EDUCATION ROUTE: ALEXIS PRODUCTS' SECOND ACT Wenhui lal 15307090037 Course: English for Academic Purposes(Business) Date: 2 January, 2018
1 EDUCATION ROUTE: ALEXIS PRODUCTS’ SECOND ACT Wenhui LAI 15307090037 Course: English for Academic Purposes (Business) Date: 2 January, 2018
EDUCATION ROUTE ALEXIS PRODUCTS' SECOND ACT 1. Background Alexis Products developed a product called the brrrd, the first interactive language-learning tool to incorporate artificial intelligence in the market. Its distinctive feature is the combination of fun and teaching. The Brrrd gained a successful beginning with sales over $3 million in its first year. However, in the next year, the sales declined drastically. Although the attraction of the brrrd came from its combination of fun and function, the falling sales were also due to this dual nature The brrrd was no more a fashion for tide chasers and its limited education function was not appealing to in-depth language learners who have rigid demands for language learning. Facing with the plunging sales performance, Wall Street is losing patient to the Alexis products. Steph, ceo of Alexis Products, has to make a decision for the next direction of Alexis products Mia, the sales manager, and Gregoire, the marketing chief, dispute with the future of Alexis Product. Alexis Product needs to choose a strategy between the fun route and the education route 2. Issues The combination of fun and education can be a highlight of the brrrd as an innovative product at first, but this feeling of freshness could fade quickly under the constantly changing fashion. The success of the Brrrd could be seen as a coincidence for Alexis Products because of the personal experience of Steph and the sudden inspiration from Steph. The plunging sales reveal a lack of orientation of Alexis Products because even the category of the Brrrd is vague between an electronic toy and a language education product. The lack of a clear orientation makes Alexis Products short of a sustainable development method for a long-tern development o the major problem of Alexis Products is: Facing with the sloping sales, which
2 EDUCATION ROUTE: ALEXIS PRODUCTS’ SECOND ACT 1. Background Alexis Products developed a product called the Brrrd, the first interactive language-learning tool to incorporate artificial intelligence in the market. Its distinctive feature is the combination of fun and teaching. The Brrrd gained a successful beginning with sales over $3 million in its first year. However, in the next year, the sales declined drastically. Although the attraction of the Brrrd came from its combination of fun and function, the falling sales were also due to this dual nature. The Brrrd was no more a fashion for tide chasers and its limited education function was not appealing to in-depth language learners who have rigid demands for language learning. Facing with the plunging sales performance, Wall Street is losing patient to the Alexis Products. Steph, CEO of Alexis Products, has to make a decision for the next direction of Alexis Products. Mia, the sales manager, and Gregoire, the marketing chief, dispute with the future of Alexis Product. Alexis Product needs to choose a strategy between the fun route and the education route. 2. Issues The combination of fun and education can be a highlight of the Brrrd as an innovative product at first, but this feeling of freshness could fade quickly under the constantly changing fashion. The success of the Brrrd could be seen as a coincidence for Alexis Products because of the personal experience of Steph and the sudden inspiration from Steph. The plunging sales reveal a lack of orientation of Alexis Products because even the category of the Brrrd is vague between an electronic toy and a language education product. The lack of a clear orientation makes Alexis Products short of a sustainable development method for a long-tern development. So the major problem of Alexis Products is: Facing with the sloping sales, which
route should Alexis Products follow to gain a sustainable profits in the future? 3. Assessment 3. 1 Red Ocean Strategy vs Blue Ocean Strateg Blue Ocean Strategy is a marketing theory from a book published in 2005 which was written by w. Chan Kim and Renee Mauborgne. Professor Kim defines traditional industries as red Ocean while the new born industries are defined as blue Ocean. The main differences between Red Ocean and blue Ocean are presented in Table 1. The Red Ocean represents the market under a fierce competition while blue Ocean means a new profit and growth opportunities Table 1: The main Differences between Red ocean strategy and blue ocean strategy Red ocean strategy Blue Ocean Strategy te in existing Create uncontested market market space Exploit existing demand Create and capture new demand Beat the competition Make the competition irrelevant For Alexis Products, choosing the fun route is Red Ocean Strategy while choosing the education route is blue Ocean Strategy The market of electronic toys has been saturated so it is highly competitive Manufacturers can just exploit existing demand so the competition is drastic. And toy industry is highly mature so the threshold of electronic toy industry is low, which adds to the competition Because of the relatively short product life cycles and compet it ion for consumers I W. Chan Kim, Renee Mauborgne, "Blue ocean strategy, "Harvard Business School Press, (2005):240
3 route should Alexis Products follow to gain a sustainable profits in the future？ 3. Assessment 3.1 Red Ocean Strategy vs Blue Ocean Strategy Blue Ocean Strategy is a marketing theory from a book published in 2005 which was written by W. Chan Kim and Renée Mauborgne. Professor Kim defines traditional industries as Red Ocean while the new born industries are defined as Blue Ocean. The main differences between Red Ocean and Blue Ocean are presented in Table 1. The Red Ocean represents the market under a fierce competition while Blue Ocean means a new profit and growth opportunities. Table 1: The Main Differences Between Red Ocean Strategy and Blue Ocean Strategy1 Red Ocean strategy Blue Ocean Strategy Compete in existing market space Create uncontested market space Exploit existing demand Create and capture new demand Beat the competition Make the competition irrelevant For Alexis Products, choosing the fun route is Red Ocean Strategy while choosing the education route is Blue Ocean Strategy. The market of electronic toys has been saturated so it is highly competitive. Manufacturers can just exploit existing demand so the competition is drastic. And toy industry is highly mature so the threshold of electronic toy industry is low, which adds to the competition. Because of the relatively short product life cycles and competition for consumers’ 1 W. Chan Kim, Renée Mauborgne, “Blue ocean strategy,” Harvard Business School Press, (2005): 240
preferences with other products, innovation is an important element in the business models of toy manufacturers. However, the innovative concepts are easy to be forged by competitors. For example, the well-known construction toy manufacturer found that over 30 Chinese companies were manufacturing similar products like Lego. The hemes of the series of lego blocks were plagiarized by those competitors. Because the inspiration was ready-made, these companies could provide similar toys with a lower price. Just like Lego blocks, the components of the Brrrd are a microphone, a tiny speaker, a headphone jack and computer chips, there is no technical threshold for competitors and they can develop similar products to compete with Alexis Products easily. To maintain the competitive advantages, Alexis Product can either lower the prices of the Brrrd or find another innovative product to attract consumers Education is also a traditional industry, but the combination of language education and al is blue Ocean in the future. The combination of fun and education, with artificial intelligence system, makes the Brrrd a favorable and effective language learning tool. The Brrrd is the first try in this new sector. Although the brrrd is too simple to satisfy the needs from language learners, the reputation has been established since it came out Language education is a lucrative and fast-growing market, especially Chinese education market. According to China Daily, the population of foreign learners of Chinese has been up to 10 million. And the demand of mandarin education is still on growth, so it is a potential market. The combination of fun, education and AI systems can be a new segment in language education market where competition rarely exists In short. for Alexis products the fun route is Red Ocean and it is difficult to establish competitive edge in it, while the education route is a lucrative and potential choice in blue ocean ECSIP Consortium, on the competitiveness of the toy industry, " August 30, 2013 3 BBC "Faked Lego, 25.2017. video file. BBC News ousiness-38740953/fake-lego, accessed December 2017 4 "Mandarin is now ecoming a global language, China daily, September 10, 2017, http://www.chinadaily.comcn/cndy/2017-10/13/content33190519.htmaccessedonDecember2017
4 preferences with other products, innovation is an important element in the business models of toy manufacturers2 . However, the innovative concepts are easy to be forged by competitors. For example, the well-known construction toy manufacturer found that over 30 Chinese companies were manufacturing similar products like Lego. The themes of the series of Lego blocks were plagiarized by those competitors. Because the inspiration was ready-made, these companies could provide similar toys with a lower price.3 Just like Lego blocks, the components of the Brrrd are a microphone, a tiny speaker, a headphone jack and computer chips, there is no technical threshold for competitors and they can develop similar products to compete with Alexis Products easily. To maintain the competitive advantages, Alexis Product can either lower the prices of the Brrrd or find another innovative product to attract consumers. Education is also a traditional industry, but the combination of language education and AI is Blue Ocean in the future. The combination of fun and education, with artificial intelligence system, makes the Brrrd a favorable and effective language learning tool. The Brrrd is the first try in this new sector. Although the Brrrd is too simple to satisfy the needs from language learners, the reputation has been established since it came out. Language education is a lucrative and fast-growing market, especially Chinese education market. According to China Daily, the population of foreign learners of Chinese has been up to 10 million. And the demand of mandarin education is still on growth, so it is a potential market4 . The combination of fun, education and AI systems can be a new segment in language education market where competition rarely exists. In short, for Alexis Products, the fun route is Red Ocean and it is difficult to establish competitive edge in it, while the education route is a lucrative and potential choice in Blue Ocean. 2 ECSIP Consortium, “A Study on the competitiveness of the toy industry,” August 30, 2013. 3 BBC, “Faked Lego,” January 25, 2017, video file, BBC News, http://www.bbc.com/news/av/business-38740953/fake-lego, accessed December 2017. 4 “Mandarin is now rapidly becoming a global language,” China Daily, September 10, 2017, http://www.chinadaily.com.cn/cndy/2017-10/13/content_33190519.htm, accessed on December 2017
3.2 Market Segment Analysis STP(Segment, Targeting and Positioning) analysis can be used to assess the situation of alexis product. the different choices between fun route and education route represent different consumer focuses. The features of different consumer bases determine the operating strategies of a company. the fun route and the education route crater for different customer bases. so the two strategies focus on different market segments(See Table 2) Table 2: Market Segments Analysis between Fun Route and education route Fun route Education route Market Segments Toy market Language education mar Consumer bases Toy lovers Language learners tech-savvies and fashion chasers The features of the. Low brand loyalty High brand loyalty consumer base Consumption level ower Highe According to the fun route, the selling points are not the products itself, but the new concepts behind the products. The target customers are those who like fashion and fun, such as tech-savvies, toy lovers and fashion chasers. Because what the consumers chase is the new concepts behind the product, consumers' loyalty to pecific brand is relatively low As said above, the competition within the electronic toy market is already severe but electronic toy manufacturers are also confronting challenge from other industries The new concepts can be conducted on other products. Customers'preference can be shifted to electronic games, comic books and any other products with new concepts
5 3.2 Market Segment Analysis STP (Segment, Targeting and Positioning) analysis can be used to assess the situation of Alexis Product. The different choices between fun route and education route represent different consumer focuses. The features of different consumer bases determine the operating strategies of a company. The fun route and the education route crater for different customer bases, so the two strategies focus on different market segments (See Table 2). Table 2: Market Segments Analysis between Fun Route and Education Route Fun Route Education Route Market Segments Toy market: Language education market Consumer bases ·Toy lovers, tech-savvies and fashion chasers ·Language learners The features of the consumer base ·Low brand loyalty ·High brand loyalty Consumption level ·Lower ·Higher According to the fun route, the selling points are not the products itself, but the new concepts behind the products. The target customers are those who like fashion and fun, such as tech-savvies, toy lovers and fashion chasers. Because what the consumers chase is the new concepts behind the product, consumers’ loyalty to a specific brand is relatively low. As said above, the competition within the electronic toy market is already severe, but electronic toy manufacturers are also confronting challenge from other industries. The new concepts can be conducted on other products. Customers’ preference can be shifted to electronic games, comic books and any other products with new concepts