Transition Window

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TRANSITION WINDOW
THE MARKETING PLAN

SWINBURNE UNIVERSITY OF TECHNOLOGY July 1, 2012 Authored by: GIOVANNI ADLIM MIDEH JR (4209575)

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EXECUTIVE SUMMARY This report provides marketing plan for a new product to Amazing Ideas, which is the transition window. The methods used to analyze the marketing opportunities are by identifying the competitive overview, macro environmental analysis, consumer’s decision making process and establishing further marketing research. Target market was selected based on the identification of suitable segmentation base, proper justification and positioning strategy. Marketing strategies was designed based on the marketing objective and by using suitable marketing strategies tools. Based on the characteristics of our target market, our proposed target location is conducive to attract sales. The characteristics include the level of urbanization and nation’s improvement of their gross domestic product (GDP), which influences the purchase power of our target market. This report suggests that the product is marketable and has the potential to gain market shares in the current market. To be the First Mover’s Advantage will put our product in a perfect spot in the market. However, there are several limitations such as misinterpretation of statistics, current economic conditions and misjudgment of target market could lead to end results of product sales.

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1.0 INTRODUCTION 1.1 Introduction to the report The idea of having a transition window comes from the current product available in the current market, which is the transition eye lens. Each lens consists of millions of silver chloride molecules or silver halide molecules. These molecules react upon the presence of Ultraviolet rays. During exposure, these molecules react in a chemical process and absorb parts of visible lights (howstuffworks 2012). Transition windows are merely an enlarged version of transition eye lens. This new product will be able to eliminate problems such as maintenance cost from window tints, and heat rejection in commercial and residential houses. In relation to the advancement of technology, it is possible to improve the performance of silver chloride and silver halide molecules, and to apply it into our transition window.

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1.2 Industry definition

Product industry

Home improvement

Car accessories and parts



 

Windows o Plastic o Glass Hand rails Ceilings

  

Spoiler Window Tint Window o Glass o Fibre glass

Figure 1: Product Industry

Figure 1 shows our focus on the product industry; which are the home improvement section and car accessories and parts section. Generally, home improvement products consist of products which aid to improve home conditions; such as ceilings made of plaster and hand rails. Car accessories and parts are products which are used to improve on the appearance and performance of a car, as well as replacements for damaged parts. This includes spoilers and windows.

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2.0 ANALYZING MARKET OPPORTUNITIES 2.1 Competitor overview The best mind tool to analyze our competitor is by using the Porter’s Five force. Below is the diagram flow of the 5 force; competitive rivalry, threat of new entry, buyer power, supplier power and threat of substitution.

Figure 2: Porter’s Five Force (MindTools 2008)

Competitive rivalry i. Direct competitor Currently, there are no commercially made transition windows in the Malaysian market. This is the best opportunity to become the first to introduce this new technology to the Malaysian market.

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ii. Indirect competitor Even though there are no similar products in the Malaysian market, we still need to consider other available products which are seen as potential alternative to our product by customers. For example in the automotive industry, potential customers might go for the usual tinting instead of purchasing our transition windows. In fact, recently Cardeas has introduced the Chameleon Photo chromic Smart Window Film which applies the photo chromic feature into the film. Currently, they have 5 branches and over 17 distributors throughout Malaysia, with over 70 trained employees to ensure high product satisfaction (Chameleon Photochromic Smart Window Film 2012). As for commercial and residential use, there are no transition tint products for the time being. However, potential customer would most probably go for window tinting because it has solved their problems which are sun protection and security. Some famous brands including Tint Master and Rono Security Film are still the preference among customers due to its multiple layers of polyester characteristics, which prevents glass from shattering in case of car break-ins or accidents. Threat of new entry Our product is quite new and different in the Malaysian market. Besides that, the initial capital investment required for introducing transition window in the market is also high. As the first to introduce transition window in this market, we are at an advantage in terms of proprietary technology and materials. Therefore, the threat of new entry is low. Threat of substitutions Manufacturing commercialized transition tints requires years of research and also expertise to create a safe product. Transition tints consist of chemicals which have sensitivity towards light and heat, and may pose harmful effect if not being manufactured properly. Therefore, the threat of substitution is low for the time being.

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Supplier power Manufacturing transition windows requires chemicals which is widely available even in the Malaysian market. There are many selections of suppliers, which mean that we do not have to be dependent on sole supplier. This is an advantage because we do not have to worry about price control over needed chemicals and other raw materials. We can always opt for suppliers from China which are currently high in terms of number and variety of products supplied. Buyer power Our product is highly differentiated and currently there are no indirect substitutes. Besides that in the Malaysian market, buyers are less concentrated than sellers. Usually, purchases are in small volume. Averagely, most people have little information regarding the technology behind the transition window. Therefore, the buyer power is relatively low. 2.2 Macro Environmental Analysis Political According to the New Economic Model of Malaysia, the government will be providing more benefits for business; including transparency for tenders, fair competitions, and fair market pricing. This means that this is an advantage for us and also for other new entrants (New Economic Model For Malaysia Part 1 2012, pg. 73). Economic factor Malaysian buying power is influenced by the nation’s Gross Domestic Product. Based on the statistics produced by financial analyst website Trading Economics, the Malaysian GDP increases to 3.7 percent in the final quarter of 2011, and grew to about 4.7 percent in the first quarter of year 2012 (Trading Economics 2012). In addition, research done by UBS Wealth Management Research suggested that Malaysians now possess higher spending power compared to Singapore. Besides that, the decrease of nation’s petrol price will encourage positive buying power among Malaysians due to reducing burden.

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Social factors Urbanization will create a new trend of product purchase among Malaysians. According to the Malaysian Department of Statistics, the most significant change in urbanization is Wilayah Persekutuan Kuala Lumpur which had achieved 100% urbanization, while other states are also developing. Most urban areas are within the capital city of each state. The data interpreted from the Composition of household expenditure shows that Malaysians are changing their spending habits from basic needs to wants and demands (Trend Perbelanjaan Isi Rumah 2010). Technological changes The New Economic Model is very helpful to new business entrants in this country. The New Approach implemented in the model includes favoring technologically capable industries and firms; whereby the government will grant incentives to support any innovation related business to enables future entrepreneurs to develop higher value product. Environment Factors The geographical location of Malaysia makes this country receives sunlight throughout the year round. The average temperature and the highest temperature recorded in Malaysia are 27.5 and 33 degree Celsius respectively. Up to date, Malaysia receives about 2228 sunshine hours annually and about 6.1 sunlight hours per day (Malaysia 2012).

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2.3 Consumer Behavior Analysis: Decision Making Process Decision making processes are the six stages of the journey experienced by customer during a purchase of a certain product. In this case, customer will undergone all the six stages in the decision making process (Gary et.all 2012, pg. 160). i. Problem Recognition

Current tinting products in the market only provide sunlight and ultra violet (UV) protection as well as heat rejection. However, the fixed Visible Light Transmission (VLT) value of tints might be a problem to some drivers. As for commercial and residential users, some users would want a clear view of the outside environment during the night, and sunlight protection during the day. Potential customers will realize that what they need is an innovation which responds based on the intensity of sunlight. ii. Information Search

Potential customers will then search for products which suits their needs. In this case, we need to investigate the perfect channel for our product advertisement; for example car magazines, online brochure, websites and properties magazines. We might need to promote our product to car accessories dealers and other car accessories shop because potential clients might get back to their original supplier for new suggestions. iii. Evaluation and Selection of Alternatives

In this stage, customers will be facing several potential products which they think will suits their needs and wants. This is where we need to influence potential customers to acknowledge the advantage of buying our products instead of other similar products in the market. iv. Purchase Decision

This is a high-involvement purchases because it involves spending a fairly amount of money and personal risk on buying a transition window. We will not be expecting impulsive purchase, and potential customers who had made their purchases had most probably undergone their personal research regarding to their selected brand.

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v.

Post-Purchase Decision

Customer’s product satisfaction is our main concern because we need to eliminate the possibilities of cognitive dissonance among customers by providing attractive side offers, quality after service and post-purchase advertisements. 2.4 Further marketing research required Defining the problem and research objective(s) We need to understand the household expenditure trend for a suitable range of years and relate it with the trending buying habit of our target market. Developing the research plan for collecting information Since we are deriving possible explanations based on available data, therefore our type of research is the qualitative research. The research methodology used is based on the grounded theory principle: to develop theory of buying behavior based on secondary data, which is referred to the statistical date released by the Department of Statistics Malaysia. Implementing the research plan The data observed from the Average monthly household income expenditure by main group of goods and services, Malaysia for 1993/1994 to 2009/2010 chart shows that the average household expenditure increases from RM1161 at year 1993/94 to about RM2190 during year 2009/2010. For the last segment, they spent for about RM89 for household equipment or RM190 for miscellaneous goods and services (refer Appendix A). For simplicity, our transition window is categorized under the household equipment and the miscellaneous goods category, which makes up about 12.74 percent from the total average household spending, which an increase if compared to the year before.

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Interpreting and reporting findings Malaysians are towards becoming a high income community. While the increasing figure suggests the increase of high living cost, it could also suggests that Malaysians average household income has increases, therefore have more excess income to spend. The increasing pattern suggests that, every year Malaysians feels the need to purchase these types of goods, probably because of changes of the external environment such as the weather and the lifestyle. We see this as an opportunity to create product awareness among Malaysians that our product is the best solution for their weather issue.

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3.0 SELECTING TARGET MARKET 3.1 Justification for choice of segmentation base Demographic segmentation Demographic segmentation is appropriate for our product because the segment is large enough to support our objectives; to identify potential customers based on their monthly income, gender, education and other relevant factor. Demographic segment in Malaysia also shows positive rate of change towards time.  Gender

The purchasing power for this type of product generally lies on men because this product falls under hardware category. Men are interested to deal with hardware products and are readily to spend money for products which they believe they needed it. As for female, majority are indecisive when it comes to purchase hardware products. Besides that, the level of interest for product browsing of this kind of product is quite low among female.  Income

Income is divided into 3 categories; low, medium and high. For low income, the monthly household income is below RM1000; medium is between RM1000 to RM5000; and high income is above RM5000. The monthly household income influences the spending power of customers; the higher the household income per month, the higher the tendency of customer to purchase expensive products.  Occupation

For this segment, we divided it into 3 parts; drivers, office workers and household residents. We had selected these based on the frequency of their presence in their work location. These work location are chosen because of the suitability of application of our product.

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Psychographic segmentation It is an advantage if we are able to understand the mindset of our buyers when they react upon new products in the market. We need to identify what captures their attention and what makes them decide that a new product in the market is what they want and need.  Interest

The measure of interest would be based on the highest contributor of the level of sales for home improvement and car accessories.  Social class

Social classes are divided into three; low, medium and high. Semi or unskilled worker would be examples of low, supervisor and administrative for medium and high managerial for high social class. The level of social class influences the buying behavior whereby different social classes have different types of expenditure level.  Activities

This segment simply refers to the daily activity of targeted segments. Behavioral segmentation We need to understand the force of which encourages Malaysians to purchase a certain product. Behavioral segmentations are divided into 3 categories; buying mode, expenditure and benefits sought.  Buying mode

Refers to which category of product has the highest purchase by a certain segment. This was measured by the tendency of a certain segment towards the purchase of a product group.  Expenditure

Refers to how many percent allocated for miscellaneous product purchase from monthly household income.

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Benefits sought

Simply explains the wants from a certain product or service upon product purchase.

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3.2 Profile of segments Demographic Gender Male Psychographic Interest Behavioral Buying Mode tendency on home

Moderate to high level interest High of home

improvement/car improvement/car accessories purchase

accessories purchase Female Low to moderate level interest Low to moderate tendency for home of home improvement/car improvement/car accessories purchase

accessories purchase Income Low -below RM1000 Medium Supervisor, Social class Semi or unskilled worker Expenditure Low <6% of salary clerical, Average 6-20% of salary

-between RM1000 to administrative RM5000

High -Income RM5000 Occupation

High managerial, intermediate High above managerial >20% of salary

Activities

Benefits sought

Drivers

Driving

as

occupation

or Protection from sun glare and excessive heat

spends more time driving Office workers

Works indoor in the city, high Protection from sun glare and excessive storey buildings heat

Household residents

Home-making, stays at home Protection from sun glare and excessive for long hours heat

Table 1: Profile of segments

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3.3 Target market choice and justification The group distinctively targeted for our product will be male which has medium to high monthly income, which spends long hours on the road or working in high storey offices which has high exposure towards direct sunlight. Our justifications are based on these aspects stated below: Aspect A: Sales potential Compared to female, the tendency of male to purchase home improvement products is higher. We see our transition window as more to ‘masculine’ products; whereby it most probably will attracts male’s attention rather than the female gender. High income customers will most probably are not concern about the price factor in their purchase, provided that they are convinced that what they are about to purchase is worth their money. Medium income customers can afford to purchase our product, but their concern about the price issue is a little higher compared to high income group. Urbanization will effectively influence the purchase manner, because it changes the way people perceive what they need and what they want. Urbanized people will most likely purchase products which appear modern and sophisticated. We are targeting drivers as one of our target markets because they understand the need of sun protection and heat rejection for their driving comfort. Drivers who want something different from what the normal tint has offered will seek other alternatives, and their solution for their problem would be our transition window. Aspect B: Growth and size of segment(s) The ratio of men outnumbered women with the sex ratio of 106, and the sex ratio increases year by year showing positive growth rate of male. Besides that, the level of urbanization increases yearly and by 2010 shows 71 percent of urbanization (Malaysia Demographics Profile 2012).

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The increase of male growth ratio indicates that our target market is growing year by year. The increase level of urbanization also indicates increase level of education and increase of medium to high income population (refer appendix E). The increase level of urbanization will also increase the number of vehicles and high storey buildings, showing the need of sun protection and heat rejection facilities. Aspect C: Accessibility Target market is easily accessible via offline or online catalogue, property or car magazines, regular dealers and also through conventional media. 3.4 Proposed positioning strategy

For better understanding, we applied the perceptual mapping to propose suitable positioning strategy. The two questions which determine the value of the axes are; perceived quality and appearance, and price.
High Perceived quality and appearance

Low Price

High Price

= Transition window = Chameleon Tint Low Perceived quality and appearance = Rono, Tint Master

Figure 3: Perceptual Mapping

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4.0 DESIGNING MARKET STRATEGIES 4.1 Proposed Marketing objectives The marketing objectives are: to create awareness among Malaysians towards our new product: the transition window; to establish a brand recognition which is synonymous with sun glares protection and heat rejection solutions; and to capture market shares in the home improvement/car accessories segment. 4.2 Statement of 3 or 6 marketing strategies We need to use the perfect marketing strategy in order to achieve our marketing objectives. There are several marketing strategies frequently being used by successful companies, such as Marketing Mix, Porter’s Generic Strategies and Boston Matrix (MindTools 2012). Marketing Mix The 4P’s is the method to define marketing mix. The 4P’s are product, place, promotion and price. Marketing mix is useful to predict long or short term possible scenario which is related to our business in the future. Porter’s Generic Strategies This consists of cost leadership, differentiation, cost focus and differentiation focus. For example; cost leadership strategy is achieved by reducing cost to increase profit, differentiation strategy refers to how the product is unique compared to other available products; cost and differentiation focus concentrates on unique needs of customers. Boston Matrix The Boston Matrix is another way to understand the function of market share and how it affects the market growth. The Boston Matrix consists of Question Marks, Stars, Dogs and Cash Flows. Based on the suitability of strategies with our product, we are using the Marketing Mix or 4P’s as our marketing strategy.

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4.3 Strategies justified by referring to earlier analysis Product strategy We should emphasize on our product’s ability to change the darkness because, since the feature is new in the current market therefore it has potential to attract attentions. Our target market should perceive our product as a high standard product which is both beneficial and stylish. Therefore, we should do product branding by creating a strategic logo and name, providing experience of our product to our customer and strong communication. Promotion strategy The most effective advertising medium is via car and home improvement magazines such as Motor Trader, Top Gear, Home Concept, Anjung Seri and Fresh Home. Other conventional media channels such as newspapers and social media is also a strategic way to attract attention. Depending on our sales revenue, we could sponsor the local car drag race team, and in return we could attract more publicity. Place/distribution strategy We would need to produce catalogues to simplify decision making by our suppliers and customers. We need our sales representatives to meet up with housing developers to introduce our new product in the effort to bind agreement between them. Besides that, we should be negotiating with shop owners so that they push the sales of our transition window to their customers. In exchange, we would give incentives based on the amount of transition windows sold. Price strategy For the first year, we are going to implement the cost-based pricing. Our aim is to achieve break even while acquire small profit margin. This is to attract more customers by advertising on attractive price. For the second year where we are finally stable in the current market, then we will implement the competition-based pricing. We will adjust our profit earning based on the sales performance.

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5.0 CONCLUSION AND RECOMMENDATION We are confident that our transition window has sales potential in the Malaysian market. Based on the analysis of marketing opportunities in Malaysia, we discovered that we have no direct competitors, and that our product is significant compared to other windows. Our target market shows high purchase potential based on the study of segments profiling, and our proposed positioning is appropriate with our target market. Therefore, our marketing strategies are focusing on the Place, Product, Promotion and Price which might attract our target market towards the purchase of our product. We strongly recommend our marketing strategies; introducing product experience to customers, promoting the transition windows in suitable magazines, employ salesman or elect a suitable sales representative who is capable to push the sales of the window, and to adjust the price of the transition window from time to time to maximize profit margin.

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