International Marketing Objectives of Galanz - Case Study Example

 International Marketing Objectives of Galanz Introduction Galanz is an international brand of home-appliance producers and one of the most excellent enterprises of the Chinese household electrical appliances industry. It has developed from a manual workshop with 7 persons into an international enterprise with 40,000 employees since September 28th, 1978. The company conducts world-leading research and maintains manufacturing centers for microwave ovens, air-conditioners, home appliances and daily-use electrical appliances in Shunde and Zhongshan in Guangdong Province. There are also branches in Hong Kong, Seoul and the North America, among other worldwide locations. Total output of this group was about 18 billion Yuan and import-export volume was about 1 billion dollars in 2006 through wide economic and trade exchanges with more than 100 countries and regions. At present, more than 30,000 employees of this group are engaging in global development and promotion of microwave ovens, air-conditioners, small home appliances and relevant sorting industries. The Galanz group was founded in 1978 as a township down producer. It changed from the light textile industry to the microwave oven industry in 1992 and has grown to be the first in the world by development for more than 10 years. The group set and met a goal to produce 10,000 microwave ovens in 1993 and became the first microwave producer in the Chinese market in 1995 with a market share of 25.1 percent. By 1999, the group had become the largest professional microwave oven manufacturer in the world with more than 6 million microwave ovens sold that year. At this point in time, the Galantz group has been rated the top producer and distributor of microwave ovens for the past consecutive 14 years in China and the top producer/distributor in the international microwave oven market for 11 years continuously. English small home appliances, often referred to as white goods, include various electrical appliances such as electric irons, dish washers, refrigerators, electric cookers and microwave ovens. All of these goods are generally used for indoor kitchens and utility rooms. Sales in the English small home appliances market was £2.67 billion in 2000 after increasing 19.6 percent in 1996 and only 1.2 percent in 1999. Volume of small home appliance unit was 11.7 million units in 2000 with average annual incretion of 4.8 percent. Overall, the number of units sold from 1996 to 2000 increased by 30.5 percent. Microwave ovens occupied the largest market sales volume in the English small home appliances market in 2000. There is a huge space for microwave oven development and sales in English-speaking countries because these nations are largely economically developed and wealthy. Their citizens are always in the market for new designs and greater efficiency of use. Situational analysis target market Office workers in England benefit from a busy economy, but this creates a very quick rhythm of life for those citizens. More and more British persons feel that they have sufficient vigor to take care of homes and prepare elaborate meals when they are working hard for long hours at the workplace. Although the government is working to reduce working hours, this will not negate the British people’s need for microwaves as these people also enjoy a great deal of snacking or prefer to spend their time in activities other than cooking. Microwave ovens enable them to save both time and cost while still meeting their daily needs and desires for cooked food. Galanz group can reach many aspects of the population by targeting various needs groups such as single persons between the ages of 20 and 25, office workers in middle adult age ranges or the elderly with a limited number of people to cook for. The microwave oven is an excellent option for those people who feel they don’t have the leisure or the convenience of preparing more elaborate meals. Competitive analysis There are many competitors in the microwave market in England. These include home appliances enterprises already based in England and organizations based in other countries or regions operating within England. Galanz microwave ovens would be exported to England for sales. These competitors have the same delicate invention techniques, excellent products and high sales amount. For instance: English Heinz Company has issued the minimum portable microwave oven of Beanzawave in the world for power supply by USB. This microwave oven may be the smallest one in the world. Its height is 7.4 inches, width is 2.6 inches and depth is 5.9 inches. Power of this microwave oven can be supplied by USB interface of laptop or lithium ion battery by utilizing radio frequency to produce heat. Estimated market price is £100 pounds. As the largest white home appliances enterprise in Europe, Electrolux ranked the 453rd position of Fortune 500 in 2007 with sales of $16.4 billion (£10.7 billion) competing with brands such as Electrolux, AEG-Electrolux, Eureka and Frigidaire. As the largest white home appliances company in the world, Whirlpool ranked the 400th position of Fortune 500 in 2007 with sales amount of $18.1 billion dollars (£11.8 billion). In 1991, Whirlpool purchased the large-scale home appliances market of Philips in order to become the largest white home appliances producer in the world. It focused on washing machines and microwave ovens in the domestic market. There is a huge risk for Galanz in the existing competition within the English market both because of the factors discussed above and because of existing legislation. political/legal There are a number of English management regulations issued by the British Standard Institute for Imported Products. As a government department designed to generate industrial and consumable standards, it prepares and regulates production, testing, installation and operation standards for all finished products sold in England and its territories. Only products that pass the English Standard can be regarded as in conformity with British Standard Coding and it can not be regarded as BS unless they pass BSI or other approved tests with certificates. Seller then has the right to attach paper certification to products which pass BSI or approved tests with certificates to verify passage. As a vivid label which can be identified easily, the paper certification has significant sales promotion value for home appliances or electronic products to the English consumer. Testing facilities of manufacturer must be in accordance with the English Testing Evaluation System or testing data will not be approved. NAMAS is a quality assurance system supervised by the National Physical Laboratory and is responsible for unity of national measurement systems. Documents required for English imported products are as follows: Bill of lading, certificate of origin, commercial invoice, import license, insurance certificate and packing list. SWOT At this point in time, the Galanz group has been the top seller and producer of microwave ovens in the Chinese microwave oven market for 14 years continuously and the first in the international microwave oven market for 11 years continuously. However, it is a great challenge to convince people to continue their loyalty to the company in the face of threats from new factories both at home and international importers. The risk to Galanz group in entering the English market is deemed worthy because entry into other European countries will roll out quickly if there is a good response in the English market. This is because the English economy ranks high among European economies and thus helps to establish the buying trends of consumers in other nations. Marketing mix The market price of Galanz microwave ovens which are transported to the English market will necessarily be higher than that of local brands due to Galanz high quality standards and requisite transportation costs. Please refer to following figure for cost details: Detailed list of microwave oven fittings I. Product fittings are as follows: Fitting name Quantity Unit price Amount Tax included Door and window plate 1 2.92 2.92 3.212 Panel cover plate 1 6.54 6.54 7.194 Button patch 1 1.28 1.28 1.408 Heat insulation glass 1 2.52 2.52 2.772 Oven lamp glass 1 0.53 0.53 0.583 HV cable 1 0.69 0.69 0.759 Dry combustion tube 2 5.33 10.66 11.726 Anti-vibration pad 1 0.13 0.13 0.143 HV capacitance 1 4.72 4.72 5.192 Bulb E14GP 1 0.62 0.62 0.682 Lamp holder 1 0.67 0.67 0.737 Thermal cutter 105°C 1 0.58 0.58 0.638 Door hook spring 1 0.032 0.032 0.0352 Large door sticker 23L 1 0.34 0.34 0.374 Transformer clapboard 10 2.12 21.2 23.32 Transformer label 1 0.012 0.012 0.0132 Mica lamination 1 0.062 0.062 0.0682 Magnetron 1 42.2 42.2 46.42 HV transformer 1 73.1 73.1 80.41 Fan motor 1 13.9 13.9 15.29 Rotating disk motor 1 18.2 18.2 20.02 Glass disc 1 8.2 8.2 9.02 Bidirectional diode 1 2.2 2.2 2.42 Shell 1 9.3 9.3 10.23 Rear plate 1 3.3 3.3 3.63 Timer 1 6.3 6.3 6.93 Total 　 　 230.206 253.2266 II. Sum of customs charges and shipping cost to England is about 10,000 Yuan. There are about 485 microwave ovens in every container and about 20 Yuan shall be charged additionally for every microwave oven. III. Other fees (such as salary, rental and electric power changes, etc) account for 3 percent of transportation cost and 18 Yuan shall be charged additionally for every microwave oven. IV. Profit accounts for about 5 percent of sales price and 33 Yuan shall be charged additionally for every microwave oven. V. Exporting drawback of microwave ovens accounts for 13 percent of the market cost. VI. Factory price is about 662 Yuan for every microwave oven. Galanz microwave ovens may be considered slightly expensive compared to other brands due to different functions, fittings and factory prices and large manufacturing and exporting fees, but they can be accurately marketed as delivering a better quality product for the money. Galanz microwave ovens have many styles and complete functions. For instance, (1) Model: Galanz G80F20CN2L-B8(S0): Cooking mode: Microwave/light wave; Output power: 800W; (2) Model: G8023YSL-V2; Door-opening mode: Sliding door with light wave sterilization; (3) Model: WG700SL20II-K6 with combined microwave/light wave cooking, manual operation and timing. Galanz plans to wholesale microwave ovens to local markets or appliance stores (such as Argos/Dixon/Cornet) for consumer sales complete with print and media advertising to inform consumers about the Galanz brand and to establish a good brand image. Network/stakeholder analysis: In general, Galanz can be divided into five levels of board chairman. These include the general manager, chief executive officer, board chairman, workshop leader and employee levels. As the board chairman of Galanz, Liang Qingde is the chief commander of the entire group and representative of business ownership. Han Wei is the general manager responsible for business management. As the chief executive officer, Liang Zhaoxian assigns tasks to various workshop leaders. The workshop leader’s primary function is to manage the employees by assuring appropriate operation and assigning them tasks. The employee is the core element of the Galanz group. Mckinsey 7S framework: Galanz generally utilized leading cost strategies to occupy a high market share and enhance the customer’s degree of satisfaction by engaging in cultural marketing and developing an affinity to news media and consumers. Galanz strengthened its core competitive edge by multimode marketing. Output increases were employed when average unit cost decreased at the same time before reaching a certain scale of market saturation in accordance with the Western principles of economics. The company’s success depends on scale advantages, upstream resources and super-low cost for the terminal market. It is realized that the lowest unit price due to annual output of 12 million microwave ovens internally plus the output of rivals makes it difficult to break through cost barriers. Galanz can work with suppliers to negotiate supply goods at a super-low price as a result of mass quantity ordering and the output company’s image as the top brand on the market. This would set up a complete industrial chain with strong tangible and intangible control force. Strategy implementation shall be guaranteed by a sound organization based on enterprise organization and survival basis of organization mechanism. It is a constitution form of enterprise organization; namely, an effective array combination mode comprised of organizational elements such as enterprise purpose, coordination, people, post, mutual relationship and information. That is, many departments will form an organic integrity which consists of vertical right system and horizontal work division coordination system by decomposition of enterprise purpose tasks to post and post composition to departments. Organization structure is to serve strategy and different strategic demands shall correspond to different organization structures for coordination. For instance, the Galanz enterprise adopted a simple business department system at the beginning until large-scale business strategy became necessary. The company’s sales amount increased greatly while poor administrative management caused business to spiral out of control to influence profit rise in 1993. Galanz management re-designed the organization structure by adopting a strategic business unit structure to solve lagging administrative management problems properly and to increase profit properly in 2000. In sum, as an organization implementation assurance strategy, the enterprise’s organization structure must suit the strategic demand. Sufficient labor preparation is also required and practice verifies that labor preparation is crucial for strategy implementation. One important principle of Galanz group is its dedication to recognizing people within the organization demonstrating excellent execution. Therefore, the company will configure and train employees according to strategic ideas with proper task assignment and strengthened propaganda so that various employees will establish ideas and styles which suits the enterprise strategy. The Galanz group employs more than 40,000 professional and skilled employees with a high level of creativity and execution force with regard to machinery, electronics and computer or other technology. Ninety-eight percent of employees are trained every year and examined many times to create an excellent selection atmosphere. A successful enterprise must pay attention to management styles to seek for continuous development. Eastern enterprises focus on perception and kinship while Western enterprises focus on rationality and rules for organization ideas. Most Eastern enterprises focus on the employee while Western enterprises focus on work for management style. Galanz strictly adheres to the rules for reward and punishment as well as building a creation system to increase salaries and posts of employees who participate in product creation. A frontier engineer can be enhanced to product engineer if products are sold in the market and he can even become the product line manager if annual sales amount of such products reaches $5 million dollars. Such a system can excite employees’ creation incentives and promote enterprise development. Strategies are the guiding ideas of enterprise development and they can not be implemented successfully unless all employees can be familiar with them as instructions. Therefore, all execution personnel shall know the entire strategic intention of the Galanz group to excite their fervor and uniform wills and desires due to guiding, restriction, cohesion, excitation and radiation effects of common values. Strategies shall be propagated by various measures so that all employees can understand and master them as instructions. One of important management experiences is to pay attention to communication with leaders and execution personnel to guarantee smooth and quick strategy implementation. International Marketing objectives – SMART At present, Galanz’s foreign trades of microwave ovens can be divided into the Americas, Europe, Africa and Asia-Pacific for overseas sales. The foreign trade objective in 2009 is 16 million microwave ovens sold overall while the goal in England for 2010 is 0.1 billion units. There are 66 cities in England and Galanz plans to promote products to 10 to 20 major cities including London, Manchester, Cambridge, Lancaster, Oxford and Birmingham. There are also stores such as Argos/Dixon/Cornet in every city. In addition, there are several branch stores in some cities. That is, 0.1 billion units can be sold by wholesales of 5,000 microwave ovens to 20 cities and this final objective can be realized by selling about 1,000 microwave ovens for every store every year. This final objective is determined by Galanz leaders and employees together. This means more than 30,000 employees and huge human resources are combining together to create excellent production conditions. Galanz regards employees as the primary element and talent management core for future development and sales of products. For instance, more than 30 percent of Galanz employees have academic certificates at or above the junior college level. There are 45 doctorates and 85 masters degrees within the employment pool all focused on producing new creative products for the company that takes care of them. Output increases when average unit cost decreases at the same time before reaching certain scale and foreign trade price is more expensive than domestic sales price so it is feasible to sell 0.1 million microwave ovens in England in 2010. Marketing Strategy : Galanz has also adopted the Ansoff Matrix to increase revenue by 4 strategies. At present, the group is located within the market penetration phase in which it is necessary to pay attention to expansion of the third and fourth markets in the future. The sales objective in the domestic market is 8 million microwave ovens and it increases by about 25 percent from the 6.5 million units sold goal set in 2008. Our global sales revenue increased by 10 percent in 2008 and sales in the Chinese market increased by 50 percent. It is reported that Galanz sales amount of 6.5 million microwave ovens in 2008 made a new high record of sales for the domestic market. Galanz plans to develop the English market by designing more styles to meet different demands. Most of the British consumers like to have snacks as meals rather than cooking at home. This is both as a means of saving time and as a means of just eating when hungry. Therefore, Galanz has updated the functions of its microwave ovens to solve customers’ problems. For instance, there are functions such as super-strong magnetization sterilization, combined barbecue, re-thawing, quick thawing, automatic menu, cooking display and children safety lock. The company will promote these products to more than 20 cities in England with repair agents to facilitate consultation or repair and thus support brand recognition and reputation. In addition, the group will propagate its products by advertising in appropriate magazines and newspapers so that more and more people will become familiar with these products. Galanz also will promote other products such as refrigerators, air-conditioners, ovens and induction cookers into these new markets to increase brand popularity and foreign trade amount, particularly if microwave ovens are sold in England excellently. Other markets to enter soon after success in England will include other European nations and North America. Implementation & Control : Television is the most common mass media format in England. More than three out of five English families own two television sets and more than one in six families have three or more television sets in the home according to statistics. Galanz will enhance media advertising efforts by advertising in magazines to guarantee huge sales amount. The company will need to pay hundreds of thousands of pounds for several 30-60 second spots for television advertising. Magazine advertising, envelope delivery or internet home page advertising may be £3,000 while our microwave ovens are wholesaled to English stores such as Argos/Dixon/Cornet. Galanz will pay about 5 percent of the unit price for stores for every microwave oven as the rental fee. Galanz needs more professional employees to introduce and promote products for larger sales amount. The company has also set a training team to ask professional analyzers to introduce products so that every employee can know them and solve customers’ problems with a professional selling attitude. Galanz will carry out a market research which is an important element for the marketing management. Market research is to provide a reference basis for management department with regard to nonrepresentational opinions, ideals, attitudes, ideas, sense of worth, philosophy or detailed favorite brands, shopping habits and behaviors. Read More