Dec 18, 2013

    Celebrity marketing pays off for OSIM

    A CAR is a car, and a shoe is a shoe, and for Ron Sim, founder of OSIM International, known for its extensive line of massage chairs, even a chair is a chair.

    How you market that car, shoe or chair is what sets the product apart from its competitors.

    "Marketing is about selling perspective," he explains. "If that perspective is not clear, your marketing is all going down the wrong way."

    In a speech at NUS Business School on marketing in Asia as an entrepreneur, Mr Sim shared details of OSIM's marketing and management practices.

    Over its 35-year history, OSIM has grown from a local household-products firm into an international lifestyle brand. Mr Sim says the company has grown every year, but it has not been a straight line.

    The recession that hit Singapore in 1985 made it clear to the young company that the small island nation had no economy of scale and, if the company wanted to grow, it would have to seek out new markets.

    The first step overseas was to Hong Kong in 1986, followed by Taiwan, Malaysia and China.

    By the time the Asian financial crisis hit in 1997, Mr Sim says OSIM was able to weather the storm because of the brand's strength.

    "We determined in the late 80s to create the brand. Therefore, during the crisis of '97, which was tough because the market was tough, we could still grow."

    And grow they have - to more than 590 OSIM outlets in Asia, Africa, Europe and the Middle East.

    But just having more stores is not enough - OSIM's success has attracted a range of competitors and copiers.

    "There are more than 10 'O's right now," points out Mr Sim, who created the company name by adding an "O", symbolising a global outlook, to his name.

    Mr Sim says innovation is OSIM's best defence. "Every quarter, we will have a new product. You need to keep excitement coming all the time."

    OSIM's latest innovation, a massage chair called the u-Infinity, was launched recently. It allows users to download new massage programs based on occupational, sports or lifestyle needs. "CEO", "tai tai" and "golfer" are just some of the programs available.

    To market the chair, OSIM has turned once again to Hong Kong superstar Andy Lau, who has been the company's spokesman for three years. OSIM has also enlisted other Hong Kong stars, like Gong Li.

    Mr Sim says a firm needs "a certain pocket size" to secure these celebrity endorsements, but the strategy has provided a worthwhile return on investment.

    "When we use Andy Lau, it's very, very powerful," he notes, describing the impact of Lau's endorsement as "quite astonishing". "People buy not because of him alone but the awareness is big, so that's very important."

    The innovation does not stop at the product line, either. In fact, Mr Sim says it is a "key touchpoint" at the company, affecting everything from the way the products are positioned to the way they are conceptualised and made, and even the way internal processes are organised.

    Not all of OSIM's moves have gone smoothly, though. Its 2005 acquisition of US retailer Brookstone was, in retrospect, poorly timed. During the global financial crisis of 2008, OSIM had to take a write-off of "a couple of hundred million dollars" for the Brookstone deal.

    Since then, OSIM has become much more structured, and Mr Sim has taken it upon himself to be more involved in the financial side of things.

    "I used to be just a businessman, the CEO," he says. "Now I'm 80 per cent CFO as well."

    He adds that the boss needs to understand every aspect of the financial information, "because if the CEO does not, and relies totally on the CFO, then that connectivity to make the operating model financially effective is not there".

    In addition to OSIM and Brookstone, the company and its subsidiaries also operate 215 GNC vitamin and supplement outlets in the region, 38 Richlife nutritional-supplement stores in China, and recently became a majority shareholder in another Singapore-based company, luxury tea brand TWG.

    As the company grows, Mr Sim finds he is not any busier. In fact, it is just the opposite.

    "Ten or 12 years ago I had less time because I was doing everything, because it was less structured. Today, I've got more time."

    He also seems pretty good at delegating.

    "The clarity of what you are building as a brand, as a concept, as a product innovation, as a service - you have to have clarity. If the leadership of a company has this clarity, building the processes, frankly speaking, is not difficult."

    As for the Brookstone acquisition, it does not sound like he has any regrets. "Every negativity is an opportunity to scale new heights," he points out.


    This article was first published on NUS Business School's Think Business portal (thinkbusiness.nus.edu)