Juul Labs, a company that offers innovative nicotine delivery system, has recently surpassed Facebook as the fastest startup to reach the decacorn status (i.e., a valuation of over $10B). It is a company mainly gain revenue from selling e-cigarette. The Juul Labs is growing quick and big. It is very surprised that how this company growth speed.
In the industry of e-cigarette, the star brand of this category is Juul. The Silicon Valley startup Pax Labs. Pax Labs, which focuses on atomizer technology innovation, was founded by two Stanford graduates. After the founding of Pax Labs, the brand Ploom, which is not burning, was launched. Ploom, which heats the herbs, is used by American pilots to smoke marijuana.
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The electronic cigarette brand Juul and the newly launched brand ERA, which is used to atomize the active ingredient THC. All three brands have achieved unprecedented success. The sub-brand Ploom was acquired by the Japanese Tobacco Empire. If Juul is not the originator of the closed tank system e-cigarette, it is definitely the most popular star of this category, and it is in short supply. The recently launched marijuana active ingredient THC nebulizer ERA is even more affordable. Pax Labs’ latest round of more than 300 million financing was led by Tao Capital Partners and Sand Hill Angels, when Juul was just released.
Product Analysis
By the product analysis of the Juul Labs can give us a clear vision of the e-cigarette. The products are more intelligent, the design is user-friendly, and the taste is highly restored, which makes Juul quickly have a large number of fans, and the loyalty is really high. Just give a few examples: gently tap the Juul twice, the indicator light will light up, telling the power, green light, yellow light, red light respectively represents the high, medium and low power, red light is the need to charge, and when it is in use, the indicator light will also be on. the magnetic design of the charger is also very cool, and the main unit will automatically absorb when it touches the charger.
In addition to these humanized designs, the taste is the root of Juul’s rapid occupation of the market. Juul has the exclusive patented technology of nicotine salt, which is worthy of greatly improving the evaporation quality of the cartridge. Juul tastes perfect to restore the taste of cigarettes and real cigarettes have very similar irritating, aroma, energy, aftertaste. The nicotine concentration produced can be higher than that of the general e-cigarette in 2 to 3 times, the degree of reduction of the cartridge is higher, which not only satisfies the taste, but also ensures health. The last thing to say is the value of the face. The design of the rectangular strip looks like a U disk. The material of the space aluminum can quickly attract the attention. The price is also a little bit expensive than other e-cigarettes.
SWOT analysis
The international opportunities for Juul is much large than the threats. The main opportunity for Juul is the huge market in the world wide. The e-cigarette market is big enough to compare to the Facebook socialized market, it is very hard to understand. In 21st century, there are nearly 1 billion smokers on earth. Nearly 1 billion people around the world light up cigarettes every day, a new study finds. The findings signal to experts that despite progress in reducing the number of smokers, more work is still needed to target tobacco use, the researchers said (There Are Nearly 1 Billion Smokers on Earth, 2017).
Many smokers start to think about the bed side of smoking. There are a lot of reason that may cause cancer, but the cigarette is still one of the biggest reason cause cancer. The tobacco users may want to try the e-cigarette because the concern of health, people may think e-cigarette is safer than the common cigarette. So that they will chose to buy the e-cigarette and like the researchers said, there are 1 billion smokers in the world and it is a big market for a new small company. The e-cigarette market has potential customers and the traditional smoke market is getting smaller and smaller because of the health concern. The biggest opportunity is the potential market.
The domestically opportunities are simpler than the internationally one. Because the young teenager in USA would like to try the new things and they would like to spend money on this safe equipment. The millennial generation like the cool things and they want to feel the new and trending thing around them, which means that they will buy the Juul cigarette maybe because they think it looks very cool and it is very popular in the social media or in the environment around them, it could be high school or college.
There are a lot of other domestically opportunities that to Juul Labs. In modern time, people start to rethink about the cigarettes. As we all know that tobacco is the first-class product that can cause cancer to human body. After this concern of their health. E-cigarette is getting more and more popular. This is a very big opportunity for Juul Labs. The majority of smokers are also concern about their health. Smokers would like to try the Juul e-cigarette that have the same taste of the real cigarettes. That is the biggest opportunity that Juul Labs have, their products are good enough for the smoking people.
For the domestically threats that Juul Labs are facing is less strong than the opportunities that they have. There are only a couple of threats are facing by Juul Labs. As you can see, Juul Labs is growing very quick and strong. The Juul Labs by earning a $15 billion valuation just seven months after its first VC round. Juul Labs reach the decacorn is quicker than Facebook which is the greatest company that connect the whole world. There is great opportunity for them to gain more revenue. The threats that Juul is facing is the FDA. The government department is a very concern about the new cigarette, they are not sure whether the Juul e-cigarette is safe as people thinks. They would like to do more research on this, but before the results come, the e-cigarette didn’t show any reason that it is safe and health than the traditional cigarette.
The second threat that Juul Labs is facing is both international and domestically which is the other traditional competitors. The old and also big tobacco companies are also working this e-cigarettes market, compare to Juul Labs, they have more marketing advantage, after the analysis of the generation X group, they are very brand royalty group which means if they decide to trust one company’s brand and they will use this brand for a long time and even to end of their life. This will give the old traditional companies more opportunities to enter this market and if the old traditional company would like to change the direction of the company and that will be the biggest threat for Juul Labs.
Down below is the SWOT analysis matrix to Juul Labs company and this graph give a great summary of the advantage and disadvantage that Juul Labs have in the market and what can help company be more successful in the future. This will give the employers of Juul Labs more options and more idea about how-to maximum the strengths that they already have and also can avid the following threats that they have.
There will be more opportunity for Juul Labs because by the analysis of the millennial’s generation and Gen X group, we can clear see that there will be more and more people use Juul Labs’ products and the market will only going be bigger and the opportunity that only will become more and more for the Juul Labs.
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Strengths
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Weakness
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Opportunities
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Threats
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Business-level strategy
The business-level strategy that Juul Labs would like to use is differentiation which is I would like to recommend to the Juul Labs. Keep the difference between the Juul e-cigarette and the other cigarette. Juul Labs need to keep the Juul product can identify the different to others. The design, the style, the trends, and the taste. Those elements are the reason why Juul Labs can growth so quick and bug. The differentiation is the main business-level strategy that Juul Labs would like to choose by the analysis.
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Should it cooperate with any of the larger players in the industry? This is a very interesting question for Juul Labs. My option of this is they need. They need to cooperate with other larger players in this industry. They will not only can have the ability that those big cigarette company have, but also, they can have the sell channel that the new cigarette company don’t have. The traditional selling channel is the key point to the Gen X group. There are researches that shows the Gen X which is the generation that age is around 30 to 50. This group is still not feeling very confidence to the online purchase product and they would like to buy things in the real world and use the traditional sell channel.
At this point, the analysis shows that Juul Labs need to cooperate with other big players in this industry, but they need to use them in a better strategy, after all, this will not be a good idea that merger by other big players or lost their independent site of this game.
International strategy
International market will be the best option for Juul to ensure success. There are more smokers in the whole world, and they all want to be more health or just want to be cooler. They would like to change the hobby to use Juul Labs. Like the research that I mention before, there are more than 1 billion people use tobacco. An international strategy is very important for a company that has such big potential market. If Juul Labs want more success from the market.
Recommendation that suggest by the analysis is influence by the Swot analysis of Juul Labs more. I will strongly agree that Juul Labs need to be more difference to other e-cigarette, give more satisfy to their customers and cooperate with big traditional company in this industry.
Recommendation
After the analysis of whole industry, the company itself, the product that made by Juul Labs, and the SWOT analysis to Juul Labs. There are a few recommendations to the Juul Labs company and help them be more successful in the future.
- Make the product has more competitive advantage.
- Use the differentiation business-level strategy in the company manage.
- Use an international operation strategy.
- Cooperate with the big traditional company.
References
- There Are Nearly 1 Billion Smokers on Earth. (2017, April 5). Retrieved from https://www.livescience.com/58563-one-billion-smokers.html
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