Sanyo 'Aqua' Washing Machine in the Nigerian Market - Report Example

Introduction Sanyo is an international company that specializes in the manufacture of home appliances. The company has branches in various parts of the world including Africa. Sanyo plans on launching a washing machine called Aqua to the Nigerian market. The paper will examine some of the products being offered by Sanyo, its current position within the market, some competitive factors that could be affecting it through the Porter’s five forces and relationship marketing affecting this company. Thereafter, some conclusions and recommendations will be made about the potential success of the Aqua washing machine within the Nigerian market. Chapter 1: Porter’s five forces In order to determine whether the Aqua washing machine has the potential to succeed within the Nigerian market, it is essential to find out some of the competitive challenges that the company may have to tackle. Michael Porter identified some five forces that should be analyzed and they are enlisted as follows (Porter, 1980) Competition In terms of competition, Sanyo will have to deal with international companies such as LG and Samsung in order to create value for their money. Most of the problems arise out of the fact that these companies have experience in selecting washing machines. Additionally, some of them also have innovative ideas. In order to counter the effects of these companies, it will be essential for Sanyo to boost their marketing strategies. (Porter, 1980)Additionally, the company will have to employ some of the innovative ideas that have previously worked in other parts of the world. On top of this, it will be essential for the company to understand that customer service is an imperative part of dealing with competition. They need to train their employees to handle these consumers. (Brandenburger and Nalebuff, 1995) Threat on new entry Industries that are susceptible to threat of new entries are those ones that operate in environments that require minimal investments in capital and low cost of leaving the market. However, because the electronics industry requires heavy investment in capital and also because costs of exiting the industry are rather high (manufacturing equipment is sold for much less value than it was bought) then this is not a very big problem for the Aqua machine. (Porter, 1979) Besides that, the company is also not likely to meet increased competition from other entrants because they have the benefit of larger economies of scale which they have established over the years. This will allow them to save and the savings can then be transferred to the consumer who can pay less for his products. Supplier power Sanyo does face a threat of supplier power owing to the fact that the Aqua machine is manufactured outside the Nigerian market. Consequently, the company does not have a chance of monitoring the Nigerian environment more closely. Additionally, this company is also faced with a threat because of the fact that it does not have closer association with the Nigerian environment. It will need to form a branch in Nigeria so as to adequately monitor their selling environment. This can be particularly difficult if the company is trying to do this while still being located in other parts of the world. (McGahan, 2004) Buyer power Buyer power may not necessarily be a threat to the Aqua washing machine launch owing to the fact that there are few products within the Nigerian market that offer the value that Sanyo product does. Additionally, buyer power would be high if there are no obligations made by consumers during the purchasing process. Sanyo can create this scenario by introducing contracts during the process of selling. (Kotler & Keller, 2004) The issue of buyer power will not be a particularly disturbing one to Aqua because of the fact that its target market segment i.e. the middle class and affluent have not been heavily penetrated by other companies. LG and Samsung can only boast of a very small percentage of its market share and this will go a long way in enhancing the overall potential within the market. It should be noted that when buyers have very many avenues to choose from, then chances are that there will be greater competition and hence greater buyer power. However, this is not the case. Also, there are fewer consumer networks in Nigeria than there are in the western world. Consequently Sanyo will not be overly disturbed by this matter. Availability of substitutes It should be noted that there are few efficient substitutes for washing machines. This is because the value, innovation and ease of use that the Aqua machine offers cannot be found in other commodities or services within the market. (Competition in Africa, 2001) For instance, consumers either have the option of doing the washing themselves; this is highly tiresome and wastes time. They have the alternative of getting someone else to do it for them but this is only not time or resource efficient. Lastly, they have the option of taking their clothes to the dry cleaners but certain garments are not supposed to be dry-cleaned. The target market has minimal substitutes thus giving Sanyo an advantage. (Porter, 1985) Chapter 2: Analysis of the company and its products Within the Nigerian market, Sanyo has already established itself as a reputable company. Its product offerings are largely home based appliances that include DVD players, refrigerators, camera, mobile phones and television sets. A product that is yet to be launched within this market is the Sanyo Aqua washing machine. This product has the potential to reach clients that have never been reached before through its innovativeness and value addition. One only has to look at the company’s overall capital base and asset capabilities to see how successful it can become within the Nigerian market. Quarterly results September (2008) Annual results (2008) Total Current Assets 1,093,395.00 1,093,919.00   Total Assets 1,672,013.00 1,683,837.00   Total Current Liabilities 876,687.00 863,329.00   Total Liabilities 1,342,744.00 1,375,794.00   Total Equity 329,269.00 308,043.00 Source: http://finance.google.com/finance?q=OTC:SANYY Sanyo creates value within its merchandises through heightening the usability of their products. For instance, currently the Aqua washing machine can accommodate a lot of dirty clothes i.e. three kilos more than other washing machines in the market. Besides this, the company ensures that usability within their products is met. For instance within the Aqua series, the company has made a relatively short commodity so that all kinds of women can use it with comfort (i.e. it if eighty five centimeters). This is also topped up by the fact that its door can be used by either left handed or right handed people. Not only does this product have the latter features, it also uses minimal water, can dry clean clothes and is environmentally friendly; it uses ozone to dry clothes. As a source of competitive advantage, Sanyo’s Aqua product is definitely above the rest especially in terms of its product quality. Using the Likert Scale that starts for least preferred company to moderately preferred to preferred to highly preferred company, Sanyo would fall in the last category. This is largely as result of the nature of its high degree of innovation. The company stands out from its counterparts and strives to offer qualities that are exceptional in either the electronics or more appliances segment. (Coyne and Sujit, 1996) If launched properly, the Sanyo Aqua machine is likely to draw up a large market from the Nigerian population. This is because Nigeria is the most populous country in the African continent.   Yr 2006 Population, total (millions) 144.7 Population growth (annual %) 2.4 Mortality rate, infant (per 1,000 live births) 98.6 Literacy rate, youth female (% of females ages 15-24) 81.3 GNI (current US$) (billions) 135.4 GNI per capita, Atlas method (current US$) 790.0 Source: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/NIGERIAEXTN/0,,menuPK:368922~pagePK:141132~piPK:141109~theSitePK:368896,00.html Additionally, the potential Aqua machine consumers can reach up to a quarter of this population. (Government of Nigeria, 2006)This is because the product will largely be targeting people from either the upper class or middle class sector of Nigeria. Consequently, the company stands to benefit tremendously if it markets its products properly and if it does a good job of spreading the information properly. Chapter 3: Relationship marketing at Sanyo Source: http://www.design-ireland.net/alpha/controller/view_article.php?oid=00000000020 Sanyo needs to establish effective relationships with this clientele in Nigeria in order to ensure that they have repeat sales for them. Many marketers agree that this is one of the most suitable and favorable ways of becoming a market leader. (Grant, 2005)In order to ensure that the Aqua washing machine secures the company repeat sales, it is essential for the company to provide benefits for its products. This can be achieved through the use of competition restricted to the company’s consumers. Additionally, the company stands a chance of boosting its relationship marketing concept through the utilization of contracts of its distributors. In order to ensure that these distributors stay with the company, it can give them licenses that oblige them to remain loyal to the company. On top of the latter, it is crucial for the company to offer certain incentives that would boost people’s ability to come back to Sanyo; it could offer additionally discounts on other products offered by the company. When consumers see such savings, then they are likely to be motivated to stick with a certain company. It should also be noted that the quality of service offered by the Aqua machine will largely determine whether consumers will stay with Sanyo. In order to do this, Sanyo will have check on the level of consumer satisfaction from time to time. This can be achieved through identification of the factors that highly matter to respective clients. These can be categorized as follows; Reliability, tangibility, empathy and responsiveness. (Hunger & Wheelen, 2003) Thereafter, Sanyo should look for ways in which it can enhance its overall consumer experience by measuring the service delivery and performance of its products. This needs to be done against the backdrop of customer expectation such as durability, performance and quality. Besides these, there should be measurement of the gap that exists between consumer expectations and the measured values. Afterwards, Sanyo needs to manage these expectations by offering realistic advertisements, being reliable in terms of delivering the promised value and also communicating effectively with one’s consumers. A word of caution is however necessary when doing relationship marketing; relationship marketing may sometime be viewed negatively if consumers’ security details are accessed by employees. It can also be a bother when discounts are misjudged as rewards rather than quality incentives. The latter may also be misused by employees to boost people those who do not deserve them. Conclusion and recommendation Aqua washing machine is an innovative, unique, efficient and cost effect product. It may succeed within the Nigerian market if Sanyo company provides good customer care, effective relationship management, reliable service, prompt delivery of promises, benefit associated with sales and if they study the market accurately. Reference Brandenburger, A. and Nalebuff, B. (1995): The Right Game - Use Game Theory to Shape Strategy; Harvard Business Review, pp 57 Coyne, K. and Sujit, B. (1996): Bringing discipline to strategy; The McKinsey Quarterly Report, no. 57 Grant, R. (2005): Contemporary Strategy Analysis; Blackwell Publishers Porter, M. (1979): How competitive forces shape strategy; Harvard Business Review Porter, M. (1980): Competitive Strategy; Free Press Porter, M. (1985): Competitive Advantage; Free Press Hunger, D. & Wheelen, T. (2003): Essentials of Strategic Management; Pearson Education Publishers McGahan, A. (2004): Principles for Achieving and Sustaining Superior Performance". Harvard Business School Press Kotler, P. & Keller, K. (2004): Marketing Management; Routledge Marketing Strategy and Competitive Positioning Competition in Africa (2001): African Competitive Report 2000/2001 Government of Nigeria (2006): Annual Statistics, retrieved from www.nigerianstat.gov.ng/n/ss/2006/survey accessed on 29th Nov Read More