Competitor Analysis One of the key pieces of the marketing plan for an organization is the examination of competitors in the market. It allows the company to set effective strategies, implementation plan, and reassessing the company’s position afterwards. The competitive analysis for SoundApp was completed through primarily Porter’s Five Competitive Forces ??? a framework that evaluates the competitive severity or volume in the market. Porter’s Five Competitive forces includes: the bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitute products, and the competitive rivalry within the industry.
Through this analysis, it helps determine the attractiveness and profitability of the industry. Bargaining Power of Suppliers Suppliers that have significant power can attain more value for their work by commanding higher fees, restricting quality or services, or transferring costs to other participants in the industry. Thus, the power of the supplier depends on their ability extract greater wealth from their customers for less. The power of the supplier also depends on the concentration of the supplier market.
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This means the number of suppliers that are available in the industry. In the case of SoundApp, the supplier would be developer of the app. The developer would not only be creating the app, but would also be assisting with the debugging throughout the life cycle of our app. In this case, the bargaining power of app developer seems to be fairly small. Firstly, there are many app developers available to create and perpetually debug the app. According to a study done by AppStoreHQ, there are 43,185 registered iOS (Apple) developers and 10,199 Android app developers.
Based on this study, it is evident that there are numerous app developers available to help create our product as well as help the constant debugging of the application. Seeing that there are copious developers offering services, it is reasonably apparent that the bargaining power of a single supplier is negligible. Additionally, the lack of bargaining power of the supplier is also evident through the fees charged by the various developers. Based on research done, the fees for app developers range from $50 an hour to $200 an hour.
Seeing that there are an abundant amount of developers charging various rates for their services, it can be said that there will be not only very little bargaining power for suppliers, but also more bargaining power for our company SoundApp. Based on these points, it is apparent that the bargaining power of the supplier is trivial. Bargaining Power of Buyers On the opposite side of the spectrum to suppliers is the bargaining power of buyers. Customers that are influential and powerful can obtain more value by attaining lower prices and insisting on better quality products.
Thus, powerful buyers or customers add value for themselves at the expense of the company. The bargaining power of buyers can vary depending on the number of buyers in the market and buyers’ sensitivity to the price of the product. In the case of SoundApp, there is very little to no bargaining power for buyers/customers. First of all, one factor in determining the bargaining power of buyers/customers is the number of buyers/customers there are for the product.
With more than 100 million users for iPhone and Blackberry and Android leading the Smartphone market, there is large number of buyers in app markets associated with each of these Smartphones. With many of these Smartphone users also use these devices to listen to music, there is a large potential market for our product, SoundApp. In addition, these buyers are individual, distinct customers and not large, volume customers who will try to bargain or negotiate for lower prices. The second factor that affects the bargaining power of the buyer is the price sensitivity of the buyer which is dependent upon the price of the product.
The price of SoundApp is very reasonably priced at $1. 99 in relation to similar utility applications. The average price of apps on the biggest app market, Apple AppStore, is $3. 87 which is almost double the price of SoundApp. In addition, there is no true bargaining that the buyer can do (since the product is sold over the Internet) other than not buying the product. Nevertheless, based on the abovementioned, it is very reasonable to state that there is very little bargaining power that the buyer or customer possesses. Threat of New Entrants
Since our product addresses a new need of consumers and there is no party employing this idea, we will be obtaining a patent for our product (more details in the implementation plan). Expectantly, this will help deter others trying to imitate our product for the next 20 years (length of which parties cannot copy our product). However, it is very possible that companies may try to produce an application that may be similar, but different in some aspects to our product if our app proves to be profitable. This cannot be prevented, yet this should not provide deterrence of creating our product.
Threat of Substitute Products Although our product does not have any direct substitutes, it may appear to have a few alternatives. One such product that may appear as a substitute to our target market is noise-cancelling headphones. These headphones cancel the surplus ambient noise by using active noise control ??? means of reducing unwanted sound. However, our product does not completely cancel noise from the environment, but allows the person using our product to set a level they want their music to be above the sound around them.
Similarly, in-ear monitors or in-ear headphones may appear to be a substitute as well. These headphones provide “a high level of noise reduction from ambient surroundings. ” However, SoundApp may be a complementary product to these headphones as it provides the user of both these products to reduce ambient sound and listen to music or anything else much clearer. Thus, based on this, there are no direct substitutes for our app. Thus, from this, it can be said that there is no real threat from substitute products.
Even if these products are seen as direct substitutes, our application may be chosen over these headphones as it is much low-cost, but effective alternative. Competitive Rivalry of the Industry As mentioned earlier, our app addresses a new need to users of headphones. There is no existing rivalry from similar apps or products. Based the analysis using Porter’s Five Forces, it seems to be profitable to create our product as there is no direct substitute to our product, no existing competitor, very little bargaining power for suppliers and buyers. Marketing Communications Strategy
After establishing strategies for product, pricing and channels, one of the most important dimensions in introducing a product is to promote it precisely and effectively to the target market. Of course, this is assuming the product is created with no flaws. In the case of SoundApp, our company has a constrained budget. However, considering our product is an app, there are inexpensive, but very effective ways to promote our application. The primary way in which hit apps, such as Angry Birds and Foursquare, became popular was through word-of-mouth.
In order to spur popularity, spreading the word about the app is pivotal for the success. However, relying on word-of-mouth through family and friends is not sufficient; thus, additional methods are needed to promote our app. One effective method is promotion through popular tech websites, app review sites, YouTubers that do app reviews and blogs that concentrate on apps. Nevertheless, it is not sufficient to just wait until they discover our app since there are numerous apps being created from week to week.
Thus, our company will be offering a free downloadable version to these parties in return for them to review our app. This will arouse the initial interest that is needed initiate the positive word-of-mouth that is behind the success of many hit apps. One additional way to spread the word is through social media websites such as Twitter and Facebook. Not only relying on verbal word-of-mouth, but also through the web is an efficient way to spread how useful and effective our app is. This can be done by tweeting the amusing and beneficial aspects of our app to appeal to consumers as well as having a good slogan.
One very important way to market a new app is to hype it up early. Since SoundApp is a unique product, our company will let people know what is coming before the launch of our app. This will be done through a captivating “Coming Soon” website. In addition, our website will be designed so that it is appealing, shows how the apps works and having a section for comments about the app ??? positive or negative. Once the app is released, we will be mass marketing our app through newsletters and primarily, social media ??? Twitter, Facebook, blogs, etc.
To increase the hype, promo codes will given out through Twitter and blogs, prizes will be given away through contests, and having a large online event. ——————————————– [ 1 ]. Article on Porter’s Five Competitive Forces [ 2 ]. http://mashable. com/2010/07/02/ios-android-developer-stats/ [ 3 ]. http://ezinearticles. com/? How-Much-Does-it-Cost-to-Develop-an-iPhone-App? &id=4825668 [ 4 ]. http://mashable. com/2011/03/02/100-million-iphones/ [ 5 ]. http://uk. reuters. com/article/2011/01/31/oukin-uk-google-nokia-idUKTRE70U1YT20110131 [ 6 ]. http://www. nformationweek. com/news/mobility/smart_phones/showArticle. jhtml? articleID=225701419 [ 7 ]. http://www. tuaw. com/2010/05/04/average-ipad-app-price-is-1-more-than-iphone-apps/ [ 8 ]. http://www. nytimes. com/2007/06/14/technology/14pogue. html? _r=1&ex=1188532800&en=5929c8bde6f1ab31&ei=5070 [ 9 ]. http://en. wikipedia. org/wiki/In-ear_monitors [ 10 ]. http://www. onlinemarketingrant. com/how-to-market-iphone-apps [ 11 ]. http://www. smashingmagazine. com/2010/03/03/how-to-market-your-mobile-app/ [ 12 ]. http://www. smashingmagazine. com/2010/03/03/how-to-market-your-mobile-app/