Executive summary
Today’s business environment has seen many corporations searching for innovative strategies in order to win the growing demand for goods and services. Many managers try and design a systematic marketing framework for their new products aimed at winning buyers. Nakamichi Corporation is a manufacturer of high quality audio and video systems. The corporation wishes to introduce a new portable audio system into the market. In order to design the marketing plan, several factors are put into consideration. A situational analysis of the current audio systems market is carried out identifying the main competitor brands for the corporation. Second, market segmentation and positioning is analyzed. This identifies the strategies used by Nakamichi Corporation together with a SWOT analysis for the organization. Third, an analysis of the internal and external factors affecting the buyers’ decision to purchase the new product is taken. The report ends with strong recommendations for the marketing mix strategy.
Nakamichi Corporation is among the world’s best manufacturers of high quality audio, video and multimedia equipments. The corporation produces quality home audio and mobile sound systems and continues to introduce new products into the market. The company was founded in 1948 by Etsuro Nakamichi and started with the manufacture of portable radios, speakers, and communication equipments (Nakamichi, 2012). Nakamichi Corporation is in the process of launching a new portable high quality audio player by the end of the year 2012. Disruptive technological innovations offer a big change in the products and services offered in an organization. Companies that come up with quality products, simple in use, and more efficient always succeed in their marketing plans for the new product. In addition, these products target new customers since they are new in the market and are designed in the current technology (Christensen, 1997).
Coming up with a perfect marketing strategic plan for a new product needs the marketer’s knowledge of the current market and other companies offering similar product. The marketing of a new portable high quality audio player by Nakamichi Corporation is a challenging aspect since some well companies like Sony, LG, Samsung, and Kodak have already overtaken the market. In order to plan for the market of the new product, Nakamichi Corporation should ensure it wins many customers. In most cases, companies face issues associated with their flexibility on politics, operations management, and social culture (Kim and Mauborgne, 2005).
Situational analysis
Marketing design assist in the successful implementation of planned strategies and achievement of goals and objectives. A perfect marketing plan enables an organization enter into a competitive advantage with the rivals and eventually win the market (Kotler & Keller, 2009; 61). The market structure adopted by an organization acts as an element of undertaking need analysis of the market share. In this, the market structure has to segment the potential market of the organization products for effective analysis of the needs, and formulation of measures that need adoption by the company. Nakamichi Corporation plans to introduce a new portable high quality audio player in the market. Many companies have introduced portable audio players in the market. Moore and Pareek (2010) argue that, human beings instinctively aim at satisfying a variety of intrinsic needs in all aspects of their life. These needs include social needs (for example, acceptance), various types of physical needs (for example, shelter and food), and individual needs (knowledge need). In 1979, Sony produced the first portable music player commonly known as walkman that was highly demanded by customers. The player was simple, and an individual could listen to music while travelling (Sony, 2011).
The portable audio player market has shown tremendous growth with a predicted increase in the number of units. Nakamichi Corporation should get into the market fast using different solutions in order to capture the growing demand. Many brands have come into the market likely to create a lot of competition on the portable audio player. Ipod is one of the brands capable of bringing competition into the market. Ipod is a portable audio player from Apple Company. The gadget has many accessories and is preferred by most customers. It is an innovative product that disrupted the music industry upon its arrival. The aim of Apple Inc was creating a technologically advanced device with unique features to hit the unexploited market. Consumer needs in a product vary largely. Some consumers aim at products with appealing quality regardless of price, while others look at the price of the product (apple, 2012). IPod product from Apple Inc is one of the top competitors for Nakamachi Corporation.
Mobile phones also are a threat to the portable audio system’s market. The introduction of mobile phones has hit the market since almost every grown up person owns a mobile handset. Most of these handsets have music players and radios whereby people can listen while working or walking. The technological know-how in the portable audio market creates a barrier for Nakamachi’s entry into the market. Individual with mobile handsets that have music players will find it hard purchasing another portable audio device. Nakamachi Corporation faces a hard task of marketing their new products and encouraging buyers to buy their products only.
The following brands have overcrowded the digital market. Ipods are used by most students since they can listen to music while studying. On the other hand, mobile handsets are produced with many accessories that are pleasing to consumers. All these products are portable ,and made fromm quality manufacturers. The introduction of the new portable audio player by Nakamichi Corporation must have unique marketing strategies in order win the competition from these two brands.
Portable audio player market segmentation
Marketing entails product image creation with the aim of attracting more customers. Marketing of portable audio system by Nakamachi will involve the creation of an image of the music system for the potential buyers in the prevailing market. The plan has guided principle that price, availability of a service, and visibility of an advertising media have no influence on consumers ability to make a choice of a given product. Consumer’s choice has the reliability on the ability of the consumer to develop a desirable, distinctive, appealing, believable, simple, and valid image of the product being offered (Mercer, 1996). The market structure adopted by Nakamachi will act as an element of undertaking need analysis of the market share. In this, the market structure has to segment the potential market of the organization’s product for effective analysis of the needs, and formulation of measures that need adoption by the company.
In addition, the market structure formulates an effective strategy for undertaking business to business (B2B) and business to consumer (B2C) marketing respectively. The differences between business-to-business and business-to-customer communication modes, channels, and content have an association to interaction levels involved (Nwanko & Gbadamosi, 2011). When it comes to B2B, Nakamichi Corporation will look for potential intermediaries of the new portable audio system. The marketing system employed identifies the buyer behavior, and incorporates the buyer in price negotiation, as well as setting. The parties involved will have a closer relationship that aids in sharing of ideas between the two parties, and resources allocation may take place in unison. On the other hand, the B2C marketing will see Nakamichi involve the final consumer of the product. In this system, the parties involved have no closer relationships, and consumers are never involved in price setting and negotiation.
Positioning strategies adopted by competitors
Apple Inc. is one of the competitors that market the iPod using different marketing segmentations and strategies. The company outsources its product in different countries worldwide and also assembles it in various key manufacturers. Foxconn International Holdings assembles iPods while its components are manufactured by different companies in China (Buetow, 2010). However, Apple Inc product design and marketing strategies are carried out at their company headquarters in United States. Figure 1 shows the product differentiation process used by Nakamichi competitors in the portable audio system.
Market segmentation in an organization involves dividing prospective market into identifiable materials. One of the product segmentation and positioning theory argues that market segmentation involves forming segmented groups that have similar wants. This theory, by Philip Kotter, Claims that marketing can be more essential if more concentration is on a particular product segment. Nakamichi marketing team should identify the most attractive parts in their marketing plan and concentrate on them effectively. This ensures an organization defeats its competitors since they always go after a certain market segment. Moreover, competitors in their designs of the marketing segment and product positioning think about these three steps (Kotter, 1999).
Mass marketing: In mass marketing, the organization makes an effort of attracting eligible buyers to use a product that has been mass produced. The product is also distributed through mass distribution channels.
Product differentiated marketing: The organization will produce more than two products for the whole market. The products have different characteristics, and are not designed for specific group thus providing alternatives to buyers.
Target marketing: In this the organization has varied market segments but focuses on one segment. The organization then develops the selected product to meet the target market needs.
In a typical market transaction, the value created is satisfaction of the parties involved in the business transaction. This satisfaction is derived from the expectations each party had prior to the transaction, and the ability to give what is expected. Therefore, exchange is the main value derived in the transaction process. Included in the exchange process are the products that the concerned parties expect from each other. These products act as indicators of the values of the transaction that takes place. Approach to segmentation occurs in two different ways. The first method considers the market to consist of consumers who have the same characteristics. In this method the main organization’s task is identifying the consumers who have specific differences. This is the breakdown method. On the other hand, the second method, known as the build-up method, consists of consumers with different characteristics. Most organizations use this method since it is the most recommended. If Nakamichi Corporation could adopt this method it would defeat the competitors in a very perfect way (Hunt and Arnett, 2004).
Nakamichi Corporation SWOT Analysis
High brand value
A designed innovation in the digital world
The effects of achievement of other company products like home theatres, radio cassettes, etc
High customer loyalty
Weaknesses
Changing market conditions for portable audio systems
Poor management due to workers shifting to well paying organizations
The marketing strategies are not within the expectations of customers.
Limited personalization on the product.
Opportunities
Nakamichi Corporation’s relationship with other companies is good
Good pricing strategy wining the competition
The company is technologically advanced compared to other companies selling audio systems
Increased demand by students and sport users.
Threats
Low end portable music players
There is high interest of other established portable music markets
Competition from smart phone and other mobile operators
Availability of online music resources through personal computers.
Marketers worldwide face many challenges in understanding why consumers purchase different products in different methods. Brands play a significant role in determining people’s perception of products offered. Making a purchasing decision for a portable audio system is affected by some external factors. These are market and demand, competitor’s costs and prices, economic conditions, and social cultural factors. Consumers always weigh these factors as well as understanding the main reason behind making the purchase.
Market and demand: The market and demand for the new portable audio system will influence the buyer’s decision. Increasing the demand for the product prompts many people to buy it. In addition, Nakamichi Corporation should take several processes in order to ensure the new product finds market regardless of the nature of competition. Poor customer perception on the brand will make it lack buyers. Moreover, the company should ensure customer satisfaction because it encourages customers to make more purchases and invite their friends (Lewis and Slack, 2003).
Competitor’s cost and prices: Competition is a very vital factor affecting many organizations. If the competitor’s prices are lower than those of the company in question, the buyers will opt for lower prices. On the other hand, the cost of production determines the amount that the company should offer for its product. Apple Inc, which is one of the top competitors, outsources its services to other manufacturers thus reducing its cost of production. Nakamichi Corporation should ensure they produce their product with the lowest cost possible and offer at a consumer friendly price in order to gain more buyers.
Social-culture factors: Cultural factors have a lot of influence on consumers buying behavior. Consumer culture plays a significant role in making a decision on the type of commodity to purchase. All efforts and activities in a business should have unity and focus on giving customers what they demand. If customers prefer to have constancy in service, the business should ensure that, if the customers are price sensitive, the businesses should offer fair prices, if customers focus, or are delighted more on reliability and variety, then the businesses should unify its efforts and resources toward delivering that. Some cultures do not accept people using the present technology because they face it as a curse from their gods (Friestad & Wright, 1994).
Influence of internal factors on purchase process
Internal factors within the organization determine the buyer’s decision on a new product in the market. These factors are: product pricing, promotions, distribution, and rational factors (Kotler and Armstrong, 2011).
Product pricing: Companies carryout product pricing considering the prices of competitors. If the organization offers higher prices, fewer buyers would be willing to purchase the brand. According to Mercer (1996), pricing should be related to the cost of producing the product, and the market prices offered by others selling the same product.
Promotion: In order to ensure good prices are offered, the sellers should create customer awareness of the new product. Advertising methods such as after-sale services, home delivery, and media campaign assists in promoting the new gadget into the market. In addition, the organization could offer gifts and free samples like T-shirts, wallets, or even bags as a method of promoting the new product.
Product distribution: The distribution channels used for the product determine the price offered to the final buyer. If the company uses many channels of distribution involving a lot of middle-men, the price will be high. This affects the buying behavior of consumers. Simchi, Kaminsky and Levi (2003), argues that distribution strategies vary depending on the type of product. For a portable audio system, only two channels of distribution are appropriate.
Conclusion and recommendations
A key method of minimizing ideas generated about a new product by a company is having a market research conducted. In this, the consumer preferences for the product, the price of related products, the brand name of related products and the target market information is gathered. The information is then analyzed and presented to the company. The ideas generated by the company about the new product are then sorted out in line with the results of the research. The ideas found to fully meet the desires of the target market are then adopted by the company and used for the product development.
To effectively market the new portable audio player, Nakamichi Corporation should make use of the 4Ps. These are Product, Price, Place, and Promotion. These four aspects are necessary for a perfect marketing mix strategy. The product should have the qualities desired by customers. Making decision on the type of product to offer requires several factors. The Corporation should decide the target market, the benefits associated with the product to the customers, and how to position the brand. The company should offer the product at a customer friendly price that creates good sales revenues. The price will determine the value of sales made. Second, the company should design a proper means of transporting the product in order to be at the right place in the right time. The aspect of place is very important since customers require proper supply of the product. Finally, carrying out various promotions enables the business to communicate effectively with the customers. Through promotion buyers get the information that assists them in making a purchase decision. The company should set aside funds to carry out promotion through advertising (Dogra and Ghuman, 2008).
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