IDENTIFICATION OF KEY MARKETING PROBLEMS
1. Key Marketing Problems Faced by Gome in 2000
In 2000, Gome Electrical Appliances was one of the biggest home appliances retail chain in China with an annual turnover of RMB 2.6 billion and 21 retail outlets spread across Beijing, Tianjin, Shanghai, Chengdu and Chongqing. It was the market leader in color television market and color television accounted for 60-70% of Gome’s turnover in 1999 and 70-80% of those were supplied by domestic brands. The key marketing problems faced by Gome in 2000 are enumerated below:
• On June 9th 2000, the Color Television Price Alliance was formed by nine of the major domestic color tv manufactureres in order to curtail price war and increase profit margins. One of
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Eliminating the middleman, enabled manufacturers to gain control of the scale of sales as well as pricing and thereby increase market share. This mode sales channel were doing pretty well until the mid 1990s due to considerable profit margins. However, as the prodcution capacity of the manufacturers started increasing during mid and late 1990s, the cities’ market was saturated and a fierce competetion started between competitors which resulted in more price cuts and furher decline in profit. Manufacture-owned sales channels were no longer able to accommodate the the high operational costs associated with big terminal networks. Barring a few big players like Changhong, TCL, Gree and Haier, most domestic manufacturers scrapped their own sales channel and started relying on specialized distribution channels.
III. Home Appliance Super Store
Another concept namely home appliance superstore also started to spring up in the 1990s whose basic operating model was letting out spaces on sales floors by its sales agents. However, this sales channel could not achieve economy of scale due to its segmented development model, its inability to carry out bulk purchases and lack of coordination in operations. This sales channel too was short lived in spite of its large number of businesses and a comprehensive
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The response of the consumer was very positive and Gome’s belief in low price strategy was reinstated. This breach of the rules set by the alliance led to another meeting of the nine members of the alliance to decide on measures to compete with Gome. If the alliance step up its actions against Gome, Gome should try and reach an agreement with Changhong whose inventory was to the tune of 1.68 million television sets as of May 2000. It would be a win-win situation for both Changhong as well as Gome. As it is quite evident from the price cuts in Prima color TVs that customers still welcome low prices, this could give great competitive advantage to Gome. At the same time it should expand its network to the rural areas and upcoming urban areas and start capturing more market share. At the same time, Gome should also use its goodwill with foreign brands and use this opportunity to lure foreign investors into the market. This opening into the growing China market for foreign brands would enable Gome to better negotiate with them and achieve lowest prices for its products. This in turn would enable Gome to offer more variety to its customers. In the meantime, Gome should raise public awareness against this alliance and create a backlash in the market. All these steps would definitely weaken the alliance and force them to retract. In the meantime, Gome should also start
At Costco, VIZIO relied extensively on consumers to purchase their product without any assistance from salesman whom would either influence or steer the consumer during the sales. Because of their low brand awareness, they strategically placed their products on conspicuous display, right at the entrance at the stores, to catch the customers’ attention, but more importantly because their shoppers fell into the market segment target by VIZIO, 35+ years, wealthy, and with disposable income.
LCD & Plasma Component Makers Raise their Competitiveness (2010) stated that in the technology industry, foreign brands, such as Samsung and LG, still occupy a strong position. Consumers demand higher quality, they pursue cheap products and high quality and enjoyment. In the supply condition, the more competitive the product is, its features are more attractive. Between foreign and domestic prices of brand, new products style and maintenances servers, these terms become a fierce competition for the suppliers.
This paper is intended to shine a light onto distribution channels, both direct and indirect, as well as, provide a better understanding of channel levels. It will also deal with the different channel organizations, including conventional, horizontal, vertical and multichannel marketing systems.
Marketing channels are very important to both the manufacturer and the consumer. These channels are the way the manufacture releases their product to the consumer for purchasing. Manufactures can choose either a direct channel which is the means of selling customers or accepting orders from them. A sales force calls on customers and prospects to present information on products and persuade them to place orders. Retailer channel is the channel that manufacturers sell their goods directly to large retailers such as Amazon which then sell onto the final consumers. wholesaler channel typically buys and stores large quantities of several producers’ goods and then
Distribution – Vizio targets membership-based retailer – Costco as its top distribution partner. This proves to be effective in balancing Vizio’s financial viability and product positioning. Although selling TV products in electronic retailers such as BestBuy delivers higher brand image and directs to more target customers, distribution terms with such top electronic retailer are likely to be unfavorable to Vizio, increasing the firm’s distribution cost. Meanwhile, Vizio does not want to partner with low-end product retailers that may signal lower quality of its products. The company’s move to partner with Sam’s Club aligns with its existing distribution strategy.
The substitute products, that may take a portion of the market share away from the consumer electronics retail industry, do not create a huge or direct hazard. Today’s society and culture place a big emphasis on technology and it is highly reliant on electronics. The bargaining power of buyers for electronic products is extremely low because the buyers primarily consist of a weak and divided group of individuals, and technology has became a vital need for most people.
In order to execute successfully on his growth plan, Rountree would need to re-assess Ohmeda’s marketing channel strategy. In 1985, 43% of equipment sales ($41M out of $95M) were booked through dealers. Dealers provided increased coverage, but also carried significant
brd sponsorship: national (manufacturer) /private (reseller), licensing, co-branding. brd management ee – line extension en – brand extension ne – multibrands nn –new brands. brd communications experiences +touchpoints, brded entertainment.retail+wholesale upstream: raw material, downstream: marketing channels and customers. “sense-and-respond” view = demand chain. value delivery network: partners of suppliers,distributors,customers to improve system in delivering customer value. channel members value –information, promotion, contact, matching, negotiation fulfill ,physical distribution, financing, risk taking. channel lvls : direct v indirect flows: physical, ownership, payment, information, promotion. conventional dist’ channel: independents, profit-seeking vertical management system (prod, wholesale, retail as unified system) corporate: 1 owner contractual(franchise): independents joining together through contracts to obtain higher sales administered: coordinates through size of 1 power franchises: manu- or serv- spons retailer, manu-spons wholesaler horizontal ms: 2+ companies join together multichannel ds: firm sets 2+ m channels to reach 2+ cust seg disintermediation: removing intermediaries or displacement of resellers) m channel design: analyzing customer needs, setting channel obj, types+# of intermediaries (intensive, selective, exclusive), evaluating channel alt. (economic, control,
In 1996, there were three largest and absolutely dominant office superstores (OSS) chains in United States office supply market, Staples, Office Depot and OfficeMax. Office superstores can get access to much more convenient and cheaper supply of goods than small retailers through signing a mass of contracts with suppliers. They are mostly located in downtown business districts, and own considerable floor areas, a wide variety of product types and sizable supply size. Therefore, they can provide consumers with great user experience and convenience by
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