Hercules has recently introduced a new line of upscale cards at bookstores across the company. The new card line is also available at a number of Shomei's retailers. Although the card is not of as high a quality as Shomei's, Hercules is heavily marketing the fact that 10% of the purchase price of the card is donated to the nationwide "Arts in the Parks" program. How will this impact the greeting card manufacturers?
THE AFFECT OF "ARTS IN THE PARK" PROGRAM ON THE SALES OF DIFFERENT COMPANIES.
Shomei: Firstly, those retailers who are not covered by the strategy of Hercules that is museum gift shops, large bookstores, specialty boutiques and gourmet coffee shops will not be adversely affected by the strategy of Hercules. In addition, those customers who are quality conscious and are willing to purchase cards by upcoming artists will not be affected by Hercules strategy. At this stage we assume that the upscale cards of Hercules are not superior to those of Shomei.
This apart those retail card and gift stores that are owned by Shomei should refrain from stocking Hercules cards and even if they do so, they must make sure through strategic shelf space, and information channels that the cards which are being sold by Hercules are not of quality comparable to Shomei cards. This will effectively counter the effect of Hercules move.
There are several customers who have used Washi cards from Shomei and will not be willing trade in those high quality cards for 'upscale' cards by Hercules. In addition, since Hercules has introduced its new "Arts in the Parks" cards in the same retail stores where Shomei cards are retailed, customers can compare the quality of the cards of Shomei and the cards of Hercules. It is expected that the customer will be impressed by the superior quality of the special nano-piezo inkjet printer generated cards and will select the much better looking card than the Hercules card. In short, just by introducing a new series of upscale cards is not likely to reposition Hercules cards overnight.
The loss of sales can be feared only from those customers who are strongly attracted to and impressed by the "Arts in the Parks" program. Such customers usually first hear of such a campaign and search out the cards that promote the cause that attracts them. In short, these customers will come to the stores specially to purchase Hercules cards and will not by swayed by factors like good quality of Shomei cards or the Japanese technology. The redeeming factor is that even though they may come to the same stores which sell Shomei cards, the customers may not actually be prior Shomei customers!
In sum, it is only those customer who were previous Shomei customer and are attracted to the "Arts in the Parks" cause and are willing to buy inferior cards to support a cause are likely to be the net loss of Shomei. In order to ascertain the volume of the Shomei sales that will be affected by the Hercules campaign we need to do a survey of current Shomei customers. ...