Market Audit and Competitive Market Analysis - Assignment Example

?REVISED WITHOUT IN-TEXT AS REQUESTED Section C: Market Audit and Competitive Market Analysis I. The product Relative advantage In international marketing and especially in market audit and competitive market analysis, the need to weigh the relative advantage of a company’s product to a new market is very important as the marketing audit is a fundamental part of the marketing planning process. This means that the relative advantage of the product must be factored into the planning process. With specific reference to kikk.k, her targeted products are writing utensils (pens and pencils), notebooks, journals, cards, wrapping, diaries, and calendars. The relative advantages for these products are that they have a wider usage coverage including schools, offices, hospitals, media houses, factories and of course homes. 2. Comparability Comparability is the capability of existing or performing in harmonious or congenial combination in terms of international marketing, it can be explained to means a situation where different companies employ similar or related business standard such as accounting, measure concepts and measures of closure. As a new force entering Japan and Tokyo for that matter, kikk.k would have comparability with existing companies who ply their trade in similar products such as stationery and plastics. As a new force, it will be important for kikk.k not to deviate from existing business norms as deviating is likely to cause hostility to existing customers who ma not be up to speed with their new norms. 3. Complexity In marketing and in business venturing, complexity can be explained with relation to customer’s willingness to adapt to the policies and marketing strategies of new companies at the expense of existing ones. To this effect, the degree of difficulty which a purchaser of a new product has in understanding the product, a major determinant of the rate of new product adoption. Japan is market destiny where consumers have fairly great understanding of stationery and plastic products due to the high level and preference for education. Kikk.k would therefore have this to their advantage but would still have to do more to convince consumers of why switching to their kind of products against existing ones is the best decision. 4. Trialability In international marketing, a common strategy adopted by most old companies entering new territories is to make potential consumers try products for free. This has always been necessary because of the need to convince consumers of the need to choose new products to existing ones. Companies and consumers in Japan believe in this principle and so kikki.k should be ready to bare the risk and cost of going into trial programs for potential consumers. 5. Observability Kikk.k will have to conduct intensive market observation in two major areas. These are consumer behavior observation and business trend observation. In Japanese markets, the use of observation as research methods has proved workable for companies and has yielded results making business and marketing plans. This duty of observation can at the initial stages be done by the middlemen who will be working for the company. This will reduce cost. A. Major problems and resistances to product acceptance based on the preceding evaluation Product acceptance for stationery and plastic products in Japan will not be difficult due to reasons as the use of such products and the need for them that is already in Japan. The difficulty will however lie in kikki.k convincing consumers to choose their new range of China Made products especially as China is a major competitor with Japan as far as plastic manufacturing is concerned. Moreover, Japanese are people who love to keep the tradition of using products made in their country. Despite these, when a very good research (observation) is undertaken, it will be possible to determine the purchasing trend of consumers so that a workable marketing plan will be designed to cover even conservative consumers. II. Sources of information Marketing Teacher, ‘Marketing Audit’. http://marketingteacher.com/lesson-store/lesson-marketing-audit.html. Marketing Teacher Limited. 2011. Web. 8th June, 2011 ‘Comparability’ http://www.definition-of.net/compatibility. Definition-of.net. 2011. Web. 10th June 2011 Salesopedia. ‘Sales and Marketing Glossary. http://www.salesopedia.com/glossary?func=display&letter=C&catid=13&page=1. 2011. Web. 10th June 2011 Hirschman, E., 1986, "Humanistic inquiry in marketing research: philosophy, method and criteria", Journal of Marketing Research, 23, 3, 237-49. Charted Institute of Marketing, CIM. ‘The Marketing Audit’ http://www.cim.co.uk/marketingplanningtool/tech/tech5.asp. 2011. Web. 10th June, 2011. Section D: Preliminary Marketing Plan: H. Terms of sale As a new company entering a competitive market such as Japan, it is advised that the terms of sale adopted by the company be one that will give less burden to middlemen and wholesalers in terms of cost. This, of course would be a way of attracting more buyers and wholesalers, who can in term make some profit from onward sale to retailers. Such an advantage is likely to attracting more wholesalers, which would intend make the company grow and achieve success. In doing this however, it is extremely important that the company gives priority to insurance and general security of goods and manufactured products. To this effect, it is advised that the company adopts FOB, which is explained to be a pricing type that does not include Shipping freight and Insurance charges. This does not mean that insurance will not be covered. However, for a start, it is important that the company bares the cost of insurance so that cost of products on middlemen and wholesalers. I. Methods of payment As a new company entering Japan, reliability and flexibility with methods of payment are both very important to kikki.k. In planning for a payment method therefore, it is important that the company factor in these two factors and choose payment plan(s) that satisfies both conditions. Method of payment refers to “the way one pays for a transaction. To this end, the dictionary mentions cash, credit and barter as the commonest forms or methods of payment. Upon careful consideration of some five modes of payments, which are cash in advance, open accounts, consignment sales, sight, time or date draft and letters of credit, it is advised that the company opts for letters of credit. Letters of Credit require total accuracy in conforming to terms, conditions, and documentation. Here, there are great advantage for both buyers and the seller in the sense that as much as the seller can be assured of payment of goods after transactions go through, the buyer will not be forced to make physical payment; a condition that calls for a lot of trust, which cannot of course be granted to a new company. II. Pro forma financial statements and budgets A. Marketing budget Percentage wise, the following is how money should be distributed: Expense Percentage of total expenditure Remark Selling 10 The company is not expected to spend so much here. Advertisement/promotion 20 Advertisement and promotion are important to enhancing sales Distribution 20 The more cash is spent on distribution, the higher the expected returns. Product cost 40 The company will make profit only when there are products to sell and so greater portion of expenses should be channeled here Other cost 10 There should be enough reserves for unplanned costs and expenses B. Pro forma annual profit and loss statement (first year through fifth year) The table below represents the pro forma annual profit and loss estimates for the first years Year Profit over Expenditure Loss over Expenditure Remark 1 0% 0% The first year will involve a lot of expenses that will go into recruitment, promotion and growth. The company is therefore not burdened with any revenue target for the first year. It is however not expected that the company should run at a lost 2 10% - After the first year, the company should be in a position to grow at 10% of its total expenditure per annum. 3 20% - After the first two years, the company should be in a position to grow at 10% of its total expenditure per annum. 4 35% - After the first three years, the company should be in a position to grow at 15% of its total expenditure per annum. 5 50% - After the first four years, the company should be in a position to grow at 15% of its total expenditure per annum. III. Resource requirements A. Finances The fact that kikki.k has actively functioning branches in other parts of the world should put the company to pre-finance its operations in Japan. As much as possible, borrowing from financial institutions should be reduced to the barest minimum so that the company will not be having too many interests to pay on its future profits. B. Personnel Kikki.k should employ the services of local staff in Japan to take up less challenging positions and roles. The advantage here is that this will make the Japanese populace see the company as one that is in to stay and also one that thinks of the welfare of Japan and thus the need to do business with them. Top managerial positions are however advised to be imported from other parent branches. This will keep the basic organizational ethics, climate, tradition and vision of the company as the same as what exists in other branches of the company. This will also assure stakeholders and shareholders of trained and tested experience of such managers. C. Production capacity The company is not expected to begin on a very large scale of production until it has been convinced of marketability of its products in Japan and the willingness of consumers to switch from existing companies to kikki.k III. Sources of information Japan Auto Pages. ‘What is FOB, CIF, C&F’ http://www.japanautopages.com/useful_resources/fob.php. 2011. Web. 10th June, 2011 Farlex Financial Dictionary. ‘Method of Payment’, http://financial-dictionary.thefreedictionary.com/Method+of+Payment. 2009. Web. 11th June, 2011. Mushrooms Trade. ‘Methods of Payment’. http://www.mushroomstrade.com/help/terms/payments.htm. 2011. Web. June 11, 2011. ORIGINAL WORK WITH IN-TEXT Section C: Market Audit and Competitive Market Analysis IV. The product 6. Relative advantage In international marketing and especially in market audit and competitive market analysis, the need to weigh the relative advantage of a company’s product to a new market is very important as the “the marketing audit is a fundamental part of the marketing planning process” (Marketing Teacher, 2011; CIM, 2011). This means that the relative advantage of the product must be factored into the planning process. With specific reference to kikk.k, her targeted products are writing utensils (pens and pencils), notebooks, journals, cards, wrapping, diaries, and calendars. The relative advantages for these products are that they have a wider usage coverage including schools, offices, hospitals, media houses, factories and of course homes. 7. Comparability Definition-of.net explains that comparability is the “capability of existing or performing in harmonious or congenial combination” in terms of international marketing, it can be explained to means a situation where different companies employ similar or related business standard such as accounting, measure concepts and measures of closure. As a new force entering Japan and Tokyo for that matter, kikk.k would have comparability with existing companies who ply their trade in similar products such as stationery and plastics. As a new force, it will be important for kikk.k not to deviate from existing business norms as deviating is likely to cause hostility to existing customers who ma not be up to speed with their new norms. 8. Complexity In marketing and in business venturing, complexity can be explained with relation to customer’s willingness to adapt to the policies and marketing strategies of new companies at the expense of existing ones. To this effect, Salesopedia (2011) explains complexity as “the degree of difficulty which a purchaser of a new product has in understanding the product, a major determinant of the rate of new product adoption.” Japan is market destiny where consumers have fairly great understanding of stationery and plastic products due to the high level and preference for education. Kikk.k would therefore have this to their advantage but would still have to do more to convince consumers of why switching to their kind of products against existing ones is the best decision. 9. Trialability In international marketing, a common strategy adopted by most old companies entering new terriorities is to make potential consumers try products for free. This has always been necessary because of the need to convince consumers of the need to choose new products to existing ones. Companies and consumers in Japan believe in this principle and so kikk.k should be ready to bare the risk and cost of going into trial programs for potential consumers. 10. Observability Kikk.k will have to conduct intensive market observation in two major areas. These are consumer behavior observation and business trend observation. In Japanese markets, the use of observation as research methods has proved workable for companies and has yielded results making business and marketing plans (Hirschman, 1986). This duty of observation can at the initial stages be done by the middlemen who will be working for the company. This will reduce cost. B. Major problems and resistances to product acceptance based on the preceding evaluation Product acceptance for stationery and plastic products in Japan will not be difficult due to reasons as the use of such products and the need for them that is already in Japan. The difficulty will however lie in kikki.k convincing consumers to choose their new range of China Made products especially as China is a major competitor with Japan as far as plastic manufacturing is concerned. Moreover, Japanese are people who love to keep the tradition of using products made in their country. Despite these, when a very good research (observation) is undertaken, it will be possible to determine the purchasing trend of consumers so that a workable marketing plan will be designed to cover even conservative consumers. V. Sources of information Marketing Teacher, ‘Marketing Audit’. http://marketingteacher.com/lesson-store/lesson-marketing-audit.html. Marketing Teacher Limited. 2011. Web. 8th June, 2011 ‘Comparability’ http://www.definition-of.net/compatibility. Definition-of.net. 2011. Web. 10th June 2011 Salesopedia. ‘Sales and Marketing Glossary. http://www.salesopedia.com/glossary?func=display&letter=C&catid=13&page=1. 2011. Web. 10th June 2011 Hirschman, E., 1986, "Humanistic inquiry in marketing research: philosophy, method and criteria", Journal of Marketing Research, 23, 3, 237-49. Charted Institute of Marketing, CIM. ‘The Marketing Audit’ http://www.cim.co.uk/marketingplanningtool/tech/tech5.asp. 2011. Web. 10th June, 2011. Section D: Preliminary Marketing Plan: H. Terms of sale As a new company entering a competitive market such as Japan, it is advised that the terms of sale adopted by the company be one that will give less burden to middlemen and wholesalers in terms of cost. This, of course would be a way of attracting more buyers and wholesalers, who can in term make some profit from onward sale to retailers. Such an advantage is likely to attracting more wholesalers, which would intend make the company grow and achieve success. In doing this however, it is extremely important that the company gives priority to insurance and general security of goods and manufactured products. To this effect, it is advised that the company adopts FOB, which is explained by Auto Japan Pages (2011) to be a pricing type that “does not include Shipping freight and Insurance charges”. This does not mean that insurance will not be covered. However, for a start, it is important that the company bares the cost of insurance so that cost of products on middlemen and wholesalers. I. Methods of payment As a new company entering Japan, reliability and flexibility with methods of payment are both very important to kikki.k. In planning for a payment method therefore, it is important that the company factor in these two factors and choose payment plan(s) that satisfies both conditions. According to Farlex Financial Dictionary (2009), method of payment refers to “the way one pays for a transaction.” To this end, the dictionary mentions cash, credit and barter as the commonest forms or methods of payment. Upon careful consideration of some five modes of payments, which are cash in advance, open accounts, consignment sales, sight, time or date draft and letters of credit, it is advised that the company opts for letters of credit. As explained by Mushrooms Trade (2011), “letters of Credit require total accuracy in conforming to terms, conditions, and documentation.” Here, there are great advantage for both buyers and the seller in the sense that as much as the seller can be assured of payment of goods after transactions go through, the buyer will not be forced to make physical payment; a condition that calls for a lot of trust, which cannot of course be granted to a new company. II. Pro forma financial statements and budgets C. Marketing budget Percentage wise, the following is how money should be distributed: Expense Percentage of total expenditure Remark Selling 10 The company is not expected to spend so much here. Advertisement/promotion 20 Advertisement and promotion are important to enhancing sales Distribution 20 The more cash is spent on distribution, the higher the expected returns. Product cost 40 The company will make profit only when there are products to sell and so greater portion of expenses should be channeled here Other cost 10 There should be enough reserves for unplanned costs and expenses D. Pro forma annual profit and loss statement (first year through fifth year) The table below represents the pro forma annual profit and loss estimates for the first years Year Profit over Expenditure Loss over Expenditure Remark 1 0% 0% The first year will involve a lot of expenses that will go into recruitment, promotion and growth. The company is therefore not burdened with any revenue target for the first year. It is however not expected that the company should run at a lost 2 10% - After the first year, the company should be in a position to grow at 10% of its total expenditure per annum. 3 20% - After the first two years, the company should be in a position to grow at 10% of its total expenditure per annum. 4 35% - After the first three years, the company should be in a position to grow at 15% of its total expenditure per annum. 5 50% - After the first four years, the company should be in a position to grow at 15% of its total expenditure per annum. III. Resource requirements D. Finances The fact that kikki.k has actively functioning branches in other parts of the world should put the company to pre-finance its operations in Japan. As much as possible, borrowing from financial institutions should be reduced to the barest minimum so that the company will not be having too many interests to pay on its future profits. E. Personnel Kikki.k should employ the services of local staff in Japan to take up less challenging positions and roles. The advantage here is that this will make the Japanese populace see the company as one that is in to stay and also one that thinks of the welfare of Japan and thus the need to do business with them. Top managerial positions are however advised to be imported from other parent branches. This will keep the basic organizational ethics, climate, tradition and vision of the company as the same as what exists in other branches of the company. This will also assure stakeholders and shareholders of trained and tested experience of such managers. F. Production capacity The company is not expected to begin on a very large scale of production until it has been convinced of marketability of its products in Japan and the willingness of consumers to switch from existing companies to kikki.k VI. Sources of information Japan Auto Pages. ‘What is FOB, CIF, C&F’ http://www.japanautopages.com/useful_resources/fob.php. 2011. Web. 10th June, 2011 Farlex Financial Dictionary. ‘Method of Payment’, http://financial-dictionary.thefreedictionary.com/Method+of+Payment. 2009. Web. 11th June, 2011. Mushrooms Trade. ‘Methods of Payment’. http://www.mushroomstrade.com/help/terms/payments.htm. 2011. Web. June 11, 2011. Read More