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Honest Tea Case Study Solution
Honest Tea Case Study Help
Honest Tea Case Study Analysis
The following area concentrates on the of marketing for Honest Tea where the business's clients, rivals and core proficiencies have evaluated in order to validate whether the choice to release Case Study Help under Honest Tea brand would be a feasible choice or not. We have actually first of all looked at the type of consumers that Honest Tea handle while an examination of the competitive environment and the company's strengths and weaknesses follows. Embedded in the 3C analysis is the reason for not releasing Case Study Help under Honest Tea name.
Both the groups use Honest Tea high efficiency adhesives while the company is not only included in the production of these adhesives but also markets them to these consumer groups. We would be focusing on the consumers of instantaneous adhesives for this analysis since the market for the latter has a lower capacity for Honest Tea compared to that of instant adhesives.
The overall market for instant adhesives is around 890,000 in the United States in 1978 which covers both consumer groups which have actually been determined earlier.If we look at a breakdown of Honest Tea prospective market or customer groups, we can see that the business offers to OEMs (Initial Devices Producers), Do-it-Yourself consumers, repair work and upgrading business (MRO) and manufacturers dealing in items made of leather, plastic, metal and wood. This diversity in clients suggests that Honest Tea can target has different options in regards to segmenting the marketplace for its new product particularly as each of these groups would be needing the very same kind of item with particular modifications in need, product packaging or quantity. Nevertheless, the client is not cost sensitive or brand name mindful so launching a low priced dispenser under Honest Tea name is not a suggested option.
Honest Tea is not simply a producer of adhesives however enjoys market leadership in the instantaneous adhesive market. The business has its own experienced and competent sales force which includes value to sales by training the company's network of 250 suppliers for facilitating the sale of adhesives. Honest Tea believes in exclusive distribution as suggested by the fact that it has actually chosen to offer through 250 suppliers whereas there is t a network of 10000 suppliers that can be checked out for expanding reach by means of distributors. The business's reach is not restricted to The United States and Canada just as it also enjoys international sales. With 1400 outlets spread out all across North America, Honest Tea has its internal production plants rather than using out-sourcing as the favored strategy.
Core proficiencies are not restricted to adhesive manufacturing just as Honest Tea likewise focuses on making adhesive giving devices to help with making use of its items. This dual production strategy provides Honest Tea an edge over rivals given that none of the rivals of dispensing devices makes instant adhesives. In addition, none of these rivals sells directly to the consumer either and makes use of suppliers for connecting to consumers. While we are looking at the strengths of Honest Tea, it is crucial to highlight the business's weak points.
The business's sales staff is competent in training distributors, the truth stays that the sales team is not trained in offering equipment so there is a possibility of relying greatly on distributors when promoting adhesive equipment. Nevertheless, it needs to also be kept in mind that the suppliers are revealing reluctance when it concerns selling devices that requires maintenance which increases the challenges of offering equipment under a specific trademark name.
If we look at Honest Tea product line in adhesive equipment particularly, the company has actually products aimed at the high end of the market. If Honest Tea sells Case Study Help under the very same portfolio, the possibility of sales cannibalization exists. Given the fact that Case Study Help is priced lower than Honest Tea high-end product line, sales cannibalization would certainly be affecting Honest Tea sales revenue if the adhesive devices is sold under the business's brand name.
We can see sales cannibalization affecting Honest Tea 27A Pencil Applicator which is priced at $275. There is another possible threat which might reduce Honest Tea earnings if Case Study Help is introduced under the company's brand. The fact that $175000 has actually been invested in promoting SuperBonder recommends that it is not a good time for releasing a dispenser which can highlight the reality that SuperBonder can get logged and Case Study Help is the anti-clogging solution for the immediate adhesive.
Furthermore, if we take a look at the market in general, the adhesives market does not show brand name orientation or rate awareness which offers us two additional factors for not introducing a low priced product under the business's trademark name.
The competitive environment of Honest Tea would be studied through Porter's five forces analysis which would highlight the degree of competition in the market.
Bargaining Power of Buyer: The Bargaining power of the buyer in this market is low specifically as the purchaser has low understanding about the item. While companies like Honest Tea have handled to train distributors regarding adhesives, the last customer depends on suppliers. Around 72% of sales are made straight by producers and suppliers for immediate adhesives so the purchaser has a low bargaining power.
Bargaining Power of Supplier: Offered the reality that the adhesive market is dominated by 3 players, it could be stated that the supplier enjoys a higher bargaining power compared to the buyer. However, the fact remains that the provider does not have much impact over the buyer at this moment particularly as the purchaser does not show brand name acknowledgment or price sensitivity. This shows that the distributor has the higher power when it comes to the adhesive market while the manufacturer and the purchaser do not have a major control over the actual sales.
Threat of new entrants: The competitive environment with its low brand name loyalty and the ease of entry revealed by foreign Japanese rivals in the instant adhesive market indicates that the marketplace permits ease of entry. However, if we take a look at Honest Tea in particular, the company has dual abilities in terms of being a producer of immediate adhesives and adhesive dispensers. Prospective hazards in devices dispensing market are low which shows the possibility of developing brand name awareness in not just immediate adhesives but also in giving adhesives as none of the market players has actually managed to place itself in double capabilities.
Threat of Substitutes: The danger of alternatives in the instantaneous adhesive market is low while the dispenser market in particular has alternatives like Glumetic pointer applicators, inbuilt applicators, pencil applicators and sophisticated consoles. The truth stays that if Honest Tea presented Case Study Help, it would be delighting in sales cannibalization for its own items. (see appendix 1 for framework).
Despite the fact that our 3C analysis has given numerous reasons for not launching Case Study Help under Honest Tea name, we have actually a recommended marketing mix for Case Study Help provided below if Honest Tea chooses to go on with the launch.
Product & Target Market: The target market picked for Case Study Help is 'Motor vehicle services' for a number of factors. This market has an additional development potential of 10.1% which may be a great adequate specific niche market sector for Case Study Help. Not just would a portable dispenser offer convenience to this particular market, the fact that the Do-it-Yourself market can likewise be targeted if a drinkable low priced adhesive is being offered for use with SuperBonder.
Price: The recommended price of Case Study Help has been kept at $175 to the end user whether it is offered through suppliers or through direct selling. This price would not include the cost of the 'vari idea' or the 'glumetic suggestion'. A price below $250 would not require approvals from the senior management in case a mechanic at an automobile upkeep shop needs to purchase the product on his own. This would increase the possibility of influencing mechanics to acquire the product for usage in their daily maintenance tasks.
Honest Tea would only be getting $157 per unit as shown in appendix 2 which gives a breakdown of gross success and net profitability for Honest Tea for launching Case Study Help.
Place: A distribution design where Honest Tea straight sends the product to the regional supplier and keeps a 10% drop shipment allowance for the supplier would be utilized by Honest Tea. Given that the sales group is already participated in offering immediate adhesives and they do not have competence in offering dispensers, involving them in the selling procedure would be pricey especially as each sales call expenses around $120. The suppliers are currently selling dispensers so offering Case Study Help through them would be a beneficial alternative.
Promotion: A low promotional budget must have been assigned to Case Study Help however the reality that the dispenser is a development and it requires to be marketed well in order to cover the capital costs sustained for production, the suggested advertising strategy costing $51816 is advised for at first introducing the product in the market. The prepared advertisements in magazines would be targeted at mechanics in car upkeep shops. (Suggested text for the ad is displayed in appendix 3 while the 4Ps are summed up in appendix 4).
