risk, solution
Fig. 8 Porters 5 Forces
Threat of new entrants
Threat of substitute services/products
An Emerging Industry
Bargaining power of consumers
Discount Culture
Bargaining power of suppliers
Outsourcing Discounts
Threat of existing competitors
Established competitors
Loyalty as a disadvantage
Outdated Technologies There is a risk that this will become a much more highly saturated market as it is still an emerging industry. The risk with this is that larger competitors may be able to of f er a better value product for customers than safe space due to factors such as high value starting investment and large economies of scale for photo books and prints. The response to this threat is acting quickly and efficiently to skim the market and capitalize on the customers loyalty.
Likely risk, Medium risk resolution
There is the threat that cloud storage services will become outdated with the next technological innovation to be introduced in the market.
As baby boomers are largely not early technological adopters, this means that gradual planning can be made and no fast, damaging changes need to happen.
Likely risk, Low risk resolution
Modern discerning customers expect a free trial period when using a subscription service, and this can be very costly to the business in terms of initial cash flow. If all consumers are receiving free trials on their first month then the cash flow of the first 6 months of operation is likely to be very weak.
Threat of low or no outsourcing discount of f ered by the supplier means a lower percentage of prof it made by MemoryLocker on each sale, damaging the profits. There is also the risk that suppliers could start producing lower quality items because they are offering larger outsourcing discounts to reduce their own costs.
This can be overcome by of f ering f ree trials on occasion and not as a rule, as MemoryLocker is not a freemium business model. Free trials can then be used for marketing purposes, selectively on and rarely, on months where cash flow is sufficient and costs are low, which will prevent any capital problems. This will also encourage a higher percentage of people to use the trial as it is something that is not often available.
Outsourcing is an added value service and is not a main driver of revenue, therefore, this is not a massive risk for MemoryLocker
Unlikely risk, Low risk resolution Likely risk, Low risk resolution Likely risk,
Low risk resolution
42
Area of medium risk - see SWOT and contingency planning for a solution
Likely risk, Low risk resolution
Likely risk, Medium risk resolution Unlikely risk, Low risk resolution Unlikely risk, Low risk resolution
Unlikely risk, Low risk resolution
Smug Mug has been established in the f ield of online photo storage f or 16 years. Therefore consumers are more likely to trust that their photos will be safe on their platform than a new market entry such as MemoryLocker Despite this, Smugmug target a different, more professional consumer and this will potentially seem daunting to a baby boomer. No other competitor in this market targets baby boomers exclusively, therefore the focus and simplicity that MemoryLocker provides will override its lack of establishment in the market.
Likely risk, Medium risk resolution Likely risk,
Medium risk resolution Likely risk, Medium risk resolution Area of medium risk
- see SWOT and contingency planning for a solution
Baby boomers are less experimental than other generations, they like to stick with what they know, and they're loyal (Farley, 2017). As a result, whilst MemoryLocker may provide customers with a higher customer proposition than its competitors, if consumers are already paying f or f or example, Dropbox services, they may be more reluctant than millennial's to change. Theref ore, the primary f ocus f or MemoryLocker will be targeting customers who do not currently use competitor platforms.
Likely risk, Low risk resolution
Low