Chapter 1. Introduction .................................................................................................. 2 1.1 Motive .............................................................................................................. 2 1.2 Structure & Source ........................................................................................... 2 1.3 History.............................................................................................................. 2 Chapter 2.

Acer Corporate Strategy ............................................................................... 5 Chapter 3. Acer Marketing Functions in Europe ........................................................... 6 3.1 Acers marketing function................................................................................ 6 3.2 Acer s multi-channel sale in Europe ............................................................... 7 Chapter. 4 Situation Analysis ......................................................................................... 8 4.1 External Environment ...................................................................................... 8 4.1.1 PESTEL Model ............................................................................................. 8 4.1.2 Porters Five Forces Analysis ..................................................................... 10 4.2 Resource Analysis .......................................................................................... 12 4.2.1. Strengths .................................................................................................... 12 4.2.2. Weakness .................................................................................................... 13 4.3 Sustainable Competitive Advantages ............................................................. 14 4.4 SWOT analysis .............................................................................................. 14 Chapter 5. Conclusion.................................................................................................. 18

Chapter 1. Introduction
Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy customer need 1. However, in modern time, its not enough to merely meet customer need, the corporate has to exceed customer need better than the competition 2. From this point of view, the corporate should proceed not only marketing function but also other business functions, like operation, human resource, accounting, etc. 3 1.1 Motive The motive to choose Acer to be the marketing topic is due to its well-known brand as well as the blooming growth of market share globally. Moreover, Acer is currently number one in Europe in notebooks and third in PCs. Therefore, this report will focus on Acer marketing functions of PC products in EMEA area. 1.2 Structure & Source This report starts with introduction and the brief history, the following chapters are Acer corporate strategies, marketing functions, the external analysis, the internal analysis, SWOT analysis. And it will be closed by recommendation and conclusion. The way I do the report is to illustrate Acer current situation, and further to analyze it is based on the secondary material which I find on the internet or text books. You can see the footnotes which I point out the original source. 1.3 History Acer was founded by Stan Shih in Taipei, Taiwan with only 7 employees. Nowadays, It has 4 main regional headquarters globally: Greater China (Taiwan), Asia Pacific (Malaysia), Europe, Middle East and Africa (Switzerland), the Americas (USA). As for the service locations already spread over 69 sites over the world. There are 28,000 employees serving at 120 branches in 37 counties and the distribution covers more than 100 countries. 4 As for the products and service, Acer provides a broad product line of electronic products; such as, high-end servers and storages, multimedia PCs, notebooks, displays,
1

2 3

O.C. Ferrell, Michael D. Hartline, George H. Marketing Strategy. Lucas Jr &David Luck, Dryden Press, 3rd edition, 2003 David Jobber. The principals and practice of marketing, 4th edition, McGraw Hill. O.C. Ferrell, Michael D. Hartline, George H. Marketing Strategy. Lucas Jr &David Luck, Dryden Press, 3rd edition, 2003 Acer, Retrieved: December 21, 2005, from http://www.acer.com 2

communication products, components and semiconductors, etc., and even the system integration service. As for the Market share and profit statements, Acer strives the global PC market with a growth 12% in 2004, and with 10.9% increase in Q1 '05. That growth is result from notebooks. Acer is currently number one in Europe in notebooks and third in PCs, while being fourth in Asia in notebooks and sixth in PCs. Acer is still a modest eighth in the U.S. However, over 58% percent of Acer's revenue came from notebooks in Q1 '05. Desktop revenue dropped from 17% to 14% in that same time, while revenue from displays increased 1%. And revenues in 2004 reached US$7 billion. Moreover, Europe is the big market for Acer with 63% of total export of PCs in 2005. See the pie chart for detail as below.

Acer exported to overseas markets in 2005

7% 14% Europe Asia Pacific 16% 63% mainland China North America

Due to the number one place in European market place, in addition, its revenue came from notebook more than 58% of total. Moreover, the biggest market place for Acer export PCs goods. Therefore, I decide to discuss Acer marketing strategy of PCs (notebook, desktop ) products in Europe.

Acer Desktop product(AS+SA20-3-sw)

Acer Notebook product(TM3200

Chapter 2. Acer Corporate Strategy

This chapter will discuss Acer strategies which are adopted and changed during 30 years. Through the analysis we will know the key success of Acer resulted from the sharp tactics and quick implement. Corporate strategy can be described as the identification of the purpose of the organization and the plans and actions to achieve that purpose. 5 Acers Objective Acer Inc. has set goals to become the world's third-largest PC brand and came out with bold forecasts that the company is planning to sell 10 million and 15 million notebook PCs in 2006 and 2007 from this year's forecast of 7~8 million units. Acers mission Acer continues breaking the barriers between people and technology by delivering innovative products and services to customers. In other words, Acer cares about its customers that it wants to empower them to reach their goals and live productively. It achieves this by providing customers with innovative products and services which are easy to use, dependable and designed with end-to-end consideration. 6 Acers vision Acer's vision is to become a customer-centric company by providing service and IP (intellectual property). IP is defined by Acer as the intangible quality of a product that gives it more function, appeal and "customer-value." Acer views customer value as the customer's perception of the benefit or value of a product, based on IP which includes the know-how, packaging, design, accessibility, comfort, user-friendliness, niche solutions- any characteristic that enhances the tangible qualities of a product. 7 Acers winning formula Acer develops a profitable and sustainable channel business model that involves working with first-class PC industry suppliers and channel partners. 8 Through the objective, mission, vision, and winning formula, Acer is clear about its right way to reach success in PC industry. It not only makes the strong relationship between technology and human, but also makes the products as better as what customers expect. And under the cooperation with suppliers and channel players to reach its vision.
5 6 7 8

R. Lynch 2003, Corporate Strategy, 3rd edition, Pitman Publishing Acer, Retrieved: November 17, 2005, from http://www.acer.com Acer, Retrieved: November 17, 2005, from http://www.acer.com Acer, Retrieved: November 17, 2005, from http://www.acer.com 5

Chapter 3. Acer Marketing Functions in Europe

There are some important marketing functions for Acer to promote is products in Europe. For example, advertisement, marketing research, financial analysis. However, not only marketing related activities are influencing Acers marketing result, but also other internal operational activities to support Acers marketing function directly. They are illustrated as below. 3.1 Acers marketing function Market Research It does the big market research in Europe, like the gender of the user, the life style of these users and the user habits as well. After gathering these information, and then it will proceed the marketing strategy further. For example, the 1.4 kilogram, 12 inch screen notebook model-Travelmate 3002 is designed for the office ladies who travel on business often after Acer analyzing the market research. Production Acer implements innovative strategy in production- fast-food model. That means, the central factory produces notebook components (Ram, Motherboard, chipset) and ship to regional units to assemble. This strategy has advantage that the production speed can meet the local market demand (just-in-time); moreover, its flexible to build the products to local tastes and quickly respond to market changes. Human resource Acer implements client-server structure for its organization. That means, the RBU(regional business unit) wont rely on SBU(central strategic business units) It can proceed its business activities- sales, marketing and computer-assembling independently. Sales people Sales people is directly related to marketing function. The sales persons allocate mainly in Netherlands, Belgium and Luxemburg for they are the biggies sales volume areas in Europe. Of course, the sales persons are spread in each country of Europe. Distribution Distribution is the most important marketing function actually. There are several channels in Europe in terms of wholesaler, retailer, reseller. For example, Acer sign the contract with Carrefour which sells it notebook every site in Europe. And
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moreover, Acer promises reseller can sell notebooks in the same price as retailer at the same quality level. Transaction Last but not least, transaction is the important function after buying and selling. Usually, there are three phase, quotation, ordering and paying. Customer usually pays in cash, credit card and check. 3.2 Acer s multi-channel sale in Europe Physical shops The main model of channel which are physical shops located in the media mall usually. The stand-alone flag stores to hold the minor portion. The players in this model are wholesaler, retailer, and reseller. E-commerce Customers can login Acer website to choose the notebook products. They usually enjoy the lower price than the ones selling in the shop. Moreover, they have the same rights as the ones buy notebook in the physical stores. For example, they can fix their laptop with 58 minutes at any service site. Mass media Acer invests the big budget on TV advertisement and the posters on the main street in Europe. Although this marketing channel is expensive, it worth investing for popularizing the brand name. Telephone The on-call service employees provide not only the after sales service, but also the window for the potential customers to reach the sales department. They are usually on duty 24 hours, and they can deal with any request call, like sending the DM, or transfer to the sales department.

Chapter. 4 Situation Analysis

In this Chapter, I will have a closer look at Acers external and internal environment which are the most important foundation for Acers top management to propose the marketing strategies. 4.1 External Environment External environment includes all the external factors-competitive, economic, political, legal/regulatory, technological and sociocultural - that can exert considerable direct and indirect pressures on both domestic and international marketing activities. 9 I will use PESTEL and Porters 5 forces models to illustrate external environment which Acer faces. 4.1.1 PESTEL Model The PESTEL model represents the Political, Economic, Socio-Cultural, Technological, Environment and Legal aspects of the environment. I present below some of the main items that can be considered to do the PESTEL analysis for Acer. Political/ Legal The European customs unionTARIC is the norm that all the enterprises import goods outside the Europe should pay the tariff according to it. However, it gives benefit to the enterprises which produce the goods inside Europe. Acer makes the product assembly line near the local market, for example, the assemble plant in UK is assembling the PC products to near countries, like Netherlands and German. Thus, Acer is benefited by reducing the tariff. Economic According to the report of IDC, "as expected, a strong back-to-school and Christmas seasons, posted solid 16% growth in 3Q,2005 and buoyant marketing activity along with attractive price points drove PC sales across the region." Moreover, the price erosion slowed sequentially, price levels continued to show significant declines compared with a year ago, with close to -20% for notebooks compared with 3Q04, resulting in much more subdued revenue growth results across the region. So the strong consumer demand for PC with the stimulus of price erosion is the opportunity for Acer.

O.C. Ferrell, Michael D. Hartline, George H. Marketing Strategy. Lucas Jr &David Luck, Dryden Press, 3rd edition, 2003 8

Socio-Cultural Schmidleithner who was in charge of Europe market (now is the president of San Jose) pointed out with notebooks, if someone doesn't know the company very well, they might hesitate a little bit. So we grow a little slower in notebooks, If you want to get the trust of the market, [customers and resellers] need to know you quite well before they do big business with you. 10 It is the difficulty when Acer wants to enter Europe market in the former years. But now Acer already makes its brand famous in Europe. Technology Wang Chen-tang, president of the Taipei-based company mentioned "if people have to buy equipment and throw it away after two or three years, that's a pity," "there's a huge installed base of users, and they're helpless. Acer sees this as an opportunity." 11 Therefore, Acer provides solution for users to upgrade their hardware and system at the same time while their PC products are already out-of-date. Acer plays an intermediate between technology and customers. Environmental The green issue nowadays is very important and concerned by environmental groups. The European Union is the first area to ask the importing electronic products should follow the green issue. The electronics industry should pay attention that re-designing the products with substitute components/material which are fit in with the specification made by the environmental groups. This will be a big job for any player in this industry. That means spending more money and time to produce products. After describing the PESTEL factors related to Europe area, I summary the threats and opportunities for Acer as follow. Opportunities Assembling lines in Europe area can lower the tariff Customer demand and price erosion is the stimulus for revenue growth Famous brand name Providing upgrade service Threats Spending money and time on green issue

10 11

http://www.desktoppipeline.com/pcs/52200247 http://www.emsnow.com/newsarchives/archivedetails.cfm?ID=3364

4.1.2 Porters Five Forces Analysis I will use this model to examine the five forces which influence Acer. Besides, it will further help to find out competitive advantages of Acer among its competitors. The Bargaining Power of Suppliers Acer subcontracts the production of PC products to several suppliers. Originally, the main supplier is Wistron-company of Acer group. In 2004, Quanta replaced Wistron to become the biggest supplier of Acer. It contracts to manufacture 37-43% of Acers annual target between 3.5 million and 4 million units in 2004. Another big supplier of Acer is Hon Hai which is the biggest maker of electronics in Taiwan for other companies. Another supplier of Acer is Compal manufacture notebook for it. Except Wistron, Quanta, Hon Hai and Compal, Acer is also looking for the 2nd supplier. ECS is the motherboard supplier of Acer, and if it continuously satisfies Acers demand of global bases, it will raise from a motherboard supplier to a system integrator. Therefore, the bargaining power of suppliers is very low to Acer due to the allocation of several suppliers. The Bargaining Power of Buyers There are a lot of brands of PC products in Europe, for example, HP, Dell, Toshiba Fujitsu Siemens, and NEC. Consumer has a lot of choices buying PC products. Therefore, the products quality as well as the organization reputation can influence the customers making choices in Europe. Acer does a good job to sustain its reputation while provides good products and service. The Threat of New Entrants: Because PCs are already the mature products, the technology is no longer the main factor for entering a new market. However, the economics of European union nowadays is buoyant that it attracts the new player to enter this area. There are some new Asia-based players, For example, Lenovo promotes new ThinkPad products that it gains Top 10 ranking in fifth position while Asus enters this area with Top 10 ranking in tenth position in Q3, 2005. These entrants will contribute to maintain a very competitive environment in European market. The Threat of New Substitute: PCs products are coming to the mature phase in the life cycle. Therefore, many IT companies develop new pc products for the next generation. For example, cube pc (portable desktop, and its size between notebook and desktop), and PDA, Palm, Pocket PC. However, they are not becoming popularity yet. Nevertheless, these
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substitutes will become the mainstream when the computing technology perform as good as notebook, like wireless speed and the disk capacity; in addition, the majority get used to them some day. The Extent of Competitive Rivals: There are several main rivals for Acer in European market place. They are HP, Dell, Fujitsu Siemens, and Lenovo. I will give each of them the brief description of their participation in European market place. HP has a solid leadership in Europe, with a 16.1% market share and a 15.2% growth each year. It has strong notebook performance in terms of consumer and commercial market segments with the retail strategy effectively. It maintains the softer growth year-on-year. However, it faces the tough competition from Dell in the commercial space. Dell owns very strong second position in the overall ranking in Europe. It increases the market share rapidly with double-digit growth in both the desktop and portable market, like SMBs and notebook, particularly in notebook space. Furthermore, it narrows down the gap between HP with the direct sale model, meanwhile implements adopts the aggressive customer acquisition strategy across all segments. FSC (Fujitsu Siemens) surpasses the market and maintains its fourth position in Europe. It is very successful to keep the strongest growth in notebooks among the top 5 vendors at over 60% year by year. It maintains a strong performance in the consumer space, at time same time, to expand the market share from not only Germany, but also other countries. It also adopts effective SMB channel strategy successfully. Lenovo has a softer performance, directly impacted by the slowdown in corporate refresh activity, while fierce competition and a strong quarter in 2004 for former IBM-PCD also contributed to constrain the vendor's results this quarter. Despite the competition from all aspects, and ongoing transition to the new organization, it shows the ambition in the notebook space with the new product-ThinkPad. Top 5 Vendors: Europe, Middle East, and Africa (EMEA) PC Shipments Vendors
HP Dell 3Q04 2,237 1,512 (1) (2) 3Q05 2,577 1,912 Share 3Q04 16.8% 11.4% Share 3Q05 16.1% 12.0% YoY Growth 15.2% 26.4%

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Acer Fujitsu Siemens Lenovo Others Total EMEA IBM/Lenovo (3)

1,026 963 7,545 13,284 640

1,512 1,248 687 8,025 15,961 687

7.7% 7.3% 56.8% 100.0% 4.8%

9.5% 7.8% 4.3% 50.3% 100.0% 4.3%

47.4% 29.6% n/a 6.4% 20.2% 7.3%

Source: IDC EMEA, Preliminary Results, 3Q05, October 19, 2005

1. Shipments are branded shipments for all form factors (including desktop and notebooks) and exclude x86 servers as well as OEM sales for all vendors. 2. Shipments unit is million. 3. Historical data for IBM PCD (excluding desktop workstations and x86 servers) and comparison with 3Q05 is provided here for reference purposes to allow year-on-year analysis but does not reflect the historical performance of Lenovo prior to 2Q05.

After describing the Porters five forces factors connecting to Acer, I summary the threats and opportunities as follow. Opportunities The bargaining power of suppliers is low because of the relationship with many suppliers There are some substitutes But it takes a long time to become mainstream products Threats The bargaining power of buyers is high But Acer can reduce it by brand name and service The new entrants will contribute to maintain a very competitive environment in European market There are several main rivals' aggressive expansion strategies have been fuelling fierce competition in Europe

4.2 Resource Analysis I will go ahead to use resource analysis to identify Acers internal strength and weakness. 4.2.1. Strengths The internal strengths of Acer are illustrated bellow: Effective internal operation The well-system of supply chain already reduces the inventory, and gains just-in-time
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benefit. Strong alliance with distributors Acer has signed contract with Carrefour, Europe's largest retailer for consumers space, and also made alliance with Ingram Micro Inc. (IM ) and Tech Data Corp. (TECD ) to boost sales to corporations and specialized computer stores. Successful strategic leverage Acer has reduced costs by moving manufacturing to its suppliers Emphasis of R & D rather than manufacture Acer now is the design house, emphasizing on the PCs product development, it doesnt provide manufacture business any more. Dedicated employee Acer provides the good welfare and training system to its employees. Moreover, it invites both headquarter and overseas employees become the stockholder. Therefore, it retains employees without big turnover.

4.2.2. Weakness The internal weakness of Acer is following bellow: Unbalance marketing strategy Acer focuses on notebook development and marketing. And it plays 58% revenue in 2005. However, the desktop pc didnt gain profit much in 2005. The focus of only notebook in Europe market is risky. Too much dependent on the chairman The founder-Stan Shih guides Acer for 30 years. When Acer faces each difficulty, he can make the strategy to win back from the brink. We dont know if the successor can do as good as him after Stan Shih retires. The non-profit invest business Acer invests a lot no matter the facility or talent employees to found the subsidiaries to do the software business, like system integration, game software, the on-line pay system. Although this business is the trend of IT industry, they didnt gain the profit. Even some closed the business already.

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4.3 Sustainable Competitive Advantages This analysis enables to identify the sustainable competitive advantages for Acer.

Tangible SCA: Global business units and plants Human Resource SCA: Loyal employees Intangible SCA: Famous brand name

Architecture:

Future technology R&D in PDA/Pocket PC Combine resources

Makes alliance with famous Europe distributors Reputation: Gains several international design award, Red Dot Design Award/iF

Organizational capacity SCA: Design Innovative ability| 1.Clear corporate strategy/ 2.Effective internal operation/ 3.Emphasis of R & D R&D develops new products on-going Core competence State-of-the-art notebooks products

1. Clear corporate strategy / 2. Making alliance (distribution)/ 3. the innovative development ability

SCA of Acer Alliances Brand name R&D

In the chart above, we can see that Acer delivers added value and sustainable competitive advantages are alliances, brand name and R&D. The alliances with European distributors can expand Acer market share directly. Furthermore, the credible brand name can keep customers loyalty. The last but not least, the R&D keeps going to develop state-of-art new PC products can keep Acer the leading position in the European market.

4.4 SWOT analysis After illustrating PESTEL, Porters five forces, resource analysis, and SCA, we can develop a matrix for the SWOT analysis. In order to get the most significant elements, I give each item weight. After that, I will take three from opportunity, threat, strength and weakness according to the highest grade. Later on, I will analyze the relationship of the chosen items in the SWOT matrix. Finally, the recommendation will be presented.

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The grade (1 10) for the Opportunity

Item Grade

Assembling lines in Europe area can lower the tariff Customer demand and price erosion is the stimulus for revenue growth Famous brand name The bargaining power of suppliers is low because of the relationship with many suppliers There are some substitutes But it takes a long time to become mainstream products The grade (1 10) for the Threat
Item

7 9 8 8 5

Grade

Spending money and time on green issue The bargaining power of buyers is high But Acer can reduce it by brand name and service The new entrants will contribute to maintain a very competitive environment in European market

7 6 8

There are several main rivals' aggressive expansion strategies 9 have been fuelling fierce competition in Europe The grade (1 10) for the Strength
Item Grade

Effective internal operation Strong alliance with distributors Successful strategic leverage Emphasis of R & D rather than manufacture Dedicated employee The grade (1 10) for the Weakness
Item

7.5 9 7 8 7

Grade

Unbalance marketing strategy Too much dependent on the chairman The non-profit invest business

8 8 9

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SWOT Matrix Opportunity Customer demand and price erosion Famous brand name Relationship with many suppliers Strength Strong alliance with distributors Emphasis of R & D Effective internal operation Threat Aggressive rivals New competitive entrants Spending money and time on green issue Weakness The non-profit invest business Unbalance marketing strategy Too much dependent on the chairman

The high demand of European market is the opportunity to Acer; however, it also results in the new entrants enter this market besides the exist rivals. This makes the PCs market of Europe become more competitive. In order to keep the leading position in Europe, Acer invests a lot on R & D expenditure, along with the media marketing for promoting its brand name. Moreover, the foreign brand like Acer, is hard to approach the channel in European market. Therefore, the alliance with distributors is a key factor for Acer to win the European PCs battle. Moreover, the good relationship with suppliers can reduce the production expenditure, and share the risk of single suppliers concurrently. Regarding the green issue, it will take Acer time and money to undertake. However, every PCs provider faces this issue; therefore, it will be equal for each player to concentrate on. Moreover, Acer will transfer all the production to its suppliers, that means, the cost of proceeding green products will also transfer to its suppliers. As for the non-profit business which Acer invests, Acer already closed some subsidiaries whose revenues are sliding seriously. After giving SWOT analysis, I will further make the recommendation for Acer, they are: Keeping investing on PCs products, not only notebooks products also other PC products to share the risk of market share Making the effective marketing advertisement, like mass media and magazines to broadcast the brand value Seeking 2nd level distributors to share the risk of channel Evaluating the balance of investment and the product future perspective by making forecast ( to see if it will become star products). And reducing/freezing
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the expenditure of the non-profit business. Dont be too dependent on the chairman. Empower other top executives to cultivate other leaders at the same time.

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Chapter 5. Conclusion
After analyzing Acer marketing management by using the internal/external models: PESTEL, Porters five forces, Sustainable competitive advantages and SWOT, we can have a clear picture of the strategies which Acer adopts toward marketing management. Moreover, we can examine if Acers marketing strategies match its corporate strategy. As we know Acer mission is to break the barriers between people and technology; moreover, its vision is to view customer value as the customer's perception of the benefit or value of a product. From this point of view, we can see that Acer pays a lot attention to the R& D investment in order to design the products meet more than what customer expect. Besides R & D investment, the mass media, relationship with suppliers and distributors are both the key strategies for Acer to reach its vision. As for media marketing, it can proclaim its brand name rapidly. And Acer can reduce the production cost by shifting production job, and then further concentrate on R&D. Regarding the alliance with suppliers, is the most important strategy for Acer to sell the PCs products all over the Europe.

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