Vision - September/October 2008 - (Page 22)

full conversion to digital broadcasting. Meanwhile the popular and extensively deployed satellite TV and cable systems serve most TV viewers. Complex Distribution Channels Marketing CE products is often complicated in a relatively small country that is the only place in the world using its unique language. Tactics have to be honed specifically for Israel. Some companies turn over the entire strategy and implementation to their distributors, and make them pay the marketing costs from their share of sales revenue. Other manufacturers control, and pay for, the marketing campaigns directly. And a smaller number of firms, especially the global computer companies, set up their own operating subsidiaries in Israel. Using a trusted local partner is recommended as the best way to enter the complicated, small Israeli market. Ra’anan Biber, general manager of Dell Israel, confirms the value of local connections. For Dell, that means working directly with local business partners. The computermaker has recruited dealers and valueadded resellers based on their “experience and coverage” in the three market segments Dell seeks to reach. For consumer markets, Dell works with retailers Electra, Big stores and Newpan, which sell via their small shops, big stores and online sites. For small/medium business clientele and for “large accounts,” there are at least three dealers and value-added resellers in each category, all of which operate entirely within Israel, Biber explains. Waxe, noting that there are “no limitations to enter the market,” emphasizes that the biggest challenge is “how to develop a brand name.” He says, “In my experience it is better to work with a local distributor than to build up a network [independently].” Waxe adds, “It is important to understand the country and the people and to speak the language. … Smaller companies should find a good distributor [especially in CE where] there are some who have a presence throughout the country.” A Dun & Bradstreet report last year underscored the value of that tactic, when it warned that nearly one-third of Israel’s electronics and electrical appliance deal- ers were in economic danger. D&B noted that most of the endangered firms suffered from a “fatal combination” of high rents and crushing margins, exacerbated by competitive price drops and discount e-commerce websites. The D&B/Israel report focused on smalland medium-sized retailers, which comprise as much as 40 percent of the electronics dealers (about 1,100 stores overall) as the most immediately threatened. The vertical integration of Israeli manufacturers and retailers further complicates the relationships for international brands in Israel. For example, Electra Consumer Products Israel is the country’s largest electric appliance maker and through its parent holding company is affiliated with the three largest electric and electronics retail chains, which sell via more than five dozen branches throughout the country. Thanks to a recent merger, the stores operate under a variety of names, such as Shekem Electric, Mahsanei Hashmal and Sensor. examine buying patterns and pricing so that their supply chains and customers can respond quickly to such evolutions. In another instance regarding flat-panel TV sets, last year the “normal” product was a 42-inch monitor. CE executives tracking sales recently spotted a preference toward 50-inch screens—despite the country’s small apartments. They also identified a fastemerging preference for black bezels around the screens—rather than the silver-colored frames that had been popular a year ago. Such ongoing analysis is essential, and it contributes to the generally positive outlook. The recent Euromonitor analysis of “Domestic Electrical Appliances in Israel” concluded that the country’s “fast growth rates, together with increasing disposable incomes and retail growth has boosted sales” of domestic electrical products. It noted, in particular that, “This buoyant trend has positively influenced growth in the premium brands and is an indicator of improvements in people’s living standards and lifestyle.” “ AmericAn And globAl suppliers should find in isrAel A very AttrActive plAce. —Ra’anan Biber, general manager of Dell Israel ” Meanwhile, Electra also is the exclusive importer and distributor/marketer of products from Philips, Sony Ericsson, General Electric and several other U.S., European and Asian manufacturers. A recent Euromonitor International report explained that the interlinking relationships between manufacturers, distributors and retailers are usually “unclear to the public because these businesses operate under different names.” Moreover, because of these interlinked connections, marketing through the various channels poses special challenges. “You have to understand their way of thinking,” advises a marketing expert about how importers should connect with Israeli retailers. The value of working with a local distributor stems from this need to fit into the Israeli commercial structure. For example, the constant changes in product pricing and consumer demand require that dealers and manufacturers keep track of subtle shifts. Distributors frequently While “economy brands” also have grown, their role represents the “widening socioeconomic gaps in Israel’s society,” the study pointed out. Reaching Diverse Markets The gaps—ranging from high-tech professionals in the dense population centers to far-flung agricultural workers—underscore the diversity of the small Israeli population. The country has the world’s highest percentage of engineers (135 per 10,000 population compared to about 85 per 10,000 in the U.S.) and its 28,000 physicians is the highest medical doctor per capita ratio in the world. To market to this selective audience requires special skills, especially among the notoriously bargain-hunting communities. Although exact sales data is hard to establish given the vertically controlled arrangements, there is a sense that overall CE sales are split between the big chains of appliance and electronics-only dealers www.ce.org 22 September/October 2008 http://www.ce.org

Table of Contents Feed for the Digital Edition of Vision - September/October 2008

Vision - September/October 2008 Contents Shapiro's Spectrum In this Issue The Economist Visionary C4 Trends Coming to a Neighborhood Near You IPv6: Connecting People and Things Israelis Spend Big on the Latest CE Devices Tech Speak Tech Policy CEA Newsline Going Global Eye on Business Market Insider Just the Stats

Vision - September/October 2008

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