How does each option affect Shomei's industry position?

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OPTION 1.
This contract with Keyso's would radically change Shomei's positon in the market, till now it was being perceived as a high quality top of the lne producer of greetings cards, which met the need of the premium customers, now it was supplying cards at a relatively low prices to Keyso. It is doubtful if at this price, Shomei will be able to maintain its exclusive design and if it will be able to afford the washi paper for its cards. Mass mechandizing can have two fold effects, Shomei may trigger of price competition with Hercules and Atlas leading to a fall in profits for all the manufacturers and at the same time losing the niche it has carved for itself. That is the company and its products may no longer be perceived as premium qualily products from the perspective of consumers. Hercules and Atlas may react in a two fold manner, they may initiate price war in the market and at the same time they may introduce several premium products under different brand names in the premium segment. So it is possible that both these companies may capture the niche of Shomei. Shomei would be able to develop distribution teams to supply its products to more that 100 Keyso's stores and this would lead to the development of its distribution and logistics team. It is very uncertain if those customers who are familiar with the premium products of Shomei will buy these cards from the Keyso's stores, because, Keyso may reposition the Shomei cards. Those cards which were premium priced may be sold at cheaper prices severely affecting the perceptions of the consumers. In fact, premium segment consumers may stop purchasing Shomei cards. In short this means that selling to supermarkets and mass merchandizers will lead to a dilution of the current position of Shomei in the market.
OPTION 2
The second option that relates to the online customization of the cards and sending paper-based cards is suitable to the extent that Shomei cards are targeted at students and students are most receptive to online card ideas. However, those customers who are used to making online cards are more likely to send their cards by e-mail that is much faster and cheaper than get the cards converted to paper cards and have them sent. Kurimon's offer is excellent and does not detract from ...