How to improve a product launch performance in
China: A case study in Plymovent
Master thesis, MscBA, specialization Business Development University of Groningen, Faculty of Business and Economics
September 2, 2011 ZHE YIN Studentnumber: S2079496 Winschoterdiep 46, 9723 AC Groningen Tel.: +31 06 34084772 E-mail: Zhe.Yin@Hotmail.com Supervisor/ University
Prof. P.S. Zwart/University of Groningen Dr. K.R.E. Huizingh/University of Groningen
Supervisor/Company Cees knijn/Plymovent Group BV
Acknowledgement
This is a master graduation thesis in Business Development and the research was performed in a European manufacturer (Plymovent). The supervision of this research was done by both the company and the University of Groningen, without which this thesis cannot be done in a sound way on time. Therefore, I would like to send my sincere gratitude to the supervisor of this thesis.
My first thanks goes to the supervisor of the company (Cees Knijn), who offered me a great help during the data collection and analysis process. His creative thinking and deep insight of the research theme is a valuable source of this thesis.
In addition, I would like to thank Professor Peter S. Zwart (the University supervisor). As my first graduation supervisor, Prof. Zwart walked me through my thesis in a scientific way. Started from the thesis layout, and then went to the detail, the discussion with Professor Zwart made the thesis writing process go well, especially for his scientific thinking and heuristic question about my thesis writing. Also, I would like to give my thanks to Dr. Huizingh (the second University supervisor) who gave me several valuable advices of how to make my research better in the future.
Last but not least, I want give my sincere thanks to all the tutors of the master degree of business development, as the knowledge I learned from this course is a whole life treasure that will help me to make a success in my career.
Abbreviation List
COMP Customer Order Management Process
EPC Event-driven Process Chain ESS Engineered Solution System
GPM Gross Profit Margin
ICT Information Computer Technology
NPD New Product Development NPP New Product Performance NPL New product launch
PLC Product Life Cycle PLF Product Launch Failure PLP Product Launch Performance
ROI Return on Investment
SCM Supply Chain Management
TMST Target Market Screen Tool
Abstract
The purpose of this research is to improve a multinational manufacturer’s (Plymovent) product launch performance in China. In order to achieve this purpose, the underlying causes of such performance were preliminary explored in both academic literature and headquarter interview, and the results showed that there are 14 causes responsible for Plymovent’s poor ESS performance. These 14 causes were further verified through a field interview and an online end-user survey, after which the top 5 influential causes were identified, namely long time delivery, unclear target market, lack of technical skills, low promotion expenditure, and narrow product application. Considering the significance these 5 causes, it was suggested that all the top 5 causes should be tackled in the near future. In addition, four solutions were designed based on the results of the empirical analysis, researchers’ working experience and relevant academic literature. In order to facilitate Plymovent’s changing efforts, an implementation plan including a cost-benefit analysis was developed in the solution design section. Although it is admitted that this research suffers several limitations, the newly developed solutions are deemed useful for Plymovent to improve its ESS China performance, and the knowledge reflected from this research is a useful input for Plymovent’s China Plan.
Content
1. Introduction ………07 1.1 Research question ………...07 1.2 Research design ……….09 1.3 Research structure ……….11 2. Theoretical exploration ……….122.1 Product launch performance measurement ………...12
2.1.1 New product performance measurement exploration ………..12
2.1.2 Product launch measurement selection ………13
2.2 Product launch failure exploration ………15
2.2.1 Strategic launch decisions ………15
2.2.2 Tactical launch decisions ………...18
2.3 Product launch performance conceptual model ………22
3. Research Methodology ……….23
3.1 Data point.. ………...23
3.2 Data source.. ………...23
3.3 Data collection process ………...24
3.4 Data collection method. ………24
3.5 Expected barriers and countermeasures ………26
3.6 Data analysis method. ………...27
4. Empirical analysis ……….28
4.1 Business problem validation ……….28
4.1.1 Step 1: Comparison of ESS factual performance and norms ………...29
4.1.2 Step 2: the attainability of norms ……….31
4.2 Problem causes validation ………32
4.2.2 Cause-effect diagram validation ………..36
4.2.3 Conclusion ………...43
5. Solution design ………..44
5.1 Solution 1: Project-based process model for efficient delivery ………....44
5.2 Solution 2: Target market screen tool ………… ………..47
5.3 Solution 3: Improve marketing mix performance ………48
5.3.1 Focus promotion………...48
5.3.2 Product-based training programme………..49
5.4 Solution 4: Multiplication for wider product application ……….50
5.5 Implementation ……….51
5.5.1 Implementation plan ………51
5.5.2 Cost/benefit analysis ………54
6. Conclusion & Discussion ………...55
6.1 Conclusion ………55
6.2 Knowledge reflection ………...55
6.3 Limitation and future research ………..56
References ………..57
Appendix I: Plymovent brief ………..………....62
Appendix II: Research schedule ………...66
Appendix III: Interview questionnaire ………..….67
Appendix IV: Self-completed questionnaire ………..……71
1. Introduction
New product development (NPD) is the term used to describe the complete process of bringing a new product or service to the market; and of all the steps of the NPD process, product launch requires the largest commitment in time, money, and managerial resources (Hultink, 1997). Such commitment will become more complex and costly if companies want to launch their products to another country. According to Eyring et al. (2011), there are right now more than 20,000 multinationals operating in emerging market from which Western multinationals expect to find 70% of their future growth. However, lots of multinationals end up with a failure despite the big opportunity of the emerging market. This research analyses a Western manufacturer’s product launch failure in China and provides several solutions to improve this manufacturer’s product performance.
1.1 Research question
This research originated from a product launch problem encountered by a multinational manufacturer (Plymovent) and the solution to this problem is deemed critical to achieve Plymovent’s business ambition.
Plymovent is a multinational manufacturer of indoor air-cleaning equipment and enjoys an outstanding brand name in both Europe and North America. The headquarter of Plymovent is located in Heehugowaard (Netherlands) and it has three manufacturing sites in Alkmaar (The Netherlands), Lycksele (Sweden) and South Africa (for the local market) respectively. Plymovent has built 11 sales subsidiaries all over the world and is represented in 45 countries via an authorized distributor network. Plymovent’s indoor air cleaning product can be categorized into four series with each represents a market segment, and of all these product groups welding fume (WF) product represents the largest market and also has the largest growth expectations (Source: internal document). Because of the influence of the world economy crisis in 2008 and the maturity of the Europe and North America market, Plymovent’s annual revenue and revenue growth has been experiencing a hard time and even showed a retreat in several regions. Plymovent has issued its business ambition, within which China WF market plays an critial role.
Plymovnet’s management board believes that the country with a subsidiary should contribute a certain sales to general revenue, which is far less achieved by its China subsidiary. Currently, the sales of the China subsidiary only accounts for a small share of Plymovent’s annual revenue. Although the general market size in China is exciting and keeps growing, Plymovent is losing its market share compared to its main global competitors and several strong local competitors. Plymovent entered the China industrial air cleaning market with a full product launch through building its own subsidiary in 2008, and of all these product categories WF product (Plug & Play and Engineered solution system) was assigned a high sales expectation. However, the general sales of Plymovent’s WF product in China is disappointing, especially for its most sophisticated product—Engineered solution system (ESS).
ESS per se is a sophisticated WF solution orchestrated by a set of individual air cleaning products. Currently, four types of ESS have been developed by Plymovent, namely multiple arm system, downdraft table system, extraction hood system and push-pull system, with each represents a particular using situation (i.e., application), for example, if work pieces are too big to be covered by extraction arms, or if the welder constantly moves among different locations, a push-pull system will be firstly considered and then fine designed for this customer need. Although ESS was developed by Plymovent several years ago and has been widely accepted in both European and North American, this product is relatively new in China, especially for the push-pull system, because of a slow technology development in China industrial air-cleaning market. Plymovent’s EES performance is as disappointing as its general performance in China and was assumed as a serious business problem that needs to be handled immediately.
Therefore, the research question can be formulated as follows:
How can Plymovent improve its Engineered solution system performance in China? This research question can be further divided and covered by three sub-questions: ¾ Whether Plymovent’s ESS performance in China is a real problem?
¾ What should Plymovent do to improve its ESS performance in China?
In order to answer this research question, two literature streams will be screened and explored in the following sections, namely new product performance literature and product launch failure literature. To be more specific, these two literature streams are very useful to answer the first two sub research questions, because the key performance measures and underlying causes identified from these literature streams are a useful input for empirical analysis.
1.2 Research design
This research starts from a broad topic of multinational product launch failure and ends with a set of technological rules developed from the problem solving process, thus following an reflective cycle (Figure 1.1) developed by Van Aken et al. (2007). In general, two main phases are incorporated into this research, namely business problem solving phase and reflection phase.
The business problem solving phase follows a regulative cycle developed by Van Strien (1997) and contains five basic process steps:
1) Problem definition: a business problem can be defined as the result of a certain perception of a state of affairs in the real world with which one or more important stakeholders are dissatisfied. An important part of the problem definition is to make explicit the perception, performance indicators and norms used by the various stakeholders in defining their own version of the problem. The problem definition should lead to a definition of a real problem rather than a perception problem (i.e., a problem defined on the basis of inaccurate performance perceptions) or a target problem (i.e., a problem defined on the basis of unattainable norms).
2) Diagnosis and analysis: this step is the analytical part of this research, through which the problem and its underlying causes will be analyzed and interpreted.
3) Action plan: in this step solutions will be designed for the verified problem. In addition, these solutions are usually related to a redesign work of the current business
process and organizational structure.
4) Intervention: in the intervention step roles and work processes are changed on the basis of the solution design and change plan.
5) Evaluation: a formal evaluation after the intervention step so that the expected performance can be controlled.
With regrad to reflection phase the core is knowledge reflection, through which a set of technological rules will be developed based on the results of the business problem solving phase. According to Van Aken et al. (2007), a technological rule is a chunk of knowledge, connecting a certain intervention or system in a certain context with a certain outcome. More specifically, the logic of the technological rule is: if you want to achieve Y in setting Z, than do X (or something like X). With the technological rule’s help, companies improve their capabilities of dealing with a similar problem in the future.
Choice of case Reflection on results Technologic -al rules Type of problem Problem mess Problem definition Diagnosis & Analysis Action plan (design) Intervention Evaluation
1.3 Research structure
Besides introduction, this research will be arranged in the following five sections, namely theoretical exploration, research methodology, empirical analysis, solution design, and conclusion & discussion. The first three sections are closely related to the first two steps of the problem solving phase (i.e., Problem definition and Diagnosis & Analysis), and the results of these three sections will answer the first two sub research questions. In addition, the solution design section is a combination of the other three steps of the problem solving phase (i.e., Action plan, Intervention, and Evaluation), and the results of this section will indicate a direction for Plymovent’s changing efforts. Finally, the last section will handle the issues of the reflection phase.
1) Theoretical exploration: in this section new product performance measurements and the causes of product launch failure will be explored via reviewing academic literature, and a conceptual model incorporating these explored causes will be developed at the end of this section.
2) Research methodology: in this section the data collection method and data analysis method will be explained, indicating this research was conducted in a sound way. 3) Empirical analysis: in this section the collected data will be analyzed and interpreted
so that validates the business problem and its underlying causes.
4) Solution design: two issues will be handled in this section, namely the design part and the change part. The former issue refers to what kind of solutions can be designed for the verified business causes, while the later issue concerns developing a plan to implement these designed solutions.
5) Conclusion & Discussion: this section mainly concerns what kind of conclusions can be developed, knowledge reflection and research limitation.
2. Theoretical exploration
In this section two issues, namely the measures of the product launch performance (PLP) and the causes of the product launch failure (PLF), will be explored by reviewing new product performance (NPP) literature and product launch literature, and by doing this the first two sub research questions can be preliminary answered. At the end of this section a conceptual model incorporating all the identified variables will be developed.
2.1 PLP measurement
PLP measurement is the basis of this research because it is an important source of the product performance norm, which in turn significantly influences the problem validation process. In order to decide what kind of measures should be adopted in this research, NPP measurements will be explored as a useful input for two reasons: 1) product launch is one of the steps of NPD; 2) the research product (ESS) is a relatively new product in China. In addition, the above explored NPP measurements will be further screened so that the appropriate PLP measurements can be developed at the end of this section.
2.1.1 NPP measurement exploration
The problem of how to define and measure NPP is not a new one. According to Hart (1993), NPP assessment is a critical step because the way in which it is defined and operationalized significantly affects the findings that describes the factors contributing to NPP, for example, the determinants of NPP may be different when performance is operationalized as “met market share goals” than when performance is operationalized as “return-on-investment (ROI)” (Hultink, 1997). In addition, NPP assessment is neither an easy nor a straightforward task because it is a multidimensional concept (Hultink, 1997) and there is little consensus among the major research studies on how to define NPP (Hart, 1993). Further more, a large body of literature has studied the issue of NPP measurement (Table 2.1).
Source Academic statement on NPP measurement Dess and Robinson
(1984)
Researchers might consider using a subjective perceptual measure when accurate objective measures are unavailable.
Cooper (1984)
Eight performance measures that captured different facets of NPP, and the factor analysis of these eight measures resulted in three independent dimensions of NPP, namely the impact, the success rate of the program and
the relative performance. Venkartraman and
Ramanujam (1986)
Two-dimensional measurement: financial (e.g., profit and ROI) versus operational criteria (e.g., innovativeness, market standing and social
responsibility).
Cooper and Kleinschmidt (1987b)
Three independent dimensions that characterize NPP, namely financial performance (e.g., profitability level), opportunity window (i.e., the new
opportunities brought by the new product), and market impact (e.g., domestic and foreign market share).
Hart and Craig (1993) NPP is one aspect of a company’s overall performance.
Hart (1993)
Dealt with the relationships between direct and indirect financial measures at the company level and financial and nonfinancial measures at the new
product level
Griffin and Page (1993, 1996)
The 15 core project-level measures of NPP: market acceptance (i.e., meeting the goals of revenue, revenue growth, units sales and market
share, customer acceptance and customer satisfaction), financial performance (i.e., attain profitability goals, break-even time, meeting ROI
goals and attaining margin goals), product performance (i.e., product performance level, meeting quality guidelines, launch on time,
development cost budget and speed to market) Table 2.1: Several academic perspectives on NPP measurement 2.1.2 PLP measurement selection
In this paragraph a set of PLP measurements will be selected through three steps: 1) PLP measurement sample selection; 2) PLP measurement academic screen; 3) PLP measurement practical screen.
PLP measurement sample selection: among all the explored NPP measurements the “15
core project-level measures of NPP” was chosen as PLP measurement sample for two reasons: 1) this project-level measure was based on a comprehensive NPP research conducted by Griffin and Page (1993, 1996); 2) this research is based on a real business
problem solving project (i.e., a project level problem) which is consistent with Griffin and Page’s research.
PLP measurement academic screen: according to Hultink and Robben (1995a),
measuring the importance of different NPP measures is less valuable when no time perspective is specified because some performance measures are important to measure shortly after launch (i.e., in the short term) whereas others are more important to measure in the long term (Yoon and Lilien, 1985). Although there is no clear boundary between long term and short term, Biggadike (1979) found that the sample of the firms in his study achieved a median ROI of 78% after two years, indicating that the performance within two years are more probably measured in a short term. As is mentioned in the introduction section, it has been almost three years since Plymovent launched its ESS to China, therefore, the NPP measures that are more important in the long term performance evaluation will be adopted in this research. According to Hultink (1997), among all the 15 core project-level performance measures, 10 of them are more important for a long term performance evaluation, namely customer satisfaction, customer acceptance, meeting quality guidelines, product performance level, meeting revenue goals, meeting unit sales goals, attain profitability goals, attain margin goals, ROI, and meeting market share goals. Therefore, these 10 long term measures were selected in the performance screen.
PLP measurement practical screen: the above 10 NPP measures were further selected
based on two facts: 1) the research product (ESS) was developed by Plymovent in 2002 and has been successful in both Europe and North America; 2) there are only a few Chinese customers available in this research. In accordance with these two facts, another 5 NPP measures were abandoned, namely ROI, meeting quality guidelines, product performance level, customer satisfaction and customer acceptance. To be more specific, the first three NPP measures were not considered because they have been achieved internally (i.e., Plymovent’s internal quality and performance standard) and externally (i.e., success in Europe and North America). The other two measurements were eliminated for two reasons: 1) the number of customers is not enough (only 6 Chinese customers have actual experience with ESS) to make a reasonable assessment of the
customer acceptance and satisfaction in China; 2) Plymovent prefers to describe ESS performance with “numerical figures”.
To sum up, PLP will be evaluated by five NPP measures, namely meeting revenue goals, meeting revenue growth goals, meeting units sales goals, meeting market share goals and attain gross profit margin goals.
2.2 PLF exploration
In recent years, there has been an increasing interest in the last phase of the innovation process as more and more studies underscore the importance of launch activities for market success (e.g., Henard and Szymanski, 2001; Hultink et al., 2000). These launch activities can be further conceptualized within two broad categories: launch strategies and launch tactics (Hart and Tzokas, 2000). In addition, most literatures assume that developing an appropriate launch strategy is a major determinant of NPP (e.g., Cooper and Kleinschmidt, 1986; Frambach, 1995). In a more focused context (new product launch), Crawford and Di Benedetto (2008) state that no matter how new-to-the-world the product is, the firm should think of product commercialization in two sets of decisions, namely strategic launch decisions and tactical launch decisions. Therefore, the underlying causes of the PLF will be explored within these two types of launch decisions.
2.2.1 Strategic launch decisions
Strategic launch decisions mainly concern the objective and timing of the new product launch (NPL), the selection of target markets and the intended newness of the new product (Kolter, 1994). As these decisions usually occur prior to the tactical launch decisions and prior even to product development (Crawford, 1984), mistakes at strategic decision level can be deemed as important obstacles to product launch success.
In order to test whether strategic and tactical launch decisions differ between successful and unsuccessful products, Hultink (1997) conducted a comparative research among the Netherlands, the U.K. and the U.S.A., and found that unsuccessful products were more often related to 7 strategic launch decisions (in comparison with successful products): equally or less innovative than competitors’ efforts, slowly new product development
(NPD) cycle (i.e., in more than 3 years), launch as a new product line, targeted at a mass-market, introduced in low-growth market (i.e., 0-5%), launched in the introduction stage of the product life cycle (PLC) and introduced in competitive markets (i.e., more than 4 competitors present). These strategic launch decisions, according to Hultink et al. (2000), can be further divided into three categories, namely product strategy (including product innovativeness, product development cycle, and product line), market strategy (including targeting strategy) and competitive stance (i.e., the market situation at the time of product launch, including market growth, market competitiveness and the stage of the PLC). In this research, 2 out of these 7 strategic decisions (i.e., slow NPD cycle and launch as a new product line) will not be explored, because the research product (ESS) has been developed for almost 10 years and act as a supplementary product line of Plymovent’s WF solution (rather than a new product line), while the other 5 strategic decisions will be explored in the context of the above three categories.
Product innovativeness
Product innovativeness is concerned with technical and marketing discontinuities (Garcia and Calantone, 2002), and the innovativeness of a product in comparison with its competing products on the market can be named as relative product innovativeness (i.e., whether the new product was more, equally or less innovative than competing products). The influence of product innovativeness on PLP is complex, for example, Henard and Szymanski (2001) found that the level of product innovativeness is positively related to product advantage which benefits new product success (Langerak etc., 2004); whereas the high level of product innovativeness will create an unfamiliar using situation and reduce customer familiarity (Danneels and Kleinschmidt, 2001) which undermines NPP. Recently, innovativeness and a clear product advantage have been shown to be central to new product performance (Cooper and Kleinschmidt, 1995), indicating that product innovativeness may positively related to new product performance. Such relationship was further tested by Calantone et al. (2006), and the result showed that the absolute total effect of product innovativeness on product profitability remains positive (0.25) despite
familiarity (-0.09), because the positive influence of the product innovativeness on product profitability via product advantage is 0.34.
Targeting strategy
Targeting strategy involves segmenting the market, choosing which segments of the market are appropriate, and determining the products that will be offered in each segment. According to the breadth of the target market, targeting strategy can be categorized as mass target strategy, selective target strategy and niche target strategy (Crawford, 1994). Whenever companies want to launch their product, they have to choose an appropriate targeting strategy so that their products can approach the customer that are most likely to purchase and use the product, thereby improving the product launch performance. For example, Cooper and Kleinschmidt’s (1995) study of 252 industrial new products showed that financial success was higher when the new product was developed to a clear specification of a target market’s needs.
Market stance: market growth, market competitiveness and introduction stage
The competitive stance of the new industrial products at the time of launch has been shown to influence success, for example, NPP is likely to be higher when the market growth is high (Gatignon et al., 1990) and when the market competitiveness is low (Green et al., 1995). The first two market stances are significantly influence new product success as they build a very favorable market situation (i.e., high market demand while low market competition) for product launch. PLC in product launch domain mainly concerns the timing of bringing a new product to the market. The decision of when to launch a new product is not easy, especially for those products with the probability of a relatively short life cycle (Calantone et al. 2010). Although the impact of product launch time on NPP varies across different products, Hultink et al. (2000) found that new industrial product success is more associated with the late stages of the PLC rather than the introduction stage, which was also proved by several previous researches (e.g., Bayus et al., 1997; Golder and Tellis, 1993; Tellis and Golder, 1996). For example, later entrants may enjoy a lower risk as the outcomes of specific decisions are revealed by
early entrants and may be able to leapfrog the early entrants in terms of technology and product offering (Bayus et al., 1997).
2.2.2 Tactical launch decisions
Tactical launch decisions, according to Hultink (1997), refer to the marketing mix decisions for a new product, namely product tactics (including the choice of the branding policy and the breadth of the product assortment), distribution (including the choice of the distribution channel and distribution expenditure), pricing (including pricing strategy and price level) and promotion (including the choice of the marketing communication instrument and promotion expenditure). These 4 groups of decisions are also known as the four P’s of the marketing mix. Further more, Hultink (1997) found that unsuccessful products were more often related to 7 tactical product launch decisions, namely launched in a relative smaller product assortment than competitors’ efforts, introduced with a new product brand name, distributed the product through new distribution channels, launch with lower distribution expenditures than competitors, launched at a lower price than competing products, without a clear pricing decision (i.e., skimming or penetration), and launched with lower promotion expenditures than competitive products.
Similar with strategic decisions, 2 out of 7 tactical decisions (i.e., introduced with a new brand name and lower price than competing product) were preliminary abandoned for two reasons: 1) the term of “new brand name” in Hultink’s (1997) research was defined from the viewpoint of the company rather than the customer. Based on this definition, this variable is not applicable as the research product (ESS) was labeled with the brand of “Plymovent” since it was developed in 2002; 2) lower price is not consistent with Plymovent’s strategy (i.e., Plymovent define itself as a manufacturer not competing on the price), plus the cost of global transport, there is no way to set a lower price than local competitors. Therefore, only 5 tactical launch decisions (i.e., product assortment, distribution channel, distribution expenditure, pricing strategy and promotion expenditure) were explored in this research.
The breadth of the product assortment, from the customer viewpoint, can be defined as the number of options or alternatives that are available to potential customers. The impact of the product assortment on PLP mainly achieved via assortment size (i.e., the number of the available options), and a large product assortment enjoys a great advantage in product launch because they allow decision makers to maintain flexibility when making a choice (Kahn and Lehmann, 1991). And such advantage will become more distinguishing when launching an industrial product, because the industrial product usually requires a large investment from customers who are obviously need several options to meet their budgets. Although the assumption that more choices is always better is intuitively appealing, it is supported by numerous findings in social psychology, decision making, and economics (e.g., Lancaster, 1990; Simonson, 1999). Besides, several studies highlighted the importance of the breadth of the product assortment in attaining new product success (e.g., Hultink and Schoormans, 1995; Lambkin, 1992). Therefore, the narrow product assortment, especially when it is smaller than competitors’ efforts, could be a cause of the PLF.
Distribution channel
The choice of the distribution channel in Hultink’s (1997) research was assessed by asking respondents whether they used current, newly developed, or a combination of both new and current channels for the NPL. A distribution channel may contain wholesalers, retailers, distributors and even the internet, through which the new product can approach the targeted customer effectively. Therefore, product launch via new distribution channel mainly concerns searching new distribution medium during the launch process.
Although the influence of the distribution channel on product launch is less studied, Hultink (1997) found that most unsuccessful product launches are usually associated with new distribution channel. An explanation for this is that new distribution channel always related to a high uncertainty, because companies are usually not familiar with the newly developed distribution mediums (e.g., distributors), for example, companies may not be able to evaluate those new distributors’ diffusion capability, which in turn significantly affects PLP. The influence of such uncertainties could be more prominent when
companies want to launch their products to an emerging market, especially when the emerging market is affected by a different culture. In line with this situation, companies need to invest a lot to assure their products can be diffused effectively, for example, industrial product developers may have to invest more in distribution to train distributors in such a way as to enhance end-user trial rates and adoption. Therefore, product launch with a new distribution channel could be a cause of Plymovent’s poor ESS performance in China.
Distribution expenditure
Relative distribution expenditure examines the distribution expenditure for the new product launch in relation to competitive spending (Lambkin, 1992). Low distribution expenditure was closely related to unsuccessful product launch because it limits company’s distribution activities, for example, distributor selection and training, relationship management and performance evaluation, resulting in an incompetent distribution network which in turn lead to a PLF. According to Ritter and Gemünden (2003), the network competency contains two aspects: the necessary knowledge, skills, and qualifications and the ability of using them effectively. Without sufficient distribution expenditure, companies may not be able to build a competent distribution network for NPL, indicating a low chance of product launch success.
Pricing strategy
According to Kotler et al. (1996), pricing strategy can be categorized as skimming (i.e., a policy of high initial prices that skim the cream of the market in order to recover investments early) and penetration (i.e., a relatively low price for penetrating markets early). The choice of the pricing strategy depends on the real market situations (e.g., the price sensitivity of customers, market competition and relative product advantages) and the type of the desired performance (i.e., sales). Successful product launch requires a clear pricing strategy, for example, Kotler (1994) suggested that the penetration price is optimal when the market is highly price sensitive, the production and distribution costs fall with accumulated production experience, and when a low price discourages actual
and potential competition. Although both skimming and penetration pricing strategies can be successful (Hultink and Schoormans, 1995), companies have to make a choice according to the real market situations.
Promotion expenditure
Promotion decisions encompass the range of communication and motivation instruments that needed to raise the awareness and precipitate purchase of the new product (Moore and Pessemier, 1993), and the attention to the promotion effort separates good industrial product launches from poor ones.
The impact of the promotion expenditure on NPP has been widely studied, for example, Yoon and Lilien (1985) confirmed the importance of sufficient promotion expenditure for a new product success, and wind (1982) found that promotion is critical in positioning the product and creating awareness, interest and trial. Further more, promotion expenditure has a great influence on the choice of the market communication instruments, for instance, without sufficient promotion expenditure, companies cannot choose the right market communication tools for NPL. Since market communication instruments act as the intermedia between product and customer, without a certain number of qualified communication instruments companies are always run into trouble during product launch process. Therefore, the low promotion expenditure, especially when it cannot support a high quality market communication, will definitely result in a PLF.
2.3 PLP conceptual model
To sum up, 5 strategic variables and 5 tactical variables identified in academic literature are responsible for a PLF and their relationship with PLP is incorporated in a conceptual model (Figure 2.1), which will be tested and further explored in the empirical analysis section.
Strategic launch decisions
Market strategy
z Targeted at a mass-market
z Introduced in a low-growth market (i.e., 0~5%)
z Launched in the introduction stage of PLC
z Introduced in a competitive market (i.e., more than 4 competitors)
Product strategy
z Equally or low product innovativeness
Tactical launch decisions
Product tactics
z Launched with a smaller product assortment
Distribution tactics
z Launched with a new distribution channel
z Low distribution expenditure
Price
z Unclear pricing strategy
Promotion
z Low promotion expenditure Poor PLP
3. Research Methodology
As is mentioned before, the research question concerns a product launch problem encountered by a multinational manufacturer. In order to answer this research question, it is necessary to understand the underlying context of this business problem. According to Patton (2002), qualitative research uses a naturalistic approach that seeks to understand phenomena in context-specific settings, such as “real world setting [where] the researcher does not attempt to manipulate the phenomenon of interest”. Therefore, qualitative research method was deemed as the most appropriate research method in this research. In the methodology section two issues will be expounded and discussed: the way data were gathered (i.e., data collection) and the way those data were dealt with thereafter (i.e., data analysis). The data collection issues contain five issues: 1) data point; 2) data source; 3) data collection process; 4) data collection methods; and 5) expected barriers and their countermeasures in the data collection process. As to the second issue two main techniques (i.e., segmenting & reassembling) were adopted to analyze the collected data.
3.1 Data point
Data point refers to which type of information should be collected to answer the research question. In this research, two data points were identified useful to solve the research question, namely the measures of the PLP and the causes of the PLF. The data gathered in this research will be used to validate the business problem and problem causes, which in turn act as the basis of the solution design.
3.2 Data source
In this research multiple data sources were adopted and further categorized into primary data and secondary data. According to Boslaugh (2007), if the data set in question was collected by the researcher (or a team of which the researcher is a part) for the specific purpose or analysis under consideration, it is primary data, while if it was collected by someone else for some other purpose, it is secondary data. Further more, the primary data mainly concerns the attitudes or opinions that are collected from 5 market stakeholders
(i.e., headquarter employees, subsidiary employees, local distributors, main competitors, and end-users) through interviews and online survey (See 3.4), while the secondary data refers to the published or unpublished figures and statements that are mentioned in internal documents and records, external reports, academic literatures and books.
3.3 Data collection process
In this research the data were collected through 3 phases, namely the desk research phase, interview phase and online survey phase. In the desk research phase several data collection related issues were discussed, for example, data point (e.g., ESS China performance), data source (e.g., the types of the interviewees), and data collection method (e.g., interview) were identified based on the research question. In the second phase, various questionnaires were developed according to the types of the interviewees identified in the first phase, and were sent out before the formal interview. Online survey phase is the last data collection phase and mainly concerns the opinions of the end-users. The results of these three data collection phases were deemed as a useful input for empirical analysis. In addition, these three phases in total cost 12 weeks with each phase is informed by the results of previous data collection stage (See Appendix II).
3.4 Data collection methods
In accordance with the above mentioned multiple data sources, three types of data collection methods were adopted, namely semi-structured interview, documentation and archival record, and self-completed questionnaire.
Semi-structured interview
Semi-structured interview, according to Boeije (2010), is an important data collection method in qualitative research and is very useful to collect participants’ attitudes and opinions, because such interview is not highly structured, as is the case of an interview that consists of all closed-ended questions, nor is it unstructured, such that the interviewee is simply given a license to talk freely about whatever comes up.
employees who are related to Plymovent’s ESS performance in China, 5 China subsidiary employees who are directly responsible for ESS China diffusion, 10 local distributors, and 9 competitors in China WF market. All these interviewees were briefed the purpose of this research and were asked several questions concerning the issue of Plymovent’s ESS China performance and the causes of such performance. In addition, the subsidiary employees and local distributors were asked how to improve Plymovent’s current performance by an open-ended question at the end of the interview. In order to facilitate the interview process, all the interviewees were appointed and sent a questionnaire (See Appendix III) before the formal interview. In addition, the semi-structured interview (33 in total) was conducted by two persons: the company supervisor and the student, with each was assigned a task during the interview (i.e., the company supervisor lead the interview, while the student act as the translator and recorder during the interview and is authorized to ask additional questions).
Documentation and Archival record
This data collection method was mainly used in the desk research phase. As a multinational manufacturer, there are piles of documents and records inside Plymovent; therefore, it is necessary to follow a selection criterion before reviewing them. In this research the selection criterion has a concentration on 5 issues, namely company history, group structure, supply chain, strategy and ESS China performance. The documents and records that are related to these 5 issues were selected and reviewed as a useful input for a better understanding of Plymovent and its current situation in China (See Appendix I). Since the internal documents and records have been authenticated by the management board, the information acquired from these documents and records showed a high reliability and validity, thereby increasing research quality (Yin, 1994). In addition, several external reports, especially for the end-user related report and competitor related report, can be deemed as a useful input in problem diagnosis and analysis process, for example, the report (China welding machine industry analysis) conducted by a Chinese welding machine research institute in 2007 indicate that there is a big market size and growth in China WF market, which can be used as a side proof of the business problem.
Self-completed questionnaire
This data collection method was used to validate the causes of the Plymovent’s poor ESS China performance from the viewpoint of the end-user. Since there are a huge number of end-users in China WF market and this research aims at improving Plymovent’s poor performance, the self-completed questionnaire was only sent to those end-users who contacted Plymovent at least once over the past two years.
According to the feedback from subsidiary employees, Plymovent has attended 21 ESS project tenders so far in China and acquired 6 ESS projects in total over the last two years. In order to validate the causes identified in preliminary interview, this self-completed questionnaire was sent to these 21 end-users with the theme of the influence of these cause on Plymovent’s ESS performance (See Appendix IV). The questionnaire was sent out via email with the help of Plymovent’s China subsidiary and local distributors so that assured a high response rate (i.e., 18 out of 21 participants respond at the end of the data collection). Although the end-user sample is small in this research, the answers from these selected end-users enjoy a high quality because they know Plymovent and its ESS product better than the other end-users.
3.5 Expected barriers and countermeasures
Time and spatial limit: The time limit refers to the fact that the data were collected and
analyzed within a relatively short period (i.e., three months), while the spatial limit concerns that most of these data were gathered from China (i.e., transnational data collection). These two limits need to be managed because they can undermine the quality of the collected data. In this research several methods were adopted to manage these two limits, for example, using online video interview to substitute face-to-face interview if the interviewee failed to keep the appointment. In addition, Plymovent’s subsidiary employees and local distributors were asked to help the data collection process because they know how to contact the end-user effectively, thereby accelerating the data collection process and raising the response rate.
from China and it is very hard to get a quick and accurate response from those Chinese participants. The reasons identified for such difficulties are three folds: first of all, the Chinese participants are generally aloof of sharing information because of no direct benefit; secondly, the language skill, conservative culture and commercial secret also could impede the data collection process; last but not least, most of the Chinese participants are more interest in sales than marketing which makes this research less attractive to them. In order to manage these barriers, several countermeasures were adopted in this research, for example, all the questions used in the data collection process were translated into Chinese and were designed for different types of interviewees. The purpose of this research and the benefit that participant could get after the research were introduced at the beginning of the interview. In addition, several interview skills were adopted to obtain valuable data, for instance, establishing a good understanding with the person being interviewed, and developing effective listening skills.
3.6 Data analysis methods
According to Boeije (2010), qualitative analysis entails two basic activities in the light of the problem statement, namely segmenting the data into parts and reassembling the parts again into a coherent whole. The former activity concerns separating various data to relevant and meaningful parts, and the reassembling refers to looking for patterns, searching for relationships between the distinguished parts, and finding explanations for what is observed. Both activities are carried out from the angle of the research questions and research purpose. In this research the collected data will be sorted, named and categorized into two groups: the product performance and the causes of such performance; and then these categorized data will be interpreted and used to verify the business problem and its underlying causes.
4. Empirical analysis
According to Van Aken et al. (2007), the objective of the empirical analysis in a BPS project are four folds: 1) validating the business problem and specifying its characteristics; 2) exploring the causes of the business problem; 3) validating the causes of the business problem and determining their relative importance; and 4) mapping the business process. This research will concentrate on the validation of the business problem (i.e., whether Plymovent’s ESS performance is a real problem) and its underlying causes (i.e., whether the explored causes are sufficient to solve the problem) so that the first two sub research questions can be answered. In addition, the results of the empirical analysis are also a useful input for solution design, thereby building the answer of the third sub research question on this section.
4.1 Business problem validation
The first step of the empirical analysis is to answer whether Plymovent’s ESS performance in China is a real business problem. According to Van Aken et al. (2007), to determine whether a performance level is satisfactory or not, two types of data should be collected and compared, namely the factual performance and the performance norm, and by doing this the researcher can avoid two types of fake problem: perception problem and target problem. To be more specific, the perception problem reflects a situation where the problem owner has an inaccurate perception of the business system and its performance, while the target problem occurs when the company set an unattainable norm for product performance. According to Van Aken et al. (2007), problems that are neither perception nor target problems are called real problems which refer to a situation that the factual performance fails to meet its realistic norm. Further more, if in reality a norm is met, it is a perception problem; while if the norm is unattainably high, it is a target problem.
In this research the product performance will be measured by 5 norms (i.e., 1 million Euro revenue, 15% annual revenue growth, 10 units sales, 5% market share and 8% gross profit margin. Source: internal document). In order to verify if Plymovent’s ESS performance is a real problem, two conditions need to be met: 1) the ESS factual
performance should at least fail three of these five norms; and 2) the failed norms should be realistic in China. Therefore, two steps will be used to verify the business problem, namely count the number of unmet norms via comparing the factual product performance and the norm, and verify those unmet norms through checking their attainability.
4.1.1 Step 1: Comparison of ESS factual performance and norms
Norm 1: 1 million euro ESS China revenue within two years entrance: This norm can be
sub divided as 40% ESS China revenue should be achieved in 2009 and 60% of this revenue should be achieved in 2010 (Source: internal document). As is shown in Figure 4.1, Plymovent’s ESS performance in China is far less achieved compared to the expected performance. Therefore, the factual performance failed the first norm.
0 0.1 0.2 0.3 0.4 0.5 0.6 2009 2010 Expected revenue Factual revenue
Figure 4.1 ESS revenue comparisons
Norm 2: 15% growth of ESS China revenue: As is shown in Figure 4.2, Plymovent’s
ESS in China gained a revenue of 0.04 and 0.11 million euro in 2009 and 2010 respectively, indicating an almost 300% growth over the past two years. Therefore, the second norm was met by factual performance.
0 0.02 0.04 0.06 0.08 0.1 0.12 2009 2010 Factual revenue
Norm 3: 10 ESS project sales within two years entrance: Based on the feedback from the
interviews, there were around 120 ESS projects released over the past two years, however, Plymovent only attended 21 ESS projects (including indirectly attended projects) and won 6 ESS projects in total over the past two years. Therefore, Plymovent’s ESS factual performance failed the third norm.
0 5 10 15 20 25 Attended ESS project Expected performance Acquired ESS project
Figure 4.3: ESS project units sales comparison
Norm 4: 5% China ESS market share within two years entrance: According to the data
gathered from the interviews, the general ESS market size in China was around 11.36 and 13.08 million Euro in 2009 and 2010 respectively. In order to achieve a 5% ESS market share, Plymovent need to acquire at least 0.568 and 0.654 million Euro sales of ESS in China over the past 2 years; whereas the results showed that only 7% and 16.8% of such expected performance were achieved in 2009 and 2010 (Figure 4.4). Therefore, Plymovent’s ESS performance failed the fourth norm.
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 5% Makret share (2009) 5% Market share (2010) Achieved share Unachieved share Figure 4.4: the degree of the unachieved market share
from internal documents and records, the GMP of ESS in China raised from -21.2% to 3.5% over the past two years, however, there is still a 5% gap between the actual performance in 2010 and the expected GPM rate (Figure 4.5). Therefore, Plymovent’s ESS factual performance failed the fifth norm.
-25.00% -20.00% -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% GPM (2009) GPM (2010) Expected GPM Figure 4.5: comparison of the ESS GPM in China 4.1.2 Step 2: the attainability of norms
In order to finalize the problem validation, the attainability of the above failed norms should be checked. In this research the attainability of these failed norms were verified by checking the validity of the norm sources, assessing whether other competitors achieve these norms in a similar condition, and checking the opinion of the employees on the attainability of these norms.
First of all, all the failed norms can find support from three important internal documents with two of them were finalized in 2010 internally and the other one was conducted by KPMG in 2008. According to Yin (1994), the internal documents enjoy a high quality and more realizable because they have been tested by real business practice and are usually discussed by internal people. Therefore, the above mentioned four failed norms are realistic according to their sources.
Secondly, several competitors’ ESS China performances were assessed against these four failed norms in a similar condition (i.e., the ESS performance over the past two years and the ESS performance within the first two years’ entrance), especially for other European competitors (e.g., Kemper), their ESS performances are an important benchmark for
Plymovent. The results of the field interviews showed that at least two local competitors and 3 global competitors achieved the above mentioned four norms in 2009 and 2010. Although there is no clear answer about whether these competitors achieved such norms within their first two years’ entrance, their ESS performance indicated that these four norms are attainable in reality.
Finally, the question about the attainability of the above five norms were asked to internal interviewees, and the results showed that all the five performance norms are attainable both in headquarter interviewees and in subsidiary employees (Figure 4.6). Further more, there is no negative answer among headquarter employees on the attainability of these five performance norms and the only 3 disagree answers came from subsidiary employees on 1 million Euro revenue, 10 ESS project sales and 5% market share.
To sum up, Plymovent’s ESS China performance failed 4 out of 5 performance norms which were further verified as attainable in reality by the above three methods, therefore, Plymovent’s ESS China performance was validated as a real business problem.
0 2 4 6 8 10 12 1 million revenue 15% revenue growth 10 ESS projects 5% market share 8% GPM 14
Agree Neural Disagree
Figure 4.6: the attainability of the five performance norms among the 14 interviewed employees 4.2 Problem causes validation
In this paragraph, the causes that explored in the theory section will be validated and further explored through a preliminary interview, thereby building a cause-effect diagram
from the viewpoint of the headquarter employee. Further more, all the elements of the cause-effect diagram will be verified through a field interview and an online survey, after which the main causes of Plymovent’s ESS performance will be finally validated and act as a useful input for solution design.
4.2.1 Cause-effect diagram
As is mentioned in the theory section, the underlying causes of the poor PLP can be categorized as strategic launch decisions (5 strategic cause variables) and tactical launch decisions (5 tactical cause variables), and the influence of these 10 variables (See conceptual model) were asked to 9 headquarter employees. The results (Figure 4.7) showed that 6 out of 10 causes were rejected during the preliminary interview, namely smaller product assortment, launched in the introduction stage of PLC, introduced in a low-growth market, targeted at a mass-market, low distribution expenditure and equally or low product innovativeness, while the other 4 causes gained at least five employees’ support (i.e., low promotion expenditure, no clear pricing strategy, new distribution channel, and introduced in a competitive market). One explanation for those rejected cause variables (based on the interviews) is that they either have been achieved by Plymovent (e.g., ESS is specialized in welding fume market and relatively new in China) or do not fit the market reality (e.g., ESS China is in the growth stage of PLC and the market is experiencing a fast growth).
Another interesting finding is that the cause variable of “targeted at a mass-market” was rejected while the cause of “introduced in competitive market” was confirmed responsible for Plymovent’s performance problem. One explanation for this seemingly ambivalent result is that interviewees do not know which market is more suitable for their ESS product, in other words, the variable of “unclear target market” should responsible for such poor product performance. Further more, this revised cause gained 8 confirmations after sent it back to all the 9 interviewees as a feedback. Therefore, the final 4 supported causes were revised as low promotion expenditure, unclear pricing strategy, new distribution channel and unclear target market.
0 1 2 3 4 5 6 7 8 9 Equally or low product innovativeness
Targeted at a mass-market Introducted in a low-growth market Launched in the introduction stage of PLC Introduced in a competitive market Smaller product assortment New distribution channel Low distribution expenditure Unclear pricing strategy Low promotion expenditure
Agree Neural Disagree
Figure 4.7: the preliminary validation of the cause of Plymovent’s poor ESS performance
Further more, in order to check whether other potential causes affect Plymovent’s ESS China performance, one follow up question was asked during the preliminary interview, and the results indicated another 10 new cause variables which clustered to five categories (Figure 4.8), namely subsidiary employee (i.e., lack of sales person and lack of technical skills), supply chain (i.e., long delivery time and high price level), product design (i.e., narrow application), environment (i.e., low health protection awareness and low legislation enforcement), and headquarter support (i.e., lack of financial support, HR support and technical support).
0 1 2 3 4 5 6 7 8 Lack of sales person
Lack of technical skill long delivery time High price level Narrow application range Low protection awareness Low legislation enforcement Low financial support Low technical support Low HR support
9 Figure 4.8: the presence of the new causes of Plymovent’s poor ESS performance
To sum up, all the 14 causes identified above were taken into account for two reasons: 1) 4 out of 14 causes (i.e., low promotion expenditure, unclear pricing strategy, new distribution channel and unclear target market) were supported in literature (See Figure 2.1) and further confirmed by at least 5 headquarter employees; 2) the other 10 newly developed causes were confirmed by the headquarter employees, whose opinion on this issue are deemed as very critical to answer the research question. These causes were presented in a cause-effect diagram (Figure 4.9) and will be tested in the next paragraph.
Environment
z Low protection awareness
z Low legislation enforcement
Poor ESS Performance
Product design
z Narrow application
Distribution
z New distribution channel Market strategy
z Unclear target market
Supply chain
z Long delivery time
z High price level
Subsidiary employee
z Lack of sales person
z Lack of technical skills Headquarter support
z HR support
z Technical support
z Financial support
Pricing
z Unclear pricing strategy
Promotion
z Low promotion expenditure
Figure 4.9: the cause-effect diagram of the poor product launch performance 4.2.2 Cause-effect diagram validation
In this paragraph the above explored causes will be verified through a field interview and an online end-user survey. Two types of analysis were adopted to achieve a better understanding of the different market stakeholders (i.e., subsidiary employees, local distributors, competitors and end-users), namely independent market stakeholder analysis and across market stakeholder analysis.
Independent market stakeholder analysis
Subsidiary employee and local distributor: The results from the 5 subsidiary employees and 10 local distributors confirmed that Plymovent’s ESS performance in China cannot be deemed as good in the interview. In order to validate the causes of such performance, all the elements of the cause-effect diagram were tested in subsidiary employees and local distributors, and the results (Table 4.1) showed that all these 14 cause variables were confirmed by at least 3 subsidiary employees and 6 local distributors. In order to further verify the influence of these 14 causes, a follow up question about “how confident are you to improve your current ESS performance if Plymovent could make improvements on the identified cause variables?” was asked and the answers showed an around 90% confidence of winning more ESS projects in the future. Although the question of
confidence is too subjective, the answers to some degree indicated the importance of these cause variables for future improvement.
Category Poor performance causes Subsidiary (N=5) Distributor (N=10)
Market strategy Unclear target market 3 9
Distribution New distribution channel 4 7
Promotion Low promotion expenditure 5 8
Price No clear pricing strategy 3 7
Lack of sales person 4 6
Subsidiary employee
Lack of technical skill 3 8
Long delivery time 5 9
Supply chain
High price level 3 8
Product design Narrow application range 4 7
Low protection awareness 4 8
Environment
Low legislation enforcement 4 7
Low financial support 5 6
Low technical support 3 8
Headquarter support
Low HR support 4 7
Table 4.1: the presence of 14 cause variables among 5 subsidiary employees and 10 local distributors
End-user: Considering this research aims at solving a product performance problem, the opinion of the end-user are very important for cause validation and solution design. As is mentioned before, Plymovent has attended 21 ESS projects with each of them belong to one end-user. Therefore, this online questionnaire was sent to these 21 ESS end-users via email and the main question of this questionnaire concerns what kind of variables affected Plymovent’s performance in the bidding process. At the end of this online survey, 18 participants responded the survey and the results (Figure 4.10) showed that 8 out of 14 causes were confirmed responsible for Plymovent’s performance in the bidding process. These causes clustered to 5 issues, namely product design (i.e., narrow application range), supply chain (i.e., long delivery time and high price level), subsidiary employee (i.e., lack of sales person and lack of technical skills), promotion (i.e., low promotion expenditure),
and environment (i.e., low health protection awareness and low legislation enforcement). As to the other 6 causes, they were not considered because the neutral answers on these causes are very high (i.e., at least 15 respondents did not give a clear answer). One explanation for such high presence of neutral answers is that these respondents do not have relevant information to confirm these causes. In addition, all of the 8 confirmed causes gained an over 60% support except the causes of “lack of sales person (i.e., ~56%)”. Further more, four causes (i.e., long delivery time, low promotion expenditure, narrow product application, and lack of technical skills) gained an over 80% support and should be deemed as the main causes of Plymovent’s poor ESS performance.
0 2 4 6 8 10 12 14 16 1
Unclear target market New distribution channel Low promotion expenditure Unclear pricing strategy Lack of sales person Lack of technical skill Long delivery time High price level Narrow product application Low protection awareness Low legislation enforcement Low financial support Low technical support Low HR support
8
Agree Neural Disagree
Competitor: In this research the interviewed competitors were selected based on two criteria: 1) the competitors should have a booth at the exhibition so that the researchers can approach them easily; 2) the competitors should be able to produce ESS so that the researchers can make a comparison. In order to facilitate the interview, the identified 14 variables were designed in a positive way (e.g., the variable of “low promotion expenditure” was replaced by “sufficient promotion expenditure”), the logic underlying this design is that if one factor is highly important for success then without which should be an important cause of the failure.
In general, all the 14 identified causes were counter supported by at least 6 competitors and the average presence rate is around 77% (Figure 4.11). To be more specific, the result showed that the contributing factor of “clear target market” was fully supported by the interviewed competitors, indicating that “unclear target market” could be the main cause of Plymovent’s poor performance. In addition, two other contributing factors, namely short delivery time and sufficient technical skills of employees gained an over 80% support (i.e., 8 out of 9), indicating that they are more important than the other cause variables (except clear target market). With regard to the other 11 contributing factors, all of them were also confirmed important for these competitors’ success (at least 6 out of 9 competitors mentioned them) and should be taken into account in business practice.
0 1 2 3 4 5 6 7 8 9 Clear target market
Utilize current distribution channel Sufficient promotion expenditure Clear pricing strategy Sufficient sales person Sufficient technical skill Short delivery time Competitive price level Multiple application High protection awareness end-user High legislation enforment region Sufficient financial support Sufficient technical support Sufficient HR support
Agree Neural Disagree
Figure 4.11: the presence of cause variables among competitors Across market stakeholder analysis
In order to draw a conclusion based on the results of the above market stakeholders, three methods were used to facilitate this process (Table 4.2):
First of all, all the 14 variables were transformed to a support percentage, for example, the support percentage of unclear target strategy among subsidiary and distributor is 80% [(3+9)/15].
Secondly, the interview quality of the different market stakeholders were discussed with the company supervisor and the results showed that Plymovent is more believe in its subsidiary employees and local distributors than the other two market stakeholders. Further more, the feedback of the end-users are more important than the competitors, because these end-users (including current client) have a direct experience on Plymovent’s ESS in the bidding process, while competitors’ opinions are only based on their own success experience. Therefore, there should be a weight for each types of these market stakeholders so that the relative importance their feedbacks can be differentiated. Finally, considering there are 6 variables which did not get a clear answer during the online end-user survey, therefore, all the 14 variables can be divided into two types: 1) the variables that gained a clear answer from all the three types of respondents; and 2) the variables that only gained a clear answer from two types of respondents (i.e., subsidiary employees & local distributors, and competitors). Further more, the first type of the causes was assigned a different weight number from the second type. Based on the discussion with the company supervisor, it was agreed that the weight number of 0.4, 0.3, and 0.3 can be assigned to subsidiary employee & local distributor, end-users and competitors respectively (the first type of variable) while the weight of 0.6 and 0.4 can be assigned to employees & local distributors and competitors respectively (the second type of variable).
Subsidiary &
Distributor (N=15) End-user (N=18) Competitor (N=9)
Category Influencing variables
Support percentage Weight Support percentage Weight Support percentage Weight Market
strategy Unclear target market 12/15 0.6 -- -- 9/9 0.4
Distribution New distribution channel 11/15 0.6 -- -- 6/9 0.4
Promotion Low promotion expenditure 13/15 0.4 16/18 0.3 7/9 0.3
Price No clear pricing strategy 10/15 0.6 -- -- 7/9 0.4
Lack of sales person 10/15 0.4 10/18 0.3 6/9 0.3
Subsidiary
employee Lack of technical skill 11/15 0.4 14/18 0.3 8/9 0.3
Long delivery time 14/15 0.4 16/18 0.3 8/9 0.3
Supply chain
High price level 11/15 0.4 14/18 0.3 6/9 0.3
Product
design Narrow application range 11/15 0.4 15/18 0.3 7/9 0.3
Low protection awareness 12/15 0.4 12/18 0.3 7/9 0.3
Environment
Low legislation enforcement 11/15 0.4 14/18 0.3 6/9 0.3
Low financial support 11/15 0.6 -- -- 7/9 0.4
Low technical support 11/15 0.6 -- -- 6/9 0.4
Headquarter support
Low HR support 11/15 0.6 -- -- 7/9 0.4
