Agathas Product Brand in South Korea - Essay Example

?[Sustainable Operation Management] By Insert Presented to Location Due Introduction Foreign sales and markets play an important role in the operation of multinational companies. This is notable in companies from various countries of origin focusing on adopting effective strategies in their foreign marketing (Wang 2008). Standardization has emerged being a key area of focus and this regards the various marketing mix elements. Therefore standardization main interest focuses on the communication as well as the product elements of the marketing mix. Marketing mix elements have received increasing attention and various studies have been conducted exploring the degree and extent of standardization on the marketing mix elements. Therefore a single study is required in order to understand the importance of each marketing mix elements in the context of standardization in foreign marketing. The key major focus is the strategies the multinational corporations are using in their international marketing (Shlomo 2010). It is important for multinational companies to determine the possibility, desirability and necessity of standardizing its marketing mix in the new target markets. This is influenced by the change in the origin and the destination markets international environments and its aspects. The degree and extent of standardization is evident in various multinational companies notably Agatha in France. Company overview Agatha was established in 1974 emerging to being a key major French brand of fashion jewelry. The founder developed this brand bridging the gap between luxury boutiques and nondescript lackluster chain stores. In the current corporate world, this brand is widely known attributed to its expansion into international markets establishing its stores in various countries. This company is an international player in the field of jewelry but its major market is in its country of origin France. The company has focused on considering new international markets expansion majorly Asian market which has emerged to be top strategic priority (Leontiades 1998). South Korea is one of the new target market destinations and the key major issues with standardization in this market are the cultural differences and establishing the new internal organization (Shlomo 2010). To determine the extent and degree of standardization in this market can be determined by evaluating the company marketing mix adopted in South Korea. Agatha marketing mix can be evaluated as follows. Agatha’s product brand in South Korea Agatha’s has to major range of products comprising of top-of- the –range products made in silver and bottom-of-the-range products mainly fashion jewels made with non-precious materials. These products ranges under the Agatha’s brand are bracelets, earrings, hair accessories and rings. This range of products is standardized and design in its international bases (Wang 2008). Therefore Agatha has nearly all the same products in all of its international markets. It is notable that most of the customers in the international markets widely accept this foundation standardization collection of this company (Rugimbana 2003). However in South Korea the company has to change the sizes of these products thus limiting standardization strategy. According to Blomstermo (2006) higher degree of standardization is higher for industrial goods in the international markets as compared to consumer products and services (Blomstermo 2006). Agatha’s products are considered consumer goods and this follows that standardization in Korean market is low because the country market segments culture has to be considered. According to Sak Onkvisit, (2008) companies require more knowledge regarding the foreign market in order to determine the appropriate standardization levels (Sak Onkvisit, 2008. He further asserts that successful multi national companies has to satisfy the consumer preference, wants and needs more than their competitors. Therefore ascribing from this Agatha has to limit its product standardization strategies in to have effective and successful entry into South Korean markets. According to Saxena (2009) on the study of South Korea markets provides that companies entering into this market have to limit their standardization degree or levels to conform with the country various morphological factors (Saxena, 2009). The bone size of South Koreans are smaller compared to those of Frenchmen. Another factor limiting product standardization in this market is the “Hallyu” cultural factor which is the love of Korean pop culture. This culture is attributed to the increasing economic growth in South Korea and Asia in general where there is increased purchasing power. There is increased diversification regarding the demand for the new cultural products. Before South Korea had this economic growth products such as Jewels were standardized from occidental products. This trend has notably changed majorly the consumer needs where they prefer South Korean products as opposed to European products. Therefore Agatha needs to minimize its product standardization aspect in its collection to meet the demand of South Korean markets (Shlomo 2010). The level of product adaptation in Agatha’s market mix can be argued to be extremely low in South Korean market because of both physical and cultural variance between France and South Korea. According to Shlomo (2010), reduced or no adoption of product standardization strategies by multinational companies in the international markets usually happen voluntarily. From this it can be argued that this has enhanced Agatha becoming more competitive in the Korean Market attributed to the good quality as well as the adapted demand of the products that is consumer oriented. The necessity of Agatha’s adoption of less product standardization strategies can also be linked to the possibility of increasing profitability (Jain 2001). This is attributed by this company addressing variations of the consumer needs in its Jewelry products. Agatha’s pricing standardization in South Korea There are a number of factors that influence the price decision making for multinational companies operating in the international markets. It is notably that Agatha taking into account these factors prefers to adopt limited standardization of prices in South Korea on its products. Customers are the key determinant in regard to this attributed to their cultures and their purchasing power. According to (Cloninger 2007) multinational companies such as Agatha determines their prices considering the final destination customers revenues (Cloninger 2007). In South Korea Agatha notably adapts the price of its products. The key major influencing factors for choosing this strategy in this market is attributed to involved local taxes, transportation taxes and importation taxes in South Korea (Codita 2010). The market price as well as the competitor’s prices in South Korea plays an important role in making this company adopt less standardization strategies. The competitive situation in South Korea plays an important role in determining whether to adopt price standardization and setting. It is notable that Agatha has an international department situated in Paris which is obligated to determine price for each destination market (Cloninger 2007). The key major determinants considered include purchasing power and the levels of development. Other factors include regulations, tariffs and the country exchange rates, these factors are essential in determining the company profitability (Shlomo 2010). The price level of their competitors in South Korea hinders standardization of prices by Agatha. Because South Korea is an emerging destination market, Agatha has to decrease its product prices in order to increase and guarantee more consumers and to expand its markets. According to Mooij (2009) multinational companies need to investigate the income population before launching any brand in any destination market which entails the population income and other costs involved. In order to preserve quality of their products Agatha does not develop cheap products in order to penetrate international markets. This has enhanced this company to be able to launch successfully its brands and maintain the market share in South Korea. In addition they have kept the products image quality and the value of its brands in South Korea. This strategy adopted by Agatha in South Korea has enabled this company to control the price level avoiding standardization and ensuring that their products are not under-priced or over-priced (Sak Onkvisit, 2008. The major reason of avoiding price standardization is to ensure that their products have the right price (Blomstermo 2006). Agatha takes advantage of adjusting and adapting the prices as it gives this company opportunity to buy at lower prices and sell for higher prices increasing the profitability of the company. It is notable that the economic situation and the population purchasing power in South Korea have an improving trend and this has enabled the company sell its products at a relatively higher price. Regarding price standardization, Agatha has it maintained at minimum levels for the purpose of enhancing profitability in South Korea. In addition is to consider the country economic situation and ranking where customer base is guaranteed (Subhash 2011). Agatha also ensures that it is coherent with the Korean economy as well as its underlying cultures which might not be consistent with price standardization. Agatha’s promotion in South Korea In regard to Agatha’s promotion Agatha’s has its promotion comprising of catalogues, brochures and billboards. Also Agatha in most of its markets has used celebrities to endorse its products example is Laetitia Casta. It is important to note that this company does not use any Radio or Television in promoting its products. The company also promotes its products and brands through giving out free gifts. In regard to the extent of standardization as far as promotion is concerned notably is that the levels are very high (Kiefer Lee 2012). The catalogue materials and contents are all the same in all of its international markets. Including South Korea it is notable that all of the promotional tools are produced in the company international database. Although, there is a greater extent of promotion standardization in South Korea there is still adaptation to a certain extent. Standardization is mainly limited as far as the promotional language is concerned (Isobel 2008). This enhances the customers to easily understand the promotion therefore bringing the necessity of adaption the destination country suitable language. In South Korea Agatha has kept some French sentences for being like “Agatha c’est moi” for being fashion and glamour. Therefore it can be argued that there is a certain degree of promotion standardization by Agatha attributed to this trend in South Korea and other international markets of Agatha. According to Codita (2010) as Agatha expands into international markets it comes into engages with markets where customers have a higher rate of illiteracy (Codita, 2010). In this case the Agatha will possibly minimize standardization, adapt and use more pictures as well as fewer sentences in its promotional activities. The pictures are not standardized in South Korea but it is mainly adapted to suit the requirements of this target market. According to Sak Onkvisit (2008) it is notable that the extent of standardization is limited because some pictures used in France country of origin can be seen to being vulgar in other countries (Sak Onkvisit 2008). In South Korea Agatha has adopted its catalogues and their website is standardized, this is where there is at first French version website which can be easily being translated into Korean version. To boost sales attributed to promotion Agatha encourages most of its customers to buy online where they offer lucrative discounts. They have an e-boutique online that proposes a range of products. With the promotion being design at its international base Agatha is South Korea can be argued to be standardized but with key major little modification to enhance effectiveness. Standardization in South Korea has been chosen mainly to minimize the promotion costs. Agatha’s French slogan is considered efficient in most countries and this standardization is efficient as it enhances the brand image in the context of quality, fashion and luxury (Sak Onkvisit 2008). The extent to which Agatha applies promotion standardization strategies is determined by South Korea cultural factors. According to George Stonehouse (2007) in his study provides that the similarity of infrastructure in various destination markets and the competitors have less significant role on the standardization of promotion George Stonehouse (2007). This has a significant impact on this company values thus making this company unique its promotion standardization and adoption in South Korea. Maintaining the company image, enhancing customer understanding, economies of scale have played a major role in Agatha decision on standardization of the promotion. The preference of standardizing the promotion by Agatha in South Korea is followed with minor modification and a cost effective strategy considerations. Agatha Distribution in South Korea It is notable that Agatha has a simple distribution channel and globally it has 280 stores all over the world distributing its products. According to Neelankavil (2009) the continuum of channels of distribution standardization, distribution is notably a marketing mix component that has a higher level of standardization possibility and necessity (James P. Neelankavil 2009). In addition the author asserts that standardization extent of this marketing mix component depends on the target market destination (James P. Neelankavil 2009). It is notable that this marketing mix aspect in most destination markets has been standardized despite of having franchise system (Kiefer Lee 2012). Three quarter of the stores is owned by Agatha Company and the rest are franchise. In addition it has its products distributed by other brands and this kind of distribution places this company better position compared to its competitors. Since the cultural differences between France and South Korea Agatha has not faced any major challenge in regard to its distribution channels. In South Korea Agatha has the place standardized and that all of its stores have a number of similarities such as decoration, size and the organization itself (Blomstermo 2006). With the use of internet Agatha has developed a greater possibility in regard to standardization of its distribution channels. Agatha has developed e-commerce enhancing its standardization and all the possibilities attributed to it. Agatha has standardized its distribution channels in South Korea with the focus of reducing costs and increasing its profitability. This standardization has been possible in South Korea because its concept is available in the Korean culture and other cultures across the world. This concept has also been enhanced by the system of franchise in which the distribution channels has a greater extent of standardization. According to Kiefer Lee (2012) on his study on the marketing mix component in regard to standardization provides that a distribution channel need to be adjusted to the destination country majorly determined by the existing channels (Kiefer Lee 2012). Conclusion To sum up the assertion of Agatha Company entering into South Korea as its destination market has a lower extent, possibility and necessity of standardizing its marketing mix. This is mainly attributed to the less and reduced standardization of its products and the other marketing mix components follows. Agatha notably offers the same product range for all the destination markets including South Korea accompanied with a number of modifications to the respective destination market. The key major reason for this company ascribing to some extent standardization is that they want their values and philosophy similar across the world. In addition they want to have the same company profile everywhere in its destination markets which is majorly attributed to standardization (George Stonehouse 2007). Agatha’s extent of marketing mix standardization and its degree is influenced by the state of the market and the customer’s differentiation. In addition is that, apart from the company origin France other international markets have unique customers and fashion trends. Therefore companies operating in the international markets needs to balance its standardization extent to ensure that it realize successful penetration in the considered market destinations. References BARTLETT, C. & GHOSHAL, S, 1998, Transnational Management, Boston: McGraw-Hill. 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