A Global Platform and Foreign Market for the Company - Essay Example

?Strategic Management of Introducing Customised Mobile Phones in Philippines Product Introduction Our company’s product, a customised mobile phone, as per the company’s marketing strategy is poised to enter the world market. Selecting a specific country for providing a global platform requires analysis of foreign market for our company product to find conducive environment. It is very important in this context to take the right lead by researching on different regions from marketing perspective. As we all know, the use of smart mobile phones has been on the rise due to quicker texting, Web surfing, GPS navigation and social networking besides the essential service that a mobile phone offers of voice calling. Today’s smart and customised phones are taking lead in the market. These tiny electronic gadgets perform multi-various functions added on with computer operating systems. These instruments can run various applications such as Twitter, games, guiding owners in shopping and dining and a host of other features. Mobile phones have such added functions as big displays, keyboards and internet availability. Old models of mobile phones are easier to operate than the new mobile phones (Yonkers, 2011). Some mobile phones have only selected features as per the needs of the customers. Our product the smart customized mobile phone caters to specific needs of the customers; they can be made to suit each customer’s individual preferences. Country Introduction (Philippines) Research indicates that in the ASEAN (Association of Southeast Asian Nations) region, an emerging global market, Philippines could be the ideal market for almost any product. The feel good factor is that Philippines is not against foreign direct investment in their country. It is the 19th largest export market of the United States with an approximate annual export of $8 billion. For launching a new product, the Philippines can be the perfect launching pad as people there have liking for the imported products. Language is not a barrier, as the Philippine is the third largest English speaking country (US Commercial Service, 2011). The Philippines market environment for the mobile phone products, called the Cellular Mobile Telephone System (CMTS) is quite encouraging. Let’s review different environmental aspects related to the Philippines economy, politics, legal, regulatory, technological, and social factors to ensure that the launching of our customised mobile phone would succeed in providing a secure international platform to our company. Market Environment in Philippines Our leading electronics product, the customised mobile phone would find a ready and ripe market as the mobile phone is a favourite digital device for the Filipinos. More than 22 million Filipinos have a mobile phone. The number of mobile subscribers is growing fast; in 2004 the growth rate touched to 34% to more than 30.2 million. In Short Messaging Service (SMS), this country is the world leader. As per the market report, carriers cover more than 1 billion text messages a day in Philippines. The above scenario regarding the mobile phone market and the Philippine’s 100 years old friendly business relations with the U.S. are enough to build up confidence of our company to enter in the Philippines market with its product launch, i.e. customised mobile phone (US Commercial Service, 2011). Industry Overview For providing a ready platform to our customised mobile phones, we need to develop an industry life cycle approach concurrent with the dynamic rationales for product strategy development, fit for Philippines. Ever-changing industry dynamics are impacted by such factors as the aggressive international competition and the need to react fast to advances in technology affecting consumer preferences. As it happened in 2000s, the mobile phone industry saw a surge in demand because of innovation in the product and process of the product model. Surge in the demand for newer mobile phones is not going to dampen as sophistication in the product technologies and the level of innovation is going to be there till the maturity stage in the electronics industry (Giachetti & Marchi, 2010). The Philippines imports in electronics are into raw material to be used in export locations. Consumer goods, a subsector of electronics industry are 0.93 percent of the total projected market share for 2009. As mobile phones are products of digital entertainment, market demand is for companies like Nokia and Samsung but our product is different due to its unique feature of being customised and made to order mobile phones. The demand for customised phones is going to appreciate as Philippine consumers are aware of the limited features offered by big brands; scope for the customised mobile phone market is yet to be exploited. Filipino consumers rate mobile phones on their value addition; they know the intricacies and complex technological features that are being offered to them. But at the same time, they are budget-savvy too. Such customers can understand the value of a product such as customised mobile phone (US Commercial Service, 2011). The Philippines government is making all efforts to introduce technological advances in the mobile market; it has started a project to systematically shift to digital terrestrial television via National Telecommunications Commission (NTC). All digital entertainment products will get a boost in sales with the adoption of DTT standard – customised mobile phone being one of them (Capatayan, 2010). With NTC at the helm of affairs, the regulatory environment would get more conducive by formulating regulations that serve the common interest of the public by boosting development of communications and broadcasting infrastructure and promoting competition. Although NTC is governed by the Department of Transportation and Communications (DoTC) yet decisions taken at NTC don’t come under the review of DoTC (Goliath, 1 July 2008). It has been the Philippine government policy led by Mr Aquino of encouraging investment in infrastructure through public-private partnerships. Further, the Bangko Sentral ng Pilipinas (the central bank) has not made any change in the interest rates, as we take note of it in the first monetary policy meeting of the bank held on 10th February 2011. The economic environment in 2010 has been very encouraging as recording growth at the speediest pace in the three decades. It is evident from the GDP growth, raising by 7.1%year on year in the fourth quarter, finally gaining overall growth in GDP by 7.3% (EIU ViewsWire, 2011). Such an environment in a foreign market is good sign to enter with a new product in electronics. The macroeconomic environment is very conducive as well with the remittances sent home have reached the US$3.50bn, thus helping in providing the economic boost to the Philippine economy. Consumer spending in the Philippines is near to 70% of the GDP, which indicates surplus money in the hands of the consumers to lavishly spend on latest electronic gadgets such as mobile phones (Goliath Report, 1 April 2008). The business infrastructure in Philippines is fully developed to the entry of new products either by foreign or domestic companies. Business culture in Philippines is very warm and pleasant. The Filipinos come to the business-point indirectly. Building business relationships is top-priority among Filipinos. English being their medium of business transactions, it is a positive factor for any global company to establish business there. Giving gifts is an accepted norm. There is no need for a tourist visa if duration of stay is not more than 21 days for business purpose, as per the Philippine Immigration Law (US Commercial Service, 2011). Three potential market opportunities Potential market opportunities exist by not going all-alone and involving experienced distributors in product marketing strategy, which can offer manufacturers of new products opportunity to enter the Philippines market. Product and brand awareness can be created through local distributors. Staff should be trained by the company counterparts for after-sale and service support (Capatayan, 2010). The new product sales opportunities can be exploited by offering price-schemes suitable for the Philippines market. Flexible payment terms can increase the chances of sales realisation. Adapting to the Philippines business environment can open the doors to abundant business opportunities (Capatayan, 2010). Agreements with local distributors should be honoured firmly by the company, especially a company launching a product in a new territory needs the services and cordial relationships to be maintained as going all alone for introducing new product could be a risky proposition. Growth opportunities can be realised by sharing profits with distributor who can be a potential catalyst of business opportunities (Capatayan, 2010). Three market threats for selecting Philippines as a foreign market Philippines market for digital electronic product like customised mobile phone has threats inherent. IPR violations –Chinese duplicate items have entered the Philippines market, creating threats to the successful entry of any new company product. Efforts at government level are not enough to nab the culprits and bring it to the knowledge of stakeholders. Importation costs -- Market entry becomes less lucrative due to 12 percent value-added tax over the tariff rates. Parallel Imports – This is the illegal practice of making bulk purchases of a product from foreign market and selling it at less than market rates, as duties and tariffs do not apply on such products. Popular terms for parallel trade are “underground” or “gray” distributors and traders who sell these items through “mom & pop” stores, which are not registered and require no taxes and relevant fees for opening a store. A chunk of market share is grabbed by such nefarious business activities. Product prices are adversely affected to the down (Capatayan, 2010). Overall growth in the ASEAN region since December 2010 has got dampened and there won’t be any worthwhile improvement till the middle of the year 2011. The problem of rising prices needs to be tackled to bring back the ASEAN economies on the road to growth (Oxford Analytica Daily Brief Service, Mar 2011). Analysis & Recommendations Political environment has shown signs of further improvement with moving towards a peace agreement with the NDF, the arch organization of the Communist Part of the Philippines and its allied aggressive wing, the New People’s Army (NPA). The first round of peace talks of the government’s peace panel with the NDF members has been realised in January 2011 through the good offices of the Norway government to resolve the issue related to the revolt that started in 1969. This is a positive indication on the country marching towards political stability (EIU ViewsWire, Feb. 2011). Further, the increasing domestic demand in the Asia region is a positive indication of growth in developing countries in Asia region such as the Philippines amidst recessionary trends worldwide. It indicates that growth dynamics are not equally applicable and domestic demand could play a crucial role in attaining high growth (Oxford Analytica Daily Brief Service. Jan 2011). At provincial level too efforts are on to realize zone ambitions by the government, as is evident by the latest Cebu-based venture to announce the whole province a “self-sustaining” economic zone (ecozone) getting congressional backing. This is the first-of-its-kind proposal recommended by seven legislators to encourage investment in the zone among other goals of the ecozone (Oxford Analytica Daily Brief Service, Jan. 2008). Special feature of such an Act, as currently applicable Special Economic Zone Act wherein there ae no local or national taxes, which would be the same in the newly formed economic zone where only 5% would be marked for tax to be further distributed towards national government, local government and for the development of eco zone, which would be 1% (Oxford Analytica Daily Brief Service, Jan. 2008). Already certain area such as the Mactan Export Processing Zone, dedicated to Japanese electronic companies, is free from tax. If such a practice is promoted in other areas outside the posh urban centres, it would lead to better growth prospects for an outside company’s product such as ours. Occurrence of such economic initiatives as it has happened in Cebu is a positive signal for the growth of industry and outside companies as we see that the state government has been so lenient in the case of foreign based companies, particularly electronics industry. It indicates better future prospects for an electronics industry company like ours although it is not that easy to get government affirmation on any such proposal, as it surfaced that loss of tax was a big issue with the local economic interests (Oxford Analytica Daily Brief Service, Jan. 2008). Growth in any of the industry sectors such as BPO, mining and tourism would incur positive repercussions in the business environment for an electronics company as demand for its products would rise with the added growth (Oxford Analytica Daily Brief Service, Jan. 2008). Our company’s marketing operations would have to bear the potential effects of the Philippines market environment. Their payment policies are not as rigid as they are in global market environment. People make purchase decisions, as their pocket allows. Local distributors can impact marketing operations both ways; if you break your business contracts with distributors, they may react by standing in competition to your business, thus, limiting your growth opportunities. On the other hand, maintaining of business contracts with local partners can help in marketing efforts in a big way (Capatayan, 2010). Market entry method Selecting a right market entry method can be detrimental to the success of our company product. We need to select the right option from a number of available options like direct or indirect export, through license, joint ventures or making new investment in the Philippines market. We should base our decision on our product marketing needs. In my opinion, we should engage the services of Single Company Promotion (SCP) method to create our company’s identity and market reach. The job should be given to commercial specialists of the Philippines market to introduce our product, customised mobile phone, to choose marketing strategies and execute them by organising product launch, sales and marketing seminars, technological presentations and using other marketing techniques (Pricing for Profit, 2010). It is recommended that the company should employ versioning tactic for various components of the product strategy – its features, attributes, service, and service features. Using the A La Carte tactic for our company’s electronics product, customised mobile phone, customers can be offered a number of add-on software capabilities in their cell phones, choice is theirs. It could be an ideal pricing strategy, most probably fit only for customised mobile phones (Pricing for Profit, 2010). Another versioning tactic is offering as much as customers desire like in an airlines company, they offer a range of classes like business, economy etc. For a customised mobile phone company, it holds true as customising is selecting as much as you want from a range of software features and capabilities. Higher pricing for in-demand features and less for ordinary capabilities! Sometimes low pricing tactic can also be used to attract customers. Again it depends on whether the company is interested in volume sales or more profits. The ideal approach should be not earning huge profits at the earlier stage of penetrating the Philippines market but stabilising the market with volume sales by offering discounts so that market for our mobile phones expands fast in a foreign country (Pricing for Profit, 2010). Some other crucial components of our product are the capability of changing the product’s attributes to create appeal and demand of the product by new customers, its service and service features. The ideal strategy should be satisfying the customers through pre-sale and post-sale services no matter if price is high (Pricing for Profit, 2010). The above mentioned components of product marketing strategy will add value to the marketing effort. All new products don’t possess the features like adjusting the product attributes through La Carte, offering them the choice of customising and providing efficient after-sale services, which should be our USP. References: Capatayan, Yan V., Jan 2010. Philippines: electronics industry market brief. The U.S. Commercial Service. Available from: www.Export.gov/CommercialService1[Accessed 4 April 2011]. Giachetti, Claudio ., Marchi, Gianluca., 2010. Evolution of firms' product strategy over the life cycle of technology-based industries: a case study of the global mobile phone industry, 1980-2009. Business History, 52 (7), p. 1123. [Abstract]. Available from: http://proquest.umi.com [Accessed 4 March 2011]. Goliath Report, April 2008. Macroeconomic forecast. Philippines Information Technology Report. Available from: http://goliath.ecnext.com/coms2/gi_0198-597852/Macroeconomic-forecast.html [Accessed 4 April 2011]. Goliath Report, July 2008. Regulatory environment. Philippines Telecommunications Report. Available from: http://goliath.ecnext.com/coms2/gi_0198-590201/Regulatory-environment.html [Accessed 4 April 2011]. EIU ViewsWire., Feb 2, 2011. Philippines politics: peace talks. New York. 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