BIO-CLEAR Air Purifier

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In 1995 Mr. T. Wan of RW & Company agreed with his foreign suppliers that there would be a market for its BIO-CLEAR air purifier in the Philippines. Since there was then as yet no such comparable commercial product in the local market, the decision was made to bring it to the market as fast as possible. This decision was made to preempt the competition, to be able to define the market by being the first product that was to be locally available, and to build up brand equity. Arrangements were therefore made for the initial shipments of the product’s range of models into the Philippines.
A year later, however, Mr. Wan was struggling with unsold inventory consisting mostly of the more sophisticated and computerized higher priced models. Sales in the provincial outlets were consistently poorer than predicted versus those in the urban areas, especially Metro Manila. Metro Manila sales, however, were still marginal as well.
Product sales were barely covering costs, and Mr. Wan was wondering whether it would be better to simply discontinue offering the line. He would be talking to the foreign supplier’s representatives in a week and needed a good position in order to be able to strike a negotiation with confidence, especially because this supplier was not only the source of the BIO-CLEAR line of air purifiers but also of other home appliance products that RW & Company was selling.
Above all, Mr. Wan had to decide as to whether or not he should renegotiate the BIOCLEAR dealership.
The Pollution Environment
According to Dr. Priscilla Tablan, director of the Lung Center of the Philippines, 43.3 % of chest patients admitted to the center were found to have ailments that were caused or aggravated by air pollution and smoking.
Pollution in places of work and the environment, as well as smoking, play a synergistic role in the incidence of the most common forms of lung diseases such as chronic bronchitis, chronic obstructive pulmonary disease (COPD), lung cancer, and bronchial adenoma. Hourly Suspended Particulate (pollution) levels in four stations in Metro Manila (Cubao,
Ermita, Pasay, Quiapo) has been increasing with every year. The trend is viewed by the
National Pollution Control Commission as an effect of the increasing number of poorly maintained diesel-fed Public Utility Vehicles (PUV’s) in the metropolitan area. In 1997, for instance, a booming economy has led to an increased rate of purchase of personal motor vehicles.
Metro Manila is generally acknowledged to have one of the world’s worst conditions in terms of ambient air quality. And it was precisely this environmental factor which Mr.
Wan had hoped to bank upon in order to sell the BIO-CLEAR line.
The Product

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This case was edited by Prof. Arturo Ilano from data and text provided by Nelson R. Santiago. This case shall be used only for purposes of class discussions, specifically about marketing strategy.

The BIO-CLEAR air purifier combines the functions of an ultra high efficiency filtration system with that of an air ionizer. It is the first product in the local market that could improve air quality in an enclosed environment to levels that were only previously achieved in “clean rooms” (ultra-clean environments for the production of microchips) and, in fact, uses part of this same technology.
The BIO-CLEAR air purifier is listed in the supplier’s catalog (and the product’s user instruction manual) as the Air Purifier AC-2100 Series. It is offered in five (5) models, namely: 2101, 2102, 2103, 2104, 2105. All of these models look almost exactly the same. They are of the same size and general appearance, and there is only one color available, namely cream on gray. The main difference between these models is largely centered on the sophistication of the control options. Model options range from the strictly manual (the user has to set and monitor almost everything) to a model with completely automatic sensing and control (sophisticated sensors detect when someone has entered the room or lighted a cigarette, which makes the machine start up automatically, and remain on until pollution levels fall below a preset level, then it shuts down again automatically).
It is important to note that all of the models will clean air pollution from the same sized room at the same rate of speed. Therefore model differentiation is not based on capacity or speed but primarily on the control options available. The retail price of the most basic model is roughly 60 percent that of a typical air conditioner, while the most expensive BIO-CLEAR model has a price that is about 50 percent more expensive than the most basic model.
The BIO-CLEAR air purifier works in the following way: dirty air enters the front of the unit via the air intake grill. Next it enters a technically advanced 5-stage purifying system: 1. PE filter: removes large particles such as dust, pet hair and pollen while smaller particles advance to the next stage.
2. Electrostatic precipitator: Smaller particles are given a positive charge and then collected by the precipitator plate and electrostatic filter.
3. Electrostatic filter: The high efficiency, high flow filter further traps small microscopic particles such as bacteria.
4. Active carbon filter: The filter removes odors.
5. Negative Ionizer: Negative ions are released to further purify the air of airborne pollution such as dust. Via high voltage electric discharge, the ozone is a strong oxidizer. It can absorb smoke and odor and also refresh the air.
The unit, which weighs approximately seven kilos, can be placed on the floor or on a shelf (standing or on its side). It can also be wall-mounted via a mounting bracket
(provided along with screws) on its back. All models can be controlled via a handheld infrared remote, or controls on the unit itself. Only the more expensive models (2103,
2104, 2105) offer sensors (flame sensor or movement sensor) that can start or stop the unit automatically.
During operation of the BIO-CLEAR machine it is necessary to close the room to prevent recontamination. This makes it difficult to use during the summer, when temperatures are high. During this time of the year, the BIO-CLEAR can only be comfortably used in closed air-conditioned rooms.

Promotions
One of the initial agreements was that the foreign supplier/partner would provide some assistance to RW & Company in terms of promotions, although the exact nature of this assistance was never really made clear to the company. This was most welcome to Mr.
Wan as they were sorely lacking in both expertise and resources for promotions.
The “assistance,” however, turned out to be a simple compendium of some of the promotional material the supplier’s distributors or retailers came up with and used abroad. This was practically useless to Mr. Wan as these did not give any other essential information, such as what may be the best strategies for selling the units, for example. With limited promotional funds, advertising was limited to the inclusion of BIO-CLEAR in sales discount promotions of SM Appliance Center. The summer discount promo included all electric fans, air conditioners, humidifiers, and BIO-CLEAR air purifiers. The problem with this particular promotion was that the SM appliance centers turned out to be independent of one another. Thus, the sales promotions and discounts only applied to specific outlets, unlike with chain stores such as Abenson and Automatic center, where a coordinated campaign across all branches could be performed.
Competitive Environment
The industry essentially consists of players who provide environmental control for enclosed spaces. Therefore any product that changes or modifies the microclimate within a room is a potential competitor for BIO-CLEAR. Among these are:
1. Electric fans (including blowers, air curtains, suction fans, that move or induce air currents). 2. coolers/humidifiers (essentially fans with the option to use ice or cold water to humidify/slightly cool the air)
3. air purifiers (filters air to reduce pollutants/contaminants).
4. air ionizers (introduces negative ions in the air to oxidize pollutants and refresh the air).
5. air conditioners (cools the air, though most have a filter that only traps large particles). One can also include nebulizers (humidifiers used with medicinal oils) that asthma sufferers use. However, nebulizers are in a different market altogether, they are essentially in the medical supplies or applications category.
The newest technology to be applied in the local environmental control industry is the use of ionization. This process introduces negative ions into the air, which are powerful oxidizers that absorb smoke and odors. Ionization also produces ozone (a charged form of oxygen) that refreshes the air, similar to what happens during a thunderstorm or after a rainstorm. Air ionizers are available for home and car use. They are small and unobtrusive, some look like paperweights or tabletop sculptures. Currently the technology is being added to some common household appliances. The champion of this technology in household use is the appliance division of the Samsung group of
Korea, locally represented by L.G. Collins. They have included ionization as a feature of some of their air-conditioner models, and also in their Bio-Vision series of television sets. Their promotions have largely emphasized the maintenance of a healthy home environment, specially for children.

Strategic Options
On his way home to Binondo, Mr. T. Wan kept thinking about his possible options for the BIO-CLEAR line. He acknowledged the fact that promotions had been limited. With a limited budget, it had to be done in coordination with his channels. However, it seemed to him that there were some things about the product that the foreign supplier could also improve, perhaps in terms of the range of models available. He also wondered whether the fact that product pricing that was based on the control options affected the customers’ price sensitivity.
As he entered his bedroom he was momentarily startled by a sudden low hum, then remembered it was only the BIO-CLEAR unit detecting his presence and automatically turning itself on.

GENERALIZED DIAGRAMS OF AIR PURIFIER UNITS

LED INDICATOR OF FRONT PANEL
AIR PURIFIER AC-2100 SERIES