components of the growth stage that JUUL is currently undergoing

components of the growth stage that JUUL is currently undergoing

1.a)

The features provided by JUUL in the case study reflects that the vaping industry is in the growth stage of the industrial-life cycle. The company, which started just three years ago, has explosive growth, high-profit margins, and it has expanded to seven countries. JUUL products are known to customers, their selling rate is exponential, and there are complementary products coming up. These factors meet the growth stage traits in the industrial life-cycle model; thus, I will focus on the various components of the growth stage that JUUL is currently undergoing.

A Dominant Design

A dominant design signals the growth of an industry, and it shifts competition focus from product innovation to scales of economies and cost-efficiency. Juul has incorporated technological innovations, which significantly differentiates its product in the tobacco industry. Juul’s idea of the e-cigarettes- Juul pods, has given the company substantive competitive advantage, with the company holding almost 70% of the U.S. e-cigarette market share. The Juul pods, which utilize a heating mechanism to heat liquids and hold nicotine equivalent to a pack of cigarettes, give customers a variety of flavors; mint, menthol, tobacco, mango, cucumber, fruit, and cotton candy. The Juul pods have gained massive acceptance too because of their design, which utilizes vaping technology to reduce the health effects of traditional tobacco.

Products Appeal to Wider Market

Products appealing to a broader market is the second aspect of the growth stage in the industrial life-cycle. Juul e-cigarettes are very appealing, for this is reflective in its profit margins and market share. Jull pods appeal is mainly attributed to four dominant factors; the product is very discreet; it does not release a lot of smoke, can easily fit in pockets, and is easy to hide. Second, the sleekness of the pods makes it outstanding and relates to technological advancements. Thirdly, the availability of different flavors to use with the pod coupled with the e-liquid heating technology which offers users more and faster nicotine hit. Lastly, the thought that it is safer than traditional cigarettes, for it doesn’t use the cancer-causing process traditional cigarettes use.

Economies of Scale

The third aspect of the growth stage is economies of scale. Juul is currently enjoying economies of scale from increased levels of production. The company in 2018 tripled in size, growing from 225 employees to 1500 employees, clearly indicating the growth of output. This is reflected in the company’s market share of approximately 70% of the U.S. e-cigarette market, which is estimated at over $2 billion. Juul’s expansion to eight countries, including Germany, France, and the U.K., is a clear indication of its increase in economies of scale.

Lower Prices

Lower prices are the next component of the growth stage. This is mainly attributed to established economies of scale, proper marketing, and a dominant market share. Juul enjoys all the three aspects that influence lowered prices, which enables the company to produce cheaper products than cigarettes. Juul’s economies of scale, marketing strategies, and customer base allow the company to offer lower prices for their products while still maintaining high-profit margins.

Growing Sales

The next aspect of the growth stage is the growth in sales. Successful marketing strategies will create demand, which in turn will lead to sales growth. Juul’s pods are currently known as ‘stars’ in the growth cycle, for they have high market share and growth capabilities. Growing sales directly reflects on growth in earnings, assets, and profits. Juul having a considerable market share in the U.S-70%, increase in assets- expanding their business to seven countries reflects the growth in sales and demand.

New Entrants

New entrants are attracted to the same industry at the growth phase. This is mainly attributed to the success of the product and the industry-leading to intense competition. In the case study, JUUL is making high profit margins which attract new entrants in the vaping industry.  Companies such as Stig and VanGO Vapes are some of the entrants that are targeting the billion dollars vape industry.

Marketing and Management

The growth life-cycle is marked by steep, fast growth, and during this period, firms tend to spread out geographically to maximize production and profits. This holds true in the case study as we see JUUL expanding to seven countries, including France, Germany and the U.K. This growth stage requires a significant amount of capital to expand operations when needed, and facilitate marketing goals to meet market demands.

Marketing plays a critical role during the growth stage, for it is vital to differentiate the products from competitors within the industry. This is evident in the case study when JUUL expands to seven counties, which require substantial capital and focuses on marketing its products vigorously. Their marketing strategy plays a vital role in boosting sales and cementing their product in the market. Even though there were other competitors, JUUL pods that were superior in quality for they did not burn the throat like competitor products but needed proper marketing to give the company an edge.

1. b)

The tobacco industry is currently experiencing modest growth, for it is at the maturity stage of industrial life-cycle. The sector is undergoing slow growth, offering competition for market share. The product in the industry is well known to the consumer, and entry barriers are moderated. The tobacco industry, as a result of low growth, has seen companies like JUUL come in with technological developments to claim a market share in the vaping sector. In the next paragraphs, I will focus on the aspects of the maturity stage of the tobacco industry.

Slow Growth

The slow growth of the industry is a trait of maturity phase, meaning companies compete for market share. The flattening of the life cycle curve indicates a slow growth rate even though sales might be growing due to ‘cash cow’ products. Companies that are looking to enter or expand in the industry at this phase need a different product. This is evident in JUUL’s case, for even though the industry has a slow growth, the company’s growth tripled in three years courtesy of a different product and superior marketing strategies.

Markets Saturated

The tobacco industry is saturated because there is no new demand for cigarettes as campaigns and health advocates are continually educating the masses on the dangers of tobacco, leading to a decline in sales. JUUL used this to its advantage and came up with a product that is allegedly much safe than traditional tobacco smoking cigarettes. This enabled the company to navigate the saturated market by offering a product that is not cancer-causing

Competition Intensifies

Some competition from late entrants will be apparent, and these new entrants will try to steal market share from existing companies. TUULS, for instance, came into the tobacco industry with a new product, the e-cigarettes, and created a niche that they have dominated and opened doors for new companies such as VanGo Vapes. This new competition and product model results in intensified competition within the industry.

Profitability

Profitability at this stage of maturity is relatively high for companies that have already structured their customer base, finetuned their production costs, and have a working marketing strategy. This is evident in the case study as we see JUUL is targeting an already smoking customer base but restructure their product to offer a less harmful effect than the traditional cigarettes. This rewards them with huge profits for there is a high and consistent customer demand.

Price-conscious consumers

Customers at the maturity phase know the prices of the products they consume. In the tobacco industry, the price of a cigarette is known to customers and companies wanting in need to match or lower their prices to attract customers. JUUL was affected by this factor of the industry and had to adjust their prices to be lower than cigarettes to attract customers.

Incremental Improvements

The industry is already established but needs constant incremental innovations to keep the product relevant and appealing. The need for this continuous improvement was met by JUUL when they offered e-cigarettes. This was coupled with different flavors, but the main product was still tobacco and nicotine.

Increased Advertising

This stage of maturity in the industry calls for reinforced marketing strategies that stress on the unique features of the products. There is a need for product differentiation as the cigarette companies offer the same types of tobacco, the difference being product differentiation. This aspect was vital in JUUL’s marketing strategy as they entered the market with a different product but offering tobacco as the end product. Due to the maturity of the industry, customers recognize particular brands, and as such new companies have to adjust their marketing goals to attract customers. This need for a super, far-reaching marketing strategy is what JUUL employed without consideration of laws and regulations.

Price wars

The industry at this phase is characterized by price wars since companies have established optimal market share and leveled production costs; they engage in price wars to boost sales. One company reduces prices, and then another has to follow. This is evident in JUUL’s marketing strategy for the pods are cheaper than cigarettes to attract customers and convince them to opt for their product.

1.c)

Declining sales in an industry can be attributed to several factors ranging from; Exhaustion of raw materials used for production or decline in demand as a result of technological innovations, customer preferences, to mention a few. A company, therefore, should resort to the following measures to deal with the declining sales;

# To effectively deal with declining sales, a company has to know the reasons for the decline; therefore, investing in the research and development department can enable a company to have better insights.

# Ensure customers needs are met. This will ensure customer satisfaction and prompt returns and even referrals.

# Adjust product prices to rival products.

# Adopt a marketing strategy that is captivating like Jull’s as marketing directly impacts sales.

# Technology and innovations give a company a competitive advantage; thus, there is a need to be on par with technology and innovation.

# Customer service is key to ensuring continued sales; companies should ensure their customer care services are the best.

2. 2. d)

JUUL is not a socially responsible company since it has to meet all the four responsibilities for it to be considered socially responsible. JUUL falls flat on three corporate social responsibilities, legal responsibility, ethical responsibility, and philanthropic responsibility, as illustrated below.

Economic Responsibility

Economic responsibilities are interconnected with philanthropic and ethical responsibilities. The goal is to strike a balance between business practices and ethical and moral regulations. JUUL has a superior business strategy, which generated big profits at the expense of the community. The company has certain business practices that create profits but endanger the lives of teens. The marketing strategy uses lifestyle advertising, social media testimonials, and the use of children attracting flavors, for instance. All these practices are geared towards profit generation at the expense of teens who get addicted to nicotine.

Legal Responsibility

The legal responsibility expects a company to comply with laws and regulations that govern the industry. JUUL fails in this regard, for the company is currently under scrutiny in the U.S. for illnesses and deaths related to vaping, as well as its marketing strategies. The Federal Trade Commission, the Food and Drug Administration, the U.S. attorney’s office, and a number of other state attorneys generals have opened investigations into JUUL’s marketing strategies. JUUL is also currently facing three suits filled in court by three U.S. school districts on the grounds of endangering and getting students addicted to nicotine.

JUUL is guilty of breaching federal law on producing tobacco flavors that are appealing to under 18-year old’s, engaging in lifestyle advertising, and using its social platforms in breach of the law. This has led to the company suspending advertising in the U.S., suspending some popular flavors, and shutting their Instagram and Facebook accounts. To sum it up, JUUL is also facing a lawsuit from a former top executive contending that the company sold almost one million of tainted pods knowingly and did not recall them.

Ethical Responsibility

Ethical responsibility entails a business engaging in business practices that society considers fair, just, and acceptable. Juul fails in this aspect, for it has several practices that are not ethically sound. JUUL decoupled selling of one million tainted pods from the evaluation. It is until a former top executive who filed a lawsuit that the matter came to light.

JUUL’s marketing strategies fell short of ethical responsibility for the company used flavors such as cotton candy, fruit, and menthol, which attract children under the age of 18. In the case study, almost 40% of Canadian teens have tried e-cigarettes and one in ten vapes daily. This is a result of the sleekness of the e-cigarette and the tasty cool flavors, which in turn leads to teens getting addicted to nicotine.

Philanthropic Responsibility

This aspect of social responsibility entails companies engaging in community service through charity, donations, volunteering to better the society. In this case study, philanthropic responsibility is not clearly illustrated, but some aspects can be identified. JUUL, through unethical marketing strategies, endangers the lives of teens by exposing them to nicotine addiction. This is doing the community a disservice which goes against philanthropic responsibilities for the families will have to invest financial resources to rehabilitate the child. JUUL is undergoing several scrutiny and lawsuits pertaining to illnesses and deaths relating to vaping. This is a drawback to philanthropic responsibility of the company as the community is at a disadvantage of financing the treatments, funeral expenses.