Sapporo (Hong Kong) Ltd    “Sapporo” is part of a major Japanese…

ProfPuppyMaster2375 Sapporo (Hong Kong) Ltd    “Sapporo” is part of a major Japanese…Sapporo (Hong Kong) Ltd  “Sapporo” is part of a major Japanese conglomerate. They manufacture in Hong Kong, but mainly buy in from their own factory in China a range of consumable cleaning items, including household brushes, mops and cleaning cloths as well as similar products designed for industrial markets. The raw material used is principally high-density woven material that has a relatively long lifespan. The company is regarded as being at the ‘quality’ end of the market for such products. Their goods are packaged and branded so as to make them stand out from the more traditional generic unbranded products. Both industrial and consumer products are distributed through intermediaries and not direct. The salesforce sells to distributors for industrial products and to wholesalers for consumer products. Advertising plays a key role in the company’s marketing efforts and products are brand managed in order to create an element of internal marketing competition. Hong Kong sales for the past three years have been increasing steadily from HK$17.4 million in 2000-1, to HK$21.2 million in 2001-2 to HK$26.9 million in 2002-3. Press and television advertising (above the line) and sales promotional spending (below the line) as well as the maintenance of a company website have been about 5 per cent of sales during this period with 60 per cent being spent on television campaigns. The remainder has been spent on leaflets, in-store campaigns, trade magazines and the press. The parent company had made a decision to expand more into the ASEAN market and has encouraged Sapporo to open up satellite manufacturing and distribution plants in the region. They are concerned that Sapporo chooses the right advertising agency for this planned expansion. The parent company uses two agencies in the ASEAN region and at one point they attempted to impose one of these agencies on Sapporo’s Hong Kong operations. Sapporo (Hong Kong) Ltd resisted, saying that another country’s agency would not understand the Hong Kong market. Now the Japanese parent company is using this same argument against Sapporo taking its Hong Kong advertising campaign (and Hong Kong advertising agency) into the ASEAN region. Questions 1 Consider sales turnover figures and comment on whether or not the company is justified in engaging in so much above-the-line promotion, especially in view of its expansion into other ASEAN countries. Would it not be better to engage in more direct selling or use a direct marketing facility?  2 In view of planned ASEAN expansion Sapporo has decided to move its promotional mix from above-the-line promotion and go more towards selling/direct marketing, so the equation becomes half to each category. Comment on potential problems in relation to the choice of advertising agency to handle this and the possibility of incorporating a pan-ASEAN theme into its promotion.BusinessBusiness – Other