Market entry strategy presentation - gazhoo.com

XYZ Company
Market Opportunities in China

Final Report
Date

1

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Executive Summary

2

XYZ DI China has engaged ABC to collaborate in developing a demand creation
strategy to grow its business in the PRC. To accomplish this goal, we have worked
together to assist XYZ to better understand China’s market dynamics and formulate
a multi-faceted strategy to enable XYZ to secure a sustainable competitive position.
Project Scope

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• Provide an overview of the China DI market, and analyze DI development
potential

• Estimate the market size based on the key growth drivers as well as the impact
of macro-economic and political environment
• Identify target industry sectors, assess the respective buyer values, and
segment the market
• Design XYZ’s value proposition to the Chinese government and primary
customers in response to their priorities and business requirements
• Identify XYZ’s strategic initiatives to create stronger DI demand

• Formulate strategies and establish a corporate infrastructure and system
(government relations, market image, product portfolio and channel partnership)
to position XYZ for long-term growth
• Prioritize the major opportunities, plot a strategic path to capture the market,
and identify the keys to operational excellence for XYZ

3

XYZ’s current position is being affected by a number of critical market forces — fluid
regulatory environment, new emerging customers, intensifying competition and
powerful channels. These forces have created tremendous opportunities for DI
players, yet also pose serious competitive threats to XYZ’s long-term growth as well
as short-term market standing.
China DI Market Dynamics

GOVERNMENT
Situation

Opportunity

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• Fragmented &
• Shape and influence
unregulated
the policy making
• Multiple bureaus and
process
• Potential “Big Bang”
influential industry
might erupt
associations

CUSTOMER
Situation
• Emerging customer
sectors
• More sophisticated
approach to DI
solutions

CHANNEL

Opportunity

Situation

• Demand for new
products/solutions
• Higher requirement
for quality product
and customer service

Opportunity & Threat

• Strong bargaining
power due to
business capabilities
• Deal-oriented, shortterm approach

XYZ
Reinvent its
Approach
to the
Market

• Inexperience in DI,
coaching and training
needed
• Control customers
• Lack of loyalty

COMPETITION
Situation

Threat

• Aggressive players
vying for share
• Strong low end
product offerings &
pricing strategy

• Addressing customer
requirements in
solutions & pricing
• New product launch
attacking XYZ
4

ABC has estimated that the market will reach US$ 86 million by 2002. To capture
the opportunities and create market demand, XYZ should take two strategic steps:
new product introduction and customer base expansion.
Demand Creation

Only with such parallel efforts, can
XYZ overcome the DI development
hurdles and create a sustainable
marketplace for itself.

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Low End

2002 DI market
US $86 Mn
XYZ
share

XYZ
share

Introduce new products

1998 DI market
US$ 18 Mn

Channel

Customer

Expand customer base

Government

Strategic
Thrusts

Mid Range

High End

Differentiation

•
•
•
•
•
•

Marketing
5

HURDLES
No strong market pull
Simple product portfolio
Low DI awareness
Limited customer base
Technology limitation (e.g.
OCR)
Weak channel capabilities

Demand creation is strongly driven by value-based segmentation. XYZ should adopt
distinctive strategies to position itself appropriately, and emphasize three areas:
brand image, quality, and delivery of customer service.
Segmentation Approach
Segment A
Major banks

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Segment B
Segment C
Other users w/ financial capability
Other users w/ less financial capability

• World class technology
Overall • Customized solution
strategy • Premium products & brand image

• High quality products
• Good price/ performance ratio
• Scalability & reliability

• Retain leadership in high-end
Product products
strategy • Ride the wave of digital and defend
micrographics

• Introduce mid- to low-end products
• Digital leads the way; micrographics
follows
• Work with customers to move up

• Convey XYZ’s willingness to help

Marketing customers in a digital transition
strategy • Aggressively push the idea of “Y2K”
• XYZ takes the main responsibility

Channel • Partnering with channels having
strategy industry knowledge and solution
capability

• Consistent, responsive customer

Customer service
service • Customer training

• XYZ takes the main responsibility

Government
strategy

• Raise DI awareness through market
education programs
• XYZ and channel share marketing
responsibilities

• Cost effective
• Easy to operate
•
•
•
•
•

Introduce low- to mid-end products
Digital takes the priority
Enter the market aggressively
Work with customers to grow
Emphasize XYZ products’ good
performance/price ratio
• Stress “easy to operate”
• Channel takes the main responsibility

• Training on XYZ’s new products
• Identify channels with expertise in
target industries

• Increase geographical and industrial
coverage of channels
• Provide marketing support

• Deliver standard and adequate
service
• XYZ and channel share
responsibilities

• Guarantee cost effective, basic-level
of service
• Channel takes the main responsibility

• Long-term relationship building
• Promote the whole concept of DI
• Indoctrinate DI into the government’s program of
digital economy
6

• Cultivate specific, project based relationship
• Offer concrete benefits
• Partnering with MNCs and domestic system integrators

To successfully execute the new demand creation strategy, XYZ needs to build the
China business fundamentals and assign the top priorities to overall market image
building, segment-focused marketing, mid-volume product launch and channel
development.
TOP PRIORITY

Implementation and Prioritization of the Tasks

Segment A

Marketing
Strategy

Strategy
Implementation
Plan

Brand awareness building

Segment C

• Conveying XYZ’s value
proposition
• Project-based initiatives

Government
Strategy
Segment A

Product
Strategy

Segment B

•
•
•
•

Premium product/service,
Solution focused
Quality product
Meet customer requirement

Segment C

Segment B

7

• Increase the number of channels
• Increase new industry penetration

Segment C

Channel
Strategy

• Strengthen relations with channel
• Account plan & solution focused

• Increase number of channels
• Expand geographic coverage




• Cost effectiveness
• Standard product

Segment A

Fulfill Demand
(Internal
Capabilities)
Objectives:
• Build internal
infrastructure
• Retain XYZ’s market
leadership




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Segment B

Create Demand
(Market Facing)
Objectives:
• Build XYZ brand
name
• Grow the China DI
market

Overall: corporate image
building and market education
XYZ’s continuous commitment
to banking




Table of Contents

What Is the
Potential of
China’s DI Market?

How Does and Will
the DI Market
Look?

• Growth Drivers and
Market Size

• Regulatory
Environment

• Scenarios

• Customer Behaviors

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What Should XYZ
Do To Expand
Business?

• Value Proposition
• Government Strategy

• Competitive Dynamics

• Product Strategy

• Channel Insights

• Marketing Strategy
• Channel Strategy
• Strategic Path/
Implementation
• Risk Management

8

Table of Contents

What Is the
Potential of

How Does and Will
the DI Market
Look?

Market Size

• Regulatory
Environment

• Scenarios


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What Should XYZ
Do To Expand
Business?





• Strategic Path/
Implementation
• Risk Management

9

The China DI market will experience huge growth over the next 4 years. To estimate
the likely market size, we have taken into account multiple market growth drivers and
have used a comparative proxy analysis to verify the results.
Market Estimate Approach

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DI Specific Drivers
Natural Growth of
Demand

Macro-Factors

GDP/Macroeconomic

Normal Conditions
(industry drivers
& macro-factors)

Favorable
Scenario

Sellers’ Marketing
Efforts
Technology Maturity &
Price Decline

Sino-US Relationship

Base
Scenario
WTO Entry

Other Natural Growth
Drivers Specific to
Industries

Comparative Study
on laser printer and
videoconferencing

China Digital Economy
Development Agenda

Verification
by comparison
between China and
world DI growth

10

Setback
Scenario

The base scenario incorporates all major drivers present under normal conditions,
including selected industry-specific drivers. The result is an estimate of $86M by
the end of 2002, with a CAGR of approximately 48%.
Natural Growth of Demand
Without external forces, the DI demand grows by itself as
the market emerges

Base Scenario Model
Market size ($M)

US$86M

Sellers’ Marketing Efforts
The collective efforts by the whole DI industry will accelerate
the expansion of the DI market in terms of volume and
number of penetrated industries

Other natural growth
drivers specific to industries

80

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Technology maturity
and price decline

70

Technology Maturity & Price Decline
The price will drop gradually with maturity of the DI
technology. The decline in price will prompt more purchases
and thus increase sales

Sellers’ marketing
efforts

60

Other Natural Growth Drivers Specific to Industries
Specific drivers in the following industries can create
significant demand to meet more complicated business needs
• Banking (credit card & loan growth)
• Government (tax reform, medical reform, & social security
reform)
• Insurance (growth in policy holders)

Natural growth of
demand

1998 1999 2000 2001 2002
(in US$M)

XYZ estimate (HV only)

1998 1999 2000 2001 2002
7.2
14
22
27
32

Natural growth of demand

18

23

30

43

60

+ Impact of sellers’ marketing efforts

26
26

35

51

71

+ Technology maturity & price decline

18
18

+ Other factors*

18

26

35
39

53
59

77
86

8
4
6

11
6
9

17
8
14

26
13
21

37
19
31

High End (43.0%)
Mid Range (21.5%)
Low End (35.5%)

Source: XYZ, Essence, AC analysis
11

100

Market size by product segment (in US$M)

80

31

60
40

19

20

37

0

1998

1999

High End

2000
Mid Range

2001

2002

Low End

The comparative “proxy” study shows that in China, IT products with characteristics
similar to those of DI demonstrate a parallel lifecycle, but with an approximate fouryear lag.
Emerging Comparable Product
(Videoconferencing)

Comparative Study

Market size/GDP
0.025%

DI, videoconferencing
and laser printer are
comparable IT
products because they
share the following
characteristics:

Our Findings

0.020%

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0.015%

World

0.010%

4 years

0.005%

China

0.000%

• China’s
videoconferencing
market is parallel to
and 4 years behind
the world’s.

1993 1994 1995 1996 1997 1998 1999 2000

•
•
•
•
•
•
•
•
•

Fragmented
Unregulated
Channel importance
High price
Low awareness
Competition by sector
Institutional
Mission critical
System compatibility

Mature Comparable Product
(Laser Printer)

Market size/GDP
0.050%

World

0.040%
0.030%
0.020%
0.010%

4 years
China

0.000%
1993 1994 1995 1996 1997 1998 1999 2000 2001

Source:

Our Conclusion

CCID-MIC, Frost & Sullivan Market Intelligence, International Monetary
Fund, China Statistical Yearbook, CBI Research Computer Market &
Industry Report for China 1996-1997, AC analysis
12

• China’s laser
printer market is 4
years behind
• The penetration
rate of China’s
laser printer will
reach the level of
the world in 2000

Assumption
Penetration rate of laser printer
in China is parallel to that of the
world along time line

For the IT products
comparable to DI,
once the market
forms and enters
the postintroductory period,
the penetration rate
in China will be
approximately 4
years behind the
world

The comparison between China and the world in DI development indicates China’s DI
still is in an embryonic stage — very young according to the product lifecycle curve
due to the lack of external pushes, such as marketing and user education.
DI Development in China
Comparison of DI Penetration Rate (PR)
Market size/GDP

0.020%

The world GDP, rather than
that of developed countries,
is used because China
consists of developed
regions along the coast as
well as underdeveloped
areas in western inland.
This composition is more
comparable to the globe.

If we assume that China’s DI enters the
post-introduction period in 2002, its
penetration rate should be 4 years behind
that of the world. Let’s make a
conservative assumption that China can
only achieve half of the projected
penetration rate, that is,

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0.016%

World

0.012%
0.008%

China

0.004%
0.000%

1993

Why is the gap
between China’s DI
and that of the world
much lower than other
comparable IT
products?

1994

1995

1996

1997

1998

1999

• Because China’s DI is still in the
embryonic stage, partly due to
limited external drivers such as
education, marketing and awareness
• Yet, once DI kicks off in China, its
penetration rate will catch up with
the world quickly. This conclusion
also is supported by the experience
of Internet growth in the PRC.

Source: AIIM Industry Study, China Statistical Yearbook, International
Monetary Fund, AC analysis
13

China’s DI PR in 2002
=1/2* World’s DI PR in 1998
= 0.0085%
X China 2002 GDP

China’s DI market size in 2002 is

US$ 86M

Therefore, the market size of
US$86M in our base scenario is a
reliable estimation.

We also have produced a set of “favorable” and “setback” scenarios. They have
been developed from the base scenario, taking into consideration several additional
factors that could alter our projections in a positive and/or negative fashion.
Macro-Factors in Three Scenarios
Base Scenario

Favorable Scenario

Setback Scenario

GDP/
Macroeconomic

• China’s GDP grows at an
average of 5% per year
• Other macro-economic
factors are neutral on DI
growth, e.g. RMB devaluation

• China’s GDP keeps high
growth rate (8%), which
accelerates DI
development
• Aggressive SOE reform
• Sino-US relationship
progresses steadily & US
investment in China is
highly encouraged & well
protected, esp in hi-tech

• Chinese economy grows
at very low speed (<2%),
and results in slow
demand growth
• RMB devaluates
deteriorates
• US products are not
encouraged by the
Chinese government

Sino-US
Relationship

maintains the current level
• US trade with and investment
in China increase normally

WTO
Entry

• WTO negotiation maintains at
the current pace, and brings
minimum impact on DI
development

• China enters WTO which
greatly reduces DI tariffs
--> price drops--> demand
rises substantially

• China’s entrance to WTO
is delayed and the tariff
on DI remains

• Government gives medium
priority to digital economy in
its development agenda

• Government continues to
push IT as a national
economic pillar

• Government lowers the
priority of IT in economic
development

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China Digital
Economy
Development
Agenda

14

With all four macro-factors playing a positive role on the development of the DI
market, the favorable scenario suggests a US$ 100-110 million market in year 2002.

Favorable Scenario
Favorable Scenario
• China’s GDP keeps high
growth rate (8%), which
accelerates DI
development
• Aggressive SOE reform
progresses steadily & US
investment in China is
highly encouraged & well
protected, esp in hi-tech

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GDP/
Macroeconomic

Sino-US
Relationship

WTO
Entry

Individual Impact
(on Base Scenario)

China Digital
Economy
Development
Agenda

5%

5%

Synergistic Impact

30%

• China enters WTO which
greatly reduces DI tariffs
--> price drops--> demand
rises substantially

5%

• Government continues to
push IT as a national
economic pillar

5%

20%
15

The China DI
market size will
be US$100-

110M if macrofactors are all
favorable to DI
development.

Additive Impact

Should all four macro-factors follow their worst course, the setback scenario derives
a DI market of US$ 69-73 million in year 2002.

Setback Scenario
Setback Scenario
• Chinese economy grows
at very low speed (<2%),
and results in slow
demand growth
• RMB devaluates
deteriorates
• US products are not
encouraged by the
Chinese government

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GDP/
Macroeconomic

Sino-US
Relationship

WTO
Entry

Individual Impact
(on Base Scenario)

China Digital
Economy
Development
Agenda

5%

5%

Collective Impact

15%

• China fails to enter WTO
and the tariff on DI
remains

5%

• Government lowers the
priority of IT in economic
development

5%

The China DI
market size will
be US$69-73M
if macro-factors
are all
obstructive to DI
development.

20%

Additive Impact
16

The possibility that all the
four factors pose the most
negative impact on DI
concurrently is low. That is
why the collective impact is
15% rather than 20%.

Table of Contents

What Is the
Potential of

How Does and Will
the DI Market
Look?

What Should XYZ
Do To Expand
Business?

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Market Size

• Regulatory
Environment


• Scenarios






• Strategic Path/
Implementation
• Risk Management

17

While the regulatory environment of DI is characterized by the absence of a single
voice, a strong advocate, or a clear agenda, the government still holds its influence
in developing the DI industry.
However, this does not mean that the
government plays no role …...

Our survey and study found three major
characteristics of the regulatory environment

 No clear agenda

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 No single advocate

 No single voice
No single
government
body is given
the authority of
regulating the
DI industry or
setting
standard

• The Chinese government works in a fluid
way in the sense that its focus often shifts
among issues and power floats from
department to department
• The government favors the adoption of high
tech
• The rudimentary structure of the government
determines that government policies have
ultimate importance in issues involving high
tech
• Fragmentation is characteristic of the
operation of the Chinese bureaucracy. It
also is true in DI
• Promotion of new technology is often carried
out through government affiliated bodies

No single
government
body acts as a
strong sponsor
and promoter
of DI

While agreeing
that DI is
important, the
government
has not
constructed a
specific plan or
time frame for
DI adoption

Unregulated
Decentralize
d
Fragmented

……it only suggests that XYZ should adjust
its approach accordingly in interacting with
the government.
18

Although there is no single champion so far, the current government structure
indicates that any one or any combination of these government agencies and
affiliations can emerge as a significant player in the DI field.
Government Power Structure

Min of Sci
& Tech

High Tech
Dept.

The State Council

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Ministry of
Culture

MII

Sci & Tech
Dept

Information
Product
Dept

Government
Affiliations

National Library/
Library Association

SDPC*

High Tech.
Dept

National Center for
Optical Memory

19

SETC*

State
Archive
Bureau

SBQTS*

Bureau of
Machine
Building

Micrographic
Association

Archive
Association

* SBQTS - State Bureau of Quality and Technical Supervision
SDPC - State Development and Planning Commission
SETC - State Economic and Trade Commission

To make sense of the complex government landscape and effectively secure the
appropriate government/association sponsorship, XYZ must understand the
evolving role of each of the key players — actual and potential.
Impact on DI Industry
Type of
Agencies
IT and
technology
development/
standard setting
Cultural affairs
Policy making/
regulation

Name of
Agencies

Roles, Responsibilities and
Activities
Min. of Science • Promotes DI technology
• Influences DI standard setting and import
& Technology
tax; Influences DI procurement process
• Lately adopted standard for CAD imaging
MII

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Ministry of
Culture

• Oversees libraries and other cultural
activities
• Is involved in national digital library

SDPC

• High level policy making in DI development
• Set up the Center for Optical Memory

Project approval/ SETC
Enterprise reform
Ministry-level
bureaus with
close ties to the
industry

Implication to XYZ
• Potential partners in
technology development
• Strategic alliance in shaping
the industry

State Archive
Bureau
SBQTS

• Potential target for high profile
project in preserving China’s
cultural heritage

• Top down approach
• Leverage XYZ’s global
expertise
• Influences DI procurement process
• Influence policy making
• Promotes DI in government bodies
• Partnership in joint ventures
• Devoted 1 million RMB in ‘99 to research on • Partnership in micrographics
document preservation and eDocument filing • Partnership in promoting DI
• Rallied 100 provincial level bureaus to
awareness and adoption
convert microfilm to digital for public access
• Partnership in standard setting
• Issues industry standard
• Keep close communication
• Influences DI procurement
20

As the influence of the government in China is often transmitted through its formal
and informal affiliations, associations are playing a leading role in setting
respective industry standards and fostering the DI growth.
Roles of Government Affiliations
Association

Government
Sponsor

Role and Activities

Implication to XYZ

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Micrographic
Association

Archives
Association

State Archive
Bureau

State Archive
Bureau

• Enhances technology applications for
micrographics and information management
• Promotes and commercializes micrographic
products and services
• Supports and participates in setting
micrographics standards
• Organizes research activities and develops
archiving science
• Promotes archiving industry knowledge
• Trains and develops archiving professionals

National Center for State Development • Develops software and hardware of optical
memory industry
Optical Memory
and Planning
• Sets up the optical disk standard
Commission

• Partnership in raising
industry awareness and
promoting micrographics
adoption

• Joint promotion of
micrographics applications
• Monitor the development of
Archives Law

• Provide referral for XYZ’s
digital products

• Provides consulting services

National Library

• Sets up standard for library industry

Ministry of Culture • Created the first national digital library
• Promotes the DI concept

21

• Potential influence to XYZ’s
digital products

Our buyer value analysis reveals that different market segments have distinct
preferences. High market potential exists among large-sized and mid-sized user
groups outside the banking industry.
Buyer Values by User
Unique
Product
Requirement

Users

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XYZ
Opportunity

• HV scanners (76ppm
and above)
• COM
• Hybrid scanners
• IDW workstations
• Network

Mid- to large-sized users
(3,000-20,000 pages per day)

• Government — archive, patent, taxation,
customs, law enforcement, statistics, weather
bureau, ICAB, land bureau, social security &
welfare, state asset admin., personnel dept., real
estate management, DMV, PLA
• Service — insurance and other financial services,
hospitals
• Culture — library, newspaper, publishing

Small-sized users (individual
and minimal usage)
• Mid-sized enterprises
• Independent departments
in large organizations
More value

Less value
22

Emerging — High
potential

• Workgroup and low
volume scanners
(mainly 20ppm and
below)

• Large quantity of documents to be processed
daily (up to 20,000 pages)
• Financial capability
• Pioneer in DI adoption

Existing — High

• MV to LV scanners
at RMB 150-200k
(21-75ppm)
• Microfilmers

Large-sized users (the banking industry)

None — minimal
The market is
crowded with too
many small players,
and should NOT be
XYZ’s target market

Only 15%
penetration rate in
the banking
industry

• Efficiency
improvement as
high priority
• Enforcement of
regulations
• Digitization agenda

In addition, XYZ’s market success depends on further understanding of the buyer
decision-making process as well as specific purchasing behaviors and criteria used
by actual and potential customers.
Buyer Decision-Making Process

What Customers Look for When Making Decisions?

• Approve purchase plan
• Have the final authority

• A comprehensive proposal addressing the
customer’s questions and concerns

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CEO/
Head Officer

• A good reference from other users

Key players with
whom XYZ should
keep close
communication

• A solid vendor’s tracking record
demonstrating increasing sales and share
• Vendor’s price flexibility

• A solution-based, enterprise-focused
approach

IT center/
Functional
Dept.

• Raise DI requirements;
initiate DI project and
recommend vendor
• Influence the leadership’s
decision making
• Execute projects

– addressing all the required components,
with updated software

Financial Dept

• Allocate fund

– providing scalable and reliable support
platforms
– providing full integration with imaging
systems and current operations

23

Furthermore, users are often led by short-term considerations and popular trends,
not always by the pursuit of efficiency or optimal performance. Therefore, education
is crucial in growing the DI market and promoting demand for higher end products.
More on Users

Speed

Large users do not always use
high-speed equipment

Users possess very limited
knowledge of DI technology

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Most banks



450

• Not abreast of/or concerned about
“Y2K” issue in DI

Some banks

TARGET
USERS

• High-speed equipment is
costly, yet labor is cheap
• Intervals are required
between each set of
document in processing

• Not concerned about the distinction
between accessibility and preservation

Patent

• Machine breaking down
won’t interfere with work flow

• More focused on present operations,
rather than long-term preservation







• Believing digital automatically serves
the purposes of accessibility and
preservation

National Library

Quantity to be Processed

Examples:

• Considerations in digital adoption
because it is the trend

• Some branches in ICBC use digital cameras provided by
Sunyard instead of high speed scanners
• National Library uses 40 AV scanners at 20ppm, and plans to
purchase up to 100 scanners of the same speed
• The Patent Office uses 15 Fujitsu scanners at 30ppm

24

The strategic issue of digital versus micrographics also needs to be given adequate
attention. XYZ should ride the “digital” wave, and at the same time defend the growth
of the micrographics.
Micrographics vs. Digital:
A Strategy Based on Customer Buyer Values

What To Do? — Strategies and Tactics
Be involved in digitization

Two important buyer value
findings stick out from our study

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No clear distinction
between accessibility
and preservation

• Understand existing micrographic-based customers’
need for digitization and be actively involved in the
course of conversion
• Work with customers to retain micrographic as a viable
media for document security

Digital is the fad

Digital leads; micrographic follows

• For user without micrographic experience, the best is to
sell the idea of hybrid solution; If the customer is not
ready, do not push
• If users are properly educated, digital may create a
space for analogue when issues of preservation emerge
• Only when customers feel the need, can promotion be
most effective
• The lesson is that to promote digital may help
micrgraphics eventually. If customers buy digital from
XYZ, it is more likely to buy micrographics from XYZ
than from competitors

Consequences and Implications

• Education is the key, but patience is needed
• XYZ cannot decide for customers what they
need
• If customers are not ready for an analogue
solution for preservation, pushing them can
be counterproductive
25

In the banking industry, DI is now at the important crossroads with competition
intensifying in a sustained fashion. XYZ needs to focus more on the concrete
characteristics of each of the prevailing opportunities to retain its competitive
advantage in the industry.
Existing Banking Users
Trends
Market
Potential

Implications

DI penetration best estimated at around 15%

Banking still offers greatest opportunities; XYZ should not
take the industry for granted

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• No set timeframe or immediate plan for digital
conversion; yet quick ramp up for HV hybrid once
digitization is on the way
Industry
Dynamics • More sophisticated approach towards DI and more
solution focused
• Higher demand in customer service

• Follow closely digital conversion & network upgrading;
network related solution capabilities are critical
• Banks are too important to leave to channels. Channels
with industry knowledge and solution capability should
be sought
• Improve service to exceed customer expectations
• Avoid sending mixed signals from Components & Media

• Decentralized decision making process except for
CCB and ICBC (ICBC headquarters currently
Customer coordinates and tries to implement a unified DI
Dynamics system)
• DI integration due to expected network upgrading
(e.g., BOC headquarters issued a directive 1998
requiring all branches to suspend micrographic
equipment purchase)

• Different approach towards different customers
• To interact with just Accounting is not enough; talk to IT
people and top management
• Face-to-face interaction with key accounts is needed

Emerging Emerging customers including foreign banks and
Customer non-major domestic banks

Leverage success in major banks and penetrate
emerging customers
26

Meanwhile, as the buyer value analysis strongly indicates, XYZ needs to reach
beyond the banking industry if it is to become the leading provider in the China
market.
Why Should XYZ Expand Customer Base?
Because:

XYZ’s competitors in the banking industry

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• Agfa — COM, ADMIS
CD51microfilmer, ADMIS SC51
hybrid scanner

• Sooner or later, the banking industry will become
saturated, and

• competition is starting to encroach on XYZ’s share in
the banking industry

• Canon — COM, 1000 microfilmer,
RF550D II/560D II microfilmer

In addition:

XYZ’s proactive expansion strategy

• The entry barrier is high — Customers won’t switch
to different vendor’s products easily due to
customers’ psychological thinking. XYZ will have
difficulty penetrating the non-banking market once it
is occupied by competitors

Expanding into the
low- and mid-volume
market is the key

• The waiting game is too costly — Successful early
entry is the key. Without prompt action, XYZ will face
attacks from its competitors in the traditional banking
base, yet find the non-banking market entrenched
with competition

27

Because many potential mid- to large-sized users have different preferences from the
banking industry, XYZ should reinvent its market position to meet the special needs
of these additional customers.
New Customer Penetration
Early entry is the key

• Moderate-scale usage can turn into large scale; Low speed can be upgraded
to higher speed as the industry matures
• As market/product develops, the mid range will experience a faster growth
• XYZ can help/educate customers grow into the high end

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Three basic criteria to identify a customer
Importance
of document
management
to business

Financial
capability

Examples of targeted users
• Archive
• Statistics
• Patent
• Insurance
• Taxation
• Library
• Customs
• Others
• Law enforcement

IT
infrastructure
and
experience

Common customer needs

• Immediate processing is not a must; thus high speed is not
required even with a large quantity of documents
• Easy operations and maintenance are required
• Price is an important factor
• Tend to use multiple low-speed scanners rather than one or
two high-speed scanners
• Many users need basic DI education
28

Reinvent customer-based strategies
Product

Marketing

Government

Channel

On the competition front, our research has discovered new rivalry, which indicates
that the competitive landscape is much more intense than previously believed.

Competitive Landscape
Competitors Previously
Identified

New
Competitive Landscape

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=
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• Agfa

Competitors Identified
in the study

• B&H

• Canon
• Minolta

• Fujitsu

• Avision

• Fujitsu

• BancTec*

• Minolta

• Avision • BancTec*

• Canon

• Panasonic

• Agfa

• B&H

Competition intensifies as the market becomes more
attractive and mature.
Note: During our research, we have not come across BancTec or its channels.
29

• Panasonic

In the digital domain, XYZ’s leadership in digital is challenged by B&H and Fujitsu —
which offer a better price/performance ratio, Avision — with its cost leadership, and
Agfa and Canon — with new digital offerings at favorable prices.
Competition in Digital
Agfa

High
Volume

XYZ

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Fujitsu

76ppm
Mid
Volume

Fujitsu:
• Good quality and service against Taiwanese vendors
• Price competitive against high end vendors
• Project: Patent Office

B&H

Canon
41ppm
Low
Volume

AV

B&H:
• No operational presence, with channel support
• Good price/performance ratio, higher channel discount
• Office automation
• Potential move to HV
• Project: Statistics Bureau

Avision:
• Cost leadership
• Channel expertise in library
• Relationship sales

21ppm
Low

High

Threats to XYZ
Source: XYZ, ABC research & analyses

Agfa:
• New release of high speed scanner, including hybrid
• Special scanner for large sized engineering documents
Canon:
• New product offering: 50ppm color scanner with
software solutions, CD document recorder
30

In micrographics, XYZ’s market share is being eroded by strong competition from
Minolta — with a good price/performance ratio; and from Canon — with localized
training and services.
Competition in Micrographics
XYZ

High
End

B&H

Mid
Range

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Canon
Low
End

Agfa:
• High quality products
• Price competitive against XYZ
• Solution with customized software: DIM&CAR
• Target industry: banking
• Weak after-sales service
B&H:
• High end products for the Banking industry (700
checks/200 ppm for A4)
Minolta:
• Good price/performance ratio
• Easy to operate: MS3000 handles both 16/35mm
suitable for the archives
• Target industry: non-banking
• No system or software support

Agfa

Minolta

Low

High

Threats to XYZ
Source: XYZ, ABC research & analyses

Canon:
• Localized training and services: national
micrographical training center at Beijing Film
Machinery Institute
• Marketing: jointly publishes Journal of Micrographics
with Micrographics Association
• Target industry: banking, archive bureaus
• Lowering prices to compete with Minolta
31

Agfa, XYZ’s biggest competitor, is well-positioned to offer high quality products for
less money and attractive software solutions, aided by a strong push from the
channel.
Agfa’s Channel Operations
Agfa
• Agfa’s sole distributor outside
of mainland China (HK &
Taiwan), yet sells to China
through HK office
• Changing from rep office to
company for better sales and
service support
• Distributor of 20+ vendors
such as B&H, Minolta
• Chief rep used to be Director
of the Archives Bureau
• “Service Bureau” concept in
discussion

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• Sole distributor in China
• Strong DI software for
banking (DI Management
and Computer Aided
Retrieval)
• Similar market share in
ICBC as XYZ
• Actively approaching
Construction Bank
• Sponsor of Micrographics
Association meeting

Tecwell

China System

Channel Conflicts

Sole distributor
in China

Sole distributor
outside China

• Key channel for Canon
• Agfa’s digital scanner
S51D as one of its
product offerings in DI
system workflow chart

Licose

32

Key
Channel

Cannon

XYZ’s competitors have adopted different strategies in product, channel
management, and marketing. The key differentiating element of importance to XYZ is
premium quality, advanced product features, and superior customer service.
Overall Strategy

Agfa

Product

• Reasonable price
• High quality
• Customized software

•
•
•
•
•

• Good price/
performance ratio
• Compact products
• No presence in China
• Price competitive
• Value approach to
customers
• Good quality & service

• Scanner (42-45ppm)
• Microfilmer (700
checks/200pm for A4)

Target Industry
(Projects)

Channel

Rotary camera (160ppm) • Banking(1/2ICBC,
•
Hybrid (160ppm)
•
Construction)
Scanner (160ppm)
• Golden Health (Flatbed) •
COM
•
Processor (best)

Marketing

China System: 20+ years
DIM & CAR from Tecwell
Service bureau in discussion
Weak after-sales service

• Sponsorship for
Micrographics Association
• DI seminar in Shanghai

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• Multiple channels
• Anxious to develop business
with channel with 40-60%
discount; no sales quota
• Uniscan, the biggest local
vendor
• Good alliance with SIs/
distributors by discounts

• NA

Canon

• Economical
• Document recorder
• Banking
• Localized training and • Scanner (20-30, 50ppm) • Insurance
• Microfilmer (730 checks) • Archives bureau
services
• Processor, reader,COM

• Licose (banking)
• JV with BJ Film Machinery
Institute, with a national color
micrographics training enter

• Jointly publish Journal of
Micrographics with
Micrographics Association

Minolta

•
•
•
•

B&H

Fujitsu

AV

Reasonable price
Easy to operate
Convenient service
No presence in China

• Price competitive
• Relationship Selling

• Scanner (15-85ppm)
• Flexible (manual &
automatic scanner)

• Office automation
• Banking
• Actively pursuing
Census 2000
• Patent office

• Co-promo with Archives
Bureau

• Microfilmer, Microfilm
reader and printer (A4)
• Microfilm scanner
• Scanner

• Archives bureau
• Beijing Library
• PLA

• Key distributor: Hanlong
• N/A
• No system or software support

• Scanner (20ppm and
flatbed)

• Beijing Library
• Archive bureau

• Essence
• SI with expertise in library

33

• Used to advertise on
Computer World
• Relationship sales

The strong bargaining power of DI channels is derived from their close ties with endusers in target industries. Accordingly, XYZ should increase the number of channel
partners to not only minimize its dependence, but also reach out to more target
customers.
Channel Insights — Expanding Channel Base Is the Key
CHANNEL STRENGTH
Customer
Interface

IMPLICATIONS

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• Extensive knowledge of customer internal
dynamics (business process &
requirement, budgeting, decision making)
• Close connection with customers

• System integration, software development,
Business
or value-added reseller
Capabilities
• Understanding DI applications & practices
• Organizational restructuring to focus on DI

Relationship • Relationship selling; industry entrenchment
Capabilities • High barriers for the new entrants
• Long and exclusive purchasing contracts

34

• Leverage channels’ knowledge to gain
industry insights
• Receive customer feedback from
channel

• Develop close business relationship to
preempt long-term competitive position
• Promote XYZ’s hardware and become
the favorable vendor

• Difficult to switch channel partners; initial
channel selection critical
• Determine and select channel
capabilities to serve respective purposes

Since most channel operators view their business from a short-term perspective,
they tend to concentrate on pursuing primarily immediate projects or opportunities.
Therefore, proper operational process and incentive schemes need to be in place to
ensure long-term business viability.
Channel Insights — Taking Control Is Imperative
CHANNEL WEAKNESS

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Opportunistic
Approach

Limited
Experience

Loose
Contract

IMPLICATIONS

• Deal making oriented, rather than
business relationship oriented
• Not taking customers’ real needs into
consideration when pushing sales

• Involve channels more in long term
relationship building with customers
• Incentives to channels for long term behavior
• Enhance joint-marketing initiatives

• Limited experience in the emerging DI
market
• Focus on limited industries
• Lack of business development capability

• Train and coach channels about DI industry
evolvement
• Provide guidance in target industries and
cultivate necessary capabilities

• Break exclusive contract with XYZ by
carrying competitors’ products
• Put their service before XYZ’s products

• Expand product portfolio
• Enforce contract by close interaction with
channels; don’t let channel undermine XYZ
• Involve channels in solution provision

35

Our analysis suggests that China DI is an attractive market (US$86 million in the base
scenario) for XYZ to commit its investment. To grow its China business successfully
and sustain its leadership position over time, however, XYZ must address the five key
issues.
XYZ’s Strategic Imperatives
1998 Market Size: $ 18M

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• Decentralized regulatory
environment
• Emerging market
• Customers buyer value
migration
• Increasing competition

KODAK Share

40%

Strategic Intent: What is XYZ’s business
objective in China?

Marketing:

Product:

KODAK Share

What should be XYZ’s
offerings?

Channel:

2002 Market Size: $ 86M
(base scenario)

What message should XYZ
deliver to the government
and the market?

How does XYZ reach out to
customers through channel
management?

Implementation: What is the strategic path to
the success?

??%

36

Table of Contents

What Is the
Potential of

How Does and Will
the DI Market
Look?

What Should XYZ
Do To Expand
Business?

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Market Size

• Regulatory
Environment


• Scenarios






• Strategic Path/
Implementation
• Risk Management

37

Designing and implementing an effective demand creation strategy involves
addressing a series of critical challenges. Above all, it requires top-to-bottom
organizational commitment and leadership as well as fundamental changes in XYZ’s
current approach to the market.
New Perspectives of Demand Creation
•

Alignment with Strategy — Demand creation principles need to be aligned with XYZ’s
business strategy and direction. To ensure sustainable revenue and profitability, strategic
decisions should be made in terms of the right industry focus, with whom to partner, what
products/solutions to offer and promote, and how to achieve goals with appropriate resource
commitment

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•

Focus on Customers — Understanding buyer values and internal capabilities is the key to
prioritize opportunities and generate more revenue growth than an ad-hoc approach. XYZ,
therefore, should identify the most valuable industry sectors so that it can direct resources
and channel towards those specific customers and hence achieve a higher return on the
investment

•

Alliance with Partners — The dynamics of China’s DI market demands XYZ to be on the
leading edge in all fronts to ensure success. XYZ needs to leverage its strong partner
network to complement its capabilities: gain support and sponsorship from the government,
and provide customized solutions with channels

•

Commitment to Investment — Demand creation is an investment process rather than
opportunistic selling. The XYZ senior management has to be prepared to commit people
and appropriate financial resources to capture the long-term advantages of this approach
38

Absent a thorough understanding of the evolving market dynamics and execution
capability, XYZ’s current DI operation in China lacks a focused business strategy, a
systematic operational approach, and a well-articulated marketing message.
XYZ Assessment

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Where XYZ Stands — Key Issues

What The Market Wants

• Not market and customer focused

• World-class brand awareness and
proven technology

• Lack of market awareness and image
recognition

• Technical support and strategic
advice to government-related projects

• Weak product offering: a fine product division
with marginal performance improvement

• High-quality performance at
competitive price

• Lack of solution and language capabilities

• Solution focused and localization

• Limited customer coverage (industry vs.
geographic) and resources (marketing, sales)

• Provision of Chinese software

• Lack of channel management system

• Superior customer service

• Lack of functional distinction

• Strong technical and marketing
support to channel partners

• Lack of internal communication channels
• Media and Components SBU division —
potential conflicts in the marketplace

39

The China DI market is an emerging one: customers need education in technology,
product qualities, features and operational benefits. Therefore, XYZ should reinvent
current operations to be more customer requirements- driven rather than simply
product focused.
XYZ Strategy Transformation
XYZ’s Today
Product-Focused

XYZ’s Tomorrow
Customer-Centric

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• Primitive stage of sales
model

• Traditional sales method;
transaction driven;
opportunistic approach
• Seller’s market

• Customer dealing with
several sales reps from
vendor and channel

Transformation Drivers

• Increasing competition
• Market evolution
• Growth need and
management requirement
• Increasing IT
sophistication and
network requirement
• Opportunity to leverage
limited resource and
valuable relationship

• Advanced sales model

• Focus on long-term business
opportunity
• Customer solution oriented
• Customer relationship
building and cultivation
• Account planning and
management

• Channel effectiveness

40

XYZ’s demand creation strategy must address explicitly evolving buyer values. By
better prioritizing opportunities, harnessing partners’ networks, addressing specific
customer needs, and engaging in creative, pro-active marketing campaigns, XYZ can
leverage its strong technological position for maximum advantage.
Demand Creation Framework
Design XYZ’s
Conceptual Strategy

INPUTS

Develop Detailed Strategies for
Market Creation

Plot Strategic
Path

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Profile of Market
& Buyer Value

Strategic Intent & Value
Proposition

• Unevenly distributed
& yet to be exploited
• Unregulated market
& growth impact from
the regulations
• Very primitive usage
of DI products
• Distinctive buyer
value among
different industry
sectors
• Increasing
competition vying for
the market share
across product
groups

• XYZ’s desired market
image
• Value proposition to
address target
customer needs
• Quick & sustainable
success through
opportunity
prioritization
• Support and capability
development to
integrate into broader
XYZ community

Government Strategy
• Short-term PR & marketing to drive sales
• Long-term strategic alliance and strong
network relations with key players
•

•
•
•

•
•

Implementation
Plan

• Marketing and PR
program (objective,
Product Strategy
timelines,
Leadership enhancement in HV &
investment and
micrographics; aggressive expansion into MV
expected results)
sector; entry to LV to create future market
• Key process maps
Marketing Strategy
(e.g., Account
Transition from “Push” to “Pull”
identification,
Consistent message and desired image via
product
aggressive education & marketing programs
introduction)
Coordinated efforts and multi-level towards
• Resource
gov’t, channel, & customer; track results
requirement
• Organizational
Channel Strategy
structure (out-ofRobust channel operational model in
scope)
customer identification, marketing, selling
Strict selection & performance measure
Risk Management

Competitive reactions; Investment commitment; Coordination with XYZ China
41

To drive demand creation and market expansion initiatives, XYZ needs to align
specific strategy components with its overall objective — to grow its DI business and
ensure sustainable revenue increases.
XYZ’s Strategic Intent
Government
• Actively involved in shaping and
influencing DI landscape
• ST concrete opportunities and LT
strategic relationship building

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Channel
• Strategic alignment
• Strict operational model (selection
criteria, performance measure)
• Effective co-marketing efforts

OBJECTIVE

Grow DI Business &
Ensure Sustainable
Revenue Increases

Marketing
• Brand equity & technology leader
• Buyer-value segmentation
• Generate demand by aligning
customer needs

42

Product
• Enhance successful product
sectors (HV & Mircrographics)
• Aggressively attack at MV; and
enter LV

The Value Proposition is a critical message to the market place. XYZ’s Value
Proposition must articulate a set of values — operationally and conceptually — that
reflects the needs and priorities of the Chinese government at the macro level as well
as XYZ’s key customers at the micro level.
Value Proposition
FOR THE CHINESE GOVERNMENT

XYZ will become an active contributor to

• Assist Chinese government’s IT
development agenda
• Promote and protect China’s historical
and cultural traditions
• Respond to Chinese government’s
desire to attract FDI
• Demonstrate XYZ’s commitment as a
devoted corporate citizen

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China’s digital economy development
and cultural heritage preservation

through its long-term investment in the
Chinese document imaging industry.

FOR CUSTOMERS AND PARTNERS

• Provide advanced and proven
technologies
• Create strong brand name and support
channel sales
• Address solution and localization
capabilities by partnering with channel

XYZ will provide world-class technologies
by leveraging its global experience, and
deliver customized solutions by forming
dynamic local strategic partnerships.

43

However, as the market forms and matures, buyer values will evolve. The key
strategy for XYZ is to shape the market early and influence the value migration to
benefit its desired positioning in the marketplace.
Buyer Value Migration

Perceived Value
by Customers

XYZ must secure customer
base early and capture
opportunities at the DI
introduction stage
Product

Customer
Indifference Curve

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• High value to
customers
• Stable value
• Limited
• Stable
competition
competition
• High growth &
profitability for • Stable margins
vendors

Cost

Small-Size Users
• Highly price sensitive
• Low product requirements

Life Cycle

Mid-Large Users
• Less price sensitive
• Some requirement
for quality & solution
Large Users (Banks)
• High product/solution
requirement
• High quality/service

• Higher value to
customers
• Intense
competition
• Low(er) profits

Introduction

Growth

XYZ must stimulate target
customers’ desire for premium
products and induce buyer
value migration to its advantage

Mature

44

Benefits

The core element of XYZ’s government strategy is to take a proactive approach to
shape and influence China’s DI landscape.

Government Strategy Rationale
What are XYZ’s opportunities in
this environment?
Activities
• Constant contact at different
levels
• Effective marketing efforts
• Systematic message to the
market
• Commercial diplomacy

Consequently, not only can
XYZ have a significant voice
in China’s DI development,
but it also may capture “big
bang” opportunities along
the way

Benefits
• Help raise DI awareness level
• Indoctrinate the necessity of DI
into the government structure
• Help establish a national-level
DI management system as part
of the digital economy

“BIG BANG”

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Form strategic alliances with
key government players as
government involvement is vital
in DI development

Fluid, decentralized,
fragmented and
unregulated environment
makes interaction with the
government a difficult task,
but at the same time, it
creates the possibility for
XYZ to be involved in
forming the rules of game

45

• Specific project related
• Not yet on the horizon
• Can erupt any time

Given that the government does not function as a unitary body, XYZ should form a
partnership with selected key players and adopt a multidimensional strategy in
dealing with the complexity and fluidity of the regulatory environment.
Government Strategy
XYZ should closely monitor the following
key players’ role development

Government strategy cannot
be ….

Accordingly, XYZ should
adopt a strategy that is both:

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Government bodies

• Ministry of Science and Technology
Dept. of High and New Technology
• Ministry of Information Industry
Dept. of Science and Technology
Dept. of Electronic Information Products Management
• Ministry of Culture
Dept. of Library
• State Development and Planning Commission
Dept. of High and New Technology Development
• State Economic and Trade Commission
Bureau of Machine Building
• The State Archive Bureau
• The State Bureau of Quality and Technological
Supervision

Government affiliated organizations
• National library/Library Association
• National Engineering Research Center for Optical
Memory
• Micrographic Association
• Archive Association

• One dimension
• Uni-level
• Focused on one target
• Once for all

Government strategy should
be ….

• Multi-dimensional —
conceptual, practical,
educational, relational, etc.
• Multi-level — from DI specific
personnel to ministers
• Focused on multiple targets —
no particular body plays a
decisive role
• Continuous — both short-term
and long-term
46

Long-term
and
conceptual/
Relationbased
AND

Short-term
and specific/
Project-based

XYZ must be able to shape the direction and thrust of change with respect to future
policy-making by relying on a strategy of consistent and constant engagement. The
goal is to get Chinese leaders to share XYZ’s DI vision for China.
Long-Term Government Strategies

Concepts and Relations Focused

Illustration

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Guiding Principles • Conceptual, educational, relation-based

Objectives

• Communicate XYZ’s Value Proposition: technological
leadership, partnership, investment commitment, and
corporate citizenship
• Promote the whole DI concept
• Educate the government about the benefits of DI
• State Council, minister level

Level of Contact

Activities

• Seminars (on digital technology development, DI
technology evolution), training classes, displays
• Advisory Board
• Marketing communications (brochures on DI technology,
not product focused)
• PR (high-level official visits and banquets)
47

Lay foundation for future
sustainable business opportunities
A concept, rather than specific
project proposals, can attract the
attention of high government
officials. For example, IBM promoted
the concept of “digital library” and
attracted a lot of attention
XYZ global senior executives
meeting with Zhu Rongji or
ministers
Cooperate with the Department of
Training in the State Economic and
Trade Commission to promote DI
technology and XYZ’s expertise

XYZ also must closely monitor and capture business opportunities arising from
inside government entities by adopting a short-term strategy which is concrete and
action-based. The goal here is to demonstrate the value that XYZ can bring to China
through its technology and business approach.
Short-Term Government Strategies

Issues and Businesses Focused

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Guiding Principles • Practical, concrete, actionable, project-based

Objectives

Level of Contact

Activities

Illustration

• Raise government’s awareness of XYZ’s expertise in
providing DI solutions
• Increase XYZ’s visibility and opportunity to get
government contracts
• Identify potential critical entry/access point
• Mid-ranking officials, IT personnel

• Free, showcase installation
• Leverage XYZ’s expertise in the global DI market, e.g.
XYZ’s involvement in the US 2000 and the UK
2001census projects — “XYZ is counting the world”
• Watch closely the government’s particular needs and
propose adequate solutions
48

Pursue immediate business
opportunities

Prepare some case study materials on
its successful DI implementation in the
government sector in other nations or
regions in Asia so that the Chinese
government can recognize XYZ’s
capability
XYZ regional officials keeping ties
with department heads
• Invite key officials responsible for
the census 2000 to visit U.S. or U.K.
census site
• Monitor government sponsored
projects. For example, a “Golden
Library” project is now in formation

An effective government strategy is carried out most easily through high-profile
projects in cooperation with government affiliated bodies, large multinational IT
companies and strong domestic system integrators. Good examples would be the
Goldens Projects and the National Census.
Strategy Imbedded in Projects
Multinational IT Companies
•
•
•
•

Credibility
Strong solution capability
Advanced technology
Example — IBM (its digital
library solution with CNPC,
Qinghua, and Fudan may need
scanning facilities)

Alliance with the government is
more viable when related to
high-profile projects.

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XYZ’s
Strategic
Partner

Government Related Project

• Brings concrete benefits to the
government and China
• Attracts media attention
• Demonstrates XYZ’s capability
• Creates credentials that can be
translated into future opportunities

Domestic System Integrators
• New application
• Advantage of getting
government contracts
• Industry knowledge
• Examples — Beijing Orient
Founder Science and
Technology Development Co.,
Ltd. Shenzhen SEG Co., Ltd.
Software Branch, Xian FutureFortress Electronics Co., Ltd.,
Qinghua Tongfang Optical Disc
Company (See Appendix)

XYZ’s
Strategic
Partner

Government Affiliated Association
• Policy influence
• Standard setting
• Business opportunities
• Examples — National Center of
Optical Memory, Archive
Association, Micrographic
Association, etc.
49

Following our proposal that XYZ should expand its customer base, we believe that
the core of its new product strategy should be to strengthen high end product
offerings, but also rapidly expand into the low-end to mid-range products.
Product Expansion Rationale
Key customer findings revisited

Customer base expansion can be
achieved by introducing low-end to
mid-range products, because when
we look beyond the banking
industry we find that large users do
not necessarily use high-speed
products:

Benefits of entering the lowend to mid-range products

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• High market potentials exist in
large- and middle-sized user
groups outside the banking
industry

• These potential users are more
price sensitive than the banking
industry and do not put a high
value on fast speed
• Banks only can’t offer
sustainable LT growth for XYZ

• XYZ can’t afford to wait and let
the opportunities outside the
banking industry slip

Expanding
customer base
is critical

Products to be introduced
immediately should be in the
range of :

21-75ppm
scanners

50

• Catch users that otherwise would
not become XYZ’s customers
• Increase XYZ’s market share
• Raise awareness of XYZ brand
• Make customers difficult to switch
vendors; build switching barrier
• Have the opportunity to help the
customer to upgrade and grow

Possibilities for future product
introduction
Our study also found an increasing
demand for large-sized scanners
used in engineering, architecture,
and CAD application. This sector
does not offer a significant market
yet, but it is expected to grow to
such a stage in the next two to
three years

The relevance of this strategy is further supported by a segmentation of existing and
targeted customers based on their buyer values related to different products.

Product Attractiveness

Big Banks

High End

Mid Range

Segment C
Big Usage with Limited Financial Capability

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Segment A

PRODUCT

Segment B
Big Usage with High Financial Capability

Non-major
Banks

Statistics, Archives Bureau, libraries, law enforcement,
Customs, Taxation, ICAB,
Patent, real estate management, Weather Bureau, Land Bureau, social security and
welfare, State Asset Administration, personnel depts.
DMV, insurance companies
PLA, newspapers, publishing companies, hospitals

Low End

No Demand

Low Demand

Medium Demand
51

High Demand

At the same time, when expanding into low- to mid-end products, XYZ also should
maintain its leadership position in the high end and micrographics segments by
realigning its products with specific customer needs.
Product Portfolio Strategy
High

Leverage and Develop MICROGRAPHICS: Digital penetration into
the low-to mid-volume segments may create a foothold for
micrographics later on. However, XYZ is likely to face competition
from Minolta and other vendors. It needs to leverage its expertise in
the banking industry to capture opportunities in the non-banking
segments

High
Volume
Offerings

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XYZ’s Capability

Micrograghics

Maintain and Enhance HIGH VOLUME: XYZ should closely
monitor competitors’ encroachment on the banking industry, adjust its
product strategies according to the buyer value migration in the
banking industry, and enhance customer service and solution
capabilities

Mid
Volume
Offerings

Low
Volume
Offerings
Low
Low

Industry Growth

High

Reach and Expand MID VOLUME: With moderate effort, XYZ can
enter this segment early, watching for opportunities in the non-major
banks and large users with financial capabilities
Enter and Grow LOW VOLUME: This segment represents the most
rapidly growing sector with the greatest potential. XYZ’s product
strategy should be to enter aggressively and help customers grow to
a higher level
52

More importantly, mid-range and low-end products need to be distinctively
differentiated to avoid cannibalization of XYZ’s existing high-volume products and to
gain advantage over competitors’ similar products. This can be achieved through
XYZ-branded product features, quality and customer service.
Differentiation Strategy
External Differentiation

Internal Differentiation
Processing
Capacity

Feature
Solution
Enhancement Requirement

Customer
Service

Quality

Features

Price/
Performance

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Significantly
lower than
high-volume
Mid- (e.g., at 40-50
Range ppm)

LowEnd

Significantly
lower than
mid-range
(e.g., at 20-30
ppm)

Moderately
easy to
operate
without losing
functions

Simple
functionality
and thus
simple
operation

Medium
level
customization

Prepackaged or
standard
solutions

XYZchannel
jointly
provided;
different
component
of service Superior
Channel
provided
basic
service;
different
component
of service

53

quality/
quality
leader

Color
scanning
and XYZ
solution
“package”

Customer
Service

Super
delivery of
Cost
service
effectiveness (response
high
time, quality
performance of services,
skillful
technicians)

The implementation of the product strategy should follow a predefined time line and
integrate customers’ preferences and needs with XYZ’s strategic plan.

Integration of Product Strategy with Customers’ Requirements

Media
strategy

• Work closely with the accounting departments in the banking industry to
keep micrographics as the principal means of document storage
• Most of the new users in the non-banking segment probably will not opt
for micrographics in the first place. Media can approach them when
their front end needs are met and a back end storage problem emerges

Realigning products with customer
needs requires XYZ to consider the
following issues:

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 2000

•

Introducing MV



2001

Reconfiguration — reconfiguring products
based on Chinese customers’ needs (e.g.
jukeboxes with one reader and one writer
instead of two readers, and scanners with
preinstalled SCSI card
Paper handling — improving high-speed
scanners’ paper handling capability (e.g.
the national library once test-used XYZ’s
high-volume scanner and found that the
scanner did not handle papers of irregular
sizes and uneven edges well, and the
machine was sensitive to dust from
disassembled old books)

2002

Introducing LV

Retain competitiveness in HV all the way

Digital
strategy

Localization — introducing Chinese
software

•

1999

Product-line simplification — offering
1500, 2500, 3500 and 9500 scanners to
cover wider range of customers

•

Micrographic Takeoff

•

• Take advantage of the digital “fad”/go with the trend
• Meet with customers’ needs of solving the problem of front end
operation
• Create space for Media
54

The new product expansion strategy will enable XYZ to achieve a CAGR of 56.3% in
sales revenue. The total sales of US$ 43M sales in 2002 will be composed of
approximately US$ 30M from high end products and about US$ 13M from new
products.
XYZ Revenue vs. Market Size
1998

1999

2000

2001

2002

CAGR

18.0

25.9

39.3

59.3

86.0

47.9%

XYZ Share

40%

40%

40%

45%

50%

XYZ Sales

7.2

10.4

15.7

26.7

43.0

44%

52%

70%

61%

11.1

16.9

25.5

37.0

XYZ Share

85%

80%

80%

80%

XYZ Sales

9.5

13.5

20.4

29.6

46.3%

XYZ Sales

0.9

2.2

6.3

13.4

146.8%

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Overall:

Market Size

XYZ Annual GR

56.3%

High End:

Market Size

49.3%

New Products:

55

In the long run, XYZ needs to consider offering XYZ branded local products, either
through OEM or joint venture. This option can enable XYZ to achieve cost
competitiveness and product localization capabilities. This option, however, also is
embedded with many potential risks.
Evaluation of Local Manufacturing
Virtues

Risks

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• Raise profile of XYZ’s DI efforts in China

• High risk if the Chinese DI market does
not grow rapidly

• Raise XYZ’s corporate image by making its
products “Chinese”

• The deterioration of Sino-US relations

• Strengthen XYZ’s relationship with the
Chinese government; Gain government
support in winning projects

• China’s entry into the WTO which
makes import duty a less significant
factor

• Utilize partner’s network; take advantage of
local talent

• Danger of intellectual property
infringement

• Reduce cost (transportation, import duty,
labor) in the long run

• Reliance on domestic partner and loss
of control

• Hedge against currency devaluation on the
condition of high local contents

• Danger of products being perceived as
“second class” because manufactured
in China

• Gain advantage over competitors

• Possibility of compromising quality

• Be able to use the Chinese manufacturing
facility as a component of XYZ’s global
production strategy
56

If it decides to make a strategic move into manufacturing, XYZ should build
progressively from OEM, licensing or simple assembly to full-scale manufacturing
facilities, so that it can gain experience and knowledge of its partners to carry out a
successful business venture.
A Strategic Option to Explore
OEM, Licensing or
Simple Assembly

Parts/ Full Product
Joint Venture

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Feasibility Study

• Macro-economic
environment (WTO,
Sino-US relations,
Chinese economic
development)

• Market study and
competitive analysis
• Business case
development

Capabilities &
Capacity
Assessment

“Discovery
Phase”

Final
Selection &
Negotiation

Example of a Possible Partner
Qinghua Tongfang Optical Disc Co., Ltd.
• Government affiliation
• Strong software development capability
• Products include CD-ROM Drive, CD-R/CD-RW, CD
tower, jukebox
• Manufacturing facility in Jiujiang, Jiangxi, with 800
employees
57

Set up &
Operations

To carry out the proposed product expansion and create additional demand, it is
imperative to have a lively marketing strategy conveying XYZ’s value proposition and
messages to the different segments. Customer-valued based positioning and a “pull”
strategy transformation need to be stressed and deployed.
Marketing Strategy Alignment

• Market segmentation and prioritization is derived from distinctive buyer values
and XYZ’s internal capabilities

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• The value-based customer segmentation should be reflected in the marketing
strategy
• In penetrating the emerging China DI market, the focus of the marketing
strategy should be on generating demand through XYZ’s value proposition,
strong brand image, clear product positioning, market education, and
aggressive PR

• This approach requires that XYZ shift from a “push” to a “pull” strategy, which
consists of:
– A multi-level approach that targets the government, customers and
channels
– A concerted marketing approach between XYZ and channels in
interacting with the industries, key account headquarters, and specific
accounts
58

Marketing activities should capture opportunities embedded in the dynamic
relationship between customer segments and product groups. This can be
accomplished by offering tailored packaged solutions to the target segments.
Transferring Buyer Values To Product Segments
Buyer values

Products

• Turn-key solution
• Customer training
• After sale service
• Fast speed
• Brand conscious
• High quality needs

Customers

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• Price/performance
ratio
• Easy to operate
• Product reliability
• Less brand
conscious

• Price sensitive
• No speed
requirement
• Easy to operate
• Not brand conscious

High Volume
(+76ppm)

Marketing
links buyer
values to
products

Segment A

(Major banks)

Segment B

Mid Volume
(41-75ppm)

(Users with
financial capability)

Segment C

Low Volume
(21-40ppm)

(Users with limited
financial capability)

59

User Migration
XYZ helps
customers grow
to a higher level

XYZ’s new marketing strategy should be based on XYZ’s segment priorities. Using
the four core marketing levers of product, price, promotion and distribution, XYZ can
further strengthen its overall market position.
Segment Prioritization
Product

Attractiveness (size, growth)
LOW

Price

• Product offerings
• Solution focus
• Service offering

HIGH

• Pricing strategies
• Discounts to Channel

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Segment
C

Segment
A

Segment
B

Segment
C

Segment
A

Segment
B

XYZ’s Ability To Capture Market
First priority

Second priority

HIGH

Third priority

Promotion
• Advertising
• Seminar
• Selling (New account
development, direct mailing)
• Corporate image
60

Distribution
• Channel partnership
• System integration &
software development
• Training and incentive

Distinctive positioning for each target segment should be in place before making a
tactical plan which outlines the key programs and allocates segment specific
resources to each marketing lever as identified below.
Segment Marketing Strategies and Tactics
Positioning

Marketing
Strategy

Tactics

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Product

Price

Promotion

• Company wide
brand advertising
through IT print
and trade journals
• Loyalty programs
• Emphasis on HQs

Distribution

• World class
technology
• Customized solution
Segment
• Entrenched
A
leadership
• Premium products
and brand image
• High quality
products
Segment
• Good service
B
• Good price/
performance ratio
• Scalability &
reliability

• Skimming
strategy
• Establish close
XYZ-channelcustomer
relation
• Account plan
• Penetrating
strategy
• Brand extension:
leverage XYZ’s
brand image in
Segment A

• Improved service
• Premium
quality
pricing
• Provide strong
strategy
solution capability
• Customer training
• Highest level of
customer service
• Introduction of
• Moderate
2500
pricing
• Provide some
quality (e.g.,
solution capability
10-20%
• Emphasize
higher than
reliability
competitors)
• Moderate customer
service level

• Strategic
partnership with
selected channels
• For key accounts,
XYZ leads and
channels follow

• Easy to operate
Segment
• Cost effective
C

• Penetrating
strategy
• Establish
awareness

• Introduction of 1500 • Low pricing • Product advertising
• Grow number of
• Standard product/
strategy (e.g., through mass print
channels
5-10% higher • Road shows
• Partnership with
simplification/
than
• Creative product names
popular vendors
stripped-down
competitors)
such as Uniscan
version

• Advertising in trade
• Penetrate new
journals
channels
• Direct mail with case
• Delegate account
studies
specific
marketing
• Seminars
• Publicize XYZ’s
activities to
overseas expertise in DI
channels
• Creative product names

To successfully implement the segment-based marketing strategy, XYZ needs to shift
from a “push’ to a “pull” strategy, which is composed of a multilevel and concerted
approach. The key element here is simultaneity, that is, making certain activities are
well synchronized and coordinated.
A Multilevel Marketing Approach
Government

Channel

Partnership/image building

XYZ
facing the
market
directly

Customer
Market education

Partnership

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• Seminars and training
classes (on DI concept/
benefit), displays
• Brochures on DI
technology development
• PR (high-level official
visits and banquets)
• Advisory Board
• Publicize XYZ’s global
expertise in DI

• Displays/discussions
• Free installation
• Adopt different ad media
to different target
industries
• Special report and
educational articles
• Direct mailing (case
studies, success stories)
• Demo centers

• Technical training
• Marketing training
• Publicize XYZ’s
strong DI capabilities
• Incentives
• Offer co-marketing
opportunities
• XYZ brand name
enhancement to
attract channels

A Concerted Approach ILLUSTRATIVE
XYZ and
channel
joint
marketing

Important Overall
Marketing Initiatives

Industry — 70:30
• XYZ leads and
channel follows
• If XYZ does not
participate, channel
would only promote
itself

Key account
headquarters — 50:50

Individual accounts
— 20:80

XYZ has face-to-face
interaction with
headquarters of key
accounts

XYZ delegates
account specific
marketing activities to
channels

62

• Aggressive marketing —
Increase % of marketing
spending
• Long-term investment
• Consider lowering
channels margin to make
fund available for
marketing
• Avoid sending conflicting
messages to the market
• Promote the concept of
DI rather than standalone digital or media
• Combine component and
media marketing activities
by establishing single
point of contact

To maximize the channels’ contribution to XYZ’s business expansion, XYZ needs to
align better with its channels at both strategic as well as operational levels.

Channel Strategy
Channel Management Objectives

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• Help XYZ reach the target market
• Complement XYZ’s solution & SI capabilities

Channel
Structure

Strategic Alignment

Operational Alignment

• How to make channels
strategic partners with
XYZ?

• What’s the best channel
management approach?
• How to optimize the
operational process with
channels?

63

Strategic alignment will enhance the partnership(s) and build synergy between XYZ
and its channels. The KVAD deployment is critical, and KVAD should be recognized
as an extended part of XYZ’s sales organization.
Strategic Alignment
Share Business
Objectives

•
•
•
•

Channels’ commitments to DI business
Long-term business perspectives vs. opportunistic approach
Channels’ experience and connections in XYZ’s target industries
Channels’ solution/integration capability to support XYZ’s objective

•
•
•
•
•

Technological and marketing support to channels
Continuous communications
Retain optimal number of channels
Healthy competition
Contract enforcement

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Cultivate Loyalty &
Restrain
Bargaining Power

Strategic
Alignment

Stimulate
Business
Development

Instill Common
Technological
Understanding

Develop Channel
Capability for New
Products

• Incentives to encourage new account acquisition and new
industry penetration (increase discount rate)
• Co-develop new applications by cost-sharing

• Regular training and workshops
• Exchange and share industry knowledge and customer
information

•
•
•
•

Resolve conflicts with competitive products carried by existing channels
Develop solution and service capability for new products
Select and partner with new channels, if necessary
Cultivate channels’ capability of customer service

64

XYZ should apply a more flexible and adjustable incentive system to encourage
channels to focus on long-term business development and strategic customer
selling, rather than adopt an opportunistic approach. The illustrated discount
schedule and rewards ensure the desired channel behaviors are being promoted.
Incentive Schemes — Motivation for Business Development
Performance-Based Discount Schedule
(Example)

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Discount schedule
should vary by
industry (new or
existing, banking or
government, etc)

Discount Rate

40%

Specific Rewards (Examples)

KVAD (with quota requirement)

30%
25%

PRman

• Additional discount the next year when
channel exceeding the quota by 10%
• 10% more discount on project wins in a new
industry
• 5% more discount in penetrating a new
account
• Additional discount for project in developing
a new application

KAIR (without quota requirement)
$0.8M

$2M

• KAIR upgrade to KVAD after 3 consecutive
years of performance improvement (e.g.,
exceeding quota, new industry penetration)

Realized Sales

• Extra marketing budget from XYZ with
channels’ active participation in marketing
(e.g., co-marketing, % marketing spending)

XYZ should develop a set of criteria to evaluate
channel performance, and determine the discount
schedule case by case and based on their last
year’s performance.
65

To develop an effective distribution network, XYZ should pursue a systematic
approach for channel management, from selection to measurement. The essence of
this approach is to ensure XYZ’s objectives and priorities to be carried out
relentlessly through channels.
Channel Selection Criteria and Process
Determine
Target Industry
& Geographical
Focus
•
•
•
•

Select &
Recruit
KVADs

Channel Performance Tracking/Measure

Select &
Recruit KAIRs
with KVADs

Illustrative Examples
• Number of new customers per year

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Buyer value
DI requirements
Growth prospect
XYZ capabilities

Trade-offs

• Sales and growth per year
• New industries penetrated into

• Shared business
objectives
• Channel
management
experience
• Financial strength
• Industry
intelligence
• Industry
relationship
• Geographical
coverage
• Resource
commitment

• Close tie with target
customers
• Account
management
capabilities
• Experience and
relationship in
industry
• Geographical
coverage
• SI & solution
capabilities
• Resource
commitment

• Relationship vs business capability (SI,
solution)
• Business scale vs dedication to DI
66

• Participation in marketing
– Spending

– # of seminars, road shows, etc
– Co-marketing

• Organizational dedication to DI
• Management of KAIRs (applicable to KVADs)
– Overall support to KAIRs
– Recruiting
– Marketing
– Conflict resolution

On a regular basis, XYZ needs to enforce operational discipline within and among
channel partners. Both KVADs and KAIRs are urged to take greater responsibilities
at each stage of the sales and marketing process; XYZ managers need to monitor
their performance frequently in this regard.
Operational Alignment
Training &
Communications

IndustryLevel
Marketing

Identify Key Account-Level
Accounts
Promotion

Sales
Execution

Customer
Service

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Key Tasks • Share business • Joint seminar to • Target customer • Identify decision • Organize sales • Post-sales
objectives
• Provide technical
and market
knowledge
• Develop industry •
specific skills

XYZ Role

• Ensure
consistent
message
conveyed to the
market

demonstrate
list
global industry • Understand
experience and buyer values and
business needs •
capabilities
Provide industry • Potential
solutions and
revenue streams •
best practice

maker and
decision-making •
process
Account-focused •
solution
Proposal and
presentation

force
training
Track selling
• Regular contract
progress
maintenance
Implementation • Customer
feedback
• Tracking usage
and upgrade

Input of XYZ global successful cases + technical & industry skills +
support + XYZ plan and directions + conflict resolution

Participants

XYZ

KVAD
KAIR
Participation Level
High  Low

67

• Technical
support
• Feedback to
product manager

Over the long term, XYZ should encourage KVADs and KAIRs to adopt an account
management system. A well-developed account plan can help XYZ and channels
focus on key opportunities and retain key customers (especially in the banking
industry), thus guaranteeing steady revenue inflows.
Account Planning
Provide accurate information
concerning revenue, market
position, strategy and growth
plan, IT budget and plan,
buyer values, etc.

ACCOUNT PLAN
Bank of China

Section I

Account Description

Channel Team Info
Design channel team; match
sales to customer reps to cover
sales activities and
relationship building; assign
responsibilities

Section IV Channel Team Information
Section VI Action Plan & Review
Appendix

68

Appendix

Based on market position, lay
out a realistic, qualified
opportunity map, indicating
time, revenue, product, and
competitors

Section III Opportunities

Section VI

Opportunities

Goals (XYZ/KVAD)

Section IV

State objectives with the
account; assess XYZ/KVAD
capabilities and develop
strategies in achieving sales
relationship goals

Section II

Section III

XYZ & KVAD Goals

Account Description

Section II

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Section I

Action Plan & Review

Design activities and
proposed high-level meetings;
provide templates for each
activity record; quarterly
review account performance
Appendix
Record information source
(account and industry
specific); provide other useful
information such as customer
installed base, etc.

Based on the buyer values associated with the target segments, XYZ should apply
different tactics to develop and manage corresponding channels. This may create
some implementation challenges, but it is critical for business success.
Segment-Based Channel Management
Required
Channel Capabilities

Performance Measure &
Rewards

• Very strong solution capability
• Strong industry relationship
and knowledge

• New banks or new
applications, account planning
• Customer satisfaction in terms
of training and service
improvement by channels
• Discount, co-marketing/coresearch support

• Established relationship in
target sectors
• Strong solution capability
• Service capability

• Organizational dedications
and marketing/education
• New penetrated sectors
• Account planning skills
• Training, support in
infrastructure and bonus

Managing Channel

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Segment A
Existing Banking Users

Segment B
Other Users with
Financial Capability

• Extensive customer networkSegment C
industry or geography
Other Users with Limited • Standardized service
capability
Financial Capabilities
• Selling skills

• Growth of revenue and # of
customers/industries
• Customer satisfaction in
service
• Discount, status upgrade

69

• Contract enforcement by
increasing # of channels
• Offer new products
• Close communication
• Take major role in marketing
• Strategic partnership to
develop solutions
• Acquire shares of channels
• Timely and regular
communications
• Involve in channel marketing
activities
• Encourage healthy
competition among channels
• Standardized marketing
materials and procedures by
XYZ with channel taking the
main responsibility

The evolution of the channel structure will be driven by the volume of business and
product offerings. In an emerging market, a one-tier structure presents its merits in
simple operational management and market knowledge development.
Channel Structure Debate: One-Tier

Pros

Cons

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• Effective operational model in an
emerging market

• More XYZ sales and channel
resource required

• Closer to the market and end
customers; development of market
and industry knowledge

• Strong internal capabilities required
(channel management might not be
the core competency)

• Easy to develop channel relationship
and understand its capabilities;
foundation for the two-tier migration

• Requirement for in-depth industry
knowledge specific to the market

• More direct and simple
communication chain

• Possible excessive competition
among channels

• Limited reach of customer base

• More cost effective (reduced
discount) and higher margin
• Contract enforcement
• Less dependent on any single
channel, thus lower overall risk
70

The recently adopted global KVAD-KAIR structure enables XYZ to reach a wider
customer base with the introduction of the MV and LV products; yet XYZ should
further examine and experiment with the two-tier structure in the Chinese setting,
especially in the major banks segment.
Channel Structure Debate: Two-Tier

Pros

Cons

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• Resource concentration on KVAD
development
• Focus on core capability
development (product, solutions,
marketing, etc)

• Viable model for low-volume product
penetration (less technical support
needed)

• Fewer conflicts among KAIRs due to
KVAD’s management

• Lack of loyalty at KAIR level

• Customer confusion caused by mismanagement (KVAD, KAIR
approaching the same customer)
• Indirect communication with KAIR,
who is the interface of the customer

• Margin erosion from two-tier discount
• Tendency for inconsistency in
marketing message

• Extensive customer reach

• Minimized XYZ’s control in KAIR and
customers

• Sales quota commitment from KVAD

• Loose contract enforcement

• Incentive for KAIR striving to be
KVAD

• Highly dependent on KVAD

71

In summary, to enhance revenue performance, XYZ should take two strategic steps:
product introduction and customer expansion. Only with such parallel efforts, can
XYZ overcome current DI development hurdles and create a sustainable lead position
in the marketplace.
Achieving Demand Creation
Differentiation

Low-end

XYZ
share

Introduce new products

1998 DI market
US$ 18 Mn

Channel

Customer

Expand customer base

Government

Strategic
Thrusts

Medium-range

High-end

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2002 DI market
US $86 Mn
XYZ
share

Marketing
72

HURDLES TO OVERCOME
• No strong market pull
• Simple product portfolio
• Low DI awareness
• Limited customer base
• Technology limitation (e.g.
OCR)
• Weak channel capabilities

Our proposed strategy implementation plan is designed to mobilize XYZ’s people and
financial resources in the four critical areas identified in our assessment of the
market and XYZ’s current position.
Overall: corporate image and
market education

Implementation Master Plan
Segment A

Marketing
Strategy

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Objectives:

• Build XYZ brand name
• Grow the China DI
market

• Conveying XYZ’s value
proposition
• Project-based initiatives

Government
Strategy

Segment A

73

• Quality product
• Meet customer requirement
• Cost effectiveness
• Standard product
• Strengthen relations with channels
• Account management

Segment B

• Increase number of channel
• Training of channels

Segment C

Channel Strategy

Segment B

Segment A

Fulfill Demand
(Internal
capabilities)

• Premium product/service,
• Solution focused

Segment C

Product Strategy

Objectives:
• Build internal
infrastructure
• Retain XYZ’s market
leadership

Segment B

Segment C

Create Demand
(Market facing)

Strategy
Implementation
Plan

XYZ’s continuous commitment
to banking

• Increase number of channels
• Expand geographic coverage

Based on the market development stage and XYZ’s position, we believe that the
centerpiece should be the marketing piece. The major purpose of the overall
marketing program is to demonstrably strengthen XYZ’s corporate image and
enhance market awareness of its major offerings.
Marketing Strategy Implementation: Corporate Image and Market Awareness
Program Type
Brochures (DI
technologyfocused and
functionfocused
respectively)
and
Newsletters
Seminars to
Customer

Journal
Articles

Objective

Responsibility

Resource
Requirement

Measurement

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• Develop high level brochure on
DI applications including flow
chart to educate the senior
decision makers
• Produce XYZ product brochures
for technical people
• Develop newsletters with
updates on products and case
studies to different segments

• Marketing team
with assistance
from BIS
corporate
MarCom group

• Marketing Team
• Global
experience
• Ad agency

• Increased
brand
awareness
• Follow-on Sales

• Educate customers on XYZ’s
offerings

• Marketing Team

• Marketing
Team
• KVAD support

• Increased
brand
awareness

• A series of journal articles to
educate the potential customers
on DI technology
• Increase visibility of XYZ DI
technology

• Marketing team
with assistance
from BIS
corporate
MarCom group

• Global
experience
• Newspaper/IT
journals
• Ad agency

• Increased brand
awareness

74

Priority
High

High- Medium

Medium

As part of its overall marketing initiatives, XYZ also should have specific, focused
programs that cater to the different segments of the evolving market. In particular,
XYZ needs to demonstrate its continuous commitment to the banking sector and to
build awareness in the mid-range and low-end segments.
Marketing Strategy Implementation: Segment Focused
Program Type
Segment A:
• Ad on Finance/
Banking
Journals

Objective

Responsibility

Resource
Requirement

Measurement

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Priority

• Ad on finance journals
to reinforce its brand
image

• Marketing team

• Ad agency
• Channel inputs

• Increased brand
awareness
• Customer
satisfaction survey

High

Segment B:
• Develop Product
Brand Name
• Pricing
• Ad on IT/Trade
Journals

• Prepare for the new
product launch of 2500
(media briefing, news
release))
• Ad on both IT and
trade journals to build
awareness

• Marketing team

• Product management
support from HQ or
Asia/Pac
• Ad agency
• KAIR/KVAD

• Product brand name
recognition and
adoption
• # of new customers

High

Segment C:
• Develop Product
Brand Name
• Pricing
• Ad on IT Journals

• Prepare for the launch
of 1500 (media
briefing, news release)
• Ad on popular IT
journals to expand
reach

• Marketing team

• Product management
support from HQ or
Asia/Pac
• Ad agency
KAIR/KVAD

• Product brand name
recognition and
adoption
• # of new customers

Medium

75

The core element of the government strategy execution is the creation of a strategic
partnership with several relevant government entities. Operationally, while this effort
is aimed at long term positioning, it requires identifying several specific projectbased initiatives in the short term to build ample momentum.
Government Strategy Implementation

Short Term

Program Type

Responsibility

Resource
Requirement

Measurement

Download at:
Gazhoo.com

Free
Installation

Identify Gov’t
Sponsored
Projects
Commercial
Diplomacy

Long Term

Objective

Advisory
Board
Seminar to
Government

Priority

• Act as gov’t/
industry critical
access point

• Marketing team
• A/P gov’t relations
team

• Big PR effort
• BIS Senior
Management
Greater China

• Follow-on Sales
from gov’t
bureaus
• XYZ recognition

Medium

• Leverage gov’t to
drive sales

•
•
•
•
•

• XYZ‘s corp.
marketing
research

• Follow-on Sales
• XYZ recognition

High

• Regular highlevel meetings
(e.g. President
of XYZ, BIS
executives)

• Partnership with
high-level gov’t
officials
• Increased brand
awareness

High

• Serves as
• XYZ China Senior
advocates for XYZ’s Management team
products
• Marketing team
• Standard influence

• Regular meetings
& exchange to
update China DI
• Marketing team

• Increased brand
awareness
• XYZ product as
recognized std

High

• Educate about DI
• Technology
focused

• Marketing team
• Support from
Advisory Board

• Increased brand
awareness
• Relations with
gov‘t

High- Medium

• Deliver value
proposition to
demonstrate its
commitment to DI
in China

Marketing team
Channel
New application
Gov’t relations
XYZ China Senior
Management team
• Marketing

• Marketing team

76

In terms of product strategy, XYZ should target different segments with different
product portfolios. Specifically, Segment A should have a premium product/service
& solution focus, Segment B should focus on quality products & exact customer
needs, and Segment C should concentrate on cost effectiveness with a standard
product.
Product Strategy Implementation
Program Type

Objective

Responsibility

Resource
Requirement

Measurement

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Gazhoo.com

Segment A:
• Build strong
solution capabilities
• Provide premium
service
• Simplify product
models
Segment B:
• Provide good
customer service
• Meeting customer
requirement/
solutions
Segment C:
• Develop standard
product

• Build strong solution
• Marketing team
capabilities to ensure
• New applications
leadership position
• Premium service level to
avoid cannibalization
• Simplified product models
for clear differentiation

• Product
management
support from HQ or
A/P
• Channel support

• Grow customer base
• Enhance XYZ’s overall
market position
• Prepare for the new
product launch of 2500

• Marketing team
• New application

• Product
• Build customer
management support satisfaction
from HQ or A/P
• Increase in # of
• Channel support
customer
• Market awareness

High

• Capture the market,
grow with customers
• Prepare for the launch
of 1500

• Marketing team
• New application

• Product management • Build customer
from HQ or A/P
satisfaction
• Channel support
• Increase in # of
customer
• Market awareness

Medium

77

• Improved customer
satisfaction

Priority
High

The new product launch needs to highly align with XYZ’s strategic plan in expanding
customer base and achieve revenue increase. The process should involve Marketing,
New Application and Channels. It should ensure that customer feedback and channel
inputs are consistently taken into consideration.
New Product Launch Process
MarCom
Strategy

Approval from Corporate
Product Group

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Marketing
Preparation

Channel Inputs

Customer
Insights

New
Product
Launch?

YES

Channel
Preparation

Product
Literature

Product Launch
Media Briefing
KVAD, KAIR
Recruitment
Channel
Training

Design of Quota
& Performance

New Application
Development

Customer
Identification
Sales Plan &
Prioritization

78

Co-Marketing/
Marketing

End Customer

Business
Development

Identifying new customers requires deploying various sources and channels. XYZ
needs a systematic multi-level approach toward business development. For example,
it needs to further leverage the proposed Advisory Board as a center of influence in
generating leads. In addition, it also should use the media to enhance visibility in the
market.
New Customer Development Process
XYZ Initiates

Screening
Process

Target
Customer? DI
Initiatives?
Opportunity for
XYZ?

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Center of Influence (e.g.
Advisory Board)

Potential
Customer

Secondary Research

NO

Personal Contact

DROP

Customer Referral

Select KVAD, KAIR;
Solution
Development

Marketing Efforts
(Channel & XYZ)

Sales Associates
Monitoring &
Review Customer
Performance

Channel Initiates
Customer Initiates
(Response to the Media)

YES

Identify More
Opportunities

79

Customer Selling &
Management

Market entry strategy presentation - gazhoo.com

Market entry strategy presentation - gazhoo.com

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