Business Strategy study guide

Eab entered the domestic market lamoiyan corporation

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EAB entered the domestic market Lamoiyan Corporation of the Philippines: Challenging Multinational Giants
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How does Lamoiyan manage to differentiate itself? - Cecilio Pedro, CEO of Lamoiyan Co. - 20% market share from the entranced multinationals and had become the 3 rd toothpaste producer in the PI - The Toothpaste Industry in the Philippines o 1997 Asian financial crisis - Toothpaste Consumption o Toothpaste prices were high o Many would use salt, burned rice, water, or nothing o Lagged behind Asian countries o 66% was packaged in plastic tubes, 10% in aluminum, 24% in sachets - Multinational Manufacturers o 1 st company to enter PI market was Colgate-Palmolive Company (US based) o Unilever also entered (both companies held 95% of market share) - Channels and Distribution o Supermarkets: 48% of sales o Sari sari: 19% o Market was divided by region o Door-to-door selling - Cecilio Pedro and Lamoiyan Corporation o Had experience in the entrepreneurial aspect of business - Aluminum Container Inc. o Difficulty to entry o *Key point – propensity to switch suppliers o Pedro thought this was a good opportunity o Sent a sample tube to Colgate-Palmolive and Unilever for a year, although nobody would take him seriously o He was very persistent, but they were curious o 2-3 years later, he got a packaging alternative, but didn’t last o After, competitors switched to plastic (problem for Pedro) – offered no significant cost advantage, but was more attractive - The Birth of Hapee Toothpaste o After Spanish colonization, the Philippines still had a colonial mentality – they still believed that anything produced out of the PI is better – had a hard time convincing them that a Filipino product was as good or even better than an imported product o Perception was the important thing about toothpastes o Used the Olympic rings in advertising – people thought they sponsored it all - Competing on Price o Pedro looked towards the Bible when things got rough – defeating Goliath o Colgate and Unilever’s weakness – price
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o Pedro began to sell his toothpaste at ½ Colgate’s price, and sales shot up o Pedro prefers winning smaller margins - Targeting Niche Markets o Stimulate sales by catering to specific tastes of different segments o “You look for areas where they are not interested, where they are not concerned, with like 2% or 3% of the market. But if you put five or six segments together each with 2% or 3% of the market, you have 15% or 20%” o Local manufacturers who developed specialized products were able to take advantage of “brand burnout” – customers getting tired - Selective Marketing o TV was the main source of marketing – couldn’t rely on this though to create a presence o Must be creative - Community Outreach o Sponsor local schools and sports teams – giving back to the community o Doing charitable things increased publicity – did not want to kill local competitors though to avoid problems - Competitive Response and Nonresponse o After ½ off prices, Colgate and Unilever made no moves to combat
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