Question 1
Brand positioning is essential for companies wishing to develop competitive advantage in a market. Strategies for brand positioning are based on two main platforms, competitors and consumers. Quality and price of a product are the two main attributes used for effective positioning of a product. This was also confirmed by Michael Porters when he came up with the generic strategy for competitive advantage. According to porter’s generic strategy, there are three approaches that can be applied to any product in any industry for competitive positioning in a market. The three approaches include, cost leadership, differentiation, and market focus. Differentiation entails creating a unique product or service different from those of competitor. Cost leadership entails pricing a product or service in a competitive manner while market focus entails offering unique services aimed at a specific segment of the market.
Panasonic is among the leading companies in the digital camera industry. The company has been using strategies for brand positioning to develop competitive advantage in the global digital camera market. The lumix brand has been in the global digital camera market since 2001. It has a wide range of models from the pocket point-and-shoot to the interchangeable lens compact digital cameras. The global digital camera market is one that has been experiencing dynamic changes in a similar manner as other markets for consumer electronic products . With the dynamism, Panasonic has adopted a product positioning strategy that is consumer based and focuses mainly on the creating unique products for competitive advantage. Based on the porter’s generic strategy, the company has been using both differentiation and focus approaches to position the Panasonic limux brand .
Since 2001, when the first product series of the Limux brand was introduced, the company has developed a wide range of products of the same brand in order to meet the needs of the consumers . It has offered leadership in innovation and product development. The reason why Panasonic has developed this wide range of products in its Limux brand is to focus on specific market segment . In 2010, the company expanded its limux brand to mobile phone based on consumer trends. Integrating a camera to a mobile phone was aimed at meeting the needs of many consumers who basically find it more convenient to have a single gadget performing multiple tasks .
The company has also been involved in creation of unique products in the limux series. For instance, the company noticed, through market research, that people enjoy sharing photos and videos taken using the digital cameras. In order to meet this need, the company made a unique feature in the limux cameras and phones where the users can easily share images over a wide variety of networks. Generally, in product differentiation, the company emphasizes mainly developing products in response to market trends. In differentiation focus, the company makes unique products aimed at a particular segment of the market. These strategies have been beneficial to the company in terms of brand positioning and gaining competitive advantage.
Question 2
Toshiba is a Japan based electronic company. In the digital camera and camcorder market, the company has only been focusing on digital camcorders. In order to enter the global digital camera market, the company needs to employ a specific generic strategy based on industry and competitor analysis.
Industry analysis
The global digital camera industry has been on growing trend since 2005. The number of units sold every year from the 2005 continues to increase. Growth for the products has been based on the three distinct areas. The first area is the need to replace conventional cameras and their functionalities. The second area is the need to use digital cameras with applications that are not compatible or cannot be used with film. The third distinct area is the need to use digital cameras for communication purposes both at homes and in the offices. These three areas have been the basis for demand of digital cameras in the global industry . However, in the recent past, the second and third areas have become more pronounced as the traditional cameras have been faced out. Some of the application that can only be used with digital cameras include online sharing of images, email postcards general and commercial use in medicine diagnostic, security, event photography, education, real estate, and insurance. Digital cameras are also integrated into mobile phones to enable multiple functionality of the device .
Consumer demands for digital cameras entail high image quality, ease of use, flexibility, performance, and low power consumption at a price rate that is acceptable and affordable for general consumers . In terms of resources or features, manufacturers of digital cameras focus on uniqueness. More specifically, the manufacturers include features for: motion pictures, lenses, high speed image instrumentation, image analysis, and high speed video instrumentation equipments, and eye mark recorders . This shows that there is extensive expansion in research and development of digital cameras as companies engage in development of new technologies in these areas.
An over view of the global camera industry in 2011, according to market line, indicated generated sales of more than $60 billion. Product wise, the cameras lead the market with 60 percent of the sales represented by cameras. Growth for the products is expected to be on the rise at a projected rate of 3 percent per annum. At this projected growth rate, in 2015, the market is expected to be valued at over $70 billion in terms of sales . There are also key market segment in the global digital market. The biggest fuel or driver of the digital camera market is the demand for single lens reflex cameras or SLR cameras. Currently, Japan holds the largest share of the market in terms of countries . Its share stands at 80 percent of the market. Asian pacific, the EU, and North America are the regions that dominate the market today however countries such as China, India, and Russia are highly likely to expand .
General and Commercial photography are key market segments that are likely to boost Toshiba’s entry into the digital market. The segment is viable due to the growth key drivers of commercial and general photography. The main drivers include social networking sites, advertising, and digital photography . As more companies continue to use social networking sites and digital advertising the demand for commercial photography will increase creating the need for the digital cameras for both commercial and domestic use . Another important market segment is the gamma cameras. This segment of the market is also showing a lot of potential for growth and it is expected that by 2017, the market value contributed by sales of scintillation or gamma cameras would stand at $843 million . The scintillation cameras are mainly used for medical purposes and there is a growing concern to preventive healthcare aimed at diseases that can easily be detected early using the scintillation cameras.
Competitive analysis
The industry is also highly competitive considering the number of global electronic companies that also manufacture digital cameras . The leading players in the global digital camera market include Panasonic, Sakar, Kodak, Sony, Sanyo, Casio Computers, and Fujifilm . Samsung Electronics, which is headquartered in South Korea, also has considerable large share of the market . The industry however does not face the threat of new entrants. Even though Toshiba intends to make an entry into the global digital camera market, the company already has a commanding market share in the digital camcorder market. The company already understands the camera market with all the necessities required to operate in this market . However, for a totally new entrant, factors such as economies of scales, capital required, production, and the business strategy would act as a great impediment to the smooth operation of the new entrant.
The biggest threat Toshiba may have to face is the threat of existing competition. This threat will come locally and internationally; locally because the industry in Japan is already saturated and has reached maturity, internationally because there are already existing companies mostly based in the US, which also control the global digital camera market. The industry is also facing the threat of substitute products . This has mainly been driven by the fact that mobile phone companies integrate digital camera features to mobile phones. This implies that consumers do not necessarily have to purchase the cameras if they can get satisfaction of the same service it offers using their phones. However, in order to get quality images, the digital cameras single handedly offer quality images and high resolution compared to the integrated cameras found in mobile phones. For the phone companies that offer high resolution cameras, the gadgets have to retail at high prices and can only be positioned for consumers within the high end market.
Based on the industry analysis and competitive analysis discussed above, Toshiba Electronics will have to employ generic strategies in order to position the new digital camera product in the market. The company has to strategize or use an approach that will ensure it remains competitive in the market by generating more sales. Looking at porter’s generic strategies, there are three approaches available for the company to use. It can decide on cost leadership approach, differentiation approach, or focus niche approach. Focus niche approach can also apply strategies for differentiation and cost leadership.
The most effective approach for the company to use is cost leadership. This approach can be used both in the broad market and the focused market or market niche. The company is making an entry into an industry that is already crowded with established companies. Consumers on the other hand have already developed preference for specific brands. This implies that when it comes to purchasing digital cameras, consumers within markets such as Asia Pacific, Europe and America are most likely to identify with specific brands. If the company offers the products at a lower price than the other players in the industry, it stands a chance to increase sales of the new product within the global market. This is an effective strategy that would give the company the sale it needs and take away the same sale from its rivals.
There are two main strategies that Toshiba can use to develop competitive advantage through cost leadership. The first has already been mentioned however it is simply increasing its market share by pricing the product slightly lower than every other similar product from rival companies . The company can do this at the same time making reasonable profit for the sales of each digital camera unit sold. The other strategy that the company can use in cost leadership approach is pricing the cameras at the average industry price while reducing costs and hence increasing profits . The costs to be reduced are those directly felt by the company such as cost of production . With reduced cost, the company can still be able to price the cameras at a price lower than that of its rivals .
One important consideration in cost leadership is that pricing of the product does not matter. What matters most is that organizational costs have to be minimized while delivering the same product quality to consumers. Therefore, the company needs to consider its capital needs while coming up with strategies for cost leadership. The company also has to come up with technologies that will reduce the cost of production. For instance, many electronic industries in Japan, human labor is not depended upon due to the high cost. This means that the company can make use of computerized technologies in manufacturing of the cameras in order to reduce human labor and the cost resulting from it.
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