Consulting Assignment for Advanced Marketing

Table of mental ability CONSULTING ASSIGNMENT CONSULTING ASSIGNMENT 1 1 KEY ENVIRONMENTAL FACTORS & angstrom TRENDS 1. 1 Macro-Environmental Analysis Political There ar legal requirements to train up selling shops in capital of capital of Sin cattle farmore. One posterior just halt for a retail support online at the Accounting and Corporate regulative Authority of Singapore (ACRA) website. This leads to it cosmos easy to oer add the barriers of launch, which may however ca enjoyment an plus in the amount of competitors for OSIM.Since OSIM is in the wellness pains, its foot soldier company of GNC/RichLife would have to go through the pick up of applying an redundant permit from Health Sciences Authority (HSA). A nonher major concern would be the w are safety issues and requirements in OSIMs products. OSIM is registered with SPRING Singapore for Consumer Protection Scheme. This intrigue take cares the basic safety requirements in OSIMs products, and is further ver ified veritable with the Safety Mark label. Economical According to the latest World Health Statistics (2008), Singapores innate health care expenditure just amounts to 3. % of its crying(a) domestic product, which is substantially lesser than other Asian countries manage Malaysia, China and India. However, Singapore spends more than dollars per head than Malaysia, China and India, with an average of SGD$1228 per person. change surface though Singapore is facing an economy recession since 2009, Singstat has reported an addition of well-nigh 4. 5% in make gross revenue of medical goods in 2009 as compared to in 2008. This proves that Singaporeans are progressively concerned about healthcare and are more willing to spend on healthcare even in ms of economic downturn.With this display of trend in Singapore, more competitor and raw(a) entrants have penetrated Singapore. This will affect OSIM in set of sales and many other factors, as clean players will be fight for th e same market place allocate. Increasing sales of healthcare products in Singapore shows that the modus vivendi healthcare industry will continue to flourish or if not, do better in future. 3 More and more competitors are examineing to reduce production costs by locating their manufacturing plants in countries with suffering production costs and labor.This will affect OSIM in terms of monetary valuecompetitiveness, as all of their abrase chairs are creationed and built in Japan. loving As Singapore is expected to continue developing into an progressively affluent society, this will have substantial impact on trends in consumer behavior. Consumers will progressively become more brand and status conscious, more discerning and health conscious. As the population ages and material comfort grows, consumers are expected to pay more attention to their health, therefore an increasing take aim for fitness and health clubs, as hygienic as choosing more valuable yet healthier food choices.This is particularly true for Baby-Boomers in their mid-fifties now with bigger spending power. More emphasis is placed on leisure activities, much(prenominal)(prenominal) as travelling, water sports, golfing and cultural activities. However, being puddleaholics, Singaporeans are constantly moving forward, hence little clip is allocated to work out. Therefore, thither is a capability market for OSIM that is in accordance with its doctrine of bringing healthy lifestyle to its consumers without the gather up of spending hours in the gym. In addition, especially after the recent pandemics much(prenominal) as Bird Flu, H1N1 and SARs, there is a greater need to lead a healthy lifestyle.Speaking of brotherly status, being able to purchase an OSIM uDream would reflect the status symbol of those who prat afford it due to its hefty price tag. Technological OSIM stands out from its competitors in terms of technological advances as sound as the innovative design for its produc ts. It is further proven and supported by prestigious Singapore Awards such(prenominal) as The Brand with Exceptional Performance and RedDot Design Award on more than one occasion. OSIM to a fault cultivates it a point to constantly come up with new designs and products to further attract existing customers as well as new potential buyers.The company has come up with 6 new products catering to different ineluctably in the last cardinal years, such as uKimono, uSqueez Warm in 2009, and also uRobic, uSpace, uYoYo and uCrown, the worlds first anti-stress head abraser in 2008. Offering an extensive wave of products to grounds the different needs of customers, as well as a coarse range in product price, OSIM seeks out a large range of target market. 4 Improvements in technical functionality such as additional health draws other than removing muscle aches in the massage chairs, piteouser galvanizing consumptions would ease give OSIM further competitive advantage.OSIM has also made use of the technological advancements available to al almost every household, which is the access of the internet. OSIMs website allows potential buyers to find out more information, reviews by other users, and even to make online purchases, all at the comfort of their own home as well as at their own time. In order to attract more buyers, OSIM even have exclusive online stretch outs that are not available in the physical shops. 1. 2 FIVE FORCES IMPACTING ON OSIMS INDUSTRYThreat of New Entrants It is comparatively easy to apply for operating license for new businesses in Singapore and it can be reflected in the daily average of 138 (ACRA Annual handle 2008/2009) of new entities that were registered. However, the initial capital requirement is luxuriously for the healthcare industry because of the R&D cost and infrastructure of the manufacturing plant. In addition, the increase in imitations also amplifies the competitiveness of the industry posing great price differential s, so leading to a lavishly brat of new entrant. in spite of being less price-competitive, OSIMs products possess more superior eccentric.Therefore, threat of new entrants is deemed to be moderate. Threat of Substitute OSIM is highly threatened by the many varieties of substitutes available in the market. Since OSIMs mission statement is to offer their customers fare well-being, customers can also easily find these needs in many other substitutes. For instance, there has been a recent retch of fitness clubs, which serves as a one-stop centre for many consumers. Customers looking for a total workout can obtain all the equipments they need in these fitness clubs, without having to buy them.These fitness clubs also cater to consumers needs for lifestyle, for example, by providing plasma televisions fitted all around the clubs. Other substitutes includes, the very well-received spas and massage parlors, low cost manual and electrical massaging equipment, participating in active s ports alike(p) Yoga or kickboxing, adopting healthier eating habits and consumption of health supplement pills. 5 It can be seen that most of the substitutes provide consumers with lower cost benefit s and some may even provide the same health advantages as OSIM products, hence, the threat of substitutes for OSIM is relatively high. designer of Buyer Consumers are presented with a dewy-eyed array of competitive brands and alternatives such as fitness clubs and traditional massages. As Singaporeans are becoming more affluent, an average household income amounts to SGD$7440 which illustrates a high spending power. Hence, power of buyer is moderate. Power of Supplier Supplier Power for OSIM is moderate. They do not own their personal manufacturing plant or factory. intimately of their manufacturing is outsourced to external companies in China and Japan. Recently, they have also entered a articulate Venture Agreement with Daito Electric Machine perseverance Company.Daito will help OSIM in the molding and manufacturing of healthcare appliances. However, given that OSIM has numerous supplies of manufacturers, they can surpass back on other manufacturers if one fails to commit for whatever reasons, olibanum the power of supplier is low. Intensity of contestation in Industry The master(prenominal) rivals in the healthcare industry include OTO and Ogawa. Being the market leader, OSIM is storied for its quality and constant innovations. This clearly differentiates OSIM from its competitors. Conversely, its price positioning might regularise off some consumers and encourage consumers to patronage its competitors.Furthermore, as mode of entry to the retail market in Singapore is relatively easy, cost of surpassing would be higher as ACRA has the right to reject any application of bourne of a retail permit if they feel that the applicant can steady survive the business, which simply means that the barriers to exiting the market is high. 6 1. 3 key issues tha t are likely to impact on the marketing strategy for OSIM make Environmental Possible Market Impact / Industry Issues Economical hike expenditure on health OSIM care in Singapore can offer more attractive Possible Marketing Mix Implications romotions such as a package deal to attract more buyers Social Consumers are more aware of OSIM can educate consumers on the the need to live a healthier products and the health benefits lifestyle Technological Ever-advancing technology OSIM has to constantly update themselves with the latest technology to continuously innovate to retail existing customers Threat Substitutes of Many different forms of It is difficult for OSIM to counter such except to offer more substitutes, some of which substitutes might cost a lot less than the attractive promotions, better products roducts of OSIM or even attempting to reach out to the consumers more readily with well located shops Intensity of Rivalry Mode of entry into a retail The chances of more compet itors within Industry business is relatively easy, entering the market and lingering, and while barriers of exit are high since OSIM focuses on quality in its products, it has to counter such new businesses in the form of quality products with newer technology, rather than low pricing strategies 7 Consulting Assignment 2 2 COMPETITOR ANALYSIS 2. 1 Market Segmentation OSIM OTO OGAWAGeographic ? residential Areas ? Shopping Areas ? CBD Areas ? All age groups ? Residential Areas ? CBD Areas ? Residential Areas ? Shopping Areas ? CBD Areas ? All age groups Demographic ? Middle-aged Psychographic ? Consumers that seek innovation ? Fast-paced lifestyle ? Family-oriented ? Benefit from down novelty ? strain quality ? Traditionally-oriented ? Family-oriented ? Consumers that seek innovation ? Fast-paced lifestyle ? Benefit from consuming novelty ? Seek value for money Behavioural ? High consumer commitment ? Seek value for money 2. 2 Strategic Group subroutine The above strategic map il lustrates the positioning of the twain closest competitors in likeness with OSIM. Judging from the numbers in the map, OSIM has the strongest world(prenominal) presence with more than 1,100 outlets across 31 countries. OSIM also has the most product offerings that can reciprocate the varieties of needs of consumers. Furthermore, OSIM makes use of their advancement in technology to constantly plead innovative products to the market. This would allow OSIM to attract new customers and retain existing ones.However, OSIMs products are priced at a much higher level than its competitors. This gives OTO and OGAWA a competitive edge over OSIM. Despite the attractive prices, they have a weaker brand image. This can be clearly seen in an independent reexamine conducted where OSIM came up as the number 1 brand of healthy lifestyle products in consumers minds, most preferred healthy lifestyle brand and the most preferred Massage Chair across Asia. 9 2. 3 rivalrous Strategy Theory Official ly launched in 1993, OSIM is the global leader in branded healthy lifestyle products.The company is constantly developing new products that possess innovation technologies, bringing its consumers healthier lifestyle and overall well-being. The two key direct competitors include OTO Bodycare and OGAWA World. Name of Company OSIM Porter generic wine Strategy Differentiation OSIM uses Market Positioning Market Leader move on PRODUCT INNOVATION OSIM expand its technology such as Osimotion total affect by constantly introducing Technology that distinguishes new products like uSqueeze and uKimono. tself from conventional devices that rely merely on vibration EFFECTIVE PROMOTION OSIM tardily and innovative Warm Air launched the uKimono that is endorsed by Technology to soothe drop International artiste SHE to reach out to muscles and improve blood the younger congregation so as to increase new circulation. users. INCREASE USERS OSIM reinforced their global leadership position in the healthy lifestyle industry by their geographical expansion into USA, a large homogenous consumer market with about 100 million household, by entering into a definitive merger agreement with Nasdaq-listed Brookestone Inc.This transaction will bring OSIM to the next level in its growth and opportunities. OGAWA Cost Leadership Market rivalry Like OSIM, OGAWA does not OGAWA adopts the indirect attack on manufacture its own products. OSIMs high pricing strategy. OGAWAs This function is to in China being products are being priced much lower but the with similar functionality as compared to to OSIM thus securing the market share of outsourced manufacturer 10 achieve economies of scale. The more price sensitive customers. savings are wherefore translated to the consumers by retailing the products at a much lower price.Despite the low price, quality is being compromised as the country of origin plays an important role. OTO Cost Leadership Market Challenger OTO focuses on providing lower Most products have similar functions and prices to win a larger share of benefits to OSIM, except that they are the market. Integration therapies of and traditional contemporaneous priced more competitively. With this, OTO is able to try to fight for a larger market share. technology allows them to offer OTO tries to indirectly attack OSIMs high quality at low prices. With most of their outlets in weaknesses, its uncompetitive pricing strategy. eartland malls, they ensure Many of OTO outlets are also situated in maximum motion-picture show in their the same locations as OSIM, strongly targeted market and also challenging them for market share. minimize operational expenses due to low rental costs. This ensures that they stay price competitive. 11 2. 4 OSIMs combative Response Competitors OTO Strategies by Competitors Price Low pricing strategy to gain market share Product Combines traditional therapies with modern-day technology OGAWA Price OSIM should employ Attack. the They OS IM Competitive Response Encirclement hould constantly develop firstin-the-market technologies and innovative products, to avoid pick out penetration pricing price competition. strategy to gain market share. It is provoke to note that in They can also employ more Malaysia, an OSIM massage celebrity endorsements to chair is priced at RM 14K where increase their credibility, brand a massage chair from OGAWA awareness and gain market with a similar device characteristic only share. retails at RM 6. 7K Product Product fulfils basic function of providing the total well-being and healthy lifestyle. 12 Consulting Assignment 3 DEMAND prognostication 3. 1 Forecast Summary Table FORECASTING METHOD adept MOVING AVERAGES CRITERIA P= 2 P= 3 P= 4 P= 5 P= 2 P= 3 P= 4 P= 5 ? = 0. 8 ? = 0. 2 ? = 0. 9 Y= a + bX FORECAST FOR N=9 8,110 7,550 6,963 6,450 8,868 9,970 8,629 9,346 5,292 8,204 8,311 9499 COMPUTED MAD 1,466 1,973 2,490 3,073 507 514 814 413 2,887 1,242 1,121 200 virtuoso MOVING AVERAGES USING ABOSLUTE CHANGE EXPONENTIAL SMOOTHING REGRESSION TABLE 3. 1 3. 2 Analysis of Forecasting Methods Judging from the sales figures, a verificatory linear trend is identified based on the increasing sales of OSIM in the past 8 periods.There are various reasons that contributed to the growth. Singaporeans are earning a higher income, thus a greater disposable income which translates into a larger purchasing power. This escalation in spending power allows the consumer to purchase OSIM products as a status symbol. Also, due to the nature of Singaporeans being workaholics, there is little time to be engaged in outdoor activities, hence, resulting in a lingering boost of such healthy lifestyle products. Therefore, due to the stable demand, the time series model best suited to this pattern is the least true method.All in all, this method is deemed to be the most effective as it has the utmost computed MAD which reflects its accuracy in the annunciateed sale for period 9. Though v erbalise so, OSIM should not rely exclusively on the regression method as the model has problems identifying seasonal impacts, and integrating those fluctuations into the forecast. The alternative would be to use the individual moving average using absolute change as the demand of the products are stable and by adopting this method, small random fluctuations are levelled out.It also has the next lowest MAD which implies the accuracy of forecasted sales in comparison with the other models. 13 Consulting Assignment 4 4 FINANCIAL RATIOS 4. 1 Ratio Summary Table OSIM FLAGSHIP STORE GROSS MARGIN pct NET PROFIT PERCENTAGE STOCKTURN RATE TABLE 4. 1 67. 72% 17. 41 2. 75 INDUSTRY AVERAGE 52% 5% 6 4. 2 Ratio Analysis Gross Margin Percentage The gross margin percentage is a measurement of a companys manufacturing and distribution cogency during the production process. In comparison with the industry average of 52 percent, OSIM generates a much higher gross margin of 67. 2 percent. This indic ates that OSIM is more in force(p) than most of its competitors from the industry. This disparity could be due to the low manufacturing cost that OSIM obtained from its trim down manufacturers, thus the high gross margin. Despite the constant introduction of new products, OSIM still managed to attain a high gross margin percentage, thus reflecting the low inventory level which signifies high sales multitude. Net pull ahead Percentage OSIM has a high net profit percentage of 17. 41 percent as compared to the industry average of 5 percent which is at least 3 time more.The figure implies that OSIM has better control over its costs compared to its competitors. This substantial difference is largely attributed to the high sales volume and low operating costs incurred through economies of scale. Stockturn Rate Stockturn rate fundamentally determines the firms efficiency in managing inventories. The stockturn rate of 2. 75 times by OSIM is relatively low as compared to the industry av erage of 6 times. The figure is still reasonably acceptable despite being a far cry from the rivals within the industry as it indicates that the inventories of OSIM were used and then again replaced almost thrice in one year.The reason for the gap could be attributed to OSIMs experience in managing the inventory. It reflects OSIMs ability to forecast its sales accurately for the next period and thus, do not need to worry about stock out situations. The risk of OSIM having a low stockturn rate could contribute to higher 14 holding costs which would in the end result in a low gross margin. However, with reference to the gross margin percentage of OSIM, the company is doing rather well in managing its resources. Also, a lower stockturn rate