To promote and sell jewelry, A.N. plans to collaborate with a network of agents. It is network marketing or direct selling. To use this strategy, one must be confident in their ability to introduce others to the items and opportunities, whether offline or online. Therefore, cultivating a positive mindset is essential for network marketing success. Some agents may be drawn to online advertising simply to avoid interacting with relatives and family. One can choose not to share information about the goods and company with others in such a situation. Before starting the business, one should find information on the following areas: capital, the capability to recruit, and experience (Daniel 2013, p.57).
Start-up Cost
Before proceeding with the business plan, it should be started by determining the capital requirement. This exercise will be done by carrying out a various assessment - for instance, finding out if there is need to buy a starter pack, what the kit should include and if it is worth the amount of money involved (Daniel 2013, p. 97). If it needs an enormous amount of money to start and run the business, it will be necessary to consider the options available and compare them. The option that saves time and money and also facilitates the better running of the business will then be chosen.
Capability to Recruit
Research has proved that successful businesses were not only founded on budgets that were limited, but also by people, who had solid backgrounds in direct selling. Therefore, it is important to obtain sufficient background knowledge and ability in recruitment. Without this capacity, the business will not be able to obtain capable agents to assist in the network marketing (Daniel 2013, p. 102). The business will have to develop a selection strategy for the initial agents. Considering individuals with a remarkable track record of performance is important.The agents that will be selected must have belief in themselves, in the products, and also in the business. They must portray confidence when explaining the products to the clients (Hoberg et al. 2014, p. 314). If one has strong belief and conviction that the goods he/she is selling are of high quality and may be superior to others in the market, one will find the ease of talking about them with the persons you meet (Daniel 2013, p. 107). It is believed that if one is only marketing the business online and failing to share that with people in the market, then it is a disservice he/she is doing to them. To obtain the necessary mind-set, the agent should take their time to learn about the network marketing industry. Moreover, they must also read the business literature to acquire the required information about products and the business, and in turn, develop confidence in themselves.
Experience
To successfully launch this business, one must be well rounded and also have a considerable background in its unwritten and written principles. If he/she has proper knowledge about the products, and he/she is ready and willing to bring the goods to the public, but lacks the experience in the industry, he/she must then buy the experience (Daniel 2013, p. 110). There will be a need to hire qualified and experienced people to help in running the business or outsourcing the solution for the much-needed expertise. The first phase is to consult with the best resources, which may be limited, but the search may disclose incredible resources in the business (Hoberg et al. 2014, p. 313). Such business must have experts in areas of online marketing start-up implementation, software selection, and compensation plan design, which are often great team players and priceless resources to the group (Daniel 2013, p. 109). Above all, one must not launch this business without in-house or outsourced network marketing business experience.
Threats in Starting the Business
A.N. has been able to identify potential risks. The objective of doing it is to equip the agents with the data on all existing threats, the extent of harm that can be caused by each, and how to deal with every single one of them in their order of occurrence (Hoberg et al. 2014, p. 314). These threats are an outside or external factor that will significantly affect the business performance. The most common effect of threats to A.N. is the reduction in sales. The organization will face numerous threats that have to be overcome to ensure the continuation of normal business operations. The following are examples of the perils that A.N. is likely to encounter in implementing the business idea.
Government Regulations
Governments at every level on a regular basis carry out restrictions and regulation on businesses. For instance, significant environmental issues are often regulated by the federal government. Rules on sales tax are made by the state governments whereas building permits, and signage is regulatory duties of the local government (Hoberg et al. 2014, p. 316). Several of the regulations approved by governments are a critical threat to A.N., especially because they operate in a regulated industry. The business is "controlled" or predicted to be "controlled" in the prospect, and A.N. must be sure to address these matters in her business idea. Since she is unaware or not sure of any government rules touching on the business, then she has to contact all levels of the government before proceeding.
Economic Environment
The financial situation is a threat to the A.N. businesses idea. For example, during the economic downturns like a recession, a lot of services and products are not sold well. Furthermore, the companies tended to minimize their capital investment as the customers also reduced their spending (Hoberg et al. 2014, p. 316). However, A.N. has evaluated and predicted how her business would respond to economic downturns and carried out necessary plans. She understands that this business will be adversely affected during economic downturns, and has, therefore, explained it in her business idea.
Changing Consumer Patterns
Whether the consumers will continue buying the products as the years pass is a question that A.N. has asked herself. She has established that the customers' interests, attitude, and desire towards the products will change over time as the business progress or when the marketplace registers an increase in the number of competitors (Hoberg et al. 2014, p. 317). Moreover, there will be changes in the purchasing behaviour of customers with regards to loyalty, benefit sought, usage, and accession, as the life style of the consumers also change. There will be altering as well in their buying patterns. In other terms, the point here is that A.N. is not adequately capable of dealing with the threat of changes in the market, which will inevitably occur as time passes. Furthermore, the organization does not have sufficient capacity to adjust to or accommodate alterations in the buying behaviour of consumers (Hoberg et al. 2014, p. 314). Fluctuating customer patterns will pose a serious threat to A.N.The three threats above are the most critical ones. In starting and running a business, it is important that one stays on the right side of the law. Additionally, one should have a plan to manage the economic pressure associated with the firm. It is also needed to be highly flexible to accommodate changes in consumer patterns (Hoberg et al. 2014, p. 318). These factors, in one way or another, will have to affect the business. However, other threats may also be important note considering A.N.'s business idea such as liability loses and technological challenges.
Barriers to Entry
Barriers to entry are partly the reason why some businesses fail, while others succeed. It is essential for the business-owner to learn what the probable obstacles to entry may be and have an understanding of the business and market before deciding to enter. These roadblocks to entry make it difficult for a new business to get into a market (Creusen and Lejour 2013, p. 504). Referring to the case of A.N., she needs to gather adequate information about the current day barriers and find out how to overcome them. These hindrances can be patents, government regulations, licensing requirement, education, start-up costs, and technology challenges among others. Some of these barriers are discussed below.
Product Differentiation
Product differentiation is mostly achieved through substantial brand recognition, network effect, or superior customer service. Because the client's perception about the products of the already existing business is good with regards to the quality, A.N. seeking entry into the same market will face challenges fitting in the marketplace (Creusen and Lejour 2013, p. 506). The organization will have to use the extra money in creating awareness among the customers about the unique features of the particular business products and the comparative benefits the products will provide to them. The terminology "network effect", in this context, refers to a situation, where a service or product increases in popularity with an increase in the number of people, who use it. If the present companies had laid down strategies such that the more their products are used by individuals, the more they become known, the network effect will be a barrier to A.N. It will create a business environment that makes it extremely difficult for A.N. to come into the market offering the products and succeed in taking away their clients.
Economies of Scale
The presence of economies of scale can as well pose as a barrier. Economies of scale refer to the achievements in efficiency and reduction in production costs. which regularly take place as a result of a business growing bigger and bigger. Because the existing businesses are already producing, they are time and again in a better position to cut down on their prices (Creusen and Lejour 2013, p. 506). Therefore, even though A.N. may have the capacity to hire good labour force, rent some buildings, and purchase everything that might be necessary, it will be difficult for the organization to sell the product at the same level as the companies that have been in the market for a considerable period.
Government Regulations
The government might act as an obstacle to entry into a particular market through licensing requirements that are restrictive or by minimizing the capability to acquire raw materials (Creusen and Lejour 2013, p. 507). A.N. intending to start a direct sales business may be obliged to receive a license or other approvals by the government to go on with making the business operational. For instance, in this case of A.N., where she desires to start a direct sales business that involves the creation of a network of the sales agent, in her research, she might realize that there are many government obstacles. These hindrances may include the costs of acquiring a license and other regulations by the federal, state, and the local governments.
Competitive Rivalry
Competitive rivalry focuses on the strengths and the number of the competitors. The questions that A.N. needs to ask, in this case, include how many rivals are there in total? What qualities do their service and products have in common with these goods and services? And who exactly are these competitors (Creusen and Lejour 2013, p. 504). Since healthy rivalry exists, businesses can entice consumers with an aggressive reduction in prices and high-impact campaigns aimed at marketing. Customers will feel attracted these companies, and A.N.'s buyers and suppliers also leave to go elsewhere, if they are unsatisfied with the deals that they receive from the enterprise. On the contrary, where there is a limited competitive rivalry, and where no one else is dealing in the same products as one and providing the services that are given, the entry will be easy. Furthermore, one will realize heavy profits and have tremendous strength.
Competitive Advantage
Competitive advantage refers to the advantageous position a business seeks to become more profitable compared to its competitors (Barney 2014, p. 321). It can be accomplished through various means including providing better quality services and products, raising marketing offers, and reducing prices. Considering A.N.'s idea, the truth is that most businesses in the market are not using social media as she intends to do. It will give her an opportunity to stand out. Firms that avoid social media provide significant changes to their competitors to capture their customers. A.N.'s business idea is likely to have the following competitive advantages.
Brand Recognition
Social media can be used as a significant and powerful brand-building tool. With social media, one makes decisions on how to position the business. One also chooses information wanted to transfer to the clients (Barney 2014, p. 323). With consistent effort and quality content, A.N.'s idea is bound to build a status around the advantages, values, and benefits of her products compared to her competitors.
Community
Social media helps in cultivating a community more than anything else. One will have access to several followers, who form the community (Barney 2014, p. 323). This enormous following will enable the business to identify challenges the consumer's face, their likes as well as dislikes about the services and products that are offered. The agents will be able to take part in conversations, making this method more favourable than market research.
Authority
For a direct sales business like the one A.N. is purposing to start, social media can become highly useful. It will assist the company to have authority in its field of operation. It provides an opportunity for the audience to seek clarifications, consult, and acquire other resources (Barney 2014, p. 324). Also, social media enable the business answer questions, share various contents, and serve clients, who allow the business to have loyal consumers.
Repeat Exposures
In most cases, it takes almost six to eight exposures to services or products before individuals can ultimately make decisions to buy the services or goods (Barney 2014, p. 324). Repeat exposure to clients will be one of the benefits of social media A.N. She will have the opportunity to regularly remind her customers about the goods and services offered an action that shortens the sales cycle significantly. It is eminent that A.N. has realized that she needs to use social media to stay ahead of her competitors in the market in terms of popularity and interaction with the clients (Barney 2014, p. 323). She has created a social media and now intends to start implementing it to achieve her goal. This strategy will no doubt give a competitive advantage and lead to heavy profits. However, the concern is some resources involved. It is money, time, and people. Social media require inspiration, creativity, and long-term commitment. Being fruitful with social media is not a become-rich-fast scheme. It takes skills, expertise, and experience to generate quality content (Barney 2014, p. 323). Building followers, tribes, and fans takes engagement and focused attention. A.N. will have to put in as much resource as possible to help achieve the goals.
References
Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson Higher Ed.
Creusen, H. and Lejour, A., 2013. Market entry and economic diplomacy. Applied Economics Letters, 20(5), pp.504-507.
Daniel, I.S., 2013. System and method for marketing products or services through an online social network. U.S. Patent Application 13/752,133.
Hoberg, G., Phillips, G. and Prabhala, N., 2014. Product market threats, pay-outs, and financial flexibility. The Journal of Finance, 69(1), pp.293-324.
