In other words, what can be identified as a niche in one country may not have the same characteristics in the next. Developing this type of strategy implies concentrating fully on one market, and market needs for the US are very different from those in Europe. Consequently, this will be of added cost, and the cost cannot be completely absorbed by the company. Indirectly, it will be passed on to the end consumer. For example, the machine Designer I that Viking introduced in 1999 as “top-of-the-line”, retailed at $5,000.
(Danlqvist & Melander; 2001, p. 743 of Johnson and Scholes) It did, however, include “extensive use of software to control the machine and contained no fewer than eight motors to cater for all functions” as well as a disk-drive and Flash memory that could be upgraded by the customer. (Danlqvist & Melander; 2001, p. 743-744 of Johnson and Scholes) These value-added features come as an extra cost, but the benefits of targeting a specific niche implies knowing beforehand that they are financially able to purchase the product.
Svante Runnquist’s extensive marketing background allowed him to consider the emerging e-business as a window of opportunity. It was an extremely powerful tool that was going to bridge the gap between the company and the consumer. A website was set up for customers to access, displaying products for the ‘after-market’, including everything from accessories such as needles, embroidery patterns, and presser feet. Particularly appealing to consumers was the fact that that they could download new embroidery patterns and buy accessories for their sewing machines.
Staying true to their belief in exclusive dealerships, the website only offered information on all of their models, but did not have the option of purchasing online. Even currently, the Viking website offers only technical information on all its sewing machines, without even displaying a suggested retail price. Their strategy of going online paid off, since Runnquist’s main objective all along was that he wanted “the after-market to grow more than the total business …
It’s by selling more auxiliary equipment and developing new products for the after-market that we will grow. ” (Danlqvist & Melander; 2001, p. 745 of Johnson and Scholes) The internet page was a direct link to customers, whose aim was to reiterate its commitment to them while potentially building a long-lasting relationship that would be measured in terms of cash flow. Viking’s transformation into a customer oriented company proved successful because they were able to please both their exclusive dealers, and their customers.
The dealers were a particular area of interest because they are the direct link with the customer. If the dealer is on acceptable terms with Viking, it will be translated in better recommendations to the customer and increased cooperation to carry their product in stores. Even the clearing system that Viking proposed for Internet commerce was appealing to the dealers, as no work was involved on their part, but a small bonus was given to the dealer based on web sales within their geographical location.
As the manager of Internet market stated, “Up till now, we haven’t had one single complaint from the dealers. I think they rather like the idea of getting a bonus automatically without any work involved. ” (Danlqvist & Melander; 2001, p. 744 of Johnson and Scholes) Using all the previous explanation as a basis, the strategies of Viking, and above all the vision of Runnquist, proved to be successful and was able to reap benefits for the company in a short period of time.