Global Market Expansion of New Irelands Wool - Case Study Example

Final Project: New Irelands Wool Table of Contents Table of Contents 2 Introduction 3 Methods 3 Product 4 Price 6 Competitors 7 Target Market 8 BrandImage Creation 9 Promotion and Advertisement Strategies 10 Distribution Strategy 11 Usage of Internet as Medium of Sales 11 Conclusion 12 References 13 Introduction The paper deals with global market expansion. The case basically states about the two Irish people migrating from Ireland and starting up their wool based business in United Sates of America. From the case, it is also evident that they were successful in their business venture locally as well as regionally. The major attributes of the two Irish traders could be considered as their nature and their pleasant accents which were a bit rare in the US markets. They did not undertake any promotional activities to sell their products as they only used the platform of fair and direct sale as the relevant medium of sale. With the success of their product in the local US markets, they are thinking of catering to a wider region by penetration in the bigger markets of US and global markets too. In order to do so a major study has to be undertaken while deciding about the expansion of the market. A faulty expansion step can, not only account for a dip in profits but also be a threat for the whole existence of the business. Thus, a market plan is a serious necessity for market expansion. Methods With the question of market expansion, the most widely used method used to analyze the decision aptly is that of SWOT analysis. It is majorly done to analyze the strengths, weaknesses, opportunities and threats of the particular business proposal. In this case, SWOT analysis is required to understand the strengths and weaknesses of the organization with respect to the idea of global expansion and also the opportunities and threats it may face from the external resources while expanding their business in the global forum. Another study which would be quite handful in this project would be the Porter’s Five Force Model. The Porter’s Five Force Model mainly takes into the account the major forces which affect the functioning of the firm namely the suppliers, competitors, substitutes, barriers to entry and buyers’ powers. A thorough study is to be made regarding all these heads so that it could be well understood that whether the decision taken of expanding their business in the global markets is really viable or not (Kotler, 2009). With the progression of the case all such topics would be covered under different heads. Each and every essential detail for entering into a global market with relation to the case will be analyzed in details and probable solutions will be provided. Product The nature of the product is a determining factor while decision regarding market expansion is taken that too globally. In this case, the major product is that of yarn. They also sell products made of yard specifically scarves, shawls, and blankets. This all products are basically wool based. The business is doing good in the local market but what stands as a problem while conquering the world market is that US is not in the top five major producers of wool. So, there is a stiff competition from the producers of Australia, China, Newzeland and few other countries. Though the market is large enough to accommodate newer entries in the world market but there would be stiff competition and a plan should be chalked out to enter the world market. Again the suitability of the product depends upon the type and quality of the product they are into. To capture the world market, variety is required. If any organization lacks variety, then specialization is required. Without have the requisite core competency, it is very hard to get entry in the world market or rather sustain in the world market. There are a variety of yearns available in the market, therefore to access the global market they should have such varieties with quality. For example, different types of yearns present in the market are virgin wool, recycled wool, rag wool and worsted wool, so to capture the market the organization needs to have all such varieties and if not then the organization needs to have core competency of producing finest yearns in any of the varieties mentioned above. Thus, it is why product is of a greater deciding factor for market expansion. If the organization has either any of the two competencies mentioned above then it can go in for expansion of the business in a larger way otherwise it would be beneficial for the company to hold back, gain such competency within a period of time and then venture into newer markets. It would facilitate the whole process to be systematic and will have less chances of failure (Oviatt, n.d.). Price Along with the product, the price is the other most important factor for capturing global markets. Expansion in global markets leads to certain complicated procedures because of exports and foreign exchange that comes to play. Thus, pricing can be considered as the most effective deciding factor while entering global markets. There are a lot of considerations to be kept in mind while fixing the price of the product. Not only the organization has to think of its cost of production and its profits but also the prices of the competitors in the existing market scenario. Even the foreign exchange rates have to be taken into account. If the delivery is on credit then there can be losses because of transactional exposures. So, while fixing the price a conscious effort is to be made to be made to have a competitive pricing strategy so it can compete in the world market. But again the organization has to check if the prices have enough margins to have a potential interest in the world market. Analyzing the above factors, the pricing strategy which the organization can follow is that of penetrating pricing. Penetrating pricing is generally best in the case when an organization brings new product in the market or where there is no large customer base of the product available in the market. In this case, though the organization has been operating in the local market but it is relatively new to the world forum. Thus, to have an entry in the market the organization should opt for penetration pricing so that it slowly and steadily creates a customer base for itself. It would be very beneficial for the organization because it can create a niche for itself and may even try to eliminate its competitors from the market. So, it will have a double sided effect on the organization i.e. it will not only help the organization to enter the market but also to create its own customer base. But the problem with this strategy is that the organization should have enough resources because they have to keep their price as low as possible at the outset (Homa, n.d.). Thus, if the organization has enough resources at its disposal so it can go in for the pricing strategy. Other pricing strategies can also be adopted but this would suit best while venturing into newer and broader markets. Competitors In this era of perfectly competitive markets, it is need less to say that there will be competition in almost all spheres. Again competition depends upon a number of elements. Nature of the product, price of the product, quality of the product plays a greater role in deciding the competition. In this case too, the competition is bound to be huge because the product is a commonly available one in the market. Even the price is quite competitive and it can be classified as an economy product as the price is not high. It is such a product which is consumed by all classes of people. Not only it wool also acts as the raw material for number of other set of products. Even the Irish businessmen are also the manufacturer of such end products. So this can be an opportunity for them because they have not based their business only on the raw material but also on the end products. Thus, there is a probability that even if one of the products does not click, the other products may click in the market. But again there would be stiff competitions in the global markets because not only the local manufacturers would operate in the market but also there are quite a few global brands of similar products. For example, it will get stiff competition from Australian Organic Group, Berroco, Blue Sky Alpacas and such many other companies are already operating in the world market. They have already established a brand image for their products and enjoy high customer base. Thus, though not impossible but to survive in such a competitive environment might not be an easy task either. Competition can only be survived if there is a certain niche of the product. So, the organization has to create something special which makes it stand apart from all competitions. It may be the price or the quality or even can be the product range. Thus, for New Irelands Wool it is their first task to decide upon what would be their USP. Then, accordingly it has to be highlighted in the world market so as to have a stronger hold in the market (Gentzkow & Sharpio, 2008) Target Market It might be difficult to cater all the markets or all the customers at once. Market segmentation can facilitate the issue. Also, there might arise the need for niche marketing. For example, the product in contention will be more popular in the colder regions than the regions which are warmer. Thus the market can be segregated on the basis of regions or climate. Again, New Irelands Wool should concentrate mostly on the industrial customers than individuals which will offer them bulk purchase. Thus, achieving target customers is very important while keeping in mind the expansion of market. Specific targeting of customers should be done after formulation of the policies of New Irelands Wool. Brand Image Creation It is difficult to operate in a world wide market without proper branding. Brand is the new age word. It is that element which differentiates between products and most importantly organizations. People often develop brand loyalty towards a particular organization. So, it is very essential for New Irelands Wool to create a brand image for them. It might seem to be a tough job because brand image or brand loyalty develops only with time. Subsequently, it might get tough for them to have a hold in the international market. But the good point about New Irelands Wool is that they already have a brand which is popular in the local market and thus the work at hand is to popularize the brand which can be done only with maintaining their standards and also with major promotional measures and advertisement activities (MIT Sloan, 2009). Promotion and Advertisement Strategies Promotional and advertisement strategies have to be dynamic and have a major hand in deciding the fate of a product. If a proper advertisement strategy is not designed then even a good product can loose its share. Even while entering into the market, it needs to be taken utmost care. A lot of promotional activities need to be undertaken while entering into the market. Measures like free gifts on purchase of products, free samples with products etc may be acknowledged for the purpose. While deciding about the advertisements, it is to be checked if the medium of advertisement selected caters to the need of the product or New Irelands Wool. Both print and electronic media is very affluent in promoting the product or the brand. A touchy and impressive advertisement should be created to be aired in the local channels to be targeted generally to the female population. Even hoarding is quite beneficial in the early stages of penetration. But the most important factor required is that it should highlight that particular entity which makes it separate from the rest of the lot. It would be better for New Irelands Wool to specify its competency and highlight it. So a wide array of promotional activities and advertisement strategies should be designed to capture the international markets at the outset. It is to be noted that all regions are not the same, so due care is needed while developing an advertisement campaign for any particular region. Distribution Strategy A proper distribution strategy is quite essential for proper existence and availability of the product. In this case, it is very important whether they would opt for importers or would like to venture into the business themselves. Initially importers can be a good choice but for longer viability or for increased profits they can opt for running the business themselves. The marketing chain in this kind of products are generally the manufacturers to wholesalers to retailers and then to end consumers. It can be followed but again for corporate clients it can be manufacturer to wholesalers or from direct manufacturers to the end - users. Thus, a lot depends upon the distribution channel. With respect to the distribution channel, timing is ought to be an important factor also as the right product should be available at the right place. Usage of Internet as Medium of Sales Internet is today’s buzz word. Life seems to be simply impossible without internet. In this case, the usage of internet for the sale of products of New Irelands Wool will be beneficial for the organization. It will not only directly affect the organization but also indirectly too. A website can be created with the name of the organization i.e. New Irelands Wool which would bring a sense of reliability on the minds of the consumers. Even internet would help them to achieve their goal that is to market expansion very easily because internet is such a medium which has no physical boundaries. So, people all over can see the catalogue of the products and can order online. Online sale can really boost the sales of New Irelands Wool. Other benefit which internet can open up for them is growth of contacts. They will have access to large number of contacts from various parts of the world. Thus, exports will be much easier. So, internet for New Irelands Wool would be very beneficial from angles and would be in sync with their objective of market expansion. Connection with the web can open up more doors for them (Chiang, 2001) Conclusion It can be said that New Irelands Wool can go for expansion into the wider markets internationally if and only if they follow all the strategies mentioned above. All the strategies and the minute specifications are very much integral to the sustainability of the venture in the global markets or in larger part of US markets. From the basic minute internal details regarding the product, price, distribution, etc to the external viabilities of target customers, competitors and brand creation should be taken care of. Entering into newer market is not an easy task at all and that too globally. So it is recommended that New Irelands Wool should analyze their resources before venturing into global markets because venturing is an easy task but sustaining in the cut throat competition of today requires definite plans and strategies. Thus, in order to venture and run the business profitably, they need enough resources, be it capital or manpower or both. If all the resources are available they can operate their business in the expected way otherwise it would be safe to cater to the local market for now and then go for expansion of market when resources are enough and abundant for the purpose (Peter, 2008). References Brownn & Katharyn, (2005). A Review of the Effects of Australian Wool Marketing Initiatives on the Associations between Selected Variables in the Global Wool Market. University of North Carolina. Retrieved Online on Aug 10, 2010 from http://libres.uncg.edu/ir/uncg/f/umi-uncg-1024.pdf Chiang, H., (2001). Introduction to B2C E-Commerce. Yale University. Retrieved Online on Aug 10, 2010 from http://www.cs.yale.edu/ Gentzkow, M. & Sharpio, J. M., (2008). Competition and Truth in the Market for News. Chicago Booth University. Retrieved Online on Aug 10, 2010 from http://faculty.chicagobooth.edu/jesse.shapiro/research/jepmedia.pdf Homa, K.,(No Date). Penetration Pricing Strategy. Georgetown University. Retrieved Online on Aug 10, 2010 from http://faculty.msb.edu/homak/homahelpsite/webhelp/price_penetration.htm McMillan, R. B.,( No Date). Wool Marketing: Some thoughts from the market place. Australian Wool Bureau. Retrieved Online on Aug 10, 2010 from http://ageconsearch.umn.edu/bitstream/22417/1/04010015.pdf Kotler, P. (2009) Marketing Management. Prentice Hall. Miwa, Y & Ramseyer, J. M.,(2001). Apparel Distribution: Inter-Firm Contracting and Intra-Firm Organization. Retrieved Online on Aug 10, 2010 from http://www.law.harvard.edu/programs/olin_center/papers/pdf/313.pdf MIT Solan., (2009). Do-It-Yourself Brand Creation. MIT Solan Management Review. Retrieved Online on Aug 10, 2010 from http://sloanreview.mit.edu/the-magazine/articles/2009/spring/50302/do-it-yourself-brand-creation/ Oviatt, B. M.,(No Date). Toward A Theory of International New Ventures. Georgia State University. Retrieved Online on Aug 10, 2010 from http://aib.msu.edu/awards/25_1_94_45.pdf Peter, J. P. (2008) Marketing Management. McGraw-Hill Irwin. Read More