Wallpaper Case

977 Words 4 Pages
1. Commercial risks

1. Majority of the target group starts to develop a preference for wallpaper
There are various reasons why people may start to develop a preference for wallpaper over paint, for example because of health reasons. When using solvent-based paints, toxic substances may be released, which are not only hazardous to the health of people but also to the environment. Another reason for people starting to develop a preference for wallpaper may be that wallpaper has become cheaper and/or easier to obtain than paint. It is a commercial risk since this risk has to do with changing customer preferences.

It is very, very unlikely that the majority of the target group will start to develop a preference for wallpaper over paint. Of course
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Majority of the target group starts to develop a preference for national brands
There are various reasons why people may start to develop a preference for national brands over international brands: they may have become cheaper and/or easier to obtain than international brands (for example due to increasingly more trade barriers and import duties faced by foreign paint manufacturers; favourable treatment of national brands), they might turn out to be way better attuned to the local climate, etc. It is a commercial risk since this risk has to do with changing customers preferences as well.

Just like the commercial risk mentioned above, it is very, very unlikely that the majority of the target group will start to develop a preference for national brands over international brands. Thanks to the globalisation of the world and the development of international trade, increasingly more brands can be bought anywhere in the world. More often than not those international brands win the competitive battle of national brands.

The possible consequences are moderate, since Van Wijhe Verf will still have a big market in the
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Negative word-of-mouth communication among (potential) customers
In the paint industry, word-of-mouth communication plays a very important role. People often have greater confidence in what other people say about a brand and its products than what the company itself says about the products it offers. This may decrease the effect of marketing activities undertaken by the company.

As companies usually do not have a lot of influence on word-of-mouth communication between (potential) customers, it is very difficult to change the negative attitude among them into a more positive attitude. Therefore, negative word-of-mouth communication can seriously harm a company’s reputation, which in turn may lead to less turnover, financial losses and maybe even bankruptcy.

The chance that people will talk positively about the brand is the same as the chance that people will talk negatively about the brand (50/50). However, the chance that the company’s reputation will be seriously harmed by negative word-of-mouth communication is almost certain, especially due to the great importance that people attach to word-of-mouth

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