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Nanyang Polytechnic School Of Business Management Principles of Marketing (BM0019) 2004/2005 Semester 2 Done By: Ng Ban Hock.....................(042306D) Lee Yi Ting........................ (040727T) Selvia Meliana Chandra ... (040370W) Chong Wei Li ................... (042465Q) Tutor’s Name: Tutorial Group: AF0402(AB) TABLE OF CONTENTS Executive Summary ............................................................. 3 Introduction .......................................................................... 4 Background of company....................................................... 5 History and background ..................................................... 5 Management team info ...................................................... 5 Marketing philosophies ........................................................ 6 Marketing mix of osim ......................................................... 7 Product ............................................................................... 7 Price ................................................................................... 7 Place .................................................................................. 7 Promotion ......................................................................... 8 Research Methodology ..................................................... 8 Research instrument and Sampling size ..................... 8 Sampling Procedure ....................................................... 8 Other research means .................................................... 9 Findings and Analysis ........................................................ 10 Conclusion.......................................................................... 14 Recommendation ................................................................ 15 Appendices ......................................................................... 16 Executive Summary In the following report, a details of OSIM’s varies marketing strategy would be stated. First of all in the Introduction, you would be looking at all the market research of our project. The purpose and scope of our research would be stated in our introduction. In addition, there would also be a brief description of our research methodology. After the introduction, it would be followed by the Background of company. In this section, the History and background of the company would be highlighted. The Management team infomation would also be presented. Number of outlet/branches and offices and number of staff would be mention in this section too. Finally there would be the mission statement and motto of OSIM. Next the Marketing philosophies that OSIM has adopted would be identified. The right Marketing mix of osim that OSIM has adopted would then be identify and analysis. The report would also have a section dedicated to explaining in details our research methodology. The sampling plan and sampling procedure would be mentioned. In our section, it would focus on the analysis of all the questions asked in the questionnaire of the market research. There would be analysis and interpretation of all data gathered. Charts of all questions asked in the questionnaire would also be included. In the Conclusion section, conclusion of all the research findings would be shown. Recommendation to the conclusion of the marketing research would then be provided. Finally in the Appendices, a clear piece of our questionnaire would be attached and also a copy of the webpage of OSIM. 3 Introduction Due to the alarming advancement of technology in today’s world, people are more prone to look forward on a higher standard of living, at the same time, placing more focus on their well-being. Hence, they are showing more concerns and awareness on their health. Health products like Extrim, low-fat yoghurt and even health equipment like massage chair from OSIM are often sought after. However, one might have overlooked the fact that “hot” products like the above we have mentioned, are actually made appealing to our purchaser by the enthralling packaging and marketing strategies done by the companies. Therefore, our group will be doing a project on OSIM, to find out more on their marketing concept, strategies and so on. In this report, you will find out the results of our marketing research done on the brand OSIM. Our marketing research objectives are focused on 4 areas: (1) The main target market of OSIM products (2) How is the OSIM product market segmented (3) The market positioning of OSIM products and (4) What motivates/influence consumers to buy OSIM products. From the research, we would be able to find out more about the customers of OSIM products. After gathering and analyzing the findings of the above research, we will provide recommendations on how to further improvise their marketing strategy. With our suggestions OSIM would be able to manage a more successful customer relation to attract and retain more customers. A brief conclusion stating the current satisfaction level of customers is also included. The information we gathered came from both primary and secondary information. Our main source of information will consist of (1) family and friends, (2) advertisements and salesperson, (3) personally using the product and (4) we would greatly rely on the information we found on the Internet. We will be putting in our descriptive research i.e. surveys that are done on the consumers of OSIM products to gain primary information. The primary information collected will thus entitle us to a better understanding of the consumers’ buying behaviour. 4 Background of company History and background The Company was originally established in Singapore in 1980 by Ron Sim, as an electrical and household appliance company under the name of R Sim Trading. With a small start-up capital, the company was mainly involved with the marketing of household products such as knives, knife sharpeners and mobile clothes drying rods. In 1989, the company registered the name Health Check and Care, and saw a shift in focus to home healthcare and related products. The period following this saw tremendous growth for the company, and it developed outlets including Malaysia and United Arab Emirates. 1993 the company officially launched the OSIM brand name and its distribution network expanded to 60 point-of-sale outlets in Asia. In 2002, OSIM opened its global business headquarters in Singapore. The Economic In 1993 awarded the Business Headquarters Status (BHQ) to OSIM. The company opened its first concept shop in Shanghai, in the People’s Republic of China. Currently, OSIM has established an extensive distribution network of more than 500 strategically located stores and shop-in-shops in Singapore, China, Hong Kong, Malaysia, Taiwan, Australia, Brunei, Canada, Indonesia, Ireland, Kuwait, Macau, Philippines, Saudi Arabia, South Africa, South Korea, Thailand, Ukraine, UAE, UK and USA. Management team info1 ☺ Mr Ron Sim Chye Hock (Chairman & Group Chief Executive Officer) o Responsible for the overall strategic and marketing directions, and management policies of the Group ☺ Mr Charlie Teo (Executive Director and Chief Operating Officer (HQ & South Asia) o Responsible for managing the Group's operations in Singapore and South Asian counties ☺ Mr Tan Kia Tong (Chief Technology Officer) o Responsible for formulating, planning, developing R&D strategies and managing the Group's R&D activities. ☺ Mr Peter Lee Hwai Kiat (Chief Financial Officer and the Company Secretary) o Responsible for financial and accounting control, investor relations and corporate secretarial functions. Mission Vision 1 : Bringing healthy lifestyle to society. : To be a global leader in relaxation and healthy lifestyle products. For a complete list of the management team’s information visit www.osim.com.sg 5 Marketing philosophiesa 1) The Marketing Concept is one of OSIM’s main philosophies. OSIM products are very focused on the customer’s health needs. Introducing different kinds of massage chair e.g. Imedic 200, Noro Bliss chair, Noro comfy chair and Isymphonic AV is a good example of catering to the customer’s needs and wants. Emphasis on building strong customer relationship e.g. offers free online OSIM store account. Latest product information is send to customers through e-mails. Strongly encourage customer’s feedback. Feedback forms are provided in both online store and physical outlets. 2) The Societal Marketing Concept is also being mildly followed. Being a company that offers healthcare product, it’s hard not to consider the customers long-term welfare and interest although they do make money from selling the products. The four aspect of OSIM’s product: health, nutrition, fitness and hygiene ensure customer good future health condition. a The set of concepts that a company adopted to suit their operation. 6 Marketing mix1 of osim Product2 (customer solution) Osim was originally established as an electrical and household appliances company. After 9 years, there is a shift in focus to home healthcare and related products to bring healthy lifestyle to the society. They came up with many more varieties in their products, such as, iSqueeze, iPulse, iDesire, iSymphonic and etc. Let’s take for example OSIM iSqueeze product; it has 4 pairs of kneading discs that firmly squeeze, energizing your calves, ankles and feet . It also comes with a soothing vibratory sensation that improves blood circulation and eases tension of your lower legs. iSqueeze has a power consumption of 35W and it has a dimension of 51 (L) x 39 (W) x 44(H) cm. It is also design in a very unique way that offers you flexibility and variation, with 4 different applications targeting various therapeutic massage needs. It comes with an innovative packaging. Osim provide a 1-year warranty for their customers and they are delivering the products right at your doorstep. Price3 (customer cost) Osim’s products offer wide range of prices to the market. Their massage chairs are price around the range of $6000 to $8000 and their household appliances are value in the range of $1000 to $3000. Hand held massager have more economical prices which range from $100 to $500. OSIM Nutrition products are mostly priced below $100. On average the overall prices of OSIM products are slightly higher than most of their close competitors like OTO. As for the payment mode, customers can choose to pay with the 12-months installment plan, the 24 months installment plan or the 36-months installment plan depending on the price of the product. All installment plan comes with interest rate of 8%.However due to periodical promotions consumers can sometimes pay with installment plan at 0% as long as they uses credit card. Payment through credit is also accepted by OSIM, and they would be able to make payment online with their credit card. Place4 (convenience) 1 The set of controllable tactical marketing tool Anything that can be offered to the market for attention 3 The amount of money charged for product or service 2 7 Osim currently have a total 63 shops all over Singapore. 20 of the stores sell health products which include massage chairs and the rest of the shops sell hygiene, fitness and nutrition products which include household appliances. They have 12,000 over staffs working in OSIM. With a large number of Osim shops located all over Singapore it is very convenient for consumers to get their OSIM products. Upon purchasing OSIM products that cannot be hand carried, Osim will provide delivering services where they deliver by truck. The products will reach the consumer’s houses within 10 to 14 days depending on the individual items that they had purchased. Road shows are also held by Osim at least once in every three months to create awareness and attraction the attention of consumers. Osim offers online shopping as well. This mainly caters to businessman and women. Through online shopping, consumer will find it easier and less timeconsuming. Promotion (communication) Osim advertise their products through newspapers advertisements, magazine advertisements, online advertisements, television advertisements as well as radio advertisements. They hope to reach out to all consumers regardless of their age and gender. OSIM also frequently involve in the sponsorship of charity events to further boost their reputation. They also occasionally make use of opinion leaders and aspiration group to promote their products. Osim has maintained good customer relationships by delivering superior customer value and satisfaction. During festive seasons, Osim will have promotion of 5-15% off for all their products. On the OSIM online store, current promotions are also listed down. Discount is their most common form of promotion. Research Methodology Research instrument and Sampling size In our research, we choose to use the questionnaire as our research instrument. We have gathered a sampling size of 100 for our survey. We safely assume that having a sampling size of 100 is enough to help us draw a generally reliable conclusion that would represent the population of OSIM consumers. Sampling Procedure For our sampling procedure we have decided to use stratified random probability sampling-the population is divided into mutually exclusive groups. The people chosen for the survey are only those who had purchased and experienced using OSIM products at least once for the past 1 year. Accurate data can only be obtained if those surveyed have a certain degree of understanding of current OSIM products. We also choose to have an equal number of males and females surveyed so that we would be able to do cross tabulation analysis. 8 Other research means Further research on the company is also done online. We surf through OSIM’s official web pages have a better knowledge on the products and background of OSIM’s products. We also did a short phone interview with an OSIM staff to seek more accurate information. 9 Findings and Analysis (Refer to the appendix for the full Questions and Answers) First introduced from which source 50 40 40 30 30 20 Percent 15 10 10 5 0 Radio/Tv ads Websites Friends/Family New spaper/Mag ads Salesperson First introduced from which source 40% and 30% of the above survey results are deriving from the radio or television ad and newspaper or magazines respectively. Hence, we can gather the immerse power of what advertisement has exerted on products. Which OSIM product own 70 66 60 50 40 30 Percent 20 16 10 12 6 0 health hygiene nutrition fitness Which OSIM product own 66% of the OSIM products purchased by our surveyed sample belong to the health category. Such can be seen by the mass understanding of the significance of health in every individual. Thus, attributed to the enacting of increasing health equipment. 10 Difficulty of locating OSIM product 80 69 60 40 26 Percent 20 5 0 very easy easy dif f icult Difficulty of locating OSIM product The above results suggest those OSIM products are widely available in Singapore. Place of purchase roadshows official OSIM shop departmental stores electronic stores 10 6 49 35 Results have shown that 49% of the survey reports actually purchased the OSIM products in road shows. This is because much talks and demonstrations are illustrated during the road shows, thus leveling the confidence level of consumers. 11 Reason for buying OSIM product 60 57 50 40 30 Percent 20 22 21 to relieve stress filial piety 10 0 health aw areness Reason for buying OSIM product 59% of our consumers purchased the product out of health awareness. This has been highlighted in our earlier graph. Most Attractive factor of OSIM 40 33 30 27 20 19 15 Percent 10 6 0 cheap pricing durablity reputable brand Attractive promo cusotmer friendly Most Attractive factor of OSIM OSIM is known for its durability and user-friendliness. It is no wonder why it turns out to be the most popular brand name amongst others. 12 Due to high technology and the high research costs that Japan has invested, it results in the high charging of OSIM product. Therefore, consumers see this as the major cons. What is the next best alternative for OSIM? Valid OTO panasonic Total Percent 62.4 Valid Percent 63.0 Cumulative Percent 63.0 89.0 26 25.7 26.0 iJoy 5 5.0 5.0 94.0 Others 6 5.9 6.0 100.0 100 99.0 100.0 1 1.0 101 100.0 Total Missing Frequency 63 System OTO is found to be the next most popular product, which make them to be OSIM’s closet competitor 13 Respondent's satisfaction with OSIM 60 53 50 40 39 30 Percent 20 10 6 0 very satisfied satisfied dissatisfied very dissatisfied Respondent's satisfaction with OSIM Needless to say, OSIM is a well-received product from every household. It is a desired “masterpiece” which every household would want to own. All this can be gathered by the genuine testimonials of OSIM customers. Conclusion OSIM has established a household name for itself. It has a defining advantage over other brand of product due to various reasons. Firstly, OSIM is able to punch in appropriate marketing strategies to arouse the interest from the consumers’ field. In addition, they possess the suitable market positioning such as devising strong marketing mix. This can be suggested by the high of the availability of OSIM products. OSIM have targeted largely the high-income and middle-income consumers setting prices of their products relatively high. Such actions definitely contributed to their annual revenue. Furthermore, the modern consumer of today had acquired the facts that health is the primary concern in every being. As stated earlier, this sole reason (health awareness) attributes to the escalating consumption of OSIM products. All in all, OSIM focused on bringing a better service and creation for the mass and is building better public relation simultaneous. Not only it appears as a health-building form, it also serves as an excellent from of relaxation to ease the tension in our hectic life. 14 Recommendation From the results of the primary data we have obtained much earlier, we found out that the major disadvantage that OSIM has is its high cost. An average OSIM armchair will easily cost up to $2,000 to $3,000. This might be an extravagance to the public who intend to invest in health equipments. Therefore, our group has come up with several suggestions. To reduce the cost price of OSIM equipment, OSIM headquarters in Singapore can actually manufacture more of the massage chairs instead of importing most of it directly from Japan. In this way, it can save both time and financial resources. Not all consumers are particular about the “Made in Japan” tag, cheaper price will appeal to a larger portion of the Singapore population. Combining cheap pricing and with a reputable brand would no doubt generate higher revenue. However, OSIM should continue to manufacture some of their chairs from Japan to maintain their position as a high quality product company and to provide for consumer in the higher income group. OSIM should also keep up to date of their close competitors. OTO is currently the strongest competitor of OSIM. Although OTO may still not have a larger market share compare to OSIM, they are catching up fast. OSIM must always be aware of their competitor’s progress and ensure that they are not lagging behind in any introduction of new products by their competitors. Improvising the products to make it more customers orientated would also be useful. Having equipments can be easily operate would be beneficial to consumers. Thus OSIM should research on the common operating difficulty that their customers are facing and improve on the area. Consumers would greatly appreciate the convenience of the product and through word of mouth, OSIM would be able to build excellent customer relation. With the enacting of the above suggestions we have mentioned, OSIM will definitely carve out a broader horizon in the health and care line. 15 Appendices 16