NATIONAL ECONOMICS UNIVERSITY

ADVANCED EDUCATION PROGRAM

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SUPPLY CHAIN MANAGEMNET

INDIVIDUAL ASSIGNMENT
Case study chapter 4 marketing: GIZMO

Student’s name: Lê Khắc Hùng

Student ID: 11182016
Date of birth: 24/03/2000
Class: Advanced International Business 60A
Teacher: Dr. Nguyen Bích Ngoc

Hanoi, 2021
 Table of Contents

A. Case study Question: GIZMO ................................................................................... 3

B. Question 1: Identify at least two different possible target markets for the Gizmo.
How would the marketing strategy differ for each target market? How would the pricing
strategy change and the volume sold? Identify the supply chain implications for each target
market. ................................................................................................................................. 4
C. Question 2: If Orange decides to go after multiple market segments, identify the
supply chain requirements. Should they have multiple supply chains? .............................. 7
D. Question 3: Discuss the advantages and disadvantages to going with one exclusive
distributor. How would this decision be affected by the selection of the target market? What
would be the implications on the supply chain? What would you do if you were Orange?8
E. Link references: ....................................................................................................... 10

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 A. Case study Question: GIZMO

Orange Company was based out of Southern California and was doing remarkably well
considering that only 10 years earlier the company had been merely a hobby for Sam
Wilkerson. Sam was fascinated by taking apart computers, adding memory, then putting
them back together. He never expected that his weekend hobby would turn into one of the
highest earning computer companies in the world. The company’s relaxed atmosphere
encouraged creativity and product innovation. The developers were never afraid to try
something new. In fact, it was one of these highly experimental projects that led to their
newest product: a smart phone that can do it all- simultaneously surf the Internet, text
message, do voice recognition note taking, play music and movies, while still maintaining
superior functioning for making telephone calls. With no buttons to get in the way, only a
touch screen, it was unlike anything seen on the market.

While the management at Orange felt that their new smartphone—named Gizmo—would
be well-received by consumers as innovative and cutting edge, they had concerns. They
were not sure about their target market, the marketing strategy, and the resulting supply
chain implications. These decisions were directly tied to their pricing strategy and had
capacity and delivery implications. Who would be their target market and how would they
price the product given its abundant features? Should the product be targeted to business
professionals or students or the public in general? If the Gizmo did significantly better than
expected, could their supply chain handle the added demand?

Orange was considering partnering with the largest mobile service provider in the industry,
Random Wireless, for exclusive distribution. This would mean that they could utilize an
already established distribution channel for their first smartphone release. Orange believed
that this would mean significant distribution savings and the ability to reach a wider market.
They would also be able to provide service support at many locations. However, there were
also disadvantages to going through one exclusive distributor.

Orange knew that they had a wonderful product but the key to success would be good
marketing, an excellent distribution network, and a reliable supply chain. They had some
decisions to make.

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 B. Question 1: Identify at least two different possible target markets for the
Gizmo. How would the marketing strategy differ for each target market?
How would the pricing strategy change and the volume sold? Identify the
supply chain implications for each target market.

In my opinion, there are two suitable target markets for Gizmo: students and business
professionals.
Target market
Students Business Professionals

Age 16 to 24-year-olds 25 to 50-year-olds

Occupation Pupils, college students Management, business, and

financial operations occupations

Income $3,900 ~$134,180

Quantity ~19.6 million ~21.5 million

Customer Most of the students are Gen Z, Contrast to students who are Gen Z,
behavior who are technology-native most business professionals are
generation. They are usually Gen Y. Business professionals are
online, consuming content, keen on communicating through
shopping online, and engaging email, text messages or even face-
with peers. They love quick food to-face communication. Being Gen
ordering service, work from home, Y, they have constant access to
playing games and studying modern technology such as laptops
online. and smartphones, their jobs and
social lives are closely tied to the
new forms of those electronic
devices. Millennials are considered
to be more family-oriented and
willing to sacrifice career
advancement for work-life balance.
Thus, the best marketing strategies for each would be relational marketing. Because with
phones, the customers typically have two-year contracts support. On the other hand, for the
students, it could be more of a transactional marketing, as they may not want to keep the
Gizmo as long as business professionals. To analyze the difference between marketing

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strategy of student and business professionals, 4P marketing mix is the best tool for Orange
Company.
Students Business Professionals

Product For students, Gizmo smartphone For professionals, Orange should

should focus on introducing high-
quality products that have great
cameras, professional sound systems,
great User Interface for smooth
experience to satisfy the self-
expression needs. Gizmo should
provide a large amount of RAM for
students who love playing games.
invest to enhance the Gizmo’s
quality such as: battery capacity,
information security, camera, The
smartphone design needs to be easy
to use. Price does not seem to be a
matter of this target market.

Price $299 is the best price $880 is a good price for business
for students with low income but still professionals as they have high
satisfy their demand. income.

Place As Gen Z love shopping online,
Orange should sell Gizmo both
online and offline. Random Wireless
should provide smartphone delivery
service in order to quickly deliver.
For business professionals, they love
shopping offline more than online as
they want to experience the phone
first before deciding to buy it. Thus,
Random Wireless should invest
more in customer service at stores in
order to support their experience
with the phone.

Promotion Free ship and discount are two Orange should provide discounts in
promotion methods for students. promotions, sponsor events such as
Another promotion is selling Technology festival, black Fridays.
accessories with smartphones such as Moreover, Random Wireless should
beautiful Phone cases for students as invest on fast delivery services as
most students love shopping with business professionals love the
low prices. convenience, thus they are willing to
spend more money in return for
convenience and time saving.
As a result, two target markets lead to the two different pricing strategies and volume sold.
The best pricing strategy for students is market-penetration pricing while market-skimming

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pricing is suitable for business professionals. According to Philips Kotler in “Principle of
marketing”, if market-penetration pricing is setting a low price for a new product in order
to attract a large number of buyers and maker shares, market-skimming pricing focus on
setting a high price for a new product to skim maximum revenues layer by layer from the
segments willing to pay the high price, the company make fewer but more profitable.
Obviously, with market-penetration, Orange can sell a numerous volume of Gizmo with
the cheaper price than selling with market-skimming price (more expensive with small
volume). For a new product like Gizmo smartphone, in my opinion, market-penetration
pricing is more appropriate than market-skimming pricing. The big disadvantages of
market-skimming pricing is that low quantity of product being sold. Moreover, market-
skimming is a risky strategy for Orange company as it only works under certain conditions.
First, the product’s quality and image must support its higher price and enough buyers must
want the product at that time. This means the Orange company must be so famous that
many people love to buy Gizmo by all means, however, the Orange company cannot
compete with big enterprises like Apple. Second, the costs of producing a smaller volume
cannot be so high that they cancel the advantage of charging more. Finally, competitors
should not be able to enter the market easily and undercut the high price. Those three
difficult conditions are the barriers for Orange to apply market-skimming pricing strategy.
On the other hand, despite the low price resulting in less profit sales, market-penetration
pricing is much more useful than market-skimming pricing. In fact, market-skimming
pricing helps Orange succeed in marketing campaigns as it raises a large number of buyers
and large market share quickly. This also requires the condition that the smartphone market
must be highly price sensitive so that a low-price process more market growth. Of course,
students are the type of customers that are always sensitive with prices and they quickly
update the information. Therefore, market-penetration pricing is the best choice for
Orange.
When it comes to supply chain management implication, deciding two target markets:
students and business professionals also leads to two different Supply chain management
decision through marketing mix 4Ps. When it comes to the product, Orange should address
decisions of quality and packaging, which are directly supported by supplier standards and
logistic packing decisions. Second, in order to perform marketing strategy for students or
business professionals, pricing strategies and price flexibility are directly tied to supply
chain costs. As the price for professionals is higher than the price for students, the logistics
department should design 2 different packaging for Gizmo products. In terms of place, the
decisions including selection of distribution channel and market coverage, also lead to
supply chain management decisions containing traditional logistic, sourcing, and
operations decisions such as inventory management, order processing, transportation, and

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reverse logistics. Last but not least, the decision of Orange must involve a sale discount,
public relation for students or business people’s promotional strategies.

C. Question 2: If Orange decides to go after multiple market segments,

identify the supply chain requirements. Should they have multiple supply
chains?
By pursuing multiple market segments, Orange can promote the customer size, market
area, and product line of Gizmo. This market segmentation makes meeting clients
expectations more cost-effective. I believe that Orange should target numerous market
sectors in order to generate better client groups based on productivity, which plays a
significant part in SCM. Therefore, Orange should have multiple supply chains.

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 D. Question 3: Discuss the advantages and disadvantages to going with one
exclusive distributor. How would this decision be affected by the selection
of the target market? What would be the implications on the supply
chain? What would you do if you were Orange?

Choosing an exclusive distribution strategy is an absolutely wise choice for Orange

Company. Due to the fact that Orange is a high-technology company, exclusive distribution
brings numerous benefits to the company. First, it helps Orange too easily keep focus on
performance of their product Gizmo in the market. Second, Orange can easily receive real
feedback from their key customers in order to take action possible. Third, the Gizmo
product quickly reaches their partner, Random Wireless on time, a factor that enhances
effective distribution. Fourth, since Random Wireless is the largest mobile service
provider, it is obvious that market penetration becomes easier for Orange’s key customers
to reach Gizmo. They also take advantage of their wide customer network in order to find
the target market of Orange as well as market information to design the product. Last but
not least, exclusion distribution helps Orange with no risk of competitors. This means no
competition will enter the area for which the company has a tie-up with the distributor or
store because Orange has engaged into an exclusive alliance with the distributors.
On the other hand, besides the advantages, exclusive distribution may cause some negative
impact to the marketing strategy of Gizmo. As Random Wireless is the only distributor of

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Orange Company, the manufacturing of Gizmo will fail if Random Wireless is not
trustworthy. Moreover, exclusive distribution causes the dependence of Orange on
Random Wireless due to the fact that without Random Wireless, Orange Incorporation
cannot reach the market. Another disadvantage of exclusive distributors is no
diversification. Obviously, the most significant drawback of exclusive distribution strategy
is that Orange relies on 1 distributor that is Random Wireless, which in some ways negates
the benefits of diversification, therefore, one distributor is unable to make good sales. In
addition, limit reach is also a drawback with this strategy because of the limited number of
distributors. With a limited number of distributors, the reach of the Gizmo gets limited
compared to extensive distribution where the goods of the corporation are available in
every corner of the country. However, exclusive distribution is still a good strategy for the
marketing strategy of Gizmo as Random Wireless is the largest mobile service provider in
the industry and its customers network is wide enough to catch the potential customers.
As a result, the decision of exclusive distribution will cause significant changes in 2 target
markets: Students and Professionals. Although exclusive distribution only provides a
distributor which customers may find difficult to come to the stores and buy product, it
helps both students and business professionals increase the satisfaction of User Interface.
Because Random Wireless is the copyright distributors, the customers can satisfy the
demand of buying a high-quality product and gain the best customer service from the
orange company. Moreover, in the digital era, distance is no longer a matter of seller and
buyers, both students and business people can buy GIZMO smartphone online. Therefore,
the logistics services must be invested to delivery the goods to the customers’ homes on
time.
If I were orange company, I will invest on CRM in order to enhance to the customer
services and gain feedback from customers to improve GIZMO. In addition, I will apply
Quality Function Deployment to translate general students or professionals’ requirements
into specific product characteristics.

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 E. Link references:
https://www.letslearnfinance.com/exclusive-distribution-advantages-and-
disadvantages.html
https://vivadifferences.com/intensive-vs-exclusive-distribution-vs-selective-distribution/
https://marketingai.admicro.vn/chien-luoc-marketing-mix-cua-vivo-hang-dien-thoai-anh-
em-cua-oppo/
https://marketingai.admicro.vn/chien-luoc-truyen-thong-cua-samsung-dinh-vi-thuong-
hieu-dinh-cao/
https://www.brandsvietnam.com/17130-Xay-dung-moi-quan-he-khach-hang-Gen-Y-Z-
voi-CRM-va-du-lieu

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