Nove Ltd is a large concern located in Hong Kong that manufactures a line of household appliances in which sales expansion in the past has been very rapid. Actual manufacturing takes place in mainland China. Since Hong Kong is a Special Administrative Region (SAR) of China, the export takes place from Hong Kong while the country of origin of the products exported is China.

For certain new products the increase in sales has been so fast that production capacity could not keep up with demand. For one of the new products – electric (dry) shavers – management foresaw and provided for more than normal commercial expansion. Production capacity for these articles has been enlarged to the extent that even in the face of a rapid sales growth, a sufficient number of dry shavers could be manufactured. In view of the enlarged production facilities, more effective sales effort became necessary. Total 2009 sales amounted to 8 million shavers. The 2010 sales target was set at 8.5 million pieces.

In order to put the planning indicated above into effect, a more intensive marketing communication campaign was considered desirable. In Countries A, B, and C (countries so designated for purposes of disguise) particularly favorable results were expected from a stepped-up advertising campaign. The approved advertising budget for these countries was therefore separated from the normal sales budget and determined individually. The company’s advertising manager felt that for the most effective results, the advertising budget should at least be doubled.

In view of the enormous amounts planned for advertising, the management suggested a preliminary investigation in the countries concerned to ascertain why dry shavers in general, and the company’s own brand, ‘Nover,’ in particular, were purchased. Nove intended to obtain arguments that might best be used in its advertising and get some tips for sales promotion.

It appeared from the market research that an important part of the dry shaver owners had received the shaver as a gift – in Country A, 52%; in Country B, 40%; and in Country C, 40%.

Choice of brand

In the process of buying, it is important to know what portion of future buyers has gained information in advance about various brands. It appears that more than 50%
of the buyers had in fact formed an opinion in advance about the brand to be selected and intended to ask for additional information. Factors that favored the purchase of a certain brand are expressed in Table 13.6 in percentages of the total answers recorded.
Further investigation of brand choice was based on brand distribution among the shavers in use. The brands in use in each country are shown in Table 13.7. Familiarity with the three brands is shown in Table 13.8. Replies to a question about the best brand generally favored Otex, rather than Nover. Results indicated that brand loyalty is very important.
In the case of Otex, this loyalty seems to be somewhat stronger than for Nover. In Country C, however, a larger percentage of Nover users seem to be

willing to switch brands than among Otex users. Relating the findings about brand switching to the results concerning the best brand (as expressed by wet and dry shavers), it can be concluded that there is a greater preference for Otex than for Nover by the wet shavers.
This last observation could be an important aspect in attacking the potential market. Subsequently, the question was raised: ‘Which brand are you likely to buy?’
Reactions are expressed in Table 13.9 in a percentage of those intending to buy and who at the same time mentioned a brand name.

Factors that favor the purchase of a certain brand Seen in shop and advertisements

It is known that advertising and sales promotion are important influencing factors. The extent to which this has affected dry shavers, however, has not yet been determined. The number of men, both wet and dry shavers, who have noticed advertising for dry shavers, is expressed in percentages of the group in Table 13.10. It thus seems that dry shavers are more quickly aware of dry shaving advertising than wet shavers. This could be explained by the concentration of shaver owners in the higher income brackets. This group reads more, and consequently is confronted with more publicity and advertising matter than the lower-income classes. In view of the high percentage of shaver owners remembering publicity, it is probable that shaver owners in general have an active interest in dry shaving publicity. Of the replies to the question, ‘Where, or in which media have you noticed dry shaving advertising?’ those favoring Nover were divided among publicity media, as presented in Table 13.11.

Questions

1. Explain why Nove Ltd can or cannot standardize its advertising in Countries A, B, and C.

2. If advertising can be standardized, what would the advertising program be?

3. If advertising cannot be standardized, what advertising programs should be developed in each country?

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Table 13.5 Reasons for shaving electrically Arguments Country A Country B Country C 84 80 52 50 52 30 Ease Speed Absence of skin irritation Other arguments Total 52 38 24 76 190 64 252 30 190