Executive Summary
The UK TV market has been marked by slow adoption of smart TVs. That trend is also identified as being in line with the global trend in other markets including Germany and US. However, the market is expected to grow with various factors driving demand. Some of those factors include increasing demand for one device solutions and increased access to the internet. In addition, the industry is subject to other factors like technological advance, improving economic, social influence, political and environmental factors. Further, the industry is highly competitive marked by a few firms that have significant market power.
Thus, a plan by TV Solutions Company to introduce an innovative Smart TV have a number of opportunities including a growing youthful segment that can be utilized and high competition threats that need to be averted. In addition, the company has weaknesses owing to it being a new entrant into the market. However, the company is well suited to venture into the market owing to its skilled manpower and innovation as it specializes in smart TV production.
In that view, the business targets the young segment that has significant income, mainly lives in urban centers as well as being technologically savvy. In addition, the operations are planned to be first launched in London with a single production plant that will act as the supply centre for all distributors. To achieve its market penetration objective, the company will employ direct entry method through full ownership of the operations. In addition, the business will employ marketing mix strategies of product positioning, premium pricing, and distribution through multiple channels as well as promotion by various methods. That will be suited to utilize the company’s resources to serve the target market needs given the market environment.
Introduction . 4
Analysis and recommendations 4
Market research . 4
Situation analysis . 7
Target segment . 8
Marketing mix .. 9
Operations, market entry and resource allocation . 12
Resource-based view 13
Overall strategy and Recommendations 14
Conclusion .. 15
Reference list 16
Introduction
Businesses operate in markets that are subject to various factors. In that respect, products launch and new business ventures require an effective analysis of the market as well as the business concerned. That is useful for identifying market opportunities and threats as well as the business capabilities that are defined by its strengths and weaknesses. In that view, this report presents an analysis of the UK Smart TV market in which TV Solutions Company seeks to introduce a new innovative Smart TV. Thus, the report provides market research and situation analysis as well as recommendation for target market and suitable strategies. In that respect, the report presents a strategic plan for the business in view of the market and its positioning.
Analysis
Market research
Market overview
Adoption of Smart TV is relatively low in the UK market. It is estimated that by 2012, only 10% of the UK population had a Smart TV. However, that was in line with the Global trend with equally low adoption evident in other markets including Germany and USA. However, despite increasing online services that offer access to video contents through sites such as BBC player and YouTube, the broadcast television audiences have remained stable because Television provides suitable size. That is because the size matters when it comes to video content. Thus, while newspapers get presented on pads, books on kindle and music on smartphones, film and television content remains as it is best enjoyed on TV screens. (Brilot, 2012)
Some of the factors that have potential top boost Smart TV penetration to the UK market include; countless services such as MSN, Skype, YouTube, Google as well as the UK launched You View and Netflix as well as access to sporting events. In addition, the industry’s increasing demand for the Smart TV is being driven by three key factors. The first is the increasing device fatigue with consumers demanding for devices that serve all required purposes smartly. That is unlike the Televisions that have endless cable trails and numerous plugs in boxes. In that respect, the ability of mart TV is to cover the functions of DVD players, TV, landline, game station, home entertainment system as well as home climate control system meets the customer needs. (Brilot, 2012)
Second, the demand is driven by the continued migration from the traditional broadcast model to digital broadcasting. Thus, as the migration increases access to on-demand services that increase the need for outmoded broadcasting. By 2012, it was estimated that 39% of the UK population watched BBC player at least one time in a week. That is a demonstration of increasing need for consumers to watch what they want at a time. Third, the social media services networking with television through social TV is an app that is driving smart TV market. The evolution enables consumers to comment on and share content through social media platforms such as twitter and facebook. In addition, the model provides virtual living rooms in which people in different locations can share the viewing experience at the same time. (Brilot, 2012)
Market factors
The industry is subject to factors that influence operations hence determine suitable strategies. Those factors determine the industry opportunities and threats and are summarized as follows.
- Economic
Factors such as employment level determine the level of disposable income in a market hence determining demand for consumer goods. In addition, factors such as the inflation rate determine consumer purchasing power hence the market demand. In that view, the decrease in unemployment from 7.8% in 2012 to 7.2% in 2013 as well as reducing inflation which fell to 2% in 2013 from 2.7% in 2012 provides a suitable market for launching the Smart TV. (CIA, 2014)
- Technology
Technology advance is a great determine of industry trends with the ability to influence production processes and the ability to reach the market. In that respect, the high level of technology advance in the UK market enhances innovation for businesses seeking to venture into the technology driven market. In addition, there is a high adoption of technology in UK hence the demand for technology driven solutions. (CIA, 2014)
- Social
Social factors are a great determine of consumer preferences. In that respect, social aspects such as lifestyle and social class determine the products that consumers demand.
- Political
A political factor such as the policy setting that seeks to protect and regulate industries is a key factor that influences industries operations and competition. In that respect, the increasing market liberalization with UK government adoption of free trade policies attracts Multinationals into the market hence presenting competition pressure for current and new entrants. (Hisrich, 2009)
Situational analysis
The business is new in the Smart TV market and seeks to penetrate an industry that is highly competitive. In that respect, the current business situation can be summarized by an SWOT analysis as follows
Strengths
- Has highly skilled manpower that can deliver innovative solution to the market
- Specialization with smart TV’s production hence ability to deliver quality and concentrate of its improvement. (Varey, 2002)
Weaknesses
- It is an unknown brand hence may need much effort to market and penetrate the market.
- Lack of adequate market inexperience may present challenges to the brand marketing as marketers acquaint themselves with the market nature and needs. (Hisrich, 2009)
Opportunities
- Emerging segments like the growing youthful segment that has a significant income in addition to being technologically savvy provides underutilized market.
- Technological advance for promotion and production efficiency. In that respect, the business can quickly reach its customers through online platforms as well as employ more efficient production means to deliver a quality product to the market.
- Increasing income and purchasing power that increases market demand. (Sengupta, 2005)
Threats
- There is increasing competition from increased foreign firms’ entry as markets increasingly become liberated.
- The increasing environment concerns presents threats to production as there is an increased call for environment-friendly production and sourcing of raw materials. In that respect, some operations may be limited as the businesses seek to embrace more environment friendly operations. (Hisrich, 2009)
Market competition
The smart TV industry is an oligopoly market that is controlled by a few large organizations. In that respect, few firms have significant market power that influences production and pricing. The current competitors include Samsung, Sony, Panasonic, Phillips, LG and Toshiba. (Brilot, 2012)
Target segment
In view of the market and situation analysis, the firm’s suitable target segment is described by the following traits.
- Young aged 25 to 40.
- Urban population.
- High income.
- Technologically savvy.
In that respect, the segment has high purchasing power, can be easily reached in the urban centers and is in need for stylish products that feature their youthful lifestyles. In addition, the segment can easily adapt to the complex technology solutions and can be easily reached using technology based promotion and distribution platforms. (Sengupta, 2005)
Marketing mix
In order to enhance sales in the market, the business will employ an effective marketing strategy based on marketing mix of product positioning, pricing, distribution and promotion. The specific strategies are summarized as follows. (Sengupta, 2005)
- Value proposition
As a means of enhancing penetration to the current competitive market. The business will seek to deliver a product that offers differentiated features and added value to its target customers. (Hisrich, 2009) In that respect, the product positioning as a brand of choice will be achieved through the following.
Power efficiency:
One of the key aspects of technological devices in power usage. In that respect, a product that enhances power saving while delivering quality service would be suitable le for the market given the increased calls for energy efficiency. Thus, the brand will be more energy efficient in line with the company values of offering innovative customer solutions. (Sengupta, 2005)
Compatibility:
The product will be enhanced with respect to the programs that it can be compatible with. That will seek to provide additional programs access to customers compared to the already existing brands offered by competitors.
Stylish design
Owing to the target market’s fashion consciousness, the brand will be delivered in stylish shapes and functionality as a way of addressing the youthful segment needs. That will provide a brand that the segment would want to identify with hence enhancing marketing through customers’ reference and social influence. (Sengupta, 2005)
- Pricing
Owing to the targeted segment income status, the brand will be sold at a price that reflects the added value. In that respect, the brand will be priced for its differentiation as a way of reflecting the status of the target segment. (Sengupta, 2005)
- Sales and Promotion
Sales and marketing will focus on informing customers of the new product availability and persuading them to buy. In that respect, a number of strategies will be applied including advertising, events sponsorship as well as packaging promotion. (Sengupta, 2005)
Advertising
Advertising will be applied for the purpose of informing and persuading customers to buy a new product. It will be done through digital media given that the target segment is technologically savvy. Thus, the business will use online platforms including its website and social media to advertise to the youthful segment. (Varey, 2002)
Events sponsorship
Given that the youthful segment is more participative and has an interest in sports, the company will be involved ion sporting events sponsorship to popularize its brand. That will entail sponsoring football that is popular in UK. (Sengupta, 2005)
Packaging
The products packaging will feature details on its functionality as well as its added value. That will seek to enhance customers’ efficiency in use of the product full benefits that would create customer loyalty and improve brand image. (Varey, 2002)
- Distribution
Specialty shops
The company will establish specialty shops within the London city which will act as a principal distribution centers and which will solely distribute the brand. The shops will also play a crucial role in enhancing online purchases deliveries. (Sengupta, 2005)
Retail outlets
The business will partners with leading retail outlets in the city to supply the product in the market. That will be useful as a way of reaching the target segment that forms a significant proportion of the urban population. (Hisrich, 2009)
Online stores
Further, the consideration that the segment is technologically savvy will be addressed by providing access to the product through online sales platforms such as a company website. Through the platforms, customers can access the products information and order for them to be delivered to their destination. (Sengupta, 2005)
Operations, entry strategies and resources allocation
The operations will be based in London given the city has a significant population that was reported to be 8.17 million by the 2011 census and expected to surpass 9 million by 2021. In addition, the city accounts for the largest population of the youthful generation with 63% of its population being aged 44 years and below compared to a 53% for the whole of UK. Thus, the business will set a new production plant in London that will act as the distribution centre for all distributors. After the launch and success of the product in London, the business will launch it in the other cities in line with their attractiveness. (London Councils, 2014)
As a market entry strategy, the business will apply full ownership of the production and operations in London. That is given a method’s ability to enhance business interest control and intellectual; property protection. In addition, the direct and total ownership method will be suitable as a business already operates in UK hence has suitable infrastructure to develop and launch a new product. (Hisrich, 2009)
Further, resources allocation will be done with the aim of maximizing operations efficiency as well as marketing operations. In that respect, the resources that include funds, human resource and the plant will be allocated for production, administration, marketing as well as research and development. (Hisrich, 2009)
Resource-based view
The company has various types of resources that will be applied for creating a competitive advantage in the market. Those resources are as follows.
- Skilled manpower
Owing to the company’s specialization in production of Smart TV, it has well skilled and specialized employees compared to competitors who produce a wide range of products. In that respect, the business has a competitive advantage and will apply that to enhance and differentiate its products quality to deliver added value. (Hill, 2014)
- Intellectual property through research and development.
Although all businesses in the market have intellectual property for their products, TV Solutions Company has an innovative product that has enhanced features. That has been achieved through extensive research and development. In that respect, the resource differentiates the value that the business seeks to deliver to the market hence providing it is a competitive advantage. (Hisrich, 2009)
- Plant
\With the company’s plant being located in London where the target segment is located, the business has ease of access of its customers hence marketing efficiency. In that respect, the business will have cost efficient marketing operations and ease access of the youthful urban population. (Varey, 2002)
- Finances
Given that the business seeks a first-time venture, it has limited finances compared to the competing companies that have been in operations for a long time and whose finance performance over time enhances their finances. In that respect, the business is less competitive financially but will seek for debt funding to launch the product. (Hill, 2014)
Overall strategy and recommendations
In view of the market and situation analysis as well as proposed operations, the business plan to penetrate the smart TV market involves product differentiation. That will be delivered through suitable product positioning by features, premium pricing to reflect added value, multiple distribution channels and extensive promotion campaign. In that respect, the business will enhance its competitiveness in the market with a particular target on the youthful segment that the product positioning suits. In respect to the direct market entry through fully owned operations, the business will have full control of operations hence the ease of making and implementing decisions. (Hisrich, 2009)
Further, the business will need effective competitive strategies to enhance its performance in a highly competitive market. That will require the following strategies in addition to the established marketing mix.
- Establishing strategic partnership with suppliers as a means of enhancing cost efficient and sustainable supply of raw materials.
- Embrace continued research and development for the purpose of enhancing the product performance as the market is dynamic, and changes could threaten the product’s sustainability as a brand of choice. (Hill, 2014)
Conclusion
The analysis has demonstrated that the UK’s Smart TV industry has low penetration and has a number of factors that are expected to drive its demand. In that respect, the market has an opportunity for growth hence TV Solutions Company can introduce its innovative smart TV. To achieve its objective, the business will launch its product in London as a city where the targeted youthful segment can be easily reached. Further, direct investment through a fully owned venture has been proposed to be implemented with a marketing mix. The mix will entail differentiated product, premium pricing as well as multiple distribution channels and promotion methods. In addition, the business needs to establish strategic partnership with its suppliers as a way of enhancing sustainability and creating a competitive advantage.
Reference list
Brilot, D., 2012. Smart TV is the Future. The Guardian, [Online] 15 February. Available at
<http://www.theguardian.com/media-network/media-network-blog/2012/feb/15/smart-tv-take-up> [Accessed 27 October 2014]
CIA, 2014. World Fact book: United Kingdom. [Online] Available at
<https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html> [Accessed 27 October 2014]
Hill, C., 2014. International Business: Competing in the Global Marketplace. 10th ed. New
York: McGraw-Hill/Irwin.
Hisrich, R., 2009. International Entrepreneurship: Starting, Developing, and Managing a
Global Venture. London: Sage Publications, Inc.
London Councils, 2014. London Facts. [Online] Available at
<http://www.londoncouncils.gov.uk/londonfacts/default.htm?category=2> [Accessed 27 October 2014]
Sengupta, S., 2005. Brand Positioning: Strategies for competitive advantage.
Lake Town: Tata McGraw-Hill Publishers.
Varey, R., 2002. Marketing Communication: Principles and Practice. London:
Rutledge.
