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MarkMan: PowerDrive Paper by LEC Group 21

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For Mr. Bong De Ungria's MarkMan Class SY 2016-2017

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MarkMan: PowerDrive Paper by LEC Group 21

  1. 1. Marketing Management Final Paper  PowerDrive: 10 Step Marketing Plan     Group 4 | LEC 21: Basallote, Marian | Dela Cruz, Katrina | Llamzon, Samantha | Lok, Niko | Lorena, Alec | Villanueva, Denise | Vitug, Brigido      I. Primary Target Market  From teens to young professionals with active lifestyles who require extra energy, improved audio quality,                              and data space in order to improve their experience with their gadgets.  ● People aged 13 ­ 30 from class A­C  ● Students to young professionals  ● Heavy gadget users   ● Gamers (Pokemon Go)  ● Tech­savvy   ● Media consumers  This target demographic was chosen because these are the “heavy users” and in order for PowerDrive to                                  make its greatest impact, it must be able to breach this targeted market.   II. Needs, Wants and Demands of the Primary Target Market  PowerDrive was created to fulfill a plethora of needs and wants. The assessment of needs to fulfill was                                    based on Maslow’s Hierarchy of Needs.     ● People do not feel safe when their gadgets have no power   ○ They feel that in an event of an emergency, the lack of power on their gadget may mean                                    the difference between getting stranded in a dangerous place and booking an uber to get to                                safety. Needs: safety    ● Documenting life events with their gadgets (Snapchat, Facebook, etc.)   ○ People want to use their gadgets to document life’s precious moments. It could be their                              baby’s first steps, their eldest daughter’s debut, showing their friends pictures of a trip to a                                foreign country, or a college graduation. Since power drive provides an extra boost of                            battery power to their gadgets, they can record or document those precious moments with                            confidence. Needs: Love/belonging/, self­esteem    ● Consuming and sharing media  ○ Students and young professionals are always copying and sharing files. Whether it be                          e­books for medical students, or a series with 7 seasons, with power drive’s storage                            capacity they can quickly transfer their data and share it with their friends as well. Needs:                                belonging, self­esteem, self­actualization because you can be your best self if you have                          resources like books  ○ Once the people have shared or stored their media, they want a way to be able to consume                                    it in a way that is to their liking. Since power drive has a built in speaker, you can watch                                        those newly copied episodes you got from your friend and be able to enjoy it with good                                  audio quality so that if you’re watching with other people, they don’t feel left out. Needs:                                love and belonging, self­esteem      
  2. 2. ● Owning the next “big thing”  ○ Everyone, especially our target market is concerned with owning the next big thing so that                              they don’t feel left out. When bluetooth speakers and powerbanks came out, everyone                          wanted one. They wanted this product because it was cool to own and add to the fact that                                    everyone else had one. Power drive seeks to build on the successes of past products by                                combining it into one easy to use unit that is ready for anything that the owner can dish out.     III. Competition and Competitive Position Map    In this day and age, technology has played an indispensable role in our everyday lives—enabling                              faster, easier communication, making various forms of entertainment readily accessible, enhancing                      productivity and efficiency at work, among many others. Technology has been constantly evolving,                          undergoing through a series of transformations to meet consumer needs that are flexible and variable. New                                gadgets serving different purposes surface in the market every so often. Bluetooth speakers, power banks,                              and external hard drives are just some of the gadgets that have made breakthroughs in the market in the                                      last decade.     As in any industry, competition has already been established among companies dedicated to producing                            quality bluetooth speakers (e.g. Creative, JBL, Bose, Beats), power banks (e.g. Xiaomi, Anker, Asus,                            EasyACC), and external hard drives (e.g. Seagate, WD My Passport, Transcend, Toshiba). However, when                            it comes to hybrid gadgets such as external hard drive with power bank add­on and bluetooth speakers with                                    power bank feature, weaker competition exists since fewer companies (e.g. JBL, Success ETC, ADATA)                            have ventured into such novelty. The group’s brainchild, PowerDrive, was thus inspired by this knowledge                              on the existing status of competition among companies and on the rising, discrete demands from                              consumers.     Utilizing Porter’s Five Forces Tool, the group has identified the key determinants of competitive power in this                                  kind of business situation: supplier power, buyer power, competitive rivalry, threat of substitution, and threat                              of new entry.     Supplier Power. PowerDrive, packaged as a power bank, external hard drive, and bluetooth                          speakers in one ultimate device, requires separate suppliers for each of the components. Due to the                                uniqueness of this product, it is anticipated that there would be fewer choices for suppliers, which translates                                  to suppliers having greater power and control.    Buyer Power. Age, price, composition, packaging, and brand are variables that may significantly                          affect consumer choice. It is most likely that PowerDrive would attract people aged 13 to 30 since they are                                      the ones who use gadgets or consume media most frequently and most heavily. Buyers intuitively opt for                                  cheaper prices. PowerDrive falls within the middle range of pricing of hybrid gadgets; thereby, granting                              buyers with modest power. The well­diversified composition of PowerDrive, as well as its packaging that is                                centered on durability, has the potential to create a following, to establish a strong consumer base. When                                  this happens, lesser power is transmitted to the buyers.     Competitive Rivalry. PowerDrive faces direct competition from only a few rival companies, JBL and                            Success ETC, which offer 2­in­1 bluetooth speakers and power bank at high and low prices respectively,                                and ADATA, which offers 2­in­1 external hard drive and power bank at a moderate price. PowerDrive’s                                strength lies exactly in what it is made of, which uniquely integrates all that can be found in the devices of                                          JBL, Success ETC, and ADATA, achieving the 3­in­1 appeal at a moderate cost. 
  3. 3.   Threat of Substitution. With a 3­in­1 kind of gadget such as PowerDrive, the threat of substitution                                exists in the form of gadgets themselves that are capable of fulfilling the intended purpose separately or as                                    single units (i.e. bluetooth speakers for audio, power bank for charging, external hard drive for storage).                                Indirect competition may also come from laptops with built­in greater storage capacity and from charging                              stations in establishments.    Threat of New Entry. At present, PowerDrive holds strong and durable barriers to entry, securing                              protection over its key technologies. Entry into this specific market entails a great deal of time, preparation,                                  and money, which makes it somehow difficult for interested companies to compete effectively.    Table 1. Direct and Indirect Competitors, Variables Affecting Consumer Choice.  DIRECT   INDIRECT  VARIABLES  JBL   Charge 3   Portable Bluetooth Speaker with Power          Bank    Individual gadgets  >Power bank  >External hard drive  >Bluetooth speakers  Age  Success ETC  2­in­1 ​Bluetooth Speakers, Power Bank  Laptops with greater storage capacity  Price*  ADATA  DashDrive Wireless HDD and Power          Bank AE800  Charging stations in establishments  Composition*  Packaging  Brand  *Two most critical factors affecting consumer choice.    Table 2. Price vs. Composition  Price vs. Composition  2­in­1 Power Bank and        Speakers  2­in­1 Power Bank and        External Hard Drive  3­in­1 Power Bank,      External Hard Drive,      and Speakers  Low Price  SUCCESS ETC     PhP 2,599      Mid Price    ADATA    PhP 4,599  POWERDRIVE    PhP 4,345/ 5,215  High Price  JBL    PhP 8,099           
  4. 4.   Table 3. Competitive Position Map: Functional Benefit vs. Brands    PowerDrive  JBL  Success ETC  ADATA  Allows for safe and efficient charging of              devices  ++  ++  ++  ++  Provides ample space for music, movies,            and other media files  ++      ++  Delivers full­range, rich bass sound  ++  ++  ++    Displays resistance to shock, dust, and            water  ++          IV. Gap, Opportunity, and Position    Up until now, there have been devices that provide two or more features that cater to the NWDs of                                      people for power banks­hard drives and power bank­speakers. The gap in the market was to provide a                                  device that could potentially create a new permutation of features never seen before, such as a hard                                  drive­speaker combo. While the opportunity for a hard drive­speaker combo was there, there was a vision to                                  simply go even further where no other device has gone before: to give a 3­1 hard drive, speaker, and power                                        bank device. PowerDrive fills in the market gap to provide a unique combination of features that has never                                    been developed, and seizes the opportunity to provide the product that most people would qualify as                                something they’d need in their everyday life.    Besides the ability to provide these features, it also aims to position itself in a way that is similar to other                                          brands and products of the same tier, plus more­­given some extra features other products don’t have.    ​Wireless Generation. People of today have been accustomed to living in a very unattached and                              wireless age­­they just don’t want to be tied down especially since the trend these days is to be on­the­go                                      and very mobile in their daily lives. PowerDrive addresses this by also providing the same needs and even                                    eases the burden of carrying supporting cables by having retractable built­in cables so people carry less                                when they actually need to be wired.    ​Unlimited Power. A very difficult situation these days is to be caught in the middle of things and                                    suddenly run without battery. PowerDrive aims to fix that by not only serving as the life force for your other                                        gadgets, but by also having solar panels, it allows charging on­the­go whenever the sun is out. People value                                    this type mobility since you’re not tied down to a need for sockets. Even more, you’re eco­friendly.    Practical Convenience. The fact that 3 features have been put into one device already makes                              PowerDrive very practical and convenient. There is no longer a problem of forgetting a device that serves                                  just an individual feature of PowerDrive. By just bringing your PowerDrive, and not even it’s cables, you’re                                  sustainable and ready for all your tech needs on the go. What’s more, people may not realize just yet, but                                        with this product, they may have been missing out a feature that they never thought would be useful in their                                        lives.     
  5. 5.   V. Market size from the 3Cs perspectives    Competition    Unlike other electronic consumer goods, the power bank market is relatively new and as such, not                                much information is made available to the public regarding its size, segmentation, annual profit, and the                                likes. This is especially true in the Philippines, where not a lot of news articles are written about power banks                                        in particular nor are there local manufacturers of power banks that disclose information regarding the                              performance. Market studies and analyses done by marketing firms are available, but they come at a very                                  high cost. As such, the information regarding the estimation of market size from the competition’s                              perspective will be from a global standpoint.    It is undeniable that power banks have found their way into the market because of the insatiable                                  need of consumers to stay connected through their electronic gadgets, particularly with their smartphones.                            The increase in digital content and technological advances in the creation of applications have led to an                                  increased use of smartphones with a corresponding increase in the discharge rate of batteries. As such,                                power banks have almost become a complementary good to smartphones and other devices.    Based on a study by marketing firm MarketsandMarkets, the global power bank market is                            segmented based on capacity range, the number of USB ports, source of energy, technology, application,                              and region. Intuitively, low capacity power banks (those less than 1500 mAh) are not as preferred because                                  they fail to meet consumers’ demands. On the other hand, those with capacities ranging from 9500 mAh to                                    12499 mAh have the highest market share and are expected to have a compound annual growth rate                                  (CAGR) of 24.2% from 2015­2020. However, due to the increasing processor speeds of newer smartphones                              as well as the increasing amount of digital content available, it is expected that power banks of higher                                    capacity (greater than 12499 mAh) will be of greater demand in the years to come.    Moreover, Zion Research predicted earlier this year that the global power bank market could surge                              to USD 17.2 billion by the year 2020 after valuing the said industry at USD 15.09 billion in 2014 (Fig. 1). The                                            firm attributes this to the growing demand for smartphones and tablets across the globe, decreasing prices                                of power banks, and increasing battery consumption secondary to increased digital content. Lastly, they also                              noted that the Asia Pacific region is the leading market for power banks globally, which accounts for 45% of                                      the total market. Thus, the total ​market size for power banks in the Asia Pacific region is USD                                    6.79­7.74 B from year 2014 to 2020.      Fig. 1 Global Power Bank Market, 2014­2020 (USD Billion) 
  6. 6. Customer    ​The number of Filipino users with a power bank was estimated using information that was more                                readily available, which is the amount of smartphone users in the country. According to market research firm                                  International Data Company (IDC), the Philippines is “the fastest­growing smartphone market in ASEAN” as                            evidenced by the shipment of 3.5 million units of smartphone in the country in the first quarter of 2016 alone.                                        They also predict a 20% year­on­year growth as well as a total growth of 25% by the end of the year (18.3 M                                              shipments). Given this trend, one can predict that a rise in power bank sales will also occur in the years to                                          come.    The number of smartphone users in the Philippines is available in Figure 2. Based on this figure,                                  there are 27.5 million smartphone users in the country. Assuming that 1 in 5 smartphone users own a power                                      bank, we can then say that approximately 5.5 million Filipinos own a power bank this year.     In order to estimate the potential market size for 10,000 mAh and 20,000 power banks, the said                                  number of Filipinos with power banks would have to be multiplied by the average cost of power banks with                                      the aforementioned capacities. For 10,000 mAh power banks, the average cost based on the online store                                Lazada is around PhP 2,924.50 (lowest at PhP 1,300 and highest at Php 4,549). On the other hand, 20,000                                      mAh power banks cost PhP 3,299.00 on average (lowest at PhP 1,599 and highest at PhP 4,999). Given                                    these numbers, we can then say that the ​market size for 10,000 mAh power banks is at PhP 16.1 B​,                                        while the ​market size for 20,000 mAh power banks is at PhP 18.1 B​.      Fig. 2 Smartphone users in the Philippines, 2013­2020    Company    ​Lastly, since the company has not started its operations yet, no existing claims or historical sales                                data can be used to estimate the market size. Instead, targets can be set at this point. PowerDrive aims to                                        have a ​target market share of at least 10%​ in the Philippine power bank market by ​year 2020​.       
  7. 7. VI. The Product: PowerDrive    Dimensions    The product size is 4 inches x 1.5 inches x 3 inches (Figure 3). True to its purpose and primary                                        target market, this compact size enables the device to easily be put inside one’s pocket or the side pockets                                      of a bag. This makes it portable for wherever one chooses to venture and adaptable to the youth’s active                                      lifestyle.        Figure 3. Product dimensions    Design    With the primary target market in mind, the design idea is centered around durability—that is, fit for                                  a life of adventure (Figure 4). The hardware is metal coated in soft touch plastic, to protect the device from                                        harsh elements. It is hexagonal in shape, with rubberized edges to ensure stability. This exterior, coupled                                with the latest software technology, makes the device shock resistant, dust resistant and waterproof.                            Because the company is confident in PowerDrive’s durability, the product includes a 3­year warranty.                            Overall, these features ensure long product life, adapting to any activity.       Figure 4. Components of PowerDrive’s durable design 
  8. 8.   A tough exterior is good, but captivating aesthetics is better. With this in mind, the product is                                  designed to be more reflective of the owner’s personality. Four color variations are available to choose from:                                  black, blue, red and apple green (Figure 5).       Figure 5. PowerDrive color variants    Components    The product has three key components—speaker, power bank and hard drive—which address the                          target market’s evolving needs.    Speaker. Size does not limit the features of PowerDrive’s speaker as it has 360­degree surround                              sound with wireless capability for a rich and unrestricted audio experience. To conserve electric                            charge, it has a toggle switch to turn on the speaker function and solar panels, which also allow                                    charging of the powerbank. To complete the experience and make it compatible to all devices,                              PowerDrive also has retractable USB and micro USB slots, as well as an AUX input (Figure 6).       Figure 6. Speaker component specifications    Power Bank. The power bank is PowerDrive’s main feature, boasting of either a 10,000 mAH or                                20,000 mAH capacity, equivalent to a maximum of 8 full phone charges or 2 full iPad charges. The                                    power bank component also allow for the charging of the speaker component. It has a brilliant LED                                  light power indicator as well as a Toggle power button to ensure efficient battery use (Figure 7). 
  9. 9.     Figure 7. Power bank component specifications    Hard Drive. PowerDrive’s hard drive provides 500 GB storage, for one’s extra storage needs. The                              device is compatible with both Windows and Mac devices for a limitless experience (Figure 8).      Figure 8. Hard Drive component specifications    VII. Promotion    The main avenue for promoting the product is through digital marketing. First, the company can buy                                advertising/promotional spaces in the marketplaces where the product will be sold to increase traffic to the                                product’s page. These marketplaces will be discussed in more detail in the section ‘Place’. Second, targeted                                and tailored advertising will be availed for users in social media. This should be optimized using available                                  information about these users, such that those who tend to shop for or browse a lot of electronics will be                                        more exposed to ads of the product.     PowerDrive will also maintain a Facebook Page that will be continuously updated and can serve as an                                  interactive portal for present and potential customers. An important factor with the maintenance of this page                                is its ability to quickly and appropriately respond to customer queries within 24 business hours. PowerDrive                                will also provide sample products to tech bloggers to review and, in the process, promote. This is to increase                                      awareness of the product and will serve as a form of advertising.     Word of mouth will also be employed, as PowerDrive recognizes the ability of spontaneous, unscripted                              recommendations to penetrate deeper into the trust and subconscious of consumers. Real                       
  10. 10. recommendations from real friends and real people will be effective in communicating the advantages of the                                product.     Third, PowerDrive expects to increase market share by being present in fairs and events where there is a                                    heavy concentration of the primary target market, such as college fairs and tech conventions. These events,                                happening once or two times a year, require more preparation by way of physical materials and logistics.                                  However, the density of people who are potential customers in these events is a positive that outweighs the                                    negatives of the preparation. Fairs and conventions also allow consumers to experience PowerDrive in                            person rather than in theory behind a computer screen. It allows user to correlate PowerDrive’s descriptions                                with its actual touch and feel, to weigh it in their hands, to experience its superior sounds, and physically see                                        how well­made the product is.    Lastly, we will employ sales promotions to engage the consumers and increase the recall value of the                                  product. Such contests can be held, for example, on Facebook’s groups platform or PowerDrive’s page                              itself. Online contests that require simple entries such as “Post your most favorite soundtrip moment” with                                the chance to win a PowerDrive unit are simple to execute and have a great impact in promoting the product                                        through that particular virtual space. The more entries are posted, the more visibility the main post gets,                                  which increases the promotion even more. Taking advantage of Facebook’s ecosystem and notification                          engine is an intuitive step in promoting PowerDrive to its intended target audience.        VIII. Price    Table 4. Summary of Features and Price Comparison of PowerDrive and its Competitors    JBL Charge 3  SCS ETC 2­in­1      Bluetooth Speakers    and Power bank  ADATA  DashDrive  AE800  PowerDrive  Power Bank    (mAh)  6,000  7,000  5,200  10,000 / 20,000  HD Space    (GB)  ­­  ­­  500  500  Speakers  Yes  Yes  ­­  Yes  Price (PhP)  8,099  2,599  4,599  4,345 / 5,215    ​Table 4 shows the summary of the important features and price comparison of the PowerDrive in                                relation to its competitors. The price for the JBL Charge 3 was based on Lazada, while that of the SCS ETC                                          and ADATA were from Amazon as they are not readily available in the local market.    As for the determination of the price of the PowerDrive, research on suppliers of the individual main                                  components of the PowerDrive was made at GlobalSources.com, a website which lists products from                            various suppliers (most of which are from China) with their corresponding prices per unit or in bulk. The                                    process was then to look for the most affordable component and to add them together. An additional 25%                                   
  11. 11. was then added to the cost for each unit of PowerDrive in order to account for other costs (i.e. shipping,                                        assembling, etc.) as well as the contribution margin. Again, all computations are used so as to provide a                                    rough estimate for the cost of the product, and as such they are subject to change. The final breakdown of                                        the components leading to the final estimated price of PowerDrive can be seen in Table 5.    Table 5. Costing of the PowerDrive    Cost (in PhP)    10,000 mAh  20,000 mAh  Power bank  1158  1853  Bluetooth speaker  463.25  463.25  Hard drive  1853  1853  Total Price  3474.25  4169.25  FINAL Est. Price ​(TP x 1.25)  PhP 4,342.81   ~​ PhP 4,345.00  PhP 5,211.56   ~​ PhP 5,215.00    Next, Table 6 presents the price difference between PowerDrive and its competitors. Cells in green                              signify that PowerDrive is cheaper than the competitor by the given percentage; likewise, cells in red signify                                  that PowerDrive is more expensive compared to the competitor by the said percentage.     Table 6. Price Differences between PowerDrive and Its Competitors in Percentage    PowerDrive    10,000 mAh  20,000 mAh  JBL Charge 3  46.35%  35.61%  SCS ETC 2­in­1  67.18%  100.65%  ADATA DashDrive AE800  5.52%  13.39%    Lastly, projected revenues and expenses for years 2017 (first operating year) through 2020 are                            shown below (Tables 7 and 8). At the end of the first year of operations, around 7,300 units of each model of                                            PowerDrive are expected to be sold (around 20 units of each model per day). Marketing expense is                                  estimated to be around PhP 50,000, which will be used to pay Lazada, costs for participation at events, and                                      other marketing events. This is expected to increase at a steady rate of 5% every year. Moreover, other                                   
  12. 12. expenses (selling, general, administrative, income tax, etc.) are estimated to be around 10% of the cost of                                  goods sold yearly.    Table 7. Income Statement for 2017     ​The projected growth rate is based on the annual increase in the number of smartphone users.                                Given this, an increase in net income of 9%, 7%, and 7% are to be expected in years 2018, 2019, and 2020,                                            respectively.    Table 8. Projected Income Statement for 2018­2020      IX. Place    The product is primarily distributed through tech­rich virtual marketplaces. These are digital                        marketplaces in which there is a large variety of technological and electronic products for sale and which are                                    very proficient in the sales and promotion of these types of products. These marketplaces, such as Lazada                                  and Ebay, were chosen because of their affinity to the primary target market, who are heavy tech­users and                                    who are always connected to the internet. Aside from the wide demographic reach of these websites (it is                                    accessible to anyone with an internet connection), most of their users fit squarely into the primary target                                  market. For instance, in 2015, more than 50% of Lazada’s gross merchandise volume ­ or the value of items                                     
  13. 13. that shoppers buy ­ came from mobile users. It is exactly this group of people ­ users who are highly                                        dependent on mobile technology ­ that PowerDrive is targeting.     The products are going to be available worldwide as a consequence of the choice of marketplace. The                                  products can be delivered worldwide by courier services such as FedEx, UPS, or DHL. For local buyers,                                  couriers like LBC, JRS, and Xend can be chosen by the buyers depending on their comfort level with the                                      respective companies. This allows for unparalleled convenience for buyers of the digital age.     X. Generic winning strategy    Of Porter’s 5 Generic Winning Strategies, differentiation best reflects the success of the product.                            First, the product is different due to its functionality. The increase in functionality proves to be essential in                                    this day and age of increased demand for connectivity. People are always on the go, and PowerDrive’s                                  functionality as well as its portability fulfills a growing need in the modern man’s market.     Second, PowerDrive is durable. Unlike other products in the market, PowerDrive boasts of shock resistance,                              dust resistance, water resistance and includes a 3­year warranty. This kind of durability is difficult to find in                                    products of a singular nature, more so in a multi­functional device. But because PowerDrive is made of high                                    quality materials, these may be guaranteed to the customer.     Third, PowerDrive differentiates itself through its value for money. Purchasing separate speakers, hard                          drives and power banks will easily cost three times as much as owning a single PowerDrive. The price of a                                        single PowerDrive unit is comparable to that of any of the single items on the market. Plus given the                                      functionality and the durability, there is no question about the product’s value for money.     Finally, PowerDrive is different in that it offers excellent customer service done through reliable and                              accessible technical support and ease of ordering and transaction of the product. This is a feature that is                                    usually overlooked in Filipino­made products. Customer service is not a high priority in local businesses. But                                with PowerDrive, we recognize the growing demand of customers for good service, and their appreciation                              for easy and hassle­free transactions. This sets the product apart from any of its competitors, most of whom                                    as based abroad and do not have a solid service center based in the country.                                  
  14. 14.   References    ● “Power Bank Market worth 17.8 Billion USD by 2020”  (​http://www.marketsandmarkets.com/PressReleases/power­bank.asp​)  ● “Global Power Bank Market Set For Rapid Growth, To Reach Around USD 17.2 Billion By 2020”  (​http://www.marketresearchstore.com/news/global­power­bank­market­194​)   ● “PH is fastest­growing smartphone market in ASEAN ­ report”  (​http://www.rappler.com/business/industries/215­tech­biz/136777­idc­smartphones­market­philippin es­asean​)    

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