Introduction
Every business person ventures into the business world to make a profit. To achieve this, business operators employ various mechanisms. This may range from diversification; where companies enter new markets with new products or through product development. A company introducing a new product to the market is not guaranteed of its product being readily accepted. Despite the company being established, its new product may not appeal to customers. This underlines the need for analysis of the new or existing market before a company embarks on introducing its new product. This paper endeavors to conduct a market analysis in the United States of America for company XYZ which intends to introduce a new brand of lead batteries that are easy to recycle.
Choosing a market for the product
XYZ Company well understands that the resources of every company are its consumers. This is because the present customers understand and trust the company more than new customers. They are more likely to buy new products that the company introduces to the market. For a long time, the company has been selling lead batteries to residents of Chicago. Its major target group comprises public service vehicle operators and the working class where almost every household owns a car. The market has been very promising and this makes the company focus on the same group for its new product. For one to travel from one place to another within the city, he or she requires to use a car. This is the reason why the city has so many vehicles. There have been complaints of the past batteries not being possible to recycle and have been blamed for polluting the environment. Every citizen of Chicago must look for ways to overcome this problem. As every person in the city is willing to adopt any type of battery that best reduces environmental pollution, the company sees it possible to acquire a huge market share in the city. The price of the product looks even more attractive making it possible for every person in the city to afford the battery.
The changing nature of working behavior in the city calls for the need for a car in every household that has members who are in the working class. Most companies in the city require their staff to travel from places of work to meet their clients in the field leading to every staff requiring a vehicle. There has been an increase in the number of vehicles in the city for the past few years. This coupled with the need for recyclable batteries in the city makes it a potential market for XYZ (Christopher & Jochen, 2004, Par. 2-5).
Analyzing the competitive forces in the industry
Understanding the available competitive force in the market as well as their potential effects helps in predicting the profit a company is likely to make by venturing into the market. This helps the company in coming up with strategic measures to counter the competition. Some of the forces that determine the rate of competition in the market include existing competitive rivalry between producers, risk of new product entering the market that would neutralize domination of the company’s new product, bargaining power of the buyers, supplier power, and threat of substitute products being introduced in the market.
Buyers can dictate the operations of a business. Often, their buying behavior may lead to decrement or increment of product price. Dealing with a small group of superior buyers also can plunge a business into problems since they can end up dictating on most of the company’s operations. As XYZ has fully established itself in the market, it enjoys a pleasant relation with a huge group of customers in the city. This makes it hard for the customers to significantly influence its pricing techniques. The products it has been supplying in the market have been of quality thus gaining trust from customers. This makes it hard for most of its customers to switch from the company and buy products from other companies as they fear the products might be compromised for quality. Availability of regular suppliers of materials used in the production of the lead batteries makes it possible for the company to maintain a stable price of the batteries in the market. This leads to the creation and retention of customer loyalty to the company. Price is a sensitive factor in the market. Keeping on varying prices of products may lead to customers being suspicious of the business leading to a decline in loyalty to the business.
Whenever a business appears to be profitable, it is likely to attract more investors in the business. Consequently, the existing business ends up losing the profit it had been enjoying and may end up running at loss. It is hard to rule out the possibility of the emergence of rival competitors in the Chicago market. The major advantage for XYZ is the quality of its batteries. It is hard for there to be a company that will produce lead batteries that equals what is currently being manufactured by the company. The company has also obtained a patent from the government making it hard for any other company to reproduce its products. The current government policies in the city make it hard for most companies to venture into the market. There are many legal requirements to be met before one is allowed to manufacture these batteries. This leaves XYZ with a chance of dominating the market. In the past, some companies have tried selling their batteries in the market but their performance has been hampered by the loyalty customers have to XYZ. The versatility of the batteries well meets the numerous needs of public service vehicles as well as those used by working people. This makes it hard for them to switch to other battery-producing companies. There is a presence of other battery selling companies in the market but their products have been criticized for not being able to meet all the required functionalities. This together with the patent rights that XYZ has obtained from the government makes it hard for there to be an introduction of substitute batteries that would compete with these in the market (Mind Tools, 2009, Par. 2-6).
Assessing the attractiveness of, and growth opportunities within, a new industry
As industries vary in the market, there is a need to analyze the performance of your industry to determine the attractiveness and potential of its growth in the market. This also helps operators in identifying the major factors that affect their performance as well as identifying the underlying opportunities and threats in the market. Before venturing into any market, it is imperative to first determine the attractiveness and growth opportunities that the market harbors for your company. To do this, there are variously internal and external factors that need to be put into consideration. Internal factors include access to finance, customer loyalty, market share, production capacity, and relative brand awareness. On the other hand, external factors include Competitive rivalry, market growth rate, and market size, and price sensitivity.
XYZ is an established company in Chicago. This implies that its long period of operations has made it acquire a huge market share in the market. One of the major reasons that have led to it gaining a huge market share in the production of quality lead batteries. This has not only made its brand popular but has also created customer loyalty. Consequently, the company has regular access to financial resources making it possible for it to thrive in the market. Availability of ready financial resources helps the company in ensuring that there is the regular production of its products. There is no one time that its products have ever been exhausted in the market. The cost incurred in producing recyclable lead batteries has scared many companies from venturing into their production. This has led to XYZ enjoying absolute domination of the market. As the population continues to rise, more people are getting employed. There is also a need for the country to cut the rate of environmental pollution by using easily recyclable products. This leaves no doubt for the demand for lead batteries increasing. There is a potential growth of the Chicago market (Bioinformatics, 2009, Par. 2-4).
Developing effective strategies to raise profitability, power, and competitive position
The joy of business is making a profit. No one would like to venture or continue with a business that does not make any profit at the end of the day. To gain profit, businesses require coming up with strategies that would help them gain competitive power in the market. To do so, XYZ is looking at the various reasons that would lead to customers not buying their new type of batteries. This will help them ensure that all customer needs are met by their products. Nothing guarantees company profit than customer satisfaction. Business cards have been perceived as not effective in improving business popularity in the market. However, XYZ has realized that distributing business cards to customers helps significantly in developing long-term relations with clients. As a result, the company has come up with a strategy of distributing business cards in the city. Other strategies include the use of blogs and advertisements through various media (Sussman, 2009, Par. 1-6).
Conclusion
Having a clear knowledge of all factors that dictate the market for any particular company, XYZ can now declare that Chicago is a potential market for its new type of lead batteries..
Reference
Bioinformatics. (2009). Market Attractiveness. Web.
Christopher, L. & Jochen, W. (2004). Services Marketing: People, Technology, Strategy. Web.
Mind Tools. (2009). Porter’s Five Forces: Assessing the Balance of Power in a Business Situation. Web.
Sussman, J. (2009). 10 Sales & Marketing Ideas to Strengthen Your Business Now. Web.