Microsoft Asia

Essay by akhaleelUniversity, Bachelor's March 2005

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Microsoft's vice president of the Far East had recently announced that China was a strategic market for Microsoft. The objective of the recently appointed director of the End User Customer Unit for China and

Hong Kong was to establish Chinese Windows 95, slated for release in March 1996, as the new standard for operating systems in China. With the launch date only four months away, she realized that she needed to initiate a sales and marketing campaign immediately. Her first step would be to develop a marketing plan which would ensure the rapid adoption of Chinese Windows 95, and which would create a permanent distribution channel for future Microsoft applications software products.

Key Issue

The key issue of the case is market penetration based on rapid adoption of Chinese Windows 95 through permanent distribution channels. This is required as Chinese market currently is not dominated by any particular player who produces operating systems.

But besides Microsoft, producers of other operating systems have also entered into the market.

Alternative Solutions

1. Maintain and expand relationship with OEMs and local vendors - Legend & Great Wall - and Delivery Service Providers.

2. Collaborate with government to educate and make awareness among the people.

3. Collaborate with retailers and dealers for post sales services.

Evaluation of Alternatives

1. Maintain and expand relationship with OEMs and local vendors - Legend & Great Wall - and Delivery Service Providers.

With the pessimism among the Chinese population towards the West, this could be the door to reach the customers in china get the feel of owning a Windows of their 'own' as Microsoft's product is delivered preinstalled through local vendors.

Pros Cons

1. Expansion of the existing market through the distribution channels.

2. Working with local OEMs could exploit new market opportunities.

3. Diversification of distribution channels as such easier to capture a large market.

4. Increase the acceptance level among the locals. 1. Need to comply with policies and regulations.

2. Cultural & communication difficulties.

3. Conflicts with the partners in the future.

2. Collaborate with government to educate and make awareness among the people.

Since the creation of Taiwan, Chinese people are hostile towards the West. As a result, the products and services from such countries are not welcomed till lately. A good relationship with the government is the best tool to tackle attitude similar to this. Therefore working with the government will help to educate ultimate users providing a friendly environment in the long-run for the Microsoft.

Pros Cons

1. Expand the existing relationship and create new opportunities in the government and public.

2. Ease for the implementation of piracy laws.

3. Ease of creating a positive image and a friendly environment. 1. Bureaucracy makes it to take a long time for processing.

3. Collaborate with retailers and dealers for post sales services.

This is another ways of producing a perception that the Windows 95 is owned by the Chinese community. This is one of the best ways to reach the Chinese public as a whole.

Pros Cons

1. Shop - front: Close to the end users.

2. Dealers create ease of reaching the business.

Recommended Solution

Alternative ONE, i.e. Maintain and expand relationship with OEMs and local vendors - Legend & Great Wall - and Delivery Service Providers, is the most recommended given the current situation. The reason for this recommendation includes:

1. The network is already in place, therefore Microsoft need to expand it and make it more viable and effective.

2. The potential market could easily be accessed as the OEMs currently shares 55% of the PCs imported to the China.

3. It will further help to change the pessimism towards the company as the local OEMs plays a major role in the distribution network.


1. Objectives

a. Penetration of Chinese market and to be the market leader in providing Operating System software.

b. Rapid adoption of Windows 95 through permanent distribution channels.

2. Current Market Situation

Currently, there are over 200 computer manufacturers 20% of which were SOEs. Legend and Great Wall are the largest computer manufacturers in the country. Both these companies had management autonomy and receive support from the parent SOEs who have a controlling share in both the companies.

By the end of 1994, the estimated number of PCs in the country was 1.6 million and the industry is expected to grow at an annual rate of 37%. And by the end of 1999 shipments of over 2.5 million new computers were expected.

According to some observers 55% of the total computers were sold by large OEMs while the remaining 45% were through the so called screwdrivers.

3. SWOT Analysis of Microsoft


a. Leader of the global software industry.

b. Strong brand awareness globally.

c. Have strength to set industry standard.

d. Excellent relationship with OEMs and others in the distribution network.

e. Strong and competent team.

f. Strong financial position.

g. Vigorous R&D programs - fast delivery of innovative ideas to the customers.

h. High reputation.


a. Limited brand awareness in china.

b. Approach to Chinese market is passive.

c. Blurred image as a result of unsuccessful launch of Windows 3.2.


a. Strengthen weak distribution channel in china.

b. New policies of the Chinese government.

c. Create the public regarding the drawbacks of pirated software.

d. No market leader, as a result could capture a huge market.


a. Suspicion on western advertising campaign.

b. Mistrusts in the Chinese market as the origin is from West.

c. Screwdrivers and few OEMs sell computers without reinstalling an OS, so the customers can install the OS of their choice.

d. The emergence of 'shell' industry.

4. Marketing Strategies

The strategy involves focusing on special areas such as security and reliability. Microsoft can guarantee the security of the data in the computers with the installation of Windows 95. We make windows 95, so we are able to screw the loosen parts of the system. On the side of the free sources, it is developed by several people as a result it will be easy to get it spoiled.

Such strategies will be maintained and expanded through relationship with OEMs, both multinational, such as Compaq, Acer and local, such as Legend, Great Wall and Delivery Service Providers.

Such vendors will help to boost the confidence with regards to the Microsoft and to reach its ultimate consumers, may it be government sector, and state owned enterprises or the general public as a whole.

5. Target Market & Market Potential

Target Market

Initially, the target market of the company shall be the government agencies and companies under direct or indirect government control. By 1995, there were more than 100,000 SOEs in operation in China. It is expected that China has over 100,000 government agencies as well.

Potential 10%

Gov. Agencies + SOEs 300,000 30,000

6. Marketing Mix


At this point in time lowering the price of Windows 95 is not a solution though the piracy rate in China is high. The price of the product will be kept the same as the other markets. But for the initial 3-4 months the production will be sold on a promotional basis with a reasonable discount. Besides this, the product will be offered at a discounted rate with another product of the company.


Chinese market has been pessimistic towards the West ever since the creation of Taiwan. As a result Chinese mistrusts the western companies and their products.

So hide these feature, the Windows 95 is modified according to the local tastes. It is basically based on Simplified Chinese Language. To give a more familiarized look the names like 'My Computer' and 'Network Neighborhood' is even given the Chinese name.


The potential customers are reached through two major channels: OEMs, and the delivery service providers. The company will continue to have the current agreements with the OEMs which will preinstall the Windows 95 with every new PC sold upon launching the software. In line with the current practice the DSPs will be provided with a standard copy of the Windows 95 and who could sell the product directly to OEMs.


Adherence to the Chinese laws, rule and regulations will be given utmost importance during the promotional campaign. In addition, promotional campaign will be flavored with Chinese cultures to attract the potential customers. With about 600 television stations, some 9,000 newspapers and half as many magazines spread across the country, advertising into a country of such diverse population becomes easy. Besides this leaflets will also be used throughout the campaign.

7. Action Plan

Table: Milestones

Activity Time Responsibility

Target advertising Dec - Jun 1996 Market communication person

Mail info about Windows 95 to customers Dec - Mar 1996 PR assistant

Seminar 1 Jan 1996 Product Manager

Seminar 2 Feb 1996 Product Manager

Road Shows Mar 1996 Product Manager

Press release Mar 1996 PR assistant



Target advertising

Mail info about Windows 95

Seminar 1

Seminar 2

Road Shows

Press release

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

8. Implementation and Control

A strategic team of ten people will be formed. The team will be responsible and provide the feedback to the headquarters. Based on the data obtained corrective measures will be taken to smoothen the process.

9. Sales Forecast and Marketing Budget

Nearly 300,000 copies will be sold during the initial stage of introduction. Upon that the sales will grow at a rate more than 50% p.a.

Marketing Budget

Activity Cost ($) % of T.Cost

Target advertising 1,500,000 30%

Mail info about Windows 95 750,000 15%

Seminar 1 500,000 10%

Seminar 2 500,000 10%

Road Shows 1,500,000 30%

Press release 250,000 5%

TOTAL 5,000,000 100%

10. Contingency Plan

The most likely change in the marketing plan will be the number of units sold due to the creation of awareness among the population.

As of this writing, it is expected that the company will not likely face a tough competition against the free source softwares such as Linux. If competition is faced from the rival, the company shall rely heavily on reliability and security issues to gain the ground.