Qingdao Haier Ltd.: Considering The Maytag Acquisition

The large household appliance industry and market is significantly large and competitive throughout the world. Large appliances are found in over 90% of North American homes alone- China is right behind them. Europe, Latin America, and Australia’s saturation levels are starting to considerably increase every year. Qingdao Haier is one of the top large appliance manufactures in the world focusing on specialization rather than diversification. Although there is big competition against Haier, their marketing strategies have helped them to increase their profitability. Their key strategy is an expansion into global markets. The objective is to create a localized brand name, which places like America or Europe, can associate themselves with. Other marketing strategies include sub-branding and multi-branding strategies. Localization is important for such a competitive market. Making the consumer feel comfortable and pleased with the product will have them coming back for more.

Consumers tend to purchase large household appliances from retail stores. Haier sells their products through national chain retailers such as Best Buy, Lowe’s, Target, and Sears. In the US consumers purchase appliances rarely on durability but on replacement of an old appliance. When replacing an item, consumers will purchase the same brand more often then not. This is why Haier needs to sell their appliances at a lower cost to attract replacement buyers to purchase their appliances instead of the lead competitors.

Maytag’s has a smaller competitive position in the large household appliance industry in comparison to GE and Whirlpool. In the US alone they hold a 20% market share but Haier is right behind them. Maytag is a Fortune 500 company that designs, manufactures, sells, and services home and commercial appliances in North America and some international markets. Maytag spends the most money out of all its competitors on advertising ranging at about $88.2 million since 2001. It is beneficial in one way because Maytag has become one of the most recognizable and respected names in the US large household appliance market. In order to expand its horizon, Maytag also owns the Hoover brand.

Haier’s competitive position in the market is increasing as time goes by. It has established itself as a global brand and is entering new markets as we speak. Haier’s revenue has increased from $4.9 million in 2000 to $12.1 million in 2004. That is a significant increase which is a result of its worldwide expansion. Haier operates 18 design institutes,