THE FINAL PRESENTATION to BOARD MEMBERS OF RONG SH

THEFINALPRESENTATIONtoBOARDMEMBERSOFRONGSHIDAMaytagJVGeneralCorp.onMARKETINGSTRATEGYCONSULTING(BOARDMEMBERSSUMMARY)October12,1999HefeiSINOTRUSTMANAGEMENTCONSULTINGStrictlyConfidentialProjectReviewProjectReviewMarketanalysisMarketanalysisDiagnoseDiagnoseTODAY’SAGENDACompetitorsanalysisCompetitorsanalysisSolution&suggestionSolution&suggestionImplementationImplementationImportantNoticeImportantNoticeObjective&ContentsObjective&ContentsResearchToolResearchToolScheduleScheduleImportantNotice1ThemonetaryunitreferstoRMBunlessspecialnotice.21tiermarketrefersto35majorprovincialcapitalcities2tiermarketreferstotownsorcitymarket.3tiermarketreferstovillagemarket.3Thereportfocusedonwasherandrefrigerator.4RSDreferstoRongShiDaMaytagGeneralCorp.Objectiveandcontentsofthisproject’’solutionsResearchTool1:9SModelResearchTool2:PQMModelResearchtool3:ProductLifeCyclecitymarketUptonowSinotrust’sconsultantshavefinished507interviews,listedasfollowingWEEK2WEEK3WEEK4WEEK5WEEK7WEEK8WEEK9WEEK10WEEK11WEEK12WEEK13WEEK1411-Aug12-SepcollectingsecondinformationplanninginterviewsortingintervieweelevelofficerinterviewingregionalmanagerinterviewingbranchmanagerinterviewingsalesmanvisitingbranchfirstreportwritingreportpresentationdiagnosingproblemstudyingHaierlittleSwanMeilingKelongXinfeiSiemensSecondreportwritingSecondreportpresentationAnayzingmarketandcompetitorstentativesolutionmarketinghandbooksaleshandbookAftersalesservicehandbookhumanresourceshandbookthirdreportpresentationadjustingsolutionsWEEK6WEEK1WEEK15draftinghandbooksContentskick-offmeetingdraftingworkplanReviewReviewMarketanalysisMarketanalysisDiagnoseDiagnoseTODAY’SAGENDACompetitorsanalysisCompetitorsanalysisSolution&suggestionSolution&suggestionImplementationImplementationMarketcapacityMarketcapacityMarketsegmentationMarketsegmentationChannelsChannelsMarketsituationMarketsituationIn1998,thetotaloutputbegandeclining,whichmeansthewholemarketcapacityalsodidsoSource:ChinaNationalStatisticBureauUnit:10,000Themajorreasonwas:SupplyexceededdemandinthefirstmarketscitymarketSource:SINOTRUSTInterview&AnalysisHowever:duringcityandvillagemarket,thereisstillmuchspareroomfordevelopingrefrigeratorsandwashersThepossessiverateof1998inchinafamilySource:ChinaNationalStatisticBureauThemajorreasonwasthat:supplyexceededneedlowBrandimagesegmentSource:SINOTRUSTInterview&Analysis15Infuture,villagemarketwillgrowmuchmorefastthanthefirstmarketdo.SoSinotrustbelieveswhetherornotthatRSDcanbetheleaderoftheindustrywilllargelydependonhowmuchRSDcontrolthesecondaryandtertiarymarketFirstmarket(majorcity)Secondaryandtertiarymarket(cityandvillage)1999MonopolytimeQualitativeanalysisSource:SINOTRUSTInterview&AnalysisAfteranalyzingthemarketstructure,Sinotrustfound:thesaleschannelhaschangedgreatly,newtypeofchannelhasemergedandisbecomingmoreandmoreimportantWholesaler:traditionalstateownWujiaohuaretailer:traditionaldepartmentWholesaler:newself-employedinsecondarymarketretailer:newself-employedexclusiveshoppingmall1996Source:SINOTRUSTInterview&AnalysisDuringthecitymarketofwashers,thetop3leadersareasfollowing;0%13%26%39%0140028004200Source;ChinaDomesticTtradeBureauComparingsalesvolumeofRSDwiththoseofHaierandLittleSwan,Source:ChinaLightIndustryAssociationFrom1996to1999:salesvolumeofwashersSeeingfromthemarketshareofrefrigerators,RSDshouldnotbeover-optimistictoitsmarketingstrategybecauseRSDisanewparticipator0%13%26%39%1700240031003800HaierXinfeiKelongSharpsiemensSamsumelectroxMeilingshanglinchanglinRSDSource;ChinaDomesticTtradeBureauRSD’smarketingstrategychart:0%13%26%39%1700240031003800HaierXinfeiKelongsiemensMeilingRSDRSDwasherrefrigerator0%13%26%39%0140028004200Source:SINOTRUSTInterview&Analysis“Ruleofthreeandfour”asksRSDshouldbeoneofthetopthreeplayersinthefuture#1#2#3#4#5#6MarketshareRuleofthreeandfour•onlythreeplayerinoneindustrycanmakeprofitduringthemonopolyperiod.•Themarketshareoftop1playertriplethatofNo3•No3playerisvulnerabletobeoversteppedbeNo4•Onlytop2playerscanmakelargefortune.ReviewReviewMarketanalysisMarketanalysisDiagnoseDiagnoseTODAY’SAGENDACompetitorsanalysisCompetitorsanalysisSolution&suggestionSolution&suggestionImplementationImplementationGeneralizationproblemsGeneralizationproblemsMarketsegmentMarketsegmentOperationOperationHumanresourcesHumanresourcesTheboardhasplanednextthreeyear’sstrategyRefrigeratorCAGR=69.0%WasherCAGR=17.7%HeaterCAGR=41.4%refrigheaterUnit:100millionSource:SINOTRUSTInterview&AnalysisTheboardhasplanednextthreeyear’sstrategyRefrig:CAGR=67.3%twintub:CAGR=13.4%automatic:CAGR=22.5%heater:CAGR=41.4%Unit:100,000TwintubautomaticheaterrefrigSource:SINOTRUSTInterview&AnalysisInordertomaintainthe24%growthrateinthefuture,itisverynecessaryforRSDtoestablishafirmdevelopmentplatform1996199719981999Thesales’objectivescouldbeachievedbydiligentsalesmengapbetweenmarketingandsalesNewplatformissuitablefornewmarketstructureandthechangingofconsumers’need•Discountorrebatepolicypromotedealers;•promotionactivitiespromoteconsumersAfter1996,withthedevelopmentofnewmarketstructure,theformersalesstructurehasbeenoutdatedSou