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Environmental Appraisal →

EMDICO

Emam Distribution Co. Ltd (EMDICO) was the newly appointed distributor of KSA by Fuji. Fuji Film is among the world's leading marketers and manufacturers of magnetic papers, photographic film, photo papers and cameras. Fuji organized her product lines in three groups that include information systems, photofinishing systems and imaging systems. Its most significant single line of product was Fujicolor series of the color negative films, while the item that sold the most was Fujicolor Super HR 100, a deal for daily photography. With regard to the market position of Fuji in the Kingdom of Saudi Arabia (KSA), as Fuji film became sold in Israel and thereby, blocked from conducting business within the Middle East until March 1983 when the Arab boycott became lifted. At the lifting of the boycott, Fuji identified exclusive distributors within the Middle Eastern countries by the help of a Japanese trading company called Mitsui Corporation. However, the distributor appointed in KSA seemed not to respond well to the challenges of marketing caused by the then Gulf war. Fuji therefore, turned to EMDICO and planned to announce its appointment on the 7th of December, 1991 (Yoshinori &Quelch, 1999).

The Absorption of EMDICO

The negotiations between Fuji management and EMDICO resulted in market growth assumptions, as well as the sales goals of 1992 to1995. Should the set goals not be realized, Fuji reserved that right to reassign this distributorship after a minimum two year period. The mission of Srinivasan, the general manager of EMDICO, was to come up with a marketing plan which would meet the objectives of Fuji, while at the same time making money for EMDICO. He estimated the minimum 1992 administrative and general overhead associated with Fuji distributorship to be at SR 400,000 (Yoshinori &Quelch, 1999). Srinivasan believed EMDICO to be well placed to actually compete for the two-year government contracts to supply to hospitals the medical X-ray film. He thus, focused on the improvement of the Fuji sales to the consumers of which he expected might account for EMDICO's 80% of the Fuji-related revenues over the five years that were to follow. He turned to resolving several issues that include; the announcement, geographical coverage, communications, organization, distribution, product mix and pricing (Yoshinori &Quelch, 1999).

The announcement

There appeared to be different opinions on the intensity of the leverage of the public announcement for the appointment of EMDICO on December 7. A local agency came up with a proposal that a press conference be held in Jeddah where 300 top dealers and journalists would become welcomed by the general manager, the new management team, including the senior managers of Fuji from Japan. The relaunch strategy of Fuji would become announced at this particular event. An estimation of the cost came up to SR 120,000 including an additional SR 30,000 if the advertisements became placed in major national newspapers. Alternatively, the announcement forthe appointment of EMDICO could become mailed simply to all the dealers within the Kingdom of Saudi Arabia at the cost of SR 10,000 (Milgate, 2003).

Geographical Coverage

Srinivasan had to come up with a decision on where to focus the initial efforts of relaunch and how rapidly this could be rolled out nationwide, that is if it could be done. He put into consideration three options that were; concentration on Jeddah; focus on KSA's 10 largest cities, Jeddah included with a 13 million combined population; or to just launch nationwide. The first option accounted for KSA camera sales and film up to 23% and 18% of the outlets selling cameras and film. The second option accounted for KSA's camera and film sales up to 90% and 85% of the retail outlets selling the products. To meet those sales targets that Fuji management set, the general manager became inclined to go countrywide as as possible (Javier 2004).

Communications

The communications budget of 1992 depended on geographical coverage, as well as aggressiveness of the used rollout plan. The general manager believed that his first priority needs to be the reestablishment of the Fuji brand awareness. He thus, planned to utilize the roadside signs also called mupi boards,as well as the billboards within 1992's first half. This was to be supplemented radio or television advertising within that year's second half (Yoshinori &Quelch, 1999).

Organization

Srinivasan seemed to have already begun the recruitment of an entire fresh service and sales organization. There seemed to be no shortage of the qualified personnel, as well as no inclination to go and hire any staff that worked for the other distributor. He came up with an estimation of manpower requirements including the monthly costs. The costs involved transportation and expenses. The sales managers were to spend half of the time supervising and the other half selling. Srinivasan planned the placement of special emphasis on the customer service (Yoshinori &Quelch, 1999). An inventory computerized management system became installed to bring about accurate and timely deliveries of the dealer orders. Moreover, the service engineers became required to repair and maintain the minilabs which Fuji leased or sold to the dealers. A single service engineer, with a cost of SR 2000 monthly , could cover 12 minilabs typically. The required number of the service engineers would depend on the aggressiveness of Fuji in setting out to install her minilabs at the retail outlets. The management of Fuji offered to train the service engineers of EMDICO at no charge to thisdistributor (Komuro, 1998).

Distribution

Srinivasan had the knowledge that the current Fuji's low dealer penetration had to be corrected, though he had to make a decision on those channels and dealers on which to focus the sales efforts. He came up with an estimation that five solid cells of sales could be made each day by a sales person and that two of these calls would be those of persuading a dealer to pick the Fuji brand. A sales call length depended partly on the width of that product line that is to be presented. He became hopeful that all Fuji's current dealers' loyalty could become reinforced and some of 100 dealers that had dropped the brand within the last two years could become persuaded to sign up once more. The general manager strongly believed in the point-of-sale signage. He came up with a plan to offer the new dealers and the current Fuji dealers the outdoor store signs which would feature the Fuji name and the dealer name in the white, green and red colors associated with Fuji brand (Yoshinori &Quelch, 1999). He estimated these signs average costs to be SR 2000. Nevertheless, the annual cost for supplying every dealer with the point-of-sale materials, the brochures, as well as the ceiling danglers for the inside of the stores. Also supplied is the Fuji tape for the shop windows perimeter including the display cabinets, which would be at SR 600. He planned to use a slogan which reads "You can see, this is Fuji" written in both English and Arabic on the ceiling danglers of the in-store. Srinivasan also wanted to come up with a print of special envelopes for the Fuji film processed within the Fuji minilabs having a slogan that reads "Quality prints within record time". Nevertheless, the delivery vehicles of EMDICO would carry the Fuji logo prominently (Milgate, 2003).

As a part of the distribution and communications strategy, Srinivasan had all though he decided to come up with a flagship. This flagship was an organization-run outlet known as Fuji Image Plaza within the forecourt of Safestwaysupermarket,which is the most modern and high traffic store within downtown Jeddah. This space would bring about a monthly cost of SR 15000 while the operating costs would amount to SR 5,000. This store would be operated as a photographic studio. In it, the full product line of Fuji would become displayed and sold. A minilab of Fuji would process films and become available for the dealer demonstrations. The initial equipment and fixtures investment became estimated to be at SR 180,000 (Javier 2004).

Product Mix

Srinivasan had to come up with a decision on whether the targets for sales required the launch of the complete line of the Fuji cameras and films, or whether he needs to focus, at least for the start on the selected higher-volume items.The latter approach could work towards the ease of inventory management though deliver a negative signal of Fuji not being a full-line supplier (Yoshinori &Quelch, 1999).Srinivasan had also in consideration three product alternative rollout strategies. One of this strategies involves the simultaneous relaunch of both cameras and film given that by purchasing one, one becomes stimulated typically to purchase the other. Certain advocates argued that the promotions on the cameras could be utilized in persuading dealers to stock the Fuji Film. The second strategy was to put a focus on the rejuvenation of film sales and to delay the promotion of cameras till 1992's second half. The third option involved the building of the relaunch around the minilabs sales on grounds. This would enable the dealers that installed the Fuji minilabs to be inclined to push and stock Fuji cameras and film (Yoshinori &Quelch, 1999).

Price

Srinivasan contemplated retail prices on the Fuji film to be at around 5% below that of Kodak and 5% above that of Konica. He had to put into account the current image of Fuji within the market, the necessity of signalling the true quality of the brand, and the significance of no making a price war erupt (Komuro, 1998).

Conclusion

Srinivasan weighed up his options as the public announcement for the appointment of EMDICO approached. The management of Fuji set up for EMDICO some ambitious sales goals from 1992 through to 1995. This seemed to suggest the necessity of an aggressive relaunch for the brand starting with a press conference deemed to be of high profile. On the contrary as a source of concern were Konica, Kodak and the previous distributor's possible reactions. Perhaps a relaunch of lower profile and a gradual rollout would be preferable. In both cases, the marketing program details for this relaunch had to become determined.

References

Javier, G. (2004). International Marketing Management and Exporting of Fujifilm.GRINVerlag.

Komuro, N. (1998). Kodak-Fuji Film Dispute and the WTO Panel Ruling. Journal Of World Trade, 32(5), 161.

Milgate, M. A. (2003). Transforming Corporate Performance: Measuring and Managing the Drivers of Business Success. Westport CT: Greenwood Press.

Yoshinori, F. & Quelch, J. A. (1999). EMDICO: (A) (Vol.9). Harvard Business School.

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