Haier in the U.S. Major Case Study

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10. Local manufacturing and purchasing has reduced costs and serves a strategic purpose for Haier in becoming a localized brand. The downside to this is that Haier is subjected to higher labor and land costs in the U.S. And Europe. In addition, the company faces a human resources challenge in dealing with local workforces around the world.

11. The parent Haier Group fully owns Haier America. According to the Haier America website, the U.S. subsidiary is considered to be Haier Group's "sales and marketing arm of the Americas" (HaierAmerica.com, 2010). As such, Haier America fills a key role in revenue generation, but there is only a limited role for the company in information transfer. By virtue of building a factory, however, Haier America is established as a major internal component of the Haier Group, due to the company's high level of commitment to the American market.

12. Haier's market entry strategy is to first move into a niche. Typically, this will be with a product that domestic producers have difficulty producing and selling profitably. Haier uses its cost advantages to enter this market and this helps to build the brand. Once Haier has established in a number of different niche markets, its objective is to move beyond into more mainstream marketing and product development.

13. Haier has been so successful entering the U.S. In part because the company has pumped a lot of money into the market. This has included the building of a factory in South Carolina and the establishment of a high profile partnership with the NBA. The company has gained success as well by establishing distribution through Wal-Mart.

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In addition, the niche strategy has worked well, allowing Haier to build its brand in smaller products before making a big push with its air conditioners and refrigerators.

14. Haier can move from being a niche player to being a mainstream one. The company's products are already relatively mainstream. What Haier needs to make such a move is to expand its distribution. At present, it sells through Wal-Mart and some other retailers. Haier needs saturation of retailers, especially the major national and regional chains. Haier also needs to get into the new home construction market, so that its appliances are purchased by contractors to furnish new homes. This lucrative market is a distribution channel that is yet unexplored by Haier.

15. Market segmentation is critical for Haier's strategic management because it places innovation and marketing emphasis on the end user. One of Haier's tactics is to develop products with an appeal to specific user segments. In doing this, they develop a niche where there may not have been one before, allowing Haier the opportunity to simultaneously fill that niche. Without fine market segmentation, the company would not understand its customers in sufficient detail as to develop products for those customers. Segmentation allows for this type of innovation and customer focus.

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