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TitleHaier’s US Refrigerator Strategy
File Size830.3 KB
Total Pages16
Document Text Contents
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 1-Why did Haier enter the US market with compact refrigerators? (Ghemawat, Haier's

Strategy, 2009)

 Market opportunity

 Compact refrigerator was a category that US appliance leaders- with possible exception of GE-

largely ignored until recently and this product segment was rather disorganized. Haier could develop

distinctive products and work with the big national retail chains to establish itself as a leader in this

disorganized product segment.

 Compact units were a growth market over the previous 15 years as living and office spaces were

upgraded, and as wine enthusiasts discovered storage cabinets. This was not just due to replacement

and number of new households but strongly was influenced by several other expansive factors -such

as changes in trends in consumers’ tastes and living patterns- as well. From 1970 through 2000 the

share of homeowners in the US who were either single or part of a nontraditional family unit rose

from 19% to 31% and this trend continued from 2000. The average size single-unit home in 2003

was 2320 square feet up from 1660 in 1973. 25% of new homes built now featured a home office

which they usually need compact refrigerators.

 Compact refrigerators were the simplest in terms of design and features. This simplicity (less

complicated parts and subassemblies) would allow optimization in whole value chain (Design,

manufacturing, packaging, transportation, etc.)

 Before Haier entrance in the US, a fragmented group of small specialty appliance players and foreign

brands supplied a limited range of compacts.

 Why Haier?

 Haier had already won a reputation among large retailers’ purchasing executives for reliability and

fast response to requests for product customization

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1-1-1- Products: Haier had a reputation for fast response to request for customization.

1-2- Focus; reduce need for variation

1-2-1. Products: at first it focused on compact models.

1-2-2. Geographies: Haier first concentrated on US: first difficult ones, but later it expanded its

activities all around the world.

1-2-3. Segments: focusing on compact segment (retail prices $100-$600)

1-3- Externalization: Reduce burden of variation

1-4- Strategic alliances: Making alliance with Michael Jemal and Welbilt company

1-5- Design: Reduce cost of variation

1-5-1. Flexibility: design business model to reduce fixed costs

1-5-2. Partitioning: having fixed (integral) parts and variable parts

1-5-3. Platforms; having one or two basic platforms per each category that can be developed into

hundreds of different SKUs.

1-6- Innovation: improve effectiveness of variation

Haier’s small-chest freezers had some innovative features including a bottom pull-out drawer,

which made it easier to find a deeply placed item

To save on shipping costs, Haier shipped spare service parts from China inside its freezers.

In its marketing, Haier focused on trade publications and less expensive media such as outdoor

and airport advertisements. Jemal used internet to reach college students.

1-6-1. Transfer: The whole idea of starting from US was to learn from difficulties from there and

use them.

1-6-2. Localization: form the case, it can be seen many forms of localization –the idea of building

an American brand. The US marketing organization had 105 employees none of them were

Chinese. Many products were designed for US markets. Establishing a factory inside US

could be considered as localization.

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