Archive for July, 2005
The art of watch-making has long been a tradition among the Swiss. As recently as the mid-twentieth century, Swiss made watches dominated the world market. However, changes in the global competitive landscape – beginning with the aftermath of World War I and changes in technology and production techniques throughout the industrial revolution – that provided higher levels of production capacity at lower costs eluded the Swiss. By the early 1980s Swiss global market share had dropped from 80% to less than 15% as Swill watch production hit an all time low. The Swatch Group (Swatch) – formerly known as SMH was born from the vision of Nicolas Hayek who believed that he could revive the ailing Swiss watch-making industry by building Swiss quality into mass produced low-end, high-quality watches.
Within months of its release, the first Swatch was a smash hit propelling the company and the entire Swiss watch industry back into the spotlight and eventually turning Swatch into the largest watch manufacturer in the world. By the late 1990s Swatch had run into several problems that were beginning to erode its competitive ability on the global stage. Although revenue and profitability continued to increase, the company found itself having difficulty competing with Asian and U.S. watch-makers that had spread their production processes across multiple countries in order to take advantage of cost efficiencies. Swatch had not wanted to sacrifice quality by outsourcing production to other countries and was now feeling the pinch. In 1998 the average price of a Swiss made watch was Sfr235, more than 2 ½ times as expensive as the next most expensive watches from the U.K and 29 times as expensive as watches being made in Hong Kong – where most Swatch competitors were manufacturing their products.
The Problems
Several problems need to be addressed by Swatch management. Chief among them is the need to focus on moving production to Honk Kong or India in order to lower costs, increase margin, increase price flexibility and allow funding for research and development and marketing to launch an attack on basic and middle segment leaders. Other areas that need to be addressed include;
• Lower its cost of production to increase margins in order to attack competitive market leaders in the US successfully.
• Focus on its core profit-generating brands
• Change the image of the Swatch brand to better compete with up-and-comers who are already targeting the older, original Swatch audience.
The Facts
The U.S. market comes with stiff competition from Timex, Casio Seiko and Citizen. 19% of Swatch sales come from the U.S., however its market share is weak in all segments. As an example, Swatch U.S. ship share is1.6% while Timex ship share is 30.6%. When we look at Swatch U.S. market share by segment we see; Mass (basic): 9%, Middle Market: 4%, Luxury: 21%. The U.S. market represents 56% of global watch demand. This is a significant reason for Swatch to focus its energy on developing successful competitive strategies in the U.S. Successful strategies in the U.S. market will play a role as major building blocks when entering other global markets.
Competition from the likes of Fossil and Guess and the stubborn nature of Swatch not moving production processes to Hong Kong or India have made it difficult to compete on cost basis. In the U.S., the only watch manufacturer operating a plant domestically is Timex.
In an attempt to diversify, Swatch has found itself with so many different product lines that distributors and retailers hesitate and have stopped carrying the Swatch line because carrying a single line doesn’t offer the margin potential that can be achieved by focusing on products from other manufacturers.
Many experts are surprised that the Swatch ‘fad’ has lasted this long. Younger buyers are no longer gravitating to the funky nature of the swatch brand and have gravitated to the more sophisticated, yet earthy Fossil brand. Original Swatch fans are older and looking for more expensive and sophisticated watches as their incomes increase - taste has moved rapidly to the likes of Fossil and Guess as well as to Swatch’s own Omega line of more expensive offerings.
The Diagnosis
Timex has always been know as the ‘blue collar’ watch - the watch that gets the job done for the longest period of time with the least cash outlay. This image has created a behemoth of a company in terms of unit sales, margin, gross revenue and market share in the U.S. It has also created a social stigma for the Timex brand. The Timex brand is not perceived to be sophisticated or of good quality relative to finer products. It is, however a brand considered to be the workhouse of the American working class - a good value for the money. Casio has followed the Timex lead and maintains the second place position in U.S. market share as result of duplicating Timex efforts. The U.S. is the largest watch market in the world as indicated by the fact that 56% of global watch demand originates in the U.S.. It is no coincidence that the U.S. also has one of the highest population density to per-capita income ratios in the world. For Swatch to discover the keys to massive growth in the U.S. would provide a direction for healthy penetration into other foreign markets. Of particular interest is the available market for basic and middle market offerings. Competition in these markets falls directly to Timex and Casio in the basic segment and Seiko and Citizen in the Middle market. In order to justify R&D and marketing expenses to attack these markets in the U.S., Swatch much outsource much of the production process to foreign markets just as all the above-mentioned competitors do. This will allow them to increase margins and therefore flexibility in pricing to distributors/retailers in order to compete, on price alone if need be, with the likes of Timex.
With a move to enter competitive battles with the big players in the U.S. market, Swatch must partner with production facilities outside of its home base. Switzerland is the most expensive country in the world to manufacture a product - thereby eroding potential margin and profitability. In order to compete effectively Swatch needs to follow the map laid out by every one of their competitors and outsource many aspects of production. Titan is ripe for developing a partnership with. The company is known for its innovative products, but carries the stigma of poor quality that comes with imported India good to the U.S. This partnership has the potential for perfection as Swatch can outsource its production, thereby increasing its margins, while Titan will get an established and trusted ‘Swiss Made’ brand to move its product in foreign markets outside of Asia. This would also give Swatch a large advantage in moving into developing Asian markets such as China and Titan’s home base of India.
Too many items to put on the shelves make retailers wary of poor margins. It becomes confusing to see that a company has diversified in so many directions, even related directions. Considering that 82% of Swatch Group total revenue comes from just three of their 14 brands (Omega, Swatch and Tissot) - Swatch needs to focus on these 3 and either liquidate or consolidate its remaining brand base. The creation of an OEM group to handle the manufacture of products under the Calvin Klein label could act as a springboard for other OEM relationships much in the fashion of relationships between Timex and Disney, Warner Bothers, MGM and Guess. The other 10 brands under the Swatch umbrella could either be rolled up into the OEM business or liquidated.
Attempts at maintaining the Swatch of the 1980s have begun to erode the power of the brand and diminish its international equity. The brand needs a focus that speaks to the more sophisticated nature of today’s youth (youth - the original Swatch audience) and the 30-45 year old original Swatch audience who demand a more expensive, elegant, conservative and hip watch that speaks more about their personality as it is today rather than how it was 20 years ago. Once production has been redistributed, Swatch should allocate funding for research and development to attack up and comers such as Fossil who are already targeting the original Swatch audience with products that fit their lifestyle today.
These strategic initiatives will affect the economic well-being of not only Swatch employees and contractors based in Switzerland, but the Swiss watch industry as a whole. In the end, the goal of any business is to maximize shareholder value by creating a profitable enterprise. Throughout the process of maximizing shareholder value on a global scale, people – from the top of the chain to the bottom – become pawns in the game of international business. It is inevitable that Swatch must move to outsource much of its manufacturing in order to continue increasing market share worldwide. The side-effect is that some Swiss will lose jobs while some Indians will gain jobs. On a global scale, this is not a negative effect; it is a fair trade for the ability to maintain the company’s status as a growing player on the global stage.
References
Bouquet, C., & Morrison, A. (1999). Swatch and the Global Watch Industry (Case Study 9A99M023). Ontario, Canada: The University of Western Ontario, London.
Dicken, P. (2003). Global Shift: Reshaping the Global Economic Map in the 21st Century (4th ed.). New York: The Guilford Press.
Krishnan, S. (The Hindu Business Line, September 15). Watch Out for Competition. The Hindu Business Line. Retrieved May 13, 2005, from The Hindu Business Line Online Edition Web site: http://www.blonnet.com/iw/2002/09/15/stories/2002091500371300.htm
Shenkar, O., & Lou, Y. (2004). International Business. Hoboken, NJ: John Wiley & Sons, Inc.
World Bank. (2003). GNI Per Capita 2003, Atlas Method and PPP [World Development Indicators Database]. Available from World Bank, http://www.worldbank.org/data/databytopic/GNIPC.pdf
U.S. Census Bureau, & Times Atlas of the World. (2004). [Countries Ranked by Population]. Unpublished raw. Retrieved May 14, 2005, from WorldAtlas.com Web site: http://www.graphicmaps.com/cntypop.htm
July 29th, 2005
Distribution Channels
Gina, and other manufacturers of burners, maintains a standardized distribution channel. With the exception of one competitor that maintains a direct sales force, manufacturers (including Gino) maintain a distribution structure utilizing distributors only. Distributors current utilize three approaches to moving inventory:
1. They sell to VARs (dealers)
2. They sell to OEM customers
3. They sell direct to the end user
Gino and its distributors have a focus three distinct segments that usually dictate the channel direction for the distributor:
1. Domestic boilers and water heaters
2. Commercial boilers and other industrial applications
3. Industrial boilers
Recommendations
The situation that Gino has found itself in with regard to Feima would not exist if Gino had appropriately planned for such a scenario. To solve the current problem and to keep future scenarios from getting out of hand, Gino should adopt a policy of demarcation that stipulates that any OEM, deal or end-user purchasing over X number of units automatically becomes classified as a direct customer. This would mean that Gino will need to develop a direct sales team to handle future direct customers. These accounts would be the largest of all customers.
Developing this sort of direct channel has the potential to alienate current distributors and dealers. To solve this problem, Gino needs to grandfather all current accounts and leave them in the current distribution structure.
With the development of a direct channel and the grandfathering of current accounts, Gino will need to satisfy the requested of Feima by working with Jinghua to offer a new price model that will allow Jinhgua to maintain this large account while offering Feima larger discounts so they are being treated, on a price basis, as a direct account.
Channel Control Strategies and Incentives
Push or pull? That is the question. Within the very successful European market Gino has been able to utilize a pull strategy in recent years due to the high level of market penetration and brand recognition. As Gino enters the China market the company will need to initially employ a heavy push strategy backed by their traditional pull strategy.
The pull strategy focuses on building demand and brand recognition and potential customers through the use of media advertising such as trade publications that serve Gino’s target segments, promotions, superior customer support and other actions aimed at developing the Gino brand. Because Gino is relatively new to the China market, the pull strategy will need to play a backup role to a more aggressive push strategy.
The push strategy focuses on building the new distribution channel. A key ingredient will be to add the direct sales channel and recruit additional large scale distributors. Most of the marketing budget should be allocated to a push strategy for the first couple of years in order to allow preferential treatment while recruiting new channels in China.
The process of implementing a push strategy in new markets will need to include an incentive strategy for new channel members. Gino will need to focus on 2 types of channel incentives; incentives to increase channel member purchase and inventories and incentives to increase channel member local promotional efforts.
Incentives to increase channel member local promotional efforts are designed to stimulate the sales of Gino burners through any given channel partner in the short term. This type of promotion is often accomplished by offering rewards to the channel member for meeting unit or dollar value sales quota’s or through other quota driven incentives such as cash, additional purchase discounts and prize giveaways.
Incentives to increase channel member purchase and inventories are designed to entice new channel members to purchase and stock larger volumes of Gino burners. Inventory incentives can be accomplished though actions such as temporary volume pricing discounts, limited or permanent product exclusivity and multiple product line volume purchase discounts.
July 25th, 2005
Madcap needs to develop a marketing plan that will build permanence to its brand image while increasing revenue, increasing awareness and overcoming the ‘try-it-once’ stigma that plagues the micro-brew industry.
Madcap must make a fundamental change in its approach to the market in order to maintain its status as a long-term, viable business entity. Without drastic changes in its product and marketing plans, Madcap only holds a small chance of growing revenue fast enough to compete with the likes of Samuel Adam’s and Pete’s. Madcap must expand its market offerings and make adjustments to production and marketing that will allow distribution into the lucrative West coast markets.
Strategic Focus
• Launch the Zebra brand on the West coast.
• Launch the MCB Light brand to compete with regional premium brand leaders for loyalty.
Promotional Strategies
With a new focus on attracting loyal buyers while maintaining the premium position of the Zebra brand, MCB will focus promotional efforts in two distinctly different directions;
The Zebra brand will be targeted to an audience made up of young professionals between the ages of 21 and 35 who drink premium and/or super premium beers. Over the next 18 months the goal is to increase unit shipments by 100%.
The new MCB Light brand will be targeted to an audience made up of professionals over the age of 25 who are currently loyal to any of the marketing leading premium brands. Over the next 18 months the goal is to develop a 2% premium segment market share in markets served.
Considering these promotional objectives and budgets allocated to the initial launch of the Zebra brand in the Cincinnati area ($250,000), MCB is aware that additional capital risk will be necessary to achieve profitable volume and brand loyalty particularly due to launching an entirely new product line. Outside of added production costs, the promotional budget for the Zebra brand will be set at $350,000 – including $250,000 for new market penetration and $100,000 for loyalty building promotions in the Cincinnati region. The promotional budget for the launch of MCB Light will be set at $750,000 – including $300,000 allocated to the Cincinnati region and $450,000 allocated to the West Coast launch. Total promotional budget for the coming 18 months will be set at $1.1million.
Zebra West Coast Launch: $250,000
Advertising
• Print
Localized upscale lifestyle publications such as ‘D’ magazine and ‘George’ , local and regional newspaper and local business journals/publications.
• Radio
Local Rock, Alternative Rock and Retro stations
• Posters
In support of in-store and in-club efforts
• POP Displays
In support of in-store and in-club efforts
• Billboard
Placement based on population density of target audience in major metro areas
• Web Site
To promote Zebra on its own merit and provide an outlet for loyalty development
• Email Newsletter
Driven by event promotion and web site subscribe requests
Personal Selling
• Tradeshows: NRA, CRA
Attendance at industry tradeshows will solidify market presence – National Restaurant Association Show in Chicago to support Cincinnati markets and California Restaurant Association Show to support West Coast Launch
• Event/Festival Planners
Target organizations responsible for beverage provisioning for major events and festivals such as art shows and music festivals
• Buyers: Convenience Store, Grocery Store, Liquor Store, Distributors
Focus on distribution relationships with top 50% of volume retail outlets in these categories on a metro area basis and focused on gaining premium placement alongside market leading craft beers such as Samuel Adams and Pete’s
Sales Promotion
• Zebra Girls: In-Club Giveaways
Team of Zebra ‘evangelists’ who work happy hours and weekend evenings providing samples and branded giveaways to patrons of high volume Pubs, themed bars and restaurants
• Zebra iPod giveaway
Work with promotions specialist to produce and giveaway an iPod every month for 12 months that is Zebra striped. This event is promoted by the Zebra girls at in-store/in-club and on-air appearances and via the Zebra web site
• Networking Sponsorship
Sponsorship of local networking group meetings that represent volume demographic attendees such as GeekMeet, local AMA chapters etc.
Public Relations
• Sales Success with local merchants as news stories to Nightclub & Bar, NRN, Food & Beverage, Restaurant Startup & Growth
• Zebra Girls on local Rock, Alternative Rock and Retro radio
MCB Light Launch: $450,000
Advertising
• Print
Local sports publications, business journals, sporting event programs
• Radio
Local rock and sports radio
• Posters
In support of in-store and in-club efforts
• Billboards
Placement based on population density of target audience in major metro areas
• POP Displays
In support of in-store and in-club efforts
• Web Site
To promote MCB Light on its own merit and provide an outlet for loyalty development
• Email Newsletter
Driven by event promotion and web site subscribe requests
• Direct Mail
Targeted to Email newsletter subscribers and high density demographic profiles
Personal Selling
• Tradeshows: NRA, CRA, Nightclub & Bar
Attendance at industry tradeshows will solidify market presence – National Restaurant Association Show in Chicago to support Cincinnati markets, California Restaurant Association Show to support West Coast Launch, Nightclub & Bar for minimal national exposure
• Event/Festival Planners
Target organizations responsible for beverage provisioning for major events and festivals such as art shows and music festivals
• Buyers: Convenience Store, Grocery Store, Liquor Store, Distributors
Focus on distribution relationships with top 50% of volume retail outlets in these categories on a metro area basis and focused on gaining premium placement alongside market leading premium brands
Sales Promotion
• MCB Road Crew: In-Club Giveaways
Team of MCB Light ‘evangelists’ who work happy hours and weekend evenings providing samples and branded giveaways to patrons of high volume night clubs
• MCB Road Crew: Major Event Club Sponsorships: Super Bowl, NBA Championship, World Series, Daytona 500, Indianapolis 500, Final Four, College Bowl Games
Club sponsorships with giveaways and sponsored food/drink specials during major sporting events
Public Relations
• Sales Success with local merchants as news stories to Nightclub & Bar, NRN, Food & Beverage, Restaurant Startup & Growth
• MCB Road Crew on local sports and rock radio
July 21st, 2005
The Challenge
Madcap needs to develop a marketing plan that will build permanence to its brand image while increasing revenue, increasing awareness and overcoming the ‘try-it-once’ stigma that plagues the micro-brew industry.
Definition and Analysis of the Problems
Madcap’s Zebra brand of beers has not been able to develop a loyal following of repeat buyer’s.
Recommendations and Reasoning
Madcap must make a fundamental change in its approach to the market in order to maintain its status as a long-term, viable business entity. Without drastic changes in its product and marketing plans, Madcap only holds a small chance of growing revenue fast enough to compete with the likes of Samuel Adam’s and Pete’s. Madcap must expand its market offerings and make adjustments to production and marketing that will allow distribution outside of the Ohio/Indiana/Kentucky region and into the lucrative markets on the West coast and the Northeast.
Introduce new brands to compete with Premium and Ultra-Premium brand categories. Play off of the MCB name to create a more conservative, yet superior flavored beer for the Premium market space and a darker, richer bock or stout for the Ultra-Premium space. Launch the MCB brands nationally by contract with regional breweries for manufacture and distribution. This give MCB a brand at a lower cost that will bring in volume business and build a level of loyalty. If we look at regional Premium beers we find an extremely loyal following. Brands such as Genesee Beer and Utica Club are examples of successful regional Premium beers. MCB should capitalize on this phenomenon in order to allow revenue growth and expansion of its Super-Premium and Ultra-Premium brands.
Maintain the Zebra brand position as a Super-Premium. Although the Bloomington test market data seems to show that a lower price-point may be the answer to increase adoption of the Zebra brand, it would also dilute the perceived value of the brand and hence the product. In a micro-brew situation such as this, a lower price point will often bring higher sales initially, but the result is the same in the end; it is always difficult to build a loyal following in the micro-brew market. MCB needs to show the marketplace that Zebra is NOT a micro-brew, but a Super-Premium or Ultra-Premium beer choice.
Repackage the Zebra brand to take advantage of less expensive paper labeling. This will increase per case margin and remove problems with bottle supply coming out of Mexico. MCB needs loyal consumers and cost savings/margin increase in order to stay alive in this terribly competitive market. The company knows about the issues related to its packaging cost and production as well as the market perception that printed labels is more expensive. Take advantage of this perception and help increase margin.
Launch the Zebra brand in on the West coast, beginning with California, by contracting production and distribution to regional breweries. The company knows that there is a high level of demand for specialty beers on the West coast – California in particular – and have received many inquiries as to the availability of Zebra in California. Contracting with a West coast brewery for manufacturing and distribution will allow MCB to benefit from increased demand, brand awareness and revenue growth while moving to position itself as a long-term player in the adult-beverage market.
Other Considerations
• Create a more conservative micro-brew brand that is not as bold as ‘Zebra’ the Zebra brand is difficult to find a loyal following for simply because it ‘feels’ like a fad beer.
• Test market a beer targeted to women. 30% of beer drinkers in the U.S. are women who are rarely targeted directly as beer drinkers.
• Consider moving product of Zebra beers to a contracted facility altogether and utilizing the excess capacity of the current brewery to product an “MCB light†brand of micro-brew to go head-to-head with the big players in the Premium category. The current brewery has the capacity to produce significant volumes of a more conservative mass-market beer.
July 14th, 2005
Executive Summary
Defining the appropriate market segments for the front-loading washing machine is the most important step on the path to redefining the marketing plan for Frigidaire. Based on internal research and data analysis, Frigidaire already has access to the information we need to help make sound segmenting decisions. The target segments we will recommend include such descriptive captions as “eliteâ€, “sophisticatedâ€, “upscale†and “richâ€. These terms are identified with market segments that will respond to the front-loading washing machine due to environmental concerns, fashion consciousness or both.
What we are referring to is the segmenting technique known as ‘perception mapping’. We are looking at the perceptions of the various audiences represented in exhibit 5 and grouping them based on factors that will influence their perception of the product. Once the segment is defined, we will direct a target campaign towards these segments to address their perceived needs.
By looking at exhibit 5 we see that we already have defined the perceived levels of importance of ecological impact, fashion consciousness and space savings and applied them to our potential target demographic groups. By looking at this study as shown in exhibit 5 we can very easily define our segment targets by simply selecting those that have an above average ecological orientation, value space savings, value performance or consider fashion consciousness to be important.
The following segments meet these definitions;
• Elite urban singles and couples between the ages of 25 and 54 because they value space savings.
• Sophisticated Asian and White townhouse couples over the age of 55 because they value space savings and environmental friendliness.
• Upscale suburban Asian and White families between the ages of 35 and 54 because they value performance and fashion.
• Upscale white-collar couples between the ages of 25 and 34 and 55 and 64 because they value performance and fashion.
Among other segment information that can be gleaned from the analysis Frigidaire has already completed is some information indicating that affluent retires in warmer climates may value the product because they value energy savings. We also see that consumers in some geographic areas consider environmental issues to be more important than consumers in other areas. Most of these metro areas are defined as generally wealthy and densely populated traditionally environmentally friendly areas such as Denver, Seattle and San Francisco, Minneapolis, Houston, Washington D.C., Salt Lake City, Dallas and Hartford.
Additionally, internal research shows us that nearly 80% of current Frigidaire customers are made up of families, 14.5% of current customers are single females and that sales by the Frigidaire brand have traditionally been highest in the Northeastern and Southeastern regions if the U.S.
Using our perception map idea, we can align the attributes that our target markets find the most appealing to work with our targeted efforts to these demographics and geographic targets. Because of the segments defined about, we find the following attributes to be our focus:
• Performance
• Fashion
• Space savings
• Environmental benefits
We must also remember the difference that will be presented among similar demographic targets in various geographic areas. Our initial target areas will include the most environmentally conscious metro areas in the U.S.:
• Denver
• San Francisco
• Seattle
• Minneapolis
• Houston
• Washington D.C.
• Salt Lake City
• Dallas
• Hartford
We must also keep in mind that, as mentioned previously, most of Frigidaire’s customers are families.
Keeping all of these previously researched bits of information in mind, we see a clearly developing product position rising from the numbers; we must position the product as being for families in our targeted cities and stressing the attributes of performance, fashion, space savings and environmental friendliness.
References
Mullins, John W & Walker, Orville C et al. (2005). Marketing Management: A Strategic Decision
Making Approach. 5th ed. McGraw-Hill. New York.
Palan, Kay M & Dannels, Timothy T. (1997). Frigidaire Company: Launching the Front-Loading
Washing Machine. North American Case Research Associates.
July 7th, 2005
The Challenge
Frigidaire needs to develop a marketing plan for the horizontal axis washing machine that will give the company first mover advantage and will positively affect brand perception, market share and revenue for the long-term.
Definition and Analysis of the Problems
Initial sales of the front-loading washing machine did not meet expectations.
Recommendations and Reasoning
Release the product under a new brand name to lessen the affect of any negative Frigidaire brand perception in the marketplace. The company has a history of delivering a quality product to both its end users as well as brand marketers such as Kenmore and, in the case of the front-loader, Whirlpool and GE. Quality, however, does not build brand value by itself. Any issue that the company may have in relation to its brand image should not be addressed as a portion of this broader, large scale and innovative product release. It should be addressed as a separate long-term issue.
Although the company has launched the product under the Gallery brand of higher-end appliances, it maintains the problematic Frigidaire name. Developing an entirely new brand and building a new set of expectations will be a more viable solution for immediate implementation of long-term success than trying to tackle the brand issue alongside such an innovative product launch.
Participate in more mass media advertising and promotion to affect positioning and category perception. Think Maytag, Kenmore or Whirlpool. These brands have become experts at manipulating the masses via the primary use of mass media. By not participating and competing on this level, Frigidaire is further helping to deteriorate the competitive ability of the Frigidaire brand. The boldest example of the problem of not participating in mass media promotion is that the Kenmore brand, by effectively promoting on a grand scale including mass media, enjoys wide-spread perception as a superior brand appliance; all the while being manufactured by Frigidaire.
Plan for a longer introduction, ramp-up and market acceptance period. According to company forecasts, Frigidaire had expectations of moving into full production capacity within 90 days of launch. With the challenges of developing market demand, overcoming brand stigmas and competing with traditional vertical axis machines among other issues, the company needs to more realistically look at the project from a longer-term expectation. Defining an entirely new product category and its associated set of consumer demands requires much more than a 3 month investment of marketing effort.
Target strictly high affluence consumer profiles. Initial studies done by Frigidaire marketing helped to develop a product launch that targeted consumers who would never consider spending nearly $1,000 on a washing machine when they can purchase a washer/dryer set for $500. By targeting all marketing efforts at developing desire among affluent markets in the most highly affluent domestic regions, the company will be helping to promote its vision of brand quality and strength as well as product quality and strength. It is possible that by promoting an entirely new brand in this entirely new market to an entirely affluent audience utilizing highly visible mass media promotion – that the brand could become so associated with the product that they are one in the same in the minds of consumers.
Other Considerations
• The issue of the weaker Frigidaire brand should be addressed outside the scope of such an adventurous product launch.
• First mover advantage is not always advantageous especially in high-risk ventures. Sometimes it’s better to let the competition make the first mistakes
• Look more at the European model – what are manufacturers currently promoting and how did they reach current levels of success over a longer period of time?
• How did Frigidaire pricing of vertical axis machines compare to top 3 market leaders? How may this have affected initial market reaction when pricing the horizontal axis machine only in relation to Frigidaire vertical axis machines?
• Address age-old perceptions more directly.
• Make a broader appeal with regard to water and energy savings.
July 1st, 2005
