Sales and Marketing Strategy
Due to the nature of the IMING Web TV Box being a single receptor for web tv usage that can be bought in the store without the requirement of subscriptions, the device can be sold directly to consumers through retail outlets, the internet, and distributors. IMING Web TV Box generically comes with access to all the free content and channels available via a cloud of over 10,000 continuously updated sources, however, it supports paid for bundling and subscription of online service providers, making it a versatile competitor to the typically bundled services of cable TV and flexible with online competitors who generally lock clients into their pricing model where by the IMING system is open to accept available feeds and play. Therefore the marketing deployment of the IMING WEB TV will reach through partnerships with internet service providers, retail outlets, directly to online web users, and distributors.
Internet Service Providers
It is projected that China's Internet population will hit 718 million by 2013, accounting for 52.7 percent of the total population. China has a gross online user base of as of July 2012 of 538 million internet users. Of the online population, 380 million primarily connect to the Internet using a PC or direct internet connection. A majority of broadband subscribers are DSL, mostly from China Telecom and China Netcom. The price varies at different provinces, usually around US$10 - $20/month for a 1M DSL with unlimited downloads. As of June 2011, Chinese Internet users spent an average of 18.7 hours online per week. The June 2007 China Internet Network Information Center (CNNIC) report states that 54.9% Internet users are male, 57.9% are unmarried, and 51.2% are under 25 years old.
IMING can partner with various providers to sell and give away IMING boxes and services to members to bundle the double play of Internet and TV. In addition, the 'Extending Coverage to Every Village' Project (a nationwide systematic project in China covering road, electricity, drinking water, telephone network, CATV network, Internet, etc. in rural areas) has enhanced the demand for STB in rural market. A look at the country's IPv6 addresses shows a growth rate of 33 percent over last year, carrying China to third place among the top IP holders, behind only Brazil and the U.S. (Reference http://www.pcmag.com/article2/0,2817,2407356,00.asp)
The rapidly increasing number of Internet users in China has also generated a large online shopping base in China. A large number of netizens have even been branded as having an "online shopping addiction" as a result of the growth of online shopping; according to Sina.com, Chinese consumers with Internet access spend an average of RMB10,000 online annually. Online payment is driven by prevalent Internet usage and has increased the online retail sector, online payment services have also grown rapidly. In 2009, the online payment utilization rate reached 24.5%, with 94.06 million users and an annual growth rate of 80.9%.
China is home to over 549,000 retail enterprises. China does flaunt a wide array of retail formats, each at a different level of evolution and development:
|Chinese Retailers Ranking among the top 250 Global Powers of Retailing 2011
|Gome Home Appliances
|Sunning Home Appliances
Department stores: These stores were popular earlier on, but are facing intense competition now and are battling to stay ahead. (Golden Eagle, Parkson, Beijing Cuiwei, Shenzhen Suibao)
Hypermarkets: The development of hypermarkets has been led by international retailers, who are now spreading their wings to tier 2 and 3 cities, as markets in tier 1 cities reach saturation. (Wal-Mart, Carrefour, Vanguard, Tesco, Metro, RT Mart Shanghai, Trust-Mart)
Supermarkets: This highly fragmented market dominated by domestic players, is witnessing cut-throat competition, often leading to weeding out of the weaker players coupled with strategic consolidation. (A-Best Supermarket, Baijia Supermarket)
Convenience stores: Though still in the development stage, this format is witnessing increasing competition, mostly among domestic chains. (Quick of LianHua, Alldays & Kedi of NGS)
Specialty stores: Electronics/Appliances: This segment is clearly dominated by domestic players, with limited foreign investment. (GOME, Suning)
Discount stores: Still evolving, this format remains concentrated in tier 1 cities. The first discount store was introduced by Carrefour in 2003.
Franchising: Constituting about 3% of China's total retail market, franchising seems to have tremendous potential for future growth. (KFC, McDonalds, 7-eleven, Pizza Hut)
Direct selling: With direct selling rules introduced in 2005, providing the much needed legal framework, the potential for further growth remains immense. (AMWAY, Mary Kay, Avon)
Online retail: Online shoppers grew 68% between 2009 and 2010 to 185 million. Online retail sales have been predominantly consumer-to-consumer transactions. However, with over 29% of its population using the internet, online retail sales are poised to grow over 30% per year. (Taobao, Alibaba, eBay)
- Retail sales increased 16.3% in 2011 Q1, while GDP expanded 9.7%. Retail sales are expected to double in the next three years.
- Retail sales in China amounted to nearly $2.1 trillion in 2010, nearly 50% of those in the U.S. China's retail sales are expected to grow by around 10% in 2011.
- China's retail sector is showing some signs of consolidation in 2011. The market share of the top 20 retail chains rose to 8.9% in 2011 from 8.4% in 2010
- Over 25 of the world's largest retailers are conducting business in China.
- Five of China's domestic retailers are ranked among the 250 largest global retailers on the Global Powers of Retailing for 2010.
- By 2015, China is poised to zoom to the position of the third biggest consumer market globally, after the U.S. and Japan.
Dell, which sells its computers in China through retail chains as well as through its direct sales model, is not alone. Competitors ranging from China's Suning and GOME to foreign rivals like Wal-Mart Stores Inc and Best Buy are profiting from Beijing's determination to drive economic growth by boosting spending in the country's $1.8 trillion retail market.
The Chinese government announced recently that it will extend its incentives for rural and small-city consumers, setting off what is likely to be a close competition among retailers that have until now focused mainly on China's big cities.
The opportunity is big. More than two-thirds of China's 1.3 billion people live in rural areas -- roughly three times the entire population of the United States. Retail sales in these areas grew 16 percent to 4 trillion yuan ($589 billion) last year.
Suning, the country's largest electronics chain by market value, said it would use the 3 billion yuan it raised from a share sale to expand sales network and to develop logistics centers. It plans to add 520 new stores in 2010 on the existing network of 941 stores across China.
Rival GOME, with over 700 stores across China, has adopted a "go rural" policy, and plans to team with small local retailers to increase the range of products on offer in a bid to tap rural spending growth.
Foreign retailers are also starting to look outside the tier-one cities. Wal-Mart, the world's biggest retailer, electronics retailer Best Buy and France's Carrefour are all eyeing growth in second and third-tier cities, if not yet rural areas.
Independent local players, which account for more than 50 percent of the rural market, have advantages including being able to use their familiarity with local spending behavior to adjust their offerings and provide customized product advice to their customers.
Consider televisions. Rural consumers tend to prefer big screen TVs, which confer greater status in their villages while urban shoppers are more focused on quality and brand, according to Zhu.
While national operators like Suning and GOME will struggle to compete with local chains, their wide selection of fast-selling electronics products may give them an edge over foreign players such as Wal-Mart and Carrefour.
IMING intends on utilizing the fast growing online and offline retail markets to expand services and product acceptance through-out China. The retail and online market are the primary sources of IMING's future sales.