Carrefour Group Market Analysis - Case Study Example

Background of the organization The case study of Carrefour Group has been taken up for the project. Carrefour Group is a French giant in retail outlets, which was established in 1959 and now has presence in more than 30 nations worldwide. It has the distinction of being the largest retailer in Europe and second largest in the world with more than 15,000 outlets or stores across the world which are either company operated or franchisees (www.carrefour.com). The company follows a strategic growth plan with the basic objective of becoming one of three major players in the countries wherever it has presence. It is now having talks with Indian Government about its entry into this rapidly emerging economy which has huge potential with its billion plus population. The company retails under four types of outlets which are designed to meet the needs of different socio-economic class of the societies in the various countries: hypermarkets; supermarkets; hard discounts; and convenience stores. We would be looking into the marketing strategies and communication techniques that must be used while entering into the Indian market (www.carrefour.com). (176) Recommendations and justification concerning standardisation/ localization of approach to marketing Emerging markets are crucial in the era of globalization and can be defined as the new area with high income and where the demand for the product can be created with relative success. India is the largest democratic country of the world having a rich cultural heritage with multi-cultural and multi religion society. With such vast diversity in values and ideologies within the social fabric, the company needs to formulate marketing and communication strategy in a way that would not only uphold a high standard of corporate ethics but it must be able to ensure and exhibit understanding of the cross cultural values and handle issues with sensitivity. Any strategy that is formed needs to be localized to suit the local conditions. Market strategy planning and effective communication is one of the most crucial aspects of a firm entering a new market. The strategy is planned around two core areas. The first one defines the market factors and basically involves intermediate markets, private agreement, economic transactions and exchange of goods. This is an interaction between the prospective customers and business partners which include forging alliances with the local production units and government so that it can meet the challenges of the demands of the local population with respect to its products and services. India has a distinct socio-cultural identity and the company’s marketing policies and strategies in India need to be tailored according to the environmental conditions of the place. Various factors that have significant impact on the market forces need to be considered and incorporated in the market strategy for the country. Hence the company must evolve strategy, keeping in mind the distinct socio-cultural paradigms and political ideologies of the region. It must also promote partnership with the local agents to strengthen its foothold in Indian market. Carrefour must remodel their business strategy to suit the local conditions and indigenize their product lines to suit them and also boost local employment and revenue. (323) Appraise and prioritise the available media in the proposed country/regional market Media plays a very crucial role in the strategy planning and is often used to define company’s position vis-à-vis the market strategy for non market factors. A well defined market strategy is the key to success in any new market. The various media in the region are important tool to popularize the company and help establish its brand among the masses. India, being one of the fastest emerging economies of the developing world, has huge market scope for global brands. It is therefore important for Carrefour to explore and exploit media for its own gain. Television is the most widely used by the urban population in India where a wide variety of channels. TV is a highly recommended media tool and is extensively used for corporate advertisements. Entertainment channels and talk shows which portray contemporary lifestyle are very popular among the younger generation and therefore offer great platform for the new brands to introduce themselves to the emerging markets. The companies must choose the target audience and strive for the appropriate timeslot in the television. Newspapers and magazines are also quite popular among the young and the old people. The growing popularity of international magazines like Cosmo, Elle, Good housekeeping etc. amply show that usefulness of media in popularizing new product and services. Apart from the regular tools of media, the company must also make efforts to contribute towards the developmental needs of the society, especially in the area of literacy, medical services, activities which promote income generation etc. so as to establish and project itself as people friendly organization which cares and empathizes with the masses. (267) Demonstration of understanding of implications for agency and media selection and related issues The strategy is planned around two core areas. The first one defines the market factors and basically involves intermediate markets, private agreement, economic transactions and exchange of goods. This is an interaction between the prospective customers and business partners which include forging alliances with the local production units and government. The second core area constitutes the non market factors which have direct and indirect impact on the overall performance and operation of the firm. These factors are highly relevant when the business interests are global. ‘These are characterized by 4Is: issues, institutions, interests and information’1 (Baron, p2). The way these issues and factors are handled have wide ranging implications for the company and therefore agency and media selection are extremely important and must be considered of prime importance while formulating and implementing the market strategy. Broadly they are the socio-political environment within which the firm has to operate. Issues, which might clash with the operations and performance of the company, must be addressed urgently. The institutions are defined as bodies which are affected by the issues, which may be local or national in character. Interests are the personal stake of the individual or groups, in the issues. Lastly the information relates to the various facts and fictions of the issues and the actions taken thereon. Another major aspect is that one must take cognizance of the social values and customs while evolving its strategy as it is one of the major initiatives that must be taken by the firm to make a success of the marketing strategy. The socio-religious culture of the community has strong impact on the attitude and consumer behaviour of the public, which has direct affect on economic transactions of the company. It is therefore vital that needs and concerns of the community, within which the firm intends to operate, be studied in detail so that sensitive public issues are not violated. For example, in India, cow holds a very revered place in the Hindu religion and therefore and therefore, precautions must be taken to handle all issues related to beef and other products. (347) Recommendations to overcome agency issues It must be emphasized that interactions of the firm with the non market factors may be voluntary or involuntary. Interaction is voluntary when the firm develops good relationship with the government officials and others by adopting their policies and programs in their strategic planning. But when government enacts special laws and regulation or the local activists organize boycott of their products, it is called involuntary interaction. Involuntary associations need concerted efforts from the firm to overcome the obstacles. Transparency in organization’s ethical approach to issues can best be promoted through judicious use media in all media formats like television, newspaper and radio. Television being the most important and widely medium, the company must exploit its potential to gain strong foothold in the market. The other non market factors that the company may face pertains to converting the seasonal demands into a year long venture which may ultimately result in long-term international trade pact with the local entrepreneurs thereby asserting that ‘since many non market issues arise from the market activity, one approach is to view non market strategy as complements to market strategies2’ (Porter). It is also true that non market strategy can offset competitive advantages as in the case of Carrefour which can be turned into a win-win situation for both the parties. The small entrepreneurs could benefit with their association with the multinational Carrefour because their tie-up would take their products to the larger markets. “Every time when we enter into a new city, we not only foster a large number of local talents, but also help our partners improve their operation and stop making loss." (Shereau3) Perhaps the most important factor that has direct implications on non market issues is the modus-operandi of the company with regard to its stand to the issues and the way it is handled by them. The projection of its image to the public has strong influence on these factors. The credibility and its positive image are big non market assets and can be adversely affected by irresponsible actions. Non market factors necessitate formations and incorporations of management strategies that go beyond the realm of individual company’s concern and interests. The globalization has made the role of such factors, an integral part of broader management strategy which encompasses planning for distinctive competencies along with considerations for wider ramifications of the socio political environment of the place. The changing times have made the businesses more competitive thereby making it obligatory for them, as well as for the working force to become more flexible and swiftly adapt to the changing technologies and work environments. With the global competition becoming increasingly stiff, “organizations must change because their environments change” (Bateman, 1990). The business houses must become less rigid and change their business and market strategy as per the socio- economic compulsions of the host countries. Carrefour must follow this course of strategy if it wants to succeed in India. (486) Reference Bateman, Thomas S., and Carl P. Zeithaml. Management: Function and Strategy. Homewood, IL: Irwin, 1990. Baron, David E. Integrated Strategy: Market and Non Market components. California Management Review. Vol.37 N. 2, 1995. Carrefour Group. Available from: [10 May, 2008]. Porter, Michael E. Competitive Strategy. NY. Free Press. 1985 Shereau. Available: [10 May, 2008]. Read More