20042004 年年 1010月月

地 板 衬 地 板 衬 dbdb covercover

* Underlay supply source – non specific common polyfoam sheet

producer

* Basically there are 2 major types of wood flooring : - plywood base - solid wood base

* Underlay availability : - polyfoam with or without silver covering applicable to both housebrand and generic product - those without the silver – lining comes with PE lining.

Wood Flooring / Underlay Market Composition

W’sale / Retail

Centers

Home Décor Mall

Home Décor Hypermart

Contractors

Interior Design /

Contractors

Distributors operating outside Branch/ Sales Office district.

Manufacturer own Retail outlet

Wood Flooring / Underlay Market Composition

(1) Wood Floor Manufacturer

National / Regional Operator

Manufacturer

Self Operate Retail Outlet

Branch / Sales Office

W’sale / Retail

Interior Design/ Contractor

Distributors operating outside Branch / Sales Office District

Market Breakdown By Segment

Interior Design / Contractors

Home Décor Hypermart ( Chain Stores )

W’sale / Retail

Own Retail Outlet

(2) Wood Floor Manufacturer

Regional / Provincial Operator

ManufacturerBranch / Sales Office

Distributors operating outside Branch / Sales Office District

Market Breakdown By Segment

W’sale / Retail

Home Décor Hypermart ( Chain Stores )

Interior Design/ Contractor

Interior Design / Contractors

W’sale / Retail

Own Retail Outlet

Wholesale / Retail

* Located at Home Décor Wholesale Center

Appointed Authorised Dealer for 1 – 3 manufacturers ( maximum )

and serviced by manufacturer.

• Product on Sales :

- Solid wood base flooring ( price range from Rmb 130 & above )

- Plywood base flooring ( Price range from Rmb 25 to 200 )

- Polyfoam sheet / underlay ( Price from Rmb 1.00 to 3.20 besides those

housebrand that offers f.o.c.)

* Showcase / display all wood flooring except underlay

Individual Market Segment – Operations

• Only hold stock for saleable lines with maximum of 100m2 each variant

( number of skus depended on each individual manufacturer )

* Majority of the operators farmed out installation work to 3rd party

* Offer quantity discount for all wood flooring.

Note : there is no operator that sells exclusively underlays.

* One stop shop for home décor products with multiple brands, each category

* Combination of manufacturer own retail outlet and authorized dealers located

in each given zone

* Also present are Interior Design / Contractor operators

* Patronized by Interior Design / Contractor operators and consumers with or

without their appointed contractor

Note : generally, brands present in this segment are of bigger setup.

Home Décor Retail Shopping Mall

* Usually a chain store with regional operation.

( Those with national operation are either JV or foreign owned )

* Multi brands operation concept, charging listing fees by product / sku

* Opportunity to have on site promotion activities.

* Operate on RSP basis with standard house profit margin but capped

at not higher than standard price at the wholesales center

* Sales term; cash and carry

* Currently no specific area allocated for underlay, but in the wood

flooring section

* patronized mainly by DIY consumers or contractors.

Home Décor Hypermart

* Primarily operate on project basis, not individual apartment

* Offers design and construction services as a package

* Quality of materials used depended largely on clients budget and request

* Provide guarantee workmanship for an agreed period.

Note : good opportunity for underlay especially those with water/ moisture resistant

product

Interior Design / Contractor

* Appointed for it’s network and logistic capabilities to be deployed outside HQ or

Branch / Sales Offices districts

* Operate own retail outlet and distribution network to wholesalers and contractors

* Distribute other home décor related products.

* Operate sizeable warehousing facilities to keep stock.

Distributor

* Low interest, but an essential product in the wood flooring market

* Basically only 1 variant available in the market

* Common product knowledge and moisture resistant

* Usually cost is added to the wooden flooring or labor charge

* Underlay is offered free for flooring manufacturer with housebrand

* On site, product is treated unkindly

Synopsis of Underlay Market

* Wholesale / retailer and contract will not be willing to sell the product unless

sold separately.

* Wooden floor manufacturer only sell their product and the underlay as a

package, hence cost of latter must not deter the overall competitiveness

Threats

* Basically, it is still an unexplored market traded as a commodity,]

with no branding with no branding

* Trade and consumers not aware of the functions and importance

of underlay

* Floor manufacturer will not be keen in this area ( not their specialty ) .

Opportunities

` db Cover ‘ is made from an international patented formulation specifically for

latex based materials that safely protects and extend the life of your expensive

wooden flooring from microbial attacks and fungal growth, thus offering you a more

hygienic and comfortable living environment.

Brand / Product Positioning

* To be the first branded underlay in the market

* To establish a distributive trade with product presence in G’zhou by mid

December 2004 and the rest of the PRD by mid 2005.

* Establish a price range that is within 10% of the 2 respective wood base floor

products.

Marketing Objectives

* Pegged against solid wood floor retail price at Rmb 180 pm2 and above

for standard `db cover ‘.

* Focus on 3 key channels/ trade segments

- Wholesale / Retail

- Hypermart

- Interior Design / Contractor operations ( project base )

Target Market / Audience

Strategic & Tactical Approach

Product Strategy

* Maintain current standard range of 4 variants for solid base flooring:

i) moisture resistant

ii) high impact sound reduction

iii) sanitized anti – bacterial treatment

iv) 3 in 1 ( combination of the above into one )

* Primary focused variants, to make these our flagship products :

i) moisture resistant

ii) 3 in 1

* To produce custom made products for professional usage.

* Introduce a lower price product specifically for plywood base flooring – 2 variants

i) moisture resistant

ii) high impact sound reduction

( Rationale : common issues for the thinner plywood base flooring. )

* Standard Packaging :

- pack size : 1m ( width ) X 50m run

- PE over wrapped for both faces.

- standard coil core

- product marked with length run by 1 meter each.

Rationale :

- Limited merchandising space and dusty environment in the w’sale/

retail trade – at best 2 products.

- Only hypermart and floor manufacturer have the retail space to accommodate

wider product range.

- Plywood base flooring prices are much lower.

Pricing Strategy

* Establish a national pricing policy system at 2 levels:

- RRSP ( Recommended Retail Selling Price )

- Ex. Factory Price plus distribution cost / charges

Rationale : prevent cross boundary profiteering with the transport charges.

* Adopt a volume and early payment term discount structure.

* Develop a pegged pricing system – 10% of the wood flooring cost at the start,

except for speciality or custom made product.

Sales And Marketing Strategy

* Introduce ` db cover ‘ as the first branded product to rebuild the Underlay market

to eradicate the commodity mentality

* Adopt a 2 prong penetration sales strategy

- Direct Sales

- Distributive Trade structure

1st Prong Approach Direct Sales

Zahonero

Key Account - Hypermarts

Specialist - Interior Design /

Contractor

General Sales – Wholesale / Retail

2 Prongs Market Penetration Approach For G’zhou

2nd Prong Approach

Distributive Trade

Zahonero Mfr.Branch/Sales

Office

Authorized W’sale / Retail

Contracted Interior Design / Contractor

Distributor

Self Operate Store

Self Operate Store

W’sale / Retail

Contractor

2 prongs Market Penetration Approach for G’zhou

* Priority given to Direct Sales to establish immediate market present through

the general trade ( Wholesale / Retail and Hypermart )

* Phase out the execution into 2 phases, with latter being the full roll out;

- Phase I : a) select a medium size wholesale center to start off offering a one off

special term to establish a market referral for the sales team

b) get listing in a local hypermart

- Phase II : Full roll out to all sectors

* Enlarge the branded market by offering OEM products to selected Floor

manufacturings

* Work with Hypermart on joint Sales promotion with co – op advertising.

* Operate on 100% distribution execution in Wholesale / Retail center or Mall,

Advertising and Promotion Strategy

* Priority given to In- store product merchandising / display in all trade segments

* Create a merchandising kit for all w’sale / retail outlets :

- create a specific location to display the sell in products , stand alone or affixed

to wall.

- display with product information board and leaflet

- issue authorized dealership certificate in plaque

* Organize periodic on site trade promotion during peak season.

* Organize joint promotion with Real Estate Developer / Interior Design – Contractor.

Rationale :

- create a presence and build awareness at the Point of Sales

- dispense product information and highlight the importance

- create an on the spot availability.

* Upon achieving targeted w’sales / retail distribution, commence in store promotion

at hypermart.

Sales Organization Set up

* Establish 2 Sales Team, each with different requirements, managed by

a Sales Manager :

i) Key Account servicing ;

- Floor Manufacturer ( Trading Partner )

- Hypermart Chain Store

- Interior Design / Contractor

ii) General Sales servicing ;

- Wholesale / Retail trade

- Contractors

* Division Manager and Sales Manager to manage all initial negotiation

particularly key account clients

* Distributor to be managed by Sales Manager.

* Recruitment recommendation for initial 6 months for G’zhou city operations

- Sales Manager 1

- Key Account Manager 1

- General Sales Representatives 3

Total field force : 5

Issues and Concerns

* Can the roll of product be lined or covered with PE sheet.

* What is the weight of the 1m X 50 m roll

* The possibility of producing a thinner and lower price underlay for the

plywood base products.

* When will the products be ready

* When will the recruitment process commence.

* Do we have the logistic means for physical distribution, both large and small

order. Latter down to an order of 1 roll.

* Zahonero willingness to do OEM for Floor manufacturers

* The trading terms.