Marketing Plan: New Range of Firefly Phones - Case Study Example

Marketing Plan – New Range of Firefly Phones Firefly Mobile Inc. - USA Module of ……………………………….. I. Mission statement Mission statement of Firefly Mobile Inc. is to keep children and teens connected to their parents. II. Company objectives 1. To reach an annual sales revenue of US$ 1 billion by year 2010. 2. To introduce differentiated versions of the Firefly phone to attract teen markets by year 2010 III. SWOT Analysis 1. Internal analysis Strengths First mover Advantage for the product niche where Firefly was the first mobile phone to provide a parental controlled kid size phones to the market. Strategic Alliances with Cingular which is one of the top mobile service providers in USA which provides Firefly with enhanced distribution reach through Cingular network. Weaknesses Despite the benefits of the product in terms of constant touch with parents, marketing mobile phones to children as young as 6 years has sparked debate on whether the Firefly offer is ethical. The company’s poor financial position has promoted down sizing staff and closing satellite offices to cut costs. These actions along with other cost cutting measures can be a weakness in promoting the product in new markets (Tomczyk, 2007). 2. External analysis Competition Two main competitors of Firefly are the Disney Mobile and the Kajeet. Both phones come with pre programmed numbers and emergency number features. The Kajeet is loaded with built-in educational games and parent-to-child messaging features. The prices of the competitive products are same as Firefly’s basic firefly model and retails at range from US$ 50 - US$ 99.99. Opportunities Social trends such as continued urbanization and dual working parent scenario prompts the parents to be away from their young children for prolonged times and creates a need for a means of staying in touch with their young children. This is the opportunity which Firefly can exploit further to expand business. Political turmoil and terrorist activities have escalated allover the world in recent years making safety and security of young children a paramount concern for parents. Parents need to provide their younger children a means of contacting them in emergencies. This is another opportunity which creates opportunities for the Firefly business expansions. Threats Demographically, the target market of Firefly is a shrinking market segment. Especially in European countries, due to low or negative population growth rates the 6-12 age groups is a small component of total populations. This will be a threat to the Firefly expansion plans in such markets. People are becoming increasingly concerned of the negative health effects of radio active signals emanating from cell phone usage. This concern will hinder parents from wanting their young children being exposed to cell phone usage from early age. IV. Marketing strategy 1. Product The Firefly is a voice only phone modeled to fit kid’s hands and comes with just five keys. This Award winning device was launched to the US market in March, 2006 as a solution to the need of parents that wanted their children to stay connected to few really important people but not have total freedom of an “adult” cell phone. The Firefly phones have few special features that differentiate the product to suit the target market needs. The new model FlyPhone will target slightly older kids 12-16 years than the original target segment of Firefly. Features in the basic Firefly mobile Small size and just five keys Mom and Dad speed-dial keys Parent-programmed, PIN-protected phone book 911 button for emergency calls, with accidental call prevention feature Incoming call screening facility Interchangeable translucent shells Glowing Firefly Fireworks™ light display. New Features for the Fly Phone MP3 movies and Music Games and game download facilities Animations and Wall Papers Up to 200 preprogrammed and saved numbers Fly Kit – CD ROM based computer interface to design and individualize the display, music, ring tones etc. The unique electro luminescent keypad changes to match the features of the flyPhone™. Full number keypad for calls and texting Digital Camera for taking and mailing photos Figure 1 –Firefly mobile device currently on offer and the new Flyphone 2. Target market Firefly’s current target market is composed of the primary segment (Armstrong & Kotler 2000) of parents whose children are aged 8-12 years whom they refer to as “tween” market and the secondary segment consisting of the kids market. Although the kids are the end users, the Firefly’s main marketing is pitched at their parents. The new Flyphone will be marketed to 12- 16 age group. Demographic Profiles of the two segments Segment A: Parents Gender: Male and Female. Age: 35 years and up. Income: $40,000 and up. Location: US, Canada, Europe Psychographic: Dual parent employed families. Parents have active social lifestyle. Are members of some club and have frequent gatherings. Segment B: Children 1. Gender: Boys and Girls. 2. Age: 12 – 16 years old. 3. Income: $0. 4. Location: US, Canada, Europe 5. Psychographic: Independent and highly active lifestyle with extra curricular activities after school hours. Spend weekends with grandparents, attends summer camps, field trips etc without parental participation. Attend birthday and other social parties on their own. During holidays, stay overnight at friends place. Techno savvy and comfortable and interested in using electronic gadgets which are deemed “cool” These target markets were chosen because, kids occupy a privileged position amongst all the other groups of society, especially so in North America. There is a constant worry amongst the parents of teenagers to be in touch with their active and mobile kids at all times and know about there whereabouts. With new social trends increasing the time children and parents are apart, engaged in their own independent activities coupled with the heightened security concerns, this need has further increased. 3. Pricing The Firefly proposes to change its pricing strategy and move the price line down for effective and aggressive competition by offering the new flyPhone at US$ 99.99 which is targeting the older teen market. Flyphone price is lower than the other products offered to older kids market by normal phone providers. The reason for bringing the price line down is to compete aggressively against the other providers who are now offering mobiles to the kids market but have not developed a kid size phone yet. The low prices are expected to make the product attractive to parents from lower income groups as well, expanding the potential market. 4. Promotion The new firefly phone versions will be marketed through a national TV ad campaign with the original slogan “The Mobile Phone for Mobile Kids”, which is captivating and delivers a very clear message and feature of its product. Firefly committed a US$ 15 mil budget in year 2006 marketing activities and will allocate equally substantial budgets in launching the new product line. Other product promos and combined cross promotions (Belch & Belch 2004) will be used to support the nationwide TV advertising. A combination of children’s channels and teen channels as MTV, Nickelodeon, and Cartoon Network will be main choices. Fast food alliance with outlets such as McDonald, KFC and Jack in the Box will run promotions with limited edition of accessories with the purchase special Firefly teen combos. 5. Distribution The product is distributed currently in US, Canada, Mexico, South America and in UK and Ireland. The products are to be made widely available via distributing partners such as Brightstar, Cingular and via mass distribution locations as K mark and Toys R Us and widely sold via online stores on Target, E bay, Wal-Mart etc. The product is also available via regional wireless carriers as Airadigm Communication, Cellular One, Cincinnati Bell, Edge Wireless, Highland Cellular, Plateau Wireless, SunCom and Union Telephone Cellular (Firefly mobile…2005) .Agents will be appointed in European markets to launch the products in to the markets. Intensive distribution is the chosen strategy due to the need for easy access to the product by a widely spread out potential customer. V. Implementation/ Evaluation/ Control As the product is in its launch phase, very close monitoring is required to monitor the progress and effectiveness of the new strategies. As such ongoing monthly reviews coupled with in depth quarterly analysis is advisable. The effectiveness of the marketing plan will be gauged through variance analysis on sales targets, and through measures such as advertising reach, distribution reach, product off take rate, customer feedback market share growth rate etc (Armstrong & Kotler 2000). Kids Mobile Phone Industry 1. Industry Overview With the growth prospects of conventional adult mobile user markets saturating, the mobile phone industry is looking to grow by inducing the untapped demographic segment of “tween” market. “The number of American tweens armed with cell phones is expected to grow 60 percent by 2010, to 10.5 million, according to the Boston research firm Yankee Group” ( Lev Ram 2007). This is indeed a lucrative prospect which many wireless providers are clambering to cater to but many have failed due to not understanding the needs of the fickle and finicky nature of their end consumer and managing the dual needs of parental involvement in the purchase decision. The European markets are just trying out the product and as such the industry forecasts are not available for commenting at this point of time. Figure 2 below indicate the potential for growth in “tween” and “early teen” market segments where the cell phone ownership percentage in each age category is 14% for year 10-11 age group while it is as high as 82% by the age of 18 years. Figure 2 – Ownership percentage of cell phones by age category of American children 2. Industry Competition The competition in the industry has increased rapidly over the past few years since Firefly inc. moved in to this niche market segment in year 2006 with the launch of a tailor made kid-phone with parental controls and 5 key mobile devise. Number of wireless service providers with nationwide coverage such as the Verizon AT&T have also tried to compete in this segment with kid-centric phones but their success levels have been low due to lack of focus and specialization for the segment. Two new competitors Disney Mobile and Kajeet have entered the market recently with offers which are based on same concept as Firefly (Lev-Ram 2007). Disney Mobile’s strength lies in the vast financial strengths which can be diverted to promote the segment growth and the conglomerate support that can be tapped in to such as the Disney channels for advertising purposes. The use of Disney characters on their phone line may appeal to the tween market but their tastes are increasingly becoming mature and mimicking adult phone designs rather than favoring kiddish appearances. Kajeet which is a new entrant to the kid mobile industry will be the newest competitor. They have taken a new approach by offering adult phone devices coupled with parental control and kid games, music and other features similar to that of Firefly so that the kids who don’t think kiddish designs are “cool” will be attracted to the Kajeet phones. The company offers competitive price points starting at US$ 50 – 100 matching Firefly in their low range Glow phone at US$ 49.99 price point. Kajeet’s strength lies in their call charges and the pay-as –you- go plans which makes their deal more affordable and appealing to the parents (Lev-Ram 2007). 3. Industry Structure For businesses to enjoy profits in the long run, two essential factors should be in place. First is the industry attractiveness (Porter 1996) and the second is the company’s capability to capitalize from the opportunities (Duncan et.al. 1998). Industry attractiveness can be assessed by using five dimensions of Porter’s Five Force Model. Below is an anlaysis of Kids Mobile industry analysis with Porters five forces model application. Threat of substitutes affects how attractive an industry is for both existing and prospective players. The substitutes can be direct or indirect and therefore the scanning of the environment for threat of substitutes should not be myopic and restrictive. In the case of the Kids Mobile industry, the niche market segment is beginning to be blanketed with competitors. The initial first mover advantage which Firefly had in the segment is eroding with new competition entering this currently small segment. Unless all players take an active role in segment growth development, some of the competition will have to exist in the long run. Bargaining Power of Buyers is another factor, which affects the industry attractiveness. If buyers are large scale and concentrated, their bargaining power will drive down prices and profitability. Alliances with large Wireless service providers such as Cingular, key customers as Target, Wal-Mart and K Mart will all be large scale buyers and have the volume power to bargain better terms and special prices. This will reduce the industry attractiveness of the Kids Phone industry. Bargaining Power of Suppliers is also an essential element, which decides the industry attractiveness. If specialized and scarce raw materials are required, the suppliers may demand higher prices and control supply conditions, affecting profitability and growth potential. In the case of Kids Mobile industry, the raw materials and technology is not scarce in this regards and as such the industry attractiveness is high on this dimension. Threat of new entrants will depend upon natural barriers and legal barriers. High capital intensity, high switching costs, alliances, economies of scale are some forms of barriers to entry, which reduce threat of new entrants. The industry under review is capital intensive and as such the barriers to entry are high. Special licensing requirements for establishing wireless service provider companies will also be stringent. These aspects makes the threat of new entrants to be medium scale. Rivalry among competing sellers will depend up on factors such as the sstructure of competition, the structure of industry costs, and switching costs, aggressive strategic objectives and high exit barriers. Currently the Kids Mobile industry has high rivalry among the competing sellers and with low cost competition among the players, the price line has come as low as US$ 50 for a unit. Therefore the industry rivalry is high, reducing the industry attractiveness since high rivalry incurs costs in terms of competitive advertising, price wars and other rival behaviour. Overall the attractiveness of the Industry for kids phones appear to be low to medium and since the segment size is also comparatively small, only few cost effective and market savvy players will be sustained in the long run. Those players will need to expand the segment size through their marketing strategies and also follow “cartel” approach by observing each other moves and mimicking them, in order to reduce the industry rivalry factor since this is costly to all suppliers within the market and erode profitability. In addition to above aspects of industry overview, industry competition, and the industry attractiveness is another important consideration in reviewing the industry is to consider the Key Success Factors of the industry. This allows firms to align their internal strengths to these KSFs to maximise benefits (Thomson & Strikland, 2003). For some industries, the efficient cost structures is a KSF while to industries such as retailing, locations of stores is one of the main KSFs coupled with efficient logistic functions. In other industries such as pharmaceuticals, the new product development is one of the KSFs which the industry players need to align their competencies with. In the case of Kids Mobile industry, the Key Success Factors can be identified as low cost structures, successful marketing communications and strategic alliances with the major wireless carriers. It is very important for companies such as Firefly to have strong alliances with a large number of wireless carriers who will offer their phone under their phone plans. Also to note is the important of high availability via the internet. As the mobile industry is a technology savvy product, most of its users are likely to use the internet as a means of gathering product information, price comparisons and also make the final purchase via the internet stores. In conclusion, the industry review for the kids mobile industry indicate that there is a good potential for growth as the segment has been recently identified and activated. The growth rates are as high as 60% over the next 2 – 3 years but the industry composition is changing with more and more new entrants entering the industry, lured by the business potential. However with the high investments and cost structures as well intense competition within the industry, the segment is only likely to sustain few of the strong players with cost efficiencies and the correct marketing strategies. Those companies wishing to succeed in the industry will need to bear in mind the Key Success Factors of the industry when crafting their product, pricing, distribution and promotional strategies so that the internal strengths are aligned with the industry success factors. While the industry analysts are forecasting favorably on the business potential, the success will depend on how well the companies tackle the most difficult demographic segment of all, the “tweens” and the “teens” that have peculiar and unconventional purchase patters and concepts of what is “cool” and “uncool” which drives their purchase decisions. References: Tomczyk, A. M. (2007) “ Firefly Mobile: Calling All Tweens” Business Week. Retrieved on 05.09.2008 from http://www.businessweek.com/smallbiz/content/nov2007/sb2007117_006317.htm?campaign_id=rss_smlbz Firefly Mobile Home page (2007) New Fly Phone. Retrieved on 06.09.2008 from http://www.fireflymobile.com/about/ Duncan, J. W., Ginter, P. & Swayne, L.E. (1998). Competitive Advantage and Internal Organisational Assessment. Academy of Management Executives, Vol.12, No 3. pp. 6 –16. Armstrong, G. & Kotler, P. (2000). Marketing: An Introduction. 5th ed. Singapore: Person Education Inc. 2000. Belch, G. E. & Belch, M. A. (2004). Advertising & Promotion: An Integrated Marketing communication perspective. Illinois: Irwin. Lev-Ram, M. (2007) “ Selling cells to 8 year-olds” CNNMOney.com By, Business 2.0 April 19 2007: 2:04 PM EDT. Retrieved on 04.09.2008 from http://money.cnn.com/2007/04/18/magazines/business2/kids_phones.biz2/index.htm Porter, M. Competitive Strategy: Techniques for Analysing Industries and Competitors. New York: Free Press. 1980. “Firefly Mobile Today Announces National Availability of the Firefly Phone” (2005) Retrieved on 05.09.2008 from http://www.fireflymobile.com/about/press_releases/July_12_2005_National_Availibility.php Thomson, A. A. Jr. & Strikland, A. J. Strategic Management Concepts and Cases. 13th ed. New York: McGraw-Hill Publishing Company Ltd. 2003. Available at online learning center http://www.mhhe.com/business/management/thompson12e/student/olc/ch01_keycon.mhtml Read More