Investment

Product: 1.1 Electricals retailing sector: In the UK, total value of electricals retailing industry was £28.9 billion (incl. VAT) in 2010, a figure which has hardly changed in five years. The figure includes all spending – brown goods, kitchen appliances and PCs. It does not include software. (2001.Mintel).Sales by electrical retailers was £12.9 billion (incl. VAT) for the same year, down by 21% over the last five years. The sector is made up of electrical retailers (such as Currys, Comet or Richer Sounds), where sales were 11% down, and PC and telecoms specialists where sales were down by 34%. In 2006, the specialist retailers accounted for 55% of electricals sales; by 2010 they had fewer than 45%. That is a dramatic decline and we need to say why and who has gained. 1.2 PC worlds The mass market specialist PC World is the leading player, capturing over a quarter of all spending through its multi-channel platform of 161 large stores and an online shop. PC World’s category-killing format has come to dominate the PC specialists sector to such an extent that it is now the only specialist with any real scale and a market share of 26.3%.pc worlds allocate appropriately 23 online shops to make customers purchase the electronicals online conveniently.(Mintel 2009).this retailing form seems to enjoy the increasing popularity in UK. 1.3 electronicals self-service service PC World chains offer consumer electronics, personal computer, domestic appliance, and photographic equipment and communication products. This company sells its products through multiple channels, in stores, over the internet and also provides product support service to its customers. Additionally, the company conducts business to business (B2B) sales and services. (Datamonitor 2009). The nature of retailing service is significant reason to purchase and use electronicals in PC World chains. Moreover, actual chains bring convenience and happiness of self-service purchase to customers. In china, operators of electronic companies tend to import the raw components from abroad. IBM can be the most appropriate supplier for domestic retailing companies in terms of its advanced technology and marketing strategy as well as global privilege.(Mintel 2009). 3. Environmental analysis in the UK Although whole IT retailing industry experienced a downturn due to a lack of confidence from most customers in recession period, the UK electronically retailing market is still growing and its future trend is promising. 3.1 Product life cycle and target market Currently, according to statistic information in Figure 1, the market is at the growing stage of its product life cycle. During the period of 2005 and 2010, total sales have increased dramatically, with a decrease from 2006 to 2007. In 2006, it reports 16,000,000 of the electronic retailing sales. Even with the influence of global financial crisis, the sale leveled off at 20,230,000 .The future size of this industry is estimated to grow by almost 8%. [pic] The target market of PC Worlds is focused on individual users with low budgets whom appreciate the technology rather than focusing only on the executives and managers with no budget limitations.PC Worlds segments its customers into three categories according the relationship, including large corporate(relationship) customers, home and small business (Transaction) customers and public sector (government and educational) customers. Transaction customers, which represent 30% of the UK sales, are small and medium-sized enterprises (about 20%) and individual customers and consumers (10%) (Mintel 2010).Transaction customers are served by several thousand inside sales representative who call up historical sales records to assist the customers in choosing systems that match their purchase pattern. 3.2 Marketing strategies of PC World PC Worlds has attempted to maximize its sales of customers and products by designing appropriate promotion strategies. Its marketing strategy is defined by its direct model approach to selling, which is in turn dominated by the company’s intent to generate as many sales possible on the PC World‘s market strategy sees the internet as the purest and most efficient means of the direct model for sales, service, and support, as well as the most efficient means of customer communication both presently and in the future. While the consumer is choosing and configuring their computer, as well as after the purchase at the Internet site, the customer has access to volumes of support and technical information.  Instead of sales people answering questions, the customer is left to find their own answer. 3.3 [pic] [pic] 4.1 SWOT and PEST analysis Strengths: In china, as the increasing the level of the life, there will be a growing demand on the electronicals and its accessories .To be specific, huge domestic market and high, sustainable GDP growth also facilitate the development of this market. Moreover, china, as the world center for original equipment manufacturers, can provide low cost of manufacturing. Asian labor cost is cheaper than that in the European markets. People in china spend 36 million dollars on electronical-related services annually (Proquest 2008).Therefore; demand on the online self-service is expected to be high in Chinese market. Weakness: initially, though legal and regulatory frameworks for this industry are developing, we have to be confronted with the intellectual property right problem and piracy. According to the actual observation, 48% of the customers purchasing computers express their concern about security in process of transaction online. Opportunities: Chinese government set to develop the Rural PC Programme for expansion in under-penetrated rural and western areas, which will be a precious opportunity to stimulate the economic development in western areas.furthermore, the IT Service sector and outsourcing, as the emerging sector, are supposed to grow rapidly. Threat: The Chinese government has made the new policy to raise the standard of introducing the newly western company. Development and reform commission may generate the claims against the marketing campaigns and advertisement of the western IT brands. Lastly, the erosion of the china’s cost advantages in some areas also becomes the negative factor while considering investment in china. Political factors: computer has been used in business and other industries and helps the industries increase the production and interest. but at the same time, some new problems come with the computer such as energy consumption, health and pollution of the environment. in china, the government encourage the green IT that means lower noise pollution and lower energy consumption. Moreover, the export tariff of IT industry has decrease to 9.1% in 2005(Global M&A Research Center, 2006).Therefore, these policies are encouraging business organization developing. Economic factors: influenced by the 2008 economic crisis, the world economic tends to going down. but in the worst time, Chinese government published the new economic policy which was positive financial policy and loose and comfortable monetary policy. The government also offered four-hundred million RMB stimulates the recovery of IT business (The Marketing Surveillance Center of China, 2008).consequently, this is a great opportunity for new companies to compete in the Chinese market. Social factors: for society culture, the population growth, lifestyles attitudes, and consumption customs are influencing the demand of high technological products. it is clear that the education level enhanced the demand of products.Becasue of the globalization ,the Chinese people become more international,out-goning and open enough(Human Geography Research Center,2007).Lastly, the consumption custom of modern Chinese people also offers a good developing environment to PC Worlds. Technological factors: with the technology development, the communications costs and increased remote work can help the different corporation share their service techniques. Therefore, this situation can facilitate techniques of self-service online. 4 .2 Product life cycle in China The Chinese market of electronicals including online shopping market is still at growth stage. The total online -market sale was estimated at 15,341,020 in 2010.the market is forecast to increase by approximately 7.9% and reach the sale of 16,567,340 in 2016. (Mintel 2010) [pic] 4.3 Target Market When defining and segmenting the target markets, several factors should be taken into consideration, such as the demographic and behaviorist factors and relationship. The targeted segment tends to be divided into three categories which are large corporation, home and small business and public sectors respectively. There is a high percentage of adolescents and teenagers in the second category in china (Datamonitor 2010); the average number of the laptops subscribers increased by the 23% in 2010, compared with the figure in 2009 (EBSCO).Moreover, in china, people are not willing to spend a substantial time on commuting in electrical stores. Therefore, introduction of online self-service will hopefully bring more convenience and comfort to customers. 5. Competition in china 5.1 indirect competitions The possible indirect competition in china tends to be quite fierce. the main electronical retailing companies are SuNing, GuoMei, LifeSpace, New Seven Days, YiShang and so forth. The market shares among the companies will be illustrated in the following chart. [pic] According to the diagram, GuoMei and YiShang are two largest retailing companies, with the market shares of 23% and 36% being reported respectively (datamonitor, 2010). GuoMei has a good reputation in Chinese market, mainly as a result of the wide variety of goods and comprehensive after-sales service. Although YiShang has a quite strong brand image, it is inevitable for it to experience a downward trend in terms of the market share after internal restructuring. 5.2 Indirect Competition Indirect competition may appear as a result of existence of the substitute service in a market. Most customers are typically sensitive of the price and ease to access, hence, in terms of convenience, some customers may consider purchasing by telephone as a more convenient way. This method has grown steadily, becoming increasingly popular alternative to online shopping. Therefore, it might become a stiff competition. 6 Competitive Advantages The NEW ERA will launch an internet -based retailing service，which are available 24 hours every day, in contrast, a visit to a conventional retail store requires travel and must take place during business hours. Another advantage of this new service result from the fact that NEW ERA has return policies to compensate for the traditional advantage of physical stores. Moreover, online shops with this service provide or link to supplemental product information, such as instruction, safety procedures, demonstration, or manufacturer specification. This service even allow customer to comment or rate their items. There are also dedicated review sites that host user reviews for different products. Lastly, although delivering cost (if applicable) reduces the price advantage of online merchandise, a lack of sales tax may compensate for this. Another competitive advantage is self-service online is being able to quickly seek out deals for items or services with many different vendors .Search engines, online price comparison services and discovery shopping engines can be used to look up sellers of a particular product or service. 7. Barriers to Entry It is not only incumbent rivals that pose a threat to firms in electronicals retail market; the possibility that new firms may enter the industry also affects competition. In reality, industries possess characteristic that protect the high profit levels of firm in the retailing market and inhibit additional rivals from entering this market.Machael (2010) suggests that barriers to entry are economical scale, service differentiation , governmental regulation , asset specificity and distribution channels. In the context of Chinese electronicals retail market, the principle role of the government is to preserve competition through anti-trust actions, government also restrict competition through the granting of monopolies and regulation. As the Mark argues that the electronicals retailing market has been more competitive (EBSCO 2010). Moreover, the service innovation and diversification will be priority that new entrants should pay attention to. From the perspective of the capital requirement, the new entrants are still confronted with challenge; the local government increases the minimum investment capital. As a result, new companies have to raise more initial capital to set up the retailing service and business in china (China daily, 2009). The asset specificity provides a barrier to entry .when firms already hold specialized assets they fiercely resist efforts by others from taking their market share. New entrants can anticipate aggressive rivalry. The distribution channels for electonicals retailing company would be quite tough, as the most current channels have already been occupied by the Chinese IT retailing operators. For instance, Dingdong cooperated with several large websites to sell their products by e-commercial transaction. 8. Marketing Plan 8.1Marketing Mix Strategies Distribution Strategy: The company will establish the channels to market their services directly and indirectly. The direct method will be investing more on training of salesmen, setting up the chains companies in major cities and attracting private investors and brokers. Furthermore, in the indirect way, the company can make creative advertisements of their service on the mass media, such as TV, magazine, which seems to be a very feasible and effective way of promotion. In October 2010, Currys and PC World adopted Star Wars characters R2-D2 and C-3PO for TV, press and outdoor ads. The campaign kicked off with a three-week TV campaign, and used the strap line “The greatest electrical store in our galaxy” to emphasize the scale of the newly enlarged stores (Mintel 2010). Price Strategy The strategy that will be adopted by the company is customer segmentation price and discount campaigns. The company will be more likely to charge different prices according to the different membership levels of customers, which can stimulate the customers’ purchasing desires while increasing the number of people using self-service online. The company state that discount will be 10% for golden membership, 6% for silver and 3% for bronze membership (EBSCO, 2009). People The marketing competition is actually the talent competition. The company will commit to employ the best people as its staffs .therefore, the top layout of the company should recruit the competent applicants according company’s operational needs. Moreover, the company are also supposed to make reward and punishment system transparent and reasonable by allocating according to the performance of the employees. Physical Evidence In order to improve the working effectiveness of staffs, the company will make its offices and actual shops very comfortable. Moreover, company will also reconstruct the new layout of service section in the official website, making visitors more clear about the products. 8.2 The company’s plans and objectives. Year 1(2012) In this year, the PC World will develop three branch companies in eastern cities. Hundreds of researchers and administration staff will be employed in these companies. Estimated share market created by self-service purchasing is approximately 5% of the total Chinese electronical market and the fixed asset will hopefully increase by above 3%.the company will cooperate with domestic mobile operators and financial institutions, which will also raise more customers’ loyalty to services made by this company. Year 2 (2013) The influence of self-service will be more obvious and significant. The Company’s market share will climb up to 7%, with times of using the self-service per person increasing by 12%.and the growth of fixed asset will accelerate, reaching 4.5%. Moreover, the chains companies will be built in the western and central region of china. Year 3(2014) The top objective for this company is to gain 10% of growth in market share, compared with the figure in 2013, and its employees’ welfare will also be improved to larger extent. In order to achieve this objective, company will optimize the age structure of employees and recruit new ones who meet the needs of fast and sustainable development. Furthermore, the company will build new platform online and update the information on self-service, while embracing more media companies and organizations. Reference: [pic][pic][pic][pic][pic][pic]