Marketing Microwave Ovens to a New Market Segment Essay

Executive Summary White Appliances is an international company that specializes in manufacturing and marketing appliances globally. The company is well known for their line of microwaves. Whereas most of their products are manufactured in the U.S and while most of the appliances are exported to the U.S and the European market, White Appliances also markets several high-end models in India where they face some issues in trying to penetrate the market. Moreover, the demand for microwave ovens has gradually increased in the past couple of years. Subsequently White Appliances had to come to a conclusion that in addition to the market of their high-end models, they must introduce new microwave ovens at all price levels in order to target the total amount of households in India. By evaluating the problems such as the culture differences between the west and the east or whether it is the consumer’s limited knowledge towards the household appliance, we determined the different strategies and alternativ es to tackle such issues. Statement of the Problem The case study focuses on the challenges of the Indian kitchen appliances  market for microwaves. Before the liberalization of the Indian economy, only a few local companies were the major players in the kitchen appliances market. But, after opening the market for foreign competitors also global players like e.g. Samsung or LG push into the market. The kitchen appliances market seems to be very promising as extensive growth in the next years is predicted. Nevertheless this emerging market in India focuses several challenges. At first the Indian market for microwaves is very different from the American market where the market share holding companies are very successful. There are several cultural specifies to consider. The Indian food for example differs a lot from the American. While Indian food has a high significance for the people, is pretty complex and time consuming to cook; the Americans emphasize an easy and simple way of cooking. Indians prefer cooking with fresh ingredients, a great variety of spices and herbs and have their own list of cooking techniques and equipments that are needed for the recipe. Contrary, the Americans prefer their food grilled or direct rather than steamed cooked over dry heat. But, there are not only crosscultural differences concerning the food, there are also differences between the geographic areas of India itself as the Indian cuisine varies between the Southern and Northern part of the country. 3 Further, there are significant variations in the cultural characteristics. Indian people mostly live in big families with close alliances. In contrast, in the American society live a lot of single people. As really individualistic culture, the families’ ties were not that tight as in India. One of the biggest challenges, that need to be faced, is the missing knowledge of the consumers. Mostly Indian people do not know how to use the microwave properly. Most of the (potential) consumers do not expect that all of the Indian dishes can even be prepared in the microwave, not only heated up. So they miss the big advantages like timesaving at cooking, that nobody has to keep an eye on the food constantly while all vitamins and nutrients retain in the food and furthermore the simplification of cleaning afterwards. Another problem that goes hand in hand with the missing knowledge of the consumers is the price discussion of the microwaves. For  the traditional poor Indian middle class, the very expensive first introduced microwave models were unattractive. Additionally the models were not adequate for the Indian market as the big Indian vessels did not fit in. Even though most manufacturers reacted by designing the microwaves according to the special Indian needs and a price cut, the sales volume did not increase notably. This leads to the chicken – egg question for the company- the prices will not come down easily until volumes up, while volume depends on prices. Additionally, the kitchen appliances market is nowadays predominated by some brands what makes it more complicate for new companies to get more market share. On the other hand, there still is a lot of potential to penetrate this relatively new market. Especially the recent development like rising living standards and wages and also the fact that household applications like washing machines are no luxury good any more, eases a market entry and increase of market share. Better access to consumer awareness and the big advantages that microwave cooking could bring to consumers also strengthens the possibilities of a White Appliances. 4 Situation Analysis To be successful in entering the Indian kitchen application market White Appliances need to identify controllable and uncontrollable elements of the markets. This can best be shown in a Strengths-Weaknesses-Opportunities-and-Threats-Analysis (SWOT). Strength – Weaknesses Microwaves are easy to use and – High price for the customers understandable for almost everybody – Microwaves aren’t common in India Convenient and efficient way of ! The presence of microwaves at cooking – Indian markets is rather weak – Time Saving – Longtime use of appliances – – Chicken-egg problem (price vs.  High technology- ideally for the  volume)  technically affine Indian people – Wide product range from high-end to basic models with different categories Opportunities – Threats New, diverse target groups in India – Trends in society (Health  available (men in the kitchen in  general, bachelors, students, young  in food industry, doubts of  women etc.) – consciousness, slow movement trend microwave radiation) New form of lifestyles and rising – Different cultural background than in living standards High interest in innovations and Indian society versus individualistic technology of Indian people could be – other markets (e.g. collectivistic Americans) used stronger by White Appliances – – Different eating habits (Western vs. Indian food, fresh vs. convenient sales in the future – Proposed bright future for microwave food, different eating habits) Only little market penetration by – Consumer’s knowledge about the use competitors – of microwaves is little, difficult to Proposed increase of retail stores convince them – Environment of competition tightens as the market is promising 5 Objectives and Goals To make the market entry in the Indian market successfully, it is important to set objectives and intermediate objectives. A goal is to find a suitable strategy to enter the market with longterm success. White appliance would like to establish itself on the market and to prevail against the major competitor. They want to increase their market share to profit from the proposed market development. It’s important that they communicate their services and predict on the market. The people need getting to know quickly and effectively the microwaves from the White appliance. To increase the awareness and the sale of microwave oven and especially of the microwaves from white appliance it is necessary to promote the knowledge of microwave cooking in India. People need to know how to use a microwave with all its functions. White appliance should have special product offerings to make the buying of a microwave more attractive. They have to offer different price ranges of the product and it can be useful to corporate with experienced partner for distribution. Strategy and Evaluations For entering a new market, a lot of decisions have to be made and a consistent strategy has to be implemented. In the following, a recommended strategy for the White Appliances Company will be introduced by focusing on product, price, distribution and communication, the marketing core elements  of all products. (1) Product In response to entering a new market and being confronted with new cultural and social behavior and habits, the adaption of the product to the Indian culture and cuisine is essential. To meet the exact needs of the new market, the investment in Research & Development as well as in product innovation is a significant first step in developing a successful and sustainable marketing strategy. Especially value added features like user-friendly one-touch program buttons, an energy saver mode or a microwave size that suits to Indian families and cooking habits need to be reconsidered in the product innovation process. Therefore every microwave model for the Indian market comes with high volume space, as this is essential to the Indian family sizes. Based on this, different microwave models will be implemented, which inhabit their special functions and features fitted to different target groups. The product range of White Appliances should include at the beginning two different models, one b asic model in a lower price range to reach a high market penetration and second a 6  comfort model, for a target group, searching for a more comfortable way of cooking with microwaves. The basic model aims to reach the advancing lower-middle class, which can be seen as the most prosperous target group. The microwave comes with a basic interface to set power and time. A manual guide will be provided to inform the customer how to make the best out of the different setting options. This microwave type will be manufactured in Asia, whereas low production and import costs can be reached, to establish a low product price. The comfort model comes with different program-buttons in addition, which eases handling and leads to a more comfortable cooking experience. This model targets the status-oriented middle-class, which aims to have a functional but comfortable cooking experience. The comfort model will be produced in the U.S., as the target group will be more qualityconscious too. If these two microwave types are established successfully in the market, a high-price combimodel will be launched in a long-term strategy. It can already be seen, that combination-oven (convection and microwave) gain more and more importance, especially in a  higher-middle class, but as the production is way more costly, it is connected with a higher risk as ROI has to be gained through high product prices. As higher the consumer’s investment, as more factors will be considered, whereas already existing brand awareness in the market would be supportive, what speaks as well for a product launch in a second phase. Regardless of whether the customer decides to buy a basic, comfort, or premium microwave model, the introduction of an excellent after-sales-service could be helpful in creating an USP (unique selling proposition) for White Appliances and to stand out from their competitors in the market. The implementation of a service-hotline, a customer-care website providing information according to the handling of the product and answering frequently asked questions as well as video-tutorials via YouTube, the offer ing of a repair service or warranties are just some examples that could be considered in creating an excellent customer service. (2) Price The two respectively three different models will be established within their own price segment. The basic model will be sold in a cheap price range round about Rs. 5000. The cheap price has to be absorbed by a high volume. This is a risky step as a high sales rate is premise, but it is the only way to solve the chicken-egg-problem of low prices can only be reached through high volume. Further it gains a high penetration in the market and can raise brand awareness fast. The comfort model will be sold for round about Rs. 10.000. This establishes our brand, as a microwave seller for affordable models, but quality and more 7  functional features will speak for the higher price. Besides, the offering of a coupled two years warrantee could increase the consumer’s attraction to this model. The premium model, which will be launched in the second phase, will be rolled-out to the market with a price of Rs. 15.000. To cut costs of production, a long-term goal could be to promote the basic microwave innovation in local manufacturing and only to continue importing the premium models. To support sales, a combination package with microwave glass-bowls and cooking equipment could be offered, in an each similar price range, which will be especially interesting to microwave starters. It can be assumed that a high percentage of the main target group buys a microwave for  the first time. (3) Distribution The distribution will be best and easiest implemented through existing kitchen equipment retailers. This gives the opportunities to sell the own product in combination with special kitchen promotion packages and fits to the existing consumer purchase habits. (4) Communication The communication strategy can be divided into two parts. The first part aims to raise knowledge about microwaves and its functionality in general, whereas the second part pushes brand and product awareness of the White Appliance company. Consumers buy products not because of the product itself, but of its potential to solve an existing need. As Indian people are mainly new to the product microwave and its functions, most consumers won’t be aware about the need to possess a microwave in their daily life. Therefore one part of the communication strategy aims to raise general product awareness via social media and TVshow cooperation. For TV-show cooperation, existing, successful cooking shows could be used to present microwaves and their functionality for daily cooking. Of course the TV-studio would be equipped with microwaves from White Appliance, but in the communication the product usefulness is primer. In parts of social media marketing, a Facebook fan-page is imaginable, where microwave recipes and tips will be promoted. The social media site, shall be named more focused on its purpose and should not be included in the company’s fan-page. Rather a â€Å"powered by† addition should make up the connection to the company. This naming makes sure, that it is findable for those, who want to know more about microwaves and its usefulness, further the site-name is promising for its purpose. 8 Besides an increased awareness about microwave and its functionality in general, the popularity of the own brand has to be pushed. This can be done sustainably via the following communication channels: †¢ TV-Commercial †¢ Promotion tour (microwave party in style of Tupperware parties, food tasting on the street, in supermarkets etc.) †¢ Point-of-Sale specials as e.g. free microwave cook books, when buying an oven †¢ Offer special services to the client (video-tutorials on YouTube; FAQ on website; hotline) As well the communication via an own App would be reasonable, but as the development of an app is pretty costly, a launch is recommended in the second phase, when the investment can be defrayed by the gained sales. As every strategy has its advantages and disadvantages, those will be presented in the following, to show the strengths of the strategy, but as well where weaknesses have to be eyed. (1) Product To enter the market with a basic model to reach the promising low-middle class target group seems pretty prosperous. Further he more comfort-oriented middle-class will be reached with a second model, so that the market entering strategy is based on a brought target group and the brand awareness will be raised by a penetration strategy. The risk of that strategy lies therein, that competitors might plan the same and the market will be overflowed by pricy microwaves. (2) Price As the production for the basic model takes place in the region, this leads to low production and logistic costs. In combination with a high volume, the  market can be entered with a low price to reach the low-middle class. Although this sounds pretty promising, the strategy is not without any risk, as the success is depending on the sales volume, which has to be very high. (3) Distribution The distribution via existing retailers leads to lower investments and the company doesn’t need to care about the legal environment. Further an already existing and proofed distribution system is used. Nevertheless the distribution via retailers means a certain loss of control, as 9  those retailers have their own demands. The offer of a trade discount to all retail partners for the first year could be helpful to diminish this risk and to create an initial demand. (4) Communication The communication strategy does not only focus on the product itself but rather on the general benefit of the usage of the product, which is the start of a sustainable product communication where the brand communication can be build on. But the penetration of the different channels as introduced means a big investment to the company. Recommendations and Contingencies For a sustainable and successful market approach, the whole strategy must be implemented in once, because all parts – product, price, distribution, and communication – depend on each other. Further it is important, that sufficient attention will be given to every single part of the strategy. When it was sensible, an implementation in two phases – short-term and long-term – is suggested, to decrease risk and base higher investments on the by then hopefully already existing success and high sales. The marketing strategy needs to be implemented carefully, avoiding to offend the socialcultural behavior and habits of the Indian community. Therefore the strategy has to be controlled and reconsidered all time while implementing, to detect further weaknesses and optimization potential. Only by paying attention to market behavior and key figures, the success of the running strategy can be proofed and in case adjusted.