An International Marketing Plan for Bright Eyes to Enter the Market of Brazil and Denmark - Research Paper Example

An International Marketing Plan for Bright Eyes to Enter the Market of Brazil and Denmark Introduction Making an entry into international market and design an appropriate marketing mix requires effective planning and strategic insight. Organizations normally enter into new markets in order to expand their business and explore markets where the overall growth chances are relatively higher and firm can successfully enter into such markets. Bright Eyes has been successfully operating in Sweden and three other markets however, in order to achieve the required growth and expansion into new markets, it needs to expand. Such expansion can be achieved if it can enter into new markets and establish its brand in order to achieve required growth targets. It is however, critical to understand that choosing right mode of entry as well as designing right marketing mix. Since each market carries its own dynamics and peculiar factors therefore strategic outlook would require developing appropriate market entry strategy, deciding on which approach to take while designing marketing mix, detailing the elements in marketing mix as well as organization and coordination of marketing activities. This report will present an international marketing plan for Bright Eyes to enter into the market of Brazil and Denmark. This plan will detail as to what market entry strategies should be adapted by the firm in each market besides discussing as to what marketing mix approaches to be undertaken. This plan will also detail as to how the overall marketing activities will be coordinated across both the markets and how Bright Eyes should approach both these markets in order to achieve its strategic objectives. Brazil Brazil’s economy is considered as the sixth largest economy in the world in terms of nominal GDP1. Brazil is also part of what is called BRIC, a group of four top emerging economies in the world suggesting that Brazil is one of the key markets to look for growth. What is important to note that Brazil has relatively opened its markets and is transitioning towards free market economy. Such approach therefore would critically allow any international firm to easily set its feet on the ground and capture the market without significant hurdles. Brazilian economy is also considered as the largest economy in Latin America and is believed to be one of the fastest growing economies in the world. The increasing competitiveness of the economy, rise of an affluent class within Brazilian society as well as globalization forces has made Brazil as one of the lucrative markets in the world. Local firms in Brazil are increasingly becoming global in nature and access to adequate and latest technology is making it relatively easier for Brazilian firms to expand globally at rapid pace. Total Population Median Age Population rate 15-64 years pop Urban Population 203,429,773 29.3 years 1.134% 67% of population 87% Date Source : http://www.indexmundi.com/brazil/demographics_profile.html Populating 8th largest billionaires in the world, Brazil can surely become one of the key markets for Bright Eyes. Since there is an emerging class of professionals and workers with increasing economic standards, a shift towards adapting a luxurious life style and spending on designer products cannot be discounted. Bright Eyes therefore has relatively higher chances of successfully entering into the market and expanding in Latin America region. Optical and eyewear sector in Brazil is considered as one of the top growing sector in the country with stronger growth posed during 2008 though it has slowed down a bit after 2009. It is also indicated that vision related problems are on rise in Brazilian women thus making Brazil as one of the critical and important new market to enter. (Data Monitor, 2010) Denmark Denmark is one of the important countries in Nordic region sharing relatively same culture and business environment as Sweden has. Entering into Denmark market therefore can be relatively easier task for Bright Eyes as it is well aware of the culture, business practices as well as other aspects of doing business in the country. Denmark is also considered as a tax friendly country thus making it easier for Bright Eyes to profitably launch its operations in the country. Denmark as an economy is reliant mostly on its human resource as country has relatively very few natural resources to exploit. As a result of this, Denmark is now a service based economy with major focus on delivering services through highly trained and efficient work force. Denmark is industrialized market economy with heavy dependence upon imported raw materials as well as other input. Such reliance on external sector therefore makes Denmark as one of the key markets to look into as it is not only in the proximity of the main market of Bright Eyes but it is also a developed market. Total Population Median Age Population rate 15-64 years pop Urban Population 5,529,888 40.9 years 0.251% 65.3% of population 87% Data Source: http://www.indexmundi.com/denmark/demographics_profile.html Denmark is also a welfare economy indicating that government has undertaken serious efforts to actually ensure that minimum level of living standards are maintained. Tax-funded healthcare as well as other facilities therefore outline that Denmark can serve as one of the key markets for the firm. Bright Eyes can successfully enter into this market due to different reasons and it is critical that overall market mix decisions are made while taking into consideration favorable factors. Mode of Entry Every organization’s decision to enter into any new market invariably depends upon overall risks involved in such market. Further, the overall level of commitment as well as control required in the market is another important criteria used in deciding whether to enter into a market or not. There are generally two broader ways through which international firms can enter into a foreign market i.e. through equity participation and non-equity participation. Entry by making equity participation involves either setting up joint ventures or acquiring/establishing a whole owned subsidy. Non-equity mode of entry includes exporting, licensing as well as franchising. (Bradley, 2005) Entering into market through equity participation relatively increases the overall risks involved because entering into a market itself is considered as a risky adventure. It is critical to note that when a firm makes equity contribution by forming a joint venture or develop a whole owned subsidy, it assumes relatively larger risk. This is due to the fact that organization actually enters into a market which is new to it. Though adequate research may be done in advance however, the real risks can only be experienced once a firm practically enters into the market. (Kleindl, 2006) In order to minimize the risks, new firms therefore tend to enter through relatively low risk modes of entry. This approach therefore can help international firms to first view the market and assess all the risks before making a full time commitment to retain the market through equity participation. Mode of Entry into Brazil Bright Eyes has relatively rich experience of operating in European markets generally and in Nordic market specifically. The overall knowledge of the market and trends in these markets therefore can really provide strategic advantage to the firm to capitalize on. However, in order to successfully enter into Brazilian market, firm needs to adapt a relatively different approach. Since the industry in which it operates is not heavily dependent upon capital expenditure therefore it can consider to form a joint venture in Brazil. Joint Venture as a mode of entry into Brazilian market will allow Bright Eyes to use the local expertise and knowledge of the local firms and build its overall market recognition. Entry through joint venture is normally for a finite time wherein parties to the joint venture agreement agree to participate in a limited time venture to set up an entity. Once the overall purpose of the venture is completed, entity is often liquidated. Bright Eyes can form a joint venture with Luxottica Group2, the leading manufacturer and supplier of designer eye glasses in Brazil. The group not only has a very wide chain of stores but it also operates into other international markets also. Bright Eyes can use the local knowledge, brand strength as well as brand loyalty of Luxottica to first increase brand awareness about its products in the market and then can look into the possibility of entering into the market by acquiring a wholly owned subsidy. Strategic partnership with the Group will not only allow firm to tap into the large network of stores but also the local knowledge and human resource considered as essential in order to remain successful in an international market. Mode of Entry into Denmark As discussed above, Denmark lies in the Nordic region with relatively open economy and same set of rules as prevailing other EU markets. It is critical to understand that global retailers are often concentric in nature with standardized offerings therefore in such a scenario, franchising is considered as a relatively viable option to expand at international level. (Park & Sternquist, 2008) It is critical to understand however, that Bright Eyes is engaged into manufacturing process and than retail its products. As such franchising may not be a viable option for it to opt to enter into the market. Since the overall cost of entry is relatively low due to less capital intensive nature of the manufacturing process, an entry through wholly owned subsidiary will be sufficient enough to provide Bright Eyes a right combination to enter the market. Firm can decide either to acquire an already established firm or develop a greenfield project to enter into Danish market. Standardized vs Adaptation One of the key strategic challenges faced by managers regarding the perusal of marketing strategies is based upon deciding between standardization or adaptation. When entering into an international market, firms therefore has to make a choice between whether to adapt the standardized approach towards its marketing mix or choose adaptation as an alternative. It is has been argued however, that practically firms neither chose standardized nor adaptation approach but attempt to find a balance between the two approaches towards international marketing mix. (Calantone, Cavusgil, , Schmidt, & Shin, 2004) One of fundamental questions to be decided therefore to decide as up to what extent a firm should standardize and to the degree to which it adapt to the localization of its marketing mix efforts. It is also critical to note that some parts of global marketing mix can be easily localized where others are more viable if molded as standardized elements. Firms therefore have to establish a continuum of global marketing mix elements which can be standardized and which can be localized. (Rundh, 2003) It is also critically to understand that overall consumer choices and behavior has become relatively complex. Firms no longer can rely on their past successes in one market and model the same in another market. In order to ensure that firm successfully enters into any market, it is critical to make a choice between two approaches after considering some of the strategic repercussions of the approach under consideration for entering into a new market. Standardization and Adaptation Approach to International Marketing Mix- Achieving Balance It is suggested that the marketing managers involved in the international marketing has the dual responsibility of foreign marketing but also coordination with different global markets in order to manage the overall marketing mix at global level. Such level of responsibility provides insight into global markets and thus managers can better tailor their overall market offering. It has been argued that consumer wants and needs often do not change across the markets and nations. The core needs of the consumers relatively remain same and as such organizations should focus upon developing their overall offerings in a manner which correspond to all the markets. It is argued that increasing internalization of products as well as global forces has made the world similar and overall the consumer tastes and preferences correspond with each other with relatively little differences. (Carl Arthur Solberg & Durrieu, 2008) Denmark, one of the proposed markets to be entered is in the proximity of Sweden, the main market for Bright Eyes. As such, firm can completely standardized its offerings in Danish market as consumers belonging to Nordic area tend to share same cultural preferences. Further, the overall utility provided by glasses remains same i.e. helping vision impaired customers to improve their vision capability therefore a standardize approach would provide firm an opportunity to offer same level of quality across different markets. Brazil is also an emerging market with rising middle class which is also ready to adapt to more Western values and spending habits. However, there are some critical and peculiar factors related with eyewear industry in Brazil which might require adaptation approach to marketing mix. This will specially be in terms of product design and development as eyewear industry is relatively regulated industry within Brazil. In such an environment where the overall brand recognition is relatively higher, Bright Eyes should focus upon delivering mix of both adaptation and standardized offering of range of its products across both the markets. However, since the overall look and design of the product is Nordic in nature therefore to better suit to the needs of customers in Latin America, firm should make modifications in its product design. Standardization approach therefore can be readily executed in Danish market however, firm need to achieve a balance between its product designs in Nordic market and other markets. Proposed Marketing Mix Product It has been argued that product is easiest element as firms can export or market their products without making any significant changes in the products. Standardization of the products will therefore be applied more vigorously into Danish market wherein firm will offer products with same design and colors. The whole product range including prescription glasses, non-prescription eyewear, and sports glasses as well as whole range of reading glasses will be offered with no significant change. Since these products already offered a relatively Nordic look into their overall product design therefore firm will focus on standardization of products across whole Danish Market. In order to customize the products according to the consumer needs in Brazil, there will be slight modifications in the product design i.e. color of frames etc. it is critical to note that eyewear industry in Brazil is a regulated industry therefore making product design to comply with the regulations will also require a local adaptation of the product design. There is also a growing market for contact lenses in Brazil however; Bright Eyes is not in this segment of the business. By complying with the local regulations, firm can also enter into contact lenses market in Brazil. Overall, firm need to account for cultural and regional differences in its product part of marketing mix especially in Brazilian market. Pricing Transportation cost as well as improved communication with the consumers are considered as two important factors in terms of deciding whether to adapt a standardized pricing approach or not. Since firm will be entering into Danish market through acquiring a wholly owned subsidiary besides using standardized approach to marketing mix therefore it can afford to set standardized pricing across this market. Further, low trading barriers, decreasing transporting costs as well as active retailers and higher level of brand recognition can clearly favor Bright Eyes to adapt a standardized pricing approach in Danish Market. Though standardized prices tend to be more suitable to B2B market segments rather than B2C however, considering the standardized products, uniform currency, relatively similar consumer tastes and preferences can allow Bright Eyes to go for standardization of its pricing in this market. However, pricing strategy in Brazil may need to be relatively different as economic middle class within country is still on the rise. The overall purchasing power may not be relatively as stronger as consumers in Danish market. Bright Eyes therefore need to ensure that its pricing is based upon cogent factors. Bright Eyes need to develop insight into the psychographics of Brazilian market before it can adapt the prices according to local factors. Price differentiation can also occur in Brazilian market because firm will be entering into the market and will be competing with already established players in the market. In order to cope with this strategic challenge, firm need to tailor its prices according to prevailing local competition. Localization of prices in Brazil can also offer the firm an opportunity to buy low in international market and sell at higher prices if market is ready to buy. Promotion Promotion activities of the firm are combination of different tools which are combined together to develop an effective marketing communication mix. All these factors are combined together to deliver value to the customer and help a firm to actually develop relationships with the customers. Standardization of message means marketing managers actually aim to relaying same message across all the markets and rely on the appeal and acceptability of that global message to attract new customers. This approach however, may not be successful in both the markets as Bright Eyes is not a relatively well known brand outside Nordic region. Firm can standardized some of its promotional activities while some other elements of promotion need to be adapted to the local situation. For example, firm can adapt same methods of selling in both the markets however; language and tone of advertising may be different in both the markets. Further, the staff involved in direct selling need to adapt to local cultural ethics in order to successfully sell out in both the markets. It is critical to understand that standardization of promotional activities may reduce cost however, it can be done at the expense of the fact that customers in each country are relatively different. The cultural differences in overall tastes and preferences therefore need to be taken care of specially in Brazilian market. It is also critical to understand that in Brazil, the industry is regulated with select retailers authorized to sell eye glasses. This fact that therefore may restrict firm’s ability to potentially how we can develop our promotional activities specially the personal selling. Distribution Due to channel variation, it may be difficult to standardized the distribution activities of the firm. In Denmark, firm can utilize its own stores and other retailers to distribute its products however, in Brazilian market same has to be done through pharmacy stores. The relative restrictions on who can sell prescription eye glasses therefore may limit the choice in terms of standardizing distribution activities. Bright Eyes therefore need to adapt to the local regulatory needs in order to effectively develop its distribution network within the country. Organization of Marketing Activities In order to effectively ensure that marketing activities are carried out according to the overall plan of the organization, it is critical that overall organization of international marketing activity is carried out effectively. It is argued that a firm’s international campaign largely depends upon two important factors of nature and suitability of marketing strategy and secondly its organizational structure which is in place to handle international marketing activities of the firm. (Gilligan & Hird, 1986) There are different factors which need to be considered when deciding about coordinating marketing activities including the overall complexity of the organizational structure, level of authority, communication, rewards and punishment incentives etc. (Phillips, Doole, & Lowe, 1994). Since, Bright Eyes will be entering Brazilian market through a joint venture; therefore coordination of marketing activities in Brazilian market will be done with the local joint venture partners. To achieve this purpose, Bright Eyes will depute a local sales force however, the overall direction will be given from head office. Bright Eyes will be utilizing local sales force of its joint venture partners in Brazil whereas the distribution channels will be controlled through the international operations. As such Head Office will have significant role in determining the product related aspects of marketing mix whereas issues such as promotion as well as pricing decisions will be taken by the local operations. There will be a dedicated team headed by a marketing head of the organization which will look after the affairs of Brazilian market. This will involve a team of 3 individuals working under the leadership of marketing head at our international office who will be actively involved in providing and helping support required at the head office level. product related decisions will be taken at the Head Office level whereas setting up prices as well as customizing promotional activities according to local culture and environment will be the responsibility of local team working together with our strategic partner. In Danish market, however, the overall marketing activity will be controlled through head office however; local management will be actively involved in recruiting local sales force which will be deployed at the stores. Conclusion Bright Eyes will enter into Brazilian as well as Danish market however, mode of entry in both the markets will be different. In Brazilian market, firm will enter through forming a joint venture whereas in Denmark, a wholly owned subsidy will be established. Firm will attempt to achieve a balance between adapted as well as standardized approach in its marketing mix decisions. Some elements of marketing mix will be standardized whereas some will be adapted according to local situation in the market. Product related issues will be mostly standardized with active participation from head office whereas other decisions such as pricing as well as promotional activities will be designed based upon local conditions and business environment. In Denmark, however, firm will be mostly using an standardized approach as the market is relatively accessible and have same dynamics which are currently been experienced by the firm in its home market. Bibliography Bradley, F. (2005). International Marketing Strategy. New York: Financial Times/Prentice Hall. Calantone, R., Cavusgil, , S., Schmidt, J., & Shin, G. (2004). “Internationalization and Dynamics of Product Adaptation. An Emperical Investigation. Journal of Product Innovation Management, 21, 185-198. Carl Arthur Solberg, & Durrieu, F. (2008). Strategy development in international markets: a two tier approach. International Marketing Review, 25(5), 520-543. Data Monitor. (2010, June). Eyewear in Brazil . Retrieved April 24, 2012, from Data Monitor: http://www.euromonitor.com/eyewear-in-brazil/report Gilligan, C., & Hird, M. (1986). International Marketing: Strategy and Management. New York: Taylor & Francis. Kleindl, B. (2006). International Marketing. 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