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Microwave ovens

Current Market Situation

Microwave Ovens, first introduced in the commercial market in1952 and gaining popularity since the mid 1980s, have been growing to become a standard kitchen appliance in most households across the world. However, the potential of growth still exists in the vastly untapped market of South-East Asia. Even in the world market there are huge potential to export microwaves as the kitchen appliance market is substantial. New households are formed everyday and each needs their own microwave.

The entire culture of TV dinner has been centered around these microwave ovens. Sony, though a new company, is a well-funded startup with a unique selling proposition. We plan to release a wave of microwaves to penetrate all the major segments with several different features that will vary with the price.

Market Description

Professional chefs have often complained that microwaves are not ideal for cooking as they are of limited usefulness because browning, caramelization, and other flavour-enhancing reactions cannot occur due to the small temperature range. Specific segments targeted by Sony are consumers in the kitchen appliance market as well as restaurants in need of quick reheating of foods.

Microwave Ovens come in various standard sizes. Sony plans to market their product in the three major sizes. Furthermore, as technology cost decreases we can now add several value added features without increasing the price. We believe that this will give us a competitive edge. We are also the first company to use spare parts exclusively made in India using the cheap labour it offers. The labours, however, are highly supervised to ensure as higher quality then the Chinese counterparts. Attention has been paid so our product requires little to no repairs, especially during the warrantee period of 3 years

Product Review

Our first product line of microwaves will come in three sizes, Compact, Medium- capacity, and large capacity.

Compact: A compact microwave, also called small, portable, or countertop, is the smallest type of typically available consumer microwave. Compacts are the most popular size of microwave oven, dominating the market. Ours will be 50 cm (18 inches) wide, 35 cm (14 inches) or deep and 30 cm (12 inches) or tall. These ovens will be rated as 700 watts of power and measure less than 28 litres (1 cubic foot) in capacity. These ovens are primarily used for reheating food and making microwave meals and popcorn. These ovens are not made to cook large amounts of food. Sony 1000 Compact is the cheapest product of the line targeting small fast food shops and people in need of quick reheating, such as single youngs. (Market Segmentation described later)
Medium-capacity: These microwaves are larger than compact microwaves. Their heights and depths are only marginally larger than compacts, but they will be 50 cm (20 inches) wide or more. Their interiors will be 45 litres (1.0 and 1.5 cubic feet) and power runs at 1000 watts. These are the standard "family" sized microwave. They will have a few more "auto-cook" features, and incorporate grills. Sony 1100 Medium is targeted towards those who want to do some cooking at home, typically a growing family.
Large-capacity: These are big microwaves designed for cooking large meals. Large- capacity ovens can handle 25×35 cm (9×13 inch) casserole dishes, and cook tall items like roasts or turkey breast, with a large number of "auto-cook" and precise temperature control measures. Large capacity ovens will use 2000 watts and have over 60 litres (2 cubic feet) of capacity. These ovens will be 50 cm (20 inches) wide, 50 cm (20 inches) deep, and 30 cm (12 inches) high. This size will come with additional features including combining them with convection cooking and "top browning" elements that will brown food (similar to the broiling function on an oven).

This product offers the best value for money.

Sony 1200 Large is targeted towards aspiring cooks, as well as fast-food and traditional food shops.

Furthermore, add-ons for the entire oven, such as grills and rotisseries will be available for sales separately.

Market segmentation

Market segmentation is necessary, which is dividing a market into distinct groups of buyers with different needs, or behaviour who might require separate products or marketing mixes. Of the four levels of micro marketing (segment, niche, local and individual), we shall use ‘segment marketing'. In today's world, it has become necessary to divide the market using several such segmentation techniques, and we will use four.

Geographical Segmentation: Urban and suburban regions of India.
Demographic Segmentation: We are targeting people with a stable income of over 20,000 Rs.
Life-stage Segmentation: Our Sony 1000 model is targeted to single young people and newly married young couples. Sony 1100 is targeted towards Full Nest 1 (youngest child under 6) and 2 (youngest child six or over), while Sony 1200 is for Full Nest 3 (older married couple with dependent children) and Empty Nest (older married couple with no children living at home).
Behavioural Segmentation: Sony 1200 will be most useful for heavy users whereas the Sony 1000 for light users. The 1200 model will also be advertised heavily during Festivals like diwali and other special occasions where convection heating (a feature often found in traditional ovens) will be most desired.

Such segments obviously overlap, but that is not undesirable at all. In fact, that will target our prospective customers with even more precision.

For example, a new couple with over 20,000 Rs monthly income around Festivals like diwali will be more prospective then without any one of the criteria.

Of course we are targeting more than just consumers. We also found that more and more fast food shops are popping up all over the country and they are need of quick reheating of the foods. Sony 1200 has been built just for such a kind of heavy usage.

Competitive Review

As noted before, Microwave Ovens have been around since 1960s and have gained popularity to now become a default kitchen appliance. Many well-reputed business have already an established market in the microwave industry. Yet, it cannot be forgotten that this is still a growing market and as such, penetration to this market is possible. Competition from such well established firms is a major factor to consider.

A 2008 Consumer Reports study on microwave ovens supplies data about percent of "repairs and serious problems" for microwave oven brands. This data was compared to the implicit price values estimated in the final hedonic regression model for microwave ovens to see if consumer valuation of brand was consistent across studies. Of the eight brands included in the final hedonic model and the 12 brands included in the Consumer Reports study, six brands were common to both studies.

The following is an ordinal ranking of brand value for both studies results:

Consumer Reports Hedonic Brand Percent of Repairs Variables Brands Ranking Ranking 1 Samsung Amana A 2 Sanyo General Electric B 3 Emerson Whirlpool C

4 General Electric Samsung D 5 Whirlpool Emerson E 6 Amana Sanyo F Such reviews, unfortunately, is out-of-date. As such, primary research was taken to analyze the countries market. The biggest competitors are, in order:

Phillips - 34%
Sharp - 25%
Samsung - 14%
LG - 12%
Ken star - 7%
Others - 8%

Research and surveys

A primary data research was executed in order to denote current customer preferences in order to design a complete product for them. It has been found that as a new participator in the market competition, we should provide a complete package to the customer. Talking in management language, all the features to focus on, mentioned above, has become hygiene factors for the customers, they have knowledge about oven and have already chosen their loyalty; therefore the product designed should provide differentiated needs of the customers by providing a complete package. People today are more concerned about artificial chemical usage; green revolution is showing its colours.

Marketing Strategy

Sony's primary marketing strategy will be to through extensive promotion to create demand for a yet properly untapped market. Our consumer targets have been discussed above in Market Segmentation. The primary consumers are households, but we are also targeting fast- food shops with our more expensive Sony 1200 model.

Product Strategy

Sony microwave product line will come with all the features as described in the earlier product review section, plus a three year warrantee. Depending on sales volume, we plan to introduce several more ovens with more specific features next year. Sony's distinctive logo will be featured prominently in all our electronics and packaging and the logo will be further reinforced into prominence during the marketing campaign

Distribution Review

Sony brand of microwaves will be distributed through a network of retailers in the electronic markets around India, specifically Metro cities like Delhi. Our partners will incorporate some major electronic specialty store from the shopping malls to “Stadium”.

Although distribution will be limited primarily only in India, we plan to expand to India in beyond from the third quarter of the year. We also plan to experiment sales using e- commerce, which has yet to gain traction in the sub-continent.

Trade promotion will be provided for the first year to all our retailers in the first year. We are hopeful that this will allow them to stock more of our goods.

Promotion Strategy

To accomplish a task, it is important to decide the objective first. Likewise, the objective of this mix was decided in the very beginning. Objective is defined as a specific communication task and achievement level to be accomplished with a specific audience with a specific period of time. Objective could be of four types. It could be informative, persuasive, reminding, or reinforcing. In this stage it has to be decided that what type of objective to follow.

For this oven brand, informative objective has to be followed. Since the brand is new in the market, so this approach will be appropriate for the introductory stage. The aim of such (informative) advertising is to create awareness and knowledge among the customers so that the new brand can occupy a space in the market, as well as in consumers' mind where lots of other oven brands have already taken place. So it is the marketer's first approach to make consumers aware about this brand and inspire them to go for it.

We intend to try an experimental approach for this particular product, because the customers are erudite about typical oven, thus, we shall place our advertisement in such a way, that it appears that it had existed in the market forever. This might assist in gaining loyalty faster.

We have also hired a creative agency well known to produce creative advertising in India, such as ads of Coca cola. We are confident that they will provide us with eye- catching advertisement that will help us enter the market (as of now, very few microwave oven retailers advertise their product in India).

As said earlier, we will be focusing on an intense advertisement campaign. As such, more details are as follows.

Advertisement Costs

Television Commercial

An estimated cost for making it:

Pradhan Kakkad (a famous ad maker) charges 15-20 lac, including editing and shooting, etc.

Print Advertisement

An estimated cost for making it:

Since the company personnel will be doing it so we are assuming that the cost involved in making a print advertisement will be minimal

Cost running advertisement on different channels

The Cost of Running the Advertisements on Different Media Channel Time advertising cost would be around 2lac per month.

Here, we have only mentioned the cost of running advertisement for the first and second month. We didn't put the cost of third month onwards because we have decided not to allocate a fixed sum of money for running the ad from then. We would observe the response of consumers and, based on that, decide the amount of money to be allocated for advertisement purpose.

Message

The message of the advertising has been developed following a creative strategy. The steps of the ad (as followed in this IMC mix) are as follows:

Message Generation

There are several ways of generating the advertising message, such as emphasizing on a single benefit, developing a character, or developing a story. For this advertisement, housewives can be shown demonstrating how easy the microwave oven is in using and how reliable they are. Along with the mentioning of low price, the demonstration should be informative since it is a new product and awareness needs to be created.

Message Evaluation and Selection

Positioning statement: Key message: Till date we have decided on ‘Sony Microwave Oven, pours delight upon food'. The creative process shall persist as the product will gain confidence in market.
Target audience: Male and female population from urban, and sub-urban middle, class and above population.
Benefits to promise: It is an easy-to-use, powerful and reliable oven.
Media to be used: Broadcast (television, print (newspaper, magazines)
Message Execution: For the advertisement of this oven emotional positioning will be done. It means there won't be any explicit information in the TV commercial, but in the radio and print media shall provide the rational information (Convection Heating, Made with “green” materials, uses low voltage). Message execution style would be “combination” of different moments of life, shall be depicted to stir the emotions.
Order of presentation: the most important message (the benefits) is placed in the last part of the ad.
Conclusion drawing: For the teaser ad, leave it to the audience. But for the complete advertisement, conclusion would be drawn. Since audience size is large but the product is targeted toward the educated (assumed) class, the message shall not be too explicit. The audience is expected to be self motivated.
Message sidedness: One sided argument would be placed.
Message appeal: Emotional appeal is followed here.

Media

A medium is considered as the general category of available delivery system. It includes broadcast media, print media, and direct mail and so on. For marketing Sony, these three types of media (broadcast, print, direct mail) are to be used. The specific media vehicles that would be used in these different medium are listed in the following page:

Broadcast Media- Television -Star plus, Zee TV.

Broadcast Media- Radio Big FM, RADIO MIRCHI.

Print Media- Newspaper -The Times of India, The Hindu.

Print Media- Magazine - Outlook, THE WEEK

Direct Mail -Personnel of the company

The manner, how it would be telecasted in different channels and radio station, published in newspapers and magazine, has been discussed in detail in the budgeting section.

Measurement and Control

First, the level of advertisement in different media and the volume of sales should be measured. Questionnaires could be given in different stores and shopping malls to find out the current condition of product in the market. Also questionnaire could be given to the people of target audience to find out their response about the product. Information like, whether they recognize or recall the message, how many times they saw it, what points they recall, how they feel about the message, their previous and current attitude towards the product and company etc. could be found through the questionnaires. If it is observed that, the rate of sales is satisfactory because of advertisement, then it is to be assumed that, the product is doing well in the market.

Again, control means comparing the actual and desired state of affairs and take steps if these two mismatch. If it is seen that the product is not doing that good in the market regardless of the advertisement, everything has to be checked and, if possible, redesigned regarding the advertisement and find out where the problem is. Finally, corrective steps have to be taken to make the position as preferred

Sales Promotion

To increase our sales and exposure of our product we have decided to carry on certain sales promotion activities.

Coupons: Offering coupons to customers which will give them 5% off if they take the coupons to the stores. The coupons will be attached at the bottom of our print ads and when consumers tear off the coupons and take them to the stores they can get 5% off on Sony Microwave Oven
Kiosk Marketing: We also decided to carry on Kiosk Marketing. We will have our sales personnel in the big super shops like Next, Big bazaar, etc and they will tell customers about our product and company. Moreover, they will distribute our free samples and coupons to get attention of our newly launched product. Certain other activities will be conducted through this marketing like giving solutions to grooming problem of men, health tips etc.
Push sales: For retailers, we will also have to practice push sales with a high mark up pricing in order to occupy maximum shelf space. It will encourage the retailers to promote our brand because of their own advantage.

Pricing Strategy

The Sony Microwave Oven product line will target a more-for-less approach to pricing. Thanks to decreasing technology cost, cheap India labour and local materials, we would by default have a cost benefit. With rigorous cost control we have bought down our cost substantially while, thanks to quality control circles, maintain a quality of product that consumers expect being surrounded by big name brands such as Samsung and Phillips. Furthermore, a trade discount for the first year has been announced to all channel partners who will hopefully help us create an initial demand. We hope that our low pricing, coupled with a three year warrantee, will give us the edge over the international brands and eventually take them over. Sony 1000 starts at 7,000 Rs MRP in a market where the cheapest Samsung product is 8,500 Rs.

Budgeting

Several factors will have to be considered while deciding the budget for the following project:

Stage in Product Life Cycle: The product is in the “introduction” stage in PLC. Since it is a new product, a large amount of budget should be allocated for advertisement to build consumer awareness. It has to be done to gain consumer tryout.
Market share and consumer base: As the product has to build market share or to take market shares from competitors, it requires large advertising spending in order to achieve it.
Competition and clutter: There are a lot of oven brands, i.e. competitors in the market. Again, there are numerous advertisements on oven. So it requires quite a large expenditure.
Advertising frequency: the aim of the advertisement is to aware consumers and to create the interest in consumers' mind. In order to do that, the ad should be repeatedly telecasted on different media, for which large advertisement budget should be allocated.
Product sustainability: Oven is a commodity type product, thus it requires creating a level of difference in terms of representation. Therefore it requires a heavy investment on advertisement.

SWOT Analysis

Strength

Convection heating methods which combine traditional oven heating with microwave. Completely new in India
Value Pricing

Weakness

Lacking Brand Awareness and Image

Opportunities

Low cost even through more value
Increasing demand in the kitchen

Threat

Entrance to a well established market added add-ons will result intense competition
The well established brands may use appliance market as microwaves their market share as an advantage if become a necessary accessory. They decide to advertise

Conclusion

We realize that the above marketing plan focuses mostly on advertising and promotion, however, that has to do with our belief that a new product should be extensively advertised in a new market. However, we all know that first year is all about gaining market share and not about profit. We believe that Sony can achieve the highest possible market share and build a great brand image while maintaining break-even provided the guidelines are being followed.

This Marketing Report for Sony Microwave Ovens is by no means definitive. In the ever changing market it is necessary to update our marketing plan as we battle along the profitable kitchen appliance.

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