Analysis of U.S Market Conditions and Marketing Plan for OnePlus 3

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The Mobile industry have grown drastically in the recent years and is continuing to grow each year. According to a study conducted by comScore (2014), the number of mobile users have already surpassed the number of desktop users in the United States (Lella, 2015), shown in figure 1. And according to a survey done by the Center for the Digital Future, the number of people who goes online through a mobile phone is now 79 percent in the United States (Lebo, 2015).

Figure 1: Growth of Mobile Industry
Source: comScore Media Metrix Multi-Platform, U.S., Age 18+, mar 2014 – mar 2015

Mobile phones, especially smartphones, have been identified as a resource or asset by both consumers and companies. This might have resulted in the $500 Billion sales figure reported by Deloitte Digital for mobile influenced transactions (Lobaugh, 2015). The global mobile unit sales are expected to sky rocket to a staggering 2.35 billion units in 2019 (CCSInsight, 2015).

The company: ONEPLUS

OnePlus is a Chinese smartphone company which was established in the year 2013 (TAM, 2015). Co-founded by Carl Pei (an ex-employee of the Chinese companies Meizu Electronics and Oppo Electronics) and Pete Lau ( the ex-Vice President of Oppo Electronics) (TAM, 2015). The main aim of the company is to build a smartphone which has the latest and the most updated technologies, but at the same time is committed to build it beautifully and without any compromise in its build quality (OnePlus, 2014).

In April 23rd 2014, OnePlus launched its highly anticipated smartphone the “OnePlus One” (OnePlus, 2015). Due to the company’s marketing plan strategy, the phone had already received so much attention that, everyone wanted a piece of it (ROSENSTEIN, 2015). The TIME magazine called it the “Phone of Dreams” since it was difficult for one to buy it due to their ‘invite-only’ marketing strategy (Newman, 2014). In One year, the Company sold more than one million units globally (OnePlus, 2015). Followed by OnePlus One, the company launched two more smartphones namely OnePlus X and OnePlus 2 in 2015 and 2016 respectively (OnePlus, n.d).

The New Product: OnePlus 3 (Assumptions)

The Company is now preparing to launch its new smartphone called “OnePlus 3”, with the slogan “Flagship Challenger, Never Settle” in the United Stated market. The new products competitive specifications are as below:

OnePlus 3
Price: US$399
Storage: 128GB + Extendable Memory
Display: Retina
Battery: 6300mah
Connectivity: 5G Ready /4G/3G

Situation Analysis

Business Environment

Markets are very volatile and keeps on changing the way it works each day, especially mobile markets. To understand the business environment and to make changes or adapt along with the market situations, a PEST analysis is necessary. PEST, where each letter stand for Political, Economy, Social and Technological factors (Makos, 2012).

PEST Analysis
  • Political Factors
    OnePlus needs to consider the political aspects of the country where they target to sell their new product, i.e. in U.S. An extensive study on the current laws which can affect selling a product from outside the U.S., how does the taxation work, what are the regulating bodies directly related with mobile etc. are some of the factors that needs to be determined (Makos, 2012).
  • Economic Factors
    The current economic status have direct impact on the sales of the product as it determines the buying power of an individual. The company should even analyse the point till which the current exchange rate holds good for the pricing of the product (Jurevicius, 2013).
  • Social Factors
    The lifestyle, buying habits, attitude toward saving money for future are some of the social factors that needs to be considered before creating the marketing strategy (Jurevicius, 2013). United States is a country where time is money, they need everything to be done at a faster pace, and this means they rely on technology to get things done even when they are on the move. Also, understanding the culture has a key role now before even stepping a foot on an international market, as it is all about acceptance of the new product in an already existing market (Jurevicius, 2013).
  • Technological Factors
    Technology is changing every now and then, OnePlus needs to be constantly keep themselves up to date to understand how consumers react to the new technology and how they are making use of it in their daily life. This can give OnePlus a competitive edge by delivering the products first in the market (Makos, 2012).

Market Analysis

Forecast

The number of total mobile users in the United States is estimated to be 219.8 million users by 2017 and 236.8 million users by 2019 (Statista, 2016) , figure 3 shows the figure below:

Figure 3: Forecast for number of users in U.S between 2016 and 2019 (Source: Statista 2006)

Competitor Analysis

CompetitorStrengthWeaknessMarketing StrategyAggressiveness Threat
OppoPricingLow SpecificationsAdvertisementMediumCreate a high specification phone
AppleBrand ImageHigh priceAdvertisementHighBring down price
SamsungTechnology and Brand ImageHigh priceAdvertisementHighBring down price
LenovoIntel processorLow SpecsAdvertisementMediumBring down price
HuaweiPricingLow specsAdvertisementlowBuild high specs mobile
HTCBrandHigh PriceAdvertisementHighBring down price
LGBrandHigh priceAdvertisementHighBring down price
XiomiPricingLow SpecsAdvertisementLowBuild high spec mobile

(OnePlus, 2014d)

SWOT Analysis

SWOT analysis helps in identifying the Strength, Weakness, Opportunity and Threats of OnePlus Company.

We can again divide the SWOT into two factors, Internal and External factors. The strength and weakness of the company comes under internal factors and Opportunities and Threats comes under external factors (LucidChart, n.d).

STRENGTHS WEAKNESS

  • High hardware Specification
  • Competitive Price
  • Save money on marketing ads
  • Manufactured in China, less labour costs
  • Cost less to manufacture
  • Since sales are done through online, no retailer cost
  • Since invite only approach, the number of units that need to be manufactured are known
  • High Build Quality

WEAKNESS

  • To reach the break-even point takes time
  • No advertisements
  • Building a brand image takes time
  • Investors need to wait a long period to see return

OPPORTUNITIES THREATS

  • US mobile market is increasing
  • More people now trust and buy mobile phones online
  • No direct competitor, as of now

THREATS

  • Change in law
  • Bad weather
  • If website is hacked, it could hinder the sales
  • Competitor with high brand image coming up with a new product with same specifications

(Source for template: (LucidChart, n.d))

Marketing Strategies

Foreign Market Entry Strategy

There are four major type of market entries which the company OnePlus can choose from:

  • Direct Foreign Investment
  • Strategic Alliance
  • Exporting (Direct or Indirect)
  • Contractual Agreements
    (Cateora, 2011)

Due to the high popularity and trust gained from U.S market through its successful product ‘OnePlus One’, the company OnePlus will choose direct sales export through their website www.oneplus.net for their new product. Like its predecessor, OnePlus 3 too can only be bought by a user only through an invitation. Through the invitation approach, the person who has already bought the phone will act himself/herself as a marketing person and then pass the invitation to the next person, who is really interested in buying the phone. This approach will save the company a lot of resource that could have been wasted on advertisement (OnePlus, 2014b).

In a world where e-commerce is booming, a study conducted by eMarketer shows the e-commerce in U.S especially, will increase by December 2016 (eMarketer, 2016). Therefore, after careful evaluation, the best approach for the company will definitely be selling the new smartphone online directly to customers. It cuts out the middle men such as distributors, retailers etc. (OnePlus, 2014b). This in turn helps OnePlus in investing more money to make their smartphones smarter than it can ever be!

Target Market and Segmentation Strategy

Target Market

OnePlus 3 is targeted towards heavy mobile users, with an age group ranging from 10 years – 35 years of age located in the United States. Heavy mobile users, defined by the company, are someone who uses or rely on his/her smartphone for all their daily needs, may it be technological or physiological needs, such as communication, entertainment, productivity etc.

Segmentation Strategy

In relate to what the new product OnePlus 3 can offer, the market can be divided into two segments:

  • Psychographic Segmentation (Kokemuller, n.d)
    The marketing strategy, invite-only method gives the people a sense of uniqueness and a feel of having something which is not easily available for everyone to buy. And with a very large battery capacity people can now use the phone without have the fear of running out of power. This could target users who use their phone as a style statement and who spends more time in using internet on their phone for daily needs without having the fear of recharging soon.
  • Benefit Segmentation (Kokemuller, n.d)
    Consumers who want to possess the best in the market, be it of high specification or build quality. With OnePlus 3, the consumer will have both the high specification and high build quality smartphone. With a challenging specification integrated, OnePlus 3, the new product, will truly be a “Flagship Challenger”.

Positioning Strategy

OnePlus has decided to stand aside from all the other smartphone companies and maintain their brand image, which they build up from their first product ‘The flagship killer’ OnePlus One, by positioning themselves distinctively in their consumers mind (Janiszewska, 2012). Below is the perceptual mapping (Figure 2) to show where the company is going to place its new product OnePlus 3:

Figure 2: Perceptual Mapping of OnePlus Company for their new product (Jose, 2016).

From the above figure, we can see that, OnePlus stands very distinct from all the other smartphone companies. Compared to their first product OnePlus One, the new product has maintained the same position, i.e between the lower quadrant of the High Specification and Low Price axis, however this time better in terms of specification (Jose, 2016). Keeping the brand unique or one of a kind might be the key strategy to win the market and consumers mind (Janiszewska, 2012).

Marketing Mix Strategy

The four major components for creating a market mix strategy are:

  • Product
  • Price
  • Place
  • Promotion
    (The Economic Times, n.d)

Product
The product component emphasis more on convincing what OnePlus can offer to the consumer. This can be in terms of hardware, software, design features which makes it an attractive and exclusive product. Some of the best features of OnePlus 3 are:
• Super-fast processor
• High Battery Capacity
• High build quality
• Retina screen

Price
This component involves fixing the price for OnePlus 3. The factors that the company should consider are:
• How much will it cost to manufacture OnePlus 3?
• What are your competitor’s price tag on their phones?
• How much is your targeted audience ready to pay?

Once the above factors are determined, it is imperative that the company calculate the Break Even Point. This is the point where the revenue received from selling your new product becomes equal to the company’s total expenditure. In other words, how many units of OnePlus 3 needs to be sold to reach a point where there is no loss but neither profit (Peavler, 2016).

(Estimated Values Only)
Formula to Calculate Break Even Point
Break Even Point = Fixed Expenditure of the Company / Gross Margin
Selling Price: $US399 per unit (Price of each OnePlus 3 smartphone)
Goods Price: $US200 per unit (The total cost to make a single unit of OnePlus 3 smartphone, this could include the cost of goods, labour charge, transportation)
Fixed Expense:
Fixed Expenditure of the Company: $US100,000
Gross Margin: (Selling Price – Goods price)/Selling Price
( $399 – $200 ) / $399
= 49%
Now,
Break Even Point = Fixed Expenditure of the Company / Gross Margin
= $100,000 / 49%
= $100,000 / .49
= $204,081
Number of Units that needs to be sold = $204,081/$399
=511.48 ~ 512 Units
The company, OnePlus needs to make sales worth $US204,081 or sell 512 units of OnePlus 3 to reach the Break Even point.
(Peavler, 2016)

OnePlus have offered the consumer’s the best hardware and design specification for the most competitive pricing i.e. at $US399, it is not even a bargain it is a steal!

Place
Place or location does not always means the location of the company. It also means the path which the company takes to distribute their products. OnePlus have chosen to sell their products directly to the US customers from there website through invite only system. This strategy, as explained above under the topic Foreign Market Entry Strategy cuts out the middle mens such as Wholesalers, Retailers etc.

(Small Business Development Corporation, n.d)

Promotion
Also known as communication strategy, this factor defines the actions OnePlus take to inform the consumer about the existence of OnePlus 3. This can be a combination of advertisements, public relations, press releases, competitions, social media etc (The Economic Times, n.d). OnePlus have used the invite only and registration system to create promotions through word of mouth. Also, by conducting multiple contests to through social media prime communication strategy used to get attention (OnePlus, 2014c).

The entire Marketing Mix strategy have been compiled and have been shown below:

ProductPricePlacePromotion
High SpecificationLow Price Compared to competitorsOnline SaleInvite only Method
High Build QualityOnly in the United StatesContests or Competitions
Superior DesignSocial Media
The owner of the phone acts as a promoter

Oneplus Company Objectives

The main objective of OnePlus is to be a part of people’s life, helping them to improve their standard of living by using the right product. A product which can bring joy to life instead of technical or service issues, OnePlus believes that respect can only be received by doing the right thing at the right way (OnePlus, n.d(b)). By constantly improving and constantly moving greatness will be an understated word.

Economic Evaluation

Planning assumptions

General Assumptions

  • The US market will accept OnePlus 3 as they are familiar now with the company OnePlus.
  • US economy will be stable
  • The US government laws will be favourable to sell mobile phones

Business Planning Assumptions

  • Will be able to payback the investors
  • Sell OnePlus 3 to a different country after 6 months

External Factors Assumptions

  • Bad weather
  • Government laws affecting direct sales
  • Bad economic situations
  • War

(bizfilings, 2012)

Forecast sales & costs

Month (2016)Sales ForecastCosts ForecastUnits Sold
July$39,900100,000100
Aug$59,85090,000150
September$59,85080,000150
October$59,85070,000150
November$59,85030,000150

Marketing Implementation & Control

Action Plan

ActionDepartment in ChargeWhen will it be CompletedCostFuture Developments
Conduct SurveyMarketing TeamBy June 2016$5000Based in survey
Research on Future TechnologiesTechnology TeamOngoingOn Going expenditureToo early to tell
Research on New Marketing StrategiesMarketing TeamBy Jan 2017$10000Might need to bring in experts from other companies

Monitoring & Control Mechanism(s)

One of the important factor for a marketing campaign is to conduct evaluation of its success rate through review process. Some of the key areas identified for monitoring are as below:

  • Marketing: Invite system – Monitor how many people have forwarded the invites to his/her friends, which in turn have converted into a sales helps in planning the company’s future.
  • Cost: Monitoring the company’s overall expenditure.
  • Failures: In the marketing campaign pay close attention to things that went wrong, study them analyse them to understand how the company can do better next time.
  • Sales: Calculate the break-even point, receive feedback from the customers who have bought the new product and their overall experience with the website
  • Competitors: Monitor the market for any new competitors who are targeting the same audience.

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