Brand's Market Analysis

Topics: Brand management, Financial ratios, Financial ratio Pages: 9 (3102 words) Published: May 29, 2013
2.1 Analysis of the Competitive Environment
Buyer bargaining power There are two groups of buyers, retailers and consumers. To established retailing outlets such as supermarkets and pharmacies, BRAND’S has higher market share1 and would translate to higher sales for them. To consumers, BRAND’S products enjoy high customer loyalty as a result of its strong branding. The presence of competitors (e.g. Eu Yan Sang, New Moon brands) is not significant of a threat yet to dethrone BRAND’S from the shelves and mindsets of retailers and consumers respectively. However, other brands are engaging in more aggressive advertising and increasing brand awareness, bridging the gap of perceived difference between BRAND’S and their products, and offering buyers more choices, hence buyers have medium power. Supplier bargaining power BRAND’S ingredients are mainly chicken essence and a small proportion of caramel. Although these ingredients are relatively easy to procure, there is high regulation from authorities restricting the number of suppliers, because of the recent 2004 avian flu which prompted authorities to step in to tighten regulations on the quality of avian products2. Due to loyalty to ingredient supplier since 2004, and the fact that few suppliers are qualified and approved by authorities, BRAND’S is assured of the quality of its ingredients, but suppliers enjoy high bargaining power because of its quality assurance. Threat of new entrants There are high fixed costs due to production method and machinery, and seasonal demands during critical periods such as examinations, as well as market saturation and high existing brand equity with other industry competitors. This creates a high barrier of entry due to high start-up capital and high economies of scale. BRAND’S recent entry to the health supplement market, has heightened the threat of new entrants (e.g. InnerShine series3), as these products do not enjoy similar consumer loyalty and new entrants can imitate them. Despite extensive brand building, threat of entrants is overall medium. Threat of substitutes Substitutes of BRAND’S include mainstream health supplements, which may appeal to consumers who do not like the bitter taste of BRAND’S traditional products. In response, BRAND’S has diversified their product line to include tablets. Moreover, BRAND’S has always been active in research and recently discovered the link between consumer benefits to an active compound4 in its products. This is in contrast to its substitutes, especially western health supplements, who have prided themselves on a long history of research and the ability to back its products with scientific foundations. Despite this, threat of substitutes is medium as BRAND’S health supplements are relatively new. Industry competition In actuality, BRAND’S products have little difference with its competitors and there are fairly similar marketing target segments because BRAND’S competitors are able imitate its marketing strategy5. Growth in demand of such products as a result of increasing competitive environments has allowed competitors to capitalize on the high demand from a spectrum of consumers. As a result, BRAND’S direct competitors price their products lower than BRAND’S and appeal to price-sensitive consumers, thus leading to a relatively strong rivalry. BRAND’s recent foray into the mainstream health supplements market also exposed itself to great competition because of existing industry players, giving it an uphill task to gain market share. As a result, industry competition is relatively intense. In conclusion, strong brand equity empowers BRAND’S and reduces threats from buyers and new entrants. Overall competitive environment was medium high due to pressures from substitutes, suppliers and competitors which led CPL to adopt the strategies below. 2.2 Competitive Strategies adopted in 2009 and 2010

CPL primarily uses focus differentiation strategy, coupled with some elements of cost leadership...
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