Market Analysis & Global Marketing Strategy - Marketing Essay Example

 

 

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Executive Summary

Yun’s Super Cooker is a revolutionary cooking device, shaped like a micro wave oven but with far greater features. The product has capabilities that enable users not only to save time, energy and costs, but also to cook far more nutritious and tasty food than what can be achieved through other cooking devices.

The product, manufactured at Shanghai will be launched in Europe and North America through a high intensity marketing campaign. While the marketing strategy and campaign, which is still under formulation, is the subject of this report, market analysis and strategy formulation will need to be matched with extremely effective execution of strategy for the product to become a global success.

 

 

 

 

 

 

 

 

 

 

 

 

 

A. Marketing Analysis and Strategy

1. Introduction

Advances in science and technology have been instrumental in changing cooking procedures and eating habits across the world and especially in western societies. These have been caused by numerous reasons that, among other things, include enormous advances in growing and processing practices, transportation of food items across the globe, the evolution of huge processed foods and fast foods industries, and raid strides in kitchen equipment and cooking devices, both at the industrial and household level. While most of the radical changes in traditional eating habits have come about because of shifts in working patterns, lifestyles, and the large scale entry of women in the workforce, the plethora of kitchen devices has also played a major role in this social transformation. While men were content to follow similar and unchanged food preparing and cooking procedures for hundreds of years, the advent of electricity and its application for mechanical purposes introduced a veritable storm in western kitchens. Devices like refrigerators, ovens, mixers, grinders, food processors, tea and coffee machines, dishwashers, food warmers and microwaves found their way into kitchens and became integral components of households across the world.

This process has also contributed to the emergence and consolidation of a huge white goods industry and the emergence of global companies, which in the recent past, (like Samsung and LG) have tended to come from the countries of East Asia. New technological advances are occurring on a regular basis, contributing to the ease of food preparation and cooking in homes across the world.

 

 

2. Organizational Details

The company, Yun’s Electronics, is a large Chinese manufacturer of electrical and electronic kitchen equipment, including refrigerators, washing machines, ovens and microwaves. The company is based at Shanghai and produces its good at two large manufacturing facilities on the outskirts of the city. The company’s products, sold under the brand name Yun are exported to various countries in America, Europe, Asia and the Pacific Rim. The company is financially strong and achieved a global turnover of 6 billion USD in 2006. Cheap labor costs, an otherwise economic environment, and effective management practices enable the country to manufacture its items far more economically than other companies in the market, without compromising its good quality.  The company markets its products through two global regions, Europe & America, and Asia. The company has a very strong R & D division and has, in recent months perfected an advanced cooking device that is proposed to be sold under the name of Yun’s Super Cooker. (YSC)

3. Product Details

YSC has been developed in the company’s R& D facilities at Shanghai over a period of four years. Kept under wraps while it was being developed by an international team of scientists, the product has recently been unveiled at a huge food expo at Paris and has innovative features that are expected to revolutionize cooking practices on an international basis. The device is the size of a small, rectangular box, with an aperture to introduce the food and five well designed control buttons. All YSCs will be provided with well written and easy to follow guidebooks for preparing food items. The machine has five separate operating cycles, can prepare five dishes together, within five minutes. Furthermore food is cooked naturally without destroying the minerals, nutrients and vitamins present in the natural items, grains, vegetables and meats, used in the cooking. The YSC will not only be much faster that electric ovens, grills and microwaves, it will also be much faster, consume far less electricity, and retain the natural goodness and flavor of food.

Customers

Customers for the YSC will comprise of all people who do a certain amount of cooking at home. The customers include not only single people and working couples who operate under severe time constraints but also regular families with school going and growing children who need to be provided with well cooked and healthy food. The markets for the company, in order of preference, will comprise of the EU and North America, followed by the countries of the Pacific Rim, ASEAN, and India. The company also expects to sell significantly in the domestic market in China.

PESTEL Analysis

The PESTEL analysis is a widely used tool that helps in assessing the various environmental factors, political, economic, social, technological, environmental and legal that can affect the marketing operations of the company and the product. The product is not expected to suffer from any political factors because of its neutral nature and its wide usage possibility. Economically the company plans to price it competitively with other cooking devices like electric ovens, cooking hobs and microwaves and does not expect any specific economic imbalances to occur. The product has enormous social advantages because it will enable people to eat nutritious and well cooked food with very significant time savings, which they can use for other quality activity both at home and at work.

The product has enormous environmental advantages. Because of significant reduction in cooking time, widespread use of the product will lead to significant energy savings and lesser consumption of power, thus reducing greenhouse emissions. In fact the company should be able to take great advantage of carbon credits and build up a separate revenue stream from the carbon credits it can generate from the potential reduction in greenhouse emissions that can arise from using the product.

Porter’s Five Forces

Michael Porter’s Five Forces Analysis assesses the competitiveness of the market by estimating the powers of buyers and suppliers and the threats posed by new entrants and substitutes. In the case of YSC the buyers have enormous power because of the enormous choice of cooking products available in the market. While YSC has revolutionary technology it will take time to establish this attribute and until then mainstream cooking devices will continue to pose competition. While suppliers have little power in products like TSC, the threat from new entrants and substitutes can be considered to be significant. Numerous new companies keep on entering this area, many of whom cater to a local market. Constant R & D work also continues at establishments all over the globe, particularly in the companies and universities of Japan, and there is always the possibility of new products coming through or the effecting of significant advances in existing products. The market for YSC can thus be assessed to be extremely competitive and require extensive analysis and preparation.

5. Marketing Strategy

Product

The product will be positioned as a revolutionary new cooking device that enables users to (a) save significant time when compared to other cooking devices, (b) prepare natural and tasty food without spoiling its natural qualities and nutrition, (c) save energy and energy bills, and (d) prepare a number of dishes at the same time. The product is not large, about the same size as a microwave oven, very attractively designed by French designers, and lightweight, thus making it easy to transport at time of installation and shifting. Comparative product features provided in the chart below reveal the distinct advantages of the YSC over comparable products like the microwave, electric oven and cooking hobs.

Device
Price
Energy Consumption
Retention of Nutrients
Taste
Preparation Time
Yun’s Super Cooker
200 USD
Very Low
Very Good
Very Good
5 minutes
Electric Oven
125 USD
Very High
Poor
Good
30 minutes to 2 hours
Cooking Hob/ Rail
100 USD
Very High
Poor
Very Good
15 minutes and above
Microwave
225 USD
High
Good
Poor
15 minutes to one hour
Price

The price of the YSC has been kept in the range of 200 USD, which is extremely competitive to that of other similar products. The price is inclusive of distributor and retailer discounts, which total up to around 12.5 % of the sales price. Additional performance and sales linked distributor and dealer incentives are expected to go up to about 4.5%, thus leading to total sales commissions of about 17 %. Apart from an attractive price, YSC provides buyers with the opportunity to benefit from significant savings in energy bills, enough to recover the cost of the machine many times during its lifetime. While the product has been priced competitively Yun’s electronics has the margins to afford another reduction of 10 % if the market so warrants. The company plans to provide a one year free replacement warrant without a money back option. Despite extensive product testing this is still an open area and while the potential costs of free replacements have not been quantified completely they are expected to be about 0.25 % of sales revenues. In recent times there has been a significant amount of negative publicity about Chinese made goods, especially after the recall of staggering numbers of Mattel toys produced in Chinese factories and it is prudent to give a money value to the likely cost of returns. Returns shall, if occasion demands, be organized by the local distributor, working in tandem with retailers.

Placement

The product shall be made available through company stores, which exist in a few select large cities in Europe and through supermarkets, department stores, electric appliance stores and special stores that stock only kitchen equipment. These are the existing sales channels of the company and the Yun’s has sufficient experience in introducing similar products in its existing markets in America and Europe. All retail outlets will have a number of demonstration pieces with young and well trained sales staff being able to demonstrate the working of the product for the benefit of prospective buyers. While pricing policies have been firmed up market research is still in progress across a broad spectrum of would be users in selected European and American metros on customer perceptions and attitudes towards the product, and the results of the research may well entail some change in pricing and distribution policies. While agreements have already been firmed up with stores like Wal-Mart and Debenham’s for stocking the product, the company also expects to sell large numbers of YSCs through on line channels using company websites as well as EBay. Deliveries for online sales will be routed from specific warehouses in key logistically friendly locations that have already been firmed up.

Promotion

Promotion will be a key element of the marketing strategy of the company and the company has already tied up with specialist marketing agencies and an international advertising agency for this purpose. Advertising and promotion will make use of the full range of promotion techniques both for direct and online sales. Large scale advertising, including billboards, newspaper, TV slots, and FM channels, will drive the promotion effort with support from in-shop promotional events, cookery demos, and free add-ons. The advertising strategy will, apart from focusing upon the product qualities and attributes will lay special stress on energy savings and the potential reduction of greenhouse emissions that should arise from widespread use of the product. (Stone & Mccall, 2004)

SWOT

The marketing strategy of Yun’s also needs to focus on the SWOT (Strengths, Weaknesses, Opportunities, and Threats) factors of the company, capitalize on its strengths, utilize opportunities, eliminate weaknesses and protect against threats. The company has numerous strengths that include low cost manufacturing facilities, expertise in production, a global presence in its existing products, as well as sufficient profits and reserves to drive YSC sales. The product has revolutionary features and opportunities exist for establishing a pan global market that can lead to significant increases in sales, profits and industry leadership. The company will have to struggle against the perception that Chinese made goods suffer from quality issues but constant attention to production processes and a customer friendly return and replacement policy will help in reducing this market constraint. The company will definitely face threats from existing competitors as well as new Me Too companies who will try to take advantage of the marketing effort of the company to piggyback their products in local markets. The company needs to have a robust technology and design protection policy and implement it forcefully across continents. First mover advantages do not last very long and it is essential that strategy be executed swiftly and with great effectiveness to translate early introduction advantages into concrete commercial and marketing gains.

 

6. Recommendations

The Yun’s Super Cooker is a revolutionary product, on the same lines as the first refrigerators, mixers, and microwaves. It has the potential of becoming one of the biggest brands in kitchen equipment because of its features, all of which are designed to achieve sustainability, social and family benefits, cost and energy savings, and environmental protection. Such products need to be launched very carefully and while it is comparatively easy to decide upon marketing strategy, the real test lies in executing the strategy effectively. It is now widely recognized that execution of strategy is much more important than its conception and the devised marketing strategy for YSC has to be implemented on a global basis with planning, anticipation, foresight and sure footedness. (Kitchen & De Pelsmacker, 2004)

The product has undergone extensive testing but the real test will come during shop promos when its benefits will be communicated to prospective consumers and it will be essential to ensure that all its listed attributes are highlighted, especially in comparison to the other available cooking devices.

 

 

 

 

 

 

 

 

 

B. Marketing Presentation

Yun’s Super Cooker is a revolutionary cooking device that is far ahead of comparable products like electric ovens, microwaves and gas grills for use in household kitchens. YSC enables its users to prepare food in an astonishingly short time, keeps all nutrients intact and saves enormous energy. The product can be positioned not just against other cooking devices very effectively but can also be used to wean families away from pre cooked and microwaveable foods that are being regularly churned out in enormous quantities by convenience food companies.  Recent years have seen a sharp increase in the consumption of fast foods and convenience foods in western countries with enormous ill effects upon health and the increase of lifestyle diseases like obesity, hypertension, diabetes and cardiac ailments.

In terms of product features YSC assures its users the benefits of path breaking technology in use of thermal energy wherein food that normally cooks in an hour or more can be prepared in 5 minutes, thereby reducing cooking tine, freeing up the person responsible for cooking and enabling him/her to spend more time on work, pleasure or with the family. Furthermore the food items prepared with the YSC not only contain all the goodness and benefits of natural foods but also taste much better than those prepared in microwaves. (The comparative chart provided in the marketing strategy provides relevant comparative details and can be used for the purposes of this presentation.)

Apart from providing a real alternative to convenience foods the YSC helps in significantly reducing energy consumption and is environmentally friendly. At a price of 200 USD per piece the product provides a great bargain to people in diverse ways that can total up by providing them with physical, emotional, and economic satisfaction. It is a revolutionary product and will impact the lives of people all over the world in a sustainable and ecofriendly manner.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

 

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Stone, M. A., & Mccall, J. B., 2004, International Strategic Marketing: A[N] European Perspective. New York: Routledge.
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