Montecarlo Simulation Essay
Essay Topic: Marketing
Paper type: Essay
Words: 3981, Paragraphs: 40, Pages: 16
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Economy is the necessity of the consumers as well as to gain the utmost credit for it. In that way our superlative innovation of “VIVO” light has its own personal history which has originated the greatest solution for the community these times. By this time, all should have been aware of the outrageous news about the ‘rising of electric bill’. One could hardly expect anyone to accept the situation. Especially people who live in areas where there’s neither electricity nor power supply.
There are people who often go for adventurous trips where they are greatly in need of light. Lighting with less capacity is always not an effective way to hold the light. There lies the problem but not without a solution which is a simple one. In this situation our team had a technical advanced resource that came up with the solution. It is none other than the “VIVO”- LED rechargeable light itself. It has the power of luminescence which will continuously last long hours.
As we have just incorporated the company, the business is in the infant stage. Further we hope to identify it as legal soon 2. 2 Vision Statement “We develop the solutions beyond your expectations based on cutting edge technologies interlinked with economy and ecology. ” 2. 3 Mission Statement “To be the leading integrated system and lights supplier to the global to the micro electronics industry and to offer complete energy saving solutions to customers for their lighting needs and providing total customer satisfaction with our highly innovative and cost-effective products. ” 2. 4 Business Model We focus to produce one of the essential products to the customer with a standard product design and size.
We have a bunch of knowledgeable and talented team to produce our initial set of production. At the mean time we target to market our products through direct marketing tool. Because we believe Door Step marketing would facilitate us to approach each and every customer individually. We mainly concentrate our product with high quality and the relationship with our customers by providing better service. Also we hope this will create a primary value for our firm. In future we hope to spread our product to Sri Lanka, island wide. 03. PRODUCT PLAN 3. 1 Features
The product will be designed based on the emerging technology of Light Emitting Diode (LED). Currently the Sri Lankan market for this type of product is dominated by imported Lamps from China, which mostly contains a florescent tube lamp inside. As per the market research the problem with these type of lamps are; these will provide light usable for maximum of one hour, even if the rechargeable battery inside is charged fully for more than three hours. The main contributor for this inefficient performance is the florescent tube lamp used. This lamp will consume more power than LED lamps.
And the brightness will also be lower than a five watts Light Emitting Diode (LED). The target customers of the company’s product are unable to use these imported lamps for the purpose of studying, working and adventurous travelling. So their needs will be satisfied with this product since the proposed product will be designed by using large number of LEDs and a rechargeable battery which is compatible and portable. It is efficient to the extent that, it will provide more hours lighting with the charging time of only few hours and more charging time will increase the usage time. . 2 Key Attributes Company is planning to incorporate two functions in the product using the LED units. That is the unit will have an Active mode and a Bright mode for convenience of the user. Bright mode: This mode is the differentiating feature of the company’s product from other lamps. This is where the unit will be supplied with more power, to the extent that the LEDs will function with its full capacity. So the lamp can be used for studying, cooking or travelling in night purposes. Active mode:
This is where the Light emitting diode will be supplied with low power using a small circuit with a help of a switch. This will result in the lamps, emitting light at a lower capacity than its full capacity. This mode can be used to place the lamp in a hall area where you don’t need too much bright. This will significantly reduce the power consumption and increase the operating hours of the unit while the durability of the LED will improve and the battery life will also increase. 3. 3 Enhancements The firm is planning to enhance its product to the extent that, it will charge itself using solar panel technology.
Currently the firm is unable to incorporate this technology, because it is not having sufficient financial aid. But once it is established in the market place it will be possible to get additional bank loan or any other sources of financing. Then the firm will be able to produce more number of units with additional features. After the incorporation of this new technology the product may be subject to a price revision and this may increase the piece. The product is made up with light emitting diodes, this means that there is low probability that this unit will fail due to the failure of this LEDs.
But the riskier part is the rechargeable battery, where the average life of a battery is around two years, so that in order to be more cautious, company is expecting to give a one year warranty for its customers. 3. 4 Product Strategy The opportunity identification suggests that, the people who suffer with the increased electricity tariffs and who are trying to reduce their electricity expenses are expecting some other forms of lighting. On the other hand there are certain areas of the country that do not supplied with the power by the electricity board, in order to carry out the native’s chores.
So this Market Gap analysis helped the emergence of the efficient rechargeable LED lamps. Initially the target segment of the firm is the consumers who live in the North and in the up country of Sri Lanka as the company has small distribution channels to market the products in these areas. After wards within the next three years it will expand the target market and company will sell the product to at least 50% of the consumers in Sri Lanka covering Eastern, Western, Sabaragamuva, Central and Uva Provinces.
Currently the product strategy is to produce the rechargeable LED Lamps which could be used for lighting purpose at houses, working places and for travelling purposes. But in future after establishing the product in the market place it will use a product mix which will include more technological products such as solar power lights and etc. The product is differentiated to attract customers, through its unique feature of brightness which could be used to light and cover a vast area (more than 500 square feet) and the efficiency where the power saved for half an hour can be used for more than five hours.
The current products in the market are less efficient and it cannot be used for the purpose of lighting a vast area, as most of the products related to this technology are small portable torch lights. The major risk of introducing a technological product is the emergence of new technologies. So company should be aware of the emerging new technologies and based on the consumer requirement, a continuous Line extension, Market Development, Product Development and Diversification strategies will be required to succeed in the business.
According to this, it has planned to introduce a self charging unit in the forth coming periods. The introduction time of this new product will not be defined at present, in order to avoid product proliferation. 3. 5 Benefits of the Product The objective behind the firm’s strategy is to make business that satisfies the customers who do not have proper and adequate electricity facilities in their region. So the target customers are the people who are in the remote areas, mainly in hill countries and north and eastern province.
Based on the preliminary study conducted, on target customers, it was identified that the main concern is lack of electricity facility and the amount of money that they can afford to obtain electricity facility through other means. The following benefits of the company’s product will full fill the above requirements and it is believed that, this is a competitive advantage of the firm compared to the other players in the industry. ? Compatibility and convenience: The product is designed with the intention that the users should be able to carry it easily where ever they go.
So the weight of the unit will be less and the size is also reduced up to the maximum. ? Expensiveness: The product incorporates the emerging new technology of LED. This has helped the company to substantially reduce the production cost. So the final output of the product will be priced in accordance with the market price, while the firm can also reduce the distribution cost, import expense and intermediation cost. Because when a company import and sell a product, the producer, distributer and ultimately the importer has to make profit from the same unit.
So the product normally will have more selling and distribution cost than the manufacturing cost. This huge disadvantage is purely eliminated from our product because it is a Sri Lankan product. So in this context the company will set the price well below the market price. So the customers can get a good quality product at a lower cost. ? Efficiency and durability: The main competitive advantage of the product is the efficient use of the product that is 30 minutes of recharge ime will enable the user to operate the unit for 300 minutes, which is comparatively high usage when comparing with other similar products in the industry. The other benefit is that we have incorporated two options to satisfy the customer needs, which is bright mode and active mode. This will further enhance the usage. ? Warranty claims: The Company will provide a one year warranty for the product. That is our company will bear all the repair and maintenance expenses of the product which is returned to us within one year from the sales date.
It increases the reliability of the product among customers. ? Customer Support: In this industry normally after sales services are not a popular facility provided by the producer. So the company has planned to provide technical support to customers after the sales regarding the usage and warranty claims. This will be done through the telephone conversation and through the business agents. So this service provides an additional comfort with the company’s product. 3. 6 Trade Secrets and Patent Rights This is a very important area to be considered.
But the firm is protected in this area because according to the initial market research there are very few Sri Lankan companies producing this type of products by importing the partly finished components and doing the latter part of the production (Assembling) in Sri Lanka. So there is no direct competitor for the firm in the current context. Bur the product may face Reverse Engineering in future. But this type of risks is common in this business area, so it is very difficult to protect this. But if the marketing team of the firm communicate the customers clearly, then it will be easier to promote the original products.
The firm is sure that it has unique knowledge and skills about its product and the business, so this is the strongest competitive advantage of the firm and, it may not disclose it to others. As many would expect, this approach has its own issues like disclosure requirement, but many ventures have competed successfully this way. 3. 7 Stage of Development The product is in the prototype stage and the company has successfully completed the previous two stages of conceptual and design stages. It will be ready for marketing once it has started the business activities.
And it is possible for the firm to grab the first mover advantage of this type of LED technology. 04. MARKET AND INDUSTY ANALYSIS Industry analysis and market analysis are two different ways to look at the environment in which a business competes. Although related, these two types of analysis differ in their scope. The purpose of the market and industry analysis is to identify the market opportunities for our product, LED rechargeable lights. LED lights are the next generation of lighting solutions which going to emerge in coming years.
Therefore there will be a good opportunity for our product in future. 1. Market Analysis In today’s technological world, we find a challenging and ever-expanding marketplace for almost any product or service. The role of the market analysis is to help guide the process of better understanding of the most important market segments, how fast the opportunity is growing, what are the key sustainable differentiations and why are these important. In this section we are going to discuss the following components: • Target market segment strategy • Market needs • Market trends • Market segmentation
Overall market The lighting industry is in the early stages of shifting away from established technologies – fluorescent, incandescent, and high-intensity discharge (HID) lighting – toward light-emitting diodes (LEDs). Adoption rates of LED lighting are expected to grow in the coming years as the efficiency and quality of LEDs surpass those of competing technologies and as the price is low. Not only the quality and low price of LED rechargeable lights, people not having the comfort of using the electricity, especially like a country like Sri Lanka, also makes way for us to make a market appearance.
Our market would be mainly based on North and central provinces as those areas have no regular and proper supply of electricity. Over the past few years the market for LED rechargeable lights has shown a growing trend and it is likely that the current trend will continue. Future development of the northern and eastern provinces may decline the demand for LED rechargeable lights in those areas as they may get the regular supply of electricity. But the increase in the price of electricity makes the market opportunity for LED rechargeable lights outshining as more people opt for cheap lighting systems.
In future, growth in the market for LED rechargeable lights is highly anticipated and it will be made possible by rapidly decreasing LED prices, ever-increasing efficiencies and improved quality of light. Therefore the revenue is expected to increase and the future looks bright for LED rechargeable lights in the coming years. Addressable market Although our overall market covers northern, eastern and central provinces our main focus would be on the rural areas of these provinces, where there is no electricity facility or the supply of electricity is interrupted often.
People who are in search of a way to minimize their cost for electricity will be also included in our addressable market. Segmentation We have identified our market segment as follows, • Groups of customers: Our main customers would be people who have no regular access to electricity, low income earners and people who want to minimize their spending on electricity. • Geography: First we would introduce our product in the local market giving more attention to northern, eastern and central provinces. • Product features: Our LED rechargeable lights give more brightness with less power consumption. Benefits: Saves power, money and time. • Prices: Our strategy would be cost leadership. We would produce the lights at a very low cost, add a profit margin to that and price our product at a low price. • Distribution channel: We would distribute our product using direct distribution methods. There won’t be any intermediaries in our distribution chain. Entry point Our main target is to cater the people who have no electricity and people who are in search of an alternative to fulfill their need for light, with a proper lighting system.
This would become an entry point for us as there are many people in Sri Lanka searching for a proper lighting system. And the recent hike in electricity prices has made many people seeking for a cheaper electricity solution as our product is cheap and power saving, this opportunity would pave the way for us to enter the market. 2. Industry Analysis Industry analysis is a vital part of the decision-making process in a business. A comprehensive industry analysis helps to take an objective view of the underlying forces, attractiveness, and success factors that determine the structure of the industry.
Understanding the business’s operating environment in this way can help to formulate an effective strategy, position the business for success, and make the most efficient use of the limited resources of the small business. We are going to discuss the following sections in the industry analysis: • Industry Description • Industry Trends • Industry Size and Attractiveness • Profit Potential • Target Market • Competitive Position Industry analysis on LED Rechargeable Light
The industry for LED rechargeable lights is very small with few manufacturers, therefore the competitors of our proposed product would be less and as a result of this, it is possible enter easily and cater the market need with cost effective, efficient solution. Another significant advantage over the product is there are no other manufacturers in Sri Lanka, who produce LED rechargeable lights. The prevailing competitors compete mainly on price and the technologies used by the competitors are relatively similar.
The degree of competition is lower in the industry therefore the probability of success is comparatively higher for a new entrant in this market. Industry organization Majority of LED Rechargeable lights available in Sri Lanka are produced in Japan, China, Taiwan and India and there are few small assemblers in Sri Lanka. The products are mainly distributed via supermarket channels, LG Abans, Singer and small retail electronics shops and distribution is extensively made in main cities such as Colombo, Kandy, Galle suburban areas.
There is less number of distribution points in Northern and Central Province and only the customers in the capital city are purchasing LED rechargeable lights. Value is created to the proposed product via operations, sales and marketing, service and usage of advanced technology. The competitive firms mainly use the above value adding activities to improve profit margin. Competitive Environment The competitive firms compete mainly on price and quality, and the introduction of new products is in a lower rate. Products are differentiated from one another mainly based on the number of LED bulbs used in light and priced accordingly.
Customer support is given in the mean of quality warranty; in average one year service warranty is given by the competitive firms. Number of firms prevail in the market is very few, since the degree of rivalry is also low. A new entrant should compete mainly based on Quality (efficiency), Price (cost effective), and service excellence (Warranty) in order to survive and to attract more customers in the market. Since the market is dominated by imported goods the response to new entrants is slow and LED rechargeable lights are not sold many dealers in Sri Lanka.
Market is highly fragmented and the competitors are traditional and old. There is high demand for Nippon products but its price extensively higher than other similar products The problems faced by the target customers due to the competitors’ products are a. Since the distribution channel is not well established in the target customers’ geographical area (Northern and Central Province), it is difficult for the customer to find the dealers to repair the product if any fault is identified in the product. b.
Similar products available in the market are less efficient in case of electricity consumption (high electricity consumption when charging), charging life is lesser than mentioned in the product catalogue, and the power is lesser than expected. c. Price of the product is high and the target customer segment find it difficult to purchase LED rechargeable light even though they have a need of it. Barriers to Entry When a new venture enters into the LED rechargeable lights industry it has to mainly face the following barriers from its competitive forces. a.
Competitors such as Nippon, Kanchen are well established firms in the international market and equipped with advanced technologies therefore these firms will enjoy economies of scale and at the initial stage our firm has to incur comparatively more costs for technology, product designing and manufacturing. Therefore at the initial stage product efficiency and manufacturing efficiency is vital. b. There are some well established brands in the market and customers are loyal to those brands but the price of those brands are relatively higher therefore target customers may not be able to afford that higher price. c.
Distribution channel of the product is not well established in the target geographical area therefore there are no competitors who have control over the channel. d. Switching cost for the proposed product relatively higher since the current market price of the competitors’ product. Even though there is an opportunity for the new entrants since the distribution channel of existing products is not reached to the target customer segment. Control over industry Competition of LED rechargeable lights are mainly based on price therefore pricing should be made in the way of value adding and it is important to set price lower than industry average.
The bargaining power of customers is higher since they prefer cost effective solution. Suppliers of the raw material have more power since at the initial stage the production volume is low therefore it is difficult to obtain discounts from the supplier by bargaining. Competitive advantage can be gained only through effective production process. Existing competitors are mainly using indirect channels to distribute; it would be successful if proposed product adopts direct means of distribution.
Competition prevailing in the industry. There is no aggressive competition in the market and proposed product is the pioneer locally produced product in the industry. The direct competitors in LED rechargeable light industry are Nippon, Kanchan and Orbit and few small importers. a. Nippon LED Rechargeable Lights Nippon LED rechargeable lights are the products of Nippon Electric Company (NEC), Japan. It is a well reputed brand in Sri Lanka and the products are imported by Nippon Lanka (pvt) Ltd.
The distribution of products made via its showroom in Bambalapitiya and through super market chains (Arpico, Keells Super), customers are loyal to the product since they perceive it has good quality than the products available in the market. Nippon Lanka doesn’t have sellers in the Central and Northern Province. b. Kanchan Rechargeable Lights Kanchan is an Indian product and price is relatively cheaper than Nippon but the technology used by Knachan is different since the major technology used is Fluorescent Bulbs and these bulbs are comparatively inefficient than LED.
The main mean of distribution is online selling and it is not reached in the rural areas of Sri Lanka. c. Orbit Star LED Rechargeable Light Orbit Star is a product from Orbit and it uses online selling as a major source of distribution to reach the target customer (www. anything. lk and www. topshop. lk), the accessibility of internet is poor in Central and Northern Province. Indirect competitors of LED rechargeable light would be the producers of Solar Power Lights, Kerosene, Dynamo, Bio gas but the above substitutes are inefficient and expensive than proposed product.
Future potential competitors would be the producers who are using advanced technologies such as NANO and OLED. Opportunity Based on the market and industry analysis there is a need for efficient, environmental friendly, cost effective, environmental friendly LED rechargeable lamp especially in Northern and Central Province. The weakness of the competitors will be used as an additional feature in order to capture the market via prevailing opportunities.