Supernova Technologies - Business Plan Example

Supernova Technologies: Marketing Strategy, Growth Objectives & Environmental Analysis Report BY YOU YOUR ACADEMIC ORGANIZATION Supernova Technologies Company Mission, Objectives & Product Overview Since the companys inception in 2000, Supernova Technologies has prided itself in generating innovation in entertainment technology. The company is beginning to experience growth in domestic sales of radio and portable music systems, by offering our product lines at prices substantially lower than that of larger competitive brands. As part of our strategic marketing plan, Supernova intends to capture the attention of domestic consumers by introducing our breakthrough 1950s inspired, retro-styled television sets. A disparity exists on the market for vintage innovation in media technology, thus Supernova has conducted extensive market research in pursuit of establishing our brand as the foremost leader of quality, low-cost classic television entertainment. Supernova Technologies strives to become the premier provider of retro-styled televisions inspired by 1950s simplicity and designed to recapture the ambiance of yesteryear. In todays electronics marketplace, sleeker, more contemporary televisions sets in the form of big screen, LCD, and plasma flat screens are capturing the attention of consumers and replacing the demand for boxier, more traditional televisions. However, to the advantage of Supernova Technologies, this particular market is highly saturated with competition as more and more electronics manufacturers are attempting to cash in on the modern consumers desires for modernized television entertainment. The market introduction of the Supernova Retro50TM will mark the first product introduction of its kind, making our brand a leader in innovative television design. Our objectives are to remain focused on retro-inspired products and, as a long term strategy, to develop an appropriate product line consisting of various vintage media technologies, including turntables and free-standing radios. Specific product and financial objectives include: Generating an increase in Supernova profitability by 20% in one year Attain a 15% share of the television market by 2010 Develop four new retro-inspired technological products in 24 months Launch a dual distribution network within four months of Retro50TM market introduction Expansion into international markets, including Europe and China, by 2009. Demographics and Target Markets Marketing research suggests that a considerable gap exists between consumers over the age of 50 created by limited efforts from contemporary companies to utilize suitable marketing tactics to reach this consumer group. A recent survey conducted by GreyPower, aimed at consumers age 50 and over, returned data that 88% of older consumers believe that advertising must change to reflect their needs and desires; citing that the over-50 group would like to see more mature people featured in modern advertisements (Marketing Week, 9). However, marketing efforts from competitors fail to recognize the over-50 group as a potentially profitable target market. Supernova marketing research has discovered that spending by people over 50 is constantly increasing, as consumers over 65 spent 12% more in 1999 than they did in 1990, however the average household only increased spending by 2% in the same decade. Further, older consumers spend more than average on entertainment and are very likely to try new products (Second50Years). Moreover, consumers are striving to return to the more modest days when I Love Lucy was the show to watch, with retro-styled electronics helping to satisfy consumers yearning for simpler times (Benitez, 24). Thus, everything old is new again. With this in mind, Supernova Technologies recognizes its target audience as consumers labeled Generation X, those young adults born between 1966 and 1978. This particular market segment represents over 50 million consumers with an estimated $125 billion annual purchasing power (Mitchell, McLean & Turner, 25). Demographic studies on Generation X consumers indicates that this particular consumer audience postpones marriage because they fear divorce and, between the 1970s and 1980s, over one million children were affected annually by parental divorce (Mitchell et al, 28). As such, the 1950s represented an era of family values and less-turbulent social issues, offering the Retro50TM an opportunity to promote its simplicity to this consumer group maintaining tremendous purchasing power and a genuine desire for safer, simpler times. Environmental Analysis (SWOT) Supernova maintains significant strengths to balance our minor weaknesses and has conducted an in-depth environmental assessment to identify potential opportunities and threats to our market entry. Our Strengths: Knowledge – We perceive our competitors as followers who maintain weak perceptions on producing innovative televisions. Competition adds a rather minute feature to existing designs and labels it breakthrough technology. Supernova truly understands our customers and we know our products. We believe the true nature of innovation is radical technological redesign. History – Though the company has only been serving our customers for six years, we have developed a consumer loyalty to our emerging technology product lines and have been working strongly to develop strong Supernova brand recognition. Our Weakness: Brand Power – Though we are building a reputation of quality and value on the technology market, Supernova is still struggling to establish a broader promotional image. However, our revenues generated by sales of the Retro50TM will bring us the brand power to actively compete with large-scale technology manufacturers. Our Opportunities: Price - Marketing research suggests that todays average price for a big-screen TV retails for $2,000 to $3,000. Further, a recent Morgan Stanley survey suggests that two-thirds of American households will not be interesting in buying a high-definition TV until the price of a 36-inch or larger set is available for around $600 (McWilliams). With this in mind, Supernova maintains an incredible opportunity to move quickly into the television market with lower-cost, retro-inspired innovative televisions geared toward two very distinct markets. The Supernova brand Retro50TM, much differentiated from its 1950s predecessor and other competitor products, will be available to the consumer in 32 inch and 50 inch dimensions for the big screen viewing experience, starting at $700, to $1500 for the largest big-screen model. Our strong balance sheet gives us the ability to focus on one specific television model which gives us a distinct opportunity to remain competitive through low price strategies. The revenues generated by our existing products are sustaining our current profit expectations and will allow Supernova to utilize penetration pricing strategies as a major marketing weapon. Our Threats: Competition as Followers – As a first mover in this radical new product concept, our competition maintains the ability to counter our product by flooding the market with imitation retro-inspired models in an attempt to seize market share. Changing Buyer Preferences – Consumers are driving down the costs of LCD and plasma televisions due to the sizeable price tag associated with competitor products. Over time, competitor price wars will force the price of contemporary televisions sets to a price comparable to what Supernova will be offering on the market. The key to our success is in continuously generating innovation, both in design and in the product features of the Retro50TM to fit consumer preferences. As we seize higher market share in the television market, our revenues will likely offset the costs associated with manufacture in order to remain competitive in low-price strategy. Marketing Strategy – The Marketing Mix A core element of our marketing strategy is formulating a change in the marketing mix. Heavy promotion is critical to our success in the television market in order to develop differentiation. Our product marketing must recognize that Supernova is providing more than a physical product, but is also selling consumers a relationship which will be vital to our future product marketing efforts. Product Marketing: The Retro50TM is currently our only television product offering. Having already conducted development testing and approved the mass production of our prototype, and received an appropriate trademark, Supernova has considered the customer service angle of our marketing strategy as well as the life cycle expectations for the Retro50TM. Currently, we are already in the process of development for a TV/DVD combination retro set which is expected to be ready for full scale manufacture by June 2007. We believe that subsequent, innovative changes to the Retro50TM will adequately extend the life cycle of our product far beyond other contemporary LCD and flat screen technologies. With no models available below 32", the long-standing trend of todays consumer who is enticed by the large-screen viewing experience will further support an extended life cycle of the model. Refer to Appendix C for a graphic illustration of life cycle extension projections. Further, Supernova has established a consumer call center which will handle the support end of our new product, delivering unsurpassed, live representative customer service. Our primary strategy in differentiating the product is with our five year "standard" warranty which covers all manufacturer defects or unforeseen repairs. All warranty claims will be handled by our customer service call center. Pricing Strategy: As previously mentioned, our primary focus is on beating the price of competitor products. Though our retro television designs are unique on the market, televisions are not, thus we must remain highly competitive on price. Supernova has determined that the breakeven point on its costs associated with manufacture is $395 for the 32" model and $700 for the 50" screen. Thus, the return on profitability for each version of the Retro50TM is 44% and 54% (accordingly) for each unit sold. Our consumer emphasis will be focused around value pricing as a method to attract the interest of our target markets. Taking into consideration our current level of growth in the electronics market, Supernova maintains little opportunity to reduce the prices of the Retro50TM, as our profit objectives require an adequate profit return of at least 40% per unit. In order to capitalize on the success of the new product, value pricing will focus on the additional attributes offered by the Supernova brand which are distinct from those of our competitors. Refer to Appendices A & B for a Graphic Illustration of Profit Projections. Promotional Strategies: The success of the Retro50TM television brand will most heavily rely on effective promotional strategies. Supernova recognizes the stages in the consumer adoption process and realizes that the firm maintains a difficult challenge in raising consumer awareness of the new products introduction to the technology market. As such, prior to the models impending introduction, heavy television and print advertising will be generated with a countdown to its emergence on the consumer market. Raising consumer awareness with 1950s inspired advertising, with a contemporary flair, will be broadcast nationwide as part of our awareness campaign. At the same time, Supernova will be distributing various promotional merchandise, including T-shirts, hats and branded key chains with the Supernova logo. These promotional items will be offered through our partnerships with various retail entities to raise brand awareness prior to our initial market introduction. One of our major retail locations has agreed to include Supernova promotional goods during the checkout process for each consumer as part of our promotional strategy. During the initial introduction, Supernova will position the Retro50TM with a catch phrase focused on both retro and contemporary attributes of the product with: Balancing Simplicity with an Awesome Big-Screen Experience: Supernova!, designed to appeal to the over-50 consumer. To capture interest in the Generation X market: Grandma will be blown away! - Supernova Big-Screen Retro50! Supernova has obtained authority from Desilu Production Studios and NBC to utilize Lucille Ball and Howdy Doody in its initial television advertisements. The powerful promotional messages are designed to position the Retro50TM to focus on its retro-inspired design and unique size. In our proudest promotional achievement, one television ad, already slotted for delivery to national networks, consists of Lucille Ball reaching out of a traditional 1950s set and physically heaving the consumer into the 21st Century, which transforms the traditional set into a dynamic big-screen version. For the Generation X consumer, promotional campaigns illustrate a monochrome family engaged in quality togetherness, huddled together in a 1950s-inspired environment, watching classic television shows on the Retro50TM, which is prominently displayed in stunning color and detail against the black and white environment. This advertising strategy is focused around the Gen X psychological belief in family values, instilled by the dynamic Supernova television unit. Further, the company will be hosting a sweepstakes contest with an "enter to win" strategy by visiting local retailers which will carry the Supernova brand. This promotional strategy is intended to lure consumers into the sales environment to witness the difference between competitor products and our retro designs. Currently, negotiations are in process with AARP magazine as an exclusive endorser of the Retro50TM as a method of print promotion geared toward the over-50 target market. Upon establishing the endorsement contract, AARP will agree to provide Supernova with a full-spread advertisement in their monthly magazine in exchange for Supernovas use of the AARP logo in the majority of our print advertisements. Further, our company will establish various print advertisements in a variety of popular culture magazines including Mens Health, Rolling Stone, and Entertainment Weekly, designed to reach our Generation X consumer. After the products initial introduction into the market, the positioning strategy will focus on price and quality once Supernova has adequately established brand recognition and, ultimately, our goal of brand preference from our target segments. Place (Distribution) Strategy: Long-term, Supernova will be utilizing a dual distribution network, or the physical movement of our products through more than one channel (Boone & Kurtz, 221). For the retail environment, the Retro50TM will be delivered using selective distribution methods. We have established agreements with Best Buy, Circuit City and TV World under cooperative advertising in order to offset the costs of our initial promotional campaign. These retailers will be exclusive agents of the Supernova televisions where we can establish strong selling relationships with these retail businesses. In similar respect, the selective philosophy of our distribution system will serve to differentiate the product as a specialty item, making it appear to consumers that our Retro50TM is a much-demanded product and only available to discriminating customers. Supernova has also established the internal capabilities to ship via direct sales, scheduled for launch within four months. Our e-business website and our internal warehousing system has granted us the capability to field orders via internet and printed catalogs for home delivery. Because of our focus on price competition, we will be able to lower distribution costs by eliminating most of our intermediaries via direct sales and service, while allowing customers to absorb shipping expenses. Supernova Effects on Competitor Interests Many of our competitors rely on intensive distribution to promote their television product lines. Traditional mass-market retailers, such as Wal-Mart stores, are beginning to expand their television and big-screen selections, inviting competition to flood even low-end retailers with their products (McWilliams). Supernova believes that intensive distribution philosophy only serves to minimize brand equity, by projecting limited quality and ultimately perceptions of non-differentiation to consumers. With Supernova being the only television manufacturer on the market promoting the product as a specialty item, this will bring our company a higher return on the investment in terms of emphasizing quality. Moreover, in order to meet our objective of maximizing our profit potential, meeting the demands of our "baby boomer" target market, in terms of price and promotion, will allow us to capture higher market share by catering to a market already frustrated with their lack of representation in new product developments and advertising. We suspect that the competition will adapt their promotional messages in order to seize loyalty of the over-50 market, however short-term we anticipate an explosive growth in sales from this growing and influential consumer audience. The Generation X psychographic profile lists these powerful consumer buyers under the category of believers, or that of family-oriented, bargain hunters who tend to watch television more than the average American (Boone & Kurtz, 420). With this segment of the population providing $125 billion in potential sales revenues, Supernova believes that our competition has only just begun to exploit Gen X psychological tendencies and our systematic promotional campaign is designed to decrease loyalty to larger, long-running technology manufacturers and turn Gen X interests toward establishing a relationship with Supernova which understands the needs of this target group. Marketing Contingency Planning Despite our recent growth, Supernova is still a small company, thus we must monitor our marketing results with the utmost scrutiny. The company has established marketing coordinators and partnered with a renowned market research firm; who will conduct periodic consumer surveys designed to emphasize how consumers view Supernova and the Retro50TM, both as potential consumers and as part of post-purchase evaluation discussion from our existing customers. The real-time data collected by the market research efforts will allow our company to develop new products and additional services as dictated by consumer trends and preferences. Further, Supernova may have to reconsider its current positioning strategies if the target objective of increased market share is not fully realized, by using strategies which appeal to the product user or emphasize product application. Our promotional division is currently working on contingency advertising concepts with various marketing slogans in the need of repositioning the Retro50TM. Further, if the results of our marketing efforts are not meeting our profitability objectives, we will re-evaluate our current target markets and reconsider our distribution methods. Our ultimate goal is not to have the Retro50TM appeal to a niche market, such as appealing to the collectibles consumer, but to be recognized as a fully functional, contemporary version of a tried and true classic television unit as a unique entertainment experience. In the event that our marketing efforts dictate radical redesign, we are currently assessing the risks of our current marketing strategies and are internally capable to adapt to the behaviors and expectations of our consumers by adjusting our strategic tactics. Long-Term Growth Potential As part of our five year strategic plan, based on our success within the domestic technology market, Supernova views opportunities outside of the domestic markets in pursuit of international brand expansion. Accomplishing successful export marketing will involve an analysis of our future financial position and our feasibility to establish a manufacturing firm overseas. Exports to Asian nations have risen 37% in the last year, partly due to Asian consumers belief that American-made goods are higher quality and a better value than those made in their own countries (Boone & Kurtz, 302). With a foreign consumer audience both able and potentially willing to support our proposed product lines, Supernova is currently researching consumer trends in foreign markets to determine whether international expansion is a reality for the company. The strength of our executive leadership and the success of our Retro50TM in the United States will determine our readiness to establish a brand presence on foreign soil. Bibliography Marketing Week. "Survey Shows Over-50s Feel Alienated by Ads". 21 Oct 2004: 9. Second50Years. "Fifty Facts About People Over 50". 7 Dec 2006. Benitez, Tina. "Going Retro". Incentive. 176(11): 24-25. Nov 2002. Mitchell, Mark Andrew, McLean, Piper & Turner, Gregory B. "Understanding Generation X…Boom or Bust Introduction". Business Forum. Los Angeles: 27(1):25-28. 2005. McWilliams, Gary. "As Flat-Panel TV Sales Soar, Unlikely Retailers Step In". Wall Street Journal. New York. 21 Sep 2006. Boone, Louis E. & Kurtz, David L. Contemporary Marketing. 12th ed. Thomson South-Western: 221,302,420. 2006. Appendix A Appendix B Appendix C Read More