Monopolistic competition markets are characterized by the existence of many firms that offer similar product substitutes. In such a market, there are no barriers to entry, which means that new companies can quickly establish themselves. Moreover, the decisions of a firm may not affect other companies directly. The paper focuses on the product and business analysis in a monopolistic competition market. The product in focus is the female sneaker, which is supposed to be introduced into the American market. Therefore, the new product belongs to the sneaker industry. The sneaker industry is considered one of the fastest-growing industries in the US, and it is projected to grow to a 95.14-billion-dollar industry by 2025 (Braithwaite, 2021). The industry is largely influenced by fashion (Powell, 2014). Notably, men’s sneakers represent more than half of the products sold in the industry. Despite the slowdowns in significant markets worldwide due to the COVID-19 pandemic, the sneaker industry has recorded substantial growth in sales as established companies continue releasing new sneakers. The boom in the sneaker industry presents a chance for the new product, Cosy Sneakers, to venture into this monopolistic competition market.
The Product and the Business Plan
The new product to be introduced into the monopolistic competition market is the female Cosy Sneakers. The product meets the customers’ needs for personalization, which means that the company will offer customization services. Customization of sneakers has become a trend in recent years, and the company will build on this to attract customers. The product also allows customers to select unique colorways and models depending on their interests. Cosy Sneakers focuses on meeting the needs of the large customer base. Technology is another aspect of the new product, as Cosy Sneakers will adopt visible technology. Specifically, the company will avail options for hand-free lacing technology to its customers, as this has become a popular trend.
Cosy Sneakers for women will retail at slightly lower industry rates. For instance, customized sneakers will retail at $10, and non-customized ones will be $5. The product’s lifespan will be approximately 5 years, and it will provide comfort to customers. Comfort will be the primary defining factor of Cosy Sneakers, something that it will achieve through its effective supply chain network. The company will get raw materials from local sources and rely on the technology to manufacture trendy and highly comfortable women’s sneakers. The business will be based in Washington, DC, with the products being made available in various local stores across the country. The company will establish effective distribution channels to ensure that the product is accessible across the US. The company’s market strategy will focus on the manufacture of trendy and comfortable sneakers available at low prices. The target market will be women, particularly those aged between 18 and 30. Advertising of the new product will involve reliance on social media platforms and print advertising in local newspaper and magazine advertisements.
Competition
The sneaker industry in the US is highly competitive. Various companies have established themselves in the industry, which means that new companies are likely to face stiff competition. The market, which the product is supposed to be introduced is highly competitive, as it is primarily dominated by global industry leaders, such as Nike and Adidas (Powell, 2014). While this market has significant industry players, numerous small companies that offer the same product also try to vie for the market share. Therefore, the company will likely face stiff competition from multiple established and small companies in the American market. While these major players in the market produce women’s sneakers, they have broadened their product lines to include athletic footwear and non-athletic footwear. The provision of a broad category of products allows these companies to continue dominating the sneaker industry. Major competitors, such as Nike and Adidas, have large market shares, which means that they have to be more innovative to compete with them (Braithwaite, 2021). Therefore, Cosy Sneakers will ensure that it relies on up-to-date technology to manufacture comfortable and trendy women’s sneakers. As a beginner, attracting customers to the new product will be challenging; however, the company will focus on quality and price to lure these customers. Precisely, the company will manufacture high-quality products and sell them at lower prices to attract more customers.
Moreover, customization of these products will be prioritized to attract customers who want to personalize their sneakers. The company will also focus on consumer engagement as a way of understanding the needs of customers. Consumer engagement will allow the company to anticipate customers’ preferences and ensure that these are met. Moreover, focusing on consumer engagement will enable the company to develop long-lasting relationships with the customers, likely having loyal customers (Ghahroudi, 2018). Through these strategies, the company will attempt to gain a significant market share, despite established companies, such as Nike and Adidas dominating the market.
Product Differentiation
Product differentiation is a strategy used by businesses to highlight their products’ unique features, which separates them from competitors (Ghahroudi, 2018; Ahuja & Ahuja, 2017). In the case of Cosy Sneakers for women, the product differentiating strategy will be based on manufacturing quality and highly comfortable sneakers and retailing them at low prices. Therefore, the unique features that will make the product different from those offered by competitors in this monopolistic competition market are price, quality, and product features. Specifically, the sneakers will retail at lower than industry standards, despite being of high quality. The company will rely on technology to ensure that the products are highly comfortable.
Seeing the profit for the investment will involve considering the total costs incurred during the manufacture and advertising of the product. Since the product relies on a lower price differentiation strategy, its profits will be based on high sales (Ahuja & Ahuja, 2017). Therefore, it will be necessary to engage in aggressive marketing to ensure that the product is sold in large numbers to actualize profits.
In conclusion, the product focused on is women’s sneakers, which belong to the sneaker industry. The sneaker industry is considered one of the fastest-growing industries in the US, which means that the company can take advantage of the industry’s growth to introduce women’s sneakers. The product will meet the customers’ needs for personalization, which means that the company will offer customization services. Customization of sneakers has become a trend in recent years, and the company will build on this to attract customers. The product also allows customers to select unique colorways and models depending on their interests. Customized sneakers will retail at $10, and non-customized ones will be $5. The product’s lifespan will be approximately 5 years, and it will provide comfort to customers. The company will face stiff competition from major industry players, such as Nike and Adidas. Additionally, it will face competition from numerous small companies that offer the same product, trying to vie for the market share. The company will rely on a product differentiation strategy that manufactures quality and highly comfortable sneakers and retails them at low prices.
References
Ahuja, H. L., & Ahuja, A. (2017). Managerial economics: Analysis of managerial decision making. New Delhi: S Chand and Company Limited.
Braithwaite, N. (2021). How sneakers became a $79 billion business—and an undisputed cultural symbol for our times. Fast Company. https://www.fastcompany.com/90637534/how-sneakers-became-a-79-billion-business-and-an-undisputed-cultural-symbol-for-our-times
Ghahroudi, M. (2018). The impact of differentiation strategies on the women fashion-clothing’ performance. Journal of Economics and Business, 1(4), 381-400. https://doi.org/10.31014/aior.1992.01.04.35
Powell, M. (2014). Sneakernomics: Marketing sneakers to women. Forbes. https://www.forbes.com/sites/mattpowell/2014/06/24/sneakernomics-marketing-sneakers-to-women/?sh=7de7237a4e67
