|Type of paper:
|Analysis Risk management Strategic marketing
Market attractiveness is various opportunities that the market offers to any firm or organization by acknowledging quite a several factors that are present within the market (Bhasin, 2019). It represents the various possibilities of the profitability that any company can get a competitive market place. Thus, it means a better market attractiveness attracts more investors since it has a higher chance of giving back profitability. Before new companies are launched in a specific market, they first analyze the market potential such as challenges the kind of seller and buyer relations persist and if it will be generating profit. Once all these are determined, then the new company is set to enter the market.
Margin and Pricing Trends
Revenue is determined through analyses of volume and the margin. Pricing trends and margins play a significant role in deciding market attractiveness and profitability. If the pricing for two markets keeps decreasing, then it is possible, they will still do the same, thus getting rid of the profit margins (Bhasin, 2019). The beauty typically has higher gross margins compared with other markets. Additionally, the market is relatively impervious to economic downturns. At the same time, people are brand loyal, especially if the products offered are high quality and meet their needs, such as maintaining youthfulness and sun care products (Kemmer, 2010). By ensuring that Hydraforte Hand and Body Cream is high quality with fewer ingredients and most importantly serves all skin types then the product market attractiveness will increase
Market Size and Growth Rate
To evaluate market attractiveness, market size and growth rate are the underlying factors that should be considered. The larger the size of the market, the more opportunities it is bound to provide in selling the products, which means higher profitability. Secondly, the growth rate of the market identified should be considered such that is an exchange is not or is slowly growing, then it means that the revenue potential is finite (Bhasin, 2019). The cosmetic industry is possibly one of the biggest markets with a rapid growth rate. The global cosmetic market grew by 5.5% in 2018, with skincare being the leading category, with 39% of the worldwide market (Shahbandeh, 2020). It shows that the market size of the cosmetic industry is significant, and its growth rate is at a higher pace. Thus, it increases the market attractiveness of the Hydraforte Hand and Body Cream. The product is not bound o fail provided the company will ensure it goes at the same pace as the market growth and fast-changing customer needs such as herbal product's needs.
Intensity of Competition
A market is considered to be unattractive if there is a monopoly in it such that the market is dominated by a single company, which is considerable. It means that if the new company tries to enter the market, the already dominating company is likely to be aggressive towards it, and even at some point, dominate its suppliers (Kemmer, 2010). On the other side, if there is an existing market space with many small companies competing against each other, then the market is bound to be attractive.
Before introducing the Hydraforte Hand and Body Cream, the company should first do market analyses on the number of competitors in the market, the strengths and weaknesses of the competitors, size of the competitors, and their aggressiveness. In a case where the competitors are present with no monopoly, then the company should launch its product. The company should focus on starting its Hydraforte Hand and Body Cream with properties that are equal or exceed those of the competitors. By executing this, it will disrupt the market and win the competitor's clients without facing unhealthy competition from the existing giant cosmetics companies.
Overall Risks in the Market
During new entry into the market or rather the introduction of new products in the market, any company is bound to experience market entry barriers (Kemmer, 2010). The company ought to overcome these barriers they want to enter and stay relevant to the market. The type and scale of these barriers determine the market attractiveness. A good example is the economies of scale. Economies of scale become a barrier once when the company must enter the market with a set minimum of produced goods to compete successfully (Kemmer, 2010). It makes the market unattractive if the company is unable to achieve the set amount. Additionally, product differentiation is another market risk that either makes the market attractive or unattractive. Before introducing the hydraforte hand and body cream to the market, the company should ensure it correlates the barriers to its potential to overcome them. Therefore, if the company is not able to overcome entry barriers in the market, then that market should be considered unattractive to the business.
It is hard to generally call a market attractive since each company possesses different targets and demands, which help in determining if the market is attractive or not. However, for any company making an entry into the market, introducing or improving a product should analyze the market to establish its market attractiveness.
Bhasin, H. (2019). What is Market Attractiveness? Importance, Examples, and Factors. Retrieved from https://www.marketing91.com/market-attractiveness/
Shahbandeh, M. (Jan 22, 2020). Cosmetics Industry- Statistics & Facts. Retrieved from https://www.statista.com/topics/3137/cosmetics-industry/
Kemmer, M. (2010). Procedure and Methods pf Target Market Selection and Risk Assessment on the Example of SMA AG. Retrieved from https://www.grin.com/document/197107
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