Porter’s Five ForcesPorter’s Five Forces as you can see in Figure 1, is the idea of how a business operates in conjunction with competitors. This process is very well known and used frequently when bringing up new business ideas to see how they will work in the marketplace. This will also help us see our strengths and weaknesses and where we will stand amongst competitors and in the overall field.
Degree of Rivalry
There are two main competitors to Velox, they are also restaurant apps, named Velocity and Uncover. Velocity mainly focuses on booking for restaurants and Uncover focuses on finding openings in full restaurants. Though both of these apps are in the same general area of restaurant apps, they do not pose a direct threat to the Velox app.
Threat of New Entrants
One of the main things that many companies are trying to implement more is mobile ordering, this is something that may be coming into more of the general public and it could hurt the app in retrospect because they are seeing their brand loyal companies over places that they are not familiar with. The incentive of a deal promised with your meal will help Velox stand apart from the crowd.
Threat of Substitution
The threat of substitution is one thing I think would be a little hard to do with this specific app, I feel that though mobile ordering is become more well-known it will not cut out an app that will be known for deals and quicker service. The generation that will mainly be using this app is very interested in anything that can save them time and money and this app does both.
Bargaining Power of Buyer
Considering the price point of the Volex App will be in conjunction to the competitors that were mentioned earlier, it will not be overly priced because remember we are targeting people that want to live a cheaper lifestyle. Buyers have a medium bargaining power because they could go to competitors but it is not very likely.
Bargaining Power of Suppliers
There would not be many suppliers in the making of the app, other than the true developers and creative assets that will be used. There would be contracts established so that the pricing would always be fair.
Pricing of the App
As mentioned above, the app is created for people that are likely on a budget and looking to gain a coupon. The best pricing strategy to use for this app would be the term, Freemium, which is essentially mixing the words “free” and “premium,” this works by creating the app and putting it on the market for free, but as you continue to get further into the app, it will charge for premium features. This will be good because people that are looking to get an app that is free to just get a coupon and eat quickly will be interested and if they want to spend more money to get higher coupons or premium seating then they can do that as well.
An example of how this would work would be, if you have the free version you can see some of the openings for reservations as far as times, so there is a 7:45pm available now you can take it or leave it kind of idea. Whereas on the premium it would show them all of the available times at once.
This is a great incentive to get people to try the app and then continue to use it later on, once they become more likely to purchase it after they have had time to look over all the features. The actual pricing of the app would be free at first, and then as time goes on it will continue to ask if you would like to add certain packages. The first could start at $1.99 and the highest premium package would end at $9.99.
- Formotus. “Figuring the costs of mobile app development | Formotus.” Formotus |➤ Mobile
Apps for Business Forms. N.p., n.d. Web. 03 May 2017.
- Mehra, Himanshu. “Complete overview of the mobile app development process
(Infographic).” Tech in Asia – Connecting Asia’s startup ecosystem. N.p., n.d. Web. 03 May 2017.
- Nichols, Nancy B., and Donna L. Street. “The relationship between competition and business
segment reporting decisions under the management approach of IAS 14 Revised.” Journal of International Accounting, Auditing and Taxation 16.1 (2007): 51-68. Web.
- Picardo, CFA Elvis. “Business Cycle.” Investopedia. N.p., 30 Dec. 2015. Web. 03 May 2017.
- Rajput, Mehul. “Ways To Determine The Best Pricing Model For Your App.” Entrepreneur. N.p., 03 June 2016. Web. 03 May 2017.
- Shalev, Kuty. “4 Questions to Help You Price Your App in a ‘Freemium’ World.” Entrepreneur. N.p., 22 Sept. 2015. Web. 03 May 2017.
- Staff, Investopedia. “Porter’s 5 Forces.” Investopedia. N.p., 07 Apr. 2016. Web. 03 May
- Sullivan, Megan. “What is a Freemium Pricing Strategy and How Can It Work for Your
Business?” QuickBooks. N.p., 16 Mar. 2017. Web. 03 May 2017.
- Viswanathan, Priya. “How Should You Think About Pricing Your Mobile Application?”
Lifewire. N.p., n.d. Web. 03 May 2017.
- Yarmosh, Ken. “How Much Does an App Cost: A Massive Review of Pricing and other
Budget Considerations.” Savvy Apps. N.p., n.d. Web. 03 May 2017.