(COVER PAGE)

Session

September 2006

Programme

B.A. (Hons) in Marketing, University of Hertfordshire

Course

MKT 325: Consumer Behaviour

Date of Release

October 20, 2006

CASE STUDY

Royal Selangor Pewter ~ Crafting the Right Marketing Mix

SPECIAL INSTRUCTIONS :
A Case Study will be given to the students two weeks before the Final Examination. Students are
required to understand the case and questions will be given based on the case. Students are
ALLOWED to bring the CASE STUDY into the Examination Hal!. No other printed or written
materials are allowed for the examination.

WARNING TO STUDENTS:
Invigilators will check on the materials brought into the Examinations Hall.

Examiner(s)

Dennis Chop and Arasu Raman

Moderator

University of Hertfordshire

This paper consists of 7 printed pages, including the cover page.

MKT325 (CASE STUDY) / Page 1 of 6
INTI COLLEGE
MALAYSIA
B.A. (HONS) IN MARKETING, UNIVERSITY OF HERTFORTSHIRE
MKT325: CONSUMER BEHAVIOUR
FINAL EXAMINATION: SEPTEMBER 2006 SESSION

This paper consists of FIVE (5) questions. Answer any TWO (2) questions in the answer
booklet provided. All questions carry equal marks.

CASE STUDY
Royal Selangor Pewter - Crafting the Right Marketing Mix

Royal Selangor (RS) was established in 1885 (then known as Selangor Pewter), operating
as a family business with a paid-up capital of RM16 million. The company grew rapidly
in the late 1980s, doubling its profits from RM.O million in 1987 to RM2.2 million in
1988; and in 1989 the profits jumped to RM4.9 million. From 1990 to 1998, the annual
growth averaged about 14 per cent. In 1998, RS captured 75% of Malaysian market and
was one of the largest pewter manufacturers in the world.
It has since become the
leading pewter company in the country and synonymous with the Malaysian pewter
industry.
RS has been a major consumer of local tin, using about 250 tons of the
commodity annually. RS produced its own pewter alloy by melting tin ingots and adding
copper and antimony to the molten metal.
RS had positioned itself in the market as a
producer of high quality pewter products. In 1991, the company was conferred the use of
the word Royal in its name by the ruler of the state of Selangor, where RS was
established. The name change from Selangor Pewter to Royal Selangor Pewter was seen
as a strategic move towards gaining exclusivity. In 2005, more than 12 million pieces of
pewter would be exported to different parts of the world. RS pewter is sold in more than
20 countries and has been particularly successful across Europe, Canada, Australia and
Hong Kong.
In 1998, RS employed more than 500 skilled workers at its pewter factory located
on a site of 12 acres in Setapak, Kuala Lumpur. The workers are highly skilled in
performing specific tasks such as casting the molten pewter, soldering parts of an item
together, and creating hammering finishes on pewter mugs. Although RS operates in a
modem factory, traditional methods of craftsmanship have been retained whereby most
of the individual tasks are done manually.
Due to high demand for pewter, RS established another pewter factory in Medan,
Indonesia in 1998. This was to take advantage of relatively cheap and skilled labour.
MKT325 (CASE STUDY) / Page 2 of 6
Competitors
Besides RS, there are four other pewter companies in Malaysia that sell pewter under
their own specific brands. These companies are Penang Pewter & Metal Arts Sdn Bhd
(Penang pewter) Oriental Pewter Sdn Bhd (Oriental pewter), Zatfee (M) Sdn Bhd
(Tumasek pewter ) and Selex Corporation (Selwin pewter), a subsidiary of RS.
Apart from RS, the other Malaysian pewter companies are seen as niche players
and are less well-known among the Malaysians. They have established their own markets
within the locality where they operate: Penang Pewter and Oriental Pewter serve markets
in the northern states of Peninsular Malaysia (Penang and Perak), and Zatfee and Selex in
KL and Selangor. These companies have also ventured into the export markets.
The Pew ter Industry in Malaysia

The pewter industry began during the 19th century when the British ruled Malaysia (then
known as Malaya). The British had exploited the large tin resources in the country to
meet the demand for tin by British industries.
Over the years, as the tin industry
expanded, Malaysia became the worlds largest tin producer through the 1980s.
Apart from the abundance of the raw tin, there was also a small demand from
England for finished pewter products (particularly tankards, wine goblets and flower
vases). The local demand for pewter was almost negligible because the use of pewter
was not a part of the tradition of the local population. In addition, the locals did not hold
pewter in esteem as it was made mostly of tin, which was considered a cheap and
abundant local resource in the country. As such, interest in pewter making was non
existent. Thus the pewter industry could not expand.
In 1990, the government undertook programmes to develop the tourism in
Malaysia. A Visit Malaysia Year campaign in 1990 resulted in a marked increased of
tourist arrivals to the country. Since then, tourists have become a major market for the
pewter industry in Malaysia. Tourists were attracted to Malaysia pewter souvenirs
because pewter was considered a national heritage and a local handicraft. As a result of
the 1990 campaign, there was an increase in the local demand for local pewter gifts.
Domestic Market
The Malaysian market for pewter consists of several segments - corporate purchasers,
tourists and the gift market. Corporate purchasers include private companies, government
agencies, associations, sports and recreation clubs ad non-profit organisations. Engraved
pewter plates have been popular among corporate purchasers as rewards to employees
and pewter trophies are common as prizes in competitive events.
Increased prosperity among Malaysian companies has led to increased demand for
high-end gift items. These companies tend to give away high-end gifts and souvenirs to
their valued customers. To meet corporate purchasers demand, prompt delivery, quality
and competitive prices are the key success factors. As the market leader, RS sets the
industry standard for quality and price for pewter products. RS has also been an efficient
producer, and has paid particular attention to prompt delivery. Smaller companies have
MKT325 (CASE STUDY) / Page 3 of 6

followed competitive pricing strategies but have not been able to deliver on time. As such
they have not posed much competition to RS.
Another major market segment in the Malaysian pewter market consists of
international business visitors and pleasure tourists. This segment is characterised by
impulse buying although there are some foreign tourists who might have planned their
purchase prior to their arrival in Malaysia. It is common for foreign visitors to request a
visit to the pewter factory or a pewter outlet. They seem to be aware of the product from
sources within their own home countries.
Such visitors usually end up making large
purchases, which sometimes require the pewter company to make special shipments back
to their home countries.
Malaysians also have been purchasing pewter items as gifts for their friends and
acquaintances. Among the local population, pewter now is positioned as a high-end gift
item and is popular for special occasions - birthdays, wedding and anniversaries.
The Export Market
Since the 1960s, the export market has been a major market for Malaysian pewter
companies. The most common markets among these companies were Singapore, Japan,

Australia and the USA. RS exported about 60 percent of its production directly to 20
countries, and about another 15 percent was exported indirectly through foreign visitors.
The Pewter industry has been identified as one of the priority industries for
development under the Malaysian Industrial Master Plan.
A pewter company could
enjoy many privileges in the form of tax allowances for capital expenditure in the
expansion of a production facility or in R&D activities.
Additional incentives are available for companies that export and promote their
products overseas. Incentives in the form of tax deductions are given to companies that
incur expenses
for overseas advertising,
market research
in foreign countries,
maintenance of sales offices and participation in trade or industrial exhibitions. The
availability of such incentives, coupled with the high demand for pewter in foreign
countries has encouraged Malaysian pewter companies to expand internationally.
Another factor that induces Malaysian pewter companies to export is the reduced
tariff rates offered by many nations such as the United States as part of the Most
Favoured Nation (MFN) status. Consequently, Malaysian pewter is more competitive in
certain foreign markets than pewter from countries that do not enjoy the MFN privilege.

Marketing Mix
Product

Malaysian pewter companies offer a wide selection of products.

In 2000, RS alone
produced more than 1,000 different items that ranged from designer pewter collection to
pewter sets and small pewter souvenirs.
The aesthetic value of pewter seemed to be a very important factor in determining
the success of a product. Thus, it was a concern for pewter companies to employ in-house
designers to create new designs and improve on the existing ones. For example, RS
MKT325 (CASE STUDY) / Page 4 of 6
employed a team of 15 designers. As part of its commitment to innovation, RS hired
designers from other industries such as jewellery and fashion apparel to design pewter
collections.
In the early 1970s, RS begin to penetrate foreign markets in a planned and
aggressive fashion. It took a multi-domestic approach in terms of the design of its pewter
products. The company developed designs that suited tastes and preferences of the
market within a specific country. In recent years, RS continued to produce pewter designs
according to cultural tastes such as the sake sets for the Japanese and the Four Seasons
oriental design for the Chinese that are being marketed on a global basis.
RS develops at least four new product lines each year. For example, in 1993, RS
introduced several new products: a collection of figurines based on the mythical fantasy
of unicorns and sorcerers was launched in Australia, Hong Kong and Singapore; the
Meridian Collection, comprising of a shaving kit for traveling male executives; a range of
pewter desk accessories called the corporate jungle featuring letter openers, business
card holders with animal designs; and a collection created by a Japanese fashion designer
comprising of pewter plates, picture frames and trays finished with wood grain patterns.
Large capital investments in design and product development are beyond the
financial capability of the other local companies. Occasionally, these companies have
capitalised on RS designs and have produced a similar range of products and
subsequently initiated competition price. Others have focused on special orders and
custom made designs.
In response to the demand for pewter souvenirs, the local pewter companies have

turned to designs reflecting Malaysian culture in the form of local landmarks like the KL
Tower and Twin Towers, people in traditional costumes, and various scenes of Malaysian
life. These designs are inscribed on the flat surface of a pewter plate, key-chain or on the
handle of a letter opener. There are also pewter figurines of Malaysians, local landmarks
and scenes carved out of pewter.
Pricing
As the leader in the Malaysian pewter industry, RS sets the prices of Malaysian pewter.
RS pewter is sold at standard prices throughout the country to maintain the perception of
high quality and to ensure that retailers do not undercut prices or give unnecessary
discounts. The other pewter companies base their pricing on RS prices and subsequently
price their products slightly lower to ensure a share in the market. This pricing strategy
guarantees their continued existence in the industry. While RS has enjoyed large mark
ups, the smaller companies are willing to accept smaller profit margins.
In the export market, RS prices are competitive in view of the large variety of
products offered by local pewter companies as well as those by other foreign companies.
Place

By the end of 2000, RS had established more than 50 pewter showrooms across major
cities and main towns of Malaysia. These places have been chosen because of the large
concentration of government agencies, institutions, private companies and tourist
MKT325 (CASE STUDY) / Page 5 of 6

attractions. The showrooms are equipped with engraving facilities, and RS employees
conduct pewter making demonstrations for tourists.
At the showrooms, pewter items are displayed on open racks where customers can
take a closer look at the design and material. Once a customer decides on an item he/she
wishes to buy, a brand new one is presented to the customer. Most customers are amazed
to see the differences between the item on display and the fresh new item in the box. Due
to constant touching of an item on display by various customers, the pewter items on
display at open racks tend to lose their luster and shine less unless fingerprints are wiped
off immediately. In fact, a special cleaning agent is needed for the long-term maintenance
of pewter.
In foreign markets, RS has established its own representative offices and outlets
in Australia, Singapore, Hong Kong, Japan, Switzerland and Denmark.
There are an
estimated 2,500 agents and distributors of RS pewter overseas. Currently many
international exclusive shops carry RS pewter. They include Harrods in London, Hum
Bolighus in Denmark, Birks of Canada, Myer of Australia and Mitsukoshi of Japan. The
other Malaysian pewter companies have also ventured into foreign markets in their own
small way, mainly through foreign agents.
There is a significant advantage for pewter companies that established their own
retail outlets as compared to those that distribute their products through appointed
retailers. Own retail outlets deal exclusively in the products of a particular pewter
company. In the general retail outlets, the pewter products of competing companies are
displayed side by side; and, hence, there is not only an intense competition but even the
shelf space allocation for each company is very limited.
Promotion

To obtain international exposure, common promotional strategies followed by pewter

companies include participation in trade shows and exhibitions, particular in international

gift fairs. Numerous fairs are held in major cities across the world throughout the year.
Such fairs, for example, are the Toronto Gift Fair, the Birmingham Fair, Farmland Fair in
Denmark, the Frankfurt International Gift Fair and the Sydney Gift Fair. A fair provides
a good opportunity to both new and existing companies to present their products to
leading retailers in the giftware industry.
RS had to make heavy
investments
in export promotion by
consistent
participation in international trade fairs. Participation in trade shows and exhibitions also
enabled companies to evaluate their own positions in the industry. Pewter companies can
also take advantage of these occasions to keep up with the design of their competitors,
and seek new ideas in designing their own products.
Conclusion

RS started off as a family owned business and initially there were no immediate plans for
the company to go public. Such a strategy shielded the company from acquisition threats
and leakage of trade secrets. Although RS has captured a major share of Malaysian
pewter markets, RS together with the other Malaysian Pewter companies faced a major
challenge from existing and emerging pewter companies from all over the wrorld. A major

MKT325 (CASE STUDY) / Page 6 of 6

issue for new entrants has been whether they can complete globally by emphasising
efficient production and targeting the low to medium priced giftware market segment.
The success of RS in marketing its products is mainly due to its right marketing
mix. Its strategy of penetrating into the export market has resulted in Malaysian pewter
products becoming exceedingly attractive. RS has not only been able to be the leader in
this industry, but has also set a pace for local pewter industry to compete globally. Other
pewter companies in the domestic market are following RS marketing mix.
Being the world market leader in pewter industry, RS has initiated the
establishment of a pewter factory in Medan. Indonesia to take advantage of relatively
cheap and skilled labour and economical raw materials in that country. In this way, RS is
able to compete globally with other international pewter companies.
Reference:
Mohamed Yussoff Abdu!lah(200I), Royal Selangor Pewter - Crafting the right marketing mix, Cases in
Marketing A Malaysian Prospective, Practice Hall, P 29-33