Vtech 2002 Annual Report Download - page 13

Annual Report 2002 11
0
500
1000
1500
2000
2500
900MHz 2.4+5.8GHz
US$ m
810
1700 1630
2180
1010
470
2001 2002 2003
including units in transit, to the equivalent of two months’
sales, and enabled us to avoid significant close out sales of
excess inventory.
More strategically, we completed the first stage in our
transition from an engineering driven company to one with
much greater customer focus. We conducted market research
among consumer groups to gain a better understanding of
their product desires and establish the perceived brand
attributes for VTech and AT&T telephony products. Our two
brands, VTech and AT&T, are complementary and focus on
different end-user groups at different price points. VTech
products are perceived and marketed largely as innovative,
vibrant and a good value that appeal to younger and more
technology-oriented users, while AT&T products are aimed
at those seeking classical design, pleasure in use and
recognized quality.
We have incorporated these findings into our ongoing
product design, sales and marketing programs. In January
2002, we were the first manufacturer to announce the
development and launch of the new 5.8GHz cordless phone
platform. This significant breakthrough confirms VTech as the
technology leader in cordless telephony and will reap revenue
and other benefits in the coming financial year.
Outlook
We remain cautiously optimistic about prospects for the
telecommunication products business in the 2003 financial
year. Current stability in our sales should continue, although
they could be undermined if US consumers were to tighten
spending significantly. We also expect competitive price
pressure on 900MHz models and potentially rising
component prices. VTech will meet these challenges
through increased new product development efforts and
sales of higher margin products.
We further expect to make continued progress in
establishing ourselves as a customer driven organization.
During the first month of the year, the AT&T and VTech
sales teams were integrated and client account teams
reorganized to enable them to focus more effectively on
the needs of our key accounts. Recognizing that our 20
leading customers represent almost 90% of sales, we
created specific teams to manage each key account,
ensuring a much higher level of customer service. We
intend to reorganize our logistics to align the execution
of orders with that of our customers’ needs. This will cut
costs, improve reliability and help cement retailer
relationships. Additionally, we will share more market
information and co-operate more closely on the full range
of sales issues including pricing, product display, package
design and promotional events in order to forge even
closer relationships with our key retail customers.
Looking beyond the United States, we see opportunities
to expand elsewhere. In the immediate future, we are
targeting increased sales in Europe on an ODM basis.
In the longer term, VTech is carefully evaluating
opportunities presented by mainland China. VTech, with
its manufacturing base long established in mainland
China, has great potential in this admittedly complex
market. A new team headed by the Group Chairman has
been established to examine the most appropriate way to
develop China business.
Source:
AAT/NPD,
Market Intelligence
“Seal of Approval – Best Overall”
award by Good Housekeeping
magazine
Review of Operations
US Cordless Market Value