Positioning & Differentiation Strategy

Tai Sin Electric Ltd

Cabling To Power & Connect Asia

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A Successful Brand In The Electronics Manufacturing Industry

Tai Sin Electric Ltd case study: Positioning & Differentiation Strategy

An Overview of The Central Driving Industries Which Affect The Cables Business
Public sector IT spending in the Asia-Pacific region, including Japan, topped US$51.5 billion in 2007, and is forecast to grow at a compound annual growth rate of 6.9 percent from 2006 through 2010. Key public sector IT spending by Japan, China and Australia, accounts for 75% of Asia Pacifics IT spending pie. The rise in IT infrastructure spending was brought about by two reasons. Firstly, increasing demand for nationwide e-governance initiatives by several countries in Asia Pacific, creating the need for enterprise networking equipment and infrastructure for public sector verticals; and secondly, a major trend in Asias public sector vertical towards cross-department collaboration whereby state or local governments require IT infrastructure to facilitate connectivity with other states and regions. The construction & engineering industry comprises of civil engineering companies and

large-scale contractors, which supports the demand for the increase in IT infrastructure. The industry has generated a global revenue of $2,323 billion in 2008 alone, which represented a compound of annual growth rate of 6.1% for period between 2004 and 2008. However, the performance is forecasted to decelerate over the five year period from 2008 to 2013, where it was expected that the value would be $2,762.7 billion by the end of 2013. The industry performance began to decline in 2009, but it is expected to rally from 2010 onwards as reported in Data Monitor: Global Construction & Engineering in May 2009. The construction and engineering industry is highly fragmented despite the presence of large, influential players. The projects granted to the players are mostly through competitive tendering, which provides coercive power for the buyers over the players, as the buyers are the ones who define the requirements and contractual terms for the project before choosing the most favourable tender. In Singapore alone, growth in the construction and engineering industry grew by 19.6% in 2008, to reach a value of $7,109.5

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million. It was forecasted that it would increase by 37.5% by 2013, totalled in a value of $9.775 million as reported in Data Monitor: Construction & Engineering in Singapore in May 2009. The markets for most of the other ASEAN countries although not as big have been growing substantially as they are seen as the key sources of growth for many businesses around the world.

Construction and engineering is also dependent on the oil & gas industry. In 2007, the demand for oil in the Asia-Pacific region was estimated to have increased to 25 million barrels a day according to the International Energy Agencys Research and Markets report. Driven by the demand from rapidly developing BRIC economies, the oil & gas industry will continue to play a major role in the manner which the global economy evolves. Most evidently, factors such as volatility of energy prices due to geopolitical developments, natural disasters and unstable demand, will remain as key challenges to the stability of this sector. The above industries were aptly reviewed due to its impact and its effects on the manufacturing of electrical engineering consumables sector. Tai Sin is a fast growing Singapore enterprise which is highly dependent on the dynamics and evolution of these industries.

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Our Clients Brief

Tai Sin Electric Ltd (as it is today) was started in Singapore in 1980. It has grown tremendously since its inception and was listed on the Singapore Exchange, Sesdaq in 1998 and later listed on the mainboard in 2005. Tai Sin Groups core business is divided into 4 key clusters of manufacturing, distribution, service and strategic investments. These 4 key clusters are served by the 15 subsidiaries it manages. Under its manufacturing cluster, Tai Sin manufactures electrical cables and wires, lamps, lightings and switchboards, electrical equipment and sanitary wares. Its manufacturing operations are concentrated in Singapore, Malaysia and Vietnam. In 2003, Tai Sin acquired Lim Kim Hai Co (S) Pte Ltd. Lim Kim Hai Co (S) Pte Ltd was established more than 40 years ago by Mr. Lim Kim Hai himself. Distribution of electrical equipment components and accessories forms the core of Lim Kim Hais business. The company carries a wide array of foreign-owned brands such as 3M, Omron and Philips. In addition, Lim Kim Hai also carries the Tai Sin brand and acts as a distributor for Tai Sins products. They service a broad distribution base that includes manufacturing, industrial processes, oil & gas, statutory boards and training institutions. Having acquired Lim Kim Hai, the Tai Sin Group has over the years, built an extensive network, distributing to a wide range of industries located around the world. Tai Sin services a wide group of customers that consists of end-users, contractors, electrical system integrators and electric power engineers, and consultants. Tai Sins distribution activities are focused on providing products that address and optimise its customers electrical and control requirements. The type of products Tai Sin distributes includes electrical equipment & accessories, data structural cables and switchboards. In the area of services, Tai Sins services cluster focuses on identifying potential business opportunities and building new networks to support the groups expansion abroad. Currently, the group has two representative offices in Vietnam and Dubai to tap unto the local market and provide their overseas customers with direct access to its services. The strategic investment cluster seeks new investment opportunities that will drive growth and increase shareholder value. These investments include new technologies and business opportunities.

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THE BRAND PERCEPTION challenge

The acquisition of Lim Kim Hai in 2003 allowed Tai Sin to leverage on Lim Kim Hais distribution prowess to drive its own distribution capabilities. However, Tai Sin recognised the need to integrate the Lim Kim Hai brand into its own brand portfolio in a manner whereby synergies could be exploited.

An initial Perception Audit of both Tai Sins and Lim Kim Hais stakeholders showed that stakeholders in both their respective markets were unaware of Tai Sins acquisition of Lim Kim Hai or the relationship between Tai Sin and Lim Kim Hai. Even when stakeholders perceive that a relationship existed between these two companies, the nature of the relationship was unclear to them. It was also discovered that there was a clear distinction between how stakeholders perceive the respective brands. While both brands were found to be renowned in their respective markets, the two brands function in an autonomous manner despite having common customers.

As individual brands, the Tai Sin brand was strongly associated with cable manufacturing; while the Lim Kim Hai brand was strongly associated to being a distributor of electronic equipment in the electronics industry. Owing to its longer history, wider product range and distribution network, there is greater brand awareness of the Lim Kim Hai brand when compared to the Tai Sin brand. Therefore, the major brand perception challenge for Tai Sin was to align the newly acquired Lim Kim Hai brand to Tai Sins brand portfolio. The brand strategy project was geared at the integrating the Lim Kim Hai brand into Tai Sins portfolio. The successful integration of Lim Kim Hai would generate positive perceptions from stakeholders of Tai Sin group, and also allow Tai Sin to fully capitalise on the synergistic benefits of the acquisition.

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StrategiComs Solutions in Partnership with Tai Sin

Working closely with the senior management of Tai Sin and Lim Kim Hai, a better understanding and analysis of the fundamental brand perception challenge was achieved. Subsequently, StrategiComs proprietary brand strategy model, the ConsiliumTM brand strategy model was deployed to manage this brand perception challenge. The ConsiliumTM brand strategy model first studied the set of signals that surrounded both the Tai Sin and Lim Kim Hai brand. The study showed that Tai Sin was perceived as a cable manufacturing company that has strong financial backing; while Lim Kim Hai was perceived as a well-established company built on strong relationships it has with its stakeholders and its heritage. Although both companies function in the same industry, both their brands stood for something different. The brand strategy StrategiCom implemented is targeted at managing this difference, integrating the Lim Kim Hai brand into the Tai Sin portfolio of brands in a manner that complements both brands. The ConsiliumTM brand strategy model provided the tools to examine and analyse Tai Sins existing brand architecture. By clustering Tai Sins business companies into its 4 key business functions: Manufacturing ,Distribution, Services and Strategic Investments, Tai Sin was able to integrate the Lim Kim Hai brand into its portfolio in a coherent and logical way, ensuring that the relationship between the newly acquired Lim Kim Hai brand was well defined and categorised in Tai Sins brand architecture. Under its revised brand architecture, Lim Kim Hai would function under the Distribution cluster while Tai Sin would function in the Manufacturing cluster. By clearly separating the Tai Sin brand and Lim Kim Hai brand into their

Tai Sin was perceived as a cable manufacturing company that has strong financial backing.

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business functions, the group is able to effectively communicate its position as an electric company while allowing individual brands in the architecture to dominate in its

own business function cluster. The categorical method of clustering the brands into business functions also drives future Merger and Acquisition decisions by determining the type of investments the company should focus on. Further, the well-defined business clusters facilitate the future integration of brands acquired in the future. At the group level, a differentiation strategy was devised for the Tai Sin Group. The differentiation strategy serves to create a perceptual advantage over its competitors in the industry by creating a brand that is highly differentiated

from its competitors. The Tai Sin group was positioned as Asias Electric solutions group and was differentiated from its competitors based on its heritage and specialisation in the area of electric solutions. This differentiation is conveyed succinctly in its tagline The Electric Solutions Specialist For Asia Since 1958. To execute the differentiation and positioning strategies, Tai Sin needed to communicate the new Tai Sin brand which includes its corporate position, architecture and differentiator. A well-planned Integrated Marketing Communication (IMC) strategy was put in place at both group and subsidiary level to drive a consistent and desired Tai Sin brand perception to all its stakeholders. The IMC strategy provides a highly effective and cost efficient platform for Tai Sin to communicate to its stakeholders, both internal and external by determining both the content and method of communication.

The Electric Solutions Specialist For Asia Since 1958

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OutcomeS EXPERIENCED
The positioning of Tai Sin as Asias Electric Company, differentiated through its heritage and specialisation, has enabled Tai Sin to carve out a niche against its key competitors in its chosen industries and markets. By executing the brand strategy through a carefully planned Integrated Marketing Communication strategy, Tai Sin was able to effectively position their brand in the highly competitive electronics industry as a specialist in providing electric solutions. Apart from building a strong brand that is differentiated from its competitors, Tai Sin also leverages upon its corporate brand to spearhead its internationalisation efforts. According to the Chairman of Tai Sin Group, Professor Lee Chang Leng, the corporate branding exercise helped Tai Sin define their core competencies and position them effectively in overseas markets as a Leading Electric Solutions Specialist for Asia. The clustering of Tai Sins businesses also provide direction for the groups growth in the future and serves as a guideline for the groups investment decisions. Currently, Tai Sin has 15 subsidiaries and offices in the region that are categorised into its 4 business functions. The company continues to grow in these 4 key business functions and strengthens its position as an electric solutions specialist in Asia. Today, the Tai Sin group continues to expand, generating year-onyear increase in turnover, from SGD 106.23 million in 2004 to SGD 256.92 million in 2008. Its operations extend to international markets in the Middle East and New Zealand; and regionally, in Malaysia, Vietnam and Brunei. By streamlining its business into 4 key clusters, Tai Sin is primed for continuous and accelerating growth in both the regional and international market.

about strategicom
StrategiCom is a global B2B brand strategy consulting firm headquartered in Singapore with 11 offices and 110 consultants & researchers around the world. The industries it serves include Information Technology, Oil & Gas, Petrochemicals, Commodities Trading, Business Services, Pharmaceutical, Medical & Healthcare, Transport & Logistics, Construction & Real Estate, Precision Engineering and Electronics Manufacturing. StrategiComs consultants, researchers and proprietary methodologies provide the catalyst for companies to transform from traditional businesses into differentiated brands.

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Nov 2009 StrategiCom Pte Ltd Published by StrategiCom Pte Ltd An imprint of StrategiCom Pte Ltd 371 Beach Road, #19-08, The KeyPoint, Singapore 199597 All rights reserved
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