Product Proposal
I have been given the assignment of designing a new product for fair trade, which is an importer from Kenya. Fair trade is a partnership between producers and buyers who are working to remove the disadvantages suffered by producers, to increase producers’ access to markets and promote the sustainable development process. Its mission is to promote social equity, environmental protection and economic security through trade. They have been supplying 50-gram chocolate bars to Oxfam for 5 years in various different flavours. It is slightly expensive then usual chocolate bars 50 pence this because of the way they treat their workers.
I am going to design a new chocolate for them as a new product I will do the research that is involved for launching the product. The research will involve market research and this way I will find out how to present my product to consumers. I am going to give promotional offer for the launching of the product I am considering giving free stickers. My market research will include primary and secondary research.
Ansoff’s Matrix
This is a further method of analyzing product and market polices it also gives you four possible strategies for increasing sales.
Market based strategies
Market Penetration: This is a basic growth area and the lowest risk area this is done by using existing markets or products to gain a large market share. This can be done by:
Persuading current customers to buy more of your products, you can use promotional offers like 5 for £1. If you are in an industry market and you are selling cars you would like customers to come back to you again and again so you would offer them promotional offers like free services of there car or 1 year free insurance. These offers will then make the potential customer keep on coming to you on a regular basis because they will know that they are getting good value for there money.
Poaching customers from competitors this is done in markets that sell products, which are made using advanced technology or are electronic goods. These products can be TVs, videos, computers and DVD players all these appeal to all customers because they are used by people in there every day life. This is the only way you can make a profit for example if one company sells a TV and DVD player together and another company would produce something more advanced like a TV and DVD player fixed in it. Then potential customers would buy the more advanced product or upgrade it.
Market Expansion: This means searching for new markets for existing products to increase their market share. This can be done by:
Entering new geographical markets, this means when a business expands to different areas to increase its sales this is mostly done through franchising. There are many companies that are franchises that are very well known like Mc Donald’s, KFC and burger king. These all are multinational franchises there are also smaller franchises and they all have the aim to increase there sales.
Catering for different market segments, this is basically offering more services like free home deliveries or longer opening hours like Asda. These services for people that are busy during the day time for example Tesco have online shopping all these stores do this to keep there customers shopping with them.
Product based strategies
Product development: This is developing new ideas for products for existing markets. This can be done by:
Adapting existing products, this can be done by making products more advanced. For example you can take out new computers with fast processing than pervious ones and also adding extras to them like C.D rewriting and also DVD rewriting.
Finding new uses for products, this can be done by taking out more advanced products to make customers life easier. For example things like pop corn makers or fresh juice makers.
Changing packing sizes, these are things like mini cans, which are appealing for young children or even different size chocolates depending on event. There are also things like bags of plaster or bonding depending on much you want to use or the amount of area you expect it to cover.
Diversification: Developing new products to sell in new markets. This is the most expensive and risky strategy. It has the risk it competition is well established the cost of production and enter cost will be too high.
Boston Matrix
The Horizontal axis shows the market share compared to the largest competitors and the vertical axis shows growth in the market.
Stars
These are often known as the strong point of the market, the products in this market are good sellers and also with a high market share. The market itself is expanding and has the high potential for market leadership. The products should achieve high profits if they haven’t achieved their position through heavy discounting.
Cash Cows
These products have a high market share but in a mature market meaning slow growth. These products finance the company in many ways like the expenditure of the marketing and also cash for development of new products this is because of low unit cost then its competitors.
Question Marks
These are products with low market share in a rapidly fast growing market, possibly a new product in a promising market it may be product that is having problems to establish itself. This means either the company benefits it by heavy marketing or with draws the product for the market because it can’t finance it self.
Dog
These are products with low market share, or the products that never reached its expectations. These can be associated with the decline stage of the product life cycle, more likely the product would be withdrawn from the market. This is because a company would prefer concentrating more on the products that are making profit.
Communicating with Customers
Communicating with customers is an important aspect for any business good communication can lead to regular customers. The customers would be more cooperative with you and your company they would even be useful for researches. For example if you were to do research on your product they would tell you what they think about your product and how you could improve it like packaging or even flavours. There are many different types of communication some of them are:
Regular and frequent customer contact is effective, but it can be costly. Phone calls, personal visits, and mailings add up in terms of cost and time. You can use computers for your customer information, and then using inexpensive, effective technologies such as e-mail, Internet-based, and broadcast fax, you can stay in touch and also do research on it.
If appropriate, hang posters that illustrate your efforts for how you are improving the environment or how you are benefiting the community as a whole. To make this way of communication more effective you can say positive things of your product and say what your goals are and how you are planning to achieve them.
There are simple ways of communicating with customers but also help build an effective customer service:
Face to Face
One way you may interact with your customers is simply face-to-face. They may come to you in a retail environment, or you may have to go to them. You need to make sure that before you try to sell a product that you are an expert on it, or at least will be able to answer any questions customers may have about how it works. One big advantage with communicating face-to-face is that you are able to use both verbal and visual cues when communicating. For example, when explaining how a process works, they may be saying "uh-huh" but have a confused look on their face. When using this means of conversation it is important to maintain eye contact, and use an appropriate tone of voice. You should make sure to thoroughly answer any question the customer asks of you, and use body language that lets the customer know you are listening. This means not to cross your arms, or turn your back while they are talking to you.
Phone Sales
This is a common means of selling. Usually it involves you calling a current or new customer and trying to sell them your product. It allows for verbal communication, but ignores visual cues. It is very important to know your customer's lifestyle in these situations. No one likes getting a call during dinner, or if they have kids don't call too late in the night. Under these circumstances, it is useful to have a script written out so you can have responses available to you based on your customer's answer. Also, before initiating conversation, ask them if they have time to talk. This small step may get you many sales you would have lost. Phones are also used for customer service lines. If a customer calls with a problem or question, listen to them. Do not get defensive if they are angry. Make sure you are clear on what they are trying to communicate with you, repeat it back to them. Make sure you keep a log of problems or questions you are getting and let your managers know what they are. This may result in a product redesign, or a change in shipping. The customer's needs are the main concern though, and phone lines can be a good means of making new sales or improving old ones.
Internet Sales
With technology changing, this may become the primary means of selling in the future. The first thing is to make sure you know the software that the customers are using. If you can't get through your website to the product then neither can they. Internet sales ignore all means of communication. It may be a good idea to have a phone number on the site to make sure the customers can ask questions. However, all of the important information about buying your good needs to be on the site. Customers need to be assured the site is secure and their credit card information will be protected. You should always verify a sale, and send confirmation of a payment and when the widget has been shipped. Make sure that the main search engines show your product when the word "widget" is typed in. Also, put a web-site address on goods that you sell retail. This will provide free advertising for your site, allow loyal customers to buy different products, and encourage your customers to use this means of sales.
E-Commerce
The definition of E-Commerce: (electronic commerce or EC) is the buying and selling of goods and services on the Internet. In practice, this term and a new term, "e-business," are often used interchangeably. For online retail selling, the term e-tailing is sometimes used. E-Commerce transactions can be handled with credit cards and it also refers to businesses who handle transactions through e-mail, fax, and the growing practice of telephone calls over the Internet. Business-to-Business is financially ahead of Business-to-Consumer on the web, both being forms of e-Commerce.
To have an effective E-Commerce you need to:
- marketing & sales
- advertise in newspapers
- signatures at the end of e-mails
- employee business cards
- company letterhead
- product packaging
Probably the most cost-effective way to promote your online business is to register your domain name with the major search engines. When consumers want to locate a service or find a product on the Internet they typically use search engines such as Yahoo!, Alta Vista, Info seek, Lycos, Hotpot, Excite, WebCrawler, etc... Once you are registered with a large search engine, anyone connected to the Internet can locate your business.
Targeted Bulk e-mail
The ability to maintain a database of customers' e-mail addresses is one of the most valuable assets of an online business owner. Well-designed web businesses will have a means of capturing customer information either through site registration or at the point of purchase. By maintaining an e-mail list of customers you can notify them about:
- special offers
- new products or services
- Newsworthy events relevant to your industry.
Marketing Mix
Marketing mix is made from 4 p’s, it is an set of ingredients that an company uses for its marketing and also to achieve its objectives. For every single product that a company makes it will use the 4 p’s but they will vary from product to product. This is because it would depend on differentiation on each product. These 4 p’s are:
- Price
- Place
- Product
- Promotion
Price
Price is a vitally important area in the marketing mix this is because prices vary product to product but it is what the company will use to gain its profit. When setting prices you have to think about how much would people be willing to pay for the product but if there are similar products like the one you have produces you should see their pricing range. You also have to think about what customers think for example do they relate price with quality? Or do they think they are getting their value for there money?
Pricing Policy: Is something that depends on what factor the product is sold in for example it were to be sold in a competitive market you keep the prices the same as your competitors. But if you products are made in countries that have cheap labour and material like India you could afford to have lower prices than your competitors.
Pricing new products: When a business launches a new product it must consider what price to use for this the business will have to study the market in which they are going to launch their product in and the choose a pricing strategy. There are many different pricing strategies they are:
Penetration Pricing: This is when a company sets its prices low for its products, when the product starts to establish it self in the market the company will then slowly rise its prices. Products that are in the competitive market use this pricing strategy. Some companies can benefit from this as well for example companies like Sony who make consoles they can reduce prices on there consoles but still the games at a price where they are making profit.
Price Skimming: Skimming is completely the opposite of penetration pricing. Firms set prices above demand based pricing to take advantage of people who like purchasing goods when they are launched. For example mobile phones when they are first launched they be at a very high price and target people who have high incomes or people who have the desire for this product. As soon as it is put on the market these people buy them. After a while usually about a month the company start to reduce the price a bit by a bit.
Differential Pricing: This is when an organization charges different prices on the same product. It is based on seasons for example in the winter you would reduce your prices on t-shirts because the season for them has gone but when summer comes you would raise your prices again because you know there is a demand for the product.
Cost plus pricing: This is a pricing policy that works for the benefit of a company. This is because it tends to ignore demand for the product or even the competition and it also is good if you want to maximize profits. Cost plus pricing is production price plus a margin of profit. For example you make a jumper which production price it £35 and you want a 20% profit margin. You would be selling the jumper for £42.
Place
When business is planning its marketing it will relate questions to place. You will have to consider the outlets you are going to sell your product and how will they reach those outlets. For example if your product is being imported you only need to find an area where rental is cheap and hire a warehouse. This more likely to be a countryside you will also need to consider transport.
Manufacturer- Wholesale- Consumer: This happens when consumers buy the product from a cash and carry warehouse. It’s good for the manufacture because they get bulk orders and the wholesaler takes on the cost with the risk of not selling the products. The consumer often benefits from low prices then if they brought from a retailer.
Manufacturer- Wholesale- Retailer -Consumer: This is the traditional route it’s still used mainly in the food and drink industry. The advantages to the manufacturer are good because they be selling products all the time. The retailer also benefits from dealing with a wholesaler because it reduces the risk of the retailer buying in smaller amounts by giving the same amount of money he would for the smaller amount. Problem is that sometimes it can take a while for the goods to reach the consumer.
Manufacturer- Retailer -Consumer: This route is becoming more common it is mainly used in the clothing industry. It’s faster than dealing with retailers through wholesalers, and the manufacture gets better consumer feed back about its products. But it’s harder for small retailers to avoid having to hold so much stock.
Manufacturer- Consumer: This is known as direct selling and also it is a very popular way to sell your products. You sell your products through factory shops, mail order and Internet selling. It’s the fastest way sell your goods and also cheaper for consumers.
Product
Product is the range of goods an organization has to offer in the market place. It is an output of any organization it can be tangible which are things that are physical goods or the can be intangible which are services provided to a customer. Customers buy products for there own satisfaction it might be because of the brand name, packaging or the reputation of a product or company. Companies like Nike and Rockport launch new products on a regular basis because the market is continuing change and they have to keep up to date or they lose.
Getting the product right: When designing a product you have to think about what you are selling and the design should be different than other products on the market this will make the product stand out more. The product name needs to be catchy; it must be something that is in demand. Your product needs to be market driven meaning by using market research you find out what customers want. You should make a product, which is product driven meaning that you design new products that no one wants to use.
Product Positioning: This is what every organization tries to achieve a specific quality and characteristics for its company and products. This can be important when you are advertising your product because you would like customers to have a good image of your products. You would try and point out all the good points of your products to attract customers.
Effective Customer Service: Customer services another important aspect when it comes to selling your product. If you have good customer services you would have pleased customers so they will come back to you also you would be able to attract new customers. This also means you get a good image for your company which can be essential in a competitive market.
Promotion
Promotion is a way to get customers to buy your goods, it consists a number of ways to get a potential customer to buy your product. This involves different ways of persuading the customer like doing things like branding, advertising, public relations and also sales promotion. Each may differ from each other but all are equally important given a certain situation these are what help you get a good company image. Every product or material producer will use promotion to sell its goods it can be a manufacturer, wholesale, retailer or even a customer.
Branding: Brand names are very important because every company would want a consumer to ask for its product by its name. Branding is important to differ products especially if they are in a non- competition market, which is a competitive market. All the prices are the same but the only thing that differs them is a brand name. Every company would like its products brand and logo stand out from the rest. A good example for good brands would be companies like Nike, Rockport, Adidas also companies like Cadburys and Coke. All these company’s brand names are well known, whenever you hear these name you think of quality. Price won’t affect companies that have a good brand name but even though they are well-established companies they still use promotions on shops and carrier bags.
Sales Promotion: This refers to techniques to get customers or businesses to buy your product its main aim really is to get customers. To do this companies use different methods like vouchers and coupons, loyalty cards which are membership cards, samples or free gifts if you spend a certain amount of money, and they also use discounts.
Public Relations: This is to improve a company’s image; it is raising people’s awareness and perception of the firm. The aim of public relations is to get good publicity not bad, it is to make a company image higher than it already is, it is also to point out all your good points of your product. You could also use public relations to boost up your sales this can be done because public relations stay in touch with the media and if your company has done well for example doubled its profits form the previous month you would advertise this. This way you would get public awareness and also have good publicity.
Advertising: Is a powerful tool that has been used for many years. Advertising is done to persuade customer to buy products this also provides information to consumers. It tells them what there product is like, how it looks like, how it works and where they can get the product. Advertising can be used anytime no matter if the product id old on the market or new. Its purpose is to increase demand, create a company image, consumer loyalty and also to make a profit. Advertising is used to make customers aware of the product. Advertising can be done through many different ways like television advertising, which is the most expensive advertising method, but it covers a large area. There are also methods like newspapers, posters, leaflets and radios.
Pest Analysis
Pest analysis, which means Political, economic, social, technological this analysis is the affects influencing businesses. This analysis is continually changing and the analysis would need to be carried out on a regular basis, especially for the businesses, which aim to launch a new product. Before you can anew product you need to see if the market is stable this means when the market is experiencing a little or no change. Also if it is dynamic this means when the market is experiencing limited change you will have to adapt to the market.
P is for political
Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include tax policy, employment laws, environmental regulations, trade restrictions and tariff and political stability
E is for economics
Economics will affect both organizations and also its customers. However the effect won’t be uniform it will be dependent on whether your business in the manufacturing or in the service sector. Businesses will need to understand how their customers and suppliers will be affected if they are going to adjust them selves in the economic factor. For example people with families and large mortgages are affected by higher interest rates. When you be looking at pacific areas in the economic sector:
Inflation
This is not good for businesses this is because of rising prices, which is measured by Consumer prices index. Sometimes there can some products, which prices are falling but the index could be rising. This is because products like mine, which are fair trade, rely on imports, which means we aren’t effect as much as the other companies are. This can be because of companies that are exporting won’t be able sell there goods abroad.
Exchange rates
An exchange rate is the price of one currency in terms of another. In my case it would be the value of the pound that matters this is because if the pound exchange rate is high importing will be cheaper. This applies to me because I will be exporting from Kenya. But if the pound rate is low it would make the costs of imports expensive, which can put my product out of the market because the price of chocolate would have to be higher, then other average priced chocolates.
Unemployment and Interest rates
High unemployment comes when an economy is in recession, which means less employment for people. This leads to people having no money to buy luxury goods but only to buy necessary goods. Interest rates are used to control inflation this is done by a group of economists getting together every month in the Bank Of England to discuss the interest rates. These economists are known as monetary policy committee. Higher interest rates will mean it is more expensive to borrow money from banks so this can mean less home improvements or a new car. If the interest rates are higher it would benefit me because it would mean cheaper imports.
S is for social
There are many social and cultural changes taking place in society. A business will have to be selective of its factors to have a measurable demand on its product. You will have to consider the buying habits of people. You have to consider different factors in society like:
Religion
Will religion affect your product meaning will it be suitable for vegetarians or will it change its packaging on religious events i.e. Christmas, Easter. For my product I am going to take in account all this because I would like my product to be suitable for vegetarians I will also change my packaging on different event especially for Christians because they celebrate Easter when they give chocolates. Also for Christmas where as other religions won’t really buy my product of there religious festivals.
Lifestyle Changes
You will have to consider different life styles i.e. married, divorced, elderly and single ECT this should help you aim your product at the certain type of group people you expect to buy your product. For example you wouldn’t sell a super car to a family man or a low class worker you would sell it to a person who is in the A class section of the Socio economic group. The same way I am aiming my product at teenagers and people with children because these are the only two groups that will buy my product maybe charity supporters by but it.
T is for technological
Technological creates opportunities for new products and product improvement and also new marketing techniques.
Invention & Innovation
This is the need to improve old products or to produce new technology and products. This is because of new products being released everyday for example new mobile phones are released on a regular basis and this is because they are using for advanced technology. The same way I will have to produce a chocolate that is different in taste and also in packaging and also to make it stand out more I will need to use a promotion.
Internet
The most important technological change affecting businesses, how these businesses respond to these developments will determine their competive future. I will be using the Internet for my product for business transactions, e-commerce and also to contact my suppliers. I might also use it as an advertising tool because it is a fast growing network.
Pricing Strategies
Skimming
A pricing policy sometimes used by companies introducing a new product. A high price is set to ensure large profits are made before the competitors are able to produce a similar product. For example game consoles when they are first introduced to the market they have high prices and once competition is introduced in the market or sales slow down they reduce their prices.
Penetration pricing
A pricing policy used to enter a new market, usually by setting a very low price then once the company thinks they have gained a foot hold in the market they will raise their prices. Companies also use this method for promotions, they make the price stand out by using colours that are eye attracting. For example chocolates when they take a different flavour out they reduce prices and then raise them if sales are going well. This method is also used for shops that open they would lower prices for opening offers to get customers.
Price competition
Attempts by firms to attract customers away from their rivals by lowering their prices. This is usually done by big companies they reduce their prices low so new competitors will be drop out from the market these companies are monopolies. They are markets that have a high entry fee like air flights or mobile phones and mobile networks. Competitors that enter the market will be drop out because when they enter the market the other organisations will lower their prices because of this the competitors won’t have as much customers neither they can’t afford to lower their prices.
Cost Based Pricing
Cost of production and plus a margin for profit, this is used to benefit a company especially if you are trying to maximize profits. For example if a company produces a C.D player and the production cost is £50. Then the company decides how much profit they want of each C.D player and then they will add that much money of the final selling cost. For this strategy to work a company has to take all overheads in to account or the company will be in trouble.
Competitive Pricing
This is when businesses set their prices same as their competitors, these are markets that have a lot of competitors. This market is known as monopolistic competition. There can also be markets like oligopoly, which are businesses with very few competitors but have a lot of competition. For example companies that produce cars they have a lot of competition or companies that produce chocolates. These companies have fewer competitors but a lot of competition so they produce more advanced or variety of their products.
Price Discrimination
This is where firms charge different prices to different consumers for the same product. A good example is cheaper rail travel for students and OAPs. I’m going to give students under sixteen ten percent discount for any product over thirty pounds.
Destroyer pricing
Also known as predatory pricing. This is where a firm’s charge low price that they know is uncomfortable for their competitors. Once they have driven competitors out of the market they will raise prices.
Product Life Cycle
The product life cycle is a description of a product life it is from the day it is launched to the day it is withdrawn from the market. The product life cycle will help a company decide if the product is worth having more money invested on it. Every company knows when they launch a product it might not be successful but if it is it will one day be withdrawn. Sometimes to keep the product on the market the company might improve the product for example when a mobile phone was first launched it was big and heavy. Then once they started to lose publicity the mobile phone company launched a new phone, which was slim, and you could have ring tones of your own. Then they improved that as well by putting cameras on them and other gadgets. The product life cycle is made from 5 different stages they are:
Stage 1: Development: Introducing a new product on to the can be very expensive and time consuming. No product can be thought of one day and developed the next day, for each product idea you have to do research this can be expensive. The research can take weeks, months and in some cases it can take up to one year. At this stage you are tend to be at a loss and big companies usually use cash cow to support the development of the product. The research will involve market research to see whether the intended customer will like the idea of this form. It will also involve technical research, to bring the product to research and development from the drawing board. Then it will be test market, which is a limited trial run to see the acceptability of the new product and price the decision would be given to go ahead or not.
Stage 2: Launch: At this stage the product has been given the go- ahead and the product is introduced to the market. Despite all the research it is hard to tell if the product will be a success, the test market might have been a success but a consumer is curious to try the product once. The main question will be that will the consumer by the product again and again? To help the product you have to do heavy marketing to gain customer awareness of the product this is more likely done by advertising. Gain the customers interest through public relations also to get their desire through sales and promotions. Then get the customers to try the product through effective selling techniques.
Stage 3: Growth: The launch is successful and the market share is increasing you are also getting customers to buy more of your product. It will be a good and exciting time for the company because the profits will be at its highest (stars). After a while the excitement of the new product is lost but you can still make money through competition. If you have time and money you might be able to make your product more advanced and keep your customers. Otherwise a company would carry on with its marketing and always have there shelves stacked up with there product. This is because it is easier to lose a customer than gain one.
Stage 4: Maturing: Once the product has reached this stage it is essential for the company to keep any possible profit coming in. one way they can use it to keep their customers is to give them bonuses like collecting tokens for a good. This may help them keep their customers loyalty. Products at this stage are often referred as cash cows they are being milked for their benefit of the company. At this stage the company is also aware of the fact that they have to launch a new product.
Stage 5: Decline: Eventually the product will reach the end of the cycle (dog). The company will then start to reduce prices to sell all its remaining products and then the decision of withdrawing the product will be considered. They will have to drop the product even if it means disappointing some customers because people might refer to it as out of date also because they have another product coming to the market soon.
Questionnaire Analysis
When I asked 35 people what type of chocolate do you prefer most of them said that they light chocolate. White chocolate was second popular and only 5 people liked dark chocolate. From this I have found out that light chocolate is preferred more than dark and white chocolate. So I am going to make my chocolate bar light chocolate.
Then when asked what kind of filling they prefer most of them said plain but all the other fillings where preferred more than 1 person. I would like my product to be available in a variety so I will make my product available in the top 3 fillings chosen by people. Then I would like it to be available in other fillings to make special promotional offers.
This is one of the main questions for me because I asked the people how much they were willing to pay for an average 30g chocolate bar and most of the people said they would like to pay 25p-35p. This is what I am going to aim my product to be selling at about 35p.
When I asked people what brand do they buy on a regular basis they said Cadburys and Nestle was second. I think these are the 2 main established companies that are producing chocolate bars. I might not be able to make as big as their advertising or revenue but would like my product to be placed next to them on shelves.
Questionnaire
I have been asked to produce a questionnaire for my business studies coursework, I would be grateful if you would take a few minutes of your time to help me with my research.
Please tick a box:
Are you male or female?
What age group are you?
Do you know what fair trade is?
What type of chocolate do you prefer?
Do you like any of the following in your chocolate?
Would you prefer to get a promotion with your chocolate?
How often do you buy chocolate?
How much are you willing to pay for a 30g chocolate bar?
What chocolate brand do you prefer?
SWOT Analysis
A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis and is sometimes called situational analysis.
The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection.
S- A strength is a specific asset, skill or competence found within the organization
which would help it achieve its objectives.
W- A weakness is a specific feature found within the organization, which could prevent it achieving its objectives.
O- An opportunity is any specific feature in the organization’s external environment, which would enable it to achieve its objectives.
T- A threat is any specific feature in the organization’s external environment which
would prevent it for achieve its objectives.
Strengths
A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. Examples of such strengths include:
- Patents
- Strong brand names
- Good reputation among customers
- Cost advantages from proprietary know-how
- Exclusive access to high grade natural resources
- Favourable access to distribution networks
Weaknesses
The absence of certain strengths may be viewed as a weakness. For example, each of the following may be considered weaknesses:
- Lack of patent protection
- A weak brand name
- Poor reputation among customers
- High cost structure
- Lack of access to the best natural resources
- Lack of access to key distribution channels
In some cases, a weakness may be the flip side of strength. Take the case in which a firm has a large amount of manufacturing capacity. While this capacity may be considered a strength that competitors do not share, it also may be a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment.
Opportunities
The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include:
- An unfulfilled customer need
- Arrival of new technologies
- Loosening of regulations
- Removal of international trade barriers
Threats
Changes in the external environmental also may present threats to the firm. Some examples of such threats include:
- Shifts in consumer tastes away from the firm's products
- Emergence of substitute products
- New regulations
- Increased trade barriers
Trade Description ACT, Monopolies and Mergers ACT
A trade description involves the supply of information regarding products and services that is/are traded in the course of business. The law requires all information provided, relevant to the nature of business being carried and the products and services relevant should be clearly mentioned and made public is accurate and not misleading.
The Trade Descriptions Act 1968 governs the description of all products, services and businesses. The rules require the communication of such information to be verbal or written. A written can be in the form of an advertisement, brochure, invoice or an order form. Advertisements may contain pictures, images and/or graphics for appropriate pictorial representation of the product or service.
Should a trade description be supplied incorrectly there are serious penalties. The Act specifies that it is an offence where
- false or misleading description has been provided in verbal or written form or by action performed prior to the supply of products and/or services;
- there is an offer for sale for goods for which false or misleading information is provided - an exhibition of goods for supply in public or being in possession of such goods for the purpose of supplying it is considered to be an offer for sale and therefore falls under the ambit of the Act.
A monopoly is defined in the UK as any business with a market share of 25%+. These businesses have a lot of market power which is sometimes abused.
An important potential form of abuse is ‘anti-competitive’ practices where a large business tries to make life difficult for smaller businesses (ideally putting them out of business) and this gives consumers less choice, higher prices and worse service.
Mergers: a full joining together of two previously separate corporations. A true merger in the legal sense occurs when both businesses dissolve and fold their assets and liabilities into a newly created third entity. This entails the creation of a new corporation.
Well trained, motivated staff in customer service
Over two-thirds of customers who seek a new store do so because they are treated with indifference at their current one. Most people leave stores not because of terrible service or a horrible experience. Most leave not because of prices or selection or convenience. They find new places to shop because store employees do not seem to care whether they shop or not. Customers want to be welcome and appreciated.
All businesses, regardless of type, have one primary and common goal to serve and satisfy their customers. Satisfied customers are the number one indicator of business success.
The key to exceptional service lies in building relationships with people staff and customers. The life of a business depends upon the quality of relationships with these two groups of people. By understanding and focusing on the needs of employees and the needs of customers, businesses create equally beneficial relationships. Without the best efforts of its employees, businesses struggle. Without the loyalty of their customers, businesses fail.
Building a business on relationships to products gives no sustainable competitive edge. Other stores can offer the same products. Very few stores can sustain a price advantage against larger competitors. However, by creating relationships with your customers, your business can achieve and sustain a competitive edge. Relationships with people build loyalty that cannot be copied.
The basis of good customer service is really quite simple:
- treat customers with respect
- provide them with the information they need
- make their shopping experience easy and satisfying
- When you make a mistake, make it up to them.
To influence staff feelings towards customers the emotional component of attitude they must feel empathy and respect for the customer. One way to achieve this is by viewing the customer-employee relationship from the perspective of the customer. Storytelling about experiences as customers and role playing customer interactions put employees in the customers' shoes.
