Marketing American Products in the China Market - Essay Example

? Marketing Paper Introduction American Goods Wholesale Club (AGW) is a service providing company which offers products made in America to local retailers and to the members of the club. AGW Club is situated in Virginia, United States of America. The club has also planned to expand the company in other States in future with enhanced growth and prosperity. Moreover, the club also has an online store for providing services to members of the club across America in a more efficient manner. AGW Club also facilitates in promoting products manufactured in America and in marketing those products to its members. Moreover, AGW Club acts as a medium for manufactures and the products are offered to the members of the club in accordance with their requirements and preferences. The products are procured from manufacturers at a discounted rate in comparison to price determined by manufacturers for offering those goods to local retailers. Contextually, it has been aimed to conduct a product launch in the emerging market of China with the motive of improving the international market exposure of made-in-America products and to enhance profitability of the club. The developing economy in China will assist the club in performing its business operations in an effective manner. The discussion will emphasize the recognition of media used for marketing American products in the market of China. Moreover, pricing strategies are required to be formulated for developing better competitiveness of the products in China and America. Furthermore, an analysis is also needed to be performed for understanding the reasons for penetrating the market of China. Reasons Behind Choosing the Market of China The market trends of China are developing in a drastic manner and there has been an increased demand for good quality products due to the enlargement in the number of customers. China possesses the second largest economy worldwide and there is an upward increase in the buying behavior of people in China. Moreover, consumers of products and services in China consider value relating to quality, reliability and features to be the most important aspects among products or services which are to be acquired. Furthermore, consumers in China are considered to be flexible and conscious and with the development of technology, behavior of consumers in China has changed as they are becoming more inclined to obtain better innovative products or services. These changes in the buying pattern of consumers have facilitated China to be regarded as an emerging market worldwide. The changes in the market trend of China has also attracted investment from international organizations along with attracting multinational corporations (MNCs) for conducting business operations in this booming economy of China (The American Chamber of Commerce in Shanghai, 2012). The market size of the Chinese market has increased to a great extent owing to the continued growth in the economy and due to the increase in the number of consumers. The positive market conditions in China have attracted a lot of foreign investments and have drawn a few MNCs to operate in China, which has improved the growth and size of the market. The developed economy and favorable market conditions will assist national and international companies in performing business operations in a more effective manner and will also aid companies in enhancing profitability. All these conditions will assist AGW Club in conducting business operations in a more effective manner. Moreover, blooming economic conditions in China and the changing buying trend of consumers will facilitate the club to perform effectively and with profitability. All these favorable market conditions and trends are the factors responsible for selecting the market of China. SWOTT A SWOTT analysis has been performed for understanding the strengths, weaknesses, opportunities, threats and trends of China. The SWOTT analysis will also assist in recognizing the various aspects of China. Strengths The economic condition of China has been prospering over the past decade and it has established itself as the second largest economy in the global perspective. The market conditions in China have also improved, and the country is considered to be an emerging market worldwide. The developing economy of China has altered consumer behavior towards purchasing high quality luxury products, which can be beneficial for the club. Moreover, the market conditions in China have shifted to the market oriented system from the closed planned system. In 2010, China became the biggest exporter worldwide. The country also possesses many natural resources and mineral reserves and it is the leading producer of natural graphite and antimony. All these are the factors that add up to the strengths of China (Central Intelligence Agency, 2012). Weaknesses In China, one of the major problems which exist is inequality of income. The development of the economy in a drastic manner has raised the problem of inequality which may affect the economic and social conditions in China. Moreover, this problem of inequality of income has raised the problem of disparity among urban and rural communities (Scribd Inc., 2012). Opportunities The rising economy of China will attract investment from foreign countries to perform business operations effectively and with profitability. Moreover, it will attract MNCs to set up businesses in the market of China for better growth and performance in favorable market conditions and emerging economy. Furthermore, there has been a constant development in trade relations between China and other countries. All this will facilitate China in better enhancement of the economy and in acquiring a better technological progress (Scribd Inc., 2012). Threats The developing economy and foreign investment along with an influx of a large number of MNCs in the country will intensify competition in the market. Moreover, intense competition will pose a threat to local companies from MNCs and foreign investment companies as it may hamper their performances. There may also be a threat of vast cultural differences and inequality among the different segments of China (Scribd Inc., 2012). Trends The growth of economy in China has changed the behavior of consumers and the market conditions. Moreover, the developing economy has attracted foreign investment and MNCs and has assisted China in developing technologically. The penetration of media and technological advancements has changed the buying behavior of consumers (The Nielsen Company, 2012). Channel Strategy of AGW Club AGW Club is a service providing company delivering products manufactured in America to its members. The most appropriate channel for the club will be a service channel for conducting its business both in the national and in international market. Service channel signifies that products and services are to be provided directly to the business consumers or through agents (Angele, Szczepanski, & Reissinger, 2012). Service Channel Source: Angele, Szczepanski, & Reissinger, 2012 AGW Club will provide products directly to its members at the national level, and in the international market America manufactured products will be provided in the market of China through agents. The club will perform its business activities with the channel strategy of channel ownership for conducting distribution activities on behalf of the manufacturers in America. In the market of China, AGW Club is required to have an agent for conducting the distribution operations of the club (Angele, Szczepanski, & Reissinger, 2012). Pricing Strategy of AGW Club AGW Club will adopt a penetration pricing strategy for conducting its business operations both in the national and international markets in an effective manner. Penetration pricing strategy signifies that products and services are provided in the market at a low cost compared to other similar products provided by competitors. Moreover, with the assistance of this strategy, AGW Club will be able to enter the market of China in an effective manner and it will also assist the club in enhancing the market share in its initial stage. Furthermore, after acquiring an enhanced market share the club will charge higher prices to improve profitability (The Pennsylvania State University, 2007). The Implications of Changing Environmental Factors on AGW Club Government, Political, or Governing Bodies AGW Club is to be registered under the Government of the US for establishing and conducting business operations. Moreover, the club should also obtain a license from the State Governments in the US for performing in the national and international market (US Government, 2012). Furthermore, the club is also required to obtain a trade license from the Government of China under the PRC Company Law for distributing products in the market of China (Asia Briefing Ltd., 2012). AGW Club is required to perform its business activities in accordance with the legal formalities for conducting business activities with fair means. There are also certain risk factors attached with regard to political imbalance which may hamper business activities of the club. Moreover, the legal requirements in China are quite complicated as it requires complex business formalities, which is time consuming (Blake, Cassels, & Graydon LLP, 2012). Economic The interest rates, exchange rates and fiscal policies of a country may affect the business operations of AGW Club. Moreover, lower interest rates and exchange rates will be favorable for AGW Club to perform business activities effectively, which can be facilitated by better fiscal policies. The monetary policy of a country is formulated on the basis of interest rate, which signifies that banks are required to maintain a certain cash reserve with central banks for maintaining a better cash flow. Appropriate valuation of the exchange rate enables to maintain a better monetary policy among countries (Taylor, 2007). Furthermore, AGW Club is required to adopt a hedging strategy for maintaining or minimizing exchange rates risks (Schmittmann, 2010). Fiscal policy is utilized by government for minimizing financial risk arising from unstable economy. The club should operate in those markets where the government holds a strong fiscal and monetary policy, such as China (International Monetary Fund, 2011). Innovation and Technology AGW Club has opened an online store for providing better services to customers both in the national and international markets. Moreover, with the developing economy and advancements in technology, consumers in the market of China have changed their buying behaviors. Therefore, with the incorporation of the online store facility, the club will be able to meet the requirements and preferences of the customers in a more effective manner. Social and Demographic AGW Club is required to develop a better culture within the club for developing a better relationship with Chinese customers. It will also assist the club in developing better relationships between employees and customers. Moreover, the club is required to have enhanced human resource management (HRM) for developing better relationships with diverse cultural employees. Furthermore, it is required to invest much in providing training to employees for better performance of employees. Conclusion AGW Club is a service providing company operating with the objective of procuring products manufactured in America and delivering those products to its members. The club is established in Virginia, US and has planned to expand in other states of the nation. Moreover, the club also has an online store facility for providing services in an efficient manner to members within America and in the market of China. The market conditions of China have improved due to the development of the economy and owing to the changes in the buying behavior of consumers, and it will be an appropriate market to target for the club. Service channel will be an appropriate distribution channel for providing America manufactured products across the nation and in the market of China. The channel ownership strategy will be adopted for conducting product distribution services on behalf of the manufacturers. Moreover, the club will enter the market of China with a penetrating pricing strategy for acquiring a good market share. The government of China is favorable for economic and market growth and the social conditions have improved. All these factors will assist the club in operating effectively both in the national and in international markets. References Asia Briefing Ltd. (2012). Roles and responsibilities of the China legal representative. Retrieved from http://www.china-briefing.com/news/2011/08/11/roles-and-responsibilities-of-the-china-legal-representative.html. Angele, P., Szczepanski, I., & Reissinger, N. (2012). Distribution strategy. Retrieved from http://www.unet.univie.ac.at/~a0025537/php/ABWLs/FK-Marketing/store3/Theory10.pdf. Blake, Cassels & Graydon LLP. (2012). Doing business in China. Retrieved from http://www.blakes.com/DBIC/guide/PDF/Doing_Business_in_China.pdf. Central Intelligence Agency. (2012). The world factbook. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html. International Monetary Fund. (2011). Addressing fiscal challenges to reduce economic risks. Retrieved from http://www.imf.org/external/pubs/ft/fm/2011/02/pdf/fm1102.pdf. Schmittmann, J. M. (2010). Currency hedging for international portfolios. Retrieved from http://www.imf.org/external/pubs/ft/wp/2010/wp10151.pdf. Scribd Inc. (2012). SWOT analysis of China. Retrieved from http://www.scribd.com/doc/45352335/SWOT-Analysis-of-China. Taylor, J. B. (2007). The role of the exchange rate in monetary policy rules. Retrieved from http://www.cenet.org.cn/download/14906-1.pdf. The Pennsylvania State University. (2007). Understanding pricing objectives and strategies. Retrieved from http://pubs.cas.psu.edu/freepubs/pdfs/ua441.pdf. The American Chamber of Commerce in Shanghai. (2012). China consumer market strategies. Retrieved from http://www.amcham-shanghai.org/ftpuploadfiles/Publications/ChinaConsumerMarketStrategies/China_Consumer_Market_Strategies_2012_Report.pdf. The Nielsen Company. (2012). Chinese take-away. Retrieved from http://cn.en.nielsen.com/documents/chinesetakeawayfinal.pdf. US Government. (2012). Laws and regulations. Retrieved from http://www.usa.gov/Topics/Reference-Shelf/Laws.shtml. Read More