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ADC 602
Marketing Management
Term Paper
Lecturer
Dr. Zurina Mohaidin & Dr Shaizatulaqma Kamalul Ariffin
Group Members
Ooi Chuan Hong S-GSM0221/18
Theepa Subramaniam P-GSM0154/19
Annuar Fazal bin Ismail P-GSM0030/19
Teo Zhi Zhen P-GSM0062/19
ADC 602 Marketing Management Term Paper Group 4
Table of Contents
1.0 Abstract ................................................................................................................................. 3
1.1 Purpose of Case Study .......................................................................................................... 3
2.0 Introduction ........................................................................................................................... 4
3.0 Company Background .......................................................................................................... 5
3.1 History of Salutica Berhad ........................................................................................... 5
3.2 Salutica In-House Brand “FOBO” ............................................................................... 6
3.3 Core Products of FOBO ............................................................................................... 6
3.4 Key Management and Shareholders ............................................................................. 8
4.0 Industrial Analysis ................................................................................................................ 9
4.1 Porter’s Five Forces .................................................................................................... 11
4.1.1 Competitive Rivalry..................................................................................... 11
4.1.2 Bargaining Power of Customers .................................................................. 11
4.1.3 Bargaining Power of Suppliers .................................................................... 11
4.1.4 Threat of New Entry .................................................................................... 12
4.1.5 Threat of Substitute...................................................................................... 12
5.0 Case Description ................................................................................................................. 13
5.1 Salutica berhad development ...................................................................................... 13
5.2 Business Challenges ................................................................................................... 14
5.3 Marketing Challenge .................................................................................................. 15
6.0 Recommendation ................................................................................................................ 16
6.1 Market Research ......................................................................................................... 16
6.2 SWOT Analysis for Market Entry Strategy ............................................................... 17
7.0 Conclusion .......................................................................................................................... 19
ADC 602 Marketing Management Term Paper Group 4
1.0 Abstract
The report mainly discusses on the Salutica Berhad is a Malaysian vertically integrated
electronics manufacturing company headquartered in city of Ipoh, Perak. Key factors of
Salutica Berhad is specialized in Bluetooth technology which is tied to the demand growth
for Bluetooth-enable devices. It has witnessed strong growth in recent years and
expected to register double digit growth. In this case study, Salutica Berhad has been
facing marketing challenges which involve sales revenue and future for their business.
The key marketing challenges faced by the company are discovering new market,
explore brand new domain, identifying key possible entrance points, weighing pros and
cons of each entrance points and defining a market entry strategy.
The following sections will be discussed thoroughly throughout the paper: Company
Background, Industrial Analysis, Case Description and Recommendation. This aims at
helping Salutica Berhad to overcome the challenges from uncontrollable factor in the
industry.
Salutica Berhad, through its 100% wholly owned subsidiary Salutica Allied Solution Sdn.
Bhd. is a Malaysian vertically integrated electronics manufacturing company
headquartered in city of Ipoh, Perak. Salutica specializes in designing, developing and
manufacturing consumer and business electronic product development like Bluetooth
stereo headsets, smart watches and precision light guides for optical touch screen
system. Salutica Berhad is primarily an original design manufacturer and its clients
include major American, European, and Japanese electronics and information
technology companies.
Salutica Berhad offers 'one stop' vertically integrated solutions for electronics and plastic
manufacturing. Its in-house services span from product design, precision engineering
plastics injection, high quality secondary cosmetic treatment, PCBA to high volume
manufacturing of complete electronics products, especially Bluetooth consumer
electronics products. Salutica Berhad has successfully launched a series of patent
pending products under its own brand “FOBO”. FOBO is an acronym for “For Our Better
wOrld”. Developed and manufactured by Salutica Berhad, FOBO products are being
sold in 28 countries across Europe, Americas, Middle East, Asia, Africa and Oceania.
ADC 602 Marketing Management Term Paper Group 4
3.0 Company Background
In 2007, Salutica Berhad secured its first hardware and mechanical design and
manufacture contract by producing Bluetooth car kits for Sony, and slowly shifted their
focus to other Bluetooth products when smartphones started replacing earlier mobile
phones.
Over the years, Salutica Berhad has successfully transformed itself into a vertically
integrated consumer electronics manufacturer, focusing in product design, plastic
injection and tooling, surface treatment, product assembly, quality assurance and supply
chain management on Bluetooth-enabled electronic products. Its core business in
designation, development and manufacture of Bluetooth products, for examples
Bluetooth headsets, speakers, smart watches and hands-free car kits for external brands
including Plantronics, Jaybird and Sony contribute approximately 90% of its revenue.
Besides that, Salutica Berhad also manufacture Bluetooth devices like security tags and
Tyre Pressure Monitoring System device for vehicles under its own in-house brand,
FOBO.
FOBO brand name is an acronym for “For Our Better wOrld”. FOBO carries a mandate
to help enhance mankind’s daily living through innovative and smart products. FOBO
products get in tune with Nature, by monitoring key environmental elements that interact
with our daily livings or things/loved ones that we care so much about; FOBO is Sensing
with Sense™.
FOBOTAG A Bluetooth 4.0 BLE wireless tag used to keep track of your
belongings or loved ones. Attach the tag to your belonging or
have your loved one carry it and receive alert on your phone
immediately when the connection is lost. Incorporated with
additional alert through motion sensing to alert you if the tag is
moved.
ADC 602 Marketing Management Term Paper Group 4
FOBOBIKE FOBO Bike is an advanced Wireless Tire Pressure Monitoring
System (TPMS) using latest Bluetooth 4.0 that works directly
with your Android (v4.3 or later) and iOS (v7.1 or later) device.
Comes with 2 wireless tire sensors.
FOBOMAX Our latest Bluetooth 4.0 BLE wireless tag. Now, the world can
help you find your lost belongings or loved ones using our
WebSearchME crowd-sourced tracking function. Also includes
all the existing functions of our earlier FOBO Tag Bluetooth
tracker.
James Lim is a trained electrical and electronics engineer graduated with an honors
degree in Electrical Engineering from the University of Malaya in 1982. He started his
career with ASEA AB in 1982 and subsequently worked in others technology companies
including General Electric Malaysia Appliance Components, Maxtor Corporation, Applied
Magnetics, Crest Ultrasonic, Seagate Technology and Knowles Electronics.
James Lim joined Salutica Allied Sdn. Bhd. in 2003 as CEO. He set up the R&D division,
which leads to critical effect in the growth and expansion of Salutica Berhad. The R&D
activities of Bluetooth technology and other wireless, touchscreen and light guide
technologies helps to reduce the manufacturing costs and time, which is vital in retaining
existing MNC clients, securing new customers, and developing new products for In-
House Brand FOBO.
ADC 602 Marketing Management Term Paper Group 4
4.0 Industrial Analysis
According to report administered by Bursa Malaysia and research done by Mercury
Securities Sdn. Bhd., global demand for Bluetooth devices is anticipated to witness a
robust growth driven by rising adoption of media streaming devices, increasing
disposable income of consumers and high compatibility of wireless Bluetooth device. For
example, the Bluetooth speaker market, as one of the biggest components of Bluetooth
Device Market, was valued at USD 4.62 billion in 2018, and it is expected to reach USD
34.56 billion by 2024, at a CAGR of 40.38%.
Figure 4: Sales revenue and profit before tax of Salutica Berhad from year 2015 until
year 2018.
ADC 602 Marketing Management Term Paper Group 4
From year 2017 and 2018 sales revenue report as shown in Table 1, most of the sales
revenue of Salutica Berhad is from North America which contribute 75.7% in year 2017
and decreased to 61,9% in year 2018. This decreasing trend of sales revenue is also
happened for Malaysia market also. However, marketing and sales team manage to
increase the total sales revenue by explore and promote in Europe country, Australia,
Asia and Africa. From the Figure 5, major contribution for sales revenue are mainly from
North America, Europe and Asia.
Table 1: Total Sales Revenue of year 2018 compare with year 2017.
Australia
1%
Europe
18% North America
62%
Recognising the opportunities for Bluetooth technology in the automotive and consumer
electronics industry, Sallutica has leveraged on over ten years of experience and
expertise in Bluetooth technology and have developed its own brand, “FOBO” which is
an acronym for “For Our Better World”. FOBO products are being sold in 28 countries
across Europe, Americas, Middle East, Asia, Africa and Oceania. FOBO products such
as the world’s first all Bluetooth Smart Tyre Pressure Monitoring System (TPMS) FOBO
Tire and FOBO Bike, FOBO Tag/Max are designed to enhance ways and standard of
living and to help preserve the environment. There is many vehicles in use that do not
have TPMS installed as a factory specification which in turns opening a new and
untapped markets for TPMS industry players.
Salutica Berhad will continue to pursue growth and put effort in developing new products
and new processes through its R&D capabilities. Leveraging on the company
experience and expertise in Bluetooth technology, they had begun in developing
Bluetooth-enabled personal healthcare relates products under their own brand FOBO
which currently under the concept stage base on engineering prototypes. This will
contribute an additional revenue and earnings stream to the company if the venture into
healthcare related products are successful.
ADC 602 Marketing Management Term Paper Group 4
5.2 Business Challenges
Salutica Berhad operates in the consumer electronics industry are subject to specific
challenge inherent to the industry and challenges relating to the general business
environment. Those challenges that more related to marketing are include as Salutica
Berhad is revenue dependence on major customers and non-availability and fluctuations
in prices of raw materials.
200 182.51
161.87
150
100
50
0
Year 2017 Year 2018
The loss of any of these major customers, if not replaced, may adversely affect Salutica
Berhad financial performance and results of operation. Hence, marketing development
is important for Salutica Berhad to discover new market and contribute to company
revenue.
Salutica Berhad committed to provide the best quality products to their customers caused
them to rely on reputable supplier which provide high quality raw material consistently
from foreign country. Hence, prices of raw materials are fluctuated due to currency and
ADC 602 Marketing Management Term Paper Group 4
other uncontrollable factors. These have impacted company sales revenue and become
another challenge of Salutica Berhad. From the annual financial report, non-availability
and fluctuations in prices of raw materials has caused raw materials cost percentage
over revenue increase by approximately 4% (approximately RM 10.5million) on year
2018 as compare to 2017.
On the other hand, Salutica Berhad operations are subject to customer's order
cancellation or order delays which is one of the uncontrollable challenges faced. This
uncontrollable challenge has caused major source of increases in total supply and
operation system cost which shown in loss by slow moving inventory cost RM7.9million
in year 2017 and increased to RM10.4million in year 2018. After investigation from sales
team, this phenomenon may due to the factor of competitor price change, customer
company downsizes due to low market demand and some unforeseen factor. Hence, it
is important for marketing department to optimize their marketing strategies by evaluate
the effectiveness of the strategies that have been implemented, forecast their customer
demand and introduce new promote method such as digital marketing. This are the new
marketing challenges that Salutica Berhad facing.
ADC 602 Marketing Management Term Paper Group 4
6.0 Recommendation
As narrated in the case description, Salutica’s business direction to venture into non-
Bluetooth related industry can be a big challenge is it does not have the experience and
expertise in the industry. The key marketing challenges faced by the company are
discovering new market, explore brand new domain, identifying key possible entrance
points, weighing pros and cons of each entrance points and defining a market entry
strategy. In order to overcome marketing challenges, marketing department of Salutica
Berhad can be solve by using Market Research and formulate effective Market entry
strategy through SWOT analysis.
In order to perform effective market research, Salutica Berhad must follow the five step
plans which are define the problem and research objective, develop research plan,
collect relevant information and present marketing findings (Philip Kotler, 2017).
Defining the problem and research objective is the most important part before conducting
any marketing research. It used to clearly and define what the is problem faced by
Salutica Berhad and what is the objective in conducting the research. The objective must
be specific to what the company wants to achieve at the end of the research. In this case
study, Salutica Berhad has define that their business is dependence to major customer
with one type of product (Bluetooth-enable device).
Next, Salutica Berhad should develop a detailed research plan. To develop a research
plan, they need identify either primary or secondary data source to collect the data. Most
of the time, secondary data source is recommended because existing data can either be
purchased from a market consultancy firm such McKinsey & Co or Government Agencies
and it can be easily available for analysis and time saving purpose. Although there is
some specific information that are not available from the secondary source, marketing
ADC 602 Marketing Management Term Paper Group 4
department should start with primary source to collect the some of the specific
information. The primary source can be collected through many methods. For example,
market survey using information available from the internet, email survey, phone calls,
interviews and others. These are the effective way to collect data which will help on
develop a research plan.
Next plan after collected relevant information is to analyze collected information. All the
relevant information collected by using the primary and/or secondary approach will be
used to analyze and understand how the business can be planned to enter the market.
Then, the research findings are presented before the management before and final
decision will be made if the management wants to proceed to enter the market or not.
SWOT analysis tool can be used to summarize the company’s strength and weaknesses
as well as potential and unexpected threats and new or existing opportunities which can
be explored in order to choose the right market entry approach. In order to expand the
growth of company, the owner and the management of Salutica Berhad should
understand and well known of the SWOT of company. By getting more information from
Salutica Berhad, we have performed a SWOT analysis for Salutica Berhad as below
Figure 7.
ADC 602 Marketing Management Term Paper Group 4
•Intense competition
•Change of technology could affect business
•Dependence on a few major customers.
•Product facing ever-shortening lifecycles due to pace of innovation.
Threat •Potential trade war.
Through the SWOT analysis, Salutica Berhad has more understand about his business.
This allow them to implement the suitable market entry strategy for their new developed
products (non-Bluetooth device).
ADC 602 Marketing Management Term Paper Group 4
7.0 Conclusion
Based on the findings, we have studied all parameters such as background history,
company movement for development, the obstacles faced by Salutica Berhad with the
solutions to overcome the difficulties. Marketing development is important for Salutica
Berhad to get their business known and trusted by new and potential customers in their
target market and eventually contribute to company revenue. Salutica Berhad has been
facing marketing challenges which involve sales. To overcome marketing challenges,
Salutica Berhad may use the five plan steps solutions to realign their marketing strategies.
The five plan steps include defining the problem and research objective, developing a
detailed research plan, collecting relevant information, analyzing collected information
and discussing with management for final decision. Our suggestion like SWOT analysis
have been strongly dominant paradigms marketing stage for many companies. However,
for getting the strategy in right direction and successful, Salutica Berhad should work on
their strength and weakness within the firm. We hope with our suggestion, Salutica
Berhad can continuously improve its business and achieve its marketing objectives.
ADC 602 Marketing Management Term Paper Group 4
References
Bhd., M. S. (2018). Salutica Berhad Riding on Bluetooth Growth. Malaysia: Mercury Securities
Sdn. Bhd.
Bradley, N. (2013). Marketing Research: Tools and Techniques. United Kingdom: OUP Oxford.
Lawrence Silver, R. S. (2013). The Essentials of Marketing Research. New York: Taylor &
Francis.
Moses Jeremiah, B. K. (2018). Michael porter’s five competitive forces and generic strategies,
market segmentation strategy and case study of competition in global smartphone
manufacturing industry. ResearchGate, 8.