Sales Management of the Sale of Vivicomb Into the Chinese Market - Essay Example

?Sales management of the sale of Vivicomb into the Chinese market Introduction Vivicom is an internet retailer that sells a hair loss treatment device. It uses laser technology to solve balding issues. The product is stored in the UAE and the UK but can be shipped to different parts of the world. Currently, the company is planning on entering the Chinese market. It has a range of options that it may use to penetrate this market. The report will examine some of these strategies that revolve around international expansion. Introduction of the product Product introduction will occur through the creation of a new Vivicom website in Chinese. It will also take place through placement of the product in Chinese online marketplaces. This is a form of international expansion; therefore, certain contacts with citizens in the target country are necessary. The latter will be indirect distributors in the online market. The product has a great value addition, which needs to be emphasised by all stakeholders. a) Sales channels Direct channel One of the most revolutionary sales channels in the western market is internet selling. It has broken the barriers between indirect and direct selling. Vivicom is already an e-commerce company that makes its products available through the internet. It therefore makes sense for the organisation to sell its products through the same channel in China. However, it will have to adopt a series of other strategies to support its e-commerce platform. Already, Vivicom has a head start in the target country it because it possesses a facebook page, and has a simple shopping cart that allows people to but the commodity through one direct transaction. Furthermore, the organisation already makes use of search engine optimisation to make itself visible to the public. The only problem with this approach is that it relies on the customer’s initiative. Unless a buyer specifically searches for hair loss replacement products, they are unlikely to get to Vivicom.com. More is required in order to get to the masses in a large country like China. Indirect channel Indirect channels could assist in penetrating the Chinese market. The organisation can work with China’s biggest retail stores to sell its merchandise. This business would be responsible for the display, pricing and distribution of the product. They also determine how effective customer experience is. It is for this reason that Vivicom would have to give up some of its control. Web stores are revolutionising the e-retail market because they have a reach that single internet stores can only dream about (Johnson and Tellis, 2008). Therefore, a combination of direct selling through the company store will be utilised. The company will the augment these efforts by placing its products on TMall, Alibaba.com(China)- Taobao, and 360 Buy, which are all online marketplaces. Since these stores specifically target Chinese consumers, then they would be critical in the provision of services to all. It should be noted that the internet selling channel was selected because it is the basis upon which Vivicom sells its products. Aside from that, China represents one of the most untapped internet shopping markets. The country already has double the number of internet shoppers in the US, yet they only account for less than half of the Chinese population. It has been projected that internet sales will grow exponentially in the next five years. Currently, the amount of time Chinese users spend online is 3 hours daily. This is already quite promising. Furthermore, the youth and other members of this generation are quite comfortable with online shopping. Therefore, the organisation has a lead. In order to increase its presence in China specifically, it needs to target market places or online stores that are already familiar with the Chinese market. The Chinese version of Alibaba.com is already turning heads in the internet world. Organisations like Taobao and TMall also broke records by reporting some of the greatest traffic on their sites. Consumers bought$3 billion worth of products in a period of 24 hours from these sites at the beginning of 2013. Therefore, Vivicom has a chance at success if it targets these groups. 2. Pricing strategy Currently the product goes for $510 dollars. This price makes sense because it must take into account shipping costs, manufacturing costs and marketing. A lot of technology has been put into the product, so it is prudent for the price to encompass that aspect. However, when entering the Chinese market, one must think about the buying patterns of Chinese buyers. Many of them have a positive attitude towards western brands and are willing to pay substantial amounts for these products. On the other hand, a number of Chinese buyers care a lot about price. Therefore, many of them would try to compare sales of other products before purchasing the Vivicomb. Fortunately, the organisation has no rival for the same product in China or surrounding areas. Comparisons would thus not be fair as they would be relating apples and oranges. Most hair re-growth products come in the form of creams or laser treatment which can only be found in dermatological clinics. The product has thus found a way of bringing a relatively expensive procedure to consumers’ homes. It is for these reasons that the retail pricing should remain at $510. The company will dwell on selling the value of the product in order to justify its high price. A number of consumers who have been looking for an answer to their balding issues would be quite willing to spend some extra money on such a revolutionary product. However, special cases will be considered for priority clients as they may be buying in bulk. For indirect selling partners, or internet distributors, the price will have to accommodate their own profit margins. Organisations such as 360Buy and Alibaba will have to negotiate selling prices with them. They must incorporate their own mark up before they settle on an offering price. Similar models that have worked for the company with Amazon will be adopted. Therefore, it is likely that the same will apply in Chinese marketplaces (Micheal and Zhou, 2010). c) Marketing support requirements from the manufacturer Value preposition The first aspect that must be covered by marketers is the value proposition. They must stress the value created by the products thoroughly. Emphasis must be given to the fact that laser technology was only available in specialist clinics until Vivicom entered the market. The visibility of results in 8 weeks must also be marketed. Individuals need to understand that this product will reverse hair thinning and increase hair loss in a very short amount of time. It is also imperative for the product to stress its primary objective which is to treat hair loss, even if it is hereditary. Before and after pictures of the products working would be crucial here. Even statistics on its effectiveness could work. 9 out of ten men have reported some impressive results from the use of the product. Additionally, because several people are always sceptical about medical products and their side effects, marketers must talk about the presence of ISO certification and FDA approval. Market segment This business will be targeting internet users with balding and hair loss problems. Sometimes the conditions could arise in young people if it is hereditary. Alternatively, the problem may simply stem from very tight hairstyles. It should be noted that hair loss is often an age-related problem. However, because the younger generation is fond of using the internet, then it will be necessary to strike a middle ground. Men and women between the ages of 18 and 50 will form the core market of the commodity. They must be experiencing hair loss or at least buy it for someone who is experiencing the same. Value chain structure This product will be distributed directly by the manufacturer through its website. The organisation has stores in the UK and UAE where it stocks its products. This will not change after entry into China. However, it will be critical to utilise the UAE platform more than the UK one because it is closer to China. This will ensure that everyone gets the goods thy desire in as fast a time as a possible. The Vivicomb will not be sold as a stand-alone product. It must be combined with a range of other complementary products. A charge is necessary for it to work, so this will be included in the box. Furthermore, the package will consist of a User guide and quick start guide for those without time. Power supply of between 100 and 240v will also be available. Marketers must combine these commodities in one package (Vivicomb, 2013). Cost structure Costs will be attributed to customer support. Partner organisations that work with the company will have to provide support to consumers on the use of the products, expected results, transaction monitoring and money back guarantees. The existence of a 24 hour support team is vital to the success of the product in China. It will allow persons to access the product at any time of day. Position in the value network Linking with consumers and suppliers will be done through the internet since this model has been established as revolutionary in the Chinese industry. Customers will visit the website for their respective needs and then find the product from the organisations. Its suppliers have been conducting business with the organisation for a relatively long time. This will not change upon entry in China. Competitive strategy As mentioned before, Laser technology way previously not available to consumers until the introduction of Vivicom. Markets will still need to compete with the traditional model of hair treatment which involves visiting dermatological clinics. Partners would have to insist on the price-competitiveness of this product as it cannot be compared to expensive procedures in those clinics. Additionally, they must emphasise the ease of reach of these products to the part of the head that causes those problems. The focus is to use the best technology to have a competitive edge over the competitors. d) Sales techniques for B2B and B2C For B2C, the organisation will place display ads on its indirect sales channels like Taobao and TMall. It will have before and after images of persons with hair loss problems and a short image of the product. All the marketplaces that have a market presence in China will be targeted for this purpose. B2C sales will also entail the use of more traditional methods of advertisements. Key Chinese cities like Beijing and Guangzhou will have print ads of this product on print media such as magazines and newspapers. The same image found on internet display ads will be found in these sources. At the end of the poster, Vivicom’s website will be prominently displayed as a call to action. In order to ensure penetration into this market, one must maintain a similar image across major platforms. This sales technique would bridge the gap between consumers who do not hunt for products on the internet but would benefit from its use. It has been shown that before and after images for cosmetic and health problems tend to elicit very positive responses from buyers. Finally, the organisation will link up with consumers on social media. It will open web pages across China’s most popular social networking like Tianjo and Wealink. Here, it will engage in direct marketing to these individuals by connecting with them, letting them know about product features and other offers available to them (Doctoroff, 2012). B2B strategies will entail the use of a website as a way of reaching this community. One way of penetrating the internet market places would be to create a Chinese version of the Vivicom website. It needs to be well-designed and should contain all the information relevant to the product. Most individuals feel that Chinese websites lack precision, so if a well-written Chinese website is available; it is likely to attract the attention of potential business partners. This website will be the place where its business partners will refer clients to or will assess information about the organisation. This strategy will also encompass the use of online communities. Several networking opportunities exist in China to connect with business and professionals in the right environment. Therefore, Vivicom will introduce itself to its potential business partners through these forums. It will also attend business events in order to network with persons in the Chinese environment. e) Key account management (KAM) It is likely that this product will elicit differential responses from clients. Those businesses that demonstrate enthusiasm for the product will do so in various ways. One avenue would be buying the product early. Such persons assist in the diffusion of the product and would be critical to its success. Additionally, those accounts that have high prospect for growth or those that seem willing to grow will be given utmost priority. There will be customers who represent vital components of their market, so they will also be prioritised. Individuals who purchase in bulk will belong to this group and so will media personalities or popular Chinese persons. They would enhance the reputation of the business and even contribute to the sale of the product. These customers will be entitled to improved service. They will receive special attention from customer support. Therefore, the amount of response time dedicated to such clients will much higher than that of the average buyer. Additionally, they will benefit from improved communication. They will have a single point of contact or sales person who will manage their account and address their problems as soon as they arise. Terms of service will also be negotiable such that individuals can get low prices for products bought in bulk. Some of them will also cooperate with the organisation concerning matters of research and development. In this case, they will work hand in hand with the company to make the product better. The most effective group to contribute to development would be frequent users of the product as they have used it and know its deficiencies. f) SWOT analysis/PESTLE/Contingency plan/ current market analysis SWOT analysis Strengths -Vivicom is a revolutionary product whose value is clearly visible -Internet sales in China are some of the highest in the online world -Online purchases are posited to grow exponentially in the next few years -Chinese customers respect western brands and would be willing to pay premiums for them -Hair loss is a serious problem among men and women and many are looking for solutions for the same -Lack of other hair loss treatment products makes it a force to reckon with -Strong online experience and international sales through its UK location Weaknesses -The product may prove to be too expensive to the average buyer -Online selling is impressive in major cities but is yet to reach other parts of the countries -The organisation’s model makes it difficult to get in on business networks or Gaunxi -Vivicom will have to give up control of the product to online marketplaces who might not implement its marketing strategy as effectively as them. Opportunities -Vivicom can take advantage of Chinese-specific websites like Taobao and Tianjo to connect and sell its wares -The company can listen to its consumers in order to better serve their needs -Marketing the product though print ads will reach non-typical online users -Use values of Chinese communality to sell the wares Threats -Fakes are quite common in China and counterfeits of Vivicom may be introduced into the market -Chinese buyers are not individualistic, so marketing messages for the product may not relate well to them -It may take longer than usual to penetrate the Chinese market as users may not notice the product immediately -Local manufacturers may copy the technology and introduce their own products. PESTLE ANALYSIS Political: The political environment in China is stable but susceptible to uprisings. Media censorship and excessive government control are common. Some parts of the country like Tibet have secessionist leanings. Vivicomb ought to avoid the most volatile locations. Economic: China’s economy has grown at impressive rates over the past decade. Therefore, Chinese buyers have experienced increased purchasing power. However, this has led to huge inflationary pressures. Consumer good prices have changed dramatically over the years. Social: Standards of living are reasonably high in major cities. However huge disparities exist between the poor and the rich. Vivicomb should target the middle class in these cities. The level of internet access is increasing significantly in the country with many shoppers turning to the internet. The Chinese have a communal culture, so marketing activities ought to carry this message. Individuals tend to trust western brands, of which Vivicomb is part. Fakes are common in China and the same pattern is still prevalent on the internet. Technological: China has garnered a reputation as the manufacturing capital of the world. This might, however, be a problem to Vivicomb due to replication from new entrants. E-commerce proliferation is yet to take root. Secure and stable methods of online payment are not in place. Credit card penetration is only at marginal levels thus impeding people’s involvement in e-commerce purchases. Legal: The government is yet to pass legislation concerning the e-commerce industry. Therefore, Vivicomb should be ready for tighter regulation. In the mean time, it can enjoy a relatively open environment. Environmental: China’s environmental laws are weak as most focus is on economic growth. Vivicomb will not be highly affected by this aspect as it does not manufacture in China. However, the special interest groups and the media are trying to sensitise the masses on the importance of this aspect. CONTINGENCY PLAN Logistical risk: Since the target market has a relatively high population, the company may face the risk of failing to get enough raw materials from its suppliers. To deal with this challenge, Vivicomb must diversify its supplier network by selecting back up suppliers for every current supplier. Political risk: Given the historical nature of government involvement in business, there is the risk of asset seizure or poor contract enforcement. To deal with these problems, Vivicomb needs to investigate deals before making them at the B2C level. It must also have insurance for possible political crises like terrorism or war. If it becomes untenable to do business with such companies, then the organisation should simply stick with direct selling through its website. Financial risk: The high inflationary pressures in China have made the country’s currency quite volatile. Vivicomb should work with banks that have a presence in the UK or US. They should allow maintenance of dollar accounts so as to minimise foreign exchange fluctuations. Regulatory risk: Entry into China may come with challenges concerning registration of the business, acquisition of permits and licensing. This is especially so for an ecommerce firm like Vivicomb. To deal with this issue, the organisation should work with astute lawyers and accountants who are familiar with Chinese lawyers at the e commerce level. Analysis of current marketplace Vivicomb is currently selling its products on the internet to different countries of the world. It has tried affiliate marketing in some geographical locations, but these efforts are largely dependent on the presence of the website. The firm is competing with online vendors like eBay for consumer attention. Several retailers often liaise with these vendors to increase reach. Most buyers choose the ecommerce platform for specialised products. These are items that are not easily sold in brick and motor stores. The latter aspect is what has sustained sales for Vivicomb’s product. This is a relatively novel item that individuals who suffer from balding will search for purposely. Buyers in this marketplace often compare prices of similar products. They are likely to seek information before they can buy it. Vivicomb has few equals in this regard, so it has an advantage. Consumers also prefer to purchase tangible and small-scale products over the e-commerce platform; they usually go for face to face contact when making huge purchases like cars or insurance. The global e-commerce market for Vivicomb is worth billions of dollars. However, the highest numbers of internet users come from China. It is surprising that the organisation has not yet tapped into this market. g) Sales staffing and product training The sales team will be the heart of this expansion strategy in China. All individuals must speak Chinese fluently, and should be aware of the prominent dialects in the country. Perhaps one of the most predominant qualities that will be assessed is the personality of the individuals. They will need to have the intellect, motivation and sales ability needed to take care of such a wide consumer base. It would also be a valuable trait if the potential salespersons have used the product and seen for themselves its benefits. This could mean that they would be preaching about products that they are already familiar with. Another additional trait would make a sales person stand out is their experience in the cosmetic industry especially matters of hair loss. These people are likely to know where to prospect for clients (Jobber and Lancaster, 2009). Salespersons will undergo training to prepare them for their positions. They will learn about prospecting through the internet as their primary platform. Additionally, they will be taught how to qualify leads, handle objections to the product and time management. They will also receive training on how to close a sale, management of their time and presentation skills through the internet. Training will also involve teaching of relationship management. The sales force will learn about the relevance of the building trust between the organisation and its clients. This may be achieved by maintaining the lines of communication with clients even after completion of sale. It can also be handled by proper after sales services. h) Monitoring sales performance Three parameters will be analysed: accounting measures, sales activity measures and customer retention quality measures. The first aspect will be analysed through increases in sales. Therefore, if the number of products sold increases, then this will be indicative of a successful sales strategy. On the other hand, if sales responses in China are overwhelming then the most effective strategy would be to use increases in profit margins as indicators of success. Other ways of measuring the effects of sales efforts is through measures of sales activity. If the number of calls made and leads followed meets certain targets, then sales goals will have been attained by the company. The latter mostly refers to single clients rather than those who belong in the key account management category (Rubinfield, 2005). Customer relationship quality measures will relate to bulk buyers. Since the nature of Vivicom is such that it may not require repeat purchases, then most customers who will keep coming back are the ones who will buy a lot of the product. The method will measure the degree of customer retention achieved by sales personnel with regard to this group of people. If repeat sales occur in the organisation, then it will be indicative of success. However, the company will need to move beyond repeat sales and assess the extent to which customers are committed to Vivicom and whether they trust the company. This will be analysed through surveys which will determine consumers’ attitude towards the organisation. The latter will help sales personnel to identify scenarios in which they need to improve. It will also motivate others to enhance the quality of relationships that they build with other promising individuals in the company. Conclusion The introduction of Vivicom into the Chinese market will occur through online selling from a Chinese version of the website, and through partnership with Chinese online markets like Taobao and Wealink. It will be critical to get the message across by using social media as well as print ads in key Chinese cities. The main message in advertisements will be communality, as this resonates with Chinese buyers. The company needs to have a sales force with experience in the target market and one that speaks the language fluently. With great emphasis on the value addition of the product, it is likely that it will succeed in China. References Doctoroff, T., 2012. What Chinese consumers want, [online] Available at: ‹http://online.wsj.com/news/articles/SB10001424052702303360504577408493723814210› [Accessed 2 November 2013]. Jobber, D. and Lancaster, G., 2009. Selling and sales management. London: Pearson Education. Johnson, J. and Tellis, G., 2008. Drivers of success for market entry into China and India. Journal of Marketing, 72, pp. 1-13. Micheal, D. and Zhou, Y., 2010. How to sell online in China. [online] Available at: http://www.businessweek.com/globalbiz/content/aug2010/gb2010082_947892.htm [Accessed 2 November 2013]. Rubinfield, A., 2005. Built for Growth: Expanding your business around or across the globe. NY: Prentice Hall. Vivicomb, 2013. Company website. [online] Available at: [Accessed 2 November 2013]. Read More