Reference no: EM133188068

Ready Kitchen Sendirian Berhad

Jason Chan is the owner and retailer of a specialty kitchen cabinet business. Chan's business is the retail link in a channel of distribution which the kitchen cabinet manufacturer ships directly to him, and he in turn sells directly to the individual customer. 

Founded in the late 1998, Chan's company, Ready Kitchen Sendirian Berhad, is located in a large metropolitan area with a population of 1,500,000. The major central city has a population of about 200,000. In the late 1990s, when the kitchen cabinet industry experienced tremendous growth, sales were exceedingly good for most of the home kitchen cabinet makers and dealers. Nevertheless, during the early 2000s, Ready Kitchen's sales were beginning to level off, reflecting intensity of competition and possibly saturated market situation in the kitchen cabinet industry. 

Chan is very practical and progressive businessman who is always keen to make appropriate changes in his marketing mix if he feels they would increase sales. He is, however, quote critical of many of the promotional gimmicks which are common in the industry. For instance, some competing companies advertise their kitchen cabinet with special offer like, "This week only you can get a smoke ventilator kitchen cabinet with no extra cost, "when, in fact, any week one can easily negotiate an equivalent price with smoke ventilator. Hence, in effect, the consumer does pay directly for the smoke ventilator. 

Chan feels that some of these companies have given a bad image to the industry by the use of such "come on" promotional techniques. Unlike these companies, Chan strongly believes in providing a quality kitchen cabinet and in keeping his customers satisfy and happy. Word-of-mouth advertising is always important to him. He feels that, if he can get the customer to his business, he can sell that customer his quality product. His kitchen cabinet lines are constructures well and are not like many of the ordinary cabinet that many dealers are selling. The public as a whole, unfortunately, is not able to recognize and differentiate these quality differences. 

Chan rents about 40 percent of his 30m x 60m sales office space to a kitchen cabinet service business. The renting out of the sales office makes it quite convenient to get cabinets delivered to consumers and set up on their lots a seemingly important selling point with many of the customers. Chan has an arrangement with the kitchen cabinet service manager to deliver cabinets to customers and to charge Chan not the customer-with a fixed fee. This cabinet service company also provides repair services for the public on all kinds of problems related to kitchen cabinets. The service company also is the local, exclusive authorized dealer of a major, add-on smoke ventilator unit. Since most kitchens do not have smoke ventilator, this is usually a heavily demanded option by customers.

However, the presence of the service business does limit the amount of space which Chan can use for display of the many kitchen cabinet options which are available in various panelling, surfacing and furniture styles. Since kitchen cabinet requires a great degree of structural standardization in order to lend themselves to mass production techniques, the options which are available give the inside of the kitchen some degree of uniqueness and provide quite an attractive selling point to prospective customers. 

            The kitchen manufacturers are quite willing to provide samples of all the available options to retailers like Chan. This includes four kitchen cabinet lines each having approximately four options within each optional area (surface types, colors, styles of furniture, etc). Chan has been unable to show case properly all the available samples. Customers have difficulty, therefore, visualizing how their own "dreamed" kitchen might look. Since delivery time on kitchen cabinet orders is one or two weeks, many customers prefer to order their cabinets. They can, of course, choose among the standard model cabinets on Ready Kitchen's lot.

Chan's lot space will park only about 15 cabinets but, fortunately, the producer of his major selling brand is located only about half a kilometre away. This location allows Chan to take customers to the manufacturer's lot to show additional cabinets which he cannot afford to stock in his limited inventory.

Like majority of other kitchen cabinet dealers, Chan participates in radio spots on local stations and classified advertisements in the local newspapers and the yellow pages. Presently, kitchen cabinet manufacturers do very little promotion which is directed toward the final consumer. Most manufacturers primarily depend on their dealers to promote their products. 

The promotion done by Ready Kitchen is very limited. Chan gives out specialty items, such as calendars, umbrellas and pens but these are only given to customers on special holidays. Chan is concerned as to whether or not he is making proper use of his promotional budget. He feels a significant amount of his promotion may be missing its target. But since he has not analyzed his owned customers data files, he himself is not certain of his exact customer profile. 

The manufacturer of his bestselling cabinet, however, has made available a great deal of such information. Chan feels this information is useful of planning his promotional strategy. Among these materials is a summary of demographic information of kitchen cabinet purchasers which has been obtained by follow-up questionnaires sent by the manufacturer to all purchasers of that brand cabinet throughout the country. Preliminary analysis suggests that there may be a unique customer profile for kitchen cabinet buyers. Youthfulness, upper income, and social status seem to be characteristic of people in the kitchen cabinet buying market. Since Chan's business is located alongside a major highway, he is considering using some billboard space. In addition, he feels that a direct mail campaign and a Web site might also be helpful to further stimulate market interest.

QUESTION 1: Discuss an additional information that Chan need to plans for Ready Kitchen's promotional strategy.

QUESTION 2: Explain what are some major considerations Chan should evaluate as he plans his promotional strategy.

QUESTION 3: Discuss what promotional changes that you would recommend to Chan.

QUESTION 4: Describe what would you see as a better promotion by Chan at the present sales office location.