Global Marketing Strategy and Practice - Business Plan Example

GLOBAL MARKETING-STRATEGY AND PRACTICE Table of contents Introduction Constantly, the global business environment is becoming competitive for companies, both local and multinational. As a result, several strategies, principles and mechanisms are being put in place by these companies to survive in the competitive global environment. According to quote (year), one of the most used strategies to survive the competition is growth and expansion options. This means that the companies are repeatedly taking advantage of the globalised nature of the world business environment to expand their tentacles to various destinations, far and near. The advantage that has been noted with such business expansion and growth options is that it makes it possible for the companies to evenly spread tap into the opportunities that exist in different markets (quote). It would be noted that no two markets are exactly the same. Because of this, each market comes with its own opportunities and threats. By having a company’s presence in as many market destinations as possible, it is possibly to balance out on the opportunities and threats. This is just like the proverbial putting ones eggs in many baskets so that they do not all get broken at the same time. Even though the general concept of expanding into new markets and having as many markets as possible bring several advantages, it is always important to take precautionary measures when embarking on new market entry. To be very successful, quote (year) notes that there are very critical factors that must be considered. This paper is thus committed to looking at ways in which ASDA can have a very successful market entry into France. 2. Background ASDA has been a dominant supermarket, operating mainly in the North of England and Wales for several years. Founded out f the merger of Asquith chain of three supermarkets in 1965, the 1999 acquisition of the company by Wal-Mart did not change the company’s market concentration very much. This is because the North of England and Wales have continued to be ASDA’s major point of operation. Today, ASDA is rated the second largest supermarket in the U.K in terms of market shares and revenue, having more than 500 stores and 200,000 employees (quote). Even though it would be true to debate that ASDA has known the English and Welsh market too well to continue to concentrate resources in these markets, it is also true to argue that the global business environment is changing sharply and that the need to take advantage of new market destinations is something that the company cannot exempt itself from. Currently, there are several reasons and factors that put ASDA in very good position to succeed in new markets, especially when the selection of the market is done with all necessary considerations in place. Typical of these factors is the global brand equity that the company has gained (quote). As part of ASDA’s brand equity, chances of succeeding in any new market are very high. Currently, France is targeted as the best market for ASDA to enter, given how favourable France is in comparison with other potential destinations. Already, a PESTEL analysis and competitive analysis have been undertaken to justify France as the best destination. What remains now is for ASDA to choose the right marketing mix, organisation structure and distribution strategy while in France. 3. Market entry 3.1 Market Entry Strategy Market entry strategy has been explained to be the use of a systematic plan in starting delivery and distribution in a new target market (quote). Market entry strategy is considered as systematic plan because it is a process rather than an event. What this means is that with a market entry strategy, a company would be engaged in series of carefully executed tasks that come together to accomplish a common goal of gaining grounds in a new market. For any company seeking expansion and growth, there are two major types of marketing entry strategies that the company may choose from. These are home market production and foreign production. Each of these two major types of market entry strategies also come with their divided components as showed in the figure below. Figure 1: Market Entry Strategies Source: FAO (2013). In the case of ASDA, entering into France forms a foreign production market entry strategy. As noted from the diagram, ASDA is presented with several foreign production options to choose from in order to make the new market entry complete. These include licensing, joint venture, contract manufacture, ownership, and export processing zone. It is very true to say that each of these options would offer ASDA one form of advantage or the other. Each of the foreign production options would also come as favourable to ASDA in the new move to France. However, there are three major issues that ought to be considered in selecting one of the options. These issues as noted by FAO (2013) are marketing, sourcing and investment and control. In the case of ASDA, the need to delve into investment and control is very crucial. In line with the issue of investment and control that face the company, joint venture is selected as the most preferred foreign production market entry strategy for ASDA. 3.2 joint venture The FAO (2013) notes that joint venture is “an enterprise in which two or more investors share ownership and control over property rights and operation.” Joint venture has been compared to merger but the two are never the same. This is because in merger, two existing companies come together to operate as a single entity (quote). In joint venture as being prescribed for ASDA, the emphasis is on investment and ownership, where an entirely new venture is invested into by more than one investor (quote). Once ASDA chooses joint venture, the company will be offered more direct participation in the new market operation than other options such as exporting and licensing would offer the company (quote). Indeed, there are several other benefits that ASDA will derive as part of the joint venture. One of the major advantages of joint venture that ASDA will benefit from is the fact that there will be the sharing of risk with the investing partner (quote). To take full benefit of this advantage, it is suggested that the joint partnership be done with an investor already operating in France and having full knowledge of the French market. This way, there can be effective local in-depth knowledge with a foreign partner with know-how in process, which FAO (2013) considers to be an advantage in itself. Other advantages are that there will be joint financial strength and that ASDA will have the opportunity of acting as the sole supply from its parent company in the U.K. This way, the issue of bargaining power of suppliers will be controlled by ASDA. There are also some disadvantages with joint venture that ASDA would have to be on the lookout for. Once ASDA enters into joint venture with its preferred partner, both partners will not have full control of the management of the company (quote). This means that most decisions that are considered strategic and urgent for the company may not be easily taken by ASDA as an independent management. This situation may also come with its own weaknesses, including bureaucracy in decision making and delays in the implementation of management policies. The recovering of capital in joint venture has been noted to be very slow (FAO, 2013). But as much as this may be seen as a disadvantage, it could also be said to be a challenge that requires ASDA to put in place the right marketing strategies in ensuring that sales can go as fast and quickly in the new market as expected. Once this is ensured, the recovering of capital will certainly come very quickly. The problem of disagreement on third party markets has also been noted by FAO (2013). Such disagreements are often related to power struggle and the need for all parties in the joint venture to have their third party interests served (quote). Still on power struggle, there is the tendency that partners may never have the same views on expected benefits (FAO, 2013). For all forms of power struggle, the use of a well managed organisational structure that gives each partner and all stakeholder clear cut domains of operation within the joint venture has been found to be an important intervention in addressing (quote). The paper will thus look at organisation structure later. 4. Marketing Mix The marketing mix is used as a very strategic marketing tool that allows the company to identify best ways to compete when using product, place, price, and process as market variables. In the following sub-sections, each of these four variables is critically assessed in terms of the France market for ASDA’s joint venture. 4.1 Product To effectively market ASDA’s products, it is important to ask some important questions, the answers of which will serve as strategies for marketing products. The first of the questions has to do with what the product is and how it looks like, as well as how customers will experience it. In the case of ASDA, the product could be identified to be both grocery and non-grocery products. These are everyday products that customers use and so are expected to be experienced by customers as things that they are very familiar with. However, quote (year) noted that when marketing products that are already experienced by customers, it is important that the new entrant gets a model about that same old product that can be used as a competitive advantage. In this regard, it would be important for ASDA to use the model of quality to differentiate its products from what has already been experienced by the French customers as either groceries or non-groceries. There is also the question of what need the product serve. This is a very important question that goes a long way in identifying one’s market segment (quote). This is because once the needs of the products are known it is possible to identify the right people that have needs of the product. What is more, knowing the people who have need of the product also makes it easier to strategise other market techniques including price around the identified people (quote). For ASDA, it is known that the products of the company will serve needs of entertainment, electrical, gift experiences, travel, cooking, and other home based needs. With these needs, it is right to say that families are best target segments for ASDA. 4.2 Place The issue of place is a very important component of the marketing mix, as it helps the company to know the right place to be at the right time in order to get the right sales (quote). There are numerous important questions that the company must pose in terms of finding the right place to be. The first of this is the question of where buyers look for products to buy. This is a question that brings to mind both online and offline markets. In relation to the needs that the products of the company serves, it will be very important that ASDA record massive physical presence in France. Such presence must however be concentrated at residential areas where families can readily get hold of products from stores. The use of departmental stores across all major cities is highly recommended. Apart from getting products of ASDA from stores, it should also be possible to take advantage of electronic commerce to dominate the online marketing business in France. Already, ASDA has online shops but it will be very prudent to have a focused online shop for the new French market, where purchasing would mean quick and easy delivery. Still on the issue of place, the question of using a sales force is very important. This is because after identifying the places to get products, it is important for the company to answer for itself how it is going to get customers to come to the place. Using a sales force is recommended for ASDA. This is especially so for not too big cities but smaller towns where the sales force can have a lot of coverage. 4.3 Price As a new entrant and in a very competitive market where ASDA is not the market leader, the issue of price is very important in gaining competitive advantage. This is because there may be market leaders who have the luxury of selling at much reduced prices without recording any price shocks. When competing with such competitors, it is necessary that the new entrant gets it right with prices so that it will not be at a disadvantage with price shocks from the bargaining power of consumers. To cater for such a situation, the first and most important question that ASDA ought to ask is what the value of its product is to the consumer. Value is always an important determinant of price, knowing that when consumers regard a particular product as satisfying value for money, they would put the discourse of value ahead of price. To gain value however, quality must be emphasised. With very high quality, there can be a differentiation in price whereby consumers will be purchasing value rather than price. With this said, there is also the question of established prices in the product area. For ASDA’s products, it is common knowledge that there are no established prices. Because of this, the company has the freedom to adjust its prices as and how it will be convenient for the market. But very importantly is the question of how much competitors are charging for their products. Even though the company may be focusing on value creation for the consumer, it is important to study the purchasing behaviour of consumers well and know how prices of competitors can affect its prices. Given that the purchasing behaviour of consumers suggest that they are more comfortable with existing low prices from competitors rather than value, it will be important to have two major lines of products, focusing on value and low prices at the same time. This way, it will be possible to capture all facets of the consumer base with both high prices and low prices (quote). As the company stays on the market for long, it will be better placed to know which of the two price modules to drop. 4.4 Process The processes engaged in by the company have been identified to be a very important variable for influencing the marketing of the company (quote). This is because the processes form a major interaction between the organisational procedures and public action, including the actions of all other stakeholders. FAO (2013) identifies several areas of process support that the company may be engaged in as part of using processes to gain competitive advantage on the market. Key among these is market information and intelligence. It is important that processes that lead to the identification of market information and intelligence be clearly defined by ASDA once it enters the French market. This is because it is only through such carefully executed market research that the true state of consumer behaviour can be identified. Once consumer behaviour is identified also, it becomes very simple to take market based decisions using the information and intelligence. Critical among such decisions are decisions on how well to promote the company to meet the demands and needs of consumers. Another aspect of processes support is customer care. For new entrants, customer care has been identified to be a major service support that the company ought to give in order to ensure that the company becomes acceptable by the new market consumer (quote). This is because of the massive global shift from product orientation to care orientation. Today, consumers are constantly looking for companies and businesses where they can get the best of customer care and support and be treated right (quote). Lastly, data processing systems have been identified to be another crucial area of processes. This is because it is only when the company has the right information database about its consumers and other stakeholders that there can be effective people-centred marketing. Because the existing competition is not respecter of new entrants and that new entrants must justify their place, it is important that the company uses a robust information processing systems to know the market very well just as existing competitors know the market. 5. Organization structure The type of organisational structure used by the new entrant will go a long way to affect organisational processing and all other aspects of decision making (quote). The way and manner in which work will be executed and the organisational culture that will exist within the company can all be affected by the organisational structure of the company (quote). Once the company enters France newly, it is important that a management that is able to have a firm control over its workforce be put in place. This ought to be done to ensure that the management gain the needed control to ensure that processes flow and tasks get executed in a manner that is planned. At the same time, it will be important that an organisational structure that avoids unnecessary delays be used. As much as there will be control, it will be important to ensure that the flow of information and resources is done really quickly so that there can be expedient action in the operations of the company. It is only when things are done in this manner that the company can be seen to be actively working all the time. Based on these requirements and recommendations, a functional organisational structure as depicted given below is recommended. Figure 2: Organisational Structure for ASDA France The rationale for selecting a functional organisational structure is that this structure will ensure the grouping of each portion of ASDA according to its purpose (quote). This way, there can be bureaucracy within each group but because of the divisions the processes will not be many to interrupt the flow of work. The recommended departments for the functional structure are marketing, sales, finance, and human resource. Each of these must have a division manager to who the workforce report to. Above the division manager must also be two executive managers responsible for quality and processing respectively. The two executive managers will then report finally to the president. 6. Distribution ----------------------------------------------------------------------------------------------- 3 4. Inventory support - Inventory management - Warehousing - Distribution - Parts supply - Credit authorisation 5. Distribution support - Funds provision - Raising of capital - Order processing - Export preparation and documentation - Freight forwarding - Insurance - Arbitration Logistics Supply chain 7. Conclusion Up to now, the need for ASDA to consider the need to going international with its business has been noted to be step in the right direction that will make the company highly competitive, both locally and internationally. Indeed, an outstanding advantage that comes with going international is that the company will enjoy a massive global visibility. It is for this reason that foreign production through joint venture has been recommended for the company. As part of the joint venture, France has been noted to be a very suitable destination. This is because of the market demographic advantages that France presents the company. However, succeeding in any new market as a new entrant will not come automatically. It remains a fact that ASDA already a global brand equity that makes its name known in France. However, there are important factors that the company has to consider in putting things right in its new market. The study has showed that one of the most critical factors is having marketing mix that can be considered as people centred. By a people centred marketing mix, the need for the company to ensure that its products are of the highly quality that offers value to the consumer has been stressed. Once such value is guarantee, the issue of price can easily be controlled by the company instead of the consumer. As part of the pricing strategy, 2-tier module is recommended for cheap general products and expensive premium products. The company must also be highly visible and have a processes support that targets the consumer. Finally, it is important for the company to understand the role of supply chain in surviving in the new market, whiles putting its house in place through the use of workable, compact and easy flowing organisational structure. As part of the supply chain, the company must learn to avoid waste and avoid scarcity at the same time. Distribution must be forthwith and timely. Once this is done, there is no way that ASDA will not have a successful joint venture entry into France. List of references FAO (2013). Market Entry Strategies. [Online] Available from http://www.fao.org/docrep/w5973e/w5973e0b.htm [March 29, 2014] Read More