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18-10-2013, 11:24 AM
My gut senses of Valore as a Marketing professional after doing a few rounds in Challenger outlets is that it's a 2-pronged strategy:
1) Positioned as a "branded" generic OEM product. From the packaging to my interaction with the sales folks hearing their pitch, the value proposition is roughly along the lines of "Hey check out Valore, after membership discounts it sells the same price as some never heard before CN/TW/SG brand, but it has a nice package and is backed by Challenger!"
I'm not quite convinced the margins per unit are substantially higher for Challenger vis a vis other generic / low end brands, but it does have the advantage of shelf space (as a marketing guy, I cannot emphaisze how important this is) seeing that many bros here have already sensed Challenger is actively promoting Valore. This might be more of a volume play than margin play. Gut sense is 2/3 volume strategy 1/3 margin strategy. Either way more profits if they pull this off.
2) Increased stickiness. Steep discounts are offered for members along the regions of 20-30% for Valore compared to other brands which seem to garner 10-20%. If you work out the math, it actually makes an upfront $20 membership fee much more palatable.
One of the major challenges of membership retention / sign ups has always been the customer pysche. Sure I might buy a total of $300 worth of goods from them in a year, but this is spreaded over many times and each time I walk into the shop I spend only ~$50, so psychologically a customer thinks short term and says heck only $5 discount, pay memberhip fee boh hua.
By having a wide range of Valore products each giving 20-30% discount, it increases the likelihood of membership sign ups since each visit becomre more "hua". How value is unlocked is by luring them to sign up through Valore small purchases which in turn causes the membership to become a sunk cost the next time he wants to buy a more expensive (high margin)product. Everytime he goes into the shop, the eye moves to the membership price label automatically and ignores the orginal price. This closes the pricing gap between Challenger and the Funan/SLS ah beng stores.
For e.g. in the past if I want to buy a printer I compare Challenger's $300 (nett) + $20 (membership fee) = $320 vs SLS $290 and conclude it is worth the trip to SLS to get it cheaper. Now since I already have the membership card, I compare $300 (nett) vs SLS $290 and may decide to forgo the $10 savings in return for convinience.
On the surface, this strategy sounds plausible and might reap some good returns if they execute it correctly.
1) Positioned as a "branded" generic OEM product. From the packaging to my interaction with the sales folks hearing their pitch, the value proposition is roughly along the lines of "Hey check out Valore, after membership discounts it sells the same price as some never heard before CN/TW/SG brand, but it has a nice package and is backed by Challenger!"
I'm not quite convinced the margins per unit are substantially higher for Challenger vis a vis other generic / low end brands, but it does have the advantage of shelf space (as a marketing guy, I cannot emphaisze how important this is) seeing that many bros here have already sensed Challenger is actively promoting Valore. This might be more of a volume play than margin play. Gut sense is 2/3 volume strategy 1/3 margin strategy. Either way more profits if they pull this off.
2) Increased stickiness. Steep discounts are offered for members along the regions of 20-30% for Valore compared to other brands which seem to garner 10-20%. If you work out the math, it actually makes an upfront $20 membership fee much more palatable.
One of the major challenges of membership retention / sign ups has always been the customer pysche. Sure I might buy a total of $300 worth of goods from them in a year, but this is spreaded over many times and each time I walk into the shop I spend only ~$50, so psychologically a customer thinks short term and says heck only $5 discount, pay memberhip fee boh hua.
By having a wide range of Valore products each giving 20-30% discount, it increases the likelihood of membership sign ups since each visit becomre more "hua". How value is unlocked is by luring them to sign up through Valore small purchases which in turn causes the membership to become a sunk cost the next time he wants to buy a more expensive (high margin)product. Everytime he goes into the shop, the eye moves to the membership price label automatically and ignores the orginal price. This closes the pricing gap between Challenger and the Funan/SLS ah beng stores.
For e.g. in the past if I want to buy a printer I compare Challenger's $300 (nett) + $20 (membership fee) = $320 vs SLS $290 and conclude it is worth the trip to SLS to get it cheaper. Now since I already have the membership card, I compare $300 (nett) vs SLS $290 and may decide to forgo the $10 savings in return for convinience.
On the surface, this strategy sounds plausible and might reap some good returns if they execute it correctly.
