Assignment

FACULTY OF BUSINESS & MANAGEMENT

SEMESTER JANUARY / 2011

BBPM2203

MARKETING MANAGEMENT II

MATRICULATION NO : 820822065772001

IDENTITY CARD NO. : 820822-06-5772

TELEPHONE NO. : 016-338 2477

E-MAIL : [email protected]

LEARNING CENTRE : SHAH ALAM LEARNING CENTRE

MARKETING MANAGEMENT II BBPM2203

1.0 tABLE CONTENTS

1.0 Table of Contents ________________________________________ 1-2

2.0 Executive Summary______________________________________ 3

3.0 Company Description ____________________________________ 4

3.1 Brief description of the company ________________________ 4 3.2 Brief description of the new product and strategic role in the future position of the company __________________________ 5

4.0 Situational Analysis ______________________________________ 5

4.1 Political _____________________________________________ 5 4.2 Economical __________________________________________ 5 4.3 Socio-Cultural ________________________________________ 6 4.4 Technologies _________________________________________ 6 4.5 Competition _________________________________________ 6~7 4.6 Environmental _______________________________________ 7 4.7 Sales ________________________________________________ 7

5.0 SWOT Analysis__________________________________________ 8

5.1 Strengths ____________________________________________ 8~9 5.2 Opportunities ________________________________________ 9~10 5.3 Weakness ____________________________________________ 10 5.4 Threats _____________________________________________ 11

6.0 Marketing Objective______________________________________ 11

6.1 Target Market _______________________________________ 11~12 6.2 Positioning __________________________________________ 12

7.0 Marketing Mix Strategy___________________________________ 12

7.1 Product _____________________________________________ 12 7.2 Price ________________________________________________ 13 7.3 Place ________________________________________________ 13 7.4 Promotion ___________________________________________ 13

8.0 Marketing Research ______________________________________ 13~14

9.0 Implementation__________________________________________ 14

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9.1 Quality Control System ________________________________ 14 9.2 In Case of Slow Sales __________________________________ 15 10.0 Budget _______________________________________________ 15

10.1 Break-even Analysis __________________________________ 15~16

11.0 Control _______________________________________________ 16

12.0 Appendix A ____________________________________________ 17

13.0 Reference ______________________________________________ 18

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2.0 Executive Summary

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3.0 Company Description

3.1 Brief description of the company

The Group had its beginnings in 1965, with a company named Keat Radio & Electrical

Co., a sole proprietor business, which was a retailer for electrical appliance at Balik

Pulau, Penang. The sole proprietor business was subsequently incorporated into a private

limited company in 1977 under the name of Keat Radio Co. Sdn Bhd. Then in 1982,

Pensonic Sales & Service Sdn. Bhd. was set up with various branches throughout the

country to accommodate the increase in business. “PENSONIC” brand name was

registered under the trademark no. 84/01379 up 1984. In 1988, PENSONIC started to

manufacture and assemble its own products under the brand, “PENSONIC”. Amongst the

products manufactured then were slow cookers, table fans, blenders, thermo- flasks and

hair dryers. Since then, PENSONIC has emerged into producing high quality household

appliances throughout the country. PENSONIC was the first brand of “Made in

Malaysia” electrical products registered in Malaysia, the management of the PENSONIC

group is looking at increasing the local materials composition of PENSONIC products

and eventually manufacturing them as 100% local products. This would reduce the

dependency on foreign suppliers; result in lower manufacturing cost and foreign

exchange saving for the government. Currently, with the newly set up Factory occupying

some area of 3 acre in Bukit Tengah Industrial Park, Penang, with more than 10 assembly

lines, and total PENSONIC workforce of more than 400 employees, PENSONIC had

indeed increased the efficiency and effectiveness in operation, sales and services

distinctively. Over the years, the name PENSONIC has become synonymous with

reliability and durability and the group has evolved into a well- known player in the home

appliances market. In response to the Government’s call, PENSONIC is gearing towards

automation to produce communication device besides to further improve technology in

electrical items to cater for export, in particular to ASEAN, Middle East and South

countries (PENSONIC).

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3.2 Brief description of the new product and strategic role in the future position of the company

The purpose of this proposal is to analyse the feasibility of launching the new product (P-

PHONE) into highly competitive Telecom market. “P-PHONE” will be positioned as the

first and only smartphone fully made by Malaysia. The “P-PHONE” will have combining

features of a mobile phone with PDA (Personal Digital Assistant). It features differs from

a normal mobile phone in that it has a distinct software operating system and local

storage, so users can add and store information, send and receive e-mail, and install

programmes to the phone such as music and video applications, web browsing and GPS

apart from chat, notetaking and media playback. The strategic role of “P-PHONE” for

PENSONIC company is centered around three objectives:

To stay at the forefront as the market leader in innovative product introductions

and successful product launches;

To strengthen and satisfy the needs of the more adventures Generation Y

consumers with a new eye-catching and functional product;

To become the market leader in the functional communication segment with

increased market share.

4.0 Situational Analysis

4.1 Political Situation

As require by governments, PENSONIC should study the taxation country by

country in anticipate profitability and pricing strategy.

Countries are very variable in stability of, so we should study each country case

by case.

4.2 Economical

Economy recovering post recession slower than forecasted.

Low marketing potential due to high competition in Telecom sector.

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4.3 Socio-Cultural

Population growth leading to expansion of the sector needs for mobile phones.

People depend more an more on mobile communication everywhere.

There id educational growth in the world.

Culture’s perception of the technology devices is positive worldwide.

Literacy and illiteracy level is not affecting using mobile phone but affecting high

technology mobile phones, this fact needs to be considered.

Acceptance of imported products in some countries is less if there is local

provider.

4.4 Technology

Level of technology in the world is increasing.

Internet level of awareness and usage for individuals and industrial aspect are

increasing in worldwide.

New technology in the mobile phone is increasing.

Future plans for technology linkage between cities, universities, colleges,

hospitals and other institutes are increasing and can be connected to mobile

phones.

Level of usage of the E-Technology for example online biding, billing,

complaints, blogging and etc are high and trendy.

4.5 Competition

According to the world's leading information technology research and advisory

company Gartner, Inc there are more than 10 big companies competing at the

world level market. The table below shown the top 5 mobile phone maker for

Third Quarter 2010 are Nokia, Samsung, LG, Apple and Research In Motion

(Gartner, 2010).

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Company3Q10 Units

3Q10 Market Share (%)

3Q09 Units

3Q09 Market Share (%)

Nokia 117,461.0 28.2 113,466.2 36.7Samsung 71,671.8 17.2 60,627.7 19.6LG 27,478.7 6.6 31,901.4 10.3Apple 13,484.4 3.2 7,040.4 2.3Research In Motion 11,908.3 2.9 8,522.7 2.8Sony Ericsson 10,346.5 2.5 13,409.5 4.3Motorola 8,961.4 2.1 13,912.8 4.5HTC 6,494.3 1.6 2,659.5 0.9ZTE 6,003.6 1.4 4,143.7 1.3Huawei Technologies 5,478.1 1.3 3,339.7 1.1Others 137,797.6 33.0 49,871.1 16.1Total 417,085.7 100.0 308,894.7 100.0

Table 1: Worldwide Mobile Terminal Sales to End Users in 3Q10 (Thousands of Units)

4.6 Environmental

The global concern of the Global Warming issue and other pollution effects

concerning the packaging material and radiation of the mobile phone.

The demand of the international environmental approvals is a must (if there is

any)

4.7 Sales

Mobile phone industries are one of the most profitable industries everywhere and

the market is increasing.

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5.0 SWOT Analysis

5.1 Strengths

Innovative

The P-PHONE has an innovative touch screen. It also has many functions of other

mobile phones all in one device. Effectively, it is purposed to provide users the

better of the two worlds of voice service and “computer” capabilities in a handset.

To put it simply, it is a mobile phone with PDA (Personal Digital Assistant)

functionality. P-Phone differs from a normal mobile phone in that it has a distinct

software operating system and local storage, so users can add and store

information, send and receive e-mail, and install programmes to the phone such as

music and video applications, web browsing and GPS apart from chat, notetaking

and media playback.

Compatibility

The P-PHONE will work with some of the PENSONIC home appliance devices.

Such optimum capability will obviously offer people a wider choice to carry P-

PHONE which offers both cellular based voice and Internet connection with PC-

like functionality.

User Friendliness

The all new touch screen interface recognizes multi finger gestures, just as the

human hand normally behaves. Its dual touch and virtual keyboard make the size

of the screen is getting bigger and more colorful. This is following the trend of

customer based multimedia entertainment.

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Price

The price of the P-PHONE would be sold at a reasonable price for its value.

Quality

In term of quality, it is cover by a high quality of scratch resistant screen on top of

durable and light metallic finish. In additional to that, it also furnish with security

software to protect the P-PHONE against loss and stealing while safeguarding the

user privacy data from cyber criminals.

5.2 Opportunities

Increasing in demand and expansion to a new target segment

Worldwide mobile phone sales to end users totaled 417 million units in the third

quarter of 2010, a 35 percent increase from the third quarter of 2009, according to

Gartner, Inc. Smartphone sales grew 96 percent from the third quarter last year,

and smartphones accounted for 19.3 percent of overall mobile phone sales in the

third quarter of 2010 (Gartner, 2010). This has been proof that the demand of the

smartphone is keeping increasing over year by year due to it technologies

enhancement

Upgradeable

P-PHONE software allows new exciting features to be brought in which take

advantage of the touch screen ability. Future version will also be hardware

upgradeable.

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Partnerships

PENSONIC can collaborate with many powerful global mobile phone companies

to penetrate the market with P-PHONEs, which reduces costs in marketing and

increase revenue through long-term agreement deals while at the same time,

creating a brand-awareness as a trusted brand in the market through such

collaborations. Although diversification to the telecom market is a new challenge

for PENSONIC, market awareness of PENSONIC as a good brand in the electric

home appliances market has already been established.

5.3 Weakness

- Image

The PENSONIC brand is not targeted towards business people and does not have

a reputation as being compatible with the corporate world.

- Price

PENSONIC does not yet offer lower priced models for more cost conscious

consumers.

- User Interface

The touch screen interfaces suffer from the problem of “gorilla arm”. “Gorilla

arm” was a side-effect that destroyed vertically-oriented touch-screens as a

mainstream input technology despite a promising start in the early 1980s

(Wikipedia).

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5.4 Threats

- Competition Increasing

Smartphones are easier to make now more than ever. More companies may enter

into the market segment, and competitors or even PENSONIC contractors can

maneuver around patents to create similar device.

- Downward Pricing Pressure

The P-PHONE is marketed as a high-end phone, but phone price are almost

certainly going to fall when other competitors undercut the price of P-PHONE.

- Difficulty Penetrate Into Asian Market

There have difficulty to penetrate in Asia market since other brand of

smartphones are better known and already widely used.

6.0 Marketing Objectives

Set an achievable objective for the first and second years of market:

First Year Objective – We are aiming for a 2 percent of share from Asia market

through the sales volume of 450,000 units.

Second Year Objective – To achieve 10 percent of share from Asia market based

on sales.

Extend on the PENSONIC brand name and link to the established meaningful

positioning.

Extend on PENSONIC image by innovation, quality and value.

Measures the awareness and response of the market in order to make adjustments

to the marketing campaigns as necessary.

6.1 Target Market

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Differentiate the P-PHONE from other brands of smartphones in the

market.

Primary consumer targeted is the middle-upper income professional to

coordinate their busy schedules and communicate with colleagues, friends and family.

Secondary consumer targets are high school, college and graduate students

who need one portable multifunction device.

Primary business target is to collaborate with large mobile communication

provider like Maxis, Digi and Celcom.

Secondary business target is mid to mid size corporation that want to help

managers and employee stay in communication or access critical data on the go.

Market segment will consist of companies with RM10 million to RM50

million in annual sales.

6.2 Positioning

Using product differentiation, positioning the P-PHONE as the versatile, convenient,

value-added device for personal and professional use.

Focus on the features of multifunction which having one device for communication,

but also music, pictures, and video as well as full Internet access.

The P-PHONE will be promoted as both professional and hip.

7.0 Marketing Mix Strategy

7.1 Product

Full year warranty along with an optional for three years PENSONIC Care Warranty

Same quality as all other brand of smartphone

Special edition version to be launched in conjunction with PENSONIC anniversary

Launching a cheaper version with less advanced features along with a more advanced

version for professional use

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Adding the following features to the P-PHONE (large disk storage capacity, lower

weight, thinner device, long battery life, 4G wireless, GPS and improved camera)

7.2 Price

Set the base model at a cheaper price of RM1,299

A more advance model for RM1,699

Special limited edition P-PHONE for special prices

Generally lower our prices to ensure we establish market dominance in as short of

time as possible

7.3 Place

Massive rollout worldwide at all reputable major retailers

Massive rollout through online, showrooms and in all mobile phone suppliers

Eye catching displays will be found at most of the big shopping mall featuring the P-

PHONE to make the product stand out from the pack

7.4 Promotion

Integrate PENSONIC message of all new communications and audio or visual

experience together in all media advertisements

Differentiate the P-PHONE with other brands of smartphone

Emphasize PENSONIC brand prominently and associate the P-PHONE with others

PENSONIC home appliance’s groundbreaking lineage

A massive TV campaign shall be planned before launching the P-PHONE featuring a

soon to be legendary ad to be talk of the country

Advertising will be appearing on a regular basis to maintain general public awareness

8.0 Marketing Research

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Four age groups will targeted: 15~20 years, 20~25 years, 25~45 years, and 45

years and above

High school and college aged people will demonstrate social uses

The 25~45 years group will be used to determine business application and social

or personal use

The 45 years and above will give us a plan to market to more senior well-retired

group

This researcher will be done through surveys (via email campaign through portals

such as other online application developed for P-PHONE) and interviews (in big

shopping mall) with the same age groups listed before

To bring the P-PHONE to the front of the business world it is important to

research different ways to grow the 15~25 years old group into business uses of the

product

Brand awareness will be an important tool in taking the PENSONIC brand from

“social cool” to “business cool”

We will ask for feedback on P-PHONE features, and modify the significant

features according to the end user’s need in the next generation P-PHONE

We will allow users themselves to design their own ideal P-PHONE through

online and use any useful ideas to further refine future P-PHONE models

9.0 Implementation

9.1 Quality Control System

Workers will get RM8 incentive pay for every non reject phone they produce

RM40 per phone for Six Sigma quality program. Six Sigma seeks to improve the

quality of process outputs by identifying and removing the causes of defects (errors)

and minimizing variability in manufacturing and business processes (Wikipedia).

Each workers will be given RM5,000 each year for best practice training

Use control measures to closely monitor quality and customer service satisfaction

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http://en.wikipedia.org/wiki/Business_process

http://en.wikipedia.org/wiki/Manufacturing

http://en.wikipedia.org/wiki/Statistical_dispersion


Setup a specify P-PHONE Customer Service Bar to allow the customer to contact

about any technical problems and a customer service phone number stored in the

phone book

9.2 In case of Slow Sales

In case of slow sales, offer P-PHONE to customers who have purchased other

PENSONIC products with a special price RM20 per phone for six sigma quality program,

which will lead to demonstrate the product for consumers in order to promote synergy

and lure buyers. Besides that it also will develop deep relationship with two very

different segments which are those who have it and those who aspire.

10.0 Budget

10.1 Break-even Calculation

Based on Assumption:

*Wholesale revenue is RM1,818 per unit

*Variable cost is RM499 per unit

*Estimated fix cost of RM50,000,000

Break-even calculation for base model:

Total Cost = Total Revenue

Variable Cost + Fixed Cost = Unit Price x Total Quantity Sold

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499q + 50,000,000 = 1818q

499q – 1818q = -50,000,000

-1319q = -50,000,000

q = 37,908 units

Break-even calculations indicate that PENSONIC will become profitable after the

sales volume exceeds 37,908 units. PENSONIC will make a profit of approximately

544 million after the first year sales of 450,000 units. Details of data can be referred

to Appendix A.

Recommended price is RM1299 per unit for base model. The markup is 40 percent.

It is predicted that sales volume will increase at least 30 percent from this change; this

will decrease the impact of fixed costs and improve opportunities to increase our

production scale, which will further improve profits in the long run

11.0 Control

To plan our strategy we will meet monthly with the board of PENSONIC, present our

information, and make a proposal for continued marketing efforts. Before each meeting

our team will meet in private, with each person presenting their own proposal based on

the information they have learned. After the initial proposals, we will vote on the best one

or come to a compromise. The final proposal sent before is the result of that meeting.

Total Words Count:

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12.0 Appendix 1

Table 1: Data Source for Break Even Analysis Chart

Sales volume per period (pieces) 45,000 90,000 135,000 180,000 225,000 270,000 Sales price per unit 1,818 1,818 1,818 1,818 1,818 1,818Fixed costs per period 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000Variable costs 22,455,000 44,910,000 67,365,000 89,820,000 112,275,000 134,730,000 Total costs 72,455,000 94,910,000 117,365,000 139,820,000 162,275,000 184,730,000

Total sales 81,810,000 163,620,000 245,430,000 327,240,000 409,050,000 490,860,000 Net profit (loss) 9,355,000 68,710,000 128,065,000 187,420,000 246,775,000 306,130,000

Chart 1: Break Even Chart

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13.0 Reference

Gartner, Inc. (2010, November 10). Gartner Says Worldwide Mobile Phone Sales Grew

35 Percent in Third Quarter 2010; Smartphone Sales Increased 96 Percent [Press

Release]. Retrieved from http://www.gartner.com/it/page.jsp?id=1466313

Gesture Recognition. Retrieved February 2, 2011, from Wikipedia: http://en.wikipedia.org/wiki/Gesture_recognition

Pensonic Official Website. Retrived from http://www.pensonic.com/pabout.htm

Six Sigma. Retrieved February 1, 2011, from Wikipedia:

http://en.wikipedia.org/wiki/Six_Sigma

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http://en.wikipedia.org/wiki/Six_Sigma

http://www.pensonic.com/pabout.htm

http://en.wikipedia.org/wiki/Gesture_recognition

http://www.gartner.com/it/page.jsp?id=1466313

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