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Lifetrons Switzerland bluetooth product
- 1. 2014-2015 Msc International Business | Linh Lai
- 2. 1 Contents Overview....................................................................................................................2 Company introduction ............................................................................................2 Product introduction ...............................................................................................2 International context and future prospect ..................................................................3 The growth of consumer electronics market ..........................................................3 SWOT analysis .......................................................................................................4 Commercial offer.......................................................................................................5 Request for quotation..............................................................................................5 Letter of Reply........................................................................................................6 Intercultural aspect of negotiation ..........................................................................7 Buyer¡¯s profile:....................................................................................................7 Cultural differences to be noted: .........................................................................7 Negotiation Strategy:...........................................................................................7 Appendix....................................................................................................................8 CAP Table...............................................................................................................8 Objections and answer to objection........................................................................9 Incoterm Calculation: ...........................................................................................10
- 3. 2 Overview I. Company introduction Founded in 2005, Lifetrons Switzerland prides itself on providing innovative products with high quality to customers all over the world. Despite its short lifespan, Lifetrons Switzerland has proven to be one of the best brands for unique electronic essentials and accessories for travellers in the move and achieved an impressive collection of product award from prominent entities such as iF Product Design Award and Red Dot Design Award. Our vision is to become globally recognized brand of excellence and the foremost supplier for innovative high quality lifestyle products. With customers at the center of our service, Lifetrons Switzerland has been devoting our R&D resources to provide the ultimate solution for refined travellers all over the world. Our wide range of compact electronics with Swiss promise of quality design, reliability and innovation has reached millions customers through our distribution of onboard selling in 120 different airlines and in selected duty-free shops worldwide. II. Product introduction The main product we are introducing is the DrumBass III Bluetooth Speaker. This is one of our signature products that received Red Dot Design Award in 2013. Specifications: ? Dimensions: ?43mm x 55mm ? Output: 3W ? Weight: 86g ? Rechargeable via standard USB output ? Mini USB input for charging (3.5 hours) and 3.5 ? Music playback time: up to 10 hours ? Wireless range: 10m ? International warranty Features:
- 4. 3 ? Swiss-designed with an elegant black metallic finish ? Built-in Bluetooth wireless technology works up to 10 meters away ? Enjoy up to 10 hours of audio playback time ? Improved DrumBass technology delivers stunningly powerful sound ? Dual Color LED: The LED indicates charging or playback status What¡¯s Inside ? DrumBass III BT Bluetooth Speaker ? Audio and charging cable ? Exclusive magnetic storage case ? User guide Compatibility ? Any portable audio device with Bluetooth capability ? Any device with a 3.5mm input for audio playback ? Any USB port for charging International context and future prospect I. The growth of consumer electronics market The consumer electronics market is one of the fastest growing markets globally. As technology keeps changing at accelerating pace, many customers strive to keep up with the latest gadgets and models. The graph below shows the intention to buy electronics devices in the next 12 months through a survey conducted by euromonitor. As indicated in the graph, tablets and smartphones are among the top buying list in both emerging and developed markets. The increase in use of tablet and smartphone will potentially raise the global sales of complements goods such as electronic accessories and computer peripherals.
- 5. 4 In Singapore, it is estimated that consumer electronics spending will increase 6-7%, reaching 4.2 USD. With computer hardware sales increased from 2.04 billion USD 2013 to 2.12 billion 2014, AV sales increased from 811 million USD to 986 million USD and handset sales from 1.06 billion USD to 1.09 billion USD according to businessmonitor, Singaporean market is expected to be heating up with competition, in which a player can only succeed if it has valuable products to satisfy the strict, premium-oriented local customers. II. SWOT analysis Strength Follow Swiss standard of product quality Innovative product with great design International Awards Global Presence Good after sale service Weakness Price of product (higher than average) Young company Distribution limited to onboard selling and few duty free shops Opportunity High demand from the market Postitive image of Swiss product Increased passengers movement in airports Strategic location of Changi International Airport Trade agreement between EU and Singapore Threats Intense competition Strong local consumer electronics industry Cost of exportation
- 6. 5 Commercial offer I. Request for quotation Sprint-Cass 49 Jalan Pemimpin #06-01/07 APS Industrial Building Singapore 577203 Lifetrons Switzerland AG Schultrasse 3, 9115 Dicken Switzerland Subject: Request for price quotation for DrumBass III BT Bluetooth Speaker Singapore, January 10th , 2015 To Whom It May Concern, As a major electronics retail store in Changi Aiport with 7 outlets in Transit Areas and Public Areas, we are currently looking for new valuable brands to add to our wide selection of electronics devices. Sprint-Cass prides itself on providing a wide array of electronic consumables ranging from Cameras, Computers, IT Peripherals, Games, Software to Lifestyle Electronics and Digital Imaging as well as working with impressive line of international brands such as MobileGear, McGear among other prominent brands. We have been particularly interested in your product: DrumBass III BT Bluetooth Speaker and would like to offer it to our customer. We are considering the volume of 3000 pieces at the beginning and if the product is welcomed in Singapore, we can double the order to 6000 pieces. We need the product to arrive on April 20th , 2015 as the last day in order to prepare for our Summer season sale. If this line of product is working well, we can consider adding more products from Lifetrons Switzerland to our outlets. We are looking forward to receiving your best price quotation. Sincerely Andy Lau Head of Purchasing
- 7. 6 II. Letter of Reply Lifetrons Switzerland AG Schulstrasse 3. 9115 Dicken Switzerland Sprint-Cass 49 Jalan Pemimpin #06-01/07 APS Industrial Building Singapore 577203 Subject: Quotation for DrumBass III BT Bluetooth Speaker Dicken, January 15th , 2015 Dear Mr. Andy Lau, We are writing to respond to your letter dated January 10th , in which you requested for our quotation of 3000 pieces of DrumBass III BT Bluetooth Speaker. First of all, thank you for your interest in our company and our product in particular. We are glad to enclose the detailed information about our product below and we are open for further discussion about price and product at your convenience. ? 3000 DrumBass III BT Bluetooth Speakers ? Individual box packaging ? 98 pieces per export carton ? Price condition: CIP Singapore ? Delivery date: March 17th , 2015 ? Payment conditions: 50% draft payment upon order placement, 50% upon delivery Pro-forma Invoice: Unit price Total Price DrumBass III BT 74 USD 222,000 USD Contractual terms: Total amount due: 222,000 USD Incoterm: CIP Singapore Packaging: individual box packaging Transportation conditions: Air transport Final destination: Singapore Payment terms: 50% draft payment upon order placement, 50% upon delivery Insurance: Covered up to CIP Transfer of property: Goods will deem to belong to Sprint-Cass when full payment is received Applicable Law: If disputes arise, the law of Singapore will be applied to resolve conflicts We are looking forward to discussing prospect of your order in the near future Sincerely, Lynn Amstrong Commercial Director
- 8. 7 III. Intercultural aspect of negotiation 1. Buyer¡¯s profile: Established in 1983, Sprint-Cass is the biggest electronics retail store in Changi International Airport and currently operates 5 outlets in Transit Areas and 2 other stores in Public Areas. Its location in Changi International Airport (approximately 5 million passengers per month) has given Sprint-Cass strategic exposure to attract customers and increase sales. Their customers are most often travelers who are waiting for their flights. They particularly look for light, compact and sleek devices with reliable quality. 2. Cultural differences to be noted: Singapore is a multiracial country; one should be cultural sensitive over this matter and avoid talking about religion, race or politics. At the first meeting, one should make sure to use the person¡¯s title and family name followed by his personal name, if the has a Chinese name. If he has English name, he can be addressed in Western manner. Business cards should be exchanged and treated respectfully. Ideally, one should give and receive by both hands and place it in front on the table. Small, meaningful business gift is greatly appreciated. Gifts are normally wrapped, presented and received by both hands and opened when the giver partner leaves. Singaporean tend to get right down to business in meeting, they are fast-paced and make decision quickly. Thus, it is advisable to get straight to the point with Singaporean and be direct when dealing with issues of money. Tardiness is considered disrespect for Singaporean, one should make sure to be on time or inform the delay beforehand. In Singapore, a trusting business relationship takes several years to form but once established, this relationship can last for very long time. Therefore, one should always be mindful of their promises and act up to their word. 3. Negotiation Strategy: Our main objective in this negotiation is to widen our product distribution and increase our presence in Singapore. In order to achieve that, we are looking for lifelong and solid relationship with Sprint- Cass. In order to pursuit our win-win strategy, we are willing to sacrifice up to 8% of our margin. We can offer additional discount if Sprint-Cass agrees to buy some other products from Lifetrons or increase the sale volume. Price can be further decreased if buyer agrees to take charged of transportation and insurance. If Sprint-Cass agrees to prolong the relationship and order higher volume (at least double), price can be negotiated and decreased up to additional 6%.
- 9. 8 Appendix I. CAP Table Characteristic Advantages Proves Security ? Swiss design ? In-house R&D ? Close relationship with manufacturers ? Secured products according to Swiss standard ? Safety priority ? Close control and monitoring ? ISO 9001 for quality ? International warranty Pride ? High quality ? Refined, distinctive design ? Fashionable ? Elegant black metallic finish with magnetic cover ? Bring out styles and personality ? Powerful Bass ? Red Dot Design Award 2013 Novelty ? New design and concept ? Attract refined travellers ? Cord to connect 2 speakers ? Improved DrumBass technology Comfort ? Small, Compact ? Portable ? Ease of use ? Reliability ? Use for different activities ? Save packing space ? Weight 86g ? 10 hours of audio playback ? Bluetooth compatible and USB chargeable Money ? Affordable ? Everyone can buy ? Average price is $95 per item ? Free 2 years warranty Sympathy ? Style that interrelated to innovation ? Uniqueness ? Perception of Swiss-design ? Stimulate need to be in style and be different from customers ? Customer class ? Design award ? Exhibition in Red Dot Award Museum Singapore Environment ? Environmental- friendly ? Produced with low carbon footprint ? Sustainable material ? Paper box instead of plastic ? Small size, use less paper containers
- 10. 9 II. Objections and answer to objection Objections Answer to objections This product is so expensive I agree that this product is at a higher price than other speakers but it is not expensive compared to the quality and benefits it brings to customers. We have to emphasize that this is Swiss standard and the design is so sleek that would make customers want to pay for a little more money. There is nothing special about this product Our product is very differentiated from other speakers. It has great sound quality, long lasting battery, portable which is suitable for a lot of activities like outing, camping, etc This is Swiss design but assemble in China, the quality cannot be very good We keep very long relationship with our manufacturer in China, which really helps us monitor the quality of the products. Even though it is assembled in China, the manufacturers still have to follow our protocol and standards, which still makes our product a Swiss standard. The device is easily ruined Our speaker is protected in a sturdy magnetic box and then a cloth packaging outside, it will not break easily if you drop it. Furthermore, we have international warranty which can be reached easily through our regional office There are a lot of competitions Yes, it cannot be denied. However, there are few portable speaker that has our design, quality and is wrapped in a magnetic box The cord is so short and how can customers replace the cords once they are ruined You can easily find similar cord in the market in variable price range. Though the cord is short, I think most people will use it to connect to other speakers as nowadays, most devices have Bluetooth and it is the main feature of this speaker I cannot finalize the order today, I need to have a closer look at it Is there anything I can do to help you with your decision? You know that we are offering you a very innovative product and a very good price. If there is anything unclear to you, we can find a solution together.
- 11. 10 III. Incoterm Calculation: We choose to deliver 3000 pieces of DrumBass III BT Bluetooth by air transport from Shanghai to Singapore. Following is our calculation concerning Incoterm Total of pieces: 3000; 98 pieces/packing box Unit Price: $67/ EXW from Shanghai = 85.09 SGD Weight: 100g/ pcs (including box) Dimension: 55mm x 43mm x 43mm/ pcs Size of packaging: 0.5 x 0.5 x 0.4, 10kg/box; 31 boxes Data Unit per box Total Real Weight 10kg 10 x 31= 310kg Volume 0.5 x 0.5 x 0.4 = 0.1m3 0.5 x 0.5 x 0.4 x 31= 3.1 m3 Virtual Weight 3.1/6 x 1000 = 517kg Chargeable Weight 517kg Tariff (air transportation: Shanghai- Singapore) (DHL) 21-44kg = 4.54 SGD/kg 45-70kg = 4.08 SGD/kg 71-99kg = 3.92 SGD/kg 100-299kg = 3.84 SGD/kg 300-499kg = 3.6 SGD/kg 500-999kg = 3.48 SGD/kg 1000kg + = 3.36 SGD/kg Calculation of threshold: (1000 x 3.36)/3.48 = 966 >517 so we will use the tariff of 3.48 SGD/kg So, transportation cost = 517 kg x 3.48= 1799 SGD (1416.5 USD) Incoterm Table: 1 US dollar =1.27 SGD Logistical conditions: Delivery time: 2-5 working days Insurance: 0.25% on 1.2 CIP by air Inland transportation from factory to airport: $50 Insurance coefficient= 1-(0.25% x 1.2)= 0.997 Incoterm Total price (3000 pieces) Unit price USD Unit price SGD EXW 67x3000 = 201,000 67 85.09 FCA 201000 + 50= 201,050 67.02 85.11 CPT 201,050+ 1,416.5 =202,466.5 67.49 85.71 CIP 202,466.5/0.997 = 203,075.73 67.69 85.97