Business for opening a new Apple store in Chile - Research Proposal Example

? Apple store in Chile Table of Contents Table of Contents 2 Apple store in Chile 3 Competitive Environment 4 Marketing Plan 5 Works Cited 9 of the Student: Name of Professor: Course: Date: Apple store in Chile In this proposal, the researcher will try to create a feasibility report for opening an Apple store in Chile. According to Organization for Economic Co-operation and Development (OECD) report published in 2012, Chile depends heavily on its exports of metals and the business environment faces lack of competitive pressure which can bring innovation. The report has also pointed out that domestic companies in the country adopt innovation by importing technologies. However, according to report published by Budde Comm Research Company in 2012, penetration of mobile phone market is highest in Chile in comparison to other Latin American countries such as Peru, Brazil etc. Budde Comm (2012) has also identified three major players in Chilean mobile market such as Telefonica’s Movistar, America Movil’s Claro and Almendral’s Entel. However, these companies can be identified as telecom connection providers. Therefore, Apple will not face direct competition from these above mentioned telecom operators, but it is advisable to decision makers to select a network service provider partner prior to opening shop in Chile. Subtel is the telecom regulator in Chile which has recently auctioned 2.5 to 4 GHz band among telecom operators, so Apple can enter the Chilean mobile market by offering Smartphone equipped with 43G network. Although currently there is an Apple store in Chile, Apple does not export its Smartphone to local retailers. According to Heim (2011), Apple has never tried to open online shop or retail store in Chile because the company has never perceived Chilean mobile market as an important one. Heim (2011) has reported that local retailers sell Apple iPhone in the price range of $750 to $1750, while they export it at 10% to 15% lower price. Central Intelligence Agency (2012) has reported that per-capita income of Chilean people is $18,400 which is more than per capita income of Brazil, Peru and other important countries of Latin America. Hence, there are opportunities for opening Apple store in Chile which will offer highly priced Smartphone to customers. Next section of the study will discuss the competitive environment of Chilean mobile phone market. Competitive Environment According to Petrazzini and Hilbert (2002), Nokia is the market leader in Chile but recent study has shown that market position of Nokia has been perturbed the rise of demand for Smartphones by Apple and Samsung. According to the OECD (2012) report, lack of administrative and legal proceeding has created challenge for foreign companies to enter the Chile market. Regional problems like counterfeits of patent, lack of infrastructure to support the road transport based logistics, irregular government policy regarding foreign investment, political tension between parties will definitely create problems for Apple while opening stores in Chile. However, in 2011, Chillean government established Fondo Capital Abe program in order to ease the credit facility to entrepreneurs and foreign companies. Apart from this, there Apple needs to use the guideline mentioned by Subtel in order to find the suitable carrier. However, the mobile manufacturing industry is fragmented, and competitive pressure will be low for Apple. In Chile, Samsung and Nokia will be two major competitors for Apple. Euro Monitor International (2012) has reported that Samsung is the market leader in general mobile phone market with 32% of retail market penetration but when it comes to Smartphone sales, Apple’s iPhone is the market leader with 29% market share. In Chilean mobile phone market, major competitors for Apple will be Samsung, Nokia and Research in Motion. Hence, it can be recommended that Apple should export its Smartphone to Chile as a short term strategy to penetrate. Then it should think about establishment of its own retail store backed by research and development centers and logistic facilities as part of its long term strategy. Marketing Plan Currently, Apple has no store in Chile and following diagram will explain why Apple has never tried producing products in Chile in order meet local demand. Figure 1: Technological Index of Chile (Source: OECD, “Chile”) Porter (1980, 1985 & 1991) has rightly pointed out that companies should choose their business strategy in accordance with national competitiveness of country. Above diagram also shows that innovation, technological development in Chile has been plagued by lack of resources, biased government policy, geographical remoteness, lack of infrastructure etc. Hence, it is advisable for Apple to export its products to its store in Chile, rather than produce them. OECD (2012) has reported that Educational department of Chile is working on increasing the number of colleges and universities in order to improve the level of education in the country. Another important thing is that people in Chile are accustomed with the Latin American culture hence it will be better to use local talents in promotional activities in order to familiarize the offering with local customers. According to the report of Euro Monitor International (2012), more than 80% people have mobile phones in the city of Santiago - the capital of Chile. Therefore, the Apple should establish corporate division office in Santiago. Cultural Aspect of Chile can be calculated by using the following Hofstede model. Figure 2: Cultural Index of Chile (Source: Geert-Hofstede, “Chile”) [Note: PDI- Power Difference, IDV- Individualism, MAS- Masculinity and UAI- Uncertainty Avoidance] According to the cultural index, Chilean people prefer to stay with families and they are less competition-oriented. They also prefer to avoid uncertainties in order to maintain a stable life. Hence, Apple should design its products and services which can match with the feminine aspect of Chilean consumers. Advertisement of the company should be less aggressive and should focus on communicating the benefits of offered Smartphone in terms of family bonding, solving daily life problems etc in order to attract Chilean customers. Apple has already established its niche position through its technologically advanced Smartphone complemented with numerous applications in Chilean Smart phone market; thus, the company should increase the number of retail stores in the country in order to increase product availability to customers. Establishing new retail stores in Chile will help Apple to enhance the increase of its brand visibility among customers. Marketing mix of the company can be summarized in the following manner: Segmentation & Target Customers should be segmented in accordance with disposable income, profession and age. Customers with annual income of over $18,000 will be the ideal target market. Positioning Apple should use its global positioning as makers of niche for state of art products which are completed with numerous benefits. Offered Smartphone should be equipped with the latest i-OS and premium priced in order to ensure its niche positioning. Product iPhone in the first phase and then other i-OS based products should be offered. Price $650 to $1050, which will be 10% to 15% lower than previously offered retail price by local retailers. Place Opening 3 stores in Santiago in the first phase and then expansion to other cities. Promotion Integrated marketing communication backed by sales promotion inside the stores, TV advertisement with local celebrities and digital, road shows should be used in order to promote the brand. Financial forecast of the marketing plan can be summarized in the following manner: Market Size 250,000 Customers   Price of the Smartphone Product Name/Version End Customer Price (MRP) (in $) iPhone $1000 Sales Forecast Particulars Year 1 Year 2 Expected Market Share 30% 50% Expected Volume Sales 80,000 125,000 Total Revenue $80,000,000 $125,000,000 Marketing Expenditure $40,000,000 $65,000,000 Net Margin $40,000,000 $60,000,000 (Source: Euro Monitor International, “Mobile Phones in Chile”) It is evident from the financial forecast that Apple needs to open one store as pilot phase project in Santiago, and on the basis of the result of pilot phase experiment, the company should go for full phase marketing strategy implementation. Works Cited Budde Comm. “Chile - Mobile Market - Overview, Statistics and Forecasts.” Budde, Paul Budde Communication Pty Ltd, 7 September 2012. Web. 12 June. 2013. Central Intelligence Agency. “South America: Chile.” CIA, CIA, 2012. Web. 12 June. 2013. Euro Monitor International. “Mobile Phones in Chile.” Euromonitor, Euromonitor, Dec 2012. Web. 12 June. 2013. Geert-Hofstede. “Chile.” Geert-Hofstede, Geert-Hofstede, 2013. Web. 12 June. 2013. Heim, Anna. “iPhone 4S just launched in Chile and in Brazil, where it costs up to $1,830.” The NextWeb, The Next Web, Inc, 16 December 2011. Web. 12 June. 2013. Organization for Economic Co-operation and Development. “Chile.” OECD Science, Technology and Industry Outlook IV.10 (2012): 260-263. PDF file. Petrazzini, Ben A., and Hilbert, Martin. “3G Mobile Policy: The Cases of Chile & Venezuela.” ITU, n.p., 2002. Web. 12 June. 2013. Porter, Michael E. “Towards a dynamic theory of strategy.” Strategic Management Journal 12 (1991): 95-118. Print. Porter, Michael E. Competitive Advantage. New York: Free Press, 1985. Print. Porter, Michael E. Competitive Strategy. New York: Free Press, 1980. Print. Read More