Launch a new product/service

A comprehensive plan to launch a new product/service in the post covid pandemic era using Michael Porters Five forces model approach

Porter’s five forces is a powerful analytical model that helps business managers and marketers in the early stages of introducing a new product or service in the market to enable them to stay ahead in challenging for the market.

In this case, as we launch a new product to the market that will target older people, we will use Porter’s five forces model to roll out our new product to the market.

The model will help us to analyze and understand the dynamics of competitors in the industry and the market. In doing so, this help in tap into  potential opportunities for our niche, mainly when coming in as new players

Porter’s Five Forces tries to access potential heights of profitability, opportunity, and market risks based on five key factors within the industry. The following are each force elaborated below.

1. Competitive rivalry

The amount of competition currently in the market that the company faces is the first aspect of the model to analyze.

The intensity of the competition varies within each market or industry, and these variations are vital in developing the plan.

Competitive rivalry is best in the industry’s concentration ratio. The lower the ratio, the intense the rivalry will be.

The rivalry will also be intense when the barriers to exit the market or industry are very high, mostly this post covid era, this forces the company to remain in the industry even if when the profit margins are not favorable.

Things to consider under competitive rivalry are the following

1. The level of competition on the sector of the product/service to be newly launched in the market.
2. Who are the big producers of the same or similar product or service, and the advantages do they have over you?

• The small and independent rivals in the market and what they are doing to stay competitive and leverage the market.

In perusing an advantage over competitors, the firm should:

1. Changing the price of the product/service to more favorable compared to that of the competitors.
2. Exploit the excellent relationship with the suppliers of the good to the market.

• Creatively exploiting the channels of distribution of the product to reach the target group.

1. Improving the product/service differentiation to make it stand out to the target audience
2. Substitute products

These are products that other industries produce that similar meet needs to the end-user or consumer.

When more substitutes become available and more affordable, substitute products within a particular industry may limit the ability of the firms in that industry from raising prices and improving profit margins during this post covid 19 pandemic era.

Substitutes will always impact price-based competition and their threat relating to technology.

Newer technologies play an essential role in contributing to the competition of substitute products and services.

In this post covid pandemic era, most people are not well financially; hence this will need that the product that will be launched to be relatively cheaper in price that its substitutes already in the market for it to be more relevant in the market.

In perusing an added advantage to substitute products, the firm should

1. The firm to access how easy it is to find an alternative of its product or service in the industry.
2. The aspects of the firm product or service that the consumers can do manually

• How the substitutes that are cheaper measure up against the firm’s products for ROI

1. Assessments of substitute producers’ profitability margins and their aggressiveness in the market.
2. The number of the substitutes available in the industry should be known and their prices compared to the product to be launched to know their price difference.
3. Bargaining power of the buyers

Described often as the market of outputs, this force is going to analyze to what extent the customers impact an industry or firm.

When the buyers’ power is more substantial, leading to a situation where there are many suppliers and few buyers, in this scenario, the buyer has the most influence in determining the product’s price.

To mitigate such kind of buyer power, the firm should seek to point buyers with less ability to negotiate, which to suppliers to handle most of the marketing for the firm and the firm to develop high level offers that are strong and appealing that it is not easy for the buyers to refuse.

Things to consider in the bargaining power of the buyers

1. Get to know how powerful are buyers currently in the industries market
2. How many buyers are available and the types of them you have interacted with

• See if they have the power to dictate the terms of business in the industry’s market.

4. Barriers to entry and exit

The possibility of a new or firm coming into the industry impacts competition by raising it.

It’s vital to assess how easy other firms are to enter the product’s niche that the firm wants to launch into the market.

The most attractive segments and niches of the industry will have varying difficulties in entering and exiting the market, especially this time of the post-pandemic era that we are in that is driven by economics.

The barriers to entry to the industry are unique in different sectors, and they help curb the rate of entry of new firms joining the market; this maintains a level of profit for the current players in the industry

For the firm to ensure or enhance its competitive advantage of the new product, barriers to entry are created.

The exit barriers limit the firms from leaving the market, which could intensify the rivalry.

In summary, when entry and exit barriers are high, the potential profit is high.

5. The power of suppliers

The force is used to analyze how much power and control the market inputs (suppliers) have. That has the potential to raise its prices or reduce the quality of the goods or services purchased. That will potentially lower the industry’s profit margin.

The product or the service the firm intends to launch should have many suppliers and substitute suppliers, and this is important in that t will help the firm to be in a better position of the bargaining end

This will help the firm to be able to dictate price and influence or boost the availability of its product.

In order for the firm to mitigate the power of suppliers is to build a mutual relationship with them and also to source from multiple suppliers.

The organization should not allow suppliers to :

1. Alter the quantity supplied to the firm for production purposes.
2. Increasing prices without them suffering from the drop in the volume.

• Have supreme control over a product that is needed in critical stages of production of an end product or service.Three marketing methods I will use to inform customers from all relevant segments about the arrival of new playstation5 at media mark outlets.

Marketing methods are various ways and plans used by a business or an organisation for reaching prospective customers and luring them to be customers of their products and services.

The three marketing methods I will use are the following

1. Digital marketing

Digital marketing will communicate the benefits of the new arriving playstation5, its latest software upgrades and its price using digital which includes, social media marketing, online display marketing, email marketing and search marketing.

Using this method its easy to track and obtain a large amount data or information, that will be analysed to provide insights into customer behaviours in order to create a more targeted online experiences.

This method can be used to exploit the behavioural segment where we analyse customer behaviours such as online shopping habits; this will help in designing specific advertising to meet each behaviour the customers may exhibit.

This data is vital because it gives a connection directly to identify how the customers interact with the product, hence this will help in the marketing more effectively.

1. Product marketing

This marketing method articulates the unique values of the playstation5 and how it will solve the customer’s particular problem.

The method employs buyer personas, messaging, sales enablement tools and massaging; they also partner with product teams to launch and display new features of playstation5. This will show the value of the new product in a a way that works hand in hand with the prospective customers.

This method will help tap into the psychographic segment of the market because this deals with characteristics that are mostly mental and emotional, this will be achieved by the showing of the superiority of the upgraded new playstation5 with amazing features .

It will reflect how the organization rolls in new experiences to the market.

• Social media marketing

This method will utilize the social media networks such as Facebook, Twitter and Instagram to promote the PlayStation gaming console

The aim is to create and increase awareness and interest of the customers on the playstation5.

This method requires the marketing team to be active to respond to the continuous changing conditions of social media.

The advertising content on the social media should be regularly evaluated and to be prepared quickly to respond to customers critics or praises, and this will require a deep understanding of the playstation5 gaming console.

This method will make use of the generational segment, to be more specific generation z will be tapped due to their enormous online presence. The geographic segment will be also be reached this is so because social media marketing is not affected by geographical distance and features or barriers.

This method is both appealing and engaging since it will involve displaying of the playstation5 gaming console features on the social networks. There will be also be engagements with customers answering their questions on various matters touching the functionality and features of the console.

Challenges of opening a business including entry barriers to market in post covid and the solutions to minimise the impacts of the barriers on business strategy and growth.

This post covid 19 era has proved to be difficult for small business start-ups this more due to the effects of the covid pandemic which has many economies on their knees, and the high entry barriers present in the market have discouraged many start-ups from progressing.

Challenges of opening a business in post covid and the market entry barriers

1. Access to capital is one of the biggest challenge Thomas will face, the capital he will need to start the business, stay afloat, keep his supply channels open and balance his personal and family demands. Thomas may face a hard time trying to figure out where to source the capital for his business because the covid 19 pandemic wrecked economies not only in Germany but all round the world.
2. Thomas may experience lack of demand for his furniture business. With most people not having money due to covid 19 pandemic effects, fewer people will be willing to spend their money on furniture. Without enough people to buy Thomas furniture products his staat up will encounter many hurdles .

• Adapting to this prevailing harsh economic situation around the world created by covid 19

It will be not an easy task for the business that Thomas wants to start .

Since this will how the business will operate , the volume it will sell, and where it will source its raw materials, there will be a problem between balancing staying afloat and going under.

1. Thomas will encounter a problem when hiring an employee since he will need someone to help bearing in mind it’s a furniture shop and it involves a lot of work.when to hire and how to pay the employee especially this post covid proves to be a hurdle, also how to manage the employee may pose a problem because it needs skills to hire and manage people in a business.

Entry barriers to the market Thomas will face

These are factors that will prevent Thomas from entering the furniture market

1. Capital requirements might be so enormous for Thomas to meet for him to be able to start his furniture business. These include the financial resources that are required to set up the infrastructure of the business.
2. Access to distribution channels can be a barrier to Thomas if logical distribution ways have been locked up by those present in the market.

• Government policy with various controls such as licensing requirements, taxes, and many others may be prove to be an obstacle for the just starting business.

Solutions to minimize impact of entry barriers

1. Thomas should consider producing high quality funitures this will make these products less price sensitive.
2. He should start with a minimum viable furniture product and then later iterate to respond to consumer feedback.

• Thomas should consider leasing rather than buying the equipments he will be using and also rent the retail space to cut operational costs

Barrie was advised by a friend to legally change his trading status as sole owner/trader to that of a limited liability company when he had an idea of opening more branches in the future. Do you agree with this suggestion? Provide examples to support your arguments.

I support Barrie changing his trading status from sole owner to limited company because of the following

1. It will minimise personal liability

forming his own company will grant him liability protection this helps when if your company run into trouble, your personal assets will be interct and secure.this is because a limited company is always treated as a separate legal entity in its own right this means that the business is completely separate from the owners and managers.

Any losses, debt, legal claims associated with the company are the responsibility of the company itself not Barrie.

As the owner or a shareholder you have no obligation to pay more than the shares you hold in the company. If the company is unable to pay its creditors , Barrie  will only be required to contribute his share of unpaid shares , beyond which his personal assets will be secure.

1. Tax efficiency and planning

Limited liability companies pay 19% on their profits, whereas a sole trader pay 25-45% income tax on their earnings. This will offer Barrie with a great flexibility planning of tax.

If Berrie changes his status to Limited Liability Company he will pay less in tax and the surplus money will be reinvested into the business.

• Berrie will have a higher personal rumination

By Barrie setting up a company, he will reduce his personal and national insurance contributions by receiving both salary and dividends.

The company will not be liable to pay corporate tax on the salary received because salaries are a deductible business expense .

The rest of Berries income will be taken as dividends that are paid after corporation tax profits. Barrie will benefit from an annual dividend allowance.depending on Berries annual profits he could save a lot of money in tax yearly by operating as a limited liability company instead of a sole trader.

1. The company will be a separate legal entity.

A limited liability company is a legal entity with its own rights that are completely separate identity from Barrie, unlike being a sole trader.

That being said companies can strike contacts on their own, and are responsible to cater for their debts and liabilities.

Barrie will be liable for the sum of his unpaid shares rather than the full liabilities of the company.

If it comes a time and the company is declared insolvent only it will be declared bankrupt but not Barrie.

1. Credibility and trust

The professional status that are encompassed by a limited liability company structure will add credibility to Berries business.

For instance, other large corporations and agencies are willing to engage with other incorporated business models due to the high risk associated with the contacts they give.in this case, sole owners are not considered in these types of contacts because they can’t bear the risks associated.  In this case Barries company will be able to enter into big contacts with large cooperations because limited liability companies are able to bear the risks associated with such contacts.