Discussion about the case study of Jason Li
This report is based on the case study analysis of a small business owned by Jason Li. He was the owner of a small-scale business which is a dress shop and is running the business for the last three years. Jason Li visits the apparel shows in every season of fashion and the glamour of the merchandise of different manufacturers which were said to be the bestsellers always impressed him. Jason mainly serves the market that quite older and is aiming towards the market of upscale level. The business operations in the first year did not prove to be profitable, as the merchandise were not sold. Jason managed to raise his investment in the business with the help of a sale, however, there were no profits made (Basu 2014).
Jason did not find it feasible to sell out his stock, however he did not exactly know the amount of his inventory that he was unable to move. Jason had great belief in his taste of fashion for women when he started the business. However, after operating the business for three years, the sales of the business did Jason’s expectations. The analysis that is done in this report is based on the problems related to Jason’s business and the mistakes he had made. The ways by which Jason can promote the business is analysed in this report. This will help Jason build a strategy to counter his competitors in the market and further flourish his own business. This will also help Jason to build a competitive advantage over his rivals (Bocken et al. 2012).
Jason had many mistakes related to his business, as he had started the business operations without proper analysis of the market and the needs and desires of the consumers. He had stocked up his inventory based only on his personal choices and tastes. He had immense belief on his choice of apparels.
The ways by which Jason can create his competitive advantage are hereby defined. Competitive advantage mainly refers to the set of exclusive features of an organization or a product which helps the product to gain an advantage over its competitors in the target market of the particular product. These features make the product superior or significant to its competition in the market. These unique features of a product help in defining the loyalty of the consumers towards are a particular brand. The different types of competitive advantages are cost advantage, service or product differentiation, defensive strategies, alliances (Cordeiro and Vieira 2012).
Competitive Advantage of Jason Li’s Dress Shop
Cost advantage of a company is acquired when an organization is able to use its workforce, costs, raw materials and operations at the maximum level to create value for the customers. The companies aim to cut down on their costs related to the offerings to the consumers. This type of advantage ensures ways of cost cutting which is extreme, so that they survive in the times of recession. The design of the products is important for the companies that use technologies and can have advantage related to costs. Redesigning is a process used by organizations so that they cut down the costs by improving the products and further redesigning the products (Bocken et al. 2012).
Service or product differentiation is also a process by which a company can gain competitive advantage in the market. This refers to the ability of the company provide more benefits as compared to other companies in the same market. Differentiation can be achieved by an organization if it provides high-quality or unique products to the consumers or if the company delivers the products to the consumers faster than the other companies (Craciun and Barbu 2014). The reach of the company to its customers also acts as an important factor in its product differentiation. This type of competitive advantage can be achieved by the company high quality, customer service and innovative products. Quality refers to the ability of the company to provide the best service or product and innovation refers to the ability of the company to meet the same needs of the consumers in a different way and focus is the ability of the company to understand the needs of the target market and provide the products or services to the target market in a better way (E. Dobbs 2014).
A business can gain competitive advantage in the market with the utilization of defensive strategies. This type of strategy helps the business to maintain the competitive advantage that has been gained by the organization. This strategy is related to cost advantage and product or service differentiation. This strategy act as an advantage for the business as it helps in sustaining the other advantages (Gianos 2013).
Strategic alliances can be made by the organization with other business, which will help the company to gain competitive advantage over other business in the identical industry. Strategic alliances are types of joint ventures made by the business organizations to use the resources of the other organizations and gain advantage over the competitors (Glancy and Yadav 2013).
Analysis of Jason Li’s case with respect to Ansoff Matrix
There are some determinants of competitive advantage which include,
- Benefit – The company needs to be clear about the benefits provided by the product or service and the also ensure that the product must be of true value to the consumers and should be useful for them. The organization needs to be aware of the features of the product and the benefits or advantages of the product. The organization needs to be aware of the constant changes in the technological environment that has an effect on the products or services (Gregor and Hevner 2014).
- Target market – The organization needs to be aware of the group of people who will purchase the products manufactured by them. The potential customers of the organization need to be selected carefully. Further, the organization will promote the products keeping in mind the target group of customers (Gobble 2012).
- Competition – The organization should be aware of the competition it has in the market who provide the same kind of products to the consumers.
Jason can create competitive advantage over his competitors in the market by improving the quality of his products. He has study the minds of the consumers to assess their needs and desires. The needs of the consumers have to be fulfilled by the products that are sold by Jason. Jason cannot create cost advantage as he has to make profit from the business as he could not gain profits in the last three years (Hacklin and Wallnöfer 2012). However, he can create product differentiation to gain competitive advantage over other companies in the market. This can be achieved if Jason can sell products which are unique in the market and are better than other products available in the same market. He has to create brand loyalty for his products within the consumers. This strategy will help Jason to increase his customer base and in turn generating profits for his shop (Hussain et al. 2013).
Jason Li’s business case can be further analysed based on the Ansoff Growth Matrix as follows,
Ansoff Matrix is tool used for marketing purposes, which helps the business in determining the market and product growth strategy (Kipley, Lewis and Jeng 2012). There are four options for growth related to Ansoff matrix for growth. These four options include,
- The first option of Ansoff matrix is market penetration which refers to a strategy related to the growth of the business and this is focussed to the sell the products that exist in the current market. The main objectives of market penetration strategy are, to increase or maintain the share in the market of the current products which the company can achieve by combining the pricing strategies that are competitive, promotion of sales, advertising and other resources related to selling, to ensure the growth market dominance, trying to restructure the market that is already mature by making the market less attractive so that the competitors can be driven out, increase the usage of the products by the customers who are present (Lee, Kim and Park 2012). This strategy is the usual business planning and it is focussed on the products and the markets. The business has adequate information about the needs of the customers and the competitors as well.
- The second option in the Ansoff Matrix is the product development strategy that related to the strategies of growth by which the business plans to launch new products into the current markets. This is strategy which will require developing competencies that are new to the market and also requires the organization to develop products that are modified and have the ability to appeal to the current market (Marshall 2013). This strategy is helpful for a business in which the differentiation is required for a product so that it can become competitive in the market. The strategy of development of the products lays on the emphasis related to marketing on the factors that include, innovation and research, insights related to the needs of the consumer and being the first in the market (Sohel, Rahman and Uddin 2014).
- The third option in the Ansoff Matrix is the market development strategy. This type of strategy is related to the strategy of growth in which the business tries to sell off its current products in the new markets. The ways by which the business approaches this strategy are, the strategy of entering the geographical markets which are new, the packaging and dimensions of the new products, the distribution channels that are new, the pricing policies needs to be different so that it can attract different customers (Tassabehji and Isherwood 2014). This strategy is comparatively riskier as compared to the market penetration strategy, the reason being that the business targets markets that are new.
- The fourth option of the Ansoff Matrix is the diversification strategy. This type of growth strategy is related to the process where an organization plans to launch new products and introduce them in new markets. This strategy is the riskiest of the four options, the reason being that the organization is planning to move into the market where they have quite less experience (Taylor 2012). The business can plan to adopt this strategy only when the organization has a clear understanding regarding the expectation of gains and the risks related to the strategy. The rewards and risks related to the strategy should be balanced and this will help the diversification strategy to be successful (Van den Berg and Pietersma 2015).
Based on the definition of Ansoff Matrix, the case of Jason Li can be analysed in the following way,
- Jason Li has started his business without proper analysis of the market and the needs. The options of the Ansoff Matrix that are applicable in the case of Jason Li are the market penetration, product development and market development. In case of market penetration strategy, Jason Li has to analyse the market of fashion apparels and then stock up his products accordingly (Vignali 2015). The strategy will help him to understand the market and then stock up his products, so that the products can be sold with profits. The next option that is related to product development can help Jason Li to make strategies to improve his products and then try to sell them in the market so that the products are not immovable and he can earn profits for his company (Zeschky, Winterhalter and Gassmann 2014).
The third option is the strategy of market development. This option will help Jason Li to introduce the products to completely new target market. According to the case he only serves the older market in his area, however by implementing this strategy he can target the upscale market and gain a bigger customer base (Basu 2014). This will help him earning customers from the upscale and further increase his profits. The implementation of the strategies related to Ansoff Matrix can therefore help Jason Li to increase his customer circle and thereby creating brand awareness of his fashion apparels.
The case of Jason Li can be further analysed based on the Porter’s five forces model as discussed further. This model states that the any type of industry is affected by the five forces that are described by Porter.
- Rivalry – This is an important force that affects the industry. The levels of rivalry in the market helps in deciding the character of the market. The markets in which the levels of rivalry are low, are considered to be much more disciplined as compared those markets with high levels of rivalry. The that affect the levels of rivalry in a market are, the more number of firms, rate of market growth, fixed costs that are high, storage costs that are high for products that highly perishable, costs of switching products, levels of product differentiation that are low, high stakes related to strategy, rivals who are much more diverse (Bocken et al. 2012). This force affects the business of Jason Li, as he has lots of rivals in the market selling fashion apparels.
- Threats related to substitutes – This force affects the business of an organization, as more number of substitutes of the same product in the market implies that the customer has more choices, and the customer should be able to differentiate products of the organization with the help of its unique features. This force has an implication in the case of Jason Li, where he has to stock up his fashion products in such a way so that the customers are able to differentiate the products and a brand is created (Cordeiro and Vieira 2012).
- Power of the buyers – The power that the buyers have in the market scenario has an implication on the pricing strategies of the organizations. The number of buyers in the market determine the pricing of products in the industry. More number of buyers implies that the prices are controlled by the buyers and less number of buyers implies that the prices are controlled by the companies (Craciun and Barbu 2014).
- Power of the suppliers – The suppliers are a major part of any industry, as they have the control over the supply of labour, raw materials, and all other components of the business related to the manufacture of the products. The relationship of the organization with the suppliers is important for the smooth running of business operations. In case of the business of Jason Li the suppliers of his shop will affect the operations of his business (E. Dobbs 2014).
- Threat related to the entry of new business in the same industry – This force has implications on the profits of the business organization and the products that are sold by them. This force also has an effect on the business operations and the profits made by Jason Li. The new entry of competition in the market will have an adverse effect on the fashion business of Jason Li (Gianos 2013).
According to the Porter’s five forces model every force affects the business of Jason Li. Jason Li has to think of promotional strategies to counter the effects of these forces (Glancy and Yadav 2013).
The four promotional strategies that can be taken by Jason Li to attract consumers towards his shop are as follows,
- Jason Li can promote his business with the help of digital marketing, which is a cheap and new age way of promoting his business. This will help to develop customers for his shop and thereby creating brands for his business.
- Jason should showcase the fashion apparels that are available in his showroom in the different fashion events, so that he can pose direct competition to the other companies.
- Jason can encourage his existing customers to promote his business, by providing the current customers with benefits and discounts.
- Conducting surveys on the customers after the sale of the product is another way by which Jason will come to know about their needs and thereby improve his products accordingly.
Conclusion
The report can be concluded by stating that the analysis of Jason’s business based on the Ansoff Matrix and Porter’s five force model has proved that any type of business in any industry is influenced by different types of external forces. Jason has implement the strategies that are recommended in the report to improve and promote his business.
References
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