CASE STUDY - CANON

Canon’s Background

Our first customer was Canon Singapore Pte Ltd. Established in 1979, Canon Singapore Pte. Ltd. is Canon’s regional headquarters for South & South East Asia. After merging with the local sales and marketing company (Canon Marketing (Singapore) Pte Ltd) it oversees both regional and domestic activities in Singapore. The company covers 22 other regions including subsidiaries in India, Malaysia, Thailand and Vietnam.

We held our first meeting with Canon Marketing department. It was an open and candid talk. Canon wants to maintain their No. 1 market positioning amid stiffening competition from the likes of Epson and HP. Canon envision every household in Singapore to possess a Canon printer. Canon runs a huge budget on TV and print media to maintain their premium branding. And Canon wants to define many reasons for their customers to choose her brand. Although printer unit sales slipped year on year, Canon unit sales for consumables grew. With the competition offering prices lower for similar specifications, Canon wants to improve on their promotional activities so that she can hold onto their price and still attract customers to purchase Canon printers.

Understanding Canon’s Objectives

We positioned ourselves as an extension of Canon’s team. To contribute to Canon’s success, we need to understand from their marketing standpoint how we can introduce new ideas and innovation to value-add to Canon’s business. We looked at Canon’s current marketing strategy (the 4Ps in particular) and discussed which aspect they want to improve on. Canon decided that they would want to make significant improve on Promotion to improve sales.

Canon Marketing Mix – 4Ps

  1. Product – Canon has the distinction of being first in many things such as the 10-key Japanese calculator, world’s first digital camera and laser printer.
  2. Price – Canon follows the competitive price mentality, and has maintained a price policy that is affordable so that maximum number of people can purchase their products
  3. Place – Canon has joined hands to form transportation partnerships so that goods are available to the distributor, retailers and consumers. The official dealers of the company provide detailed and efficient services to its customers
  4. Promotion – Promotion is the most important aspect of marketing in Canon’s philosophy. Canon has an active marketing communication strategy, and promoted sales by offering gifts on their products, discounts on services and lucky coupons for winners.

At the same time, we identified some of Canon’s pain points.

Identified Pain Points

1. Ink Jet Printer market highly competitive and rival brands are lowering their retail price to expand market share

  1. Canon wants to maintain premium brand positioning without lowering their retail price
  2. Customer wants to see match value when comparing between Canon and rival brands
  3. Not every household or family owns a printer, how can Canon market their printers to their target audience?

The Solution

We recommended for Canon to improve sales of their mid-high end printers by offering a premium gift compelling enough for their customer to justify their purchase decision. Their entry level printer will not use Promotion strategy but rather Price strategy.

We helped Canon source for a gift that is affordable relative to the market price. We introduced to Canon wireless headphones suitable for TV. We did a market survey and the average market price for TV wireless headphones was around US$99. It was a product of exceptional high value. It was the perfect gift for Canon’s customers. And the timing was right, TV was in transition from Plasma to LCD and many home owners are attracted to converting their home plasma TVs to LCD TV. These home owners are also the same target audience that Canon wants to target to sell their printers.

Canon agreed to the project.

Product Development

We recommended Canon customization in terms of product design, color, weight, packaging and materials used for the wireless headphones. After hand-drawn sketches were shown, we worked with our factory to produce working prototypes. At the product development stage, the most important is to run through with Canon cost and benefit analysis, we determine our price based on an open and transparent overview of the project cost. From the working prototype, we demonstrated to Canon how the transmitter can connect with various TV brands and the headphone (receiver). At the same time, we calibrated the FM frequency to improve the sound reproduction from the headphones. After product evaluation is complete we document every feedback that Canon has on the final product. We improved the initial prototype and got our factory to manufacture a final sample – we call it the golden sample. After the golden sample is confirmed. We then worked on the packaging box. Perhaps one of the most important aspect of the project. The packaging box was a crucial component of the gift and we developed a packaging box that looks premium yet a competitive price. With Canon’s final agreement on the final sample we move on to the next stage – Production.

Product Production

Before production started, we shared with Canon our factory inspection report. The report showcase a summary of our factory’s capabilities and experience in managing global projects. The lead time at start of discussion was forecasted at 25 days for 5,000 TV wireless headphones. At every stage of production, we give a timely update to Canon on the completed production line. Example, after the headphone parts are constructed we replayed the information to Canon. In total, there were 20 different production lines to produce the wireless headphones. We took photos of each stage of production and informed Canon.

For quality assurance and control, every material used for production is examined by our QC team. And in total there are 8 QC tests that are done for a completed wireless headphone. One of the critical test is the radio connection between the transmitter and the receiver (headphone). One of the challenge we solved was to calibrate the radio frequency that is acceptable in Singapore’s IDA telecommunication law; and at the same time offer good quality sound reproduction.

We completed the production in 20 days, 5 days ahead of time. We took a full day for quality inspection. Every headphone was inspected and after getting approved marked with a “QC passed” label. After updating the QC report to Canon, we moved on to the next stage – shipment.

Product Shipment and Logistics

We stored boxes of wireless headphones in 5-ply carton boxes (we avoided 3-ply to give a better protection for the gift boxes). Each carton box holds 20 wireless headphones and are printed with our standard labels. We informed our shipping company to be extra careful when handling the carton boxes, and at the same time installed wooden crates for added protection. The shipment from China to Singapore took around 10 days.

The final push was to inform our Singapore shipping and logistics vendor to handle the stocks with care at the port during retrieval. With all shipping documents prepared, our wireless headphones are finally shipped to Canon’s warehouse.

Product Launch

Canon was very pleased that the project was completed in time. At the trade fair where the TV wireless headphones were used as gift bundle for every Canon printer sold, sales results exceeded forecast and feedback was positive. We took another 1,000 units order from Canon to fulfill customers who have purchased their printer although our gift ran out of stocks.

Product warranty

All TV wireless headphones were offered a 1 year warranty. We provided a 1-to-1 exchange within the warranty period. In 1 year, there were about 15 units exchange – that’s 0.25% defect rate less than 1% defect rate that we forecasted for Canon.