites and one Vodite in its brand portfolio, currently having a solid position in the Sonites’ market. One of the firm’s greatest strength is probably its consistency since they have always been in top positions in the Sonites’ market, having ROCK as the current market leader for the savers segment, ROSHY in a comfortable second position targeting Shoppers and ROLL targeting Professionals, sharing the leadership with MOVE. (appendix 5) On the other hand, as a weakness, the company’s Vodite has been clearly facing some issues in terms of product and positioning since RECORD is targeting the followers but has a low market share of 10%, the smallest in the market (appendix 12- purchase intention and market share of Vodites markets). This might have happened due to the fact

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that RECORD was firstly targeting the same product to both Adopters and Followers, only starting to focus exclusively on Followers in last period. In the long-term, since ROYAL usually opts for a reactive strategy, it is predictable that it will try to improve its Vodite’s promotion and positioning strategy for the Followers. Nevertheless, it will be extremely difficult since this segment is already well explored and penetrated by the other firms. Having this said, the diffusion of a product in this type of segment isn’t likely to be successful, so an accurate prediction would include that, in the future, this firm will probably leave RECORD, focus solely on its Sonites and continue to lead this market. SNEAKY This firm, just like the previous one, currently owns three Sonites and one Vodite. However, this portfolio is somewhat irregular since it includes SOFT and SEEK, two second-place

products

in

terms

of

market

share

in,

respectively,

the Sonite and Vodite markets (appendix 5 and 12). On the other hand, it is also represented by two Sonite products with low market shares, SOLO and SOUL. MEGAMIND

was

able

to identify that

SNEAKY

struggled to

serve

the

consumers’ needs when it comes to developing new products, which can be observed in the launch of SEEK and SOUL, where the products’ characteristics were far from the consumers’ ideal values. Just like RECORD, SEEK started by targeting Adopters and Innovators and is now targeting Followers, which might not have been a good strategy for the product. Nevertheless, the company’s most distinguished strength is its persistency: by opting for a reactive strategy, it has been trying to keep up with the other companies and eventually grew significantly in the last periods. In the future, SNEAKY will probably try to maintain its current good position in Sonites and aggressively invest in its Vodite in terms of advertising and commercial team with the goal to become the market leader. TRIGGERS This firm currently holds three Sonites and three Vodites in its brand portfolio. Currently, the firm isn’t leading any market, having its products in middle rankings. (appendix 5 and appendix 12)

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From the beginning, they have always been the most unpredictable company, launching the first Vodite in period 3, another Sonite in period 4, and four new products in period 5 (two Sonites and two Vodites). However, this firm eventually had to remove two of their Sonites from the market, one in period 6 and another in period 7, because they didn’t have enough funds to invest in all their products and, consequently, weren’t able to keep up with the competitors’ investments in advertising and commercial team. Having this said, and looking at this firm’s SPI evolution (Appendix 17: SPI evolution of TRIGGERS), it’s extremely accurate to state that TRIGGERS is very proactive and unpredictable, which may be considered as strengths, but also very unstable and irregular, which weakens the company and its image. For the long-term, TRIGGERS will probably have to remove one or two more products from their portfolio so that it can focus on perfecting the remaining products and reaching the market leadership. The products they might drop are the two Vodites that are targeting the Innovators and Adopters’ segments due to their declining size and potential. Afte...