Marketing of Changhong in China

Essay by TomasterUniversity, Bachelor'sD-, November 2004

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Marketing of Changhong in China

Section 1. Customer Analysis

A. Segments

1. Color TV

Pure flat serial

Super flat serial

Flat square serial

Comments: Largest segment, dairy products, segmented by regional needs/functional Offerings/entertainment, accelerating growth

2. Projection TV

Comments: Second largest segment, technical offerings, Middle-class's favourites, high growth rate in urban areas.

3. LCDS & PDP TV

Comments: Potential, high technical supports and luxury appliance, growing dramatically.

B. Customer Motivations

Segment Motivations

1. Color TV Basic appliance for families, affordable, entertaining

needs, internet access

2. Projection TV Entertainment, enjoyable, business purposes (KTV e.g.), replace CRT-TV for an update.

3. LCD & PDP TV Fashion, objectification.

C. Unmet Needs

Lack of intercommunication and interaction:

It does not respond like a personal computer.

Section 2. Competitor Analysis

A. Competitor Identification

Most directly competitive: TCL corp, Konda, Xiahua, Haier Group, Chuanwei, Sony corp, Panasonic, LG, SAMSUNG.

Group Co, Skyworth, Xiahua, Panasonic, LG, Samsung, Tomson, JVC

B. Strategic Groups

Strategic Group Major Competitors Share

(1) Domestic well-known TCL corp 14.09%

brands from national huge

producers Konka corp 12.86%

Haixing corp 9.84%

Xiahua corp 8.88%

Haier Group 6 .88%

Chuanwei corp 7.89%

(2) Import premium products Sony 10.49%

Mainly from Japan

Panasonic 3.2%

South Korea LG 9.8%

Samsung 7.5%

(3) Joint-venture products (mainly

Chinese with other countries 8.67%

Strategic Group Characteristics/ strengths

(1) Domestic well-known National famous brands

brands from national huge widely porefolio of product

producers Heavy use of advertising

The newest advanced products

Emphas on new technological

innoration implemenation

sell begin at supermarkets

Strengths Weakness

Production scale economies High-fixed cost investment increase

Lower pressure on local competitive pressure because of

responsiweness price war frequently.

Huge presence in supermarkets Spending more on building/

Get enough financial supports maintaining a strong, long term

From local government by good relationship with every agents and

reputation supermarkets

Lack of efficient management on

Each selling branch

(2) Import premium products International brands

Focus on new trends with higher

technical offerings

High-presence in non-supermarket

Channels, such as specialty store

Strengths Weakness

Provide the newest high quality goods High price is lack of competitive for customers who are interested in capability in the consumer group high-tech product and have more who have no high salaries.

demands on products. Customers can't change current

Strong competitive advantages are products very frequently due to

beneficial to attain the best cooperation the prices.

partners and employees like advertisement lack of the understanding of

companies, excellent selling agents and local cultures.

good location.

Sell and advertisement through many

Channels such as international competition

exhibitions.

C. Major competitors

Competitor

Kokna

Characteristics/strategies

Main market leader, share 23% over 25ench color TV set

Massive advertising in multiple channels

High good financial capital that is accumulated over ten years.

Start to launch new product to EU from base on Turkey

High quality of after-selling services

Strengths Weakness

Economies of scale low costs difficult to maintain unique

Strong and effective supply-chain comparative advantages on

in all main cities. CRI product due to similar

market situation for each

producers.

Competitors

Sony

Characteristics/strategies

.

Attractive brand name stimulates purchase.

Quickly technology renew with forever good quality

Develop new markets also through other digital products like DVD, digital camera, and laptop.

Strengths weakness

Deep financial resources Less developed in non

Supermarket channels

Loyalty lack of localized customer

Product quality reputation after-selling services

Top technologies in some areas

competitor

LG

Characteristics/strategies

Innovation breeds strong competitiveness

Leader in the field of digital TV, PDP TV.

Strengths Weakness

Fast innovation Less developed in nonsupermaket

channels

Deep financial recourses Higher ingredient and production

Costs

Section 3. Market Analysis

A. Market Identification: The TV sets Market of China

B. Market Size

Sales (100 million Yuan)

1998 1999 2000 2001 2002 2003

773.71 945.93 1016.56 1089.98 1469.1 1770.2

Emerging submarkets

High-end products

Low- bargain products

Market Growth

Supermarket -- Growing at 7 percent

Specialty - growing at 10 percent annually

Mass merchandisers - growing at 13 percent

Factors Affecting Sales Levels

The large population means huge demands on products

Growth of needs for up-date

Segments with High Potential

It seems that China will emerge as the world's largest digital TV market by 2015, there could be potential for growth.

C. Market profitability Analysis

Existing Competitors

In 2001 there were 190 enterprises above designated size ( all the state-owned enterprises , and non state-owned enterprises with the annual sales revenue of over 5 million yuan) in TV set manufacturing in China.

In the past three years, the hot price war in the Chinese TV market dramatically injured the vitality of the domestic TV manufacturers.

Potential Entrants

Some oversea big firms target the biggest market in the world as well.

Threats of Substitutes

Film industry

Internet and PC products

Bargaining Power of Customers

Specialty stores have moderate bargaining power.

Mass merchandisers have strong bargaining power.

D. Cost structure

Diversified companies have lower cost because of economies in advertising, manufacturing, promotion, and distribution.

Specialized firms have higher costs.

D. Distribution system

Major Channels

Supermarkets are dominant in terms of quantity they deal with

Retailer handle about 30 percent of marker and are increasing

rapidly.

Observations/Major Trends

Specialty stores sales have increased very rapidly.

Online sales become more important in major areas.

E. Market Trends and Developments

Superpremium and premium brands from overseas have grown

TV sets will be gradually replaced by high definition digital TV sets in the near future.

F. Key Success Factors

Present

Brand recognition

Product quality

Access to major channels

Introduction of new products

Breadth of product line

Marketing program

Future

Capture the trends of consumers

Follow the trends of distributors

Section 4. Environmental Analysis

A. Technology trends and events

There are two important trends in the TV set market today. CRTs are

Being replaced with flat panels and microdisplays in direct view and

View and rear projection TVs. Digital tuners are being integrated al-

-ongside analog tuners in large TV set markets.

These two trends are opportunities for many companies that are not

Traditional suppliers of TV sets, like PC manufacturers, to enter the market. They are also creating opportunities for traditional TV set manufacturers to expand and target new markets.

B. Scenario Analysis

Little growth in traditional color TV sets and increase in superpremium segments, such as Projection TV, LCD & PDP TV.

C. Key strategic Uncertainties

Foreign producers are entering the price war to grab an increased share of China's high-end TV market, ratcheting up competition. Domestic TV makers are facing great challenges, will they lose their share of market?

Will the high-end TV sets substitute CRT TV sets in five years?

Section 5. Internal Analysis

A. Performance analysis

Objective

Chanhong Company raised a clear development plan which had been drafted in 40 Billion Project on TV sets manufacturer by the end of 2005.

CRT TV: output goal is 20 million units, and sales income goal is 20 billion yuan.

Projection TV: the company manufactures all kinds of models from 38 inch to 70 inch, and yield goal is 1 million units, earnings goal is 15 billion yuan.

LCD: the company manufactures all kind of models from 15 inch to 32 inch now, and will realize earnings 5 billion yuan.

Strength

We have 60 million faithful customers. One of reason is our products have good national reputation. We currently has annual manufacturing capacity for 17 million color TVs, 1 million rear projection TVs, so far, we share 23% TV sets market.

Weakness

High-fixed cost investment increase competitive pressure because of price war frequently. The final dumping duties which will be imposed on products made.

Opportunity

As the fastest-growing segment of domestic TV industry, for example, sales of LCD televisions in China is expected to increase sharply, Changhong still have chance to win the market with technology advantages.

Section 6. Strategic Development

The overseas marketing strategy should fit our strengths, our objectives, and our organization, which is to increase the sales of Changhong products in overseas markets through a variety of market promoting activities, such as strategic allies with other companies, capital operation and brand management.

We will:

Seek a practical entrance of changhong products into the overseas markets.

Establish contacts with local clients and governments in order to obtain prompt and accurate business information.

Seek proper business partners at proper places in order to set up changhong global sales network.

Develop products appealing to different overseas markets.

Increase our overseas market share through the export components, sets of products parts, complete products, technology, and production equipment .

Establish after-sales services network in accordance with local situation.

References

David A. Aaker. (2005). Strategic Market Management. (7th ed.). New Caledonia: Leyh Publishing LLC.

Changhong color TV sales rank the second in the globe. Chang Hong Ltd. Retrieved 26 August, 2004. From

http:// en.changhong.com/product/20030106/

http://en.ce.cn/Industries/Consumen-Industries/200407/13/t20040713_1215204.shtml

http://www.acmr.com.cn/

About the size of TV industry in China

http://www.tcl.com/china/index.jsp

The analysis of TV sets sale in 2003. Huichong home appliance survey.

Retrieved 27 August, 2004. From

http://info.home-a.hc360.com/Html/001/009/002/138530.htm

http://141.211.136.211/eng/industry/hysc/page2.asp?t1=20020801