Market Analysis of Fortress

Last Updated: 10 Jan 2022
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Table of contents

Executive Summary

This marketing report is aimed to analyze the electrical appliance retailer, Fortress, and provide(provides) several recommendations to improve its market positioning that can achieve its targets and objectives. After investigating the current situation and external environment, it is suggested to launch a new promotion campaign that allows Fortress to gain more attention from consumers and succeed in the industry.

It is found that the trend of collective purchasing is significant on the internet. Also, the number of marriage increased with the economy rebounded. In the Social Awareness on the environmental friendly penetrate to the public. Therefore, the promotion campaign is designed from these findings so as to enhance its competitiveness in the market. And, other detailed findings will be explicated in later parts. This promotion campaign is to offer a bundle of products labeled with high energy-saving efficiency for the young couples planned to be married.

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And, the marketing calendar as to the implementation of this promotion campaign will be explicitly shown to execute the proposed marketing mix program.

Company Background

Fortress was established for thirty six years in Hong Kong, founded in 1975 and acquired by Hutchison Whampoa Limited (HWL) in 1986. It has expanded its business up to around 67 outlets hiring more than one thousand staff in Hong Kong. As for First mover advantages, Fortress is the first Hong Kong retailer to offer one-stop shop convenience and a multi-zone in-store retail concept in this industry.

All these contribute to its current market offering, but not market myopia, which allows(allow? ) customers to enjoy excellent time-saving shopping so as to fulfill their needs and wants. In order to publicize its new smart living concept, Fortress publishes online magazine, “Wave”, and a number of free seminars on different interests including high-definition products, computers, digital cameras, home audio and video studio are held to educate consumers about the technology development and new products arrival in Fortress.

Company Prospect

“Inspiring Smart Living” - It was introduced in 2004. Of this core aspiration of Fortress, professional services and advices provided by Fortress will be offered to customer in order to inculcate them to start “smart living”. “Smart living” means living with the support of the advanced technology. This mainly aims at inducing consumers to alter their life style to the advanced life style through leveraging advanced digital devices and home appliances. Customer-Oriented Services and Products Provided

To accompany with its prospect, Fortress allocates much resources in providing excellent customer services and introducing a variety of products. Thus, many external organizations recognized its outstanding services. a. Customer-Oriented Services The frontline staff will base on the different customer’s preferences to provide personalized recommendations on the particular products or other insurance products in After-Sale service. Some of customer services have been firstly introduced in the consumer electronics retail market, which Fortress gained several first-mover advantages.

For instance, Fortress was the first one to launch the ‘24-Month Interest Free Installment’ Program, ‘Purchase-to-play’ Service; a ‘PAY THE DIFFERENCE’ policy that guarantees shoppers the lowest prices on every product every day, ‘Ideal Gift List Service’ and an ‘Emergency Replacement Service’ that guarantees ultimate satisfaction through the second year of product life. To ensure the high standard quality of the customer service, “Fortress Academy” was established to cultivate the continuous learning culture and to provide comprehensive training program to staff, ranging from frontline to management. . Products Offer Fortress has more than 50 suppliers that supply a wide range of electronic appliance and digital products to sell in retail stores. From the supplier list of Fortress, the product differentiation is typically high. It targets on undifferentiated market to satisfy different customers’ needs and wants. Besides, it also manufactures its own products named as “Fortress” brand to target the consumers with high-price sensitive.

Market Leading History

To achieve the large scale of the market shares, many innovative pioneering policies has(have) been created by Fortress, and some of these policies were later also adopted by other competitors.

Competitors Analysis

Industry Perspective

Being a robust market leader in the electronic retailing market, Fortress develops a wide brand network in the local market. Comparing with Fortress, Broadway is the closest market leader in the industry with narrower customer coverage . However, Broadway and Gome are good at different fields. In fact, they have quite different marketing strategies.

Fortress aims at developing a wide distribution network and convenient locations for customers in order to create high accessibility to the target market.

Market Leader - Broadway

For Broadway, the marketing strategy is more trendy and fashionable. Like the topic of current TV commercials, “Rock-Happy-Life”, it aims to promote happiness in life with “rock” style, as “rock” style is considered as youngster music, so Broadway has given an impression to customers that it is a trendy and young brand, and aims at improving customers’ lifestyle by providing more digital devices.

As the closest competitor for Fortress in the industry, it does not only pioneered in using celebrity as spokesman and some policies, but also follows most the pioneering policies made by Fortress, such as the free interest installment payment pioneered by Fortress. However, Fortress has also adapted some of the policies firstly made by Broadway, for example providing gift to customers. It offers products with similar brands and prices as Fortress does.

Market Challenger - Gome

Gome is the largest electronic appliance retailer in China. More than 740 outlets are widely-spread in China, including Hong Kong outlets. Gome has seen the potential business opportunity of electronic appliance with Chinese brands in Hong Kong, so Gome invaded in this industry with Market Challenger strategy to offer various the products with Chinese Brand at lower prices, which can attack Fortress’s weaknesses on this kind of products and avoid the leader and challenge in this market. It adopted similar promotion strategy as Fortress.

Company Review

Strength Fortress has won many awards, like Metropolis Daily Print Ad Award 2004, My Best HK Brands 2005, the HKMA and TVB Award for Marketing Excellence, top 10 favorable brands in HK by Guangzhou Daily, etc. The market share is large; hence Fortress is defined as Market Leader. Meanwhile, Broadway also promotes the similar brand campaign. Hence, it is defined as Market Leader. Weakness Fortress does not have much Chinese brand products. Gome provides similar home appliance products as Fortress does, but the brands are mainly China local top brands.

Under this review, Gome attempts to attack this Fortress’s weakness, so Gome is defined as Market Challenger.

External Environment Analysis

Geographical view

Hong Kong is the city with large population and high density and its traffic systems also are complete and convenient. When customers want to do shopping here, they can travel to the nearest shop in short time. No matter where the shop it locates, it still have lots of potential customers around the shop place. It means that retailer shops may not need to open plenty of stores within the same areas, which can minimize the overall operating costs.

Also, the geographical advantage of the location between Hong Kong and other cities in Mainland China is certainly vital to any business, in terms of logistics and tourism.

Demographical view

According to Hong Kong Commercial Daily, Hong Kong’s population consists of approximately 50% of middle class family. This group generally is well-educated, willing to consume and has higher purchase power. In the society, they play a significant role as they have an enormous contribution on consumption. Furthermore, according to Census and Statistics Department, there are about 30% of people aged between 15 and 34.

Also, from the latest population census conducted by Census and Statistics Department shown, the number of resident at mid-class increased up to 45 % of the overall working population. The mid-class is defined as the resident who earn in the range of $10,000 up to $40,000 in their monthly income in the working population. Of these residents at mid-class level, they mostly completed the secondary school certificates and more (than) a half of them completed post-secondary education.

It is expected this group of people will continuous to grow for a decade, which is a business opportunity for the companies selling normal goods. In recent year, the number of marriages increased from 43 thousand people in 2005 to 52. 8 thousand people in 2010. The overall trend of the marriages was increase(d) when the economy was better. Also, the number of households was increased by 21 thousands. These two statistics shows the(that) there was an increasing trend of a new marriages forming a new “love nest”.

PEST Analysis

Political Environment

After financial budget 2011-2011 released, John Tsang, financial secretary, announced that the government will distribute $6,000 cash to Hong Kong permanent residents aged 18 or above. The overall total cash amount of this policy is estimated to be around 37 billion. Minimum Wage policy is going to implement on the 1st May, 2011. This policy is purposed to set $28 per hour for all full-time and part time workers in Hong Kong. Companies anticipate that this may increase the labor cost for the companies which employ low-skilled workers.

Economic Environment

In 2011, Hong Kong economy is believed to be better than last year.

John Tsang, Financial secretary, estimates that the economy will grow about 4% in 2011. With the low unemployment rate and the increased mid-point salary, the purchasing power of consumers will be stronger than ever. The Centa-City Index shows the housing price increased to 87. 52 of 100, compared with that of 2008, which was 55. 46. It reveals the housing price is estimated to approach the highest housing price in1997. From the report on rent index in Housing conducted by Rating and Valuation Department, there was also an increasing trend in the housing rent, which increased to around 130, compared with 100 of the index in 1999.

It shows the rent was increasing during the past years. Meanwhile, The United States Federal Reserve Board implemented a second round of quantitative easing (QE2) with 600 billion US dollars. It is expected that QE2 will depreciate value of US dollars. Finally, Hong Kong currency will be depreciated due to the linked exchange rate system. Also, Renminbi (RMB) continues to appreciate year by year. If the tourists from other countries, especially mainland china, purchase goods in HK, they will enjoy the currency depreciation.

Thus shopping in HK is so attractive to them but, for local resident, the inflation rate is anticipated to become serious in the near future. However, in March 2011, a serious earthquake in Japan has destroyed lots of factories. Japan will spend a long time to recovery all. Yet, most of electronic components are made by Japan corporations. It is expected that these components may be shortage in the future, so the final goods of these components, such as digital cameras and notebook, are also expected to be out of stock.

The recent investigation of overall economic situation in Hong Kong, which was conducted by Census and Statistics Department, GDP per capita was 25430 U. S dollar and the number of visitor was 36 millions, around 50% of that was Mainland visitors. It is expected that the Hong Kong economy will grow steadily. Moreover, on 3rd May 2011, Census and Statistics Department announced the over-night visitors spent around $6700 HKD on average, whilst non-over-night visitors spend about $1800 HKD on average.

Most of the retailers believe that the number of visitors will still increase continuously, and their consumption will definitely positively affect to their profits.

Social Environment

The “Collective Purchase” concept has been recently developed on the internet, which a large group of people who have a same interest on the specific product creates a stronger buyer power to the seller so as to force the seller to offer a discount by buying a large amount of the same item. However, this kind of strategy may encourage the consumers to wait until the success of the group formation.

According to the report of WenWeiPo daily on 13rd Mar 2011, 82 billion U. S. dollars worth of retail business is achieved through online transaction, which was about 1/10 of the retail industry’s trade. With the establishment of Taobao. com, the online shopping model of B2B, B2C and C2C has been developed well. The interaction of the business activities between Mainland Cities and Hong Kong is stronger than ever. More Hong Kong consumers are willing to order the goods on Taobao. com, because the products often are at lower prices than the retailer outlets in Hong Kong.

And, more Mainland onliners are willing to spend money on Taobao. com to purchase the goods of Hong Kong local brands. This can be seen that the online business does not just only serve the local consumers only, but also the national consumers. The investigation of the number of hours spending on the internet conducted by Synovate, a marketing research company, shows the average minutes spending on the internet rose from 136 minutes to 145 minutes, during past 4 years. On the contrary, the average time spending on TV was less than that on the internet.

Therefore, people tend to spend more time on the internet. People start to cultivate a “Green” environment. Many of them attempt to choose the electronic appliance with low electricity usage to save the environment. Being environmental-friendly, more companies start to implement environmentally sustainable strategies and practices, such as recyclable packaging, better pollution controls, more energy-efficient operations and so on. This can help companies to improve its(their) image and reputation.

Technological Environment

Online Shopping has become popular to the society, especially the advanced technology of mobile phone and the mobility internet services are widely used in Hong Kong. Hence, many companies have started to setup a website to operate their business on the internet at the same time. The product life of a digital product is expected to be shorter due to the fast development of a new product model and technology . quickly replaced in a short period. The main reason is that the company frequently promotes the new product in order to compete with other rivals.

For instance, IPad1 has already been implemented in last year, but now IPad2 is introduced in this year. It is estimated that the competitiveness in digital products will be more and more intensive in the coming future.

Consumer Review

Consumer involvement of buying home appliances is mainly determined by, a) previous experience, b) interest and c) perceived risk of negative consequences

Previous experience

As the functions of home appliance are developed to be more advanced time by time, consumers may not be always familiar with the new latest functions when a brand-new product is launched to the market.

Hence, it requires consumers to spend time on searching its information internally and externally on the brand’s differences of the home appliance products to deliberate its unfamiliar functions in a familiar product category.


Consumers’ interests can be derived from the Maslow’s hierarchy of needs. Home appliances aim at assisting the consumer’s daily life. This can be referred to the physiological needs, safety needs and social needs. Of physiological needs, rice cookers and microwaves are typical example(s) of consumers’ need recognition.

Other electronic appliances, such as communication devices, can be fulfilled their social needs that interact with others. Safety concern of home appliances is always an importance factor to influence their buying decision, especially for the consumers who are married couples with children at the Family life-cycle stage.

Potential risk of negative consequences

Price is the key factor for the perceived risk of negative consequences, situation and social visibility, and they are directly related to the price; as the price of the product increases, so does the level of involvement.

Some of the large home appliance, such as refrigerator and television, are set to be at higher prices; therefore the tolerance of the risk of negative consequences will be lower. With home appliances at higher prices, consumer often requires longer length of time to make a decision. Thus, the level of consumer involvement can be concluded as relatively high.

Dissonance-reducing buying behavior

The price of electronic appliance is ranging from few hundred up to several thousands, and consumers purchase them infrequently.

Moreover, the products among electronic appliance retailer industry are perceived with few brands differences with the major competitors. For instance, Fortress and other competitors provide the similar electronic appliances and brands. The products and services provided by Fortress and Boardway are similar, so there is few brand difference. Because of this, the consumers behave as Dissonance-reducing buying behavior and mainly response to the after-sale services, discount and promotion campaigns to make their purchasing decision.

SWOT Analysis


Selectively distributed retail stores in Hong Kong From the geographical view, the population density is relatively high in Hong Kong; therefore the number of outlets may not need to be widely distributed. Fortress is one of the leading retailers of electronic appliances in Hong Kong with over 67 outlets, which the accessibility for consumers is high. Thus, the channel power is created towards the suppliers, which can enjoy the competitive advantage of this channel partnering, and the setup and operation cost are optimized efficiently.

As a result, consumers can enjoy the optimal price. Reliable Services Mix due to Excellent Comprehensive Training For retail market, service is heterogeneous and vital to the retail market. Fortress emphasizes on the personal selling, so it set up a “Fortress Academy” to provide a thorough and extensive staff training program for frontline salespersons on “frontline consumer service”, “technical knowledge” and “management skill”. By joining this program, staffs can be inculcated with effective customer service, in-depth products knowledge and appropriate management skills.

Accordingly, experienced and enthusiastic staff serves the customers confidently and convince the customers properly, and so they are the most valuable asset to Fortress. Additionally, Fortress developed “smart living”, therefore the products displayed in outlets are mostly like to be more advanced technology. Referring to the product life cycle, the new launched products should be displayed with an informative promotion strategy, so Fortress staff is(are) always well-prepared from their trainings. Fortress is a customer-orientated company. It provides differentiated after-sales services to customers.

They include “24-month interest free installment” to release consumers’ burden; “Purchase-to-Play” service to plan and install AV products for consumers; “10-days Money Back Guarantee” to strengthen consumers’ confidence towards its products. Furthermore, Fortress provides mobile phone insurance to consumers, which can raise consumer’s confidence in purchasing mobile phone in Fortress. Meanwhile, consumers can get the refund or exchange if they were unsatisfied with the products. The outstanding services are highly recognized and awarded, as in “Best Customer Services Award” and “Hong Kong Merchant of Integrity”, by media and other xternal associations, which consumers should comfort with its services and integrity. Sole Agency Advantages Fortress has a number of exclusive agents to engage in a line of business without competition. For instance, Fortress gained the exclusive advantage from Stiebel Eltron, which mainly produces water heaters (See Reference), and launched the promotion campaign of limited quantity with it. During the past years, Fortress carried out this strategic alliance along with a number of brands, as in HPC and Hissense, to enlarge its market shares and the product category is enhanced more than the other competitors’ one .

Since some consumers may have loyalty to some specific brands, Fortress will be the only distribution channel for them to purchase. This certainly brings a stronger bargaining position in Fortress.


Difficult to differentiate from competitors Variety of products, quality of products and sales service, proficiency of products knowledge, and distribution of stores of Fortress are similar to its competitors, as in Boardway. It is easy for consumers to seek for complements from competitors due to the low switching cost.

Moreover, consumers (have difficulty in) are difficult to distinguish between Fortress and its competitors, since Fortress focus on targeting the mass market and all previous unique marketing strategy were quickly adopted by other market followers. Consequently, consumers may switch to other retailers based on souvenir, ad-hoc promotion or discounted price but it is not merely because of the brand of Fortress. Multifarious Products Offers Qualified products with low selling price are inclined to be more popular when the economy is downturn.

Since the manufacturing cost and the delivery fee of products made in China are lower, the listed prices of China’s brand products are lower. For these reasons, Fortress may lose some price sensitive consumers due to narrow range of products from China’s brand. One of its competitors, Gome Electrical Appliances, is offering qualified China’s brand products with low price. Frontline salespeople are educated with basic and general products knowledge, which is not specific enough. Most buyers, especially the beginners and learners, can be satisfied with the sales service.

Nonetheless, some professionals may be discouraged by salespeople’s limited products knowledge. Also, the professional specific components of a product, such as camera lens, are uncommon to display in Fortress. Consequently, Fortress may potentially lose these digital professionals, who may consume frequently. High Inventory Cost of Bulk Unsold Items For the unsold Electronic Appliance, they occupy large storage space, so it leads to higher inventory costs to store them. Compared with other electronic appliance companies, Fortress targets mass market, so various electronic appliances at bulk size will be offered.

However, when these items are unsold, Fortress suffers a significant inventory cost and cannot utilize the cash flow appropriately. Hard to Hold Customer Loyalty Compared with the direct closest competitor- Broadway, Fortress has not launched the membership programme to build up the long term relationship and loyalty with customer in retail outlets, although there is a membership programme for the customer to do online shopping. From this, the customer loyalty may not be solidified strongly due to the weaker Customer Relationship Management.

Even though Fortress co-operates MoneyBack (??? ) to promote different kinds of special offers to the MoneyBack owners, this promotion channel of non-personal communication is simply not wide-spread to the target customer causing the promotion strategy and AIDA model may not be effective as expected.


Extra HKD$6,000 allowance Hong Kong government proposed to distribute 6,000 for each citizen who is aged 18 or above. It can absolutely induce citizens, especially youngsters, to consume more.

From Hong Kong China News Agency survey shown, about 40% of respondents aged between 18 and 30 who prefer to spend this money on their favor digital products including iPhone and cameras, therefore it is definitely a significant potential opportunity to retailer companies. Trend of collective buying Youngsters in Mainland China, Taiwan and Hong Kong prefer collective buying through the internet rather than purchasing in retail shops. According to the Phoenix News, there is a large potential booming trend of collective buying.

They can purchase products in a special discount throughout the collective buying. Fortress can take the advantage of the trend to expand the market share in Hong Kong and to promote its products simultaneously. By using the developed and faultless online sales platform, Fortress can implement the idea of collective buying inexpensively. Green concept In recent years, public’s concern on environmental issue has been aroused. Companies like CLP Power Hong Kong Limited and EPS Company have adopted policies to promote their company products and services.

For instance, CLP has launched several programs like “Old Appliances Recycling Program” and “Energy Saving Proposal” provided from their professionals; besides, EPS has launched the “EPS iDo” to promote the donation to plant trees in Hong Kong urban districts, ever since the program was launched they have already planted more than 2600 trees. By employing green concept, companies can develop a positive image towards public and create a sustainable company income in the future.


Loss of Japanese suppliers Owing to the disastrous earthquake in Japan, most of the electronic suppliers were suspended.

The cost of related complements may increase due to the high demand. In the meantime, the cost of products may be raised and, consequently, Fortress may earn less. Vertical Channel Conflict Online business has been adopted by companies including the direct suppliers. Online retail business can easily be substituted by these mature shopping platforms. Thus, most competitors attempt to prevent from this online business to avoid vertical channel conflict. It is because suppliers may directly distribute their product though the internet channel.

All these may affect the online business of Fortress.

Conclusion and Recommendations

Target Market and Positioning Strategies

The purposed promotion campaign aims at targeting those who planned to get married and are going to purchase or renovate their houses aged between 27 and 37 in the coming 6 months. The reasons why this segment is chosen are because the targeted customers are most likely to purchase numerous new home appliances; therefore they have the highest possibility to contribute revenues to Fortress.

This target segment is derived from the above analysis with supporting figures and facts, thus it is measurable, accessible and actionable. Unmarried couples can enjoy discounted prices through this promotion campaign. This campaign consists of bundle pricing strategy and niche marketing strategy. To further illustrate, the idea is that the target customers will be acknowledged this package through different promotion channels to motive the collective buying behavior on Fortress online shopping website. This package consists of three product categories.

It allows customers to select one product in each category of A, B and C on a first-come-first-serve basis with limited time and quantity. Goal & Marketing objective This package is purposed to optimize the inventory spaces and the warehouse management efficiency. It generally is for consumers to select the three most favorite products from the product list of washing machine, refrigerator and TV respectively. The product list is suggested to contain clearance items with energy-saving label, since the Green environmental friendly starts to penetrate to the public.

This package is suggested to offer special discounts to fiance couples, so as to build up a long term relationship with them. By launching this, it is expected to increase the market share by 6% and significantly increases the revenue by 8% in a short time.

Marketing Mix Programs


This promotion mainly emphasizes on cleansing the warehouse, which is one of the weaknesses of Fortress, so the product list should contain high and low brands of home appliances with bulky size, such as air conditioner and washing machine, in each category of the product list promoted.

The quantity in each category should be sold based on the number of products left in the warehouse. The selected products in each category will be reserved by customers on first-come-first-serve basis.


The bundle pricing strategy & Promotional Pricing The promotional pricing strategy is applied to the package, this temporarily promotion to offer discounts from normal prices for increasing sales and reducing inventories. The bundle pricing strategy is implemented in this campaign promotion to offer discounted price by purchasing a bundle of home appliances - promoted package.

Based on political analysis, a couple will receive HKD$12,000 from HKSAR government. This policy can induce unmarried couple to consume in this campaign. The bundle price of television, washing machine and refrigerator (“A+B+C”) is set to be HK$13,140, which means love forever in Cantonese implication.


As for Market factors, the fiance couples would likely own or rent a new house for their new life, so Fortress may promote its campaign through the channels of wedding services as follows. Physical distribution--Strategic Channel Alliances

Fortress can use the existing channels to promote this campaign. For instance, Fortress may co-operate with wedding consulting companies, solicitors, interior design companies and property agent to deliver this message, since the target customers may go through these two channels to organize their wedding. All these purposed channels needed to reach an agreement Moreover, according to the investigation of the time spending on the Internet, people spent their time on the Internet more than that of TV.

Thus, Fortress may consider the Internet advertisements to draw the target customer attentions, and this is much cheaper than the TV ads. There are some existing famous forums, such as HK Discuss Forum and Uwants, to discuss the plan for wedding issues. Hence, Fortress may advertise its campaign to these forums and support the environmental friendly trend. For other competitors, many of them have not established the online store on the internet and mainly focus on the digital devices rather than home appliances; therefore this promotion campaign is difficult to be imitated due to the barrier of entry.

Logistics After the end of campaign, Fortress will consolidate all the ordered products and deliver them in a short time, so it lowers the transportation cost, and it fully utilize the logistics resources. Make use of social network The popularity of the social network, such as Facebook, can be shown by the statistic report of Facebook in year 2010. It was reported that the number of Facebook user in Hong Kong on Dec 31st 2010 has reached 3. 67Millions people. Since the Fan pages of Fortress on Facebook has been established 2 months ago, the number of fans was only around 1650 people who “Like” this page.

The effectiveness is not explosive enough to arouse the attention of the public. Therefore, it is suggested that, in order to grasp the channel effectively, when the pages on Facebook reach a certain amount of fans, Fortress will offer coupons or gifts through their e-mail addresses. With more people “Like” this page, this channel can raise the awareness of a new product arrival effectively and efficiently with several other promotional channels together.


Informative promotion through online channel and strategy alliances Posters with the detail of the program are suggested to be posted on the Facebook communication channel.

Fortress can make use of this online instant communication platform in order to convey the most updated information to the customers. Besides, in order to arouse people’s interest on this program, all of the retail shops will display the promotion poster on the eye-catching position. Moreover, leaflets will be distributed to the marketing alliances mentioned in the previous part; these leaflets will be displayed in their information desk or even attached to their promotion documents. Emotional appeals on the promotion campaign

It is recommended to use emotional appeals to move the fiance couple. In the poster, it is suggested to use the emotional slogan emphasizing on the eternity love and the care of husbands towards the wife to touch the target customers.


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Market Analysis of Fortress. (2017, Jul 16). Retrieved from

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