China’s Business Gift Market
Marketing Research for Metro Hampers & Gifts
Author: Jurriaan WentinkChina’s Business Gift Market
Marketing Research for Metro Hampers & Gifts
The author is responsible for the content of this report; the copyright of this report is vested in the ownership of the author.
Author: Jurriaan Wentink
Supervisor Metro Hampers & Gifts:
Marjanne Wijnen
Supervisors University of Groningen:
Mr. Drs. H.A. Ritsema & Drs. H.C. Stek Groningen, June 2004
Summary
In 2003 Metro decided to expand its Hamper gift business to China. Hampers & Gifts (H&G) is a Business Unit of Metro and develops and sells Hampers. Hampers are nicely decorated boxes that contain combinations of food and non-food articles. By creating exclusive and unique (new) gifts every year H&G wants to become the gift solution supplier in China for professional customers with a business relation or employee gift need. Chinese New Year 2004 was H&G’s first activity. The month before Chinese New Year it became obvious that the sales targets would not be achieved.
Metro and H&G are very confident of the success of the concept, although some adjustments could be necessary for the Chinese Market. From H&G’s project manager’s point of view there was a need to research the changes which needed to be made to the marketing program of H&G in order to increase sales next year. Therefore the following research goal was formulated:
Provide recommendations to H&G’s Project Manager for necessary adjustments to be made to the marketing program so that the sales of Hampers will increase during the next Chinese New Year.
From the interviews at the beginning of the season with Sales Executives it was discovered that the aspects influencing the sales could be found in the value creation process of Kottler. H&G’s Project Manager also desired that research would be undertaken in that field, because the strategy and business mission were already defined and not to be changed. The aspects of the strategic and tactical marketing program that influenced the value offered to the customers would be diagnosed to determine how the offered value could increase and better match with customer needs. The research question that was set up was:
What adjustments does H&G have to make to its strategic and tactical marketing program to achieve an increase in sales of Hampers during next Chinese New Year sales season?
The different aspects of the strategic (segmentation, focus and positioning) and tactical (price, place, product and promotion) marketing program were diagnosed on the criteria “influence on sales” and “performance in 2004” to determine its “need for improvement”.
The data used for this diagnosis was gathered from the following: Interviews with customers and non-buying companies, Internal Interviews, Internal Documents and Sales Results.
H&G developed twelve Hampers to be used as employee gift or business relation gift. Most Hampers were used as a Business gift (70%). The Hampers designed by H&G seem to fit well to the needs for business relation gifts, but less to those of employee gifts. A better fit of the product to a more defined segmentation is proposed. The Employee Gift segment should be served with more food orientated product whereas the Business Relation Gift segment should
be more non-food oriented. H&G should develop business relation gifts over 1.000 RMB which need to be more exclusive and be made up of high value articles. The Custom-Made Hampers segment (for customers that want to choose the articles themselves) was not expressively served in the first year, but showed great potential. The fit with H&G’s objective to become a gift solution provider corresponds very well with this segment.
The sales force of H&G was directed to focus on certain branches. Some branches counted for a significantly greater sales volume, but this seemed to be induced by the approach of the sales executives and the number of Metro-customers (the main distribution channel of H&G) in these branches. Because there were no early adopters or innovators identified in the first year, further research is recommended. If H&G could ascertain that certain types of companies are more open to the concept then this would influence sales positively.
There was no clear positioning of H&G in the first year. H&G underestimated the fact that the Hampers were “new” products for the Chinese Market. Too few companies were informed about the new concept and trial purchases were not stimulated enough. The main objective for next CNY should be to make more potential customers aware of the new concept.
The product-aspects seemed to be of the biggest influence whether customers purchased the Hampers or not. Surveys amongst customers showed that on the one side the product part was the purchase initiator, but that suggested improvements were also often product related. The articles in the Hampers of last year were not all considered to be suitable for gift items. This could be partly caused by the testing of H&G in the first year. Next year testing should be held among decision makers in order to determine the purchase intention. The packaging of this year was overall not well received and should be tested next year as well.
The price strategy of H&G could be defined as high. Customers and targeted companies thought of the Hampers as highly priced, but the uniqueness of the products compensated for the price for the most part. H&G also does not want to focus on price buyers, as a relationship with these customers is difficult to develop. An important factor on B2B markets was the budget available for gifts. The prices of the Hampers could be geared better to the budgets of potential customers. The unclear discount policy influenced sales negatively. Because the product is new on the Chinese market and the price of Hampers was considered to be high a lower price strategy is advised. Many customers who bought the Hampers for the first time became very loyal customers in Holland and results from the first year indicate that the same pattern could be seen in China. It is therefore advised to develop a large customer pool. A lower price will stimulate potential customers to do a purchase.
H&G makes use of the distribution channel of Metro. The Hampers were sold via the sales floor for small volume customers and via a showroom in the Metro store for large volume customers.
This will not be changed, but it is advised to make better distinction between the channels.
Small customers were also buying Hampers from the showroom last year. The sales floor should be used to sell to small volume (convenience) buyer where as the showroom should be used for solely big volume purchasers who need more personal sales attention (relationship buyers) and are also looking for additional value (custom made Hampers).
Some adaptations in the channel management seemed appropriate. Some retail traders showed interest in the Hampers for reselling. This channel was not actively pushed by H&G, and will not be pushed actively because of the strategy chosen of Metro. The direct sales channels via the showroom and strong partnerships with B2B resellers showed potential for the next year.
H&G used several promotion tools, but did not use the most effective tools regarding the readiness for buying that potential buyers were in. The personal sales force did/could not target a pool of potential buyers large enough to generate the targeted sales. In a later stage personal selling seemed to pay off as it generated significantly higher average amount spent per customer as via the sales floor. Advertising, telemarketing, direct mail and public relations are advised to make a large pool of potential customers aware whereas personal selling can be used to follow up interested companies.
Implementations of the recommendations are not included in this research. It is advised to measure the influence of the implemented recommendations next year to determine its influence and to continue H&G’s business more successful.
Preface
This research report is written for Metro Hampers & Gifts and is also the final dissertation for my study Business Administration at the University of Groningen. Hampers & Gifts was set up in 2004 in Shanghai to sell Hampers which are known in Holland as “Kerst- / Feestpakketten”.
Setting up a total new business and introducing a new product on a new market rarely goes without any problems. Still H&G succeeded from my point of view in making huge achievements in a very short time. Of course not everything went smoothly, but a market introduction provides information which can be helpful for the successful continuation of the business.
My assignment was to diagnose the marketing program of H&G and the results from the sales of the first year. Recommendations for improvements in the marketing program were desired so the sales of Hampers would increase in the next season. Therefore I analysed sales data, marketing literature and interviewed customers and non-buying companies to gather all the information I needed for profound recommendations. H&G always gave me all the space to get this information. 36 Sales Executives interviewed over 500 customers and I flew all over China to get to know the H&G business thoroughly.
Therefore I would like to thank Marjanne Wijnen especially, who guided and supported me during my whole research. She was never reluctant to spend time with me to discuss relevant issues regarding my report. And of course I would like to thank her for giving me the possibility to write my final dissertation in Shanghai.
However my research did not include the implementation of my recommendations I’m glad that H&G recruited another intern who was assigned partly to implement my recommendations. It gives me the feeling the report is not only written for the university and myself, but also helped H&G with the continuation of their business. I’m sure that the Hamper business will be successful in the future in China and if so, I hope that my report helped with that.
Finally I would like to thank my supervisors Dhr. Ritsema and Dhr. Stek for the feedback they gave me during my stay in Shanghai and after that.
Index
Summary ...3
Preface ...6
Chapter 1 - Background and Introduction ...9
1.1 Background ...9
Chapter 2 - Problem Analysis and Research plan...12
2.1 Problem Analysis...12
2.2 Research Goal ...13
2.3 Conceptualisation...13
2.3.1 Other factors influencing sales ...17
2.4 Research Question...17
2.5 Sub Questions...17
2.6 Method...20
2.7 Research Classification...22
Chapter 3 – Diagnosis Strategic Marketing Program ...23
3.1 Customer Segmentation ...24
3.1.1 Employee Gift and Business Relation gift ...25
3.1.2 Evaluating segments...26
3.1.3 Additional segments (resellers) ...28
3.1.4 Unmet needs...28
3.1.5 Conclusion ...30
3.2 Market Selection/Focus...31
3.2.1 Sales over branches ...31
3.2.2 Diffusion of the concept ...34
3.2.3 Big and small volume sales ...34
3.3 Value positioning ...35
3.4 Conclusions Strategic Marketing Program...37
Chapter 4 – Diagnosis Tactical Marketing Program H&G 2004 ...39
4.1 Introduction...39
4.2 Product Decisions ...41
4.2.1 Hamper development...42
4.2.2 The Hamper content ...44
4.2.3 Packaging ...45
4.2.4 Service ...48
4.2.5 Quality ...49
4.2.6 Variety ...49
4.2.7 Conclusions Product decisions...50
4.3 Price Decisions...51
4.3.1 Price setting ...52
4.3.2 Price and the budget...55
4.3.3 Product line ...56
4.3.4 Metro and H&G ...57
4.3.5 Discount ...58
4.3.6 Purchasers commission...58
4.3.7 Conclusions Price decisions ...59
4.4 Distribution Decisions...60
4.4.1 H&G channels...60
4.4.2 Additional Channels...61
4.4.3 Conclusions channel decisions...64
4.5 Promotion Decisions ...65
4.5.1 Communication objectives...66
4.5.2 Innovation-Adoption Model ...66
4.5.3 Purchasing decision time...72
4.5.4 Conclusions Promotion decisions...74
Chapter 5 – Evaluating the Strategic and Tactical Marketing Program ...75
5.1 Strategic Marketing Program ...76
5.2 Tactical Marketing Program...76
5.3 Limitations sub question 3...77
Chapter 6 – Recommendations & Conclusions...79
6.1 Strategic Marketing Program 2005 ...80
6.1.1 Positioning H&G 2005...80
6.1.2 Focus H&G 2005 ...81
6.1.3 Segmentation H&G 2005 ...82
6.2 Segmentation and Tactical Marketing Program 2005 ...83
6.2.1 Price recommendations 2005 ...83
6.2.2 Product recommendations 2005...85
6.2.3 Promotion recommendations 2005...88
6.2.4 Distribution recommendations 2005 ...93
6.2.5 Segmentation 2005 ...96
6.3 Final Conclusion and limitations ...98
Used Abbreviations ...100
Reference List ...101
Appendix ...102
Chapter 1 - Background and Introduction
1.1 Background
Metro AG is the third largest retailer in the world. Metro is active in China on the business to business market under the name Metro Jingjian Cash & Carry (Metro) since 1996. Hampers &
Gifts (H&G), established in Shanghai, is a SBU of Metro.
H&G introduced the Hamper concept in 2003 for Spring Festival (Chinese New Year).
Hampers are attractively decorated boxes that contain a selection of articles, which are always a combination of food and non-food. The name Hamper (in Holland more known as
“Feestpakketten”) is a synonym for the English word: “basket”. From origin, gifts were given in baskets and therefore the name Hampers evolved.
The success of H&G in The Netherlands and Spain resulted in Metro deciding to expand the Hamper business to China. Together with the success of the business elsewhere the Chinese market appeared very attractive for the gift business. The gift business embraces the rich Chinese culture of exchanging gifts. In Chinese tradition establishing and maintaining relations plays an important role in business and in private lives. To value these relations the Chinese use several methods: (exclusive) dinners; special liquors; presents and money. In this tradition of gift giving “keeping face” plays a very important role. For the business relation gifts the price of the gift plays a minor role whereas the majority of employee gifts are limited by a budget. The most important is that the recipient feels valued by the giver. Chinese people are also very sensitive to new and western things. Though they accept new concepts quickly they also reject them very fast. Using this information as a basis, H&G wanted to develop and introduce a new concept in the Chinese market responding to the needs of "giving" during Spring Festival.
Above information was the vision of H&G and Metro before they entered the Chinese market.
Although it gives an idea of the attractiveness of the market more information was needed.
Therefore H&G’s Project Manager had several meetings with the Business-unit managers, Sales managers of China and the Store Managers of the 18 stores with whom she evaluated the concept. H&G also instructed the research company Synovate to investigate the Chinese business relation and employee gift market to get more facts and figures.
The key findings of Synovate were:
• Market for business and employee gifts is the biggest in: Beijing, Shanghai, Guangzhou and Shenzhen (Synovate, 2003:71).
• The size of the market for employee gifts was 5.806.000.000 RMB and for business relation gifts 1.587.000.000 RMB during Spring Festival in China 2002 (Synovate, 2003:42). The market of business relation gifts has a growth rate of 20% till 2005 (Synovate, 2003:42).
• In China concepts are copied very rapidly. Chinese companies tend to follow multinational companies like Metro very closely and copy their business (Synovate, 2003:71).
• Amount spent on business relation gifts (Synovate, 2003:38):
o Common accounts: 100 – 300 RMB o Key accounts: 500 – 2000 and more
• Amount spent on employee gifts varies from 100 to 300 RMB (Synovate, 2003:20)
H&G had a clear vision of the Chinese B2B business relation and employee gift market after the analysis of Synovate, the discussions and H&G’s Project Managers own experiences.
The following business mission/vision/strategy was formulated. Hampers will be introduced as an alternative to standardised habits (customers can differentiate themselves from the others).
H&G will offer customers a service (they don’t have to concentrate on finding and buying suitable gifts for their employees and business relations). Customers will get exclusivity and
“value for money” (H&G use special, unique non-food articles). By actively promoting the trend of giving Hampers instead of dinners, food and money, and intensively sourcing for special articles (to create the attraction), H&G is confident that in the near future they will achieve Metro Hampers & Gifts Awareness and become the gifts solution supplier in China for exclusive and attractive (in style and price) Hampers for professional customers with a gift need.
H&G wants to create a loyal customer base. By being consistently different and creative every year the customers will continue to return, eager to buy the gifts from Metro. The strong sourcing/purchasing of H&G will enable them to create unique Hampers of food and non-food articles each year for a reasonable price. The attractive combination of the Hampers must be the driving force behind the purchase decision.
The Hamper team (Appendix 10) started its first year on 1st of August 2003 with the development of Hampers for Spring Festival 2004 (22 Jan. – 27 Jan.) and planned to focus on
big volume sales (> 7500 RMB). The market was segmented in a market for business relation gifts and one for employee gifts. Finally the product assortment, price, place and way of promotion were determined for the two segments. The Hampers were available in all the 18 Metro stores from 1st of December until 31st January. After the season H&G already began with the preparations for next season. As time was very short in the first year to implement the concept H&G’s Project Manger wanted to have an evaluation of the first year. She would like to have determined the problems which occurred and how to overcome these problems in the next season.
Chapter 2 - Problem Analysis and Research plan
2.1 Problem Analysis
The market demand in China for Hampers was estimated and H&G presumed it could sell 136.000 Hampers in China. During the season the second production of 66.000 Hampers was cancelled because of the low sales. Eventually H&G achieved to sell 25.749 Hampers.
Although entry to the Chinese market was carefully considered (within the time available), the results of the sales were not as expected. This report is written in response to the disappointing sales of H&G during Chinese New Year (CNY) 2004.
H&G’s Project Manager wants to know what the reasons for the low sales were and what adjustments have to be made to achieve sales growth in next season. H&G entered the Chinese market to serve a specific type of customers. With these customers in mind H&G put together an assortment of Hampers, estimated demand and selling prices. These decisions were based on H&G’s Project Manager’s experiences in Holland and the research of Synovate, but the question is whether these decisions can be improved in order to accommodate the Chinese market. H&G’s Project Manager needs therefore information about the customer’s needs and how H&G could better fulfil these needs. The desired improvements can be found in the marketing program of H&G. The “market” in this research can be defined as the professional customers in China with a need for business relation gifts and/or employee gifts during Spring Festival. Same as in Holland, Metro and H&G forecast that the sales during Spring Festival (Christmas in Holland) would be enough to cover the costs during the rest of the year. Other professional business gift needs besides Spring Festival are therefore not included in this research.
The strong sourcing of H&G makes it possible to create unique combinations. This differentiates H&G from competitors and provides the competitive advantage in Holland and Spain. H&G’s Project Manager is interested in the reasons why customers are purchasing the Hampers and if they are purchasing them for the same reasons she deemed important (i.e. the unique creative combination of food and non-food articles). She believes that a certain type of customer (middle class and upper middle) would buy the Hampers. H&G’s Project Manager thinks that those particular customers will appreciate the product for its uniqueness and will become faster loyal (Interview PM, 2004). Information about the type of customer is therefore needed.
A marketplace will change. When it changes companies should review and change their implementation, programs, strategies and even objectives (Kottler, 2001).
The uncertainty about the size and needs of the Chinese market was high at the beginning of the season. Metro started and acquired a great deal of knowledge throughout the first year. Market introductions provide huge amounts of information. After the first season the market had changed from the perspective of Metro and H&G. It is therefore a necessity to review the first year and give recommendations for next years market approach. Whether the Hamper project will be continued next year or not is not doubted. Metro is convinced of the success of the Hamper project in China and is willing to invest in it. They realise that time is required to make the necessary changes in order to adapt to the market needs (within the concept).
Therefore the following research goal is formulated:
2.2 Research Goal
The goal of this research will be to provide recommendations to H&G’s Project Manager for necessary adjustments to be made to the marketing program so that the sales of Hampers will increase during the next Chinese New Year.
2.3 Conceptualisation
H&G’s Project Manager desires to increase sales of Hampers next year. The sales are determined by the value offered to potential customers and their specific needs. To achieve increased sales it is essential to gear the value offered to the customer’s needs. The variables influencing the value of a proposition are defined by Kottler in the Value creation and delivery sequence (Figure 1). The different aspects can be divided into strategic and tactical decisions.
Normally strategic decisions are made prior to tailoring a tactical marketing program. Tactical marketing decisions need to be reviewed every year. As it is the first year of H&G entering a fairly new market it is possible that adjustments are also necessary on the strategic marketing level.
From the questions and doubts of H&G’s Project Manager plus the interviews with the Sales Executives, it can be concluded that the desired information or required adjustments can be found in the aspects of the value creation and delivery sequence of Kottler (Figure 1).
Figure 1 Value creation and delivery sequence (Kottler, 2001:50)
One of the most important business scope decisions is whether you should serve a certain product-market or not (Aaker, 2001:4). The segmentation of H&G is based on the experience of Metro. Through utilising the literature on segmentation and this year’s experiences it can be diagnosed whether there are segments currently not served which are worth considering. Also copying the same segmentation from one market to another does not automatically generate the same success. A diagnosis of the segmentation of H&G is therefore advised to see whether this segmentation generates the most sales. As this is the first year of H&G in China with this new concept there are several aspects that need to be taken into consideration more then others. A distinctive positioning of the product in the market is crucial for the development of the product in that market. The way H&G positioned the Hampers is therefore an essential aspect to diagnose. To achieve market share in the gift market, H&G has to find “new” users of the Hampers. The targeting of these so called innovators and early adopters is essential to gain a substantial market share (Kottler, 2001:143). Whether H&G targeted the market effectively with the highest number of sales as result will therefore be diagnosed.
The value provided to the customer consists of different value elements (Figure 1). Each element does not equally influence the value provided. This research will illuminate the most important aspects influencing the sales of Hampers in China in 2004. The performance of these aspects will also be diagnosed. Both “influence on sales” and “the performance in 2004”
provide the basis for the need for improvements or adjustments. The more influence a particular aspect has on sales and the worse it performed, the higher the need for improvement.
As stated previously tactical marketing decisions need to be reviewed every year, but the necessity is even more substantial when entering a “new” market with a “new” product.
Customers decide whether they buy a product on the value they deduct from the purchase.
There are different aspects influencing this value. An analysis of customers and non-buying
Customer Seg- mentation
Market selection/
focus
Value positioning
Product develop- ment
Service develop- ment
Pricing
Sourcing Making
Distributing Servicing
Sales Force
Sales Promotion
Ad- vertising
Strategic Marketing Tactical Marketing
Choose the value Provide the value Communicate the value
companies regarding their perceptions of the various aspects of the value creation and delivery sequence will provide useful information to H&G of their needs to make adjustments.
A complete marketing process consists also of the implementation of the tactical and strategic marketing program. The eventual outcomes of this research will result in recommendations for adjustments and not the actual implementation. The operational decisions are of course also influencing the sales results, but these will also not be taken into account in this research.
The goal of the research is to give recommendations so Hamper sales will increase. The various factors influencing the sales have been taken into consideration. These factors are also influencing each other. The influence of the different aspects on each other is mixed into the whole diagnosis and not addressed particularly. For example: The fact that H&G should always sell Hampers via the channel of Metro, which is considered to be low price, could be influencing the image of it uniqueness. Where H&G is trying to make the price, promotion and product to reflect the image is the channel not reflecting this. This kind of cross influences are taken into account during the diagnosis and mentioned where applicable. The relations of the different variables influencing each other and the eventual Hamper sales are visualized in the conceptual model (Figure 2). During the sales meetings in the beginning of the season the factors that were of more influence then others were already identified. These will be assessed and recommendations will be given to improve the positive influence on the Hamper Sales.
Figure 2 Conceptual Model
Customer Segmentation Market selection/focus
Value positioning
External Environment
- Habits/culture - Trends
- Substitute products - Competitors - Economic Factors - Political and regulatory
developments - Social responsibility
- …..
Internal Environment
- Vision Chinese business gift market and Hampers
- Metro ÅÆ H&G - Hamper Concept - Mission
- Organization H&G
Hamper Value Offered
Promotion Price Place
Sales promo
Direct Marketing
Public Relation
H&G‘s Channels Price setting
Discounts
Commission
Operational Marketing Decisions Budget
Other Channels
Product
Packaging
Quality Hamper Developm ent
Content
- - Å Æ ++ - - Å Æ ++ - - Å Æ ++
Service
Needs of (potential) customers
Hamper Sales
= Research area
Pricing Product line Advertising
Personal Selling Variety
Discrepancy Recommendations for 2005 to reduce discrepancy
2.3.1 Other factors influencing sales
The internal/external environment, business mission and goal will not be re-discussed. Any recommendations given in this research will be limited by the business mission and strategy of H&G. The assumption will be made that the Chinese market is an attractive market for H&G to serve. The experience of H&G’s Project Manager, Interviews with Business Unit managers and the Synovate Report support that assumption. Serving the professional gift market in China with Hampers is a strategic decision made by Metro Germany. H&G has a budget for 5 years.
Still it could be possible that the Hamper concept is not going to be successful in China. Other aspects could be influencing the business of H&G (competitors, government rules, etc.). These other aspects are not included in this research. If some factors outside the scope of this research appear to be of great influence this will not be let unmentioned in my final recommendations.
2.4 Research Question
The research question that will be answered in this research is:
What adjustments does H&G have to make to its strategic and tactical marketing program to achieve an increase in sales of Hampers during next Chinese New Year sales season?
2.5 Sub Questions
The research model (Figure 2) should be read as follows. The sales of Hampers were not as expected in the first year. Growth of sales is the goal for next year and this research is carried out to give recommendations to make that happen. The sales of Hampers are determined by the value offered to (potential) customers. The value offered is determined by the aspects visualized in the conceptual model. These specific aspects are adapted from the marketing mix (4 P’s) of Kottler.
Although the subdivision is different from the Value creation and delivery sequence of Kottler the marketing mix covers the same topics that are applicable to this research. The formulated strategy, business mission and market report of Synovate gave the needed information for the development of the strategic and tactical marketing program of 2004. The strategy, business mission and market report of Synovate are also used as input for this research. The derived strategic and tactical marketing program is subject to possible changes and will therefore first be diagnosed (sub question 1 and 2). To determine which aspects need improvements the most, the different aspects of the strategic and tactical marketing program are valued and ranked on the criteria
“performance” and ”influence is on the sales” (sub question 3). Concepts from literature what aspects are determining the value offered together with gathered information in the beginning of the season from potential customers will be used to make the choices which aspects to diagnose.
Information from (potential) customers is used as representative data for the market needs. The perception of the value offered of customers and non-buying customer will be used to diagnose the
strategic and tactical marketing program. Literature will also give insight in the relative influence of the different aspects and will give useful guidelines how to improve the total program.
Eventually the diagnosis will lead to a better understanding of the value offered by H&G to the Chinese market and the needs of the market. Adjustments will then be given how to improve the value offered so that the discrepancy between the needs of the market will better fit with the value offered by H&G (sub question 4). This will therefore lead to higher sales (when implemented well).
The research question and model can be split up into the following sub questions. Per sub question the sub-sub questions and data sources that will be used are mentioned.
1. How did H&G fill in the strategic marketing program in 2004 and do strategy, literature, market information and (potential) customer demands give reason for adjustments?
a) How did H&G segment its market and do strategy, literature, market information and (potential) customer demands give reason for adjustments?
b) What was the market focus of H&G and do strategy, literature, market information and (potential) customer demands give reason for adjustments?
c) How did H&G position the Hampers in the Chinese market and do strategy, literature, market information and (potential) customer demands give reason for adjustments?
Data Sources:
- Interviews H&G’s Project Manager - Sales plan 2004
- Hamper & Gifts Sales Manual - Customer Interviews
- Synovate Report Business Gift Market China - Theory on product positioning (Kottler) - Theory on market introductions
2. How did H&G fill in its tactical marketing program in 2004 and do the strategic marketing program, literature, market information and (potential) customer demands give reason for adjustments?
a) Product b) Price c) Distribution
d) Promotion
Data Sources:
- Marketing Mix (Kottler)
- Diagnosis Strategic Marketing program.
- Interviews H&G’s Project Manager
- Interviews Sales, Purchasing and Marketing Manager - Synovate Report
- Customer Interviews - Sales Plan 2004
- Hamper & Gifts Sales Manual - Internal Memo’s
3. What was the relative performance and influence of the different aspects of the strategic and tactical marketing program in 2004 on the Hamper sales?
Data sources:
- Marketing Mix (Kottler)
- Diagnosis Strategic and Tactical Marketing Program 2004 - Sales Reports
- After Sales reports
- Customer Feedback reports - Sales Executives interviews
4. What adjustments should be made to the strategic and tactical marketing program to achieve Hamper sales growth in 2005?
Data sources:
- Marketing Management (Kottler)
- Diagnosis Strategic and Tactical Marketing Program 2004 - Synovate Report 2003
- Interviews H&G’s Project Manager
The report will be structured following the sub questions: Chapter 3 will be the diagnosis of the different aspects of the strategic marketing program; Chapter 4 the diagnosis of the different
aspects of the tactical marketing program; Chapter 5 will be the evaluation of the strategic and tactical marketing program. The performance and relative influence of the aspects on the sales will be the starting point for the recommendations chapter. The aspects will be ordered in “need for improvement” from high to low and Chapter 6 will consist of the recommendations for adjustments of some (not all) aspects influencing the Hamper Sales (based on the findings in Chapter 3, 4 and 5).
2.6 Method
In this research the strategic marketing planning process of organizations will be used to look at the problem. With strategic marketing literature and results/experiences of this year the strategic/tactical marketing decisions made will be evaluated. The strategic and tactical marketing decisions and the interpretation of H&G are of influence on the sales. Not only will be looked how H&G intended to fill in this program, but actually use this years experience (sales results and customer feedback) to evaluate the program.
Looking at the strategic planning process of H&G it resembles in many ways the process as visualized below.
Figure 3 The Business Strategic-Planning Process (Kottler, 2001:46)
This report is a result of the last step (feedback and control) and will result in recommendation for the design of the new program formulation with some strategic adjustments for the next season.
The DOV (Diagnosis, Design and Change) scheme of De Leeuw (1997) will be used for this research. The different aspects on strategic and tactical marketing level are not influencing the Hamper sales equally. During the sales meetings in the beginning of the season some factors of more influence were determined. This was determined by the feedback the sales executives got from customers during their first sales activities. Besides the aspects from the interviews the
Business Mission
External environment
Internal Environment
Goal Formulation
Strategy Formulation
Program
Formulation Implementation
Feedback And Control Mission SWOT Analysis
literature also provides factors that are of influence on the total value creation. The different aspects that are influencing the sales will be diagnosed so the performance of this year and the amount of influence on sales can be made clear. The aspects will be evaluated on two criteria:
“performance this year” and “influence on the sales”. This can vary from low (-- very little influence or bad performance) to high (++, very big influence or good performance). The combination of those two evaluations will result in a “need for improvement” (++ need of adjustments high, -- low need for adjustments). The “-” or “+” on the criteria “performance this year” and “influence on the sales” are weighted equally. The aspects will be evaluated relative to the other aspects and is not clarifying the exact influence (in numbers) on the sales and is therefore partly subjective to the interpretation of the researcher.
The evaluation of the different aspects will be the starting point for the design phase. Those aspects that performed the worst and have the biggest influence (“—“ and “++” results in a
“++++” for “need of improvement”) will be addressed for re-design first. Aspects of lower importance will be re-designed later. The design phase will consist of recommendations for adjustments to the strategic and tactical marketing decisions so Hamper sales will grow (exact numbers are difficult) next year.
The information for the diagnosis will be gathered from different sources. Besides the data sources mentioned in paragraph 2.5 primary data will be gathered and used. This data will be gathered from two groups.
1. Non-buying companies
These are the companies that showed interest (prospects), but eventually did not purchase the Hampers. The non-buying companies can give valuable information about the reason why they did not purchase a Hamper. The 540 non-buying companies that looked the most potential during the season were included in the survey (Appendix 6). These surveys were filled in by the sales executives based on secondary data. This was possible, because in the beginning of the season the sales executives were told to archive all feedback from all approached companies.
2. H&G customers 2004
H&G customers provide information about their purchase reasons and which aspects they think that should be improved. The surveys are conducted to determine which aspects are influencing the total value offered. The customers can also provide information about unmet needs. The customers were split up in three different groups (depending on their purchase amount), because they were considered to be of different interest for H&G.
- Purchase 0 – 1.500 RMB (2.210 customers)
These customers were not included in the surveys, because it was assumed that the purpose of these customers was not professional. Because H&G does not want to target non-professional customers the needs of these customers is not interesting. For some analysis the sales volume of this customer-group was included.
- Purchase 1.500 – 7.500 RMB (449 customers; Pro-2 customers)
These customers were interviewed by phone via a semi-structured way. (Appendix 7) - Purchase over 7.500 RMB (119 customers; Gold-3 customers)
This group was interviewed face to face or by phone via a semi-structured way. (Appendix 8)
Literature about the development of a strategic and tactical marketing program will be used to diagnose the decisions made by H&G in 2004. The marketing decisions of H&G’s Project Manager were based on her practical experiences. Marketing literature can provide tools and concepts that were perhaps overlooked when the marketing plan of 2004 was developed. The business mission, market analysis of Synovate, goal and overall strategy will be used as well for the diagnosis of the programs of 2004 (Figure 3). H&G took these sources into consideration while developing the programs, but in the diagnosis these sources will be taken into re-consideration together with the input of the market to validate the interpretation of H&G.
Here has to be taken in the back of mind that Synovate is a well-known research company in China, but that many findings of this report are based on statistical yearbooks of China. Figures from these books are not always representing factual data.
2.7 Research Classification
This research can be typified as a research to support the way of doing business by H&G. It is focused on gathering and providing information that is useful in H&G’s specific situation. The
“problem” of H&G is actually a sub-optimal situation (low sales). Solutions will therefore only be presented in the way of improvements. The analysis and diagnosis of the Chinese Business gift market for H&G will give the necessary information to provide profound recommendations for adjustments to the marketing program that will result in a “better” situation (higher sales).
The information gathered will also support H&G in their future decisions to make.
Chapter 3 – Diagnosis Strategic Marketing Program
In this chapter the strategic marketing program of H&G in 2004 will be diagnosed. The question that will be answered is: How did H&G fill in the strategic marketing program in 2004 and do strategy, literature, market information and (potential) customer demands give reason for adjustments?
The start of the development of the strategic marketing program was the overall strategy.
Together with the external and internal analysis this provided the input for the marketing program in 2004. Now customers got to know the Hamper concept they can provide extra information about their professional gift needs and opinions regarding the Hampers. These information sources will be used to diagnose the strategic marketing program of 2004.
One of the most important business scope decisions is whether you should serve a certain product market or not (Aaker, 2001:4). As Philip Kottler stated: “If the targeting and positioning decisions are made correctly, the other things will follow. If they’re made incorrectly, nothing good will follow”. Selecting your markets is therefore a crucial decision.
For selecting target markets, three major steps should be taken (Kottler, 2001:143):
1. Identify and profile distinct groups of buyers who might require separate products of buyers who might require separate products or marketing mixes (market segmentation) 2. Select one or more market segments to enter (market targeting)
3. Establish and communicate the products’ key distinctive benefits in the market (market positioning)
The segments H&G served will be discussed and evaluated in paragraph 3.1 to see whether adjustments are necessary. First the effectiveness of the segments will be diagnosed. Are the segments measurable, substantial, accessible, differentiable and actionable? Is this the best possible segmentation for the Chinese market?
Then the segments will be evaluated on the variables 1) attractiveness and 2) fit with companies’ objectives and resources. The available market information (Synovate), customer needs (from after sales surveys) and sales results will provide the necessary information about the attractiveness of the segments. The strategy of H&G chosen is a very important factor to consider when diagnosing the fit with the companies objectives.
Besides the evaluation of this year’s segmentation the results of the sales of this year and customers and non-customers surveys will be used to see whether there are any (attractive) segments not served yet. These unserved segments can be important for additional sales besides the “regular” customers.
The Hampers were perceived by potential customers as new. Therefore it could be seen as an innovation. An innovation is not adopted by the market in the same pace. Some customers are faster inclined to change their buying behaviour. These customers are called innovators and early adopters. Sometimes these innovators and early adopters are a specific type of customers.
Identifying these types of customers could help sales in the first years because the targeting could be done much more effective (these customers need less persuasion to change their buying behaviour). By analyzing these years’ customers in paragraph 3.2 it can be diagnosed whether there were any early adopters among the (potential) customers of H&G.
The positioning of a product is crucial for a market introduction. A product passes various stages in it so called product life cycle (PLC). These stages demand different positioning and interpretation of the marketing mix. The diagnosis of the stage where H&G’s product (Hampers) is in now in paragraph 3.3 will be helpful for the diagnosis of the tactical marketing program in chapter 4.
3.1 Customer Segmentation
A market segment can be defined as a large identifiable group within a market with similar, wants, purchasing power, geographical location, buying attitudes or buying habits (Kottler, 2001:144).
Before H&G entered the market in China they segmented the market. H&G segmented the market on the level of segment marketing, into business customers who want to purchase a gift for Spring Festival to use it as an employee gift and/or business relation gift.
To get the specific characteristics of the two segments Synovate researched both segments and the following characteristics (among others) came across:
Figure 4 Segmentation H&G 2004 and characteristics (Synovate, 2003)
H&G took these characteristics into consideration and added some variables to define the segments in more detail. In paragraph 3.2 the targeting of the segments is discussed further.
Effective segments have to be, measurable, substantial, accessible, differentiable and
Segment Employee Gift Business Relation Gift
Purpose employee gift business relation gift Budget per employee or
relation
100-300 RMB 300 up to 2000 RMB (sometimes even higher) Purchasing Department HR manager Marketing or General Manager Wants Basic / Festival Food Non-food and exquisite food
actionable. As stated before, the Synovate report shows the purchasing power of both segments (measurable) and they are considered substantial (Interview PM, 2003).
The accessibility of the segments looked easier then it was. Sales Executives had a hard time contacting the Decision Makers in the companies (Interviews SE, 2003). One characteristic that distinguishes business markets of consumer markets is that the purchasing decision is most of the time not taken by one person. Purchasing decisions are made by a so called Decision Making Units (Biemans, 2000:31). The Synovate report projected that the gift-decision process was done by one person. In reality this was not the fact and more persons are involved in this process. A decision making unit also uses more time before making a purchasing decision as a single person. Together with the fact that purchasers had to change their almost standardised gift behaviour above arguments made the accessibility of the segments lower as presumed.
Although the accessibility seems more difficult then represented the problems are not insuperable. A good tactical marketing program can overcome the obstacles mentioned.
Whether H&G did this effective enough will be diagnosed in Chapter 4.
The Business Relation Segment and Employee Gift segment should react different to different marketing mixes. The product needs and price range were the biggest distinction between the both segments. Whether the Hampers designed by H&G for the different purposes (employee gift or business relation gift) were also used as meant will be diagnosed in paragraph 3.1.1. How both segments reacted to the specific marketing mix elements will be diagnosed in Chapter 4.
The demand differences as described in the Synovate report concerning price and product make both segments actionable.
3.1.1 Employee Gift and Business Relation Gift
During the season it became clear that the first six Hampers were not solely used as employee gift and the other six as business relation gifts. For each segment H&G designed twelve Hampers in the price range from 150 RMB to 888 RMB. The Synovate report provided the most common price ranges for both segments and that was the basis for the Hamper development. The different product needs were only partial used as input for the development.
This could be a reason for the differences in purpose of the Hampers (Figure 5).
Hamper Employee Gift
% Business Relation
% Employee Gift and
BR
% Reselling % Private Purpose
%
Total
Hamper 1 75% 21% 2% 0% 2%
Hamper 2 45% 37% 14% 5% 0%
Hamper 3 9% 78% 6% 4% 3%
Hamper 4 61% 33% 4% 0% 1%
Hamper 5 32% 65% 0% 3% 0%
Hamper 6 9% 77% 5% 8% 1%
Hamper 7 17% 78% 1% 3% 1%
Hamper 8 3% 88% 0% 3% 6%
Hamper 9 12% 86% 0% 1% 1%
Hamper 10 2% 88% 1% 7% 2%
Hamper 11 0% 94% 0% 5% 1%
Hamper 12 1% 93% 0% 5% 1%
Custom made
100% 0% 0% 0% 0%
Total 24% 67% 3% 4% 2%
Figure 5 Purpose sales (>1500RMB) per Hamper
The results from Figure 5 surprised H&G’s Project Manager as she thought that the market in China was very big for employee gifts. Despite the information of Synovate she thought that the share of Hampers used as employee gifts would be much higher.
Companies looking for employee gifts favour food articles above non-food articles much more as those that are looking for business relation gifts (Synovate, 2003:20). With the information available on forehand the segmentation seems appropriate, but the fit with the marketing program does not. The only distinction of price and partly product between the segments (promotion and place was the same) was not clear enough. Most employee gifts in China are food orientated only and that does not fit with the Hamper concept (food and non-food). The attractiveness of the Employee Gifts segment is therefore much lower as the Business Relation Gift segment.
The Hampers produced (in sales volume) for the different segments were equally (50%-50%) distributed over the segments although the market size (20% employee gifts - 80% business relation gifts) was available on forehand. Now sales results are available it seemed that the distribution of the purpose of the Hampers sold over the different segments in 2004 reflects the market sizes of both segments as proposed by Synovate.
3.1.2 Evaluating segments
Serving a certain product market requires companies’ resources. Resources are valuable assets
of a company and can be needed to compete successfully elsewhere (Aaker, 2001:4). It can seem very obvious to serve a certain segment, but it’s possible that sales would be much higher when targeting other segments. Therefore the segmentation of H&G will be evaluated here.
In evaluating segments two aspects are important (Kottler, 2001:155):
1) The segments overall attractiveness; and 2) The companies’ objectives and resources.
Ad 1: According to the Synovate report the size of the employee gift market (1.587.000.000 RMB) was substantial. (Synovate, 2003:42). The Business Relation segment is much bigger (5.806.000.000 RMB) where as this segment is also growing 20% in the next three years (Synovate, 2003:42).
The total potential market for H&G is 7.393 Million RMB. The size of the Employee Gift segment represents 21% of the potential market and the Business Gift segment 79%. This corresponds with the outcomes of the first year’s sales of Hampers and purposes (Figure 5). As mentioned previously the volumes (in RMB) of Hampers designed for each segment (50%-50%) did not reflect the demand differences. The Hampers designed as employee gifts were luckily also purchased by customers looking for business relation gifts (they used the cheaper gifts for less important relations).
Ad 2: H&G wants to be a gift solution provider with exclusive and practical combinations of food and non-food articles for professional customers (Business Mission, 2003). The strong sourcing of Metro makes it possible to get exclusive non-food articles every year. This has consequences for serving the Employee Gift segment. The needs of the (lower) Employee Gift segment does not fit with the Hamper concept as those companies are looking mainly for basic food products. The feedback from customers looking for employee gifts also shows that a substantial part was more attracted to the food products. H&G does not want to serve those customers as these do not fit with the desired customer profile. H&G must realize that getting the right customer (willing to buy non-food) takes more effort as these are rarer in the Employee Gift segment. Together with the fact that the market for employee gifts is smaller then the Business Relation Gift segment makes this segment less attractive overall. Although the market is smaller the competition is also not so fierce in this niche (food and non-food as employee gift). H&G wants to create awareness of being a total gift solution provider, so the targeting of this segment is explainable. It is also possible that these customers are not ready yet to buy exclusive Hampers, but that they will develop and become potential H&G customers. If H&G is already serving this segment it is less difficult to gain market share and make sales in
the future.
3.1.3 Additional segments (resellers)
There was a small demand from resellers in the first season. H&G is sceptical about serving resellers. In the end it could be that pushing Hampers through the retail channel will harm the image of H&G. In this research the customers as resellers are partly treated as additional distribution channels. Some distinction must be made here. The strong sourcing of unique products made companies approach H&G for their knowledge about gifts. China Post approached H&G if they could work together in some way. This kind of company cannot be seen as a customer, but also not as an extra distribution channel. These should be considered as partners (see also Figure 21). These companies will have very specific wishes concerning the product, price and promotion. The difference with normal resellers is that these companies have strengths of which H&G can profit as well. In this research the opportunities of partner-development will not be discussed thoroughly, because every possible partner must fit exactly with H&G (Interview PM, 2004). The possible extra sales via “resellers” will therefore only diagnosed in paragraph 4.4 and the possible sales via “partners” is not discussed further.
3.1.4 Unmet needs
An unmet need is a need of customers which currently can not be fulfilled by the existing products in the market. These unmet needs can be very interesting as they can create additional sales besides the regular sales. The needs and feedback in the beginning of the season of companies brought up interesting topics that were researched further. The feedback from customers and non-buying companies showed results of possible additional sales for H&G and unmet needs of the customers. These are companies who were attracted by the concept but looking for gifts that match their budget (more expensive gifts > 888 RMB or cheaper gifts
<150 RMB) and those that want to choose the articles in the Hampers by themselves (Custom Made Hampers).
3.1.4.1 Custom Made
20% of the non-buying customers gave as a reason (among others) for not buying the Hampers that they want to choose the articles in the Hamper by themselves (Appendix 6). An additional 45% of the customers with purchase over 1500 RMB and 73% of the customer with purchase over 7500 RMB showed interest in putting a Hamper together themselves instead of buying a pre-made Hamper (Appendix 7 & Appendix 8).
In Holland customers have the possibility to put together the Hampers by themselves. These customers can put together a Hamper by selecting articles out of a pre-selection made by ICN (H&G in Holland). H&G did not want to start with this in the first season, because time was short and it would take a lot of effort in terms of logistics. When Siemens asked in December if they could put together a Hamper by themselves H&G did respond positive to that. This was because Siemens is a type of customer (technology, foreign investment) that H&G likes to have (Interview PM, 2004). Their purchasing volume was also big enough to make it profitable for H&G. To make it easier they could only select articles from the content of the existing Hampers.
Despite the effort (they wanted a custom made box as well) the margin was still 23% and the customer satisfaction is probably higher as with a standard Hamper. Besides Siemens, the Army also purchased a custom made Hamper. Together the Custom made Hampers counted for XXXX RMB which represents 4.3 % of total sales. Taken into account that these custom-made Hampers were only proposed to a limited number of customers together with the feedback of the non-buying companies gives the impression that this a need of customers worthwhile considering.
Offering a custom made product has several implications for the marketing program. While catalogue products (such as the first years’ Hampers) have a lower price and are bought in larger quantities, custom made products require more personal sales attention and a higher price (Biemans, 2000:227). This certainly counts for the Hamper business.
Although a large proportion of the customers of this year indicate that they would like to put Hampers together by themselves some remarks must be made here. In Holland customers are also offered to make Hampers by themselves, but a lot of customers find it very hard to choose the articles themselves (Interview PM, 2003). Customers also tend to say yes to this possibility, but will not make use of the opportunity if available. PTT once held a survey among customers whether they would like to be able to decide themselves when (time of the day) to get their mail.
A large proportion seemed to want to have this opportunity, but once implemented nobody made use of it (Bron: College Dhr. van Engelen).
The Custom Made segment can be served in several ways. Customizing your product is (especially with the Hampers) a sort of continuum. Adding products or printing personal boxes is already easier as a complete new Hamper. 64% of Gold-3 customers (purchase over 7.500 RMB) for example showed interest in adding articles with their company logo and 70% wanted to have their own printed box.
3.1.4.2 Budget insufficient
Around 14 % of the non-buying companies that were included in the survey gave as a reason among others for not buying the Hampers that their budget was not sufficient (Appendix 6). All of these companies were looking for employee gifts. In China the budget for employee gifts varies most of the time between 100 and 300 RMB. For very high placed employees this can be much higher, but the majority has this budget range (Synovate, 2003:20). As the Hampers have a price range of 150 to 888 RMB a sufficient amount of companies did not have the budget for a Hamper. This topic will also be addressed in paragraph 4.3.2.
Here must be taken into account that those customers that were looking for cheaper gifts most of the time also were looking for more food-products. This is caused by the fact that the companied with low budgets also consists of recipients with low salary who prefer practical (food) products above non-food products. These customers do not fit very well with the customers H&G wants to serve.
3.1.4.3 Looking for more expensive gifts
In contrast with the preceding paragraph there were customers who were looking for more expensive gifts. The most expensive Hamper of 888 RMB did not cover their needs. 13 % of the non-buying companies gave this (among others) as a reason for not buying the Hamper. These customers were looking for gifts for their most valuable key accounts and government. The report of Synovate shows a budget range for business relation gifts from 300 up to 2000 RMB (and even higher). It is hardly impossible to cover this area with pre-made Hampers. To decide whether this segment is attractive must be further researched. Especially the needs of these consumers must be taken in careful consideration, not to end up with high value products which are difficult to sell in large quantities. These customers fit very well with the customers H&G want to have, as price plays a minor role in their purchasing decisions. These customers find it the most important that the recipients feel valued.
3.1.5 Conclusion
Besides some adjustments and additions the basis of the segmentation of this year seems appropriate and explainable. Both segments answer to the needs for an effective segmentation and are also substantial concerning market size and the fit with the company’s resources, but to positively influence the sales a more refined segmentation seems useful. To fully benefit from the segmentation a big part of the success depends on the fit of the marketing mix with the segments. This will be diagnosed in chapter 4.
3.2 Market Selection/Focus
The Hampers are new products for the Chinese market. Combination of food and non-food in a box are available on the market, but these are always combinations of drinks and glasses. The Hampers can therefore be seen as an addition to existing product lines in the market. Products which customers perceive as “new” can be conceived as an innovation. Many customers who came to the showroom perceive the Hampers as a new concept (Interviews SE, 2003).
An innovation is not adopted by every customer at the same time. An innovation is adopted first by innovators and early adopters. By focusing on the innovators and early adopters a company can gain market share quickly, because peoples and organizations differ in their readiness to try a new product (Kottler, 2001:170). Targeting the so-called innovators and early adopters will positively influence the sales of Hampers and the effectiveness of the targeting. The Adopter Categorization on the basis of Relative Time of Adoption of Innovation can be visualized as follows.
Figure 6 Time of adoption of innovation (Kottler, 2001:170)
3.2.1 Sales over branches
In the first season H&G thought that specific type of companies would be more open to the concept. H&G targeted therefore companies of specific branches1 (Appendix 4 & Appendix 5).
Besides that, H&G expected that their customers would differ a lot from the customers of Metro.
H&G would, as a consequence, attract additional customers (and sales) for Metro. Whether there were any specific types of organizations more open to the concept will be diagnosed here.
1 4-5 star hotels, Real estate, Legal Financing & Consulting, Taxi, Pharmacy & medicine, Hospital, Educational Institutions, Party & Government, Army, Police, Rep/Sales office of manufacturing, Manufacturing, Purchasing dept. of big companies, Building & Construction and Expatriates
Time of adoption of innovation
To test whether some branches are more open to the Hamper concept the total sales within the different branches can be compared with each other.
Branch Sales RMB % of total sales
Traders 2.2%
Horeca 4.9%
Special (without internal) 3.9%
Non-food retailer 14.6%
Industry 22.7%
Service Companies 13.4%
Administration Institutions 14.9%
Agricultural 0.3%
Construction 1.6%
Health Care (no Hospitals) 3.7%
Export / Import 2.0%
Other 15.9%
Total 100.0%
Figure 7 Hamper sales volume over the branches
The total sales of Hampers over branches show that certain branches count for a bigger proportion of the total sales. Whether this is subject to the nature of the companies depends of different variables. An important variable is the amount of customers targeted by the Sales Sxecutives within that branch. Therefore the proportions of the contacted customers within the branches (Appendix 4) will be compared with the eventual proportions of the number of customers responsible for the sales. (Figure 8).
Branch # Contacted % Contacted Sales Volume % of total sales
Horeca 941 4.9% 4.9%
Special (Without Internal) 164 0.9% 3.9%
Industry 4305 22.4% 22.7%
Service Companies 5407 28.1% 13.4%
Administration Institutions 3883 20.2% 14.9%
Construction 432 2.2% 1.6%
Other 4106 21.3% 38.7%
Total 19238 100.0% 100.0%
Figure 8 Sales and contact information over branches
The Chi-Square test returns a value of 0.99 (Appendix 11). This means that the two variables are not significantly different and seem associated. It seems that the difference in sales over the branches is caused by the sales approach.
