Foreign Market Entry Plan - Essay Example

?Foreign Market Entry Plan Table of Contents Foreign Market Entry Plan Table of Contents 2 Audit of the Foreign Market’s Environment 4 PESTEL Analysis 4 Political 4 Economic 5 Socio-Cultural 6 Technological 6 Environmental 7 Legal 7 Marketing Plan 8 Segmentation 8 Targeting 9 Positioning 9 Marketing Mix 10 Product 10 Price 11 Place 11 Promotions 11 People 12 Process 12 Physical Evidence 12 Marketing Budget 13 14 References 15 Audit of the Foreign Market’s Environment The market environment in Hong Kong can be analyzed using PESTEL analysis to describe the various macro-economical factors influencing and impacting upon the business environment. Firms get widely affected by the external environmental factors acting on them which consequently influence their business directions and strategies. Conducting PESTEL analysis is one of the essential steps in scanning the business environment of firms and attaining a complete overview of the various macro-economic factors that the company must take into consideration. PESTEL analysis describes the political, economic, socio-cultural, technological, environmental and legal factors prevailing in the industry or the firm’s business environment. The tool is particularly essential for businesses for making a thorough understanding and analysis of the growth or decline of markets, business positions, potential and direction of operations. PESTEL Analysis Political Political conditions in Hong Kong seem favorable for conducting overseas businesses. Implementation of the Principal Officials Accountability System in 2002 was meant to bring about promptness and more responsiveness in the Government’s actions towards people’s concerns. This is especially favorable for conducting businesses because of the fact that any rising demand in the economy would be catered to with immediate action and support from the government. The country demonstrates an open and free economy where people’s rights are respected, courts can function independently and the rule of the law is highly respected in society (US Department of State, 2011). Economic Hong Kong represents one of the most open and dynamic economies. Recovering from the impacts of the global economic turmoil, the country attained high economic growth rates of 6.8%. Inflations rates have also gradually increased from 0.5% to 2.4% since the financial crisis. This was possible due to the government’s aggressive initiatives and measures to control the risk of the housing market bubble due to low interest rates and high liquidity in the international financial system (US Department of State, 2011). From the perspectives of conducting business operations also the economy looks favorable with a sound banking system and very little public debt. The economy has adequate foreign exchange reserves coupled with a strong legal system. A rigorously implemented anti-corruption regime along with the above factors has also enabled the economy to adapt itself to the changing circumstances (US Department of State, 2011). The government has made a conscious initiative to promote measures for improving attractiveness of the economy as a trading and commercial centre and has been constantly reviewing and refining the financial architecture of the economy. Hong Kong seeks to reduce trade barriers considerably. In fact it has recently included a free trade agreement with China in order to enhance potential benefits from trade between the two countries. Its export of goods and services was highly on the rise since 2012 by about 17.3% which was attainable quickly because of the strong fiscal and monetary stimulus provided by the Chinese economy helping to recover from the impacts of the recession (US Department of State, 2011). Socio-Cultural The population of the country is steadily on the rise and has reached 7.097 million in 2012. It accounts for one of the most densely populated economies in the world. English accounts for the official language of the country and is spoken widely by a large group of the population. It is mandatory by the law that all children must be provided with full time education between the age of 6 and 15 years. The length of the education has now been revised to 9 to 12 years. These aspects would go in favor of stationary as there would be high and growing needs for stationary products which are mostly used by is school children. It also seen that more than 90% of the children complete their upper secondary education and other equivalent vocational education. Technological Hong Kong depicts rapid advancement in the field of information and technology. Technology developments have increasingly affected the traditional stationary business in the country. With the introduction of the computer assisted designs the traditional technical pen business has been on the path of decline gradually. Competition has been rising in the stationary industry which has been consequently creating pressure of prices in this sector. Other cost cutting measures, there is an increasing pressure on suppliers to keep innovating products, create striking designs, use attractive colors and reach out to the new target groups of customers. Manufacturers have gradually transformed themselves from sellers of products to seller of concepts (HKTDC, 2011). Competition is keen in the stationery industry, which adds onto the price pressure in this sector. Apart from cost cutting measures, such as relocation to less expensive production bases, suppliers need to counter the pressure with innovations, striking designs and attractive colors, and by reaching out to new target groups. Manufacturers are no longer sellers of the products only, but also the design. Increasingly, products are sold together with concepts (HKTDC, 2011). Environmental Environmental aspects includes a growing need for eco-friendly products because of the growing concern of the government to preserve the environment and maintain ecological balance as they have been getting disturbed through the emission of toxic gases and materials. Strict actions and regulations made by the government have been affecting the ways companies operate and offer their products. Environmental concerns have been influencing their operations considerably and many have been forced to create new markets and destroy their pre-existing ones completely. Legal Organizations widely accept the country’s sound legal system which favors their business environment considerably. Hong Kong employees and employers have shown a growing awareness of their rights and obligations under the various legislations such as the anti-discrimination legislations, sex discrimination ordinance etc. Within a very span of time since the implementation of the ordinances numerous companies in Hong Kong were seen revising their human resource management strategies and practices. Numerous Hong Kong have implemented the anti-discrimination policies. Considering the liability of employers for the actions of their employees and the numerous claims which are brought under the ordinances, it is anticipated that the situation will change rapidly in the coming years (Brown, 2009, p.5-6). Marketing Plan Segmentation Segmentation is one of the most essential parts of a marketing plan as it involves the division of the target market audience so as to select the most appropriate set of customers whose needs and wants can be fulfilled by the products and services of the company’s product offering (McDonald & Dunbar, 2004, p.16). In case of Smiggle’s international expansion into the Hong Kong market, the company would segment the total population on the basis of age groups and needs. The pricing of the products would be kept low so as to make the product affordable and ensure a wider target market audience. The company would try to target customers in the age groups of 12-35 years of age with a wide array of products suited to meet the individual needs of the consumers. The company would specifically design products that are popular with students such as fancy stationary items as well as gift cards and other presentable items to be sold as gift items to be sold to the older age group segments. The online interface of the company would have dedicated sections with easy navigations so as to guide individual customers to their areas of interest. The company would also specifically target the female consumers considering their affinity towards fancy stationary and gift items. Office goers shall be of particular interests to the company. Most of the products would be priced in a moderate to low range considering the fact that the company would base its profitability on volume basis rather than on margins. Moreover this strategy would also help in targeting a wide range of consumer audience so as to ensure a wider customer base for the company. Targeting Targeting involves reaching out to a specific market audience so as to satisfy the needs and wants as well as ensuring the long term sustainability of the organization (Allen, 2011, p.69-70). In case of Smiggle’s proposed international expansion into Hong Kong market the target market audience would comprise individuals in the age group of 12-35 years of age. The main target market segment for the company would comprise of children, young office goers, teenagers and the student population. The product offering of the company would be of cute and fashionable stationary and gift products that can be customized to fulfill the needs of the target market audience. Going by the trendy nature of the target market audience, the company would have products like customized badges, erasers as well as other stationary items that can be of interest to kids and teenagers. In addition to this gift options for fancy products would be used to target office goers especially the female customers as they have a flair for these kinds of products. The pricing of the products would be done optimally so as to ensure greater affordability and have a wider customer base so as to better penetrate and establish a strategic foothold in the market (Smiggle, n.d.). Positioning Positioning is defined as the perceived image of a product or service in the minds of the target market audience. Positioning of a brand or a product is considered to be very important as it is an important factor that influences the consumer behavior of the consumers (Kalb, 1993, p.49). Smiggle would position itself as a fun filled and trendy company with fashionable products that suit the needs of the target market audience. It products and services would essentially be cute and adorable so as to give a trendy outlook to the brand. The products can be custom designed by the customers so as to give a good feel and perception of a cool aspect to the target market audience. The company would be bricks and clicks company and the design of the web page of the company would give the feeling of a causal, trendy and fun filled approach among the target market audience. Customers would be able to purchase products directly online or can also customize their designs that are specific to the needs of the customers. This would help project a fun filled and trendy perception about the company in the minds of the target market audience. Marketing Mix The most important part of the marketing plan for any organization includes in marketing or service mix. These are the most vital elements to the success or failure of an organization in a new or an existing market as ultimately the company would make their purchase decision and consequently the positioning and perception of an organization or a brand based on these elements. The elements of service mix for Smiggle would include the elements of product, price, place, promotions, people, process and physical evidence (Kumar, 2010, p.48). Product The product offering of Smiggle would be trendy and fashionable stationary products that would be available for sale through the online channel. The company would sell stationary products like erasers and other stationary objects that would be fashionably designed to meet the expectations of the customers. In addition to this there would be gift items that can be used by younger generations as a gift to their friends and relatives and even kids for various occasions. The designs can either be selected from the templates of the company or can be customized to meet specific demands of the consumers. The company would also sell badges at affordable prices to the consumers for its new international venture in Hong Kong. Price Smiggle would adopt a value based optimal pricing strategy wherein the products would be available at low prices. The main rationale behind this strategy is to target a wider customer audience. In addition to this the company would focus on volumes to drive profitability rather than margins and also to the fact that customer segments like kids and teenagers would be able to afford the products of the company at a low price range. The customizations as per specific requirements of consumers would however be additionally charged depending on the nature of the graphics and other design specifications. Place Smiggle’s would operate from a bricks and clicks model in which the company would sell its products through both the online e-commerce based channel as well as the traditional stores to be located in Hong Kong. The aspect of having a bricks and clicks model would help in generating greater advantages for the organization considering the fact that it would help attract a larger customer audience for the company in the new market considering the popularity of the online channel among the target market consumers. Promotions An integrated marketing communications approach would be followed by the organization in promoting the brand in the new market. The promotional campaign would mainly include the online channel including SEO and advanced web analytic tools like Google ad words and Ad sense. In addition to this the power of social networking sites like facebook and twitter would also be harnessed in order to reach out and communicate to a wider customer audience. In addition to these traditional promotional tools like advertising through print media as well as sponsoring small events in schools and colleges would also help in attracting new consumers to the company and make individuals aware of the brand. People The employees at Smiggle would be trained in the best practices of the industry with regards to service standards as well as relationship management so as to provide the best experience to the consumers. An after sales service team would also be in place to help address customer queries at the fastest possible time frame. These aspects would not only help in attracting new customers but to also retain the exiting customers. The best of the talents would be handpicked from the best colleges in the nation so to bring effective and quality manpower into the organization. Process The company would place an efficient back end process that would include both an efficient and fast service. The products would be made available to the customers in a maximum time frame of 48 hours after placing the orders. Technologically enabled aspects would help in generating the best experience for the customers. The online channel would have good navigation facilities so as to direct customers to their choice easily. There would be a secure payment gateway so as to ensure that there is a trustworthy and reliable money transfer options. Customers would be able to pay using credit and debit cards as well as through payment gateways like PayPal. Physical Evidence The looks and ambiance of the store as well as the web layout would be designed to meet the local tastes and preferences of the consumers. This would be in the lines of the ‘glocalisation’ strategy of thinking globally and acting locally’ (Culpan, 2002, p.60). This strategy would help customers to easily make a good connect with the new player in the market so as to help generate long term sustainable competitive advantage for the organization in the Hong Kong market. Marketing Budget To promote the brand in Hong Kong the company should open up the store in such area where the numbers of teenagers are higher. As the products of Smiggle are targeting towards the young aged people so they should choose the area where the numbers of teenagers are higher that is in Mongkok. For preparing a budget the researcher has to take the costs of the items those are needed for start the venture. For preparing the plan the researcher has to take the costs involving the personnel costs, the direct costs and the indirect costs (Richman, 2002, p.130-131). For marketing of the products the company needs to set up an attractive store as the primary customers are the teenagers. The store needs 10-12 staffs. The store will include a store manager, an assistant store manager, 2 cashiers and 10 staffs. The budgeting cost will include the salary of the employees, the cost of the office which would be regarded as the direct cost. The other cost includes the promotional campaigns which can be said as the indirect costs. The purchasing price of an office is about $8250000 in Mongkok. The price of the assets is about $50000. The promotional campaign cost about $10000 in Mongkok. The researcher has included the office price and the asset price in the marketing budget plan because for the successful marketing of the brands the company needs to design the store attractively as the target customers are the teenagers. The promotional budgets can be divided as follows. The newspaper advertisements cost $3000. Through the advertisements the local people can come to know about the company’s presence in Hong Kong. The brochures of the company cost of $1000. Through the brochures of the company the probable consumers would come to know about the new company at that region. The sampling process may incur $2000. The sampling is needed to conduct the market research process for understanding the attitude of the local people towards the products of Smiggle. The sponsorships charge may be $1000. If the company sponsors some local events then the local people would come to know about the company and from the people some might be interested to know more about the company. The company should organize some trade show displays which may costs $1500. The trade show displays can be considered as the aggressive marketing of the company. The local people would be interested if the shows are innovative. The shows need the participation of the local people. Some quiz shows may be organized and the attractive gifts (which are the products of the company) should be provided by the company to the participants and the winners of that event. The advertisements should also cover the electronic Medias which may cost $1300 in Hong Kong. As the company is the new one in the market so it needs to advertise more and more to promote their companies and their brands. The company management should provide business cards to the local people which may cost $200. The marketing budget plan and the finance required for that plan is provided by the researcher in the above part. As the company is entering Hong Kong for the first time so it needs aggressive advertising and it may costs more for that. References Allen, P. (2011). Artist Management for the Music Business. Focal Press. Brown, M. (2009). Guide to Discrimination Law in Hong Kong. Retrieved on January 31, 2012 from http://www.mayerbrown.com/publications/article.asp?id=4517&nid=6. Culpan, R. (2002). Global business alliances: theory and practice. Greenwood Publishing Group. HKTDC. (2011). Stationery Industry in Hong Kong. Retrieved on January 31, 2012 from http://www.hktdc.com/info/mi/a/hkip/en/1X006S5J/1/Hong-Kong-Industry-Profiles/Stationery-Industry-In-Hong-Kong.htm. Kalb, I.S. (1993). Marketing Your Legal Services. K&A Press. Kumar, P. (2010). Mktg Of Hospitality & Tourism Serv. Tata McGraw-Hill Education. McDonald, M. & Dunbar, I. (2004). Market segmentation: how to do it, how to profit from it. Butterworth-Heinemann. Richman, L. (2002). Project management step-by-step. United States of America: AMACOM Div American Mgmt Assn. Smiggle. (No date). Wear It. Retrieved January 31, 2012 from http://www.smiggle.com/SM_loadSelectedCatSection.process?RestartFlow=t&Section_Title=Wear%20It. US Department of State. (2011). Background Note: Hong Kong. Retrieved on January 31, 2012 from http://www.state.gov/r/pa/ei/bgn/2747.htm Read More