6/18/2019 How to Sell Garbage Disposals in China - WSJ This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit https://www.djreprints.com. https://www.wsj.com/articles/u-s-disposal-maker-grinds-away-in-china-1395876668 BUSINESS How to Sell Garbage Disposals in China Emerson's InSinkErator Rejiggered to Munch Kitchen Favorites Like Eel, Bullfrog Skin and Duck Heads Emerson Electric hopes China's housing market will open up for its kitchen disposals. Pictured, workers at its Racine, Wis., InSinkErator factory. ROB HART FOR THE WALL STREET JOURNAL By James R. Hagerty March 26, 2014 7 31 pm ET RACINE, Wis.—About half of all U.S. homes have garbage disposals gurgling under kitchen sinks to grind up food waste. The rest of the world generally doesn't share Americans' enthusiasm for this gadget. That's a problem for Emerson Electric Co.'s EMR 2.04% ▲ InSinkErator unit, the world's largest disposal maker, whose founder invented the device 87 years ago. The U.S. market for disposals, totaling about $1 billion at the retail level last year, is mature and slow-growing. Despite decades of overseas promotion by InSinkErator and others, the U.S. still accounts for more than three-quarters of global demand for disposals. So InSinkErator has staked its growth hopes on China, where it sees big potential even though the product is almost unknown there. "We are turning the dial up in China," said Dave MacNair, vice president of global marketing at InSinkErator. The company in November 2012 opened a plant to make disposals in Nanjing, https://www.wsj.com/articles/u-s-disposal-maker-grinds-away-in-china-1395876668?ns=prod/accounts-wsj 1/3 6/18/2019 How to Sell Garbage Disposals in China - WSJ China, its only manufacturing site outside the U.S. It is pitching its product to the Chinese via online marketing and in-store displays, while working with home builders and local buildingcode and waste-handling officials to explain its benefits. While browsing at Jiahe Jiamei Furniture City in Beijing recently, Wang Chao, an office worker, was skeptical about the disposals on display, costing 1,000 to 4,000 yuan, or $161 and $645. "I don't know much about that," she said, "and I'm not interested in buying one either." But James Liu, an antique dealer who studied in Britain, was interested in one to avoid blocked drain pipes and "disgusting" smells. "Not many of my friends have this at home," he said. So far, sales in China are tiny. InSinkErator won't provide data but says sales are growing quickly—more than 30% a year—from a small base. The company is competing against several Chinese rivals, including Beijing Becbas Technology Co. and Ningbo Oulin Kitchen Utensils Co. China is attractive partly because it has more housing construction than any other country. InSinkErator executives also believe the Chinese have a greater need for disposals because they eat less processed food than Americans and have more leftover vegetable peelings, fish bones and other items that can be ground up. InSinkErator redesigned its disposals for the Chinese market, angling the grinding teeth differently so they could handle tough waste, including eel or bullfrog skin. The device also grinds more finely so leftover rice or noodles won't clog pipes. At InSinkErator's labs in Racine, workers test disposals by feeding them with cow ribs and pinewood blocks. They also now test food more likely to be found in China, such as white radish (whose density presents challenges) and duck heads. The technicians have found shark skin nearly impossible to grind up. Mango pits are equally tough. "They're like nature's Kevlar," said Dane Hofmeister, a lab manager. InSinkErator regularly seeks meetings with local Chinese officials to explain how disposals could reduce the amount of household waste that needs to be hauled away and buried in landfills. One victory came in early 2012 when the Shanghai Urban Construction and Communications Commission, under a pilot program, recommended use of disposals in certain types of housing. The disposal was invented in 1927 by John Hammes, an architect in Racine, who got the idea while watching his wife clean up after dinner and built a primitive grinder from sheet metal and a small electric motor. He obtained a patent eight years later and formed the company in 1938. InSinkErator sales didn't take off until after World War II, when housing construction boomed. https://www.wsj.com/articles/u-s-disposal-maker-grinds-away-in-china-1395876668?ns=prod/accounts-wsj 2/3 6/18/2019 How to Sell Garbage Disposals in China - WSJ Sales depend heavily on new construction because it is expensive—often $400 to $800—to retrofit disposals into old homes. For that reason, they're far more common in the Western U.S., with its newer housing stock, than in the Northeast's older cities. In the 1970s, InSinkErator used wild-haired comedian Phyllis Diller as a pitchwoman. Her lines included: "Every woman needs a leftover lover." It diversified into trash compactors, which squash refuse into smaller bundles, but quit making them because they weren't a big hit. It found more success with kitchen spigots that provide instant hot water at temperatures near boiling. Still, disposals are the company's mainstay. "We know kitchen waste solutions better than anyone," says a banner hanging from the ceiling in the company's bustling Racine factory, which has about 900 workers and 24 robots, including one nicknamed Wilma after the "Flintstones" cartoon character. In the U.S., InSinkErator disposals retail from about $80 to $340. The company competes against General Electric Co. and the Waste King brand of Anaheim Manufacturing Co., both of whom import disposals from Asia. For now, InSinkErator is focusing efforts on China's high end, but it may eventually have to offer lower-cost versions, Mr. MacNair said. "We think it will become a mass market [good]," he said. "The question is how long it is going to take." —Lilian Lin in Beijing contributed to this article. Write to James R. Hagerty at bob.hagerty@wsj.com Copyright © 2019 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit https://www.djreprints.com. https://www.wsj.com/articles/u-s-disposal-maker-grinds-away-in-china-1395876668?ns=prod/accounts-wsj 3/3 6/18/2019 Apple Scraps Like an Underdog in Second Biggest Mobile Market - WSJ This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit https://www.djreprints.com. https://www.wsj.com/articles/apple-scraps-like-an-underdog-in-second-biggest-mobile-market-1498123803 TECH Apple Scraps Like an Underdog in Second Biggest Mobile Market In India, tech giant is forced to work on brand awareness where Samsung has head start on smartphones Apple chief executive Tim Cook met last year in New Delhi with Indian Prime Minister Narendra Modi. PHOTO: PRESS INFORMATION BUREAU OF INDIA ASSOCIATED PRESS By Newley Purnell and Rajesh Roy in New Delhi, and Tripp Mickle in San Francisco June 22, 2017 5 30 am ET Apple Inc . AAPL 2.35% ▲ is broadening its push into India, perhaps the iPhone’s last great growth market. The company’s first ever Indian-made iPhones began selling locally this month with hopes reduced prices will boost sales in the sprawling country where Apple has just 3% of the https://www.wsj.com/articles/apple-scraps-like-an-underdog-in-second-biggest-mobile-market-1498123803 1/7 6/18/2019 Apple Scraps Like an Underdog in Second Biggest Mobile Market - WSJ smartphone market. The Cupertino, Calif., company is considering opening flagship stores in India’s megacities and is helping hundreds of third-party resellers open new shops at an unprecedented pace. It also has set up development centers to build apps for Indian customers and enhance local mapping capabilities. While Apple’s strategy typically is to sell high-price handsets to telecom carriers, its effort in India reflects the realities of an emerging market where wages are low, cellular speeds are sluggish and consumers mostly buy phones from small, unaffiliated shops. The company also must overcome weak brand awareness and its relatively late arrival in a market where Samsung Electronics Co. has a head start. “It’s not a push for premium—it’s a push to sell an Apple device by any means necessary,” said Lauren Guenveur, an analyst with market research firm Kantar Worldpanel. India, already the world’s second-largest mobile market after China, is expected to add more mobile subscribers—310 million—than any other country in the four years through 2020, according to estimates from GSMA, a global association of mobile-service providers. Apple wants to make sure all the growth doesn’t go to Samsung and rising Chinese competitors such as Xiaomi Corp. and Lenovo Group Ltd. There is “a lot of headroom [in India] in our mind, and so we are working very hard to realize that opportunity,” Chief Executive Tim Cook said on a call with investors in October. Samsung, which holds 27% of India’s smartphone market, announced this month it was doubling its capacity in India with a $760 million investment in its smartphone and refrigerator factory outside India’s capital. Chinese brands such as BBK Electronics Corp.’s Oppo and Vivo are rapidly gaining ground, with their 50% share of the smartphone market in the first quarter representing a doubling from a year earlier, according to Kantar Worldpanel. Apple may need to temper investor expectations in India where by 2020 it is likely to increase its market share to just 5% worth about $10 billion, not much for a company with more than $215 billion in annual revenue, said Mizuho Securities analyst Abhey Lamba. “They can’t ignore it,” Mr. Lamba said “But it’s not enough to move the needle.” India is using its giant domestic market to woo global manufacturers, charting a different path to development than that of the export-powered economies of Japan, South Korea and China. If a lower-cost iPhone became popular with a rising middle class of Indian consumers, production could be expanded and more jobs could be created—which in turn would help lift living https://www.wsj.com/articles/apple-scraps-like-an-underdog-in-second-biggest-mobile-market-1498123803 2/7 6/18/2019 Apple Scraps Like an Underdog in Second Biggest Mobile Market - WSJ standards and discretionary spending. It is comparable to what Ford’s inexpensive Model-T did a century ago for the young, up-and-coming economy in the U.S. India has worked hard to persuade Apple to produce phones locally. The government has eased foreign-investment restrictions, with an eye toward fostering an ecosystem of phoneparts manufacturers to supply international electronics makers. The effort is in keeping with Prime Minister Narendra Modi’s Make in India initiative. https://www.wsj.com/articles/apple-scraps-like-an-underdog-in-second-biggest-mobile-market-1498123803 3/7 6/18/2019 Apple Scraps Like an Underdog in Second Biggest Mobile Market - WSJ https://www.wsj.com/articles/apple-scraps-like-an-underdog-in-second-biggest-mobile-market-1498123803 4/7 6/18/2019 Apple Scraps Like an Underdog in Second Biggest Mobile Market - WSJ Under investmen t restrictio ns, foreignowned singlebrand retailers like Apple A salesman checks a customer's iPhone at a mobile-phone store in New Delhi. PHOTO: ADNAN ABIDI REUTERS were required to source around 30% of their products locally in order to open their own shops. Apple was rejected when it pushed for that restriction to be waived. New Delhi later said companies could be given three years to reach the requirement, according to government officials. Apple was also refused permission to import used iPhones to be refurbished and sold in India, said one Trade Ministry official who asked not to be named. “The government is eager to have the world’s most-valued company have its operations here,” the official said. “We hope something mutually agreeable is worked out in near future.” https://www.wsj.com/articles/apple-scraps-like-an-underdog-in-second-biggest-mobile-market-1498123803 5/7 6/18/2019 Apple Scraps Like an Underdog in Second Biggest Mobile Market - WSJ When the company decided to make its own phones here, Apple picked Taiwan’s Wistron Corp. to begin assembling the iPhone SE, its least expensive model, with production starting in May. The high prices on iPhones are the biggest reason Apple can’t sell more in India. Analysts estimate more than 75% of the smartphones sold in the country sell for less than $250 and 95% sell for less than $500. The iPhone SE was introduced last year at about $600 and now sells for around $325—could fall further to a level more Indians can afford. If it were priced below $300, the model could win buyers now spending a similar amount for higher-end Android phones, said Faisal Kawoosa, principal analyst at research firm CMR. Apple has been trying to expand its distribution network in India, where about 85% of smartphone sales occur across a fragmented network of small retailers, according to Mizuho Securities. Apple supports resellers with marketing materials, furniture and other assistance. It plans to back 200 new stores in the next year, according to a person familiar with the company’s thinking. As it plunges into India, Apple faces a consumer-awareness problem, with nearly half the population unfamiliar with the brand, according to a Morgan Stanley survey. To build awareness, the company has been considering opening flagship stores in New Delhi, the tech hub of Bangalore and the financial center of Mumbai, according to a person familiar with the company’s plans. Meanwhile, Apple is doubling down on content. In March, it opened an app-development center in Bangalore to help coders making iOS apps for India. The country has nearly 3 million mobile app developers, but fewer than 15% of those make iOS products, said Jayanth Kolla, founder of research firm Convergence Catalyst. Apple has also opened an office in Hyderabad to boost mapping capabilities. Of course, Indians don’t have to buy iPhones to bond with the Apple brand. In a bid to get young users hooked, Apple this year started offering Indian college students its Apple Music service, which is also available on Android devices, for the equivalent of 93 cents a month—less than one fifth the cost in the U.S. —Karan Deep Singh in New Delhi contributed to this article. Write to Newley Purnell at newley.purnell @wsj.com, Rajesh Roy at rajesh.roy@wsj.com and Tripp Mickle at Tripp.Mickle@wsj.com Appeared in the June 23, 2017, print edition as 'Apple Recharges Effort in India.' Copyright © 2019 Dow Jones & Company, Inc. All Rights Reserved https://www.wsj.com/articles/apple-scraps-like-an-underdog-in-second-biggest-mobile-market-1498123803 6/7 6/18/2019 Apple Scraps Like an Underdog in Second Biggest Mobile Market - WSJ This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit https://www.djreprints.com. https://www.wsj.com/articles/apple-scraps-like-an-underdog-in-second-biggest-mobile-market-1498123803 7/7 D’Amore-McKim School of Business 3: Product Policy Meeting Varying Customer Needs Ravi Sarathy Week 2 L1 1 D’Amore-McKim School of Business Product Policy for Global Markets Which products to offer in international markets (relevant product attributes) How broad a product line to offer Adaptation of individual products and product lines Factors affecting standardization verses adaptation decision in foreign markets Segmentation in international markets Product line and related marketing mix choices affected by variations across markets Customer needs Conditions of use Ability to buy 2 D’Amore-McKim School of Business Standardization versus Adaptation Standardization influenced by Need to lower costs Convergence of tastes Similarity in country markets Industrial product setting Centralized global marketing (GM) management Availability of scale economies Standardization by competitors 3 D’Amore-McKim School of Business Factors Favoring Product Standardization versus Adaptation Standardization Adaptation High costs of adaptation Differences in technical standards Primarily industrial products Primarily consumer and personal-use products Convergence and similar tastes in diverse country markets Variations in consumer needs Predominant use in urban environments Variations in conditions of use Marketing to predominantly similar countries (that is, the triad economies) Variations in ability to buy—differences in income levels Centralized management of international operations when mode of entry is mainly exports Fragmentation with independent national subsidiaries Strong country-of-origin image and effect Strong cultural differences, language, etc., affecting Scale economies in production, marketing, and research and purchase and use development (R&D) Local environment-induced adaptation: differences in Standardized products marketed by competitors raw material available and government-required standards/regulations Adaptation strategy successfully used by competitors 4 D’Amore-McKim School of Business Standardization versus Adaptation Factors favoring adaptation Differing technical standards In a consumer-product setting Variation across countries in consumers and conditions of use Income differences Cultural differences Local environment requirements Fragmented management across subsidiaries Adaptation by competitors 5 D’Amore-McKim School of Business Buyer Decision Process Need: latent or conscious Search for product/ service Evaluation of Alternatives: Multi-attribute evaluation Choice: Preferences, social norms, and conformity Point-of-sale factors and outcomes 6 D’Amore-McKim School of Business Adoption and Diffusion of New Products Awareness • Peer group, word of mouth • Advertising Deepening interest • Information seeking • Other user’s experience (for example, Yelp) Evaluate the new product Trial Adoption phase Internation al adaptation • Decide whether to try • Actual first use of new product • Assess use experience and satisfaction, decide whether to continue using new product • Market tests, pilots 7 D’Amore-McKim School of Business Product Attributes in Global Marketing (GM) Product features, price, and value to customer can vary across markets Country of origin effect—Specific products from certain countries have a more favorable image (for example, German cars, Italian fashion design) Branding choices: Local, regional, and global brands; umbrella branding Brand extensions Private branding and OEM markets Protecting intellectual property (piracy and counterfeiting) 8 D’Amore-McKim School of Business Product Attributes in International Marketing (cont.) Product standards Global versus regional and country-specific standards (for example, smartphones: emerging 5G standards; older standards: Global System for Mobile communications (GSM-Europe), Long-Term Evolution (LTE), and Code-Division Multiple Access (CDMA-U.S.) Competing to establish a standard: barrier to entry, customer lock-in Customer satisfaction, loyalty, and repeat sales Packaging and labeling, warranties and service Bundling products and services 9 D’Amore-McKim School of Business Adapting Product Attributes Products can be seen as a bundle of attributes For example, automobiles: power, performance, design, style, image, status, safety, quality, comfort, size/capacity, and price Attributes need to be adapted to a greater or lesser extent to satisfy Consumer preferences/tastes differing due to cultural differences Economic development levels affecting affordability and consumer behavior National product/technical standards mandated by state regulations 10 D’Amore-McKim School of Business International Market Segmentation Sell to same customer segment across countries Sell a standard product to different segments in different countries Market segments encompassing multiple country markets allow companies to offer the same product in different markets, but possibly target different segments in the various markets Adapting products to segments in different countries The existence of multiple market segments impels firms to adapt products to meet the needs of the distinct segments. When differences are significant, companies may customize products for specific markets Similar segmentation questions arise about advertising message, choice of media, distribution channels, and pricing and service offerings 11 D’Amore-McKim School of Business The “Right” Customer for a Firm Customer segmentation based on purchasing behavior, future buying potential, and loyalty Keeping customer loyalty: It is costly to acquire new customers; hence, value from retaining customers Service quality and its impact on retention Leveraging the customer base—selling more to the same customer, share of the wallet Is there a “right” customer for a firm? Is there such a thing as a “bad” customer? 12 Ravi Sarathy D’Amore-McKim School of Business What Is the Value of a Customer? Customers who purchase often have value because they will create future profit Hence, customer value = Volume of Purchases × Profit Margin × Number of Repeat Purchases. How often do my customers buy? How well does the variety of products I carry appeal to my customers? Repeat purchases can stretch over several time periods; time value of money? 13 Ravi Sarathy D’Amore-McKim School of Business Implication of Putting a Value on a Customer The customer is an asset The customer’s total purchasing/shopping experience matters Important to develop a (long-term) relationship with the customer Develop and maintain knowledge about the customer Social media plays a key role in enhancing customer loyalty and obtaining repeat purchases 14 Ravi Sarathy D’Amore-McKim School of Business Implications of Customer Orientation Decision area Product Price Inventory Advertising Store layout Information Customer orientation What products are customers buying? Through which distribution channels? What other products might they buy? What price maximizes value for this customer? Who should get discounts? How much and when? What variety of products are our most valuable customers demanding? Which products will be sold? When? Which media platform will reach our key customers? How do customers wander about the store? Browse our site? Which departments should be next to each other? Site navigation? What do our most valuable customers look like? How do we get more of them? Which customers have left us? Why? What can we do to keep others from similarly leaving? Ravi Sarathy 15 D’Amore-McKim School of Business Pricing Strategic pricing Predatory (quick share-of-market focus): lower prices to drive competitors out, then raise prices Multipoint pricing: Pricing in one market may have an impact in another market; subsidize low pricing in one market from profits in another Experience curve: use aggressive pricing to build volume and move firm down experience curve (lower marginal costs) Regulatory issues: Anti-dumping, monopoly restriction 16 D’Amore-McKim School of Business Additional Pricing Considerations Lifecycle ownership costs and affordability Pricing and customer value Demand elasticity can vary by country—Hence, price discrimination; varying pricing policies by country Pricing and cost competitiveness, exchange rates Pricing and overall competitiveness Price wars and broader underlying strategic motivations 17 D’Amore-McKim School of Business Distribution Channels High distribution channels dissimilarity across countries Retail system: concentrated-fragmented Channel length: many or fewer layers Channel exclusivity Channel performance Channel costs Channel control Direct versus indirect channels Post-sale considerations—monitoring customer satisfaction; training, service, customer support; customization 18 D’Amore-McKim School of Business New Product Development Ravi Sarathy Northeastern University Week 2 L2 1 D’Amore-McKim School of Business Product Development Adding new products to an existing line: product proliferation Selling existing products into new markets Developing new lines of business: highest risk, greatest promise? Hence, importance of market size 2 D’Amore-McKim School of Business New Product Development Design: desired attributes and features Product adaptation; base product platform, proliferation of variety on the base; technology generations Phased introduction across different country markets Influenced by product life cycle phase differences However, product life cycles are getting compressed May be necessary to simultaneously launch new products in multiple country markets Where to locate research and development (R&D)? Listening, responding to key markets, and customer needs; multiple locations Customer Feedback in developing new products Minimizing time to market Integrating R&D, marketing, and production 3 D’Amore-McKim School of Business New Product Development— The Platform Concept New products as outcomes of the meeting of a company’s knowledge and its customers’ needs Build products on a bedrock of core competences Build product platforms, then product families 4 D’Amore-McKim School of Business Figure 1 A Framework to Integrate Markets, Platforms, and Competencies Markets Tiers of Price-Performance 1 through N .... Segments 1 through N .... Derivative Products or Services with Development Time/Cost Efficiency and Attractive Price-Performance Positioning Product or Service Platform Subsystem A Int erfacei....n Subsystem C Subsystem B Common Design Rules and Tools Competencies Market Insights Product Technologies and Design Processes Production Processes and Technologies Organizational Capabilities and Infrastructures 5 Marc Meyer, 1999 D’Amore-McKim School of Business Automotive International Drills, sanders, saws, etc .. Better Drills, sanders, saws, etc .. Best Consumer Outdoor Drills, sanders, saws, etc .. Consumer Indoor Drills, sanders, saws, etc .. Markets Good Figure 2 The Integration of Markets, Platforms, and Competencies in a Manufacturer Other Power Tool Groups ... Saws Sanders Product Platforms Drills Common Subsystems Universal motor Field & armature Mot or housing Geat , Chuck, Switches P ower supplies, Cords Fasteners Plastic molding Designed in metric Automated packaging Automated balancing and testing Loctite bonding Powdered-metal gears Automated motor manufacturing Magnesium die-casting Marc Meyer, 1999 6 D’Amore-McKim School of Business Technology Intensive Environments Incremental innovation verses next generation revolutionary innovation Cannibalize existing product sales Build on core capabilities One approach: Develop products for specific customer segments Use new technologies to focus on leading-edge customers Alliances are helpful Use financial targets to control new product process 7 D’Amore-McKim School of Business Where to Develop New Products? One or many country locations for R&D? Critical to receive information on market needs from all major markets Allows adaptation to local use conditions, legal considerations early in product development Allows participation in domestic market R&D consortia Necessity of coordination and control of multiple R&D sites 8 D’Amore-McKim School of Business Japanese Approaches One or many country locations for R&D? Develop a product concept—price target, utility Broad R&D, focus on materials, processes Product Design: multiple parameters performance, efficiency, style, safety, features, environmental effects, addressing different tastes and segments Importance of supplier relations, global sourcing Examples: Japanese cars 9 D’Amore-McKim School of Business Incremental Innovation Small continuous changes to product resulting in better customer value Enables firm to keep ahead of competition Requires technology stability Danger that firm does not see new technologies emerging, competitors may develop new generation products first, obsoleting current product line Utility of global benchmarking and continuous quality improvement 10 D’Amore-McKim School of Business Acquisitions, Divestments, and The Product Line International acquisitions allow quick expansion of product line, diversification Extend geographic reach, penetrate new markets Can lead to product sprawl—need to occasionally refocus on value chain concentration and contribution; hence, divestments Product line extension facilitated Quick response to competition’s new product moves 11 D’Amore-McKim School of Business New Product Development Teams and Management Use of cross-functional nationally and culturally diverse teams Team composition: Representation from each function Physical co-location to build team culture, communication, and conflict resolution processes Speed over perfection? Launch early versions with beta customers, learn, refine Clear plan, goals, milestones, budgets Top management must accept the risks, be involved 12
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