Tutbury Crystal in the Pottery Market - Case Study Example

Abhyuday Dev www.academia-research.com Order 167959 01 may,2007 Contemporary and International Marketing. Tutbury crystal is a manufacturer of quality glass products made of lead crystal. The factory is established in Staffordshire village. It is established in 1920. Although it was closed once in 1980 then reopened in 1982. In 2006 the factory was shifted from Tutbury to Stoke On Trent. The shifting was done to increase the sales and get specialized in the pottery market. But this shifting proved to be a wrong decision says the managing director Ian Nicklin. This was due to the cheaper imported goods. He also concludes that the company had already taken risks to increase the sales but this may cause the closing of the factory. The company employed some new initiatives when shifted to Stoke On Trent. Like Montrose corporate range. Company has two new brands namely Montrose crystal and Tutbury crystal eponymous. The former product aimed at corporate and gift sections. While the later aimed basically on consumer market and hand crafts. The products have standards and also personalized. Personalized means to engrave name or certain other information on it. Bespoke items are also available. Bespoke products are those products which have some other shape than the normal shape. Also it is exclusive according to the requirement of the customer. The Montrose crystal is less complex than the traditional designs of Tutbury crystal. It has lesser number of cuts. But overall it is more contemporary. The quality of the crystal can be judged by the sparkle and glare. It is not easy to judge the quality of crystal. The content of lead is less in Montrose range than the Tutbury crystal. Tutbury Crystal invests 60% of its sales to the direct factory work 30% to the organization and rest 10% to the retailers. The company is now providing facilities to create shape of their own choice through internet. These products are almost 10% cheaper than their competitor like Waterford. The other competitor in his field are Royal Brierly and Royal Doulton. The detail of distribution of its sales is like 60% is the breakdown price. 10% profit before tax and approximate 8% is the overhead cost 15% is direct labor cost and 6.67% for the material. Its middle east turn over is of about 95%. Tutbury crystal is now looking for its expansion in other countries. This will expand the business and increase its sales and market capitalization. This expansion is also called market entry mode. The entry scheme should be properly designed or it may even cause a big loss to the company. Their are some points which should be kept in mind before entering into another country. These includes the export strategy, the investment strategy and the contractual strategy. If they are designed properly keeping the keen observation about the market of any other country then it will be easy for the company to jump into the market of that company with cheaper rate and equal quality. These categories help to assess the characteristic of product and its power to capture the market. The national market is independent of other national market. There are many factors that influences the global market. There is a lot of competition in global market. The position of company in any national market effects the image in other country also and this cumulative process causes the company to successfully capture the global market. The fight for the leadership on a worldwide position is in between the big companies. To acquire the position in global market the company should follow certain points. Globally participating into the market, global products and service should be designed according to the market, creating a global market and all such other activities should be done for leading the global market. The strategies required for competing in the global market is to be defensive against the competitors. It is not necessary to acquire the leading position in all countries but to be ahead in maximum countries. The company should have a strong hold in at least in its home town. Like for Tutbury crystal it is essential to be leader in its own area that is Tutbury or now Stoke On Trent. Then it should look to move forward. To sale the product cheaper and cover losses with the profit earned in the critical market helps the global company to easily fight with the domestic company. In order to earn the profit on a global share the company should make profit in maximum countries. The main objective is how we can extract profit from the international market. To make the entry mode strategy for any company we need following points to be focused. The market strategy is the response of following questions. Is the company able to enter into the other country Which should be country to be entered How should the market attain the position How to adopt the market strategy Whether the global strategy should be adopted or not Planning of international marketing. If a company like Tutbury crystal want to expand its production the best option to invest in some Asian country like China or India. Taking consideration of Indian market. The strategy should be such that the domestic and local companies can be overtake easily by providing a wide variety of products and on the cheaper rate. The major crystal manufacturers in India are Saint Gobain, Modiguard, Asahi. The major features of these companies are that they have a stable position in Asian market. The export of the products may be done in two ways either by direct selling in the market or indirectly sell the product through a home market customer who re sell the product according to the market strategy of that country. The later method is more reliable as the home dealer knows better about the domestic market. The direct method also gives a better opportunity to get indulged in the overseas market by engaging some home agent. Distributor may also be appointed for this purpose. These agents and distributors should be motivated towards the profit. Another way of direct marketing is to directly sell the product to the retailer or customer. Tutbury as it is a UK based company should hire a distributor for the expansion in Indian market. The international market selection is also important. Following factors attract any company to enter into that country. Market size, Market growth, export requirement, inflation and other political factors. these factors were related to the company location and some factors about the product is growing trends for that similar products, cultural acceptance of that product, further development and taxes and duties on that product. Certain factors affecting the product is the competition with the existing product, entry strategy, reliability of information and other such similar factors. the company should concentrate on the key market from where it can earn maximum profit. The main aim of the company should be to set up for long term existence and earn profit by minimizing the cost. The threat to the market position of the company is political and economical risk, inflation, market selection. These threat may be avoided by simply following some points like nature and extent of risks, differentiating risks, measurement of cultural differences. The company should study well about the country market whether the country is poor or developing or developed. This may be classified according to the gross domestic product or GDP rate. There are some organizations which look these trades should expand and get reliable information about international market. These are the world trade organization and International monetary fund. The world trade organization helps to gather the knowledge of the international market. The international monetary fund has some objectives related to the international market. These objectives help to know about the monetary issues. These objectives are promoting international cooperation, balancing the growth of international market and contributing to the society by providing employment, providing financial resources to every one, expand the exchange of currency and maintain stability. Some cultural influences which affect the trade are customer relation, market type, segmentation strategy, relation with dealers and partners. The international marketing strategy is developed taking certain considerations and to have proper knowledge and research on it. These strategy includes product, segmentation, targeting, positioning and branding of product. The knowledge of product market is very essential to launch any product in the market. Whether all the products should be launched or not. The attraction of the brand name should be assessed. The competitive products market share and its hold in the market. The market does keeps very important role in the branding of that product like the consumption rate in the market, cost of the product, innovation of new products with more advanced feature than that, form of the product, usage of the product and many more. The reasons why these products do not get better response is may be the lack of knowledge of brand name, competition is too much as there are number of existing products. The consumer behavior and consumer profile also keeps important role in launching a product. The company had to build different strategy and different plan for various different countries. The target is made for holding initially the market. This may include to focus on any one product and market, different marketing strategy for different countries and culture, profit and output of the market. The company should be capable of its skills and resources to attract the customers by only its brand name, cost must be such that is close to its counter competitor. Positioning is also very important concept that may have two meaning namely it may be considered as the combination of targeting and differential environment or it may be considered only the idea generated in the customers head. Positioning in reality is the focusing on any one attribute. The positioning of certain product varies from country to country and product to product. The country of origin or COO has more importance in positioning. The brand image may vary across countries. The current market position may also effect positioning. These above factors should be well balanced and helps in the developing market entry mode strategy. The whole channel should be such managed that the marketer must be concerned of the whole process involved from producer to buyer. This knowledge helps in branding, maintaining the relationship between intermediaries, effective pricing. This helps in taking the appropriate decision about the whole channel. The management of channel involves following factors like channel length, channel trend, channel relationship, channel power. The export market entry mode make the product in home market and then export it to other markets. Thus the export strategy is of great importance in any market strategy of company. The export strategy includes the manufacturing cost, shipping cost, import barriers and supply capacity. These factors are able to develop a good export strategy. The channel includes following stages exporter, own branch marketing manager, overseas agent or overseas distributor, retailer and then user. The role of an agent is quoting, obtaining enquiries, market research and marketing communications. The role of distributor is importing, holding and financing of stock, selling it to whole sellers and retailers, making a market plan, after sales support, market research and market communication. There may be some conflicts if these things are not properly arranged. The main sources of conflicts may be some of these. Poor communication, not having support from the company or distributor, too many agencies having different strategies. The characteristic of international market entry mode strategy are nature of product, country of origin or COO, brand marketing strategy and customer needs. Another important strategy used in developing a market entry mode strategy is the contractual strategy. This strategy includes several smaller strategies such as Licensing, franchising and many more. Licensing means a kind of agreement to exchange products from overseas company. The licensing can have two meanings either selling the product directly or selling the manufacturing process like in food products they sell the recipe and the brand name. Licensing is a better way of extending business in overseas. Franchising is the process of selling the whole business package. Like that of Mc Donald sells its franchisee to some person or group under its brand name and sells the whole business package. This is advantageous because it allows the expansion of business fast and economically. The entry modes must be carefully developed and keeping in mind certain points like given below. The nature of the product is very important. If the product is of high volume it should be manufactured in the destination market while if it is of low volume it is manufactured. Another factor is portfolio of product and company. The experienced firms have better option and strategy as compared to new company. The commitment is of more importance and reliable for experienced company. The next factor is the target market. The market should be such that the investment is done on a lower risk and more profit can be generated. The political and cultural support is more. The country should be stable in its market environment. One factor is characteristic of the entry mode strategy. The exporting and contractual strategy should be as low as possible and should be fixed. The investment strategy have all the control of marketing of the product. Commitment is of great importance in the market. the planning is made to adapt changes as well as control market strategy. The market entry mode strategy is done either by WFOE(wholly foreign owned enterprise) or by EJV (Equity joint venture). For equity joint venture one needs to have knowledge of local market, experienced in risk management and goal and sources of conflicts. The main objectives of entry mode strategies is to recognize alternatives of strategies, importance of channel management, identify the characteristics of entry mode strategies. Better management of agents, distributors and retailers. From the above study of international market and global market strategy the conclusion that can be drawn for the Tutbury crystal is that it should develop strategy which is more similar to the light products rather than heavy products. For the company the export strategy should be such as to manufacture the product in the home market and distribute it to the international market. As the products are light and delicate the risk factor is more. The investment strategy should be very flexible as it needs to control the market share and have well planning of understanding the market share. The market size is very small but have better future opportunities so the Tutbury crystal should invest in Asian market. As the company have a branded name and experienced so there will be no problem of obtaining the license in any other market. Since the products are not bulky the crystals manufactured in the home market and thus no need of franchising the manufacture process. The company should carefully evaluate the alternatives of developing these strategies. The market targeted should be Asian because of the more number of developing countries thus the number of construction is more and the company can establish the position very fast and expand in closer areas. The positioning of the company should be in such area so that the exporting of products should be economical and feasible. Thus the better option for Tutbury crystal to enter into the international market is to enter into the Asian market. Reference: 1) Indian Management, volume 46, January 2007 edition. 2) Business Today, volume 15, December 2006 edition. 3) http://www.fao.org/docrep/W5973E/w5973e0b.htm 4) http://www.knowthis.com/internl.htm 5) http://www.tutburycrystal.co.uk/tc06/ 6) http://www.fao.org/docrep/W5973E/w5973e02.htm 7) http://en.wikipedia.org/wiki/International_Monetary_Fund Read More