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NEW Glo-Bus - AC Camera and UAV Drone - Business Strategy - Understanding Products 07 - The Competitive Factors that Determine AC Camera Sales and Market Share

NEW Glo-Bus - AC Camera and UAV Drone - Business Strategy

New GLO-BUS — 2017 Edition

NEW Glo-Bus 2017 - AC Camera and UAV Drone - Business Strategy

Action-Capture Camera Design

UAV Drone Design - The Competitive Factors that Determine AC Camera Sales and Market Share

NEW Glo-Bus 2017 - AC Camera and UAV Drone - Business Strategy

Action-Capture Camera Design

UAV Drone Design

 

The Competitive Factors that Determine AC Camera Sales and Market Share

Competition among rival makers of action-capture cameras centers around 11 factors:  

1. Average Wholesale Price to Retailers

how a company’s average wholesale price for the camera models it sells to retailers in each region compares with the wholesale prices of the camera models of competing companies. Charging a price above the price charged by certain rival companies puts a company at a price-based competitive disadvantage against these rivals whereas charging a lower price results in a price-based advantage over these rivals—big cross-company price differences matter more than small differences and much more than “tiny” differences. But the more important price-related consideration affecting a company’s unit sales/market share is the extent to which its wholesale selling price to retailers in each region is above/below the industry (all-company) average in the region.  The more a company's wholesale price to retailers in a geographic region is above the industry average to retailers, the bigger and more important its pricing disadvantage and the more that the region’s action-camera shoppers will be inclined to shift their purchases to lower-priced rival brands.  Conversely, the more a company's wholesale price to retailers in a geographic region is below the industry average, the bigger the fraction of action camera shoppers in the region it can attract to purchase the company’s lower-priced brand. However, the size of any company’s pricing disadvantage/advantage versus rivals (and the resulting loss/gain in unit sales and market share) can be decreased/increased by its competitive standing versus rivals on the other 10 competitive factors. Any company whose price exceeds the average prices of its regional rivals can partially offset or even overcome its price disadvantage when it has competitive edges over rivals on some/many other relevant buyer considerations—such as an above-average P/Q rating, more models for buyers to select from, or longer-than-average warranties. But the further a company's average price to retailers is above the average prices of rival companies, the harder it is for a company to use non-price enticements to overcome rising buyer resistance to the company’s higher priced camera models. Similarly, any company whose price to retailers is below the average prices of its regional rivals can widen its price-based advantage over rivals when it also has a competitive edge over these rivals on some or many of the other 10 competitive factors that determine a company’s unit sales and market share in a region. In addition, the further a company’s price is below the average being charged by regional rivals, the easier it becomes to offset any competitive disadvantages relating to a below-average P/Q rating, shorter-than-average warranties, a below-average number of models, and other competitively relevant factors One other price-related factor also has to be taken into account. The buyers of action cameras in Latin America and the Asia-Pacific region are more sensitive to cross-brand price differences than are camera buyers in North America and Europe-Africa. Thus when camera makers raise their wholesale prices to retailers in a region this quickly translates into higher retail prices in the region because retailers mark up the wholesale price they pay camera-makers by 50% to 100%. Consequently, when the product offerings of competing companies entail only minor differences in P/Q ratings (and other factors that shape buyers’ brand preferences), then cross brand differences in wholesale price will have a bigger impact on unit sales and market shares in Latin America and the Asia-Pacific than in North America and Europe-Africa.

 

2. P/Q Rating

the vast majority of action-capture camera shoppers consider the widely-available and much-publicized annual P/Q ratings compiled by the World Digital Video Federation to be a trusted measure of the performance and quality of competing brands of action-capture cameras.

Market research indicates buyers worldwide consider the P/Q ratings of competing brands of AC cameras to be one of the two most important factors (along with price) in shaping their choice of which action-camera brand to purchase.

A company whose P/Q rating is above the P/Q ratings of rivals in a region and, more importantly, the industry average P/Q rating, enjoys an important competitive advantage on the performance-quality aspect of its camera models.

A below average P/Q rating constitutes an important performance-quality disadvantage. The more a company's P/Q rating is above the industry average, the more that camera shoppers in the region are attracted to purchase the company’s camera brand—unless the company’s higher P/Q rating is undermined by

(1) unfavorable comparisons against rivals on such other buyer-relevant features as comparatively few models for buyers to choose among, a significantly weaker brand reputation, or a much shorter than-average warranty or

(2) charging a price premium for the added performance-quality that buyers consider “too high” or “not worth the extra cost.”

Market research further reveals that the buyers of action cameras in North America and Europe-Africa are more sensitive to cross-brand differences in P/Q ratings than are camera buyers in the Asia-Pacific and Latin America regions.

Thus, when two brands of action cameras have slightly different prices and P/Q ratings (and all other buyer considerations are, on balance, virtually identical between the two brands), then a bigger percentage of buyers in North America and Europe-Africa will purchase the brand with the higher P/Q rating while a bigger percentage of buyers in Latin America and the Asia-Pacific will purchase the cheaper-priced brand—resulting in bigger sales for the camera brand with the higher P/Q rating in the North America and Europe-Africa regions and bigger sales for the lower-priced camera brand in the Latin America and Asia-Pacific regions. However, beware of assuming the differing cross-region sensitivities to price and P/Q ratings mean buyers in North America and Europe-Africa care little about price or that buyers in Latin America and the Asia-Pacific care little about P/Q ratings. Camera prices and P/Q ratings matter greatly in all geographic regions.

3. Number of Model

Companies offering buyers a bigger selection of models than rivals enhance their company’s competitiveness by giving camera buyers more opportunity to find a model well suited to their preferences.

Companies offering comparatively fewer models than rivals risk losing sales and market share to competitors offering greater selection, unless they offset their narrower selection with other appealing competitive attributes (such as a lower price, higher P/Q rating, longer warranties, and so on).

4. Advertising Budget

Media advertising is used to inform the public of the prices and features of newly introduced models, to tout the merits of buying the company’s brand, and to inform shoppers of special sales promotion campaigns and discounted sales prices.

Even though retail dealers act as an important information source for customers and actively push the brands they carry, advertising on the part of camera-makers (often done in conjunction with the advertising efforts of retailers stocking its brand) strengthens brand awareness, helps pull buyers into retail stores carrying the brand, and informs the public about the features and prices of a company’s latest action camera models. The competitive impact of advertising depends on the size of your company’s current-year advertising budget in each region.

Companies spending more on advertising than rivals in a given region gain an advertising-based competitive edge over rivals spending lesser amounts. When all other competition-related factors are, on balance, close to equal in a region, companies spending more on advertising in a region will outsell rivals spending less on advertising.

5. Sales Promotions (number of weeks)

Rival companies can run from 0 to 20 week-long sales promotion campaigns annually to tout their action-capture cameras—all such campaigns involves offering retailers a discount of some size off the regular price.

Periodic sales promotion campaigns are of interest to retailers stocking the company’s models because they call attention to the brand, spur consumer interest and store traffic, and help increase unit sales.

Market research indicates that the competitive impact of sales promotions is a function of the extent to which the number of sales promotion events a company has annually is above/below the industry average in each region.

Companies having more sales campaigns than rivals in a given region gain a promotion based competitive edge over regional rivals having fewer campaigns.

When all other competitiive factors are, on balance, close to equal among the rivals in a region, companies having more sales promotions will typically outsell rivals having fewer promotions.

 

6. Sales Promotions (% discount)

Retailers that are offered, say, a 15% discount off regular wholesale price on units sold during a sales promotion event can be counted on to pass the savings along to consumers in the form of corresponding sale prices of 15% off the regular retail price. In the camera business, just as in most other businesses, bigger sales price discounts attract more buyers than smaller price discounts.

Thus promotional campaigns involving sale prices of 15% to 20% off the regular price have substantially greater sales-enhancing impact than promotions offering only 5 or 10% discounts, even if a company holds more sales with such small discounts. In other words, the size of the discounts off regular price a company offers during sales promotion events is a very crucial factor in determining the sales-enhancing impact of its promotional campaigns, more so than the number of promotional events.

So long as all other competition related factors are, on balance, close to equal among the rivals in a region, companies offering bigger sales promotion discounts gain a sales-enhancing competitive edge over rivals offering smaller discounts

 

7. Retailer Support Budget

Support for regional retailers involves providing retailers with in-store signs, up-to-date product-information brochures, and engaging video-enabled point-of-purchase (POP) displays that showcase uses of the company’s camera models and accessories.

A portion of the retailer support budget is also used to support the trips of company marketing personnel to visit the stores of high-volume retailers and work with store managers/clerks in expanding/improving the footprint of the company’s POP displays.

Companies providing greater retailer support gain a competitive edge in attracting retailers to stock their brand compared to companies providing lesser amounts of retailer support—the bigger a company’s retailer network in a region, the stronger is its brand exposure to camera shoppers and the better chance it has to win sales and market share.

 

8. Website Product Displays / Info

The level of expenditures for website displays and information is a proxy for the time, effort, and creativity that a company puts into

(1) posting periodically refreshed and visually appealing displays of its various camera models, along with ample and useful information about each model’s features, capabilities, and specifications,

(2) providing site visitors with the capability to create side-by-side model comparisons,

(3) enabling site visitors to post their reviews of particular models, and

(4) providing good after-the-sale product support to customers.

Many potential buyers make a point of visiting the company’s website to gather information about the company’s models and research how the features, capabilities, and specifications of its models compare against those of rival brands.

The product displays, informational content, and customer reviews at each company’s website, along with the website’s visual appeal and functionality, is thus an important element in prompting buyers to visit a nearby retailer of the company’s brand, personally inspect the company’s various models, and perhaps make a purchase.

Visits to a company’s website also enable customers to obtain needed after-the sale technical support, download apps and software updates for previously-purchased camera models, browse product manuals, discover how to file a warranty claim, and use the chat function to pose questions to online personnel.

 

9. Retail Outlets

A company’s sales and market share in a geographic region are strongly influenced by the number and type of retailers (multi-store chains, online electronics retailers, and local retail shops) it can convince to stock its brand and display its models. In general, having more of each type of retailer selling the company’s brand is better than having fewer retailers because of the added display exposure and the added convenience to camera buyers of being able to buy a given brand at more locations. In the last two months of each year, camera retailers decide whether to stick with the camera brands they are currently stocking or whether to make some adjustments based on five considerations:

(1) which camera brands in their region are growing in popularity and declining in popularity among buyers (as measured by changes in each company’s market share in the region),

(2) each camera maker’s P/Q ratings for its line of action cameras relative to the industry average,

(3) the number of week-long sales promotion campaigns each company undertook relative to the regional average,

(4) the size of the promotional discount each company offered during these weekly sales promotions as compared to the regional average, and

(5) each company’s expenditures to support the merchandising efforts of camera retailers in the region as compared to the regional average.

 

10. Warranty Period

Camera buyers, of course, find longer warranties more appealing than shorter warranties. To the extent that all other competitive factors are, on balance, roughly equal, a company with longer warranties will typically attract more camera shoppers to purchase its brand than a company with shorter warranties

 

11. Company Image (brand reputation)

The “image rating” for each company in the industry that is based on its P/Q rating for action-capture cameras, its P/Q rating for UAV drones, its global market share of action camera sales, its global market share of UAV drone sales, and its actions to display corporate citizenship and conduct operations in a socially responsible manner over the past 4-5 years—a total of 5 factors.

All companies had an overall worldwide image rating of 70 at the end of Year 5. Image ratings/brand reputations are updated at the end of each year, using the existing P/Q ratings, year-end global market shares, and information relating to the social responsibility efforts of rival companies. Newly-released brand image ratings are widely-publicized and become quickly known to buyers considering the purchase of action cameras and UAV drones.

Market research confirms that the prior-year company image ratings (brand reputations) of rival companies have a moderately strong influence on the brand choices of camera buyers in the upcoming twelve months.

Thus, companies with prior-year image ratings above the industry average have a meaningful edge over rivals with below-average image ratings in attracting camera buyers to purchase their brand and in recruiting additional retailers to stock and merchandise their camera models for a period of 1 year (at which time new end-of-year company image ratings/brand reputations are released).

The importance of a strong brand reputation in attracting camera buyers is big enough that companies with comparatively weak reputations must exert enough extra effort on the other 10 competitively relevant factors to boost overall buyer appeal for their brand and overcome their image/reputation disadvantage.

When weak image companies significantly improve the overall buyer appeal and competitiveness of their camera models from one year to the next, they can definitely win market share from strong image rivals despite having an image rating disadvantage. Should companies with once-weak brand reputations continue to improve their overall image ratings over a period of several years, they can definitely turn the liability of a weak brand reputation into a strong brand reputation and competitive asset.

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