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NEW Glo-Bus - AC Camera and UAV Drone - Business Strategy - Understanding Products 08 - The Competitive Factors that Determine UAV Drone 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 UAV Drone 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 UAV Drone Sales and Market Share

Competition among rival makers of UAV drones centers around 9 factors:

1. Average Retail Price to Online Customers

In a given region, charging a price that is above the industry average puts a company at a price-based competitive disadvantage against rival companies, whereas charging a price that is below the industry average results in a price-based competitive advantage over rivals. The bigger the amount that your retail price is above or below the industry average, the bigger the resulting price-based competitive disadvantage or advantage. However, any company whose retail price is above the industry average in a region can partially offset or even totally overcome its price disadvantage when it has a competitive edge over rivals on some or many other important sales-determining factors

such as a P/Q rating that is above the industry average P/Q rating, an above-average number of models, longer-than-average warranties, an above-average number of third-party online retailers, above-average expenditures for search engine advertising, and a better brand reputation. Price disadvantages become progressively easier to overcome as a company’s P/Q rating rises further above the industry average. P/Q ratings that are 1-2 stars (or more) above the industry average can command prices hundreds of dollars above the industry average because a sizable fraction of the commercial enterprises that purchase UAV drones place a high value on the added performance of drones with P/Q ratings of 7 stars and higher

perhaps as many as 5% of the world’s drone buyers can be enticed to pay prices perhaps as high as $2,000-$2,500 for UAV drones with 9-star or 10-star P/Q ratings. But the further a company's price to retailers is above the industry average in a region, the harder it is for a company to use enticements other than higher P/Q ratings to overcome rising buyer resistance to higher retail prices for its drone models. Likewise, the further a company’s price is below the industry average in a geographic region, the easier it becomes to offset any competitive disadvantages relating to lower P/Q ratings, shorter warranties, fewer models, and so on.   One other price-related factor also has to be taken into account. The purchasers of drones in Latin America and the Asia-Pacific regions are more sensitive to price differences than are drone purchasers in North America and Europe-Africa. In other words, when the drone offerings of competing companies entail only minor differences in P/Q ratings (and other factors that shape buyers’ brand preferences), then price differences will have a bigger impact on unit sales and market share in Latin America and the Asia-Pacific than in North America and Europe-Africa.


2. P/Q Rating

The vast majority of drone shoppers consider the widely-available and much publicized annual P/Q ratings compiled by the Global Alliance for Safe and Responsible Use of Commercial Drones to be a trusted measure of the performance and quality of competing brands of drones. Market research indicates buyers worldwide consider the P/Q ratings of competing drone brands to be one of the two most important factors (along with price) in shaping their choice of which brand to purchase. A company whose drones have a P/Q rating above the industry average thus has an important competitive advantage over rivals, whereas a below-average P/Q rating constitutes an important competitive disadvantage. P/Q ratings that are more than 1 star above or below the industry average result in particularly strong competitive advantages or disadvantages. The competitive advantage that attaches to an above-average P/Q rating can make a company’s drone brand even more appealing to buyers (and thus translate into even bigger sales volume and market share) if it is supplemented by charging an attractively small price premium for the added performance-quality, by also offering a longer-than-average warranty and/or an above-average number of models to choose from, and so on. Likewise, a company selling drones with an above average P/Q rating can erode its performance-quality advantage by charging a price that buyers   consider “unreasonably high” for the added performance and quality or by weakening the competitiveness of its product offering with other subpar characteristics (a short warranty or a weak brand reputation or an unappealing website) that undercut the P/Q rating advantage. Market research further reveals that when two brands of drones have slightly different prices and P/Q ratings (and all other buyer considerations are, on balance, an even tradeoff 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.


3. Number of Models

An above-average number of models enhances a company’s competitiveness in the marketplace by giving drone buyers wider product selection and thus more opportunity to find a model with the features and specifications that best matches how they plan to use the drone. Companies with a below-average number of models risk losing sales and market share to competitors offering greater selection, unless they offset their narrower selection with other appealing competitive attributes (a lower price, a higher P/Q rating, a longer warranty, etc.).


4. Retailer Recruitment / Support Budget

This expenditure covers the costs of calling on prospective online retailers to (1) personally communicate the expected rapid growth of the UAV drone market, the advantages of a company’s drone models, and the R&D effort the company is making to improve future models of its drones, (2) build a relationship with these prospects via a face-to-face visit, and (3) explain the kinds and amount of merchandising support the company provides. Retailer support includes providing periodically-refreshed pictures of the company’s various drone models, supplying comprehensive and up-to-date information about each model, and engaging in collaborative efforts to service buyer requests for various kinds of after-the-sale product support (filing warranty claims, downloading product manuals, obtaining software updates and useful apps, and so on).   


5. Discount Offered to 3rd-Party Online Retailers

While exerting efforts to recruit third-party retailers and support their efforts to merchandise the company’s drone models is important, the crucial inducement to securing the commitment of 3rd-party online retailers to market a company’s drones is the size of the percentage discount off the price that a drone-maker is selling drone models at its website. Understandably, third-party online retailers have zero interest in buying a drone-maker’s models at the same price the drone-maker is charging at its website, then marking the purchase price up by some percentage (10% or more to cover their own costs and allow for an attractive profit) and trying to secure orders at prices above a drone maker’s website prices. Hence, a drone-maker wanting to gain wider buyer access and additional sales volume through 3rd-party online retailers can do so only by offering to sell its drones to these online retailers at an attractively large percentage discount off its own website price. The bigger the percentage discount offered, the greater the interest of 3rd-party retailers in stocking and merchandising a drone-maker’s brand. But, as should be expected, the bigger the amount by which a drone-maker’s percentage discount offer exceeds the industry regional average, the bigger the number of 3rd-party online retailers it will attract to sell its brand of drones in that region.


6. Search Engine Advertising

Search engine ads are a means of attracting more drone shopper traffic to a company’s website and thereby helping achieve a bigger unit sales volume and market share in a region. A company’s competitiveness versus rival brands is stronger in a region when its expenditures for search engine advertising are above the industry average and weaker when its expenditures are below the industry average.


7. Website Product Displays / Info

The level of expenditures for website enhancement 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 drone models, along with ample and useful information about each model’s features, capabilities, and specifications, (2) providing site visitors with capability to create side-by-side model comparisons, (3) enabling site visitors to post their reviews of particular models, (4) making it easy and quick for buyers to place orders and pay for their purchase via credit card or wire transfer, and (5) 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. Visits to a company’s website   also enable customers to obtain needed technical support, download apps and software updates for previously-purchased drone models, browse product manuals, discover how to file a warranty claim, and use the chat function to pose questions to online personnel


8. Warranty Period

Shoppers for UAV drones find longer warranties more appealing than shorter warranties. To the extent that all other competitive factors are, on balance, roughly equal, a company offering a longer warranty period will typically attract more shoppers to purchase its brand than a company offering a shorter warranty period


9. Company Image (brand reputation)

Just as with action-cameras, market research confirms that the prior-year company image ratings (brand reputations) of rival drone-makers have a moderately strong influence on the brand choices of drone buyers in the upcoming twelve months. Thus, companies with prior-year image ratings above the industry average have a competitive edge over rivals with below-average image ratings in attracting drone buyers to purchase their brand for a period of 1 year (at which time new end-of-year brand image ratings become available and are widely publicized). The bigger a company’s image rating advantage, the bigger the edge it has in increasing its sales of drones in the upcoming year.   Companies with comparatively weak brand reputations must exert enough extra effort on some (or many) of the other 8 competitive factors to overcome a weak image disadvantage and boost overall buyer appeal in order to increase sales and market shares above prior-year levels. Winning big chunks of sales and market share away from rivals with strong image ratings in a single year is difficult. But it is certainly feasible for drone-makers with below-average image ratings to nibble away at the business of strong-image rivals, gaining 1 or 2 points of market share in a single year, (maybe more) if they significantly improve the overall buyer appeal and competitiveness of their drone models relative to the models of rivals. Should companies with once-weak brand images continue to improve their image ratings over a period of several years, they can definitely turn the liability of a once-weak brand image into a strong brand image and competitive asset    













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