Global Market Analysis of Wiggles - Case Study Example

? Globalizing a local brand Executive Summary This study deals with global market analysis of Wiggles. The study mainly focuses on the company business operation in one of Middle East Countries. The country selected for this study is United Arab Emirates or UAE. 'Wiggles’ is a children music company and now they have franchised their concepts in one developed country of Middle East i.e. UAE. This study has discussed the political, environment, social, legal, technological, environment, environment of UAE. This study also analysed the competitive business environment of the country. In international marketing, it is important for any company to judge the external environment before entering into a new foreign market to understand the feasibility of the business in the target country. The evaluation of external environment is very essential and it is a continuous process. In the light of the all the external environmental factors the crucial factors that are important to know are market growth of the particular industry and the organization’s growth. From that only, anyone can actually understand the performance of the company. For example, if the market is not good in a particular region then it’s obvious that a company should maintain caution while going to international market. The host country’s political and economic conditions play a major role in understanding the potentiality of the company. The branding of Wiggles is also important aspect here to understand the situation. This study has analysed the entire business situation of the company on the basis of the mentioned criteria. Table of Contents 1.0 Introduction 5 1.1 Aim 5 1.2 Scope 5 1.3 Background 5 2.0 Environmental forces of Middle-east affecting the Wiggles 7 2.1 External Environmental Forces 7 2.1.1 Political Environment 7 2.1.2 Economic Environment 7 2.1.3 Social Environment 9 2.1.4 Legal Environment 11 2.1.5 Technological Environment 11 3.0 Competitive Factors in UAE 12 3.1 Market size 12 3.2 Purchasing power 12 3.3 Disposable income 12 3.4 Market Demand 12 3.5 Industry Supply 13 4.0 Market potentiality in the Middle-East analysis and discussion 13 4.1 Analysis 13 Strengths and weakness to open a market in UAE 14 4.2 Discussion 15 5.0 Conclusion 16 References 17 1.0 Introduction 1.1 Aim Business has taken a new dimension now days. It is not the traditional way to do the business where there will be a point of sale and people will believe on hard sales that means selling the products would be in highest priority. Business has taken new shape and colour. Previously there were only two approaches of marketing present in the world – the Production concept and the product concept. The production concept says that emphasizing more on production can lead to a greater amount of output in the economics. 1.2 Scope By selling more units the firms can gain more profit. After that, the Product concept came in view and the concept explains the details about the product differentiation that means adding more and more features on product could make the product different from the other product. But this concept also leads to high cost for the producers and this is what we call as “Marketing Myopia.”Recently the concept is present in the market is Social marketing. Social business concept is the new dimension of the business where the organization feels itself as a part of the society. The organization would provide the merit goods to the society (Blythe, 2006, p.89). 1.3 Background It’s not only the goods market but it’s the service market that has created a new era in the marketing field. The companies like Wiggles provide service to the people around world for last 21 years. Here it is noted that goods market is somehow different from the service market. In goods market, we can actually see the products, we can touch the products, we can transfer the product but in case of service marketing there is no transformation of the product, there is no homogeneity of the products. ‘Wiggles’ has been providing the service of entertainment for a long time. The concept of social business talks about the satisfaction of the consumers, its talks about the long term sustainability, its talks about the merit goods; it talks about the society’s welfare component. Social Business concept is the systematic approach where the marketing communication and all the other issues will be considered simultaneously. Wiggles also followed the same strategy. It believed that big will come from the small. From the beginning of the Wiggles, with young Anthony Field and with his brother and with some friends it started it journey with the street shows in Sydney in Australia where the focus as only to achieve the fun and the customer satisfaction not the profit. Systematically, they started going to overseas markets for expansion. It expanded with Wiggly TV and Wiggly cinemas. The group franchised the concept to other developed countries where it owns several industry records and Times of India called Wiggles as world’s largest preschool brand. In 2011, Wiggles has entered into the Middle East market (Botha, 2004, p.76). The reason behind entering into UAE market is that, per child expenditure for toys and video is twice high as expenditure of toy for per child spends in Europe. Because of the huge potentiality of the toy market the company has decided to enter into UAE as a first foot step to penetrate into the all the potential Middle East countries within next few years. 2.0 Environmental forces of Middle-east affecting the Wiggles 2.1 External Environmental Forces 2.1.1 Political Environment The political scenario of UAE countries are changing from 2011. The Arab World was the major place where the authoritarian rules could be established without any hindrance but from 2011 the scenario has been changed a lot. In UAE the mass protest against the government has occurred and the government was forced to resign within weeks following the success the other Middle East countries also got the enthusiasm and protests bolstered there also (Indiana, 2011, p.7). UAE requires the economic reforms by the government. Earlier the country was in the centre of authoritarian country but in 2011, it is seen that the persons was put in jail only because of the reason that earlier they had enjoy some power. It was called the anticorruption campaign in UAE. In 2011, the separation of power took place and in most of the cases the decision of power went in favour of unelected persons. The political reform programme did not limit the King to enjoy from the power. The king has every power to control the government, to appoint the prime minister, the ministers and the house of senate. So, it can be said that still UAE is in the state of authoritarian system. 2.1.2 Economic Environment The main source of income for UAE is oil. The present economic scenario of UAE is stable in terms of the oil exporters are able to maintain a healthy growth and the oil importers also are maintaining a stable growth form the last few years. The Middle East region has shown a healthy growth rate for the exporters – Algeria, Bahrin, Iraq, Iran, Libya, Oman, Qatar, United Arab Emirates, Yemen all these countries have projected an average growth rate from 5.7 percent in 2012 to 3.2 percent in 2013. This happens mainly due to of the modest global demand. But on the other side region’s oil importers – Afghanistan, Egypt, Jordon, Lebanon, Pakisthan, Sudan and Tunisia face a difficult situation in terms of external environment. In the Arab countries the continuous political disturbance is hampering the economic growth to some extent (Kuran, 2004, pp.1-43). In the year of 2012, oil exporting countries achieved the highest growth of 5.7 % after the restoration of Libiya’s oil production and the present of strong expansions of the Gulf Cooperation strengthens the growth of oil export. Though the world market price for oil is somehow lower but the growth of export market is able to achieve the surplus of current account of about US$370 billion last year (Karun, 2003, pp.7-8).If export volume and prices of gas and oil are evaluated then the total amount of current account surplus will become US$440. For bringing the balance and stability in the fiscal account, government needs to revise the subsidy and current revenue policies. (Source: IMF, 2013, p.1) 2.1.3 Social Environment UAE has shown highest growth rate in the population. Total population of Middle East countries were 132 million in 1990 and it is increased to 212 million in 2012, where current population of UAE is 8,659,000 (Fearon, 2003, pp10-12). The country has achieved a drastic growth rate in population that is 61%. The cultural behaviour is responsible for the rapid growth of population. The country follows the Islamic ideologies- as per the Islamic law. For example, birth control is not allowed as people of that country believe that child is the god gift to human beings and they believe in large family mechanism so, stay together and require many children (Bayat, 2002, pp.1-28). Figure 1: Population growth Middle East countries UAE is hardly influenced by the religion feelings; it is the centre point of combination of the three major religion of the world. The country is the most conservation region of the world and the media, communication tools can be used very sensitively in Middle East nations as the rue of business is also conservative to some extent. Dubai is the main business hub of the UAE where people from developed nations also come and stay there. So, it can be concluded that there is a cultural exchange between the Islamic conservations and the free culture of developed countries. 2.1.4 Legal Environment . In UAE, the scenario is again complex, their military has a little interest or no interest to support the democracy and the militants are very powerful in political environment of UAE. In contrasts, the Tunisia has only minor amounts of oil to export in other countries and they have a relatively big amount of educated middle class group as the followers of democracy. Overall it can be concluded that the country is trying to keep them aloof from the military power. In addition, the many Middle East countries like UAE are facing massive changes in the social factors in their socio economic factors. In the year of 2008, it has been found that 22 percent of the population under the below poverty line, and the unemployment rose to 12 %. 2.1.5 Technological Environment Technology is one of the major factors for a business. Technological environment in a specific market has major impact in a business like Wiggles. UAE is one of the developed nations in Middle East and technological advancement has played a major role. Globalization has helped this country to adopt the new technology developed by the developed and developing countries around the World like USA, China, and Japan etc. This helps the companies in UAE to achieve cost effective manufacturing of their products in shorter time. Therefore, the Wiggles can get extra benefit in terms manufacturing of toys by using the hi tech sources available in the market like advanced machineries, trained labours and advanced manufacturing g processers. Due to the faster development of technology in UAE, one of the major cities of the country i.e. Dubai has become the business hub of whole Middle East countries. 3.0 Competitive Factors in UAE 3.1 Market size Large number of substitute products is available in the market for large industry; any entertainment industry can be threat to the Wiggles. Basically Wiggles have the product of toy, video, music; Wiggles TV are available in the market. Because of the availability of the large number of substitute products together under one brand name it is easier for Wiggles to overcome the problem of substitute products. The differentiated product of Wiggles has reduced the threat of substitutions. Therefore it can be judged the market size is huge for Wiggles. 3.2 Purchasing power The buyers would always have greater bargaining power, in today’s marketing buyers are considered as God. But brand could itself negotiate with the buyers. A branded product can reduce all kinds of risk associated with a purchase. The economy of UAE is strong enough and therefore the purchasing power of the buyers is high. They have high disposable income and spent them on luxury goods. 3.3 Disposable income The demand of oil is ever increasing which is contributing to rise in disposable income of the community. Therefore the disposable income is taking the steep rising curve for the population of the country. 3.4 Market Demand When a consumer buys a product, the first risk occurs that is the financial risk and for service marketing component this financial risk is higher compared to goods market. Financial risk means risk to become a looser while buying a product. The brand Wiggle is reducing that risk. 3.5 Industry Supply High competition among the suppliers leads to a positive against the Wiggles, for manufacturing the toys someone needs low concentration in the suppliers. There is very low cost for switching of from one supplier to another supplier. Many players are present in the market in the same industry and while going to Middle East nations there are many local brands present, so competition from the rivals are a threat for Wiggles. 4.0 Market potentiality in the Middle-East analysis and discussion 4.1 Analysis Strengths: The Company under consideration has emerged as one of the most successful pre-school program. In 2012, the company announced its reunion with Greg Page. He regained his health and returned to the job. Weakness: After the retirement of Greg Page the company failed to find someone who matches with the capability of Greg Page. This shows the importance of a man within the organization. This can be treated as a weakness of the company as it is depending upon the capability of a single employee. Opportunity: Till date, Wiggles has ventured only in some countries and the global market is still awaited. With the return of Greg Page, this is the time for the company to venture into new markets. They can change the way they use to record music. With the advancement of technologies, music can be made more soothing to the ear. Wiggles need to adopt the latest technologies on board. Threat: The threat of new entrants and new competitors are usual in any in of business. The company is not immune from this threat. The only way to sustain the business is to provide the best quality products with low price. The recent advancements in the music industry provide the opportunity to the business entities to offer the consumers good music with less production cost. Wiggles need to adopt these technologies and deal with the threats in business operations. Strengths and weakness to open a market in UAE The government regulations in the region of UAE are somewhat less stringent compared to other regions. The region offers enormous tax incentives which cement the stature of the region as economic venture. Therefore if Wiggles aims to expand into UAE then it will also gain the incentives offered. The industry where Wiggles operates is still untapped which opens up the opportunity to place the footprints in the untapped market. It also offers attractive trading environments and the financial sector of the country is on a high since they are slowly turning away from their dependence on oil for revenues. The greatest challenges that foreign entrants face in setting up a new business is that of competition. However Wiggles is immune from this challenge since the industry where it operates has few competitors only. Based on the analysis of the different environmental forces, this chapter will try to evaluate the market potentiality of Wiggles. The political issues can have major impact in Wiggles business. From the above analysis it is clear that the political environment is not stable in UAE compared to Australia. Everywhere there is a flow of change and whenever a change comes in economy it would create a major impact on the society too and sometimes it can be a blood reform also. The change of political system from Authoritarian to democracy means a reform is needed in this country. That reform might be economic reforms. The political structure is supporting the economic reforms and the economic structure is always supporting the reform. When a reform comes it makes some changes. The fiscal situation is not stable in UAE. Due to the global financial crisis of 2007 to 2009 and also due to the lowering of the oil prices, the exporters are not gaining that much of profit. The hike in the exports though can maintain a good Balance of Payment ratio especially in current accounts but we need to remember that export price is low, so it is downgrading the BOP. The BOP is in favourable situation because the hike in amount of oil export can able to cumbersome the low oil price but in case of fiscal deficit due of the political issues the government spending has increased a lot. Reform would bring down the government spending subsidy and for that to gain the popularity of government they need to have more and more foreign direct investment from developed countries. 4.2 Discussion In this light, it is clear in near future the Middle East economy will be open for the developed nations for business purpose and with business the socio-cultural transformation will take place. For an entertainment company like Wiggles it can create a great platform to play. From the above discussion, it is also clear that the UAE spend more than twice on their children’s toys and other products than the European countries than Australia. The demographic estimation says that, 24% of the world’s population would be expected to between 0-14 by 2012, and there is a huge growth of toy’s and entertainment market through all over world. The growth rate of UAE would be highest among the other nations like Australia and it is obvious that the child population will be higher as the new birth rate than Australia. There is a great potentiality for Wiggles in the Middle East market than Australia. UAE is the 7th amongst the top 10 toy importing countries. 5.0 Conclusion From the above analysis, data given it is clear that for Wiggles it is right step for moving to UAE. The market potentiality of Middle nations is very high in Toys and other children entertainment segment. This potentiality lies not only from the Marketing perspective but also from economic, political and socio-cultural perspective. Though, recently UAE is politically unstable but that instability is suggesting a major reform in the economy. Reform always invites the growth in the economy; it invites the prosperity, foreign public or private investment in the economy that would definitely raise the consumption expenditure in the economy. This raised consumption expenditure would help Wiggles to sustain in a long term basis there. The buying behaviour and the religion behaviour of people in UAE are also supporting the entrant in the Middle East Market. The systematic approach of Wiggles would provide success in UAE market. In toy market especially, the labour cost is very cheap in Middle East and in Asian countries than Australia. So it would be beneficial for the company to manufacture and sell toys in UAE rather than Australia (Elson, 1999, pp.31-36). References Bayat, A., 2002. Activism and social development in the Middle East. International Journal of Middle East Studies, 34(1), pp.1-28. Blythe, J., 2006. Principles & Practice of Marketing. USA: Cengage Brain.com. Botha, J., 2004. Introduction to Marketing. Capetown: Juta and Company Ltd. Elson D., 1999. Labour markets as gendered institutions: equality, efficiency and empowerment issues. World development. 30(2), pp.31-36. Fearon, J., 2003. Ethnic and Cultural Diversity by country. Journal of Economic growth, 40(1), pp.10-12. IMF, 2013. Economic Growth Moderates across Middle East. [Online]. Available at: http://www.imf.org/external/pubs/ft/survey/so/2013/car052113a.htm. [Access on August 7, 2013]. Indiana, 2011. Explore Global Issues In a Regional Context. [Pdf]. Available at: http://www.indiana.edu/~global/icab/notebook/Exploring%20Global%20Issues%20in%20the%20Middle%20East.pdf. [Accessed on August 07, 2013]. Karun, T., 2003. The Islamic commercial crisis: institutional roots of economic underdevelopment in the Middle East. The Journal of Economic History, 20(1), pp.7-8. Kuran, T., 2004. Why the Middle East is economically underdeveloped: historical mechanisms of institutional stagnation. 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