MKT 4523-001 Dr. Steyn March 27, 2019
Market Audit and Competitive Market Analysis By: Grady Milligan, Junwei He, Sydney Smith, and Xuerui Mei
Table of Contents
Introduction
5
The product Evaluate the product as an innovation as it is perceived by the intended market: Relative advantage Compatibility Trialability Observability Major problems and resistances to product acceptance based on the preceding evaluation:
5 5 5 6 7 7 7
The market: Describe the China market: Geographical regions Forms of transportation and communication available in those region(s) Consumer buying habits Product-use patterns Product feature preferences Shopping habits Distribution of the Product Typical retail outlets Product sales by other middlemen Advertising and promotion Advertising media usually used to reach China market Sales promotions customarily used Pricing strategy Customary markups Types of discounts available Compare and contrast the product and the competition’s product(s) Competitors’ products(s) Brand name Features Package Competitors’ prices Competitors’ promotion and advertising methods Competitors’ distribution channels Market size Estimated industry sales for the planning year Estimated sales for your company for the planing year Government participation in the marketplace Agencies that can help you Regulations you must follow
8 8 8 9 10 10 11 11 12 12 12 12 12 12 12 12 13 13 13 13 14 15 16 17 17 19 19 19 19 19 19
Executive summary
19
Sources
19
Introduction Our company, E-sooner, is a new company that established in Oklahoma. Our main products are our laptops. China is our target market. Most of our laptops will export to China. In this market audit and competitive market analysis, we will analysis two part: the product and the
market. About the product, we will evaluate our laptop based on its degree of innovation. We will also analysis its relative advantage, compatibility, trialability, and observability of the market. In addition, we will point out that the major problems and resistances to our laptops based on the preceding evaluation. About the market, we will describe the China market based on geographical regions, forms of transportation and communication available in those regions, consumer buying habits, distribution of the product, advertising and promotion, and pricing strategy. We will compare and contrast the product and the competition’s product. Market size is another part that we will analysis at the end.
The product Evaluate the product as an innovation as it is perceived by the intended market: The laptops are our main products. The laptop is not a new thing in China but some elements in our laptops such as touch screen, detachable screen, wireless mirroring, and duooperating system are considered as innovations in laptop itself. In the hardware aspect, we equip the latest chips such as 8th generation Intel Core i7 processor and NVidia RTX or 10-Series Graphic card in our laptop. In the software aspect, we choose to set Duo-operating system which means customers can use both the Windows 10 operating system and the E-sooner operating system. With Windows 10, an operating system is compatible with most of the office software, our customers are able to do anything for office purpose. With E-sooner operating system, our customers are able to do any entertainments they want on our laptops which including playing video games and music, watching movies and TV series. In addition, in our E-sooner operation system, we do a lot of optimizations for gaming and we also have partnerships with many famous internet entertainment companies such as Netflix, HBO, Youku, and Tencent Video so that our customers are able to have ultra experience when using our laptop.
Relative advantage There are two relative advantages for our laptops. First, comparing to Chinese local laptop producers, our company use the latest hardware on our laptop to make sure that the capacity of our laptops precedes most of our competitors. Second, our duo-operating system
enables our laptop to be suitable for both officing and entertaining. Our competitors are either focus on office using or focus on entertainment. For most laptops focus on office using, they usually have no capacity to run games and for most laptops focus on entertainment, they usually are too heavy to carry as they have to use heavier hardware to achieve their target capacity. However, due to our optimizations in our E-sooner operating system, our laptops are able to play most of the games smoothly while keeping them portable.
Compatibility As I mentioned above, our laptops have the duo-operating system which contains Windows 10 and E-Sooner operating systems. As our target market is China, Chinese is the default language in our duo-operating system. Of course, our laptops have many other language options in their database. The rated voltage of the charger for the laptop is between 100V and 240V which can be used in any place in the world.
Complexity The main complexity of our laptop is the supply of hardware. Our company has own assembly line which is totally operated by robots, so there is no risk and threat from cheaper labor in China to our company. However, the hardware price changing cannot be controlled by our company. The price of hardware change frequently due to the trend of the market, demand of the PC and even the weather. In 2012, Thailand suffered a heavy flood which killed more than 350 people and caused widespread chaos in the country. As Thailand is the main manufacturer of the magnetic hard drive, one indispensable part of PC, in the world, the output of magnetic hard drives fell as much as 30% that year. The price of magnetic hard drives rose sharply during that time which also led the price of PC rose apparently. (Arthur)
Trialability The main problem that may obstruct people using our laptops is learning how to use our E-sooner operating system. To solve this problem, we try to make our operating system as easy to use as possible and create a very detailed user manual for our customers. We make our programs as an icon and people can run it just by clicking them on our touch screen. The way to use our E-sooner operating system just like using a tablet or a smartphone.
Observability When more and more people use our laptops, our E-sooner operating system can be the main trend operating system. Our company can produce many derivative products such as VR headset, TV monitor, and other smart appliances or smart furniture. Our company will establish our own products ecosphere. Our customers’ experience will be improved extremely at that time.
Major problems and resistances to product acceptance: As our company is a new company that only established by a few months, there are two biggest problems of our company: 1) Low brand awareness 2) Lacking customers and feedback. Low brand awareness leads to low sales and reduces the trialability of our products. Lacking customers make our company develop slowly and also lead to having little feedback. Lacking feedback leads to our team cannot improve our product and E-sooner operating system which will also slow the expanding of our company.
The market: Describe the market(s) in which the product is to be sold: Geographical regions
Our laptops will be sold throughout China. Geographically speaking, there are 5 autonomous regions in China. An autonomous region is similar to that of a Chinese province, but has more administrative rights (“China’s Autonomous Regions,” 2008). The 5 autonomous regions of China include Guangxi, inner Mongolia, Ningxia, Tibet (Xizang), and Xinjiang (“China’s Autonomous Regions,” 2008). Guangxi is located along the southern border of China, and it constitutes a relatively small amount of landmass. Inner Mongolia stretches across the northern border of China but does not reach very deep into China. Ningxia is a very small region located right near the center of China. Of the 5 autonomous regions, Ningxia is the smallest by a
significant amount. The Tibet (Xizang) region covers the southwestern region of the country, and Xinjiang stretches across the northwestern portion of China. Aside from the autonomous regions in China, there are 23 provinces in China (“China’s Autonomous Regions,” 2008). These provinces include Anhui, Fujian, Gansu, Guangdong, Guizhou, Hainan, Hebei, Heilongjiang, Henan, Hubei, Hunan, Jiangsu, Jiangxi, Jilin, Liaoning, Qinghai, Shaanxi, Shandong, Shanxi, Sichuan, Yunnan, and Zhejiang (“China’s Autonomous Regions,” 2008). There are also 4 municipalities in China: Beijing, Chongqing, Shanghai, and Tianjin (“China’s Autonomous Regions,” 2008). These are China’s largest cities. Lastly, there are 2 special administrative regions in China (“China’s Autonomous Regions,” 2008). These include Hong Kong and Macao (“China’s Autonomous Regions,” 2008). While our goal is to create a market throughout all of China, it will be our goal to distribute laptops along the coast and to China’s largest cities. Our products will ship across the ocean to the ports along China’s coast. From there, the majority of the laptops will be distributed to Beijing, Chongqing, Shanghai, and Tianjin. The remaining will be dispersed as demanded through the remaining regions.
Forms of transportation and communication available in those region(s)
Throughout all regions of China, there is access to trains, cars, and bicycles. In the more urban regions, such as Beijing, Chongqing, Shanghai, Hong Kong, and Tianjin, there are additional forms of transportation, as well. This section will focus on the forms of transportation available in these regions. The aforementioned regions include access to electric vehicles (Huang and Kennan, 2016). These types of vehicles have become far more popular in recent years as China attempts to reduce its carbon emissions as part of its 5 year plan (Huang and Kennan, 2016). From 2015 to 2016, there was a 223% increase in the sale of electric vehicles throughout China (Huang and Kennan, 2016). Furthermore, heavily urbanized areas like Beijing offer incentives to those who drive electric cars(Huang and Kennan, 2016).
Another form of transportation is electric buses. These are a popular form of public transportation in larger Chinese cities (Huang and Kennan, 2016). There are more than 100,000 electric buses throughout China, and the entire nation’s bus supply is expected to be completely electric by 2025 (Huang and Kennan, 2016). Thirdly, bus rapid transit (BRT) is offered to those in metropolitan areas (Huang and Kennan, 2016). The BRT commutes over 4.3 million people on a daily basis (Huang and Kennan, 2016). 25% of commuters in Changzhou use the BRT as their form of transportation. Next, these big cities emphasize bike-sharing programs Beijing, Chongqing, Shanghai, and Tianjin (Huang and Kennan, 2016). These types of programs attempt to foster good health practices and reduce dependence on fossil fuels (Huang and Kennan, 2016). The goal is to have 18% of China’s urban commuters using bicycles by 2020, as per the 5 year plan (Huang and Kennan, 2016). There are also subways offered throughout the urbanized areas. There are 30 of them located throughout the most heavily popularized areas of China, and 4 of these 30 are the busiest subway systems in the world (Huang and Kennan, 2016).
Consumer buying habits Product-use patterns
China is home to the world’s largest population, as we all know. What is more surprising is that over 802 million people in China are active internet users (McCarthy, 2018). On top of this, 98% of these active internet users use a mobile device, which includes laptops,
smartphones, and tablets (McCarthy, 2018). That means that over 788 million people in China are active internet users through portable devices (McCarthy, 2018). Much of the internet used by the Chinese population is to reserve a bicycle from a bike-sharing program, or to reserve tickets for the local metro, which means that most of the internet use stems from large cities and metropolitan areas (McCarthy, 2018). Regardless, the use of portable devices to access information on the web is astounding.
Product feature preferences
A study conducted by a group of Chinese researchers indicates the product features that Chinese consumers prefer in a laptop. The data used in this study was pulled from online reviews of laptops. This study indicated that operation fluency is the most frequently requested attribute from customers (Li, et. al, 408). Next on the list is the appearance of the laptop itself (Li, et. al,
408). People seek a laptop that has an aesthetic to match or fit their style and needs. Thirdly, the price matters, which is no surprise (Li, et. al, 408). Consumers are willing to pay a reasonable sum of money for a quality laptop, but not an excessive amount. The operating system is next on the list of importance (Li, et. al, 408). The two main operating systems we see today are iOS through Apple and Windows. Product features that have little to no relevance (especially when compared to the aforementioned) include memory, brand, sound, battery, and package (Li, et. al, 408). Collectively, these categories only constitute about 7% of interest from the people in this study (Li, et. al, 408). Shopping habits
Chinese shopping habits differ from that of American and British habits in that Chinese shoppers have far more enthusiasm and excitement when it comes to shopping (Jing Daily, 2014). Millward Brown conducted a study that allowed these results to be concluded when comparing the differences between the American dream, British dream, and Chinese dream (Jing Daily, 2014). In Chinese culture, there is a large sense of urgency when it comes to achieving goals and dreams, which plays into Chinese shopping habits (Jing Daily, 2014). Furthermore, 68% of Chinese consumers indicated being overjoyed whilst shopping, while only 48% and 41% of American and British shoppers indicated this same answer, respectively (Jing Daily, 2014). It was also found that Chinese shoppers do more research about a product than Americans and Brits do (Jing Daily, 2014). In addition, online shopping is vastly more popular in China than it is in America and Britain. (Jing Daily, 2014). In China, 40% of shoppers use the web to shop (Jing Daily, 2014). However, only 25% of Americans use the web to shop, as well as only 27% of the
Brits (Jing Daily, 2014). The Chinese are also heavy on forming their own opinions about products (Jing Daily, 2014). Chinese shoppers are not reluctant to make a purchase. Rather, they actively seek an opportunity to make a purchase they are satisfied with. They also are not opinion followers (Jing Daily, 2014). Instead, they create their own opinions about brands and tend to be very loyal to brands they enjoy (Jing Daily, 2014).
Distribution of the Product Typical retail outlets
The most common place to purchase a laptop in China is at a computer shopping mall (Foreigner CN, 2019). This is essentially a mall solely for making a laptop or desktop purchase, along with the accessories that can be used with these products (Foreigner CN, 2019). Computer shopping malls are typically only found in large cities. For example, Beijing is home to 3 computer malls: Dinghao Electronic Market, PC Online Computer Market, and Hilon Electronic Market (Foreigner CN, 2019). Furthermore, Shanghai also offers several computer malls: Bainaohui Computer Shopping Mall, PC Online Computer Market (chain), and Cybermart IT Mall (Foreigner CN, 2019). Guangzhou also has a few computer mall locations: Tianhe IT Mall and Jinmao IT Mall (Foreigner CN, 2019).
Product sales by other middlemen The concept of middlemen being involved in commercial transactions is somewhat contentious in both the U.S. and China. Middlemen must have a good proposition to remain
relevant, since they typically do not add much value to the product or the transaction, save for convenience. Expert on Chinese sourcing, Mike Bellamy, is adamantly against conducting business with middlemen, and has experience with some particularly heinous ones in China. Adding more stages in the supply chain process drives up prices for the consumers, so Bellamy makes a case in favor of purchasing factory direct whenever possible. Another consideration is the lack of security for intellectual property that dishonest middlemen carry with them, being a huge contributor to the prevalence of knockoffs in China (Bellamy, 2).
Advertising and promotion Advertising media usually used to reach your target market(s) Because our target market is China, we will analyze advertising media based on China's primary media. First of all, there are currently four major media in China, namely “ Television, Radio, Newspaper, and Internet�(Hinsbergh). Start with the cheapest and most basic media -radio, before computers and TVs were not popular. Radio is the essential media in China. But after entering the 21st century, the economy has developed rapidly. Radio has gradually withdrawn from people's attention. So Esooner will choose to give up advertising on the Radio. The next thing to talk about is the newspaper. Although it is an era of internet, there are still some people who choose to read the daily newspapers because this is the habit they have developed over the years. But nowadays newspapers have a relatively shallow audience, so Esooner will choose to invest a 30% amount of money in advertising on newspapers. The next thing to say is Television. It is not simple to advertise on TV in China. We must choose to watch TV channels with a larger viewer to advertise our company. Due to the particularity of Chinese politics, it is necessary to go through a series of reviews to advertise on these channels. And a
small company like ours that has just been established is difficult to achieve. So our Esooner will choose to spend 20% on TV commercials. If it is not successful, the loss to us is still affordable. The last thing to say is the Internet, which is also the place where we mainly invest in advertising. Nowadays, China has 802 Million people using the internet, which is 57.5% of the population(McCarthy). Esooner is a laptop company, so our company's primary customers are also Internet users. Also, the review of the Internet in China is not as complicated as TV. So we can post Esooner's ads on a single website in a short time, which is why we invest half of the money in Internet advertising.
Sales promotions customarily used As a new brand and a company, sales promotion is a significant way to help our product to be familiar with our target customers. First, we will host an event to an event or a new products conference to introduce our products to the public. Hosting an event is a great way to get people physically into our business, which makes them more likely to become a customer. (Emily) Organizing a new products conference can introduce not only our products but also our brand to the public. In-store promotions are the second step we will do. We can promote our new products in the store with signs and promotional material. (Emily) Offering exclusive in-store discounts is another way to attract new customers. After accumulating a certain amount of our initial customers, we will provide customers with an exclusive preview for our laptops. Loyal customers are a vital part of how to promote our product because they are most likely the first ones who will buy it. Offering customers an exclusive preview of our new laptop can take the form of a private, pre-launch party, an online show, or a special invitation to test out your latest laptop. These exclusive offers to loyal customers will make them feel good and keep them
coming back. (Emily)
Pricing strategy Customary markups
When placing computer products on the market, there is typically a standard range through which retailers will markup the wholesale price (iNetStart, 2018). The markup price range for computer products is most often seen between 8% and 15%, with 8%, 10%, and 15% being the most common markups. Computers or laptops that have been customized to suit a customer’s needs normally follow a 15% markup, as these products require more time in production and are not readily available in stores (iNetStart, 2018). Computer products sold at a lower markup, such as 8% or 10%, do not seem like they would have a decent profit margin (iNetStart, 2018). However, there is a larger payout as more computer products are sold because the profit begins to add up (iNetStart, 2018). Furthermore, having a markup price that is lower allows your products to be more competitive. Types of discounts available
During certain times of the year, there are discounts offered for laptops, both online and in-store. During the month preceding the start of an academic school year, many companies, such as Amazon and Walmart, offer discounts on laptops because many students end up needing one for schoolwork, especially in higher education (Piltch, 2018). In addition, companies such as Apple and Microsoft offer a student discount to those who have a student ID to prove that their
laptop will be used for academic purposes. Another way to score a deal on a laptop is simply by waiting. New models of laptops are released every few months, which causes the older models to fall in price, as they are no longer the superior laptop (Piltch, 2018). When the prices of the older models fall, you are able to save some money by buying a new laptop, though it is not necessarily the most recent product on the market (Piltch, 2018). Lastly, holidays oftentimes provide a consumer with the opportunity to save a considerable amount of money. When holidays arrive, there are often many promotional activities that companies partake in in order to boost sales and revenue.
Compare and contrast your product and the competition’s product(s) Competitors’ products(s) Brand name
Although our company –Esooner, is a newly established Chinese-American joint venture, our goal is to achieve a certain share in China's big market in next five years and even let our company in a dominant position in the Chinese market. Our ultimate goal is that laptops that made by Esooner can achieve a certain degree of a monopoly position in China. To accomplish our goals, Esooner must force ourselves to improve the competitiveness of our company, so we regard the most successful computer company in China as our competitor, which is Lenovo.
Features
According to Company History, the founding chairman Liu Chuanzhi funded Lenovo with 10 of his colleagues who have thought like Liu and a very few initial capitals which are RMB 200,000(US$25,000). Since 1996, Lenovo has become China's best-selling laptop brand and has occupied the first place in China's laptop sales brand from that time. In 2005, Lenovo became the third- largest personal computer company in the world by completes the acquisition of IBM’s Personal Computing Division(Company History). In 2013, Lenovo's computer sales ranked became first of the world, becoming the world's largest PC manufacturer. In October 2014, Lenovo announced that the company had completed the acquisition of Motorola Mobility(Company History). Lenovo is a company with headquarters in China and the United States. Lenovo's company slogan is Never Stand Still. Besides, Lenovo became the best laptop brand in 2018.
Package
Because environmental problems are getting worse now, Lenovo has also linked their packaging and ecological issues. They call this package “PACKAGED WITH THE ENVIRONMENT IN MIND�( Lenovo Think Green Product Packaging Design | Lenovo US). Since 2008, Lenovo has been using packaging that can be recycled 100%. Through the accumulation in recent years, Lenovo has eliminated 2,750 tons of packaging waste(Lenovo
Think Green Product Packaging Design | Lenovo US). Even if some packages are not 100% recyclable, Lenovo has chosen to replace the ordinary packaging with products that are less polluting and less harmful. Moreover, Lenovo will increase the use of renewable materials in product packaging.
Competitors’ prices
Lenovo's laptops take into account the different consumption levels of different consumption stages. According to these different consumption levels, Lenovo sets different prices for different laptops according to different configurations to meet the needs of consumers with varying degrees of consumption. These prices range of laptop from a minimum of $420 to a maximum of $1223.1, with a variety of laptops waiting for consumers to choose.
Competitors’ promotion and advertising methods
In Lenovo, the most famous promotion is The “Four-in-one� Brand Promotion Strategy(Han). In China, Lenovo's brand structure is relatively complete, because Lenovo is not just a computer company, Lenovo has many branches and subsidiaries, and the products of these companies have reached almost all levels of the Chinese market. Lenovo also uses different names for its products to attract more consumers. On the other hand, in the international market, Lenovo mainly promotes development in the field of sports. For example, Lenovo has become a sponsor of the 2008 Beijing Olympic Games. Became the official PC partner of the NBA and so on(Han). In terms of advertising, in the early 1990s, China did not have an independent computer brand. At this time, Lenovo stood up. They used the advertisements of the Chinese people's computers to quickly occupy the Chinese computer market through several consecutive price
cuts and cooperation with the government. Competitors’ distribution channels
Because the Chinese economy has achieved extremely rapid development in the past three decades, base on the development of China's economic form, Lenovo has adopted different distribution channels. In summary, there are three forms in total traditional distribution; intensive distribution and integrated distribution (Liu). From 1994 to 1997, Lenovo used traditional distribution, which is to complete sales through three parties, namely producers, wholesalers, and retailers. The producer gives the laptop to the wholesaler, who distributes the laptops to the retailer(Liu). But this distribution channel is less efficient, which not suitable for long-term development. In 2004, Lenovo launched its distribution channel, also known as dense allocation. Lenovo displays its products as much as possible in different cities, allowing consumers to familiarize themselves with their products. And the focus of their product promotion in China's small towns and villages(Liu). Since China joined the WTO, Lenovo has started a third distribution channel called integrated distribution. Lenovo promotes the internationalization of its products through the cooperation of different customers in small and medium-sized enterprises(Liu). Besides, Lenovo established a telephone direct sales team in China to deal with the domestic market because the Internet was not as common as it is now.
Market size Estimated industry sales for the planning year On the global stage, from around 2011 to 2016, laptop sales had been steadily decreasing
from about 209 million units sold in 2011 to 156 million units in 2016 (statista). This can be partially attributed to the rise in popularity of cheaper, more simple tablets over the same time frame.
However, according to Grand View Research’s market analysis of the laptop industry, the laptop market size in China has been experiencing resurgent growth since 2016, and will continue to experience ongoing steady growth through the development period of Esooner. This can be largely attributed to “growing internet penetration, rising disposable incomes, swelling global population, and increasing awareness among consumers about emergence of novel technologies� (Grand View Research).
Estimated sales for your company for the planning year Due to the premium offerings of our hardware and software outlined in the product section of this report, we are projecting that sales for our Esooner laptops will experience moderate growth for the first three years. After this introductory phase of the product life cycle, we believe the growth rate will skyrocket as brand recognition and goodwill swell as we enter the growth stage of the product life cycle. By staying on top of technological developments and focusing on continually adjusting our strategy for thriving in the Chinese market, we can continue to ride the growth stage until we become a serious threat to the aforementioned competitors.
Government participation in the marketplace Agencies that can help you One agency that is willing and able to assist Esooner in our efforts to engage in
international trade with the Chinese market is the U.S. Commercial Service. They posses a global network of trade specialists for the express purpose of helping to identify trade opportunities and trade partners, and provide a wealth of information on many industries sectors (U.S. Commercial Service). In China, the U.S. Commercial Service operates in the U.S. Embassy in Beijing, and five different consulates in Shanghai, Guangzhou, Chengdu, Shenyang, and Wuhan. They have also published a fair amount of market research and regional information on their website, which may serve as a valuable resource on its own.
Regulations you must follow Considerations must be made at each stage of the international trade process for laws and regulations in place from both countries. In China, this largely comes from the Ministry of Commerce of the People’s Republic of China, the Standardization Administration of China (SAC), and the China National Certification and Accreditation Administration (CNCA) (Bao). In the United States, such agencies with relevant regulatory policies include the Department of Commerce, the State Department, and the Department of the Treasury, each with more specific branches governing various specific areas of policy (Noah). Liting Bao, a representative of the U.S. Commercial Service discussed in the previous section, compiled many of the trade standards U.S. exporters are subject to when commercially engaging with China. Relevant regulations will be discussed in no particular order. The CNCA would require our laptops to obtain a safety and quality certification mark before selling in or importing them to China (Bao). This process can be rather time consuming, taking up to several months and requiring upward of $4,500 in fees. Additional certifications or tests of a similar nature may be required from other government agencies as well. An eye must be kept out for ongoing technical regulations, as World Trade Organization members all notify one another
regarding changes in that area. Apparently, China often only gives a few weeks notice before such regulations take effect, meaning that ongoing consideration must be given to such topics (Bao). There are some standards that make the distinction of being voluntary; however, in China, Liting Bao notes that is important to be aware that laws and regulations may make reference to these voluntary standards, essentially making them mandatory in China.
Executive summary Esooner is a newly established laptop manufacturer seeking to export our premium computers to China. Our laptops are at the peak of technological innovation, with top of the line hardware and combining our personal operating system with Windows 10. This means that our product is perfect for all types of laptop consumers; those who purchase laptops for personal use, professional use, or as a gaming computer. It sports enough powerful technology to be a powerful gaming device, while staying light and having compatibility with most any business software. Our company has considerable scalability, with plans to produce peripheral products to accompany or compliment our impressive laptops. Our primary weakness stems from Esooner’s youth. As a new company, we have relatively low brand awareness. We believe this problem will be eliminated over time, as our marketing efforts and word of mouth spread information about the excellent features of our laptops. As we gain customers, we will also receive more feedback from users, both satisfied and unsatisfied, and will be able to continuously improve our products based on that feedback. Geographically, we plan on beginning our entrance into the Chinese market along the coast and in the largest cities, namely Beijing, Chongqing, Shanghai, and Tianjin. Longer term, we aim to penetrate into the rest of China and have full national coverage, but large urban centers
will be the most sensible places to begin. We will focus on getting our laptops on computer shopping mall shelves, where most Chinese laptop purchases take place. When it comes to marketing efforts, Esooner will invest 30 percent of our advertising budget on newspapers, as there is still a fair amount of Chinese consumers that read the daily newspapers. Television advertisements are quite difficult to get aired in China, especially for such a young company. As such, we will allot 20 percent of our advertising budget to television. The remaining 50 percent will go towards internet advertisements, which we believe will be the most effective and simple marketing method. Our primary competitor in China is Lenovo. This giant computer manufacturer has huge market share in China, and we aim to be a serious thorn in their side in a few years, and be a dominant force in the Chinese market in around 10 years. There are several ways we will learn from Lenovo’s history, both mistakes to avoid and successes to emulate. Although there was a period that laptop sales were declining, they have been back on the rise and this is a great time to enter the market. With impressive internet penetration in China and rising disposable incomes, we believe our product can thrive once established. After obtaining a safety and quality certification mark from the China National Certification and Accreditation Administration, Esooner can begin the long journey to success as we enter the Chinese market.
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