LG Watch Phone Essay

LG Watch Phone Essay.

The consumer electronics industry is associated with rapid growth, leaps in innovation and fierce competition. LG’s attempt to release their latest technology, the Watch Phone, is crucial in order to secure their current position as one of the dominant market leaders. With a well-integrated and effective marketing plan, LG has the potential to change the market with a product that resembles a high-end timepiece in addition to the full functionality of a smart phone. After already having launched the product in Europe, LG is now faced with the task of expanding the device’s market to include Canada.

Having identified a clear target market, the promotional plan will focus on first raising awareness of this new product in the Canadian market. With significant financial resources for a large marketing budget, we recommend several forms of traditional means of advertising as well as joint advertising with telecommunications carriers. The product should be conveying an image of a stylish luxury good for young affluent professionals.

Furthermore, pricing decisions reflect a skimming strategy and the product will be distributed with the “big 3” telecommunications companies in Canada.

Through an analysis of the internal and external environment as well as threats and opportunities facing LG, we are confident that the company is poised for success in achieving substantial sales within the profitable market we have identified. We estimate justifying our budget with 25,000 units sold and a profit margin of 25%. Ultimately, we want to attain robust returns for our shareholders and capitalize on this opportunity to make LG the number one household brand for consumer electronics. The Canadian Market Launch

The LG Watch Phone is a revolutionary new product in the consumer electronics industry making its way to Canada for the first time since its preliminary launch in Europe last year. As this is a new product in a segment of its own, establishing this product as a success in the volatile technology industry will be largely attributed to the actions LG’s marketing team takes in the period leading up to the launch. Our job is to come up with a comprehensive marketing plan that will present the value of this product to our target market and ensure that this product will be successful in the Canadian market when it is launched.

Having completed a thorough analysis of our external environment, our internal competencies and the needs of today’s consumers, we will identify a target market, a positioning strategy, and a marketing mix that will create high demand in the market, leading to an overall profitable launch and sustained product life cycle. Analysis External Influences One of the major opportunities for LG Electronics is the fact that the portable consumer electronics industry is exhibiting the highest growth in comparison to in-home and in-car electronic products – in 2008 this segment captured 46. 8% of the total consumer electronics market.

In North America, mobile phone products are in greatest demand, recently accounting for 18. 5% of consumer electronics sales. Additionally, experts observe that the industry has not been negatively impacted by the financial crisis and the prices for these electronics remain stable. Furthermore, the portable consumer electronics market currently demands constant product miniaturization and integrating multiple functional features and multimedia in the device, which bodes well for LG’s Watch Phone. With this device, LG goes one step further, introducing the first wearable smartphone ever produced.

This product is something that has great potential to catch on with the market. In terms of opportunities that are exclusive to the Canadian market, it is important to mention that LG has been successful in Canada for many years and has established relationships with the telecommunications providers and other members of the distribution network. Finally, there is the opportunity to use Canada as the ‘test’ market, implementing the marketing plan and making the necessary adjustments before a future launch into the United States due to the similarities between these two markets.

However, LG’s path to success in Canadian market is laden with threats. Firstly, although the industry survived the financial crisis without being severely impacted, it is unknown whether the prices for consumer electronics are not going to decrease in the near future. Moreover, it still has to be proven that the general public is ready for mass commercialization of wearable phones. Specific to Canadian market, the major threat is the fierce competition. Albeit no competition has the same product, the large players in the market have much lower prices in comparison to the Watch Phone’s European offering in their own products.

In comparison with phones ranging from $0 to $199. 99 on contracts and from $110. 00 to $699. 95 without it, LG’s European price of $1,290. 00 on a 12-to-24 month contract seems enormous. There is a threat that the customer will not be willing to part with such money for the value that the LG Watch Phone provides them with. Internal Competencies and Deficiencies LG currently offers a variety of different products available through many different sources. Their products are available at most main retailers including Future Shop, Best Buy, and Rogers.

Within the consumer electronics industry, LG produces mobile phones, televisions, and home appliances which are made to be observed as premium products. With the premium positioning of their products comes higher prices in general compared to competitors. LG generally incorporates television and print ads for their new product lines, which follows the industry standards. In addition to traditional advertising LG has been involved in marketing campaigns with both Avatar and Transformers. Strengths:

LG is the 4th largest South Korean multinational conglomerate corporation as they have developed a strong brand identity and reputation of being an innovative leader in the consumer electronics industry. The company is currently the 3rd largest phone maker in the world with a large market share in the mobile phone industry. Their market share in the consumer electronics industry is 5 percent, which is comparable to industry leaders. This is accomplished by always introducing leading edge products by using high quality materials in their production.

Also, LG has a significant amount of financial resources available for funding of promotional campaigns. In addition, LG has the advantage in production scalability from consistently delivering and producing a variety of trustworthy products from previous experience. Weaknesses: On the downside, LG faces the biggest problem of being new to the Canadian Market. LG is a company that has never been in the industry of producing watches. Watch enthusiasts may have doubts as to whether LG is familiar with the watch industry.

They also like variety and often like to wear different watches for different occasions. There are currently numerous new functionalities for a watch and there may be concerns of this product being able to adapt to them. The Watch Phone is extremely expensive at the current price of $1290 on a 12 to 24 month contract in the UK and thus the price is high compared to competitors. Therefore, consumers must be enticed to leave their existing phone contracts to switch over. The Watch Phone may also be seen as inconvenient due to its size of being too bulky.

The Young, Affluent Professional We have decided to target men in their 20’s up to the age of 40, who have been university educated and are classified as “young professionals” in today’s demographic segments. This market internally emphasizes the importance of stylish yet functional products that deliver a pronounced sense of achievement and convey the individual’s refined taste in the newest fads and technological advances. Geographically, the consumers are urban/suburban members of densely populated cities in Canada.

In the business world, a watch is regarded as an accessory to demonstrate wealth and power aside from the obvious function of telling time. Thus we are looking to specifically target university educated men with a medium to high income level and who have a clear desire to pursue further financial success. This age group is targeted due to its Generation X and Y characteristics that make the group more attracted to the Watch Phone. Both Generation X and Y are favorable potential consumers of the Watch Phone because of their use and acceptance of technology.

More specifically, Gen X has the spending power while Gen Y has a strong love for digital electronics such as cellphones, digital music players and digital cameras. Based on the widely used psychographic system of VALS, the main behavioural segments we aim to target are the innovators, achievers, strivers and experiencers. The innovators are characterized as successful, sophisticated change leaders who are active consumers and also make purchases that reflect a taste for finer things. Similarly, achievers are also active consumers who favour prestige products that demonstrate their success in addition to the value in functional benefits.

Thus a novelty product that incorporates the capability of a watch and a phone together along with a stylish appeal that can convey success will cater to the tastes and preferences of these two VALS segments. The lifestyle of strivers involves being trendy, stylish and displaying status. The experiencers spend high portions of their income on being fashionable and acquiring the latest in any trend. Another big advantage that the watch phone has is the ability to satisfy customers who are active in sports. With the surge of mobile devices, people are increasingly trying to incorporate the use of them in their daily sports activities.

Similar to the arm band strap of mp3 players used by runners, the Watch Phone facilitates the use of technology while exercising, providing tremendous value to working professionals who also are health conscious and are actively attempting to stay fit (no pun intended). Decision Criteria The decision we make must be made to ensure that a few key criteria are met: 1. Our activities create widespread demand for the LG watch phone in the Canadian market 2. Our activities ensure profitability in the short term as the technology industry is rapidly evolving 3.

Any decisions we make must parallel the mission and values of LG Electronics, Inc. An Integrated Marketing Campaign To be able to call the LG Watch Phone a success in the Canadian market proceeding the upcoming launch, we need to put into motion a full advertising campaign that will introduce the market to our revolutionary new product. This LG Watch Phone will be portrayed as the latest and greatest in the consumer electronics industry; this is a device that simplifies everyday life by being attached to your wrist at all times.

The LG Watch Phone will get widespread media attention through a variety of promotional mediums including television, magazines, and the Internet. This product will be priced as a premium product and will target those young professionals who lead a busy life and have a need to stay on the leading edge of technological innovation. Through the use of advertising tactics aimed at directly targeting the young, affluent professional, we put ourselves in a good position to have a successful launch in the Canadian market. Marketing Strategy

A differentiated segmentation strategy would make the most sense for a product of this nature. Like many major mobile phone releases, there are often several specifications to choose from and could be distinguished through variety in data storage size, design (ex. colour and size), screen resolution and most importantly price. Further, service carriers in Canada will offer major discounts on the retail price of the phone if you decide to purchase a 3-year plan along with the phone. Consumers have the option of choosing between paying full price or a discounted price with a contract by the carrier.

Service providers also give a variety of plans to choose from that allow each price segment a different offering. Experienced professionals most likely pay full retail price or sign with a plan. The best positioning strategy would be to focus on product attributes that are most important to the target market. Due to the novelty and innovative appeal of the combination of a watch and a phone, the product largely speaks for itself. It makes sense for the product to focus on leadership, placing importance on dimensions of innovation, quality performance, design and reliability (See Exhibit A).

Based on this strategy our positioning statement is as follows: “For young, affluent professionals who are looking for a sleek, stylish, mobile phone, the Watch Phone is a revolutionary smartphone that combines the convenience of a watch with the technology of a mobile phone unlike any traditional smartphone. ” Consumers will look at this product as one that will fulfill a psychological need. Many individuals in our target market will have both a phone and a watch, but a product that will integrate two very essential products in a young man’s life will be very attractive to that individual.

The price will be set at a premium, which means that once they are aware and interested in the LG watch phone through our promotional campaign, they will take action by making a complex purchase decision in which a thorough information search will take place. This means that it is vitally important that the details of the product are readily available to all potential consumers. Marketing Mix Product The LG Watch Phone is the first of its kind by having a wristwatch format with both the dual functions of a phone and watch. LG has a first mover advantage as a result of this.

Benefits include features such as a touch screen, 3G connectivity, Bluetooth, web browsing, calendar, waterproof materials and a speakerphone. The Watch phone provides the convenience of hands-free features and text-to-speech. We will market the LG Watch Phone as a specialty product. Due to growing competition in the consumer electronics industry, consumers have a variety of choices when considering a new mobile phone purchase. This environment induces consumers to be highly involved in the purchase by comparing different brands/models when considering their purchase.

The product adoption cycle for the Watch Phone should be relatively quick, due to relative advantage, compatibility, observability, and trialability. The LG Watch Phone is consistent with consumers past need for mobile phones in this market with additional advantages such as being portable, stylish, and convenient. Consumers will have the ability to test and view the phone at several different distributors. It should be seen as a “fashion statement” and as a status symbol. Today’s consumer has a high affinity for brand names.

The “Watch Phone” name should be associated with the LG product and have LG’s premium product status when it is launched. Distribution Channels LG currently has the option to distribute through multiple carriers or a single carrier. It is best to stay consistent with LG’s current distribution model, by having the Watch Phone available through a variety of networks. The Watch Phone will have a selective distribution strategy through the 3 main carriers: Rogers, Bell, and Telus. These three hold 95 percent of the Canadian market share.

Koodoo and Virgin Mobile also go against our product’s core values by advertising low cost phones with cheap plans. Rogers, Bell, and Telus are all well known to carry more expensive phones with high-end plans. Pricing Strategy Since the Watch Phone operates in the very unpredictable, fast moving technology sector, our main objective is to adopt a profit orientation to ensure LG profits as much as possible from this product before trends in the market diminish the demand for the watch phone. This is a luxury product, meaning that demand for the watch phone will be inelastic when factoring in the price.

Also, since there is no real comparison to the product in the market – we are the first-mover. This will allow us to set the price in a way that reflects the inelasticity of this market segment The Watch Phone operates in a grey industry. On one side, the watch market is very monopolistic. The smartphone market on the other side is monopolistic as well, with a few key players such as Apple, Samsung, Blackberry, etc. The LG Watch Phone operates in a market of its own. It is a merger of the smartphone and watch markets – a market we call the “SmartWatch market” – which is a monopoly.

This means that there is no price competition – at least until other companies start manufacturing their own rendition of a watch-phone. To take advantage of this, we will implement a price-skimming strategy. We will set the price high initially to capture large margins from the innovators and early adopters, who are willing to pay the price premium in exchange for being one of the first to own such a revolutionary product. This strategy is very important to be able to recover the costs associated with R&D.

Once competitors enter the market, competition will force LG to lower the price on the product, which is in line with our initial price skimming strategy. This will capture the rest of the market who were waiting for a more affordable time to purchase. As the European Launch had the phone at over $1,200 USD, we believe that with the traction the product has in the market, we can be flexible and drop the price down to $799 for the Canadian launch. Promotional Strategy As LG has a large budget for advertising and promotion, having to determine our plan of attack with regards to advertising becomes very simple.

We can use an objective and task method wherein the budget is reflective of all promotional activities LG deems necessary to create a demand for the product. To create the demand that we are looking for, we will use a variety of different mediums to pull our target market to the product: 1) Television Usage of 30 second television spots during evening prime time and sporting events will allow us to reach our target market, who are likely to be watching the news in the evening and their favourite sports teams otherwise. ) Magazines We will be promoting the Watch Phone in magazines such as Forbes and Wired. These magazines epitomize the type of consumer we are targeting, and portray the professional and tech savvy lifestyles that our target market thrives in. With approximately $600,000 in magazine budget, we should we able to get 4 full page ads throughout the year in Forbes and Wired (see Exhibit E) 3) Internet Since this is LG’s revolutionary new product, the watch-phone will make a big presence on LG’s website.

LG’s website will have a “composer” tool that will allow the consumer to “build” and price their product choosing from the various features available. We will make use of the interactive nature of the internet to create buzz through social media (including Facebook, Twitter, and YouTube), as well as show some of the finer details of the product to portray the quality of the LG Watch Phone. Using a mixture of rational and emotional appeal in our advertising efforts will ensure success for this product.

Allowing consumers to discover all of the previously unmet needs which can be met with this product, along with creating the sense of luxury, exclusivity and a fashion statement will help drive the demand for the Watch Phone. We have recommended an advertising budget for the Canadian market of $5 million. In 2007, LG spent approximately $9 million on the advertising of their new product, the “LG Chocolate”. Taking into account the fact that this was in the United States, we predict a $5 million budget to be reasonable for the size of the Canadian Market.

Included in this will be a $2 million endorsement deal with Canadian born Sidney Crosby. Sidney is an ideal choice for our celebrity endorsement as he is a Canadian icon who fits the description of our target market. He will make appearances in our commercials and in portraits on our website. Our budget will be broken down into three main categories based on a $3 million allocation after our celebrity endorsement expenditure, as illustrated in Exhibit C. Expected Results

We did some calculations in order to predict our sales for the first 3 years after the release of the phone in Canadian market. We know that in 2008 consumer electronic sales in North America totaled $515 million. Furthermore, we know that cell phones constituted 18. 5% of overall consumer electronic sales. For the growth rate for worldwide consumer electronics sales we used is 8% in 2009 and 10% in 2010. Fairly low growth rates are being used because of uncertainty instilled by the recent financial crisis.

Also we introduce a “Watch Phone restrictive factor” that lowers the forecasted sales due to uncertainty of the real ability of such a novelty gadget to gain the necessary traction in the market. Taking into consideration the proportion of Canadian population to the overall North American population, the LG’s market share in the consumer electronics market, and the percentage of LG’s cell phone sales in Canadian market that LG’s Watch Phone will account for, we are able to produce a fairly conservative forecast that still allow LG to break even and earn a reasonable profit.

Looking at Exhibit B, the vertical axis represents the projected Watch Phone sales in Canada (in thousands of dollars). Then, the differently coloured bars represent projections for various Watch Phone sales percentages in relation to total LG cell phone sales in the Canadian market (these are indicated on the right; each color corresponds to a percentage of LG’s phone sales for 3 years after release; 2009-2011) (Exhibit F).

With a profit margin of approximately 25%, our $5 million advertising budget is justified with 25,000 units sold in Canada. On the graph, we can see that only in the worst case (blue bar) for 2009 do we not cover our marketing budget being 1. 5 thousand units short of the desired amount. However, in subsequent years we feel that we can now not only cover the marketing budget, but also generate solid profit.

LG Watch Phone Essay

Nokia’s Porters 5 Forces Essay

Nokia’s Porters 5 Forces Essay.

BUYER’S POWER: – Nokia had been edged out by rivals in the smartphone market who launched new and better products which resulted to Customers shifting to android phones which resulted to Nokia reducing their selling price in order to increase the rate of sales but they lost in the rate of profitability and consumer loyalty. The customer power is high; nokia is focusing on the smartphone segment because it has the biggest margin in the industry, the consumers are increasing despite the high rate of recession, product and price differentiation is getting lower which is resulting in the difficulty of buyers making a decision about the particular phone they will want to buy.

Most consumers get phones on contract and switching from one phone to another is difficult and expensive and with other brands leading in the smartphone industry, it will be difficult for consumers to switch from Samsung or iPhone to Nokia. Most of the other brands own distribution stores while nokia doesn’t really have enough distribution channels, making it difficult for buyers to reach their product easily in some countries.

COMPETITIVE RIVALRY: – Competitors were quickly catching up with Nokia’s Symbian platform. As the Symbian OS was not optimized for touchscreen devices, users were turning to the Android, Blackberry OS, and Apple’s iOS. Nokia struggled to keep pace with rivals such as Apple, Samsung, Google, and RIM in the high-end smartphone market. Nokia is not only competing with high-end manufacturers but also low end manufacturer. brand recognition is an essential factor for success in the industry, nokia’s brand name has suffered a great deal. The level of differentiation in price and product is low, making it difficult and unnecessary for customers to switch from brands, which can also create problems for new brands entering the industry to gain the attention of consumers in the smartphone industry.

The smartphones sales are providing profits for the brands, and wholesalers are focusing on brands that have the highest market shares in the industry (where nokia is lagging behind).consumers find it hard to switch from their existing handset producer to another when they are on a contract because it is difficult and expensive to change so they wait till when the contracts expires. The fact that nokia was not only slow in launching smartphones with the latest version of its Symbian operating system, development of new software services and hardware designs, but also in catching up with the touch screen technology left an open space in the industry for new brand players into the industry. It failed to gain the presence, brand recognition and customer loyalty in the USA as the consumers are known to have a strong impact in the global smartphone industry.

THREAT OF SUBSTITUTION: – The adoption of Android was growing fast and became the latest trend in the smartphone industry. The sleek touch screen look with numerous applications to go with it made the irresistible for consumers even though it wasn’t price friendly. Smartphones have become a daily necessity in our daily lifestyle so it is most unlikely for consumers to switch to a substitute products resulting to the low rate of substitution.

The ability to communicate with people and do several things at the same time will always make smartphones unique. Consumers tend to do different things on different products(for contacting people, usage of social media, emails and VOIP systems are substitutes, digital cameras for photography, TV/radio/iPod for listening music, tablets for internet browsing, reading books, emailing etc.) All these other values from substitute products can be found in a smartphone that is relatively cheaper compared to the substitute products and can be carried around with ease. Nokia had been the market leader in the mobile phone market since 1998 but in 2004, Younger buyers opted for trendier mobile phones offered by rivals such as Motorola, Samsung, and Sony Ericson.

THREAT OF NEW ENTRY: – the smartphone industry is difficult to penetrate because patents and proprietary is required so as to not get involved in legal battles over patent issues. Brand recognition is important for success and it will take a while for new players to build up their brand name. it will difficult for new players to get a share in the profitability of the market share In the industry as the few major players already account for most of the market share. The capital involved in the industry is very high owing to the funds that will be invested in areas of production, R&D, marketing budget and distribution channel in order to get to consumers. The distribution channel in the industry is very complex, without the right distribution channel, consumers can’t get access to the products.

SUPPLIER’S POWER: – Nokia doesn’t depend on suppliers leading to the moderate rate of suppliers’ power in the industry.

REFERENCE LIST
http://users.metropolia.fi/~pankajs/5forces.html
http://www.antiessays.com/free-essays/359380.html
http://www.authorstream.com/Presentation/aSGuest74841-641869-final-nokia/

Nokia’s Porters 5 Forces Essay

HTC Case Analysis Essay

HTC Case Analysis Essay.

HTC, originally founded by HT Cho and Cher Wang, was initially commissioned by Compaq to be an ODM, original design manufacturer. Their job was to engineer and design products for Compaq, all of which would be sold with under Compaq’s brand. Their innovativeness attracted business professionals and soon they collaborated and succeeded in creating the world’s first pocket-sized PC with Microsoft. Their success at fulfilling their vision of creating smaller lightweight devices then lead HTC to creating PDAs, once again a bit hit.

All of these successes lead HTC to thinking about the future of mobile phones and what their part in it would be.

Once the idea struck, it stuck. HTC’s new goal was to make smart phones and wireless PDAs. In order to achieve this, they partnered with Qualcomm, the world’s leading wireless chip maker, and allied with Texas Instruments, using their processors for the phones and internet functions that would be available through their phones.

Eventually HTC saw the future in transitioning from PDAs to smart phones and partnered with Microsoft in order to produce a smart phone together. Eventually it hooked up with Google and used its Android platform to become the user friendly smart phone that it is today.

HTC did a great job when it decided to create direct relationships with its end users. They did this by offering customized mobile phones that fit the needs of each individual customer. This tactic lead to better margins, helped HTC differentiated themselves from other ODMs, and it created a horizontal approach which helped HTC to specialize in what it did best, instead of focusing on everything concerning the supply side. Although customization was a huge hit, it did have its drawbacks. Customization produced high costs, thereby taking away from the margins. But in the end it was worth it due to the consumers feeling that they were in control of their phones and that their mobile devices were able to meet their specific needs.

Competitors: Apple, Microsoft, and Android phones. Apple was distinguished as a revolutionary, fun, advanced and user friendly phone. It was claimed as invention of the year. This provided HTC with great competition since Apple took all the hype away from its products. The app store was a genius idea that drew in consumers and took away from HTC, especially when it was still in collaboration with Microsoft, which had an app store that was too expensive to even consider. Its innovative product helped it to capture 10% of the market share within 2 years time, a huge success! Its one weakness (strength for AT&T carrier) was that it offered its products to only one carrier.

Microsoft’s Windows mobile was very popular due to its compatibility with Microsoft office, but it soon received many complaints about windows mobile due to its non user friendly experience and weak support for graphics oriented applications. Their unattractive design and slow platform detracted consumers from their products and allowed for other competitors to really shine.

Android phones were a hit! It was the first open sourced platform where it allowed third party developers to create application that could be used on different devices or carriers with no licensing fee. This approach drew many consumers due to their ability to offer apps at a lower, if not free price when compared with Apple. Seeing this opportunity, HTC hooked up with Google to be able to offer a more attractive smart phone to the market.

Overall HTC viewed its competition as its strength at times. Smart phones were still a relatively new idea, but when Apple promoted its iPhone, HTC saw the opportunity to really convince that market that it was a legitimate brand and that its innovative product would be able to support the consumer’s needs. HTC’s ability to see Androids potential is really what separated it from other phones at the beginning of the race, allowing it to have a lead against competitors in the same field.

Strength: HTC’s strength lied in the fact that they were able to were able to envision a evolutionary future and was able to fulfill its demand. Through perseverance and innovation, HTC was able to deliver a smart phone, competing at an equal level as Apple’s iPhone. Another strength is that HTC was able to make the right connections. By first pairing up with Microsoft, they were able to build a phone based off of the Windows platform, attracting many business professionals who saw the convenience in syncing their Windows phone to their Windows operated computer. When HTC found that the Windows platform was not user-friendly, they approached Google and started using the Android platform that would be more approachable and user-friendly.

Weakness: HTC’s main weakness is its lack of brand awareness. Due to its little market share in the U.S., it was hard to compete with other big brand named mobile suppliers, such as Samsung, Nokia and Motorola. By spreading itself thin globally, its concentration gave it a disadvantage. So instead of focusing on the U.S., HTC entered the European market instead due to its “unlocked” market.

Opportunities: HTC made a risky move when it started to produce its own phones under its own labels. This move eventually paid off, but its foresight into the future of mobile technology is what really gave HTC their competitive advantage.

Threats: Although HTC spent a lot of time on innovation and creating a great product, other companies were catching up very quickly. It had to find a way to differentiate itself in order stay ahead of the game.

HTC’s positioning of smart phones has really fluctuated over the years. In 2008 it had as much as 68% of market share, but within the next couple of years its hold of that market decreased dramatically. It can be seen that once HTC switched from the Windows platform to the Android platform, its revenue increased dramatically, indicating that its more user friendly platform has attracted more consumers.

HTC Case Analysis Essay