We are considering here for illustration and explanation a company called Sonic and its products. Sonic has several powerful strengths on which to build, but has major weakness in lack of brand awareness and image. The major opportunity is growing demand for multifunction PDA that delivers communication-specific benefits. They also face the threat of ever-greater competition and downward pressure on pricing.
Strengths Sonic can build on three important strengths:
1. Innovative product: Sonic 1000 include a voice recognition system that simplifies usage and allows hands-free operation. It also offers features such as built-in cell phone functionality wireless communication, and MP3 capabilities.
2. Compatibility: One PDA can work with the hundreds of Palm-compatible peripherals and applications currently available.
3. Pricing: Their product is priced lower than competing multinational models all of which lack voice recognition which give an edge with price-conscious customers.
Weaknesses: By waiting to enter the PDA market until the initial shakeout and consolidation of competitors had occurred. Sonic has learned from the successes and mistakes of others. Nonetheless, it was found they have two main weaknesses:
1. Lack of brand awareness: Sonic has not yet established a brand or image in the marketplace, whereas palmOne and other rivals have strong brand recognition. This is an area we will address with promotion.
2. Heavier weight: To accommodate the multifunction features, the Sonic 1000 is slightly heavier than most competing models. To counteract this , we will emphasize our multifunction features and value-added pricing, two important competitive strengths:
Opportunities Sonic can take advantage of three major market opportunities:
1. Increasing demand for multiple communication methods: The market for wireless Web-enabled PDAs with cell phone functionality is projected to grow faster than the market for non-wireless models. There are more users with PDAs in work and educational settings, which is boosting primary demand. Also, customers who bought entry-level models are now trading up.
2. Add-on peripherals: More peripherals, such as digital cameras and global positioning systems, are available for the Palm operating system. Consumers and business users who are interested in any of these peripherals will see the Sonic 1000 as a value priced device able to be conveniently and quickly expended for multiple functions.
3. Diverse applications: The wide range of Palm- compatible software applications available for home and business use allows the Sonic PDA to satisfy communication and information needs.
Threats: We face three main threats at the introduction of the Sonic 1000:
1. Increased competition: More companies are entering the US PDA market with models that offer some but all of the features and benefits provided by Sonicâ€™s PDA. Therefore, Sonicâ€™s marketing communications must stress our clear differentiation and value added pricing.
2. Downward pressure on pricing: Increased competition and market-share strategies are pushing PDA prices down. Still, our objective of seeking a 10% profit on second-year sales of the original model is realistic, given the lower margins in the PDA market.
3. Compressed product life cycle: PDAs seem to be reaching the maturity stage of their life cycle more quickly than earlier technology products. We have contingency plans to keep sales growing by adding new features, targeting additional segments, and adjusting prices.
Competition: Increased entry of established computer and cell phone companies has pressured industry participants to continually add features and cut prices. Competition from specialized devices for text and e-mail messaging, such as Blackberry devices, is also a factor. Key competitors:
1. palmOne has had financial struggles because of the need to reduce prices for competitive reasons . Its acquisition of Handspring boosted its product development strength and expanded its product mix. As the best known maker of PDAs, palmOne gas achieved distribution in nearly every channel, including distribution by US cell phone service carriers. At present, palmOne product lacks some of the voice recognition software standard in the Sonic 1000.
2. Hewlett-Packard targets business markets with its iPAQ Pocket PC devices many with wireless capabilities to accommodate corporate users. For extra security, one model allows access by fingerprint match as well as by password. HP enjoys excellent distribution, and its products are priced from below $300 to more than $600.
3. Garminâ€™s iQue 3600 was the first PDA with built-in global position susyem (GPS) capabilities. Priced at $589, its mapping software and verbal commands eliminate the need for an automotive device. Garminâ€™s PDA uses the Palm operating system and has other unique functions, such as a digital voice recorder for brief memos.
4. Dellâ€™s PDA model is priced starting at $199. However, this product is larger than competing palmOne products and it lacks wireless functionality as a standard features. New, slimmer models are expected at regular intervals from this low-cost competitor, which markets directly to customers.
5. Samsung is one of several manufacturers that have married cell phone capabilities with multifunction PDA features. Its i500 uses the Palm operating system, provides speedy e-mail ad MP3 downloads, plays video clips, and offers PDA functions such as address book, calendar and speed dial.
Despite strong competition, Sonic can carve out a definite image and gain recognition among targeted segments. Their licensing arrangement with Cellport Systems allows them to provide the exclusive feature of voice recognition for hands-off operation, a critical point of differentiation for competitive advantage.