Lynda’s Recommendation

Gap Analysis

Lynda’s Recommendation

1. With the higher income market now saturated, it makes sense for Praxim to shift its focus to the consumer segment. Praxim need to market and sell to customers differently. Here Lynda was emphasizing on segmentation and targeting.
2. Branding: By this Lynda meant to take Praxim closer to consumers. A well-recognized brand can help consumers to consider your product. For this Praxim must provide consumers with an incremental intangible value by offering emotional benefits. So if Praxim can be made to consider as a brand, which is a one stop solution for all the PC requirements, then
3. Customization: The main point raised by Lynda was to gain the confidence and attention customers by providing what they want. She emphasized on customizing the product according to whims and fancies of consumers and at the same time providing customer service to gain their confidence.
4. Customer marketing with new service driven positioning
5. Bundling the PC with high margin products like software and services will help to make up for the lousy margin.  More extensive bundling can get more profits, with gross margin ranging from 20% to 80%.
6. If Praxim is successful in marketing itself as a service driven company to the consumers, it’ll have an exclusive positioning in the minds of the customers and will enjoy the first-mover advantage in this space.

Shortcomings

As per Scott, Lynda don’t know the basics of marketing. The implementation of direct workforce which was suggested by Lynda will add to the initial costs. The new initiatives which was suggested by Lynda requires extensive consumer research to know the consumer. Lynda is not considering a holistic picture and challenge is to find a meaningful consumer group with differentiated solution and to build a brand around that solution.

Industry Attractiveness

Porters 5 forces

Threat of New entrants: Medium

1. Capital: Entering into a PC industry require a huge amount of capital which deters too many players to compete in this industry.
2. Brand: PC being considered as a premium product in early 90s, having a good brand makes it way easier to penetrate into the market.  

BP of suppliers: Low

1. Market share : Prior to 1998 suppliers was not having much control over the PC firms, as the processor, sensor industries was not developed, which makes bargaining power low
2. Size of suppliers: low

BP of buyers: High

1. Switching cost: low. In consumer segment, it’s very easy for customers to switch to other brands as cost involved is very less.
2. Volume: Generally a household consumer won’t buy PC in bulk, so the volume involved in each transaction will be low, making consumers to have more control over the transaction.

Threat of substitutes: Low

1. Performance of the substitute: At the given point of time there was no strong substitutes to replace PC.
2. Price:

Rivalry: Medium

1. Number of competitors : The number of firms in the PC industry is less

SWOT Analysis of Praxim

Strength

1. Experience in the PC industry: Praxim was there in PC industry for more than 20 years. Company had already issued stocks and it has now even moved to consumer segment, which accounted for more than 20% of sales
2. Strong team: Jack has been with Praxim for 18 years, Lynda consumer division manager, with experience in a leading packaged goods company, Bob vice president with tons of experience in running PC industry.

Weakness

1. Lack of proper structured strategy Company lacks a proper strategy on how to move about from the situation. Though they are giving ideas, but it doesn’t get into a full proof solution. With higher income market saturated, Praxim is competing on price. Consumer division also got a dip in margin and company not able to figure out how to proceed

Opportunity

1. Increased use of customized product

With changing technology and internet landscape consumers are looking out for more personalized product. PC being a premium product customers are really cautious before purchasing the same and would love to have one which meets their needs.

1. Internet users increasing

Internet was really in a niche state at that point of time , with increase in technology, the number of internet users are shooting up.