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The Sony Example

Reallocated Funds in Unexpected Ways

For Sony, the key finding was how its in-store presentation affected different shoppers. For those who had no particular preference or rejected Sony, repeated visits to outlets did nothing to sway their opinion; indeed, these shoppers became increasingly disaffected with the Bravia proposition. Money formerly spent on massive TV campaigns that reached millions of people who would never buy Bravia should be directed elsewhere.

Most of the company’s sales were concentrated in three major retailers. Of the three, Suning was the largest sales maker, so it might appear that this chain offered the greatest potential. Indeed, the bulk of Sony’s in-store investments were in Suning stores.

Suning, China’s largest retailer, with well-located stores and a broad range of products, attracts hoards of shoppers during the weekend. These shoppers find browsing the extensive offer an entertaining way to while away a few hours. Suning attracts people of all incomes, but it particularly appeals to shoppers with a budget. Retailer Gome, by contrast, offers a hard discount feel, and the more pressurized environment appeals to shoppers who know what they want and are just looking for a deal. Yongle, the smallest of the three chains (it’s owned by Gome), offers a cleaner environment with more expansive space, allowing browsers to spend more time interacting with brands.

When we analyzed the role that each chain played for the target shoppers, we found quickly that our two target groups spent significantly more time in Yongle. They found the crowds in Suning distracting and the feel of Gome too down-market. Suning and Gome were full of shoppers, but increasing marketing efforts in them would be a waste; most shoppers in these stores had little or no potential to buy a Bravia TV. By contrast, focused investment in Yongle would directly target the shoppers with the greatest buying potential. We were able to calculate that a dollar invested in Yongle would recoup almost twice as much return than the same dollar invested in Suning.

Prime real estate in Yongle stores required massive payments. But, remember, the target shoppers either preferred Sony or consider Sony an option. We found that 92 percent of these shoppers would visit the Sony booth, regardless of its location, so we immediately concluded that prime location was not essential. Not only could we save money by taking a less busy location in the store, but doing so also ensured more of our target shoppers would be able to engage with the brand without dealing with busy crowds. Money previously spent on inflationary location fees was spent on booth decoration, staff training, and new materials. Funds were diverted from Suning toward Yongle, where returns would be better. Investment decisions that historically had been based on assumptions and received wisdom were now being made based on facts and insight. Not only did sales return to strong growth, but Sony was able to redeploy hundreds of thousands of dollars in marketing money to activities with proven returns–and they could save money on costly locations in-store to boot!

This blog found in Course 07: An Example of the Five-Step Process.

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