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issue: January 2007 APPLIANCE European Edition

Guest Editorial
Solving a Chinese Puzzle


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by John Graham, managing director, Sovereign Appliance Marketing Limited

I arrived at the conclusion quite some time ago that sales and marketing are not too dissimilar from brain surgery: If you know what you are doing, it’s actually pretty straightforward. First, clearly define what needs to be done, then decide how to do it, and finally, using your knowledge and skills, get on with it.

This fairly simple approach is one that I have adopted over the past 30 years or so to help a number companies that had, for one reason or another, moved away from those basic principles, resulting in lost sales, market share and money. In these cases, the first requirement was to stop the rot and bring some stability back into the business while formulating a longer-term sales and marketing strategy to provide a base from which the company could rebuild and move forward. All of the companies in question went from loss to break-even in 1 year, and from then on returned to profitability.
In 1997, a major Chinese manufacturer wished to establish their own brand of domestic appliances in the United Kingdom. Although an unusual move in and of itself, this presented an opportunity to put to the test all of the experience gained in reviving failing companies by launching a completely new and unknown brand in a crowded marketplace.
Unfortunately, our Chinese colleagues were less than forthcoming with any financial support, so in addition to the expertise that was being provided, so too was an amount of cash in order to get things moving. Sovereign Appliance Marketing Limited was set up as the exclusive vehicle to manage and control the development of the brand in the UK market.
As many of you may know, it is not possible to simply bring in domestic appliances from anywhere and put them into the market. Official approvals and legislation have to be considered, as well as the more obvious logistics like stock availability and after-sales service. Consequently, a great deal of time was spent in setting up shippers, warehousing, distribution, and an effective after-sales operation. All of this takes time, as does convincing buyers that they should stock Chinese-built products, which 8 years ago did not have a great reputation.
So, after a great deal of preparatory work and almost 2 years down the line, products started to appear in the British market. To the surprise of some customers, product quality and reliability were extremely good, resulting in a steady growth of product listings and with them, an ever-increasing level of sales. Rather than try to hide the Chinese connection and any negatives that went with it, it was decided to use the “Made in China” message as a main plank in the promotion of the brand. This approach worked well initially, but was later dropped in favor of a more conventional approach.
Over time, products became well established and brand awareness was growing. Deliveries into the trade in some of the key product areas totaled around or in excess of 20 percent of the total market.
Of course, when starting a new brand from scratch on behalf of the brand owner, it is not too surprising that they are quite content to allow someone else to use their time, effort and, in this case, money, to get things set up and moving forward. There will always come a time, however, when the volumes being generated will have a certain attraction to the brand owner and, inevitably, they will look to take control of what has been created, preferably at no cost. Alternatively, they may look to set up their own company to control future business.
This is precisely what happened to Sovereign and with total exclusivity on one brand, the options are limited if your brand supplier is no longer prepared to supply. You can, of course, decide to simply close the business and go off on holiday. Or you can use the experience gained in bringing a new brand to market and do it all over again.
We chose the latter option. And “Sovereign brand” was launched—partly out of “bloody mindedness,” but mainly out of a conviction that Sovereign had something to offer to the market. New suppliers were sought from Europe as well as China and a product range, based on the success of the previous range, was put together, supplemented by products in new market areas.
Arguably, that was the easy part. The real challenge was convincing the customer base to switch from what they have been doing successfully for a number of years to a new, unknown brand that had a new range of products.
The result of the brave (or foolish) decision to launch a new brand into a market already overburdened with well-known names has been extremely gratifying. The first “Sovereign” branded products were put into the market in mid-January 2006, and volumes in the first year will only be marginally below those of 2005. Sale value will be down a little, but more importantly, a profit will be generated.
Needless to say, a cohesive sales and marketing plan is a key ingredient in success. But we still operate in a people business and, ultimately, that relationship is what can make the difference between success and failure, no matter how good your sales and marketing plan may be—a part of the puzzle to which our Chinese friends may not have yet found the answer, or even considered the question.

John Graham

About the Author

John Graham is the managing director of Sovereign Appliance Marketing Limited. He is a veteran of the British domestic appliance industry with a career spanning over 40 years. If you would like to contact Graham, please e-mail editor@appliance.com

 

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