Competitor analysis is a tool used in marketing as well as strategic management whereby an assessment of the strengths and weaknesses of an organizations both current and potential competitors is done. A useful technique in carrying out a competitor analysis is the construction of a competitor array. This is done through various steps first identification of the industry that the organization wants to venture into. This encompasses the scope and nature of that particular industry (Abahe.co, 2011). The second step involves the determination of competitors for the intended product. The third thing is identifying customers and the benefits they expect from the organization. It is also crucial to find out the key factors of success in the industry. Through this analysis the organization acquires both defensive and offensive strategic context so that it identifies threats and opportunities that are present. Competitor analysis is therefore a crucial and essential component of an organizations strategy (Entrepreneur Media, Inc. 2013). Cellutant electronics, a large corporation is thinking of expanding its market scope and start producing tablets. As part of the strategic planning, the tablet that is yet to be manufactured in bulk is to be analyzed in terms of the market structure and the possible demand and challenges and other determining factors within the market as will be seen below. The paper will focus on cellutant electronics primary competitor in the products market especially in regards to the Tablet market.
The organization and its product
Apple Inc. is among the most successful firms in the cellular phone market. Though Apple has not been always on top, they have always come up with tactics of ensuring that they surpass their competitors in the industry through their product quality and pricing. Presently when you walk into any super store you will not fail to find Apple products. Apple is known for various products such iPhones, iPods, iPods, Mac and so on. Apple's product on focus is the iPad since it is the equal of the new tablet that is to be introduced into the market. The iPad is a tablet that can be used by virtually anyone from students to business people. Apple was among the first manufactures of the tablet and since it a device that is user friendly it is still on demand by many consumers. Apple uses its own operating system that is known as iOS which is designed specifically for its devices such as the tablet. Apple has been enjoying and commanding a great market share of the tablet market. This is because Apple is a household name and the company is well-known and this will be one of the model companies, with the iPad being a model product for the new Tablet that is to be rolled out.
Demand, supply and equilibrium prices
Some of the factors that affect the demand for tablets are such as their cost, portability and the specifications of the tablets in terms of its abilities and what it has to offer. As the demand for tablets goes up its supply goes up too. Besides Apple there are also other many companies which are selling the tablets at competitive prices. This creates a problem in the area of supply of tablets since the demand for the product is so high. From the time tablets began being sold the demand for the product has been going up. The situation with tablets is that their demand and the difficulty of supplying them that has been projected has kept their cost relatively high. The new Tablet will hence take advantage of this and be priced at least $25 below wach of the prevailing prices for the commensurate product in the iPad category in terms of the specifications of the Tablet. This will attract more buyers to the new Tablet since they will be getting same specifications and features at relatively lower prices.
There are many more companies that are manufacturing and selling tablets and hence their prices are now becoming more affordable due to the high competition within the market. Some of the companies that manufacture tablets are Apple, Samsung, Polaroid, and Microsoft and so on and this is the stiff competition that the new Tablet to be introduced in the market will have to contend with. The buyers of the tablets can be students, those in business, teachers, lawyers, doctors and virtually anyone from any profession. These are devices that are meant for personal use and therefore anybody can own one. The potential customers have greatly increased since more and more people are developing the interest of tablets. Further more the tablets are easy to use and convenient to carry and hence attracting so many people (Prenhall.com, 2011).
Elasticity of cellutant electronics
This indicates how much quantity demanded changes when the prices of goods or services change. It measures the responsiveness of the quantity of demand to the price changes in the market (Samuel L.B., 2006). The change in price may at times cause significant changes in demand, for instance many people would seek to have a tablet will look for alternative cheaper tablets once they cannot afford the ones available. It is therefore said that the more the quantity changes due to prices the more elastic the demand is as will be the aim of this new tablet to achieve this elasticity. The elasticity of demand is very significant for any organization since it helps to foretell the effects of change in price to the revenue of the firm (Business Book Mall, 2011). Since there are many people who would want to one a tablet but they cannot buy one simply because they are not able to afford it, the cellutant aims to manufacture tablets that are affordable compared to those of its competitors in order to ensure that they increase the demand for their tablets. Another issue which is an opportunity is technological innovation. Cellutant electronics will ensure that they employ the latest technology in the manufacturing of their tablets. This will involve the use of up-to-date technology and operating systems such as android that will make the products more user friendly. These are factors that will help increase the demand for the product.
Marginal cost is the cost that a manufacturer incurs in producing one extra unit of an item. It is the cost of the additional inputs that are required to produce the output. It can also be referred to as the derivative of total production costs with respect to the output levels (Econ Model, 2011). As the production increases, the average total cost curve will decline as the fixed costs will be spread across the large number of goods being produced. This will however change according to the law of diminishing returns and the curve of the average total cost will start climbing. This means that for the new tablet, the initial marginal costs will be high with low marginal revenues, but as the demand will increase due to the price elasticity, there will be a sharp decrease in marginal cost and an increase in marginal revenue hence profiting the company. Marginal costs decrease when there is a falling marginal product of labor that is when the company is using less on each item on additional items needed to make tablets than the extra amount of money for paying the workers (Novinson, 2012).
Being a new product in the market, there are bound to be several difficulties in getting the acceptance by the buyers and this means that there needs to be more strategy that just the pricing strategy for this tablet. The most important one is for the management to keep focus on the cost and the inventory. There is need at this entry level to keep all expenditure related to the tablet as…