The Large Household Appliance Industry
The Large Household Appliance Industry
1) How would you characterize the large household appliance industry and market? According to the textbook, I would characterize the large household appliance industry and market have great potential and opportunistic revenues; especially, in the developing countries such as China, India, and Southeast Asia areas with great portion of population do not own any or very few of these appliances; moreover, the population of these countries is very large; for example China population about 1.35 billion, India about 1.15 billion that had supported by the industry analysts about their findings of the great opportunity for the industry sale as many or greater as North American and Western European consumers because the combination of two great factors–large population and low saturation level owning home appliances; in point of evidence, China is leading in the quantities of selling refrigerators (Kerin & Peterson, 2010). Any how, the market is showing great opportunity so is the competitiveness; there are many monster home appliances producers such as Matsushita Electric Industrial, Haier, and Whirlpool etc…. 2) How do consumers buy large household appliances?
Consumers buy large household appliances most likely for replacement of the existing and/or broken one which has very high rate (70%) and the rest 30% for first time buyers and desired upgrade buyers according to data in the United States for retail chain. Further, data information showed that independent appliance retailers only have 47% due to product failure, 17% for remodel, 15% for first-time buyer, 11% for upgrading, and 10% for moving (Kerin & Peterson, 2010). In addition, it is similar to other products consumer are very high brand loyalty that they usually buy the same brand for replacement.
Other factors are not less important attributes which are ranked by U.S consumers such as store placed in the first, next best deal, then convenience, and service and knowledge which play very critical role. The tasting of the U.S consumers has been changing overtime too. According to the data analysis has shown that the sale in the high end and low end are increasing over the year for instance for high end 22% in 1995, 30% in 2000, and 35% in 2004; the low end 23% in 1995, 25% in 2000, and 34 in 2004; in contrast, the midrange is decreased over the same period for example 55% in 1995, 45% in 2000, and 31% in 2004 (Kerin & Peterson, 2010).
3) How would you characterize Maytag’s competitive position in the large household appliance industry? Maytag has been established and produced home appliances for more than century. It has very strong brand equity and recognition. One of the most famous adverting campaigns that have positioned Maytag very well in the consumers’ mind such as “Lonely Maytag Repairman” and the obvious standout uniform of the repairman which are conveyed the dependability of its products. However, the changing of the technology, globalization, and aggressive competition from huge companies such as Whirlpool, General Electric, and Electrolux, there are numerous others smaller companies but they are not less aggressive to compete and invade the same market with Maytag.
As the result, Maytag has been losing the profit margin for over the periods 2003 to 2005. Even though Maytag is fourth place in sale for appliances in the United States this margin would not sustain without the helps from innovation and intelligent strategies because the aggressive invasion from both national and international companies. I believe that Maytag would be able to maintain its positions and compete with others by using more aggressive for innovation and reevaluation (consolidation) as necessary for maximizing capacity which will help reducing costs and increasing profit margin.
4) How would you characterize Haier’s competitive position in the large household appliance industry? According to the data and information, I believe that Haier’s competitive position would be very strong and aggressive in the large household appliances. Some characters that are to determined its positions such as its varieties of items and products; it has a leadership position in China that swallow 30% share of 13 billion market; its operating revenues have been increased for last 4 years for instance 48% in 2001, 18% in 2002, 13% in 2003, and 25% in 2004; Haier’s brand is highly recognized in China; never-stop innovation; good customer services; in the short period of time, it is already in the fifth place for sale revenues after Whirlpool, General Electric, Sweden’s Electrolux, and Germany’s Bosch-Siemens; currently, global positions of Haier is very low in the U.S market (3%) and 2% in the Western and Eastern Europe; but Haier is in the captain position in Asia it has 10% market share (Kerin & Peterson, 2010).
5) How would the Maytag purchase (a) further Haier’s corporate initiatives and (b) capitalize on Haier and Maytag strengths and overcome Haier and Maytag weaknesses in the United States and worldwide? a) The Maytag purchase would further Haier’s corporate initiatives in the U.S. market and global market as well; because it can utilize Maytag technologies and innovations and combining its to develop a better and more competitive products; facilities and supplies are ready for producing quantities as if demands increase; Haier can use Maytag retail channels to display and market its products; Haier can provide wider range for customers. b) The Maytag purchase would strengthen both Haier’s and Maytag’s market place in the U.S and worldwide as the results that they would have bigger, wider, and stronger only capacity but also financial. The combination of the two would help each other overcome its struggle such as technology and core advantages that will help them to support each other to become more efficiency and effectiveness which in turn to produce better margin for them.
6) Should Haier market Maytag’s current brand names or should Haier replace Maytag brands with the Haier corporate brand name? Maytag is a very high recognition and valuable brand which has been produced dependable products since its first initial 100 years ago; therefore, it would be better for Haier to use Maytag’s brand to market and use Haier’s brand name as well because Haier is not well-known brand yet in the US; moreover, marketing two brands would provide more varieties in the markets which also strengthen their positions in the market as well.
However, Haier may introduce Maytag in the Asia market place where Maytag does not have any market. Another strategy that Haier can use to market its products such as using more aggressive brand recognition for Haier brand in the Asia to establish brand loyalty in this market; on the other hand, Haier will use innovation to enhance Maytag’s brands, styles, figures to market in North America and Europe.
Kerin, Roger A. & Peterson, Robert A. (2010). Strategic Marketing Problems Cases and Comments (12th Ed.). New Jersey: Pearson Prentice Hall.