Target market:
The ideal target market for the product is office executives and businesses where pens are widely used. Businesses that do a lot of paperwork are ideal target market since they are likely to use a lot of pens too. It is usually the smaller businesses with fewer resources that have to depend on more paperwork to keep accounts and issue orders and requisition supplies. The ideal customer profile for the company will be small businesses that are in a low-technology sector, with few resources to computerize all records and paperwork. Such small businesses can usually be found in medium-sized cities, and as such St. Louis, Missouri, and Lexington, Kentucky, will be a perfect location for a customer base. One major customer that can be identified is the County & Local Government offices in St. Louis, Missouri, where there may be demand for this product. Another major customer in the same region can be the Dierberg Grocery Market chain, which has a lot of offices in the Midwest and employs a lot of paperwork. The pen holder needs to be marketed as a necessary accessory that will prevent company pens from being stolen or going missing. A pen holder will make it easier for the company to keep track of its stationery inventory (Wiid and Diggines, 56).
Market analysis and consumer analysis:
The size of the market includes almost hundreds of small to medium sized business establishments in Kentucky, the Southern and the Midwestern US. The demographic segmentation would mostly include business owners who want to save money on process costs and also want to better preserve stationery from getting pilfered or lost. The key loyalty segment for the product and the company will be from long-term business customers who integrate the product well into their internal processes.
According to Porter’s Five Forces’ model, a business is likely to face five significant challenges in the market. However, for the company manufacturing pen holders, this will not be a major problem. Suppliers have the disadvantage in the relationship because the supplies would be mostly using very commonly available raw material resources, some of which can be imported if necessary (Aaker and McLoughlin, 165). The consumers do not have a high bargaining power either. The product to be manufactured by the company is not that unique and is readily available in the market. However, for small businesses located in remote towns, getting a seller to deliver custom made pen holders directly would be hard to find. The danger posed by alternative products is moderately high, while the competition from new entrants is quite low. This is because of the higher entry barriers in a manufacturing business (Stokes and Wilson, 214). Thus, the competitive intensity is moderate.
Market share:
Almost 75% of the market share in this sector is occupied by major Chinese producers and imports from Shenzhen Manufacturer which is one of the largest sellers for executive pen holders. In this context, the company can aim to get a 5% market share initially and then expand to a 10% market share after 24 months of operation.
Competitors:
The major competitors are the Shenzhen Manufacturer from China, which owns a major market share in this product category and other stationeries, and IKEA, which is the major multinational corporation which competes in the same category .
SWOT analysis:
Strengths: The Company competes in a market that is yet to be saturated by bigger players with bigger resources. Apart from IKEA, the other main competitors are mainly foreign companies based in China with weak product design and unreliable quality. The company on the other hand will market its product based on its strong customized design and reliability.
Weaknesses: The Company is a new entrant relative to its competitors and has to gain market share at their expense. It has to design a marketing pitch from scratch and thus, it has to take a risk in the form of the initial investment. Also, the target market is relatively small due to the exclusive nature of the product.
Opportunities: If the product gains popularity, it may be exported across the border to Canada. Moreover, the large numbers of doctors’ chambers, hospitals, and educational institutions are also a big potential market for the product and an opportunity.
Threats: Any further downturn in the economy can be the greatest threat to the business. If any or the major business customers of the company become unprofitable or are forced to shut down because of losses, it will be a big loss of revenue for the company. Further social trends in reduction in the usage of pens and paper will also be a major threat in the medium-term future (Aaker and McLoughlin, 267).
Product Planning and Product Mix:
The product mix can be evaluated by the 7 Ps model:
The price of the product has to be competitive and low, in order to gain an initial foothold in the market. The product itself will be reliable and long-lasting, emphasizing ease of use rather than design or aesthetics. The promotion for the product can be conducted through a targeted advertisement only at the pre-selected potential customers and small businesses. It can be carried out through flyers and other printed material, and in advertisements on the local newspapers (Kapferer, 92). The placement for the product would be initially from door-to-door through sales agents, and then by tie-ups with local supermarkets and corner stores that sell stationery and office supplies. After long-term contracts have been drawn up with business customers, the product deliveries can be made directly to the customer premises periodically. The People who will represent the business will involve the sales and marketing assistants who will be in charge of maintaining contact with customers. The Physical Environment will not be a big factor for this business since it is a manufacturing business that will deliver products directly. The Process that will market the product as valuable and different will be the regular feedback taken from the end users in the customer’s offices and making annual reviews of the product. This will help the company to achieve a superior product (Stokes and Wilson, 237).
References
Aaker, D. and D. McLoughlin. Strategic Market Management: Global Perspectives. Hoboken, New Jersey, USA: John Wiley & Sons, 2010.
IKEA. IKEA Office and home appliances. 12 December 2014. 27 12 2014 <http://www.ikea.com/>.
Kapferer, J. The New Strategic Brand Management: Advanced Insights and Strategic Thinking . London: Kogan Page Publishers, 2012.
Stokes, D. and N. Wilson. Small Business Management and Entrepreneurship. Mason, OH.: Cengage., 2010.
Wiid, J. and C. Diggines. Marketing Research. Cape Town, South Africa: Juta and Company Ltd., 2009.
