New constructions mean new customers for TOTO. Less construction means less customers for the company.
Also, given the new economic and financial circumstances, it is expected that individuals' in comes will experience a decrease. This means that they may not invest in purchasing new toilets unless they absolutely need to.
In other words, the global economic and financial conditions that are also reflected in Catalonia may affect the company's initial sales on this market. The company's estimations regarding the volume of sales may prove to be optimistic.
However, a marketing campaign and a pricing strategy in accordance with the new economic and financial requirements of the market might be able to counteract these risks, or at least to significantly diminish them.
Competitors
The company's most important categories of competitors on the Catalan market include:
Local manufacturers
International manufacturers that are already present on this market
Potential American manufacturers that might take into consideration TOTO's intention of addressing this market and follow this direction
On the Catalan market, the leaders are represented by local manufacturers, even if they are small companies. Their advantages are numerous in comparison with TOTO. They benefit from local, cheaper labor force. This is reflected in the price of the products that may be significantly lower than that of TOTO's products.
Their production costs are also reduced by the fact that transportation costs are significantly lower that those in TOTO's case, given the fact that they are local producers. Also, their connections with the Catalan market are different than the connections that TOTO might be able to establish.
Also, local manufacturers are definitely favored by the customers in this market, especially during the financial and economic crisis that the region is traversing currently. Customers on the Catalan market might be determined to support the local economy by purchasing products manufactured in this region.
Being the leaders of this market, such companies will implement a leader strategy. They will benefit from the fact that their products or the brand are well-known by the customers in this region. They will afford to introduce lower prices for their products.
As mentioned above, they are well-known to local customers, which means that they do not need to invest impressive amounts of money into advertising campaigns. They will also afford to introduce a series of promotion that might help the customers decide when buying this type of products.
Another category of competitors is represented by international companies that are already present on this market. They do not benefit from the same advantages as local manufacturers, but they still hold plenty of advantages in comparison with TOTO.
They are the followers on this market and their strategy must be in accordance with their position on the market. They cannot afford to practice the same prices that local manufacturers practice because they do not benefit from the same reduced production costs.
Substitutes
Given the economic and financial distress that affects everyone, as mentioned above, it is expected that customers on the Catalan market might shift their purchasing interests from toilets to other items that they need more. For example, they might choose to buy furniture or electrical and electronic appliances instead.
They might also prefer to save their money in a bank instead of spending them on items like toilets for the moment. During such economic conditions, people tend to satisfy their primary and secondary needs mainly, and postpone tertiary needs until they can better afford it financially.
Price
The pricing structure for TOTO's products on the domestic market is the following:
Aquia Dual Flush and Aquia II Dual Flush Toilet lowest price is $457
The average price is $526
The highest price is $686
In other words, for the Aquia Dual Flush and for the Aquia II Dual Flush Toilet the price starts at $457. For the Aquia III Dual Flush Toilet the price starts at $588.
These prices may not be suitable for the Catalan market. Customers' living standards in this region may be lower than that of the customers on TOTO's domestic market. Therefore, the company must adapt the pricing strategy to the financial possibilities and the economic conditions in the Catalan region.
The economic and financial crisis has already reduced the incomes of Catalan customers and it is expected that these incomes will decrease in the following period of time also.
The recommended pricing structure for the Catalan market is the following:
Starting price - €357
Average price - €426
Highest price - €686
However, these prices might still sound too much for Catalan customers given the fact that the company is not known to these customers that do not know what to expect from the company's products.
The company cannot...
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