The Case of Raleigh - Essay Example

? The Case of Raleigh Table of Contents Page 0 Introduction 3 1 Q1 4 1 Marketing issue 4 1.2 Keegan’s approaches to the study of culture 4 1.1.3 Adaptation and standardisation 5 1.1.4 Justification 6 1.2 Q2 7 1.2.1 Franchising and licensing 7 1.2.2 Distributorships 8 1.2.3 Multi-level marketing 9 1.2.4 Sales agencies 9 1.2.5 Partnerships 9 1.2.6 Justification 10 1.3 Q3 11 1.3.1 Alternative competitive strategies 11 1.3.2 Overall cost leadership 11 1.3.3 Focus 12 1.3.4 Differentiation 12 1.3.5 The chance in the world market for Raleigh 13 1.4 Recommendation 14 1.4.1 Market research 14 1.4.2 Marketing experts 14 1.5 Conclusion 14 References 16 Appendix 18 1.0 Introduction The case of Raleigh is a story of both success and failure at some point. Just like any other type of business, what did Raleigh possess are remarkably the opportunities for potential to grow and even become a cut above the other due to a certain competitive advantage. The company evidently as its humble beginning started from nothing to something. However, Raleigh was able to survive tough times due to its implementation of competitive strategies. It was able to survive the Great Depression due to its introduction of value-for-money products. Not only that, even if in between 1950 and 1962, Raleigh was still able to consider a competitive strategy which involved focusing on bicycle sales. Focus is a generic strategy which was then applied to Raleigh. This strategy particularly includes concentrating on a certain segment of product line that at some point would benefit the entire organisation in reaching its competitive advantage in the international market (Porter, 1998). By then, Raleigh started to acquire other rival groups in order to dominate in the market and then it started to expand overseas where there were potential for its product offerings. Not only that, Raleigh was good at ensuring promotion of its product line by sponsoring road racing team in Europe. Raleigh survived as it continuously obtained subsidiaries which in 2005 came to be around six in all, which include Derby Cycle Werke, Raleigh America, Raleigh Canada, Raleigh Taiwan, Raleigh UK Limited, and Raleigh International. This simply shows how marketing at Raleigh has become more complex as it continues to expand in the international market. 1.1 Q1 1.1.1 Marketing issue Marketing today is about creating a need or demand for certain product or service offerings and various firms are actually good at doing this for this is an essential step in order for a certain business to survive (Boone and Kurtz, 2006; Kotler et al., 1999). Although the basic idea of marketing is about meeting the needs of the customers, firms actually have significant influence in order to create a need for their service or product offerings. Raleigh was good at doing this stuff. In fact, its ability to create a significant sale amidst tough economic times just proved that it was essentially good at creating a need for its product offerings. 1.1.2 Keegan’s approaches to the study of culture However, modern marketing tries to integrate the idea of understanding the entire market and its prevailing language, religion, values and attitudes, manners and customs, aesthetics, technology, education, and social institutions which are dynamic variables that are integral components of culture (Czinkota and Ronkainen, 2007). Keegan (1989) had different approaches in the study of culture and these include anthropological approach, Maslow’s approach, the Self-Reference Criterion, diffusion theory, high and low context cultures and perception. In the case of Raleigh, all of these can possibly be applied, but on a general or universal context, it is much applicable to use the Maslow’s approach which is entirely about understanding the hierarchy of needs. Modern marketing after all, is about understanding the needs of the customers and even trying to create them on the part of the firm (Kotler et al., 1999; Boone and Kurtz, 2006). Thus, the decision to standardised or adapt a customised approach for e-bike concept in the international market should be entirely based on the universal concept of needs in order to understand further the prevailing market condition. 1.1.3 Adaptation and standardisation Adaptation and standardisation in international marketing are significant concepts that need to be critically considered in the case of Raleigh. There are desired degrees of standardisation and adaptation that are primarily based on competitive strategy variables such as branding, advertising, sales promotion and pricing (Szymanski et al., 1993). Standardisation is just like seeing both the local and international markets comparatively of the same business environment leading to come up with standardised marketing mix, but adaptation on the other hand seeks to find for the best strategy that would best function in the individual local market according to prevailing circumstances and company’s choices (Vrontis and Thrassou, 2007). Adaptation therefore is a form of localising product and customising it to satisfy local needs whereas standardisation could be more general only about the product involved (Pehrsson, 1995). However, it still remains a reality that the idea about dynamic marketing standardisation remains limited and applicable only to cultural country markets, implying further that the implementation of marketing mix standardisation as a global marketing strategy could be limited also at some point (Kustin, 2004). 1.1.4 Justification Therefore, if Raleigh attempts to consider standardisation for its e-bike offerings, the chances would be its ability to consider widely the issue about human experience, which at some point may not only include the culture itself, but the prevailing needs within the society. In Europe, there is a strong policy development and implementation for sustainability and even environmental protection and control. This is the reason why the sales for electric bicycles in Europe are increasing. Now, the question would be if Raleigh should sell a standardised e-bike concept, or should it adapt its marketing mix to each local market depending on the culture and potential future e-bikes sales. The answer should be in favour of adaption of marketing mix to each of its local market depending on the culture and potential future e-bikes sales. One of the obvious reasons is the fact that in Europe, e-bike is not just a source of anything else but as a way to implement the policy for sustainability and environmental protection. In other society, e-bike may pose an appeal but may be for a substantial reason based on the prevailing diverse human experiences. In Japan for instance, e-bike may be substantially used as a way to conserve energy and for other practicality sake, but it may not be sold out for those Japanese who prefer bicycles in which they would exert much effort to run it for other potential health purposes. In the Philippines and other neighbouring countries, it might be as a source of status symbol. However, other markets are entirely conscious about the cost and the practical advantage of the product. In this reason, strategy for marketing mix should be expected to be highly differentiated at some point. This only illustrates the fact that standardisation cannot entirely consider the international market as completely how adaptation applies to local markets. The issue would now depend on the need of Raleigh. Since it wants to expand, diversification of its marketing approach is necessary because as stated earlier, there are some issues that need to be completely considered. International marketing is a significant issue which primarily involves the idea of achieving superior business performance. However, the application of either adaptation or standardisation in international marketing completely relies on the prevailing circumstances faced with the firm in a foreign market at a certain period of time (Theodosiou and Leonidou, 2003). With this in mind, Raleigh should consider much deeply the implications of its approach once it started to implement its entire marketing process in the international market. Evaluation process is still necessary, but at this moment that it is still trying to achieve necessary information on the market trend of e-bike in the international setting, the adaptation of marketing mix at the local market would be necessary. This would ensure achieving the right feedbacks that could be used to confirm if the idea of standardisation would be applicable at Raleigh and its e-bike product offering into the world. 1.2 Q2. 1.2.1 Franchising and licensing Franchising is a business model to expand a firm or a business by giving license for certain rights to a third party which might include trademark, service mark, or even the total image of the business firm (Murray, 2003). This is risky on the part of Raleigh because this substantiates strong effort for control. Raleigh is a renowned name in its industry and any moment if a franchiser fails to demonstrate substantial responsibility for the firm’s total image, then various complications for the said business would start to exist in both specific and general detail. However, franchising is one of the fastest ways to build a brand without incurring much cost for infrastructure and other necessary initial investments, in both international and local markets. Just like franchising, licensing gives right for the licensee from the licensor for the use of trademarks, patents, copyrights and other confidential information of the firm (Sherman, 2011). The licensor does not have the right to prescribe how the licensee should operate the business. In other words, the licensee in the case of Raleigh is given the opportunity to use either a standardised or customised approach in operating the entire business. Control may not be strong on the part of the licensor. Certain business has a choice to go for other alternatives aside from franchising and licensing. There are various alternatives to franchising and licensing and some of them would include distributorships, multi-level marketing, sales agencies, partnerships, and other business opportunities. 1.2.2 Distributorships This is a legal relationship that exists from a distribution contract (Study Group on a European Civil Code, 2009). For the sale of goods abroad, distributorship is a significant tool to be used due to the advantages it can bring to both sellers and buyers of goods. Distributor buys good from the supplier and resell them for a profit, but with the consent of the former especially on the agreed terms and conditions on the actual distribution (Fisher and Fisher, 1998). Fast distribution of goods by the supplier is dynamic. However, the supplier does not have so much control over how the distributor transacts its business on a day-to-day basis (Fisher and Fisher, 1998). 1.2.3 Multi-level marketing Multi-level marketing on the other hand replaces the wholesalers as marketing activity takes place from the source directly to the customers (Moore, 2003). This gives opportunity for the seller to directly have control over the price of the product and at some point controls or minimises some add ons on the final cost of the product, giving substantially higher profit margin on the part of the supplier (seller). Control in this case especially in international marketing has to be so tough and challenging due to complex business transactions. 1.2.4 Sales agencies Agents are the primary contacts of the supplier or seller of a certain good in the employment of sales agencies. Sales agents have competitive advantage over a stocking distributor (McCready, 1982). Aggressive efforts of sales agents as they primarily have many contacts would make for instance the product lines of Raleigh be distributed at a substantially fast pace. A seller or product producer would only pay out selling expenses in the process. Control however, should be more focused on the human motivational aspect. 1.2.5 Partnerships Partnership ensures sharing of workload and including emotional and financial burdens (Moore et al., 2005). The issue of control is not so complex with partnership, but when applied in a wide setting especially in international market, business concerns would be a bit complex and would further include issues on the human resource, culture and others. Thus, though it might not cost a lot, but the risk lies on the ability of partners to comprehend the actual business process. 1.2.6 Justification There are many ways to expand or grow a business and Raleigh can actually try at least a two or more of the above business models. Franchising and licensing are not that bad for Raleigh especially in its goal to maintain its trademark with substantial application of legal matters. After all, the founder of Raleigh was a practising lawyer by profession. However, on the marketing aspect, franchising and licensing may not be the best options to use to achieve faster result in expanding or growing a business especially in modern marketing. The multi-level marketing for instance is capable of expanding a business at a higher rate and ensuring cutting additional cost that may be incurred in the actual business process because of the elimination of other key players such as the wholesalers. The issue of control at Raleigh is a significant issue because its competitive advantage is found on its brands. This has to substantially take good care of its trademark and other important business or marketing concerns. Franchising and licensing when combined will provide the opportunity for Raleigh to build its brand and ensure aggressive expansion. Control in this case lies on the ability of understanding the international law applicable to Raleigh’s entire business process. 1.3 Q3. 1.3.1 Alternative competitive strategies According to Porter, there are three generic competitive strategies that a company or firm could further explore or implement in its business. These include overall cost leadership, differentiation and focus which make it possible for companies to achieve competitive advantage (Porter, 1998; Schemerhorn, 2010; Singh, 2008). This is shown in Appendix 1. Raleigh definitely needs to strengthen its current global position and this can only be substantially achieved when it has sufficient competitive advantage in the first place. 1.3.2 Overall cost leadership Cost leadership is a competitive marketing strategy that is about selling products at substantially lower prices than competitors, and innovation is therefore necessary to obtain high level of operating efficiencies (Schemerhorn, 2010). Raleigh could possibly use this strategy not just for the sake of competing with its competitors but as a way to promote its products in a market where there is remarkably high acceptance for other alternative products at lower cost. At the very moment, the product life cycle of Raleigh’s produced iconic bicycle brand is most probably at the point between maturity and decline stage. These stages are further illustrated in Appendix 2. These stages substantially consider improve production efficiency and quality, and profitability issues focusing on production cost and other related concerns. This definitely is one of the concrete cases of managing product life cycle in a supply chain (Kumar and Krob, 2005). Cost leadership may be a significant alternative competitive strategy for Raleigh knowing the fact that its product life cycle is on the point of maturity and moving forward to decline stage. This specifically calls for substantial innovation in the supply chain management for both cost and profit monitoring. 1.3.3 Focus If there is any way to serve a certain segment better than anyone else, focus strategy is such a tool that can possibly be used in order to achieve this goal (Schemerhorn, 2010). Niche customer group, geographical region and product or service line are the ultimate considerations in the focus competitive strategy. This strategy has two variants; cost focus and differentiation focus (Porter, 1998). At its recent development, it is appropriate to use focus differentiation for Raleigh especially on its consideration on e-bike marketing. It substantially started in Europe and it was proven that the product actually worked out there. Such specific market trend must be studied across other markets and in doing so, focus differentiation would be necessary in order to come up with customised product offerings that will work in a certain niche customer group, geographical region and product or service line. 1.3.4 Differentiation Differentiation originated from the specific attempt to create a unique buyer value especially through the effort of achieving uniqueness requiring creativity and leadership in the industry at the bottom line (Schermerhorn, 2011; Porter, 1998; Grant, 2005; Keillor and Kannan, 2011; Hill and Jones, 2007). Innovation is one of the essential elements needed in order to achieve a highly differentiated product because it creates differentiation (Vogel et al., 2005). The idea of e-bike is a specific strategy for innovation and at some point a case of product differentiation strategy as well. Raleigh should see to it that it specifically achieved a specific identity for all its product lines, making it highly unique from the rest to the point that this uniqueness would be able to mean competitive advantage. Differentiation is entirely based on the firm’s capabilities and resources and its implementation success lies on them (Doyle, 2008). Raleigh has substantial opportunity for this strategy because its resources are enough to create the firm’s competitive advantage in both international and local markets. 1.3.5 The chance in the world market for Raleigh The chance for Raleigh in the world market is great considering that by using either a strategy or more of the mentioned alternative competitive strategies discussed above; the firm has the substantial capabilities and resources to make its competitive advantage in its industry possible. In particular, the opportunity for e-bike for instance is great considering that the market for bicycles is still huge and this is a significant segment for consideration. 1.4 Recommendation 1.4.1 Market research The case of Raleigh significantly requires substantial marketing research. To ensure that the desired information could be guaranteed prior to the actual implementation of any marketing strategies, Raleigh should be able to understand the prevailing market issues in the first place. It is not just enough to have instinctive ideas about its whole business, but empirical evidences would be more so required in order to enhance a highly effective decision making process. 1.4.2 Marketing experts It is not just enough for Raleigh to acquire highly experienced executives to implement its competitive strategies, but in order that it would continue to proliferate in the international market with consideration on varying cultures, needs or human experience, marketing experts are necessary. These experts should be capable of understanding the prevailing market needs and modern trends in both local and international context. They have to stand as important aids in the decision-making process. 1.5 Conclusion Raleigh is evidently at the point of ensuring how it could continue achieving a significant market share. In this case, it is important to focus on its marketing activities with prior consideration on empirical studies integrating the concept of culture, human needs and experience, and the best possible competitive strategies to be applied. The aggressive efforts of Raleigh prior to its survival in its industry prove that there is still something more important things to happen with it in the future. The only possible option in obtaining them is to achieve the essential key and this would involve combined effort for effective administrative and marketing management in both local and international context of its chosen business model. References Boone, L. E., and Kurtz, D. L. (2006) Contemporary Marketing. 12th ed. Mason, OH: Cengage Learning. Czinkota, M. R., and Ronkainen, I. A. (2007) International marketing. 8th ed. Mason, OH: Cengage Learning. Doyle, P. (2008) Value-based marketing: marketing strategies for corporate growth and shareholder. 2nd ed. Hoboken, NJ: John Wiley & Sons. 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Standardization In International Marketing-The Country-of-Origin Effect. Journal of Innovative Marketing, Vol. 3 (4): 7-21. Appendix Appendix 1. Porter’s generic strategies (Porter, 1998) Appendix 2. Product life cycle (Kumar and Krob, 2005) Read More