Home' Trinidad and Tobago Guardian : March 22nd 2015 Contents SBG12 CASE STUDY
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt MARCH 22 • 2015
After winding down from a
hectic Carnival season, Janet
Simon was reviewing plans
for the upcoming year at the
electronics store that she
managed with her husband.
The couple had recently discussed finding
new ways to serve their existing customers
and the need to reach a wider audience for
their products and services. Janet was excited
by the thought of developing a Web site and
offering the company s products online but
was not sure if her husband would be receptive
to such a major change in strategy.
The marketing strategy they had put in
place five years ago seemed to be working rea-
sonably well but she sensed an overhaul was
needed if they wanted to remain competitive
and improve sales.
Simon s Electronics opened for business in
1998 and, over time, had developed a repu-
tation for offering superior customer service
and reasonable prices on a wide range of
household appliances and electronic equip-
ment. Shortly after opening, the owners had
started offering high-end headphones and
speakers for sale but this experiment was short
lived as sales were slow and stocking these
items tied up too much cash in inventory.
As Janet recalled "My husband and I learnt
our lesson from that fiasco, stick with what
you know you can do well". With the wide-
spread introduction of high definition television
sets to the local market in 2005, sales had
flourished as customers upgraded their old
sets to the newer digital models. Sales of HDTV
sets currently accounted for 40 per cent of
total revenue and the store was also one of
the few places where customers could have
their sets repaired.
In recent years, the repair and service depart-
ment had experienced rapid growth although
sales of the televisions themselves had slowed
sharply as larger competitors entered the mar-
ket.Overall, sales had declined 14 per cent over
the past three years as consumers responded
to a slowdown of the local economy by delaying
purchases of big ticket items such as HDTV
When Simon s Electronics first opened, the
local market was divided between the large
retail outlets which sold a wide range of fur-
niture and household items (including elec-
tronics) and smaller independent electronic
The larger retailers typically carried a narrow
range of name brand products which tended
to be similar in price to what was available at
the smaller electronic stores. These retailers
were, however, able to offer deeper discounts
during their sale periods due to the economies
of scale that they enjoyed. In contrast, the
smaller stores frequently stocked a wider range
of items, including lower quality brands that
were sold at much cheaper prices than the
more popular brands.
Several of the smaller stores also competed
by stocking a variety of parts and accessories
as well as providing a repair service for the
items they sold. This repair service was also
available to customers with products purchased
from the larger retailers but which were no
longer under warranty.
The downturn in the local economy had
seen a significant shift in the market with
fierce competition among retailers and the
exit of many of the smaller electronics stores.
The entry of a membership warehouse club
into the market had further depressed the
price of electronics and generally made cus-
tomers more price sensitive.
The customers who patronised Simon s
Electronics comprised four distinct groups.
There was a relatively small set of commercial
customers consisting of bars and pubs who
provided multiple televisions for the enter-
tainment of their customers. These business
customers often bought multiple units and
required both installation and after sale service.
The sets that were bought tended to be larger,
high-end units and these customers were more
focused on reliability of the sets rather than
the sticker price.
Hobbyists comprised another core group
of customers. These were primarily persons
looking for parts to build or repair their own
electronic devices. This customer segment
was mainly interested in electrical accessories
and power units which could not be easily
sourced at the larger retailers. These customers
tended to be middle aged or teenaged males
who were serious about their specific projects
and though limited in number, were very loyal
to the store.
Over 50 per cent of the store s sales was
derived from customers who were unfamiliar
with the newer technologies available and
depended on the sales assistants in the store
to provide recommendations about the prod-
ucts they should purchase.
In order to cater to this segment, Simon s
Electronics invested in a high level of training
for its employees so they could easily explain
the features of all the products sold in the
store. This level of service was difficult to
obtain in the large retail stores and many of
these customers relied heavily on word of
mouth referrals when selecting electronics.
This segment was quite price sensitive and
less interested in purchasing the most updated
technology in the market.
The final set of customers were younger,
upwardly mobile professionals and students
who were very knowledgeable about the latest
technologies and were incredibly price sensitive.
They were more likely to buy niche brands
and products that might not be available at
the larger retailers and spent a lot of time
online researching these products before they
made a purchase.
This group made up the second largest seg-
ment of customers for the store and were most
likely to bring in products purchased elsewhere
Simon s Electronics carried a variety of elec-
tronics and small electrical appliances.
The store had a wide range of HDTV sets
from all the leading manufacturers along with
accessories and wall mounts. The inventory
also included musical supplies and specialty
wiring that would be needed to install home
In an attempt to diversify its product lines,
the store had recently received a supply of
cellphone cases which Janet hoped would
appeal to the students and young professionals.
Small appliances and electrical parts needed
by DIY builders rounded out the store s inven-
The store policy was to set prices that were
equal to or no more than 10 per cent higher
than competitors. Repair services were priced
based on a combination of parts and labour.
Janet paid the repairmen $50 per hour but
used a rate of $100 per hour when calculating
the customer s bill.
A 50 per cent markup was also added to
any parts that were required to complete the
repair. The store currently offered a 90-day
warranty on items purchased and Janet was
considering charging a service fee to customers
who wanted a longer a longer warranty period.
She was still unsure however, how many cus-
tomers would be willing to pay for this serv-
ice.Little promotion was conducted by the store
since the owners believed that there was no
better advertising than having satisfied cus-
tomers spreading positive word of mouth. Fly-
ers for Simon s Electronics were distributed
on a nearby university campus and the store
was listed in the Yellow Pages.
Once a year the store took out a full-page
ad in one of the daily newspapers to advertise
its inventory clearance sale, This sale saw
prices on older models being reduced by up
to 40 per cent and usually generated a lot of
excitement among existing customers who
sometimes timed their purchases to coincide
with the sale. Janet was considering developing
a website to promote the company and its
products as well as using some form of social
She estimated that it would cost at least
$10,000 to develop the site and recognised
that she would have to hire an additional
employee to maintain the site on an ongoing
basis. Although implementing these changes
could prove to be a costly mistake Janet was
convinced that a more effective marketing
strategy was needed to arrest the current
decline in sales.
1. What are the major
strengths and weaknesses of
2. What segment of the market
should the company target?
3. What marketing strategies
should the owner pursue in
order to ensure the viability of
Dr Barney Pacheco is a lecturer in the
Department of Management Studies at
The University of the West Indies, St Augus-
Case Study: Simon's Electronics
Boosting retail business sales
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