Harvard Case - Hisense: Breaking Recurring Channel Conflict
"Hisense: Breaking Recurring Channel Conflict" Harvard business case study is written by Miao Cui, Xin Li, Heng Wu, Wanling Li. It deals with the challenges in the field of Marketing. The case study is 13 page(s) long and it was first published on : May 12, 2022
This case study solution recommends a multi-pronged approach for Hisense to address recurring channel conflict and achieve sustainable growth. We propose a comprehensive strategy that focuses on enhancing brand positioning, optimizing distribution channels, and fostering a collaborative ecosystem among stakeholders.
2. Background
Hisense, a Chinese electronics giant, faces persistent channel conflict between its distributors and retailers. This conflict arises from competing interests, price discrepancies, and a lack of clear communication and coordination. The case study highlights the company's efforts to expand its global presence, particularly in emerging markets, while navigating the complexities of managing diverse distribution channels.
The main protagonists in this case are:
- Hisense: The multinational electronics manufacturer seeking to expand its market share and brand recognition.
- Distributors: Independent businesses responsible for distributing Hisense products to retailers.
- Retailers: Businesses selling Hisense products directly to consumers.
3. Analysis of the Case Study
We will analyze the case using a combination of frameworks, including:
1. SWOT Analysis:
- Strengths: Strong brand recognition in China, diversified product portfolio, commitment to innovation, cost-effective manufacturing processes.
- Weaknesses: Lack of brand awareness in some international markets, inconsistent distribution strategies, limited marketing budget compared to competitors.
- Opportunities: Growing demand for consumer electronics in emerging markets, increasing adoption of digital channels, potential for partnerships and acquisitions.
- Threats: Intense competition from established global brands, fluctuating currency exchange rates, potential for trade barriers.
2. Porter's Five Forces Analysis:
- Threat of New Entrants: High, due to the ease of entry in the consumer electronics market.
- Bargaining Power of Buyers: Moderate, as consumers have multiple choices and can easily compare prices online.
- Bargaining Power of Suppliers: Low, as Hisense has a large supply chain and can negotiate favorable terms with suppliers.
- Threat of Substitute Products: High, with various alternative brands and product categories available.
- Competitive Rivalry: High, with intense competition from established brands like Samsung, LG, and Sony.
3. Marketing Mix (4Ps):
- Product: Hisense offers a wide range of consumer electronics, including televisions, refrigerators, air conditioners, and mobile phones. The company needs to focus on product differentiation and innovation to stand out from competitors.
- Price: Hisense's pricing strategy is focused on affordability, but the company needs to ensure consistent pricing across all channels to avoid channel conflict.
- Place: Hisense's distribution channels are diverse, but the company needs to optimize its network and establish clear roles for distributors and retailers.
- Promotion: Hisense needs to develop a comprehensive marketing strategy that includes digital marketing, advertising, and public relations to increase brand awareness and drive sales.
4. Consumer Behavior Analysis:
- Target Markets: Hisense's target markets include price-conscious consumers in emerging markets and value-oriented consumers in developed markets.
- Consumer Needs: Consumers are seeking high-quality, affordable electronics with advanced features and reliable performance.
- Decision-Making Process: Consumers research products online, compare prices, and consider brand reputation before making a purchase.
4. Recommendations
1. Enhance Brand Positioning:
- Develop a clear brand positioning statement: Articulate Hisense's unique value proposition and target audience.
- Invest in brand building activities: Implement a comprehensive marketing strategy that includes advertising, public relations, and social media marketing.
- Focus on product differentiation: Develop innovative products with unique features and design elements.
2. Optimize Distribution Channels:
- Establish clear roles and responsibilities: Define the roles of distributors and retailers and ensure clear communication about pricing, inventory management, and marketing activities.
- Implement a multi-channel strategy: Leverage both online and offline channels to reach a wider audience and provide a seamless customer experience.
- Develop a robust logistics network: Ensure efficient and timely delivery of products to retailers and consumers.
3. Foster a Collaborative Ecosystem:
- Create a partnership program: Incentivize distributors and retailers to collaborate and share best practices.
- Develop a comprehensive training program: Provide distributors and retailers with training on product knowledge, sales techniques, and customer service.
- Establish a customer relationship management (CRM) system: Track customer interactions and preferences to improve customer satisfaction and loyalty.
4. Leverage Technology and Analytics:
- Implement a data-driven approach: Utilize data analytics to understand customer behavior, optimize marketing campaigns, and improve product development.
- Explore emerging technologies: Integrate artificial intelligence (AI) and machine learning (ML) into marketing and sales processes to personalize customer experiences and automate tasks.
- Invest in digital marketing tools: Utilize social media platforms, search engine optimization (SEO), and content marketing to reach a wider audience.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Hisense's core competencies include manufacturing, product development, and distribution. These recommendations align with the company's mission to provide affordable, high-quality electronics to consumers worldwide.
- External customers and internal clients: The recommendations address the needs of both external customers (consumers) and internal clients (distributors and retailers).
- Competitors: The recommendations consider the competitive landscape and aim to differentiate Hisense from its rivals.
- Attractiveness ' quantitative measures if applicable: The recommendations are expected to improve brand awareness, increase sales, and enhance customer satisfaction.
6. Conclusion
By implementing these recommendations, Hisense can effectively address recurring channel conflict, strengthen its brand positioning, and achieve sustainable growth in the global consumer electronics market. The company must prioritize collaboration, innovation, and a customer-centric approach to succeed in this competitive industry.
7. Discussion
Alternatives not selected:
- Vertical integration: Acquiring distributors or retailers to gain more control over the distribution process. This could be costly and complex, and may not be feasible in all markets.
- Exclusive distribution agreements: Limiting product distribution to a select group of distributors or retailers. This could limit market reach and potentially create new conflicts.
Risks and key assumptions:
- Implementation challenges: Successfully implementing these recommendations requires significant investment, commitment, and coordination across all stakeholders.
- Market volatility: The consumer electronics market is subject to rapid changes in technology, consumer preferences, and economic conditions. Hisense must be agile and adaptable to remain competitive.
8. Next Steps
Timeline with key milestones:
- Year 1: Develop a comprehensive brand positioning strategy and implement a multi-channel distribution model.
- Year 2: Launch a new product line with innovative features and enhance customer relationship management (CRM) capabilities.
- Year 3: Expand into new emerging markets and leverage data analytics to optimize marketing campaigns.
By following these recommendations and diligently implementing the proposed timeline, Hisense can effectively address channel conflict, strengthen its brand, and achieve sustainable growth in the global consumer electronics market.
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Case Description
Hisense Group Co. Ltd. (Hisense) was a leading manufacturing enterprise in the Chinese household appliance industry. In 2010, Hisense began to lay out its online channels. At that time, the same products had different prices in different channels, which caused fierce channel conflicts. To solve this problem, Hisense segmented online and off-line products and took a series of actions to help off-line channels improve efficiency and reduce prices. Therefore, Hisense successfully changed from having different prices for the same products to having different prices for different products. However, in early 2020 the new model was challenged again, and channel conflicts soon reappeared. How would Hisense break the recurring channel conflict this time?
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