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University​ ​of​ ​the​ ​Philippines​ ​Diliman Extension​ ​Program​ ​in​ ​Pampanga A.Y.​ ​First​ ​Semester​ ​2017-2018

A​ ​Case​ ​Study​ ​on​ ​BIO-CLEAR​ ​Air​ ​Purifier

In​ ​Partial​ ​Fulfillment​ ​of​ ​Business​ ​Management​ ​170:​ ​Marketing​ ​Management

Colomer,​ ​Hernica​ ​Hazel​ ​P. Lorenzo,​ ​Maria​ ​Ana​ ​Pierina​ ​D. Palaganas,​ ​Rhys,​ ​C. Pigarowa,​ ​Nina​ ​Karla​ ​B. Tolentino,​ ​Paul

I.

Case​ ​Background/History

Pollution has always been a major issue of the world. It is the process of making the environment (land, water, or air) unsafe or unsuitable for use. Air pollution along with cigarette smoke collectively plays a role in the occurrence of various lung diseases such as lung cancer and chronic bronchitis. In the Philippines alone, 43.3% of chest patients admitted were found out to have ailments brought about by air pollution and smoking. It was this environmental factor that Mr. Wan of RW & Company had hoped to sell​ ​the​ ​BIO-CLEAR​ ​product​ ​line.

Mr. Wan has foreign suppliers for the BIO-CLEAR Air Purifier and agreed to them that there is indeed a market for the product in the country. He aims to be the first to sell​ ​the​ ​product​ ​locally,​ ​having​ ​no​ ​competitions,​ ​to​ ​build​ ​up​ ​brand​ ​equity.

The BIO-CLEAR Air Purifier is the first product in the country that promises to improve air quality in enclosed environments (at the same level of the cleanliness of the environments in microchip production. It combines the function of an air ionizer and an efficient filtration system. Being the same in size, color (cream on gray), general appearance, capacity of room cleaned and rate of speed, the Air Purifier is offered in five models – the 2101, 2102, 2103, 2104, and 2105 and only differ in the control options. The unit can be placed on the floor, shelf, can be wall-mounted and is operated with a remote or with the controls on the unit. As dirty air enters the unit through the intake grill, air is purified in five stages though the (1) PE filter, (2) Electrostatic Precipitator, (3) Electrostatic Filter, (4) Active Carbon Filter, and (5) Negative Ionizer. The retail price of the basic model is 60% of a typical air conditioner, and the most expensive model is 60% more expensive than that. Since the unit can only be used comfortably in an enclosed​ ​room,​ ​using​ ​it​ ​in​ ​the​ ​summer​ ​is​ ​difficult.

However, a year later, Mr. Wan is struggling with unsold inventory as sales (especially in provincial outlets) were poorer than what was predicted and were barely covering costs. He acknowledges that promotions were very limited as the product’s promotions were only inclusions in SM Appliance Center sales discount promotions (no coordinated campaign across all branches), and there were potential competitors for BIO-CLEAR which include electric fans, coolers and humidifiers, air purifiers, air ionizers, and air conditioners. In addition, Samsung has also included ionization in some of their television sets and air-conditioner models and advertises as they point out the maintenance​ ​of​ ​a​ ​healthy​ ​home.

With the details of the BIO-CLEAR Air Purifier laid before him, Mr. Wan is thinking of possible options for the product line and concerns such as improvements on the part of the foreign supplier, the product pricing, and a good positioning as he plans to negotiate​ ​with​ ​his​ ​suppliers.

II. Point​ ​of​ ​View

The case was written in the point of view of Mr. T. Wan of RW & Company. Considering the competitive market and the buying behavior of the consumers, Mr. Wan is trying to determine the reason behind the poor sales. He also wants to figure out the appropriate​ ​marketing​ ​plan​ ​to​ ​be​ ​performed.

His point of view consists of the issues concerning the introduction of a new product,​ ​the​ ​positioning​ ​of​ ​the​ ​product,​ ​and​ ​specific​ ​marketing​ ​communication.

In his point of view, since sales (especially in provincial outlets) were poorer than what was predicted and were barely covering costs, he has to talk to his foreign suppliers’ representatives and decide whether he should renegotiate the BIO-CLEAR dealership of not. He also knows the fact that the promotions of the product were limited (since

promotions were only inclusions in SM Appliance Center sales discount promotions), believes that more improvement can be done in the part of the foreign suppliers (range of models available for sale), and thinks about the product pricing affecting the price sensitivity​ ​of​ ​customers.

III.

Time​ ​Frame The case happened in 1995, where Mr. T. Wan of RW & Company agreed with his foreign suppliers that there would be a market for its BIO-CLEAR air purifier in the Philippines

IV.

Statement/s​ ​of​ ​the​ ​Problem RW & Company is dealing with unsold inventory of its BIO-CLEAR product line (mostly of the more sophisticated and computerized higher priced BIO-CLEAR models) due to its aggressive entrance in the air-purifier market in the country, probably because it would be the first of its kind to penetrate the Philippine market. The company is experiencing poor and marginal sales in rural and urban areas and product sales were barely covering costs. Now the company, in order to improve the sales performance of BIO-CLEAR, needs to capture the market of air-purifier in the country. Furthermore, it needs​ ​to​ ​re-position​ ​and​ ​establish​ ​a​ ​specific​ ​target​ ​market.

V.

Areas​ ​of​ ​Consideration The​ ​following​ ​are​ ​the​ ​areas​ ​to​ ​be​ ​considered​ ​for​ ​this​ ​case:

Product​ ​identity​ ​and​ ​specifications​ ​of​ ​different​ ​models.

Focus​ ​on​ ​a​ ​specific​ ​market.​ ​Where​ ​and​ ​who​ ​will​ ​buy​ ​the​ ​product.

Product​ ​promotion​ ​of​ ​RW​ ​&​ ​Company​ ​&​ ​foreign​ ​suppliers.

Pricing​ ​of​ ​air-purifiers.

To​ ​help​ ​solve​ ​the​ ​problem​ ​of​ ​the​ ​case,​ ​the​ ​following​ ​analyses​ ​are​ ​used.

A. SWOT​ ​Analysis

STRENGTHS

WEAKNESSES

Products have ultra high efficiency filtration system with that of an air ionizer

First product in the local market that can improve air quality in an enclosed​ ​environment

The product series is offered in five​ ​models

Unsold​ ​inventory

 

More sophisticated and computerized (higher priced) models

Limited suppliers since RW & Company’s foreign suppliers supplies not only BIO-CLEAR products but also other RW products

Limited variation offered in the product line (all models look the same​ ​and​ ​only​ ​one​ ​color​ ​available)

Advanced five-stage purifying system

The unit is handy and portable (it weighs​ ​seven​ ​kilos)

More sophisticated and computerized (higher priced) models

Low model differentiation (differentiation is based on control options​ ​available)

All models can be controlled via handheld infrared remote, or controls​ ​on​ ​the​ ​unit​ ​itself

Only works in an enclosed space Difficult to use during the summer, when​ ​temperatures​ ​are​ ​high.

Promotions had been limited (limited funds and only to specific outlets)

The​ ​sudden​ ​hum​ ​it​ ​emits

 

OPPORTUNITIES

THREATS

No such comparable commercial product​ ​in​ ​the​ ​local​ ​market

Limited​ ​suppliers

 

Unclear

agreements

between

Pollution

foreign​ ​supplier/partner

 

Increased number of patients admitted due to air pollution and smoking

Competitive​ ​environment

Appliance

division

of

Samsung

Group

of

Korea

(champion

of

Increased in the number of poorly maintained diesel-fed puv in metropolitan​ ​areas

ionization​ ​technology)

Increased rate of purchase of personal​ ​motor​ ​vehicles

 

Metro Manila having one of the world’s worst ambient air quality conditions.

Newest technology to be applied in the local environment control industry​ ​in​ ​the​ ​use​ ​of​ ​ionization

Air ionizers are available for home and​ ​car​ ​use.

Air ionizers are small and unobtrusive;​ ​paperweight.

B.​ ​Competitor​ ​Analysis

The major indirect competitor of Bio Clear Air Purifier is any companies that sell products that can change the temperature in a room. Examples of these products are air conditioners and electric fans. The main goal of almost all companies is to be on top or to be equal with its competitor. This can be achieved by RW & Company if they will think of a good business strategy, and for them to do this, they should not only focus on the

internal environment (inside the company such as management, employees) but also on the external environment (competitors). Bio Clear Air Purifier should keep a file of their competitors​ ​and​ ​list​ ​all​ ​of​ ​the​ ​strengths​ ​and​ ​weaknesses​ ​of​ ​their​ ​competitors.

STRENGTHS

WEAKNESSES

1. They have already gained a large​ ​market​ ​share.

1. They provide core benefit that is less compared to Bio Clear Air​ ​Purifier. 2. They offer lower prices but their quality is also lower compared to Bio Clear Air Purifier.

2. Their selling price is more affordable compared to Bio Clear​ ​Air​ ​Purifier.

3. They have variations in their product.

The major strength of Bio Clear Air Purifier’s competitors is first, they are already known in the market. Products offered by Hanabishi, Sharp, and Standard are very popular to the market that they have already established brand equity before Bio Clear Air Purifier was introduced to the market. Their chosen industry was already dominated by these brands that sell products like air conditioners and electric fans. They had good strategy of positioning theirselves in the minds of their customers (positioning map). Second, the price that Bio Clear Air Purifier’s competitors offer to the market is a lot cheaper compared to them. As stated in the case, the retail price of the basic model of Bio Clear Air Purifier is 60 percent of an air conditioner. This proves that their products are of high price. Lastly, their competitors offer variation in their products. They offer products that have different features, price, quality, and design. They also offer customer service that can attract more customers and build customer relationship. They also give differentiation​ ​to​ ​customers​ ​that​ ​give​ ​customers​ ​more​ ​options​ ​when​ ​buying. Their competitors have a lot of strengths. However, they also have a number of weaknesses that can be used by Bio Clear Air Purifier. One is that they provide core benefit that is less comparable to that Bio Clear Air Purifier. An example of this is that usually, a typical air

conditioner gives cool ventilation in a room that result to a chilled air effect, but as for Bio Clear Air Purifier’s product, it is different because they offer products that purify air by cleaning air pollution. Second is that some competitor products have lower quality than Bio Clear Air Purifier, even though they have lower prices. As a consumer, buying these kinds of products is for​ ​short​ ​term​ ​use​ ​only.​ ​Eventually,​ ​customers​ ​would​ ​shift​ ​to​ ​other​ ​alternatives.

C.​ ​Pricing​ ​Analysis

One of the many factors that affect the sale of BIO-CLEAR Air Purifier is the product price being relatively higher priced compared to other competing products RW & Company must plan strategically to overcome this factor. One of the strategies the company can do is to offer discounts​ ​and​ ​incentives​ ​and​ ​it​ ​can​ ​also​ ​offer​ ​payment​ ​schemes. In the case that the company would like to maintain its high price, it must assure that the products have higher quality thus having more benefits. In this way customers will be more willing to pay for more benefits despite the product having a higher price. This is reasonable as RW​ ​&​ ​Company​ ​may​ ​not​ ​want​ ​to​ ​sacrifice​ ​the​ ​benefits​ ​that​ ​their​ ​customers​ ​want​ ​to​ ​pay​ ​for.

VI. Alternative​ ​Courses​ ​of​ ​Action

It is clear in the facts of the case study that Mr. T Wan of RW & Company agreed to his foreign suppliers hastily to set up a local presence of a state of the art air purifier, with the objective to penetrate the market first and to dictate the dynamics of the market. However, it is understandable that usually the opportunity cost being the first in the market and being able to dictate dynamics is too high which may translate to possible market share and profits for the

company, with establishing the premise that ‘first to market gets the pie hot’, listed below are the possible​ ​alternative​ ​courses​ ​of​ ​action​ ​RW​ ​&​ ​Company​ ​should​ ​taken:

1. Find a niche market, focus less on immediate expansion - it was clear in the facts of the case study that RW & Company had provincial outlets that are not performing very well. Given the limited funds for operations and advertisement, Mr. T Wan could have poured

and concentrated much of this budget to where the company is strongest and has the ability to further gain market share, which is in Metro Manila. It is only after the company​ ​have​ ​maximized​ ​the​ ​market​ ​in​ ​Metro​ ​Manila,​ ​then​ ​they​ ​can​ ​expand​ ​outward.

2. Find a niche market, survey customer demographics and not use channels to deliver products,​ ​but​ ​try​ ​to​ ​use​ ​personal​ ​and​ ​direct​ ​selling.

3. Partner with appliance centers that carry out promotions simultaneously in all stores, rather​ ​than​ ​having​ ​to​ ​deal​ ​with​ ​individual​ ​appliance​ ​stores.

4. Partner with other companies to distribute and advertisement the product, it may mean profits being divided among the distribution companies. However, what is important, is that​ ​the​ ​product​ ​be​ ​known​ ​to​ ​its​ ​niche​ ​market​ ​as​ ​fast​ ​as​ ​possible.

5. RW & Company could have asked early on to step up its support for promotions, and help share data about customer demographics that could help the company tackle the local​ ​market.

6. Ultimately, for BIO CLEAR as a product to survive and gain popularity, RW & Company must renegotiate deals with its foreign supplier to provide a.) main customer demographics b.) advertisment tools of the trade c.) more differentiated options like for example,​ ​the​ ​color​ ​of​ ​the​ ​appliance​ ​being​ ​not​ ​only​ ​limited​ ​to​ ​the​ ​color​ ​white.

VII.

Conclusion/Recommendation

Our group thinks that Mr. T Wan should not just take advantage of Metro Manila's lower ambient air quality, we think he should also take advantage of the product's uniqueness in the market. The company should help the spread of information along by partnering with other companies in order to distribute and advertise the product. Though this may mean that the profits might be divided amongst the distributors, but the profit loss can easily be countered by the Increase in demand of the product, due to more people knowing about the product, and also because given that the product will be promoted well by the distributors the income gained will exceed​ ​the​ ​possible​ ​losses​ ​that​ ​may​ ​be​ ​incurred.