3. Strategy Formulation in the Marketing Planning Process166
Case 3
Royal Copenhagen A/S
Establishing relationships to international consumers with tableware –
Royal Scandinavia A/S is the mother company for the international known silver
and porcelain trademarks: George Jensen and Royal Copenhagen.
The Porcelain trademark can be dated back to 1775 when the Royal Porcelain Factory was founded, and in 2004 George Jensen celebrated its 100 years anniversary.
Today, the Royal Scandinavia Group is separated in independent units/companies
based upon their trademarks:
Georg Jensen A/S, producing watches and jewellery, is globally represented
through a large number of retailers and through 100 of its own shops and has
a strong market position in Denmark, Japan, Hong Kong and Taiwan. In Scandinavia and Finland, Georg Jensen A/S is a market leader in the Design/Living
segment. Royal Copenhagen A/S’s hand painted porcelain is the market leader in
Scandinavia and among the leading brands in Japan and a number of other Asian
countries.
This case is mainly based on the Royal Copenhagen A/S
The Company
Royal Copenhagen A/S (RC) has through a number of years shown a negative
balance on its accounts, and in the worst period even lost approximately USD
100 mill. each year. A turn-around of the company was achieved partly by changing the productions routines at home in Denmark and partly
by moving some of the production to Thailand.
(the famous RC ‘Flora Danica’ – see picture to
the right: According to Royal Copenhagen, the
Blue Fluted design is the company’s oldest and
has been produced since 1775. This was the first
service to be made at the Royal Danish Porcelain
Manufactory, and to this day it is still known as
Service No. 1.)
In the latter years RC has placed a great emphasis on the Japanese market, which today accounts
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Case 3 167
for 37% of RC’s total turn-over. The company has developed a unique market position in Japan after having exported to the country for 40 years in such a way that
70% of the Japanese consumers are familiar with the RC brand, says RC Director
Peter Lund.
Around the turn of the millennium RC strengthened its position further on the
Japanese market, and established a 100% owned sales subsidiary with a Japanese
Director. Also a number of Danes are employed in the subsidiary.
In the following years new 100% owned sales subsidiaries were established in Taiwan and Korea.
In 2004 it was decided to move some of the production from Denmark to Chiang
Mai in Thailand. Here RC and a local Porcelain manufacturer, Pardas, have formed
a Joint Venture with about 100 employees producing RC’s more standard porcelain
products. The more prestigious filled, complex and classical products are still produced in Denmark.
During the 80’s and 90’s RC has also establish sales subsidiaries in Germany, Italy,
UK and USA. Previously these markets were managed either directly from Royal
Copenhagen A/S export department or via local sales representatives. Today RC’s
main markets are Japan, Taiwan, Italy, USA and the Nordic Countries. Germany
and UK are no longer growth markets.
The Products
RC produces tableware, collectibles (plates and ornaments) as well as figurines, vases and gifts. The creating processes of the various products
are very complex and detailed,
and a common denominator
is that all products are hand
painted in complex patterns or
different motives. The products
come in white, blue, black, red,
yellow and green with hand
painted patterns/motives in
another colour(s). Each item
undergoes a long process of
moulding, casting and biscuit
firing before the painting, glazing and final firing, involving
skilled craftspeople at each
turn. The parts are moulded and assembled by hand. If one of the modellers or
moulders makes a single mistake, he or she will have to start all over again.
Learning the difficult and detailed craft normally takes up to 3 years in Denmark.
In Thailand, however, it has been possible to train the local craftspeople in only 30
weeks. One explanation being a very high degree of motivation as Thai workers
consider it very prestigious to work for Royal Copenhagen in Thailand and at the
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3. Strategy Formulation in the Marketing Planning Process168
same time Thailand has a tradition for old and beautiful Thai writing and lines in
their artworks.
Royal Copenhagen’s products are of high quality, high price and are considered
very luxurious. RC’s products have become collectors’ items for people around the
globe, and have – according to RC director Peter Lund – become a global brand.
Japan
As mentioned earlier RC have had a great success on the Japanese market. Contrary
to a decade with negative growth in the Japanese economy, RC has succeeded in increasing its turnover on the Japanese market with 6–7% during the last 5 years. The
Japanese economy is now showing a positive trend and during the last 6 months of
2009 the retail sector sale has steadily expanded.
It is primarily luxury goods which are in demand. The consumer places emphasis
on high quality and if the product can relate to a story even better. The Japanese
are much interested in Danish design, and have substantial knowledge of Danish
products.
Furthermore, Japanese culture is characterised by an important gift-giving tradition, and Peter Lund informs that it is prestigious to give a Christmas plate, a mug
or any other collectables from RC.
When selling the expensive and prestigious porcelain from RC, the consumer is at
the same time given an artistic and fairytale land experience. This is done by retelling the stories about Denmark, H.C. Andersen, the Royal Family, and the detailed
craftsmanship behind each product. The products are at the same time marked as
‘Danish design’.
RC sells today to the Japanese market via its Japanese sales subsidiary, partly directly to customers through its own shops (5) and shop-in-shops (37), partly through
wholesalers to department stores.
Questions
1. What is the target customer group for Royal Copenhagen’s tableware?
2. Evaluate whether it would be possible for Royal Copenhagen A/S to introduce a
global product strategy?
3. Why has Royal Copenhagen A/S chosen to market its products on the Japanese
market as ‘Danish design’, and associating them with stories of Denmark and
the Danish Royal Family?
4. What do you think is the reason for Royal Copenhagen A/S to choose a local
Japanese director for its Japanese sales subsidiary?
Note: The authors want to thank Christian Wibroe Warming for his input to this
case
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References 169
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44. Marketing Mix in the MarketingPlanning Process
Learning Objectives
After studying the section about product and service decisions you
should be able to do the following:
define the term product and product levels•
discuss the differences between services and goods•
explain the different product differentiation strategies•
explain the different product stretching strategies•
After studying the section about pricing decisions you should be able to
do the following:
discuss the importance of pricing decisions to the individual firm•
explain the major steps in pricing decisions•
explain how the product life cycle can affect the price decision•
understand the advantages with a differentiated price strategy across •
segments
After studying the section about distribution decisions you should be
able to do the following:
explain how distribution patterns affect the aspects of marketing•
list the functions, advantages, and disadvantages of various kinds of •
middle men
explain the different stages in the design of channel structure•
understand how distribution channels can be managed internationally•
After studying the section about communication decisions you should
be able to do the following:
distinguish between theories of how advertising works•
explain the steps in developing an international advertising campaign•
describe the targets and objectives of public relations•
discuss the objectives and methods of sponsorship•
explain the reasons for the growth in product placement and its risk•
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References
Zusammenfassung
Marketing – A Relationship Perspective
Moderne Grundlange zum Marketing
Das Lehrbuch behandelt eines der wichtigsten und aktuellsten Themenfelder des modernen Marketings. Der Ansatz verbindet dabei den klassischen Ansatz der strategischen Marketingplanung und seiner Instrumente mit dem neuen Ansatz des Relationship Marketing. Der ganzheitliche Ansatz des Buches umfasst dabei die aktuellen Marketing-Grundlagen, Praxisbeispiele sowie anwendungsorientierte Fallstudien und eignet sich somit ideal sowohl für Manager und Entscheidungsträger im Marketing-Bereich, Studenten in Bachelor- und Materstudiengängen sowie Dozenten und Trainer.