In their quest for new channel management, Gome Electrical Applications has shown that they seek new markets to develop and increase their share in their business. It has set industry standards for the lowest price selling strategy and has also mastered the countermeasures for smart TV controls in order to maintain its leadership on the channel. The case analysis examined the admission of a new product in the India state, carried out a SWOT analysis and defined market strategies for new additions to GOME Electrical Appliances. The paper also provided key recommendations based on the SWOT analysis research and also gave different factors to examine the feasibility of the recommendations.
Gome as an electronic company has enjoyed much success after initiating their channel leadership strategy in the home country in China. This success in the country has resulted in the high volume strategy and low margins in the sale of its products. A new smart TV product was chosen as the entry choice product for the Indian market. The paper discusses the different elements including the SWOT analysis of the Company and the new market. The internal and external environments were core to the analysis. Conclusive recommendations for the company were also introduced to showcase the different areas that the company needs to consider for a successful product entry.
The customer durables industry has been widely classified into two main segments: customer appliances and the customer electronics. The customer appliances category can also be divided into two main groups in the white goods and the brown goods. The urban markets accounts hold the highest number of market share held at 65% of the total customer durables sector in the country of India. This means that the demand for new electric products such as laptops. LED TVs and even split ACs will gross high sales in the urban areas. In the rural markets, the refrigerators are the kind of customer durables that have the highest demand. The electronic market has been considered to have six main categories including strategic electronics, communications, components, broadcasting equipment, customer and industrial electronics, and computers. The highest share of the electronic market is held by the broadcasting and communication equipment, which is at 29% of the total number of electronic goods sold in the country of India, according to data collected in the year 2015, and this closely followed by the customer electronics with a total of 28% share. For the Gome Electrical Appliances Company, the challenge is introducing products that will be able to suit the demand of the country. In this paper, the main topic to be discussed will be the role played by Gome Electrical Appliances in the new product entry into India as the case country of study. It will discuss the business concepts and conduct a market analysis using SWOT as the tool for analysis.
Gome Electrical Appliances was established in the year 1987 as a personally owned appliances retail chain. They had developed a steadfast approach that was concerned with dealing with their customers, as a way of going in line with their strategy of establishing a focused retail chain that only operated on the thin margins and the high volumes. With the increase of the company’s strategy based on the flourishing market, the company had started expanding very rapidly and had become one of the largest retail chain stores that dealt with the sale of home appliances in the Chinese market. The smart television market has been one of the company’s leading products in terms of sales.
Even though India is becoming one of the largest smart TV markets in the past few years, it still has a high market potential to allow for new entry of a new smart TV product. There has been an elevated progress in the demand for smart TVs in the country and acts as an ideal market destination for the Gome company product. The highest market share is in the urban market and continues to expand yearly with the advancement of new technologies and the flooding of the cable TV networks. Gome needs to ensure that it has created a product that will be suitable for this market and also suit the needs of the already existing urban market if it is able to increase its market and development of the company’s business operations in the external environment.
The company has the biggest privately-owned electrical electrical device retailers in the Chinese state with 50,000+ employees
Is seen to have a higher strategic mind set
Significant Enterprises” located in China
Consistently has growing financial position and profits
Has over 850 store
Public quarrel among the founders on the business strategy which has caused issues
Has a Limited geographic dispersion in the European continent and in other emerging economies
Has a higher global presence in the course of tie-ups and expansions
Recognized global brand
erratic markets and home policies that can affect business
Threat from domestic companies
Cheap replicas from two countries in Taiwan and Korea
The market dimension has been discussed in this section and analyzes the significant factors that actually represent the positioning of the market in this industry. The dimensions discussed in the market analysis include the market restraints, opportunities, and the market drivers (Greenwald, 2005: 34). The market drivers are considered to be the responsible for driving the market in regards to growth and revenue generation, increasing the cable TV customers, the increase of the internet subscribers, the increase in the rate of use of advanced technological devices, TV digitization, and the launching of new HD channels, which are the factors that actually correspond to the market growth. The market restraints in the country illustrate the factors that are responsible for restricting market growth and include factors such as the lack of awareness in the country on the presence of the new product. The figure below shows how mentioned impacts have an influence on the market.
The number of the internet subscribers in the Indian market have actually increased and in a very significant way over the past few years. The country is majorly populated by the younger generation and is referred to as a youth country. This means that the country is in its prime when it comes to growth. By the end of year 2012, the internet subscribers in the market were expected to grow by up to 15.8% and reach 150 million in the country #. The other factor that has also become an important market driver is the growth of the internet pay TV subscribers making it a great destination for the Gome smart TV product. The total number of subscriber of the pay TV services in India was estimated to be around 98 million when a study was conducted in the 2008 and was also seen to increase up to 138 million across the country in the year 2011.
India is considered to be a very sensitive country when it comes to the setting prices and is said to be a major attraction for its large customer base. Gome has enjoyed a large global presence and is capable of doing this through market tie-ups and also on strategic expansions that are orchestrated by the company. They have also had a large investment in their advertising and branding campaigns. India seems to be a suitable market for their new smart TV products and would actually enjoy a large presence in the country.
The company has been known for its large electrical retail stores and wide variety of products with a large resource base. They have the strength to actually take on other competitors in the market through their key strategic entry options. The company has had years of experience in the electronic market and its brand awareness has created a growth in their market share due to the products that they have in their disposal (Kotler, 2007: 182). These would allow the company to actually to have simpler entry strategy through investment in the electronic industry and introducing their smart TV products that would complement the market in terms of the opportunities in the market.
There is also the threat of the fluctuation of the market and the domestic policies that can affect the way that the market responds to the new product. The business entry into the market may be under threat from the local industry players who might offer stiff competition to the company and its product (Kotler, 2007: 179). There is also the threat of cheap copies of the product that could affect the sales and result to loss of revenue for the company.
The Indian market for smart TV has been predicted to reach an estimated $10.41 billion come the end of this year. It is growing at a constant rate and would provide for a suitable destination for the company smart TV product. The company_x0092_s brand is well received in other countries and would also be a good competition to the local market and the products they offer. The smart TVs that Gome offers are known to have the latest technological advancement which means that it would get a good reception from the urban and also in the rural market where growth is still coming up.
New Product Description
The product is proven to offer the best in smart technology and also offer digital TV capability. It is also going to offer a connection to the various users of the product as more and more of the urban are becoming connected to the Cable TV networks. The main product is supposed to offer the Indian market a way of support the market drivers that are currently in place in the country. This means that Gome will be introducing an already workable and functional product to a market that is already in demand in the market.
Customer Value Preposition
The company has excelled in the field of customer satisfaction with the help of its quality products which have a greater value than other products in the market. The products even though have competition from the cheap Chinese low priced quality products have maintained a constant low price and are also quality products which offer the customers value for their money (Matthias, 2008: 76). India is a country that is still growing and is a very sensitive market. The customers in this type of market require the best of products at the cheapest of prices. This means that the company has to offer the best quality products to their customers in this new market at the lowest price.
Justification of Product Choice
The product chosen for the company to launch in the Indian market supports the growth and the market drivers that are supposed to ensure that the country remains at a growth inclination. Smart TVs offer the best opportunity product choice for this type of market to ensure that they gain the best outcome in terms of increasing their market share and market presence. It is a product that is guaranteed to improve the sales of the company by satisfies the existing demand in the market.
The paper has addressed the different market perspectives of how Gome Electrical Appliance Company on its product entry in India. The research has proposed different market variations and dimensions that are identified with the Indian electronic market. It gave an insight in to the analysis of the entire market and how the product performs when it is introduced in to the market.
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