3 Organizational Strategy and Competitive Advantage
3.3. Competitors
3.3.3 Post-Purchase Competitors
3.3.1. Pre-Manufacture Competitors
There are some pre-manufacturing measures that increase the quality of the product, like Total Quality Management and ISO9000 standards, which are indirect competitors to The Great Wall since they in effect decrease the volume of our user base.
3.3.2. Pre-Purchase Competitors
Pre-purchase verification measures applied by companies like Genda, which focuses on identifying bootlegged alcohol in China, are an indirect competitor. They can reduce The Great Wall’s potential customer base by reducing the volume of issues on the market. However, their focus is on a narrow segment, which allows them to concentrate more on that specific service and be more professional but at the same time it is a disadvantage for them, because it is not easy for them to apply this method to expand into other product categories besides bootlegged alcohol.
3.3.3 Post-Purchase Competitors
a) The customer service departments of responsible corporations that follow through on their contractual warranty commitments could be considered direct competitors. However, consumers of their products are not our target market.
b) The China Consumer Association Complaints and Negotiation Platform is our largest direct competitor. It is a website that allows consumers to communicate with a list of only 40 of the most reputable organization with high standards of quality such as China Unicom, Sony, and Hewlett Packard. The consumers of these 40 listed companies are not, however, our target
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
market. In addition, the website is not well known by most consumers. It doesn’t offer comprehensive and well-rounded consumers service and law consulting support. Not to mention that such big government organizations within China are famous for their bureaucracy and low efficiency.
c) Those among the nation’s 20,000 law firms that do not wish to cooperate with The Great Wall are potential competitors. The law firms can communicate with the consumers directly without an intermediary like The Great Wall, but it is not easy for lawyers to actively seek out new customers, because they lack an efficient means of reaching their target market. They rely solely on the recommendations of others or advertisements in accordance with the rigorous rules as established by the central government.
Although the measures and organizations listed above are our competitors in a sense, we are pleased to join this ecosystem and offer our unique service to improving both the exercise of consumer rights and the quality and safety of domestic products in China.
‧
The Great Wall is a non-profit social venture in the online service industry. It bridges our two distinct customer groups: consumers and lawyers.
4.1. Market Size Determination
There are 564 million individuals using the Internet in China, of which 419.77 million individuals use their phones to connect to the Internet (National Bureau of Statistics of the People’s Republic of China, 2014). 467.75 million individuals use instant messaging like
“WeChat” to chat and share, while 308.61 million individuals use Weibo (The Chinese equivalent of Twitter) to post status updates (Forbes, 2014). The potential market for the Great Wall is constituted by this huge amount of netizens and APP users.
We used ‘keyword research’ to assess the volume of people who care enough about quality issues and actively post about it on Weibo. We did a search relating to the building material industry. This was done by searching for posts containing the keywords “fang wu jian cai zhi liang wen ti’ when literally translated from Chinese to English means “Building material quality problems” This keyword search identified 7,192,288 posts.
We then found the number of officially lodged complaints on the National Bureau of Statistics in the same building materials category. In 2012, there were 24,631 logged complaints in this category (National Bureau of Statistics of the People’s Republic of China, 2014).
The number of people who complained about their products was 0.3425% of the peole who took the time to comment about this issue on Weibo. The volume of people who took serious
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
action in protecting their rights and lodged an official complaint was 3353, 13.6170% of the 24,631 people who made complaints (note: all data were in the building materials industry) Refer to figure 2 below.
Figure 2: Market Size Determination Process
It is our belief that the huge gap between the number of people complaining and the number of people lodging official complaints is due to the widespread perception that current platforms are highly inefficient and this prevents people from taking real actions.
Our website’s target consumers are those who are making complaints on Weibo but have not taken further actions due to the perceived inconvenience involved or have previously had a failed experience.
This kind of unstructured interaction is prevalent in China. The Great Wall aims to provide a structured place to lodge quality related complaints instead of yelling them into the hurricane that is Weibo, we provide the place that will actually make a difference. and serve as leverage against unscrupulous companies in a negotiation.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
4.2. Market Trends
Data from the National Bureau of Statistics demonstrates a clear increasing trend in the total value of loss as a result of product quality issues for the 8 year period from 2009 to 2016. See Figure 3 below. This reinforces the severe financial impact that quality related issues have on China and confirms the need for the Great Wall’s services. These figures represent all quality related issues for all products including fast moving consumer goods, which are not a component of our target market.
Table 1 below depicts data from the National Bureau of Statistics. We estimate the Gross Value of Consumer Loss based on the geometric average growth rate which was calculated based on the 5 year period from 2009 to 2013. This is based on the assumption that the geometric average growth rate of 12.5% will be constant over the three year period from 2014 to 2016. This estimation based on historical data allows us to assume that the Gross value of quality related consumer loss will continue to rise throughout 2016.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
Table 1: Gross Value of Consumer Loss Chinese Nation-Wide Data (in millions)
2009 2010 2011 2012* 2013 2014 2015 2016
Gross Value of Consumer Loss
128.77 133.5 151.7 100.3 206.3 232.2 294.0 330.8
Market Growth Rate
NA 3.7% 13.7% -33.9% 105.7% 12.5% 26.6% 12.5%
*: In 2012, the State Statistics Bureau adopted a new method to count complaints, leading to omissions of some provinces and cities. (The data was gathered from the website of National Bureau of Statistics of the People’s Republic of China, 2014)
‧
Figure 3: Gross Value of Nationwide Consumer Loss
(The data was gathered from the website of National Bureau of Statistics of the People’s Republic of China, 2014)
4.3. Target Market
The population of our target markets, Zhejiang, Jiangsu and Shanghai, is 153 million. The citizens of these areas are well-educated individuals and are known for having the highest standards of living in China and are well versed in their rights as consumers. These areas account for over 92 million of the total 564 million Internet users in China, which is 16.31% of the total Internet user base. These regions account for more than 40% of the total industrial export for China, containing dense manufacturing hubs. The most important fact is that these combined areas tend to be blanketed with products from the same manufacturers, leading to a higher possibility of similar manufacturing flaws.
2009 2010 2011 2012 2013 2014 2015 2016 128.77 133.47 151.72
‧
We intend to target these areas with our promotions, but plan to expand into the whole of China.
Even in our initial stages, our platform is accessible to all, but marketing measure will be concentrated in these key areas.
The Great Wall intends to concentrate on the highly competitive industries of appliances, building materials, digital products, and furniture, which have ranked among the top of quality complaints in China for years. These figures mirror the trends above, however you can see the annual growth rates for our target areas of Zhejiang, Jiangsu and Shanghai are 33.59%, 11.3%
percent higher than the yearly national average growth rates for the same period.
Table 2: Gross Value of Consumer Loss /Market Growth Rate in Target Markets
2010 2011 2012 2013
‧
Table 3: SWOT Analysis of the Great Wall Platform and Suite of Services
Strengths Weaknesses
1.First mover advantage
2.Obtain economy of scale advantage 3.Government support
4.Huge market demand
5.Increase law firms earning potential 6.Favorable geographic location.
1.Regulations limit class-action suits and are frowned upon by government
2.Potentially easy to be duplicated
Opportunities Threats
1.Relaxing of regulations on class-action suits 2.Outsourcing of customer service department function for manufacturers
We have undergone and extensive marketing plan to ensure the rapid takeoff and adoption of the Great Wall’s platform and suite of services.
4.5.1. Positioning Strategy
The Great Wall’s strategy is to facilitate the locating of other consumers who find themselves in the same unfortunate position, seeking resolution to quality issues against unscrupulous corporations.
‧
4.5.2. Unique Selling Proposition
To consumers either concerned or negatively affected by product quality/safety from unscrupulous manufacturers the Great Wall is the one stop platform that connects you to other stakeholders for the purpose of 1) keeping informed of quality/safety issues related to purchases 2) to join forces with other affected individuals and together accumulate sufficient legal fees to combat irresponsible companies 3) to engage the services of skilled counsel because by working together we will level the playing field, empower the economically powerless, and restore integrity in corporate activities in China.
To law firms struggling to connect with civil case clients, The Great Wall is the one and only platform that 1) makes it possible to litigate small civil claims 2) offers browsing of high potential cases 3) generates leads 4) efficiently accumulate fees to sufficient compensation levels because its the only platform that provides lawyers with appropriate incentives.
We also enable users to share their posted complaints in one easy click from our Great Wall App or on the Great Wall Website to other mainstream social networks such as WeChat, Weibo and Qzone. This facilitates the locating of others in the same boat and serves to raise awareness for the Great Wall Platform.
4.5.3. Pricing Strategy
The Great Wall intends to obtain an economy of scale advantage, which means we are able to price our service competitively. Since there are two kinds of users on our platform, consumers and law firms, the Great Wall adopts two different value based pricing strategies that enable us
‧
law firms and will charge a membership fee based on the bulk-volume fee structure. (Refer to Table 4 in the financial section below) In addition, The Great Wall charges a brokerage fee on winning cases in order to cover our costs and maintain our daily management. Our APP is a free-download and available to all interested consumers which is used to broaden our customer base and maintain our existing customers.
4.5.4. Promotional Mix
Since The Great Wall is a non-profit social venture to protect consumers, we can utilize this social corporate responsibility mentality to our advantage and use a variety of channels to advertise for free or at reduced costs.
4.5.4.1. Advertisement
a) Choose an influential media platform: We choose BAIDU, the Google of China, which allows Non-Profits to advertise for free. Baidu maintains a 76% share in China's search engine market. We intend to use this in the initial phases of our advertising campaign and throughout our business life- cycle.
b) Utilize micro movies on streaming video websites: We will utilize a creative micro movie and upload it on famous streaming video websites in China such as Youku and Tudou (The Youtube’s of China) to show the function of our website.
c) Participate in law conferences: We choose some of the most influential law-related conferences which are held annually in our target markets as our first-step in reaching law firms.
We will utilize the opportunity to do face to face advertisement. The conferences we plan on
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
attending include the Shanghai International Conference on Law and the China Law Conference in Shanghai.
d) Advertisements on corporate third-party websites: Based on our research and negotiation with our strategic partner "WOCHACHA" (an existing app for scanning barcodes), we intend to do reciprocal advertisements: ours on their site, and theirs on The Great Wall’s site.
e) Advertisements in trade publications: We intend to use two famous trade publications,
"Chinese Lawyer" and "Regulations", for focused advertising to lawyers and law firms.
4.5.5. Public Relations
We plan to build symbiotic relationships with influential social media users and well known public figures in China. During the next inevitable quality related issue we intend to employ these channels to raise awareness and bring traffic to our platform. In the refrigerator example detailed in the executive summary, a public figure named Yonghao Luo was introduced. The Great Wall intends to use him as an ambassador of our Platform and promote our services. We intend to ask him to use The Great Wall platform to release future problems and also tweet on our behalf on his Weibo site with his extensive list of followers. Because of this public figure's effect, we could gather a significant consumer base in a relatively short period of time.
At the start of the business, we adopt a door-to-door sales pattern to our suppliers-the law firms in our target market.
We would ride the wave of consumer outcry as our initial phase of advertising utilizing these
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
people who are experiencing the same challenges with the same quality-related flaws. As the number of consumers with the same issue accelerates to a sufficient level, The Great Wall would assist them by contacting a professional law firm to help them solve their problem. This would be our first success case and we would use public relations to manage the spread of this information in free public media outlets. Since we will choose a big issue which will generate a huge social impact, it will be an efficient way to raise awareness of The Great Wall’s Website and App. We intend to maintain ongoing announcements of our successes via these outlets to maintain our social influence and public attention.
4.5.6. Integrated Marketing Communications
To set the tone of our limited marketing/advertising budget, we feel our brand character is empathy, empowerment, and effective. We feel our brand personality will highlight our comprehensive set of our services and further differentiate us from our competitors. We intend to apply a consistent brand message across both the traditional and non-traditional marketing channels described above to reinforce each other.
‧
It is important to make an early distinction: The Great Wall does not promote class action suits.
The Great Wall is a middleman between upset consumers and potential legal representatives charged with seeking resolutions through direct communications and negotiations with manufacturers. The Great Wall effectively lowers the transaction value of this type of legal representation making previously unfeasible cases possible.
5.1. Mobile App/Web Based Platform Models in Detail
The Great Wall is both a web based and app based platform for its two users, consumers with complaints and lawyers willing to take on their cases. The Webpage and App will both be designed so that all users can complete their primary task quickly, and efficiently without any fuss. Both the app and website function similarly. The Great Wall app requires downloading from the Android Market, Wan Dou Jia, 360 App Store for Android mobile devices, while Apple users will obtain our app through the Apple App Store. From herein the procedures for both the app and the webpage are relatively similar. Unless major variations exist, the minutia of differences will not be detailed. Major variations will be provided as necessary. The User will be prompted to identify themselves as either a consumer or a law firm. The following section discusses the user portal. The law firms portal will be disused later.
5.2. User Platform
On both the app and the webpage, users are required to agree with an exhaustive disclaimer that protects and safeguards The Great Wall from legal issues as well as informs users of our
‧
information sharing policies. Users will not be able to proceed without agreeing to these safeguards.
The consumer registers by inputting valid personal and contact information including telephone, email, and address. They are now ready to begin scanning barcodes for purchased items, and uploading supporting documents such as receipts, and warranty cards if available. One or all are acceptable; however a push notification will appear stating that a valid receipt must be used in the event of future negotiations. They will be prompted to take a photograph of the receipt and have The Great Wall App will store it in the cloud should it be needed for future legal negotiations. This is the user’s choice as some may prefer traditional methods of keeping paper receipts. A clear warning is pushed stating that lacking this critical supporting document will prevent them from being involved in a group case should they lose their hard copy being held in their own personal records at home.
Since the major benefit to this system is receiving notifications of potential danger/quality issues when other users upload formal complaints onto our system, users are now asked to determine their notification preferences and settings. We don’t want them to be bogged down with an overload of messages, so we suggest collecting enough complaints before an initial notification is sent.
If a Great Wall user(s) has lodged an official complaint on our system pertaining to the exact product that other users have stored on our system, notifications will be sent as per their individualized preference settings just discussed.
These notifications will be sent in two formats, one in app notification, and one via email. The message will not detail the personal user information, rather just the complaint details. It will
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
also identify the monetary value the individual(s) have transferred to the third party escrow account, Ali Pay where it remains safely. This will be disused in detail to follow.
If the recipient(s) of the notification finds themselves with the same product issue, they can follow the same easy steps to lodge their official complaint on the Great Wall Platform whether they are in the app or on the Great Wall Webpage.
5.3. Lodging an Official Complaint
The user will be asked to upload a receipt if not previously performed. Additional uploads can be performed at this time if further supporting documents are available such as warranties.
Product photographs depicting the issue can also be supplied if available and pertinent to this case.
The user will then be asked to write a series of short answer questions which in the future could be used to create value as a potential monetary stream, for example:
Did you contact the customer service department of the store/manufacturer/ distributor? If yes, was their service helpful? If no, why didn’t you contact them first?
What has caused you to make a complaint on this platform?
What other features of the product disappoint you?
Do you have any recommendations on how to improve this product?
Next, in the event that the user had previously scanned the product barcode, a sliding scale of contribution is immediately presented to the user based on the underlying value of the asset. If