Discuss About The Combining Entrepreneurial And Effectuation?
The Iconic is a big fashion hub of Australia selling all type of women handbags and defines the future of the retail industry. The company loves to create new products and offer the best shopping experience to the customer. The company has always maintained a forward thinking attitude towards its products and the marketing pattern. The company launched its first product in 2011 with the help of some of the best and modern technology. Continuous effort of the company in bringing innovations has helped it to introduce new product anytime it wants. Moreover, the company also maintains a strong online channel through which it can reach to its customers.
The report focuses on the mission of the company to introduce a new innovative product for their company. The paper will further project a marketing plan for the company to make its new product invention successful.
The Iconic is a big retail company in Australia selling fashionable women handbags for the Australian population. The company has a technological team of around 50 people with the best talent and ideas of the fashion world. With such a string talent team and innovative structure of the organisation, the company has planned to introduce a new handbag for their customers (Slater et al. 2014). The handbag that the company is planning to introduce is a recycled handbag that the customers can buy, use it and return it back to the company for recycling it. The new product is being launched by the company to be in pace with the sustainable need of the environment. The product that the company is planning to use for its recycling is cotton fabric.
The company has the mission inspiring a new icon in every customer in a new way along with to abiding with the needs of the environment. With the aim of being sustainable and compete successfully the brand has come up with a new innovative idea of introducing a fashionable recycling bags (Berends et al. 2014). The mission of the company also holds are planning the way the company want to offer the product in the market and to manage the introduction within the $ 200,000 budget of the company.
The company has an in-house team for the planning and manufacturing of various types of handbags and backpacks for women to maintain their styles and introduce an icon within them. Some of the products already offered by the company to its customers are handbags, backpacks, totes, sling bags, clutches and others (Drucker 2014). These products are offered in various range and sizes to the customers of young to medium age group. The company usually followed a premium pricing strategy for its products. Presently the company is planning to offer a new type of product to its customer and for protecting the environment (Kireyev et al. 2016). It is planning to come up with recycled bags, which the customers can use and return it back to the company for recycling it. This will reduce the waste leakage in the environment and is a different type of innovation in the retail industry. The company will be using cotton fabric for manufacturing the bags and it will be available in different sizes and style. The price will be set just like other bags produced by the company. However, initially the brand will allow discounts and offers on the bags in order to attract potential customers.
The demand is increasing at a fast rate in the Australian fashionable handbag industry. This has caused a battle in the handbag-manufacturing owners, which has increased the need of planning something different and innovative. The companies working under this industry should be creative in planning the product they want to manufacture in order to compete with each other effectively. Further, product innovation will also help them to be successful in the international fashion retail market. Australia is expanding rapidly in its luxury retail industry and this has made it important for the brands in this industry to target the local market effectively. The industry also experiences a lot of new products being invented by various companies and brand. However, since 2016 the innovation has reduced, as most of the companies are not taking much initiative in bringing new ideas. However, this has increased the opportunity of some brands in the industry to take up new ideas and grow faster in the business. The iconic is thus aiming to introduce a product that no one in the industry has ever thought, as this will also facilitate in the industrial growth. The industry also offers great opportunity for the brands as most of the customers demand latest trends of bags. However, there are various challenges as well that the bag manufacturer face in Australia, which has put a constraint on their efforts. Thus, The Iconic can also face challenges while bringing its innovation in the fashion retail industry of Australia (Romani et al. 2016).
Competition is yet another factor that increases the concern of the brand while planning for an innovation. The industry in which the brand is involved exerts many competitions on it because of the presence of large number of retail brand selling wide varieties of handbags to the customers. It also faced a strong competition in its online platforms as almost all the brands have their own online presence. This requires The Iconic to maintain a god ad attractive online channel with easy return and exchange policy. In the online sector, the company not only faces competition from the local brands and from the other international brands as well. The main competitors of the company are Temple and Webster, Kogan, Booktopia and others. All these companies hold a very string online presence as well and have their own in-house manufacturing unit for manufacturing handbags. Each of these companies competes with each other by bringing continuous innovation in their product variety. The Iconic thus wants to bring about a new creativity in their product, which will not only make them stand out of others and allow them to take a concern for the environmental damage happening due to globalisation (Maniatis 2016).
Targeting is one of the most crucial and important factor for a company so that they can plan and manufacture their product accordingly. Targeting is done by a company and is one of the important factors of marketing as it helps the company to know their potential customers whom they will sell their products. Targeting includes a group of customers towards which the company targets its efforts. It is through an effective targeting the company can map out its marketing strategy such as price, promotion, product and place. This is because the approach to various promotional channels varies from one age group to other. For example the young age customers will be more approachable through online channels compared to the customers belonging to old age group. Identifying a target market is very important step while the company is developing a marketing plan for their further growth (Wirtz and Lovelock 2017). The Iconic too needs to plan a target market for offering their new recycling handbags that it is aiming to introduce in the market. The primary target market for the company is the young and medium aged people that have an attraction towards fashionable bags. Primarily the company will target the locals as they can easily figure out their choice and fashion trend. Other than the local market, the company can also target the international customers through online sources. Even though the primary aim of the company is the locals, it also wants to expand internationally (Barton 2015). The company can achieve this expansion only by targeting the international market as well. Thus, the new production innovation taken up by the company will be available for the local market as well as to the international market through online channel. However, the company will maintain a premium pricing strategy because the customers that the company is targeting will be ready to buy the fashionable bag even at higher price (Seo et al. 2014).
The Iconic is aiming to offer sustainable fashionable handbags for women. The new sustainable products that the company is planning to introduce will not only meet the requirement of the customers and will benefit the environment in a great way. A sustainable and eco friendly product is necessary in the era of increasing globalisation. The innovative idea f the company is incomparable with the other products. The bags that the company is introducing are recyclable by the customers after using it as long as they want. The customers will have the chance to use the product and return it back to the company. Moreover, it will use cotton for making the bags as cotton can easily be designed the way they wants and recycled when necessary (Khan 2014).
Pricing is one of the most important factors while planning for a product innovation. This is because the price of the product is one such factor by which the customers are motivated to buy the product. The products will be offered at premium pricing to the customers. This is because locals have a love for expensive bags that can display their status. Moreover, the company will be offering some discounts for first few days in order to make the people purchase the products and use it. This will help them get a good experience and allow the company to attract more traffic. Premium pricing strategy of the company will also be maintained din their online website for the international customers. This will allow the company to portray itself as a premium brand (Adams 2016).
Distribution is the channels through which the company offers the products to eh customers both locally and internationally. The main distribution channel of The Iconic is through fashion retail shop of Australia. The company has some franchisee store sunder them to which it supply its products. Those products are then offered to the customer visiting them. The other channel is the company’s online website in which it can target the international market. The customers along with other details can view the products before deciding to purchase it. Along with it, the online site will also offer an easy return and exchange policy through which the customers can return their products within thirty days of purchase. Thus, the brand is planning distribution through both physical and online stores (Solomon 2014).
Promotion is yet another factor that is crucial for the organisation as it helps it to put its view and plans in front of the customers. Advertising is important as through the advertisements the customers gets to know the content of the products and the quality of the brand offering the product. It helps in generating brand recognition by the consumers. The Iconic is planning to use online promotional strategy for its products (Kumar and Raju 2013). This is because online advertisement is less costly and the young age group customers that the company is targeting are easily approachable through online channel. Today’s generations are highly active in social media and social media and it is the easiest way they can be reached. However, the company can also conduct some fashion shows and events to promote it new product (Sheth and Sisodia 2015).
Financial or budget plan is yet another crucial aspect for the company before taking any innovation. It is a comprehensive analysis of the total current investment depending on the financial state of the company. It comprises of the money that the company is planning to invest for the manufacturing of eco-friendly bags. The company also needs some investment for the recycling machine that it will set in its venture. Total financial ability of the company is $ 200,000, in which $ 100,000 is the existing fund and $ 100,000 is the fund the company is seeking.
|
Variables |
Quarter 1 |
Quarter 2 |
Quarter 3 |
Quarter 4 |
|
sales |
$84,200 |
$120,000 |
$140,000 |
$145,000 |
|
Direct Cost of sales |
$50,000 |
$60,000 |
$75,000 |
$55,000 |
|
Profit |
$34,000 |
$60,000 |
$65,000 |
$90,000 |
Figure1: Financial projection of 1 year
Source: Author creation
|
Break even Analysis |
|
Monthly Revenue Break-even $30,000 |
|
Assumptions: |
|
Average Percent Variable Cost 30% |
|
Estimated Monthly Fixed Cost $20,925 |
|
1st year |
|
|
Starting Cash Position |
|
|
Inflow (individual investment) |
|
|
Sales from customers |
$10,200 |
|
Sales from vendors |
$110,200 |
|
Other Cash Receipts |
$15,000 |
|
Total Cash Inflow |
$357,900 |
|
Outflow (Use of Fund) |
|
|
Fixed Cost |
$90,000 |
|
Administration |
$15,000 |
|
Marketing |
$2,800 |
|
Operations |
$90,000 |
|
Total Cash Outflow |
$197,800 |
|
Closing Cash Position |
$160,100 |
The above figures and graphs shows the financial plan of the company for one year after the introduction of its new product. The company invests $200,000 of its budget on the introduction of the product and bringing it into the market. however, after analysing the total cost and total revenue of the brand from the new product it is seen that the company will close its cash flow with a profit of $160,100. This shows that if the company moves the way it plans then it can earn a good profit at the end of the year from the new recycles handbags.
There are certain risks that surround any company and the idea that it wants to put forward. The Iconic too has some critical risk that it might face while introducing the product in the market. The eco friendly bags that it is planning might not appear to be much attractive to the customers. The customers might not accept the concept much that easily as planned by the brand. They might think that the price that the company is charging for a cotton or eco friendly bag is more than expected. Secondly, it might happen that the quality and the design of the product might not come up the way they have planned. This might waste their investment on the project. Thirdly, it might happen the cost of recycling the bags might prove to be very costly compared to the plan of the product. There are some of the challenges that the company can face while planning the innovation and after bringing it to the market. The company should view these critical risks before planning to move forward with the innovation.
Conclusion
From the above analysis, it can be deduced that the company is planning to bring about an innovation in its handbag manufacturing. The innovation is the new recycled bag that it will offer to the consumers both locally as well as internationally. The eco friendly handbag will be made up of cotton in a fashionable way that the consumer can love. The company will charge premium pricing from the customers as the company has always marketed itself as a premium brand. Moreover, the promotional strategy will include online marketing as they are planning to target the young generation. However, the company also has the chance to face some critical risk from the actual success of the product after introduction in the market. The company thus needs to consider everything while planning the innovation.
References
Adams, M.E., 2016. Beyond the Glass: Examining Wine Tasting Room Profitability Using the 4Ps of the Marketing Mix (Doctoral dissertation, Virginia Tech).
Barton, L., 2015. Active Positioning: The Importance of Relevancy. Journal of Marketing Perspectives, 1, p.48.
Berends, H., Jelinek, M., Reymen, I. and Stultiëns, R., 2014. Product innovation processes in small firms: Combining entrepreneurial effectuation and managerial causation. Journal of Product Innovation Management, 31(3), pp.616-635.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Khan, M.T., 2014. The concept of’marketing mix’and its elements (a conceptual review paper). International journal of information, business and management, 6(2), p.95.
Kireyev, P., Pauwels, K. and Gupta, S., 2016. Do display ads influence search? Attribution and dynamics in online advertising. International Journal of Research in Marketing, 33(3), pp.475-490.
Kumar, D.P. and Raju, K.V., 2013. The role of advertising in consumer decision making. IOSR Journal of Business and Management, 14(4), pp.37-45.
Maniatis, P., 2016. Investigating factors influencing consumer decision-making while choosing green products. Journal of Cleaner Production, 132, pp.215-228.
Romani, S., Grappi, S. and Bagozzi, R.P., 2016. Corporate socially responsible initiatives and their effects on consumption of green products. Journal of Business Ethics, 135(2), pp.253-264.
Seo, J.H., Perry, V.G., Tomczyk, D. and Solomon, G.T., 2014. Who benefits most? The effects of managerial assistance on high-versus low-performing small businesses. Journal of Business Research, 67(1), pp.2845-2852.
Sheth, J.N. and Sisodia, R.S., 2015. Does marketing need reform?: Fresh perspectives on the future. Routledge.
Slater, S.F., Mohr, J.J. and Sengupta, S., 2014. Radical product innovation capability: Literature review, synthesis, and illustrative research propositions. Journal of Product Innovation Management, 31(3), pp.552-566.
Solomon, M.R., 2014. Consumer behavior: Buying, having, and being (Vol. 10). Upper Saddle River, NJ: Prentice Hall.
Wirtz, J. and Lovelock, C., 2017. Positioning Services in Competitive Markets. World Scientific.
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