Brand Positioning Strategies for Competitive Advantage
Executive Summary
The growing demand for a vacuum cleaner in the world market is due to the rise in the awareness towards maintaining proper hygiene and also for the increases in the standard of living of the people. The development of new technologies and the efficiency of vacuum cleaners may influence the demand for products among households. It has been observed that the robotic vacuum cleaner is the fastest-growing segment in the global market. The high price of these products acts as the principal barrier in the product’s market growth. The new brand has developed a high-quality, cost-effective, product. It thus aims to capture the market by adopting the super value strategy to offer superior quality products at a relatively low price. Therefore, the brand will be able to capture the growing demand in the United States and emerging economies. Consequently, it is expected that the new brand will be able to earn high revenue and gain profits after spending a significant portion of the promotional activities.
Segmentation Approach
The market for a vacuum cleaner is mainly driven by the growing awareness about maintaining proper hygiene and the rising standard of living of the citizens. The global market for vacuum cleaners is segmented along with the type of products and the specific regions. The market can also be segmented along with the retail selling price above USD 200 and below USD 200. The new brand in this industry in the United States, which focuses mainly on robotic vacuum cleaners, segments its consumers according to the social class (Euromonitor, 2015). Thus, consumers can be divided into three social categories: the lower level, the middle level, and the upper level. The products offered to the different segments differ from each other based on their performances and price.
Needs by Segment
The demand for robotic vacuum cleaners increases, particularly among persons who are allergic to dust and the pet owners. The hectic lifestyle of the present world and the application of modern technology have created a need for products like the robot vacuum cleaner. The new brand offers different types of robotic vacuum cleaner depending on the nature of use and the purchasing power of the consumers. The brand provides various kinds of filters for outside and inside of a home, for cleaning the pool or a gutter. The products designed for cleaning the interior of the house are targeted at low-income consumers. The pool cleaner and other outside cleaning devices are made for the middle and the high-income groups (SmallBizConnect, 2015).
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Segment Potential
Though the robotic vacuum cleaners are expensive and thus the investment for the consumers is high, they view it as money-saving because the product helps them to save valuable time and also avoid the costly cleaning services. Apart from their cleaning ability, some models are designed to perform tasks such as mopping and UV sterilization. The ease of access increased performance and reliability, and cost-effective cleaning solutions attract all the consumer segments.
Analysis of Current and Potential Competitors
The robotic vacuum cleaners have attained significant success in the domestic robot market. One of the most significant market players in the local segment, iRobot Corporation, has sold 6 million units of its robot named “Roomba” between its release in 2002 and 2010. About 2.5 million personal and service robots have been sold in 2011, which is 15% more than the number in 2010 (Euromonitor, 2015). This indicates a rising trend in the use of robotic machines in households and their growing impact on human lives.
Companies that focused on the production of the robotic vacuum cleaners experienced the highest increase in unit sales. Neato Robotics had more than 6% in sales, followed by iRobot Roomba but with a higher market share than the former. Moreover, various small and medium manufacturers have entered the vacuum cleaner market, so the competition for the new brand will be high in the American market.
Environmental Analysis
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Technology
The robotic vacuum cleaner operates in the same manner as the usual vacuum cleaners. To avoid human involvement in the cleaning process, self-navigation systems are incorporated within the products. At first, the cleaning machines determine their cleaning route by mapping the space to measure the size of the room with the help of a laser scanner of an infrared signal. During the cleaning process, the machines identify hindrances with the assistance of bumpers in their front. Several models of the robotic vacuum cleaners have more than one brush to increase the machines’ particle suction capacity. However, some designs also possess side brushes to facilitate edge and corner cleaning. The mechanism of robotic vacuum cleaners includes the power system, cleaning arrangement, batteries, and programming software.
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Society
The robotic vacuum cleaner minimizes the energy consumption of the society, given the increase in mass demand for energy and the rising dependence of society on energy. To provide more benefit to the consumers and the community, companies in this market are determined to launch robotic vacuum cleaners which can operate independently without the power grid. These products help maintain a healthy environment by providing innovative products for cleaning the pools and gutters. The government of the countries can also collaborate with these companies to develop products to clean the society as a whole.
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Industry
The manufacturing of robotic vacuum cleaners is the fastest-growing segment globally at present. The rising awareness about a dust-free and hygienic environment and the convenience offered by the products are expected to stimulate the demand for residential robotic vacuum cleaners. However, the low customer awareness, acceptance of innovative products compared to traditional vacuum cleaners in the emerging markets, and high prices are some of the factors that may adversely affect the market growth of the robotic vacuum cleaners.
Marketing Plan
Description of the Market Opportunity
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Description of Need
The rise in the awareness of people towards maintaining a clean environment quickly has to lead to an increase in the use of robotic vacuum cleaners globally. Also, the comfort and convenience of using the products attract the consumers, but the high price of the products has hampered its demand to a large extent. Thus, the new brand needs to make the products available to the customers at a relatively low price than its competitors to explore the opportunities in the growing market.
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Discussion of Market Potential
The companies which act as market players in the home appliances sector gains most of the profits from the robotic vacuum cleaners they present in the market. According to a report published by Transparency Market Research, the household vacuum cleaners market is expected to achieve USD 14 million by 2018. The market growth is also likely to increase due to the rise in disposable income in households, the introduction of energy-efficient and eco-friendly technology, and the small-sized apartments. Thus, the market for residential robotic vacuum cleaners has immense potential to be explored at present.
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Description of Product Concept
The new brand aims to fulfill the needs of the customers by offering better quality, performance, and service than the standard products that the existing brands provide. The new product is designed to minimize the consumers’ energy consumption by increasing the capacity of the batteries installed in the systems. It must also be equipped with excellent navigation systems to execute its functions efficiently. This will provide satisfaction to the customers and save time for performing tasks other than cleaning the household.
Product Strategy
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Description of Product
The product has a slim design to reach the hedges and corners of a room where the other models cannot. It also has extra-long brushes to clean the edges and corners of space and a two-stage cleaning system to absorb dust from the surroundings. The product is also equipped with laser sensors rather than infrared sensors to detect the cleaning process’s route. The new product also takes less time to get charged, and the one-button use of the system makes its operation easier for the consumers (Kim et al., 2015).
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Objectives for Product
The objective of launching the new product is to explore the immense potential of the market for robotic vacuum cleaner both in the domestic as well as in the global market.
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Features and Benefits
The product is also equipped with laser sensors than infrared sensors to detect the route of the cleaning process. The new product also takes less time to get charged, and the one-button use of the system makes its operation easier for the consumers.
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Product Quality Strategy
The new brand adopts the super value strategy by offering high-quality products at the lowest prices. For this purpose, the new brand has invested much in the research and development of cost-effective technologies. Thus it aims to capture the growing market by offering the product at low prices than its customers. This is because of the high costs of the robot vacuum cleaners available in the market act as a barrier to the expansion of demand for the product (Sengupta, 2005).
Product Service Strategy
The new brand also plans to develop a network of service centers with trained customer service personnel to provide high-quality services to the customers. This will help the brand to enhance customer satisfaction and to develop customer loyalty.
Competitive Positioning of the Product
The new brand must build an image of their brand in the minds of the customers and make them aware of their quality of services and create the demand for their products by applying various marketing mixes in the targeted segments. It must position its products as a high-quality model that is affordable and accessible to all consumers.
Estimated Costs
The cost of robotic vacuum cleaners is usually more than USD 500 per unit in the US market. Thus, the new brand must target to develop a pricing strategy that will be lower than the prevailing per-unit costs.
Pricing Strategy
Basic Price Strategy
- Skimming vs. Penetration: The new brand chooses to adopt the price penetration strategy than the price skimming strategy. This is because it aims to target price-sensitive consumers and thus sells to the whole market without differentiating. It also focuses on the volume of sales rather than the profit margin. It tries to achieve economies of scale that will make entry to the market a difficult task for other manufacturers.
- Cost Plus: The new brand also adopts the cost-plus pricing to recover the costs it has incurred to conduct research and development for introducing new technologies.
Competitor Issues
The market for robotic vacuum cleaners is beautiful to producers, but the cost of research and development for incorporating innovative technologies also involves huge costs. Thus, the threat of new entrants is moderate in this industry. However, prominent market players are dominating the sector, along with several small manufactures. Therefore, the competition in the segment of robotic vacuum cleaners is high.
Distribution Strategy
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Channels Used to Distribute the Product
The new product may be distributed using both direct and indirect channels of distribution. It can be distributed, keeping in mind the customer convenience. An increasing number of consumers are using the internet to purchase the required goods to save time and travel costs. Thus, the new brand must focus on distributing and advertising its product with the help of eCommerce and also promote offline selling by setting up retail stores.
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Channel Co-Marketing and Relationships
The new brand must also partner with the existing market players to share technology and thus promote its products using the brand name of partners.
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Costs
The cost associated with developing the distribution channel is vast and thus needs to be managed efficiently.
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Competitor Issues
The company must also conduct extensive research on the distribution strategy of its competitors and then establish its network according to the market conditions.
Marketing Communication and Promotional Strategy
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Overall Promotional Objectives
The company’s overall promotional objective must be specific, measurable, achievable, reasonable, and time-oriented. The brand must also manage its promotional expenses efficiently and effectively to utilize the maximum benefits from the activities (Webster, 1984).
Advertising
Companies advertise to provide the targeted segment with information, persuade them to avail of its services and remind them about its existence by repeating the key messages. Advertisement is expensive, and the company must plan its budget for implementing the plan within the specified period (Stone, 2001). Since it is a new brand, the enterprise must invest primarily in conducting vigorous advertisement campaigns.
Personal Selling
- Sales Programs: Sales programs need to be conducted, but in the later stage of the marketing plan since recruiting sales representatives and training them to learn about it is time-consuming.
- Incentives: The company must provide various incentives to the customers while promoting the product through personal selling. This will allow the sales representative to attract the attention of the customers towards the newly launched product and increase the company’s sales.
- Sales Support: The enterprise must set up a sales support team to administer the sales operations carried out by the salespersons and coordinate their work to gain the maximum benefits from the promotional activities (Kotler, 2008).
Sales Promotions
Sales promotion provides several attractive offers to the customers to gain their attention towards the company (Cravens & Piercy, 2008). As the company is launching a new product in the market, it must extensively use sales promotions as a useful tool in increasing awareness about its services among the public. For example, the new brand can offer attractive discounts and provides during the initial stage of introducing the product (Hawkins & Mothersbaugh, 2009).
Program Costs
The various promotional activities like advertising and direct selling involve a considerable amount of costs, and the company must plan its budget to avoid any monetary restriction.
Competitor Issues
The brand must also research to get information about the marketing strategies of the competitors in the segment of robotic vacuum cleaners.
Technological Issues
Trends
It has been observed that the sale of traditional vacuum cleaners has been stagnant in the United States market, and robotic vacuum cleaners have been rising steadily over the years (Euromonitor, 2015). The population of the developed countries is aging as a low birth and death rate characterize them. As a result, the popularity of devices which can do the essential household chores such as cleaning and dusting the floors are gaining popularity in the developed markets. These products act as necessary goods to the people rather than luxury products, so they are willing to invest in such items (South China Morning Post Publishers Ltd, 2015).
Import on Product Offering
The new product is equipped to perform way better than the existing vacuum cleaners. This is due to the advancement in the field of robotics that allows enterprises to incorporate cost-effective technologies in the products. This, in turn, enables the new brand to offer high-quality products to consumers at affordable prices.
Financials
Sales Volume Forecast
The sales volume of the new brand has been forecasted to be rising over the months since the lower price, and the high quality of the product will attract the attention of the consumers.
Marketing and Service Provision Costs
| Marketing and Service Provision Costs | Costs ( in USD) |
| Advertisement | |
| Television Advertising | 100000 |
| Print Media Advertisement | 5000 |
| Social Media Advertisement | 5000 |
| Public Relations | 4000 |
| Direct Marketing | |
| Telephone | 5000 |
| 3000 | |
| Sales Promotion | |
| Discount and Offers | 50000 |
| Personal Selling | 70000 |
| Training Costs | 50000 |
| Service Costs | 50000 |
Estimated Income
The price of the product is estimated at USD 300 based on the market research conducted on the amount charged by its competitors and also to cover the costs of research and development and other associated costs. The estimated income per month is shown in the following table:
References
- Cravens, D. & Piercy, N. F. (2008). Strategic marketing. New York: McGraw-Hill.
- Euromonitor. (2015). Vacuum Cleaners in the US. Retrieved June 26, 2015, from https://www.euromonitor.com/vacuum-cleaners-in-the-us/report
- Hawkins, D. & Mothersbaugh, D. (2009). Consumer behavior building marketing strategy. New York: McGraw-Hill.
- Kim, J. H., Yang, W., Jo, J., Sincak, P. & Myung, H. (2015). Robot Intelligence Technology and Applications 3: Results from the 3rd International Conference on Robot Intelligence Technology and Applications. Berlin: Springer.
- Kotler, P. (2008). Principles of marketing. New Delhi: Pearson Education India.
- Sengupta, S. (2005). Brand positioning: Strategies for competitive advantage. Noida: Tata McGraw-Hill Education.
- SmallBizConnect. (2015). Market Analysis. Retrieved June 26, 2015, from https://toolkit.smallbiz.nsw.gov.au/part/3/10/49
- South China Morning Post Publishers Ltd. (2015). Thank the rich for driving technology trends that will benefit us. Retrieved June 26, 2015, from https://www.scmp.com/business/economy/article/1597900/thank-rich-driving-technology-trends-will-benefit-us
- Stone, P. (2001).Make marketing work for you: Boost your profits with proven marketing techniques. Oxford: How To Books Ltd.
- Webster, F. E. (1984). Industrial marketing strategy. New York: Wiley.