Reflective Report On Launching Economic Glasses In The UK

Opportunities

The venture that I would reflect on is a venture to market high-end sunglasses in the United Kingdom. The study opens with an analysis of an article published on CBS News which mentions that most of the high-end glasses like Ray Ban and Prada are actually manufactured by an Italy based company named Luxotica (Cbsnews.com. 2018). The emphasis of the paper would remain on the supplier aspect of Luxotica which would bring into light the opportunity to launch a venture called Economic Glasses.

The problem which I seek to bring forward is that the cost of manufacturing of pairs of sunglasses are very low compared to the high price the marketing companies like Prada and Ravban charge which means that they cheat the customers. The article brings into light that though the global spectacle market is dotted with several big brands, these brands are dependent on one supplier of glasses which manufacture pairs of glasses for them. The article further points out that it is Luxotica which embosses the trademarks of the brands on the pairs of glasses according to which these pairs of glasses are priced. Thus, it can be argued that this disparity between cost of production and sales prices of the glasses is actually unjustified and exploitation of customers. I can also reflect on the fact that Luxotoca, being apparently the largest suppliers of finished products to these companies utilises its position to charge immense prices from these companies. This also raises the prices of the sunglasses which the customers have to bear. This gap between the customer expectations and the actual marketing mixes of the high-end spectacles marketers would form the base of the new venture. The new venture would aim to acquire pairs of glasses directly from China and market them under its trademark which would read EG.

My value proposition for the new sunglasses marketing venture would be offering of premium quality bipolar sunglasses with advertisement and LCD blockers at affordable prices. The main attribute of the pairs of double polarised sunglasses which EG would market in the market of the United Kingdom would the lenses would enable in reducing the glare of sun and protecting the wearer from the glare of the screens. Pinder et al.(2016) mention that the sun rays get polarised on falling on flat surfaces. This results in glare in the eyes in people driving or working in the sunlight and LCD displays. The divers, boatmen and pilots have also reduced reduced visibility and glare due to its polarised effect. It can be inferred from the discussion that glare poses serious risk to the people involved in dangerous activities like boating in the open sea. The double polarised IRL (It’s a real life) lenses would allow the viewers reduce the glare light and LCD screen of the lenses, thus enhancing view. Thus it can be pointed out that sun-glasses would not only enable the consumers look good but also enhance their safety (Herhausen et al. 2015). This means target customer segments of EG would primarily consist of people involved in sports like diving and skiing. The target customers would also drivers who are distracted due to led screens.  This means that the demographically the customer segments can also be divided into upper class and middle class. The geographic segmentation of the customer segments would consist of people living in the cities (Daronkola 2017).  This would allow the firm to make international quality pairs of glasses available to large middle class consumer base, the target customer segment in the United Kingdom at reasonable rates, thus creating value for the latter. The second value proposition which EG would provide the customers in the United Kingdom would be that the pairs of bipolar sunglasses would be available in a wide range of places, both in the physical market as well as digital market (Jung et al. 2017). The customers in the United Kingodm wpuld be able to buy the pairs of sunglasses at the outlets of EG as well as at the retail chains. The fim, in order to gain deeper market penetration would also make some of the models, especially low price models would be available in the third party retail stores. This would enable the customers residing in the small towns and villages avail the pairs of sun glasses. As far as the digital market place is  concerned, EG wpould market the sunglasses on its official website as well as on third party ecommerce websites. I have learnt from the discussion that while the first unique value proposition relates to the product and pricing component of the marketing mix, the second value proposition rests on the place and promotion aspects of the marketing mix of EG (Vilnai-Yavetz and Tifferet 2015).

Problem perceived

I observed that the customers buying premium quality sunglasses have to pay high prices which rests only on the brand value of the company marketing the pairs of sunglasses to a great extent which uncovers several problems in the marketing mixes of the eyewear marketing companies. The first problem I recognised upon reflection is that the supplier of most of the high end sunglasses namely, Luxotica literally a sort of monopolistic position in the global premium sunglasses industry. The marketers of the sunglasses like Rayban are dependent on the supplier and this allows the latter to charge high prices for each model of sunglasses. The companies like Prada are high-end premium fashion firms, are forced to acquire the finished products, the pairs of sunglasses at high prices. The second problem which I have recognised is that the companies marketing high-end pairs of sunglasses add their goodwill value to the costs of the sunglasses which in turn raises the prices of the sunglasses. It can also point out that the strategic raw materials like frames and lenses are not expensive. This means that the cost of production of pairs of sunglasses is very low compared to the exorbitant prices the customers have to pay. The third problem which can be pointed out from the discussion that the marketers of the pairs of sunglasses like Prada to a certain extent are exploited by the supplier, Luxotica. The leading marketers of the high-end designer glasses in order to maintain their market position and retain their customer bases are dependent on Luxotica to supply them with readymade pairs of sunglasses bearing their respective names. It can also be pointed out that installing an in-house manufacturing process would require the companies to invest immense amount of capital to acquire technology, machinery and human resources. Thus, the companies in order to keep their operation costs low are compelled to outsource their manufacturing operations to a number of large scale suppliers like Luxotica. Thus, it can be inferred from the discussion that Luxotica, owing to its almost monopolistic position in the market of designer eyewear is able to exploit not only the customers but the marketers of the high-end sunglasses as well.

The opportunity I see is launching of a new business venture of acquiring sunglasses from suppliers in China and market the same in the United Kingdom under the name Economic Glasses or EG. The new business venture would have lesser brand value then the designer wears like Prada. Apparently, this fact looks like a disadvantage but the firm would form strategies to take advantage of this lower brand value. It can be pointed out that brand value of products are assets to the respective companies owning them. Thus, it this respect it can be pointed out the companies add a portion of their goodwill to the prices of the products to get positive returns on the investments which they bear in holding these products. It can be pointed out in this respect that EG owing to its lower brand value at the initial stage would be able to charge lower prices for its models of sunglasses. I can further point out that this idea is used by companies marketing consumer goods in order to achieve deeper market penetration right in the initial stage of introducing new products. The low prices enables large population of middle class customers to purchase the products which in turn enables the marketer of the goods generate immense revenue. In fact, it can be pointed out that its pricing strategy is more effective in earning returns on investments at a faster pace compared to target a small number of consumers with high priced products. EG would market high quality pairs of sunglasses at reasonable prices which would allow it to attract customers from both middle class in the United Kingdom. I can also opine in this case that EG by the virtue of offering high quality sunglasses at reasonable prices would also be able to attract upper class customers in the country. The proposed venture called Economic Glasses would conduct business within the shores of the United Kingdom. The firm would then embark on expanding its business to other markets like the United States. The firm would maintain its unique selling propositions namely high quality products and reasonable prices while operating in the United States as well.  It can also be pointed out that the firm in order to gain access to market capital to operate in the British and American market as well as continue its foreign expansion strategy would get listed on the London Stock Exchange. This would enable it to source capital from the securities market in Britain. The firm would then launch its branded premium high priced sunglasses range which would target primarily the upper class customers. The sunglasses would be bipolar in nature and would be available in large numbers of shades. The models would also be available in variety of shapes to suit customers with varying face contours and colour preferences.

Origins of entrepreneurial opportunity and proposed venture

The value proposition method of Economic Glasses would be offering high quality double polarised LED blocker sunglasses at affordable prices. This would enable the customers from the middle class obtain sunglasses which would protect their eyes and make them look stylish at the same time. The company in order to enhance value creation for customers would also offer contact lenses, at a later stage. The firm besides marketing high quality and stylish sunglasses would also market lense cleansers at reasonable prices. The cleansers would be compatible for the branded models of sunglasses as well like Prada. Thus, here again the venture would create value for both the middle and upper class customers. I can further reflect that the value proposition of ED would expand into its place strategy as well. ED would make the sunglasses models available in both its own branded outlets as well as retail chains. The firm, in order to gain deeper penetration in the eyewear industry in the United Kingdom, which is already extremely competitive would make selected models available at the retail stores as well. This means that the value creation proposition of the brand would also take into account its distribution chain to gain deep market penetration. The sunglasses marketed by ED would also be available to customers on its official shopping portals as well as third party ecommerce portals like Amazon.

The business model of the new proposed business venture namely, Economic Glasses would aim to boost the productivity of the polarised sunglasses marketing firm. The business model would consist of nine blocks as per Blank (2013). The following are the analysis of the nine blocks:

The key partners of EG would be the IRL glasses manufacturer located in China, the international firm from which the former would buy the pairs of sunglasses. Porter and Heppelmann (2014) mention that in order to maintain the competitive advantage in the market, it has become important for marketer companies to maintain specific product standards. This fact can be applied for EG as well, as the venture being new in the market of the United Kingdom already dominated by brands like Prada. Hence EG in order to maintain the product standards would source finished goods, pairs of polarised sunglasses from the Chinese manufacturer. The other key partners would consists of distributors, retailers and retail chains which would enable EG to sell the pairs of polarised sunglasses to the end consumers.

The key activities of which the value proposition of EG would require would consist of offering high-quality sunglasses to customers at affordable (Hair et al. 2015). The distribution channels would aim to ensure maximum market penetration for companies. This is required to gain strong competitive advantage in the market and generate high amount of revenue (Jensen 2017). The distribution channel would consist of its own outlets, retail chains where its products would be available and smaller retailers especially in the semi-urban areas. The firm would aim establish and maintain long term customer relationship. The firm would build this relationship by offering high-end glasses at affordable prices (Rodriguez, Peterson and Ajjan 2015). The revenue streams of the firm would consist revenue earned by marketing the polarised sunglasses in the market of the United Kingdom.

The value proposition of EG would consist of marketing if high-end polarised sunglasses to its customers which would value to the customers. Skålén et al. (2015) mention creation of value of firms depend on their power to introduce products which are capable of address and solving existing problems customers are facing. Considering the case study, it can be pointed out that the customers are facing the problem of having exorbitant prices for buying branded sunglasses (Cbsnews.com. 2018). EG would aim to solve this problem by offering sunglasses of same standard as its competitors at less prices.

The bundles of products which EG would offer would be polarised sunglasses, cleansers or their bundles. The product bundles would enable customers to buy more products at discounted prices (Macdonald, Kleinaltenkamp and Wilson 2016).

Economic Glasses would aim getting, maintaining and growing customers by offering high quality products. The firm would establish relationships with both middle and upper class customers. Creation if customer relationships would be connected all the other blocks. For example, establishment of customer relationship paves way for revenue generation and cost diversification which corresponds to revenue streams and cost structure blocks respectively. Customer relationships are costly since attract high prices in the initial phase also increase the cost of production (Pisano 2015).

The key resources for value propositions are financial resources, material resources, human resources, technological resources and knowledge resources. The distribution channel would consist of online and offline channels. The customer relationships would be created by offering high-quality polarised sunglasses at affordable prices and by maintaining continuous communication with customers. The company for this purpose would acquire and manage immense body of customer data (Santos and Spring 2015). Lemon and Verhoef (2016) propose that the companies can utilise the customer data to manage customer journey by using the customer experience mapping in order to create positive customer experience by offering appropriate products. EG following this opinion would stress on creating positive customer experiences by mapping the customer data in its possession. This would lead to generation of high revenue by offering appropriate products.

The customer segments of EG want to be accessed through both online and offline sales channels. Dinner et al.(2014) point out that in keeping with customer preferences business organisations use omnichannel to sell products to customers. EG following this opinion and suit of its competitor companies, would use both online channels like ecommerce and offline channels like retail chains to market its products. However it can be pointed out that online channels like ecommerce channels as well as official website portal attract maximum number of customers to ascertain more sales. The sales channel choice is matched by EG using its customer data by forming appropriate customer persona mapping to offer appropriate products to customers (Gallino and Moreno 2014).

The cost structure of EG would be divided into fixed costs and variable costs (Campbell et al. 2015). The fixed costs would include rent of property, interests on bank loans and taxes on property, warehouse expenses. Taxes the firm would pay on its net profits would consist of semi-variable costs. The variable costs of EG would include salary of employees, stationary, marketing costs and inventory management expenditure

The key resources which are expensive would include pairs of polarised sunglasse (finished goods) which EG would acquire from Luxotica. The key operations which are expensive are payment gateways and online marketing portals.

Customers are ready to pay for high-quality polarised sunglasses at affordable rates. Currently they have to pay high prices for high quality sunglasses which is unjustified considering the low cost of production of sunglasses. Revenue model would consist of sale of sunglasses both in the brick and mortar outlets as well as on ecommerce portals (DaSilva and Trkman 2014). Pricing tactics would consist of offering discounts on product bundles as well on single units during festive seasons around the globe.

The key activities of EG would be marketing high quality sunglasses, contact lenses and lens cleansers. The key activities of EG would be based on the several operations namely, financing, marketing, HR management and research and design. The finance department would allocate funds towards acquisition of ready-made sunglasses under the brand name EG from the Chinese manufacturer. The financed department would also manage the revenue earned from marketing the pairs of glasses. The HRM department would concentrate on acquisition, training and retention of talented employees in order to achieve high levels of organisational performances. The HRM department would operate in association with all the other departments like finance, marketing and research and development. The marketing department would play the very important of acquisition of business partners like distributors as well to market the product in the market of the United Kingdom. The marketing department would conduct repeated market research in order to ensure that the product line of the firm is in line with the customer expectations and the changing macroeconomic changes. The marketing department would also be responsible for maintaining and controlling inventory of finished goods. The department would use techniques like just-in-time to acquire and manage stocks of goods. The marketing department would also act as the communication centre between the research and development department and the market. It should gather information about the customer expectations and convey the same to the R&D department. The R&D department should conduct research on the information to bring about changes in the product line of EG in alignment with the customer expectations. The finance department should support the R&D and the marketing department by allocating sufficient funds.

The marketing department along with the R&D department should also prepare an information brochure. The venture would require a variety of resources right from financial resources to manpower. The finance department would allocate the resources to the promotional activities. The marketing department would acquire products from China as per the requirements of customers. The marketing department should hold contest and other promotional activities as part of the crowd funding activities to raise funds to support the ventures. The human resource department would concentrate on acquisition of personnel as per the business requirements.

I can also point out that I have decided to follow alternatives methods of supporting the business. EG at a later stage would acquire its own manufacturing process to ensure that it is able to manufacture its own products.

Bandura (2018) mentions in the cognitive entrepreneurial theory that entrepreneurs have cognitive power to recognise the customer preferences trends like biasness towards certain brand which directly comes into play while making purchase decisions. According to this theory, EG would conduct market research to gain knowledge about customers’ preferences attributes, like more preferences sunglasses of certain shades. The firm should integrate the customer preferences and market trends in its product strategies. This would enable it create more value for customers by offering products aligned to the preferences and expectations of the latter. This would generate more revenue and enable the firm to strengthen its market position at a faster pace.

Conclusion:

I can conclude by mentioning the EG should introduce its own line of sunglasses and offer the same at low prices in the United Kingdom. This would enable it to generate high revenue by serving middle class customers. Further I can point out that the business at a later phase should expand into foreign markets to serve foreign customers and generate immense revenue. This would enable it to grow and compete with the international brands. Further I can point out that scope of the paper is very narrow. This is because it only stresses on the theoretical aspects like proposing value for customers. However, it does not throw light on crucial areas like budgeting and feasibility analysis. Thus, I can finally close the discussion by mentioning that the firm should enter the market of the UK and generate huge revenue.

References:

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Campbell, J.F., De Miranda, G., De Camargo, R.S. and OKelly, M.E., 2015, January. Hub location and network design with fixed and variable costs. In System Sciences (HICSS), 2015 48th Hawaii International Conference on (pp. 1059-1067). IEEE.

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