The vast majority of mainstream CRT monitors are sold as part of a system. The monitor is mostly an assumed inclusion, and is not given much consideration, even by resellers. It's a pretty tough market out there. ARN's Tom Allen hit the market to check out the dos and don'ts of selling monitors . . .
The view that computer users have of their applications is a key factor in their over-all satisfaction with the system. How good everything looks to the user has a big impact. Yet very few resellers appear to take advantage of sale closing opportunities offered by quality monitors. (We all become pre-occupied with price.) Many sales staff prefer to focus on other features presumed to be more important such as processor speed, RAM and hard disk capacity.
"The monitor and the computer deserve separate purchasing decisions," says Jacqui Begbie, Information Products business unit manager, Philips Electronics Australia. By implication, this would suggest that separate purchasing decisions offer computer resellers separate sales closing opportunities.
According to Begbie, a lot of the pre-mium has gone out of selling computer systems, and a quality monitor can be the point that carries the overall sale.
Monitors have push-through effect
Although the IT market increasingly demands higher specifications and performance in CPUs, monitors seem to have progressed slowly. Fourteen inch SVGAs have gradually been overtaken by 15in, and larger monitors have mostly been in the domain of specialist applications and professional environments. Availability -- rather than demand -- has gradually pushed sales of CRT monitors with higher performance specifications or larger tubes.
As the larger monitors have become more affordable -- largely due to economies of scale -- demand has been pushed along the mainstream users who did not have any real need for them, like graphics or CAD applications.
As well as this, new suppliers in the market, in an effort to gain market share, gradually creep along the specification or size line to offer inducements to buy. Simply being able to supply can cause a push-through effect.
An example of this is Daewoo, which recently picked up the business of BBF Components and Peripherals when its regular monitor supplier LG Electronics found itself without available stock.
Consider quality . . .
Many mainstream monitors -- 15in CRT type -- have similar specifications, yet there are substantial differences in quality. Joseph Rau, Samsung Electronics Australia marketing manager, believes that monitor quality can be measured in many ways.
He told ARN: "Factors such as design, components, production, company policies and after-sales service standards are measurable, and can be just as important as the image on the screen."
Considering these quality fac-tors, resellers can take advantage of the "brand equity" offered by monitor vendors to establish higher perceived value of the complete system.
By giving higher priority to the "view", selling a better quality monitor allows resellers to provide a more profitable solution, with a lower specification computer, to a better satisfied customer.
As one reseller put it: "For most customers, the monitor is the computer, and if the display is poor, or causes eyestrain, the computer is no good."
Consider the effect that a 10 per cent increase in your customer's satisfaction would have on re-ferred business and repeat sales. Could this be as easy as giving further consideration to the monitor recommended and supplied with the system?
The monitor market is described by vendors as having "open" and "closed" segments . . .
The open segment includes those branded monitors sold through distributors and resellers, either on a retail or wholesale basis, including assemblers and system builders. It accounts for approximately one-third of monitors sold in Australia.
The closed segment refers to those monitors supplied on an OEM basis (manufactured and branded for computer system vendors). In most cases, these monitors are not sold separately, but are either included with a new system, or supplied as upgrades.
Philips Electronics Australia
Talking to Jacqui Begbie, Information Products business unit manager at Philips Electronics Australia, there is no doubt that a new wind has blown through the operation.
"We want to be the customer's first choice," said Begbie. In support of this commitment Philips invested $30,000 in an outside research company last year. The company interviewed around 200 distributors, resellers and end users of both Philips and non-Philips products.
"For the first time I am aware, we did some benchmarking of the monitor market," said Begbie. She says the purpose of benchmarking was to see where the business unit is in relation to the market, as well as where it needs to go.
This type of research can give an indication, for instance, of customers' attitudes and expectations about the company, its products and how they compare with the competition.
The nitty gritty
"One result we found was in customer satisfaction, where everyone [monitor vendors] was mediocre," Begbie said. "Another area was distributor effectiveness, and we've been able to let our distributors know what their resellers think of them."
The distributor effectiveness survey also measured the percentage margin that distributors expect to make on Philips products, and compared this to what the resellers saw as "value adding". Begbie added that Philips will be commissioning similar research again this year, paying close attention to the level of customer satisfaction for its existing distributors.
"If you want to be a distributor for a major manufacturer, you've got to do your part too . . . because it's a partnership and we need to work out how we get stronger together," said Begbie. She added that as of last year Philips has written reseller agreements which outline rights and responsibilities of both parties.
What's important in monitors?
Philips' research revealed the four most important factors when a reseller is choosing a distributor. They are:
1. Fast delivery
2. Customer service
4. Established relationship
For an end user, the four most important issues are:
1. Quality of product
2. Quality of repairs
3. Delivery reliability
4. Turnaround of repairs
In response to two of the order winning factors, Philips recently announced that, in Australia, all new monitors have a three-year on-site warranty that includes a four-hour replacement service.
Begbie said that 1997 saw a lot of relationship building in the distribution channel for Philips. February marked the start of a revamped market approach.
She listed elements such as responsiveness, better pricing, improved technical information, cooperative advertising and promotion, and general product advertising as being key to their sales performance.
In summary, Begbie said: "In 1997, we nearly doubled our monitor sales in units . . . we got going again."
Tel (02) 9704 8317 Fax (02) 9704 8483
On-site replacement warranty within four hoursAs a strategic step to winning monitor market share -- and not to mention resellers' hearts -- Philips has announced it has raised the standard of its monitor warranties.
The new warranty applies to sales from January 1, 1998 and guarantees delivery of a top-of-the-range replacement monitor for a faulty unit within four working hours of a user calling an accredited Philips service centre. The faulty monitor will be removed and returned to its owner when repaired.
Philips Monitors product manager Paul Robson described the on-site warranty as one of the most comprehensive in the industry.
Robson says the new on-site warranty was in addition to Philips' existing three-year full parts and labour warranty on its entire monitor range.
Users must be within 50km of authorised Philips service centres in capital cities and major regional centres in Australia. It covers the full Philips range, from 15 to 21in monitors.
Samsung Electronics Australia
Samsung Electronics Australia (SEA) claims to be the world's most prolific manufacturer of monitors, and is reported to have produced nearly nine million units in 1997.
Samsung IT&T division marketing manager, Joseph Rau, puts Samsung's "open market" 1997 sales in Australia at 80,000 units. This is more than double its 1995 figure of 35,000.
"Mostly these are 14 and 15in with a significant and growing number of 17in monitors. Our 1997 sales included 14,000 17in monitors," said Rau.
"The increase in sales of larger monitors is expected to help SEA achieve 100,000 units in the open market in 1998."
In 1997 SEA implemented a two-brand strategy -- SyncMaster and Samtron (taken over from its trading arm). Syncmaster is Samsung's predominant and premium brand, while Samtron rests at the "value" end.
According to Rau, 1996-97 saw some distinct changes in the channel -- both open and closed markets. He estimates that in 1996 the open market in Australia accounted for 33 per cent of monitors sold.
If Rau's 1997 estimate of 1.1 million monitors sold in the total Australian market (open and closed) is accurate, then the open market equates to 330,000.
"This figure went down to 30 per cent in 1997. We believe the total market also declined in 1997," he said.
Rau says this may be partly attributed to pressure from major computer vendors on local system builders, especially the tier threes. Yet these local system builders represent a major part of the open market. Rau says that vendors often provide incentives to distributors and resellers so they won't "unbundle" monitors.
"Except for upgrades, when an end user buys a bigger CRT monitor or new LCD, there are very few monitor-only sales at the retail level," said Rau. So vendors maintaining their "attached rate" reduce the open market.
Rau revealed that, aside from Samsung's open market targets, it has substantial closed market commitments. "In 1997, we commenced a world-wide contract to supply IBM with 15 and 17in monitors," he said. He added that the fulfilment of this for Australia is out of SEA in Rydalmere, NSW. He listed other computer vendors including Compaq, Hewlett-Packard, Digital, Unisys and Dell.
Rau expressed concerns about the crowded open monitor market to Australian Reseller News. "The channel will sell the easiest thing . . . and there is not much loyalty. Yet it [the channel] does determine how the customer perceives the product."
As a result service issues have come back to the manufacturer, says Rau. He predicted that we will see manufacturers taking decisive steps to distinguish and retain brand loyalty.
Tel (02) 9638 5200 Fax (02) 9638 0087
Daewoo Electronics Australia
Since setting up in February 1997, Daewoo Electronics Australia (DEA) has faced the challenge of establishing itself in a crowded and mature monitor market.
DEA's national sales manager computer products, Garry Lougher, acknowledges the company was not bringing any new technology to the market. So how has Daewoo gone about grabbing market share?
The first step was experience. It's interesting to note that Daewoo has already been manufacturing and supplying monitors indirectly to the market for a number of years.
"Monitors manufactured by Daewoo had been in Australia for several years before we set up in February 1997. This was both in the form of OEM product branded by other vendors, and up until 1995, there were Daewoo branded monitors distributed by Merisel."
Lougher estimates there were already around 30,000 Daewoo branded monitors brought into Australia up to 1995, which he claims had an "astonishingly low failure rate". The second step was to ensure supply and timely availability of stock.
"That's how you can exploit opportunities arising from other brands' inability to supply," he explained. DEA has substantial warehousing facilities and is set up to consign small quantities all over Australia quickly.
Next came exploiting the brand recognition. Lougher says the Daewoo brand monitors had already established a reputation for reliability, and this was enhanced by the profile of the automotive division -- the car with the very smart blue heeler. Of this Lougher said: "I have been staggered at the value of the Daewoo brand recognition."
The final step was establishing an effective warranty program. Based on some market research and statistical information on Daewoo's monitor failure rate, DEA introduced up a three-year on-site warranty, including a 28-day "DOA replacement".
Part of the policy is the express repair of problems -- if a customer reports a fault an authorised technician will visit the customer's site -- usually within 24 hours.
If the repair means the customer will be without a monitor for more than 72 hours, a replacement unit is lent.
And as for Daewoo's "DOA replacement" scheme? In the first 28 days after purchase, Daewoo doesn't even send a technician -- just a courier with a new replacement monitor.
"We're a solid tier-two monitor supplier," said Lougher. "That's where we are muscling in for market share. We're not launching a product into a space where there's a void, we're taking market share from others. That's what the distribution business is all about."
Lougher insists that the thing that makes Daewoo stand out among its monitor competitors is supply. He said that resellers or system builders have no reason to try Daewoo until a problem occurs with their current supplier.
"We've always got inventory," he concluded.
Tel 1800 809 397 Fax (02) 9645 6141
Brand equity -- what's it worth?
When a vendor speaks of "brand equity", what is this worth? It can mean the difference between winning and losing a system sale.
The dilemma, as always, for resellers and buyers is the choice between quality and price. The rub is that we are all torn between price and value. Value, like brand equity, is in the mind of the customer.
As Begbie from Philips says, the monitor and the computer do deserve separate buying decisions.
Yet because the monitor is often bundled with the computer, it loses some of its perceived value -- its individual brand equity.
Monitors with similar specifications can have very different perceived values, largely because of their brand equity. If the monitor is simply "included", the reseller misses the opportunity to gain any potential leverage offered by its own brand equity. (see table above).
The monitors retain their value in this example, as a separate buying decision. The sell price will always be exceeded by the perceived value, as customers never pay more than they believe something is worth. If the monitor is included with the system, its sell price is likely to be lost or spread over the total price. This leaves its brand equity or perceived value either as a premium to the customer or as profit left on the table.
It is widely understood that resellers use brand equity to justify the higher cost of a familiar brand name when compared to a lesser known brand with similar specifications.
In the open market, a well-known brand of monitor, with a good reputation for quality, will increase the perceived value of a system that, otherwise, may not have much brand equity.
This is largely why Intel has invested in advertising and promotion of "Intel inside" and Pentium II. It allows a computer vendor or reseller to exploit not only the benefits of the processor but also its brand equity. Brand equity is built not only by promotion and advertising, but also by information known in the distribution channel about the product.
Philips, for example, builds its monitor brand equity with information about its range.
It produces point of sale packs, runs quarterly road shows, and provides information to resellers about issues such as ergonomics.
As well as product information and other brand building promotions, Samsung Electronics enhances its brand by its association with the Olympics. Samsung is a worldwide supporter of the Olympic Games.
While difficult to measure how much this contributes to the brand equity of its SyncMaster monitor range, it is an example of corporate brand equity.
In the PC assembly market, monitor vendors try to build the perceived value of their products, including the brand equity. The marginal cost to the assembler, distributor and reseller (compared to alternative monitors) may be very small.
Some assemblers have recently had to consider ways in which they can either build their own brand equity or at least benefit from that of their suppliers.
Consider the impact that the brand equity of the monitors you bundle has on your over-all profitability.
Cost Perceived value Sell price Profit margin Monitor A $150 $250 $200 $50Monitor B $160 $300 $235 $75Monitor C $250 $400 $350 $100Monitor repairs, any brandTeco Australia offers fixed price monitor repairs for any brand.
For a flat fee (not counting fly back transformer or CRT) Teco's Monitor Repair department will repair a monitor in an average of five working days. The repaired monitor will come back with six months warranty.
Dealer costs (excluding freight to and from Teco) are as follows: 14in -- $50; 15in -- $60; 17in -- $120; 19Ð21in -- $250.
Justin Fan, Teco Australia's Information Systems Division manager, told Australian Reseller News that the service was used to repair 5000 monitors last year and had a better than 98 per cent success rate.
Tel (02) 9765 8157 Fax (02) 9757 1366
KOA sets up
KOA Group has set up and is shipping its Hansol range of CRT and TFT-LCD monitors.
Managing director Peter Park says he would be very happy to hear from system integrators and assemblers interested in the Hansol range, and representatives have been established in New South Wales, Victoria and Queensland.
The range includes 14in, 15in, 17in and 19in CRTs as well as 12.1in and 13.3in LCDs.
Tel (02) 9416 4377 Fax (02) 9416 5377
DAT appointed by Funai
Funai has appointed DAT Computers as its distributor in Australia and New Zealand.
According to Daniel Chan, sales and marketing director at DAT, the Funai range of monitors fits perfectly into commercial, entertainment and educational environments, and comes with a nationwide three-year on-site warranty.
Tel (02) 9736 2688 Fax (02) 9736 1988
What is the link between the following monitor vendors -- Hyundai, NEC, Philips, Samsung, Teco?
(Sydney readers have an advantage) See p38Answer: All of these brands appear on the North Sydney business district skyline.