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Group Project

Group Project

Introduction

The product presented in this group project is a flash drive that has a feature of heating mugs as well as preserving a set temperature in a mug. This device works from battery power, USB plug-in or from an outlet. We hope to make potential consumers interested in the product, although it is quite innovative in the current market.

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Environmental Context Analysis

• Our product is a new entry in the market, and as of yet the typical customers do not know about its existence. Therefore, it is necessary to study the changes and processes in the external environment that are likely to influence the likelihood of of our product's adoption by the customers. The device is a flash drive connected to a mug, and is thus an innovative product. Thus, we anticipate that the people who ‘are not afraid’ of innovations and use them regularly in their daily lives are more likely to accept and buy our proposed device. Typically, the abovementioned type of consumers is composed of the youth, although more and more of elder people tend to use modern innovations in the everyday life. As a result, we are likely to attract buyers of different ages. Nevertheless, it seems more reasonable to promote our product in areas that have a higher percentage of youth population, as this age group is more likely to buy innovative products, of which out device is one. In terms of the economic environment, it is better to focus on the markets with a relatively high average income of potential consumers, because innovative products usually cost more than the already established ones. Thus, we need to attract customers with enough disposable income for them to be interested in buying an innovative product. We should also address the socio-cultural factors, as they are an integral part of any marketing campaign. It is better to sell our product in more technologically developed areas, where modern technologies are a part of the society and its general culture. Thus, we will focus primarily on the developed countries. A country’s political environment also has a significant amount of influence on our product, because we should follow laws regarding the business operations and ensuring the quality of the proposed product, as well as pay taxes and other legally required payments. Technological environment is another influential factor, since we will use modern technologies for manufacturing and distributing our product. Thus, it is better to produce our flash drive in those regions where there are developed and relatively affordable means of technological production. Finally, there are many considerations as to the current state of the natural environment. Thus, it is necessary to make our product as environmentally friendly as possible in order to follow the legal and ethical environmental requirements and, as a result, attract additional customers.

Consumer Behavior

• It is necessary to determine the types of behavior of our typical consumers. As we have already mentioned, our device is innovative, and its popularity necessitates a particular consumer behavior. The behavior of our typical consumers focuses on utilizing innovative products and gadgets. Our typical consumers are not afraid of trying something new, and they are ready to pay a relatively high price for an interesting innovative product. The behavior of consumers that influences their choice of our product also includes their living habits. As the primary feature of device is heating drinks, it is natural that it will be useful for those consumers who, for any reason, are not likely to heat their drinks using traditional devices. Thus, it is likely that our typical consumers are active people who often spend their time out of home, and thus they cannot heat their drinks with traditional devices such as microwave ovens. At the same time, the consumers of our device should have interest in consuming hot drinks, because people who do not consume drinks such as tea or coffee regularly are not likely to be interested in our product.

Competitor Analysis

• Our product is quite innovative, thus we do not expect to have direct competitors at first. Of course, there are many available devices with a function of heating drinks, but all of them are significantly different from our proposed product. The closest device on the market that we have found is a devices that heats a mug via a USB connection from a desktop computer or a laptop. However, our product differs from such a device, because it can draw power from a USB connection, an outlet or batteries to function. This feature makes our device much more convenient and universal, as it it has potential uses not only in office environment or at home, but also outdoors or in places, where it is hard to find an outlet or a computer.

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•Nevertheless, our product has some points of potential competitive vulnerability, even though it does not have direct competitors as of yet. The most important areas of potential vulnerability are the following:

1) As the device is innovative, it is likely to have a relatively high cost. It is a vulnerability, because alternative heating devices are usually quite cheap.

2) As of yet our product does not have a reputation. Thus, this area of vulnerabilities includes high costs of advertising, promotion and marketing research.

3) The device can work using USB connection, an outlet or batteries. Like many other devices that use various power supply means, it is prone to breaking.

Segmentation, Targeting and Positioning

• There are several potential market segments for the product. The first segment includes the people who usually work in offices or stay at home. In general, such people already have enough devices for heating their drinks. Thus, they can buy our device and use it for convenience, but are not likely to use it regularly. The second segment includes the people who do not work in offices and do not stay at home often. This type of consumers may encounter problems with heating their drinks wherever they want. The typical consumers in this segment are students, drivers, outdoors workers, tourists, and other occupations that have limited access to heating devices. Consumers of this segment are likely to use our heating flash drive regularly.

• The target market for our product consists of people who often encounter problems with access to heating devices (students, drivers, outdoors workers, tourists, etc.). Such people are likely to buy our product because it provides them with a valuable service. Our target marketing approach is a pioneer approach. Our product is innovative, and therefore there is a need for a new market  in order to promote and sell our product.

• The positioning strategy of our product bases both on its application and on pricing. First base is application because we position the heating flash drive as an innovative product for active people who rarely stay at home. In terms of pricing, the product will be relatively expensive because it is new. The points of difference that the consumers can find only in our product include convenience, multiple variants of use and innovations.

SWOT Analysis

Strengths:

Product is innovative and currently has no direct competitors.

The device is very convenient as it can work by drawing power from an outlet, USB connection or batteries. Thus, the use scenarios are practically unlimited (outdoors and indoors).

Weaknesses:

The initial price of the product will be relatively high as the product is innovative.

Product is new, and customers do not know about its existence yet.

Opportunities:

Our product can become popular and competitive because it is innovative, very useful and convenient.

We can find many potential customers bases among students, people who do not work in offices, tourists, etc.

Threats:

Consumers may prefer resorting to traditional devices, as our device might seem unusual and risky at first.

Consumers may be disinterested in our device as it will be quite expensive at first.

As the device can rely on different types pf power supply, it is prone to breaking more often.

Product Strategy

• We have designed our product in order to satisfy the need of potential customers for a convenient heating device for their drinks, which could be used practically anywhere: at home, outdoors, at work, etc. Our product has three options: core product, actual product and augmented product. The core product is a benefit received from our product: convenience to heat drinks anywhere. The actual product is a small and convenient device that is easy to use and can be taken everywhere. The augmented product adds in a warranty and a customer service in cases of the product’s breakage.

• The brand name for the product is “Easy Heat”. This brand name is likely to appeal to our target market sector because it is easy to read and remember, and it represents the advantages of our product.

• Our product is not taking advantage of any existent strategies of product or brand development, because our product is new, and its introduction and development in the market is not suitable for the existing strategies.

• On the BCG Matrix, our product is a question mark. As it is a new offering in the market of heating devices, it will have an intially low market share. However, we expect the market growth rate to be quite high. Thus, our strategy aims at securing an initial market share and growing it quickly by becoming more and more popular.

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Pricing Strategy

• Our pricing objective is to get enough revenue to cover the introduction costs. As our product is innovative, we have to spend much money to promote and advertise it to find enough customers and take a stable market share. Moreover, much money is required to develop the product and test it. Thus, our main objective is to set the price at which we could cover all of the costs that we incurred in the process of developing, testing and introducing the product  to the market. As a result, price will be relatively high in comparison to the costs of production. In order to reach our pricing objective, it is necessary to select an appropriate pricing technique. In the beginning, when the product will have the initial introduction to the market, we will use price skimming. The price will be relatively high, and it will help to cover our costs on product development, testing and promotion. Thus, only innovation lovers will buy our product, because it will be quite expensive. Then, when our costs are covered and product becomes more popular, it is possible to change our pricing technique in order to make the product cheaper and affordable for more customers. Thus, we can use penetration pricing strategy. The prices will be lowered, as this would help to rather quickly increase the sales volume and the market share of our device.

Marketing Communications Strategy

• Our target market includes various people: students, outdoors workers, tourists and others. Thus, our marketing communication mix should be flexible and include different means of marketing communication to reach different groups of consumers. First, it is positive to focus on professional periodicals that are read by people of particular occupations or lifestyles. For example, we can advertise our device in magazines and newspapers for students or tourists. Thus, many potential customers will see the advertising. Second, it is possible to focus on traditional advertising means; TV, radio and outdoors advertising. Many people see such ads, and therefore it is very likely that potential customers will see it as well. Third, it is necessary to promote the product via Internet and social networks. Currently they are very popular, advertising on these platforms is relatively cheap, and this approach is able to cover many potential customers. Thus, , it is sensible to advertise our product on social network websites as well as on those websites that are used by particular customers groups (students, tourists, etc.), since we would be able to reach many potential customers.

Distribution Strategy

• There are various distribution channels suitable for our needs, but it is necessary to focus on those several strategies that are likely to show the highest sales. It is better to invest in distribution via online shops. They are becoming more and more popular, and sales via online shops are growing fast. Moreover, many potential customers use online shops. It is possible to create a separate shop for selling Easy Heat. The product can also be offered in traditional shops. For example, we can use very popular platforms of eBay and Amazon, as well as specialized devices shops. Selling in the existing shops is usually cheaper than creating and maintaining a new one. We can also sell our product in physical stores. It is possible to use universal retail chains, as well as specialized shops for devices or touristic equipment. Using both online and physical stores, we can find more customers.

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