Global Marketing Research Assignment - Essay Example

Global Marketing Research Assignment Table of Contents Introduction 3 2. Justification of Market Choices for H&M 4 2 Brief about the Organisation 4 2.2. Analysing Key Rational Factors of the Selection of Target Markets 4 2.2.1. Economic Performance 5 2.2.2. Socio-Cultural Factor 6 2.2.3. Industrial Openness and Resource Availability 7 3. Analysing the Marketing Environments of the Nations 8 3.1. Demographic Passage of the Nations 8 3.2. Trade Policies and Legal Obligations 9 3.3. Infrastructural Development 9 3.4. Technological Advancements 10 4. Comparison and Contrast of the of the Strategic Marketing Challenges in Both Nations 11 4.1. Keeping up with Changing Marketing Trends 11 4.2. Brand Management 11 4.3. Connecting 13 5. Recommending Market Entry Mode and Strategy for Operating in Each Market 13 5.1. Entry Mode Strategy for Indian Market with Justifications 14 6. Conclusion 15 References 17 1. Introduction The definition of marketing is always applicable for any organisation, whether it sales products/services within the domestic or across the international borders. It has been with the expanding effects of globalisation that marketing of goods and/or services internationally is argued to help in broadening scopes for organisations towards better achievements and growth. The concept of global marketing not only describes selling of goods and services across the international borders, but it also defines the key dimensions and attributes associated with the principle concept of sound marketing. According to the modern concept of global marketing, it has been referred as a practice of establishing long-lasting relationship by planning, implementing and controlling the pricing, promotion, conception and distribution of goods, services and/or ideas that help satisfying the needs of both the customers and the organisation as well (Food and Agriculture Organisation, 2014). The nature of global marketing environment has long been witnessed as influenced by a number of key factors associated with the demographic, political and socio-cultural dimensions. In relation to the current pace of globalisation, the strategic measures and practices adopted by organisations towards obtaining better control and managing capability can also be regarded as a key nature of global marketing environment. Therefore, with due emphasis on the recent competitive business world, the assignment tends to conduct an analysis of the global marketing environment for Hennes & Mauritz AB (H&M), wherein it seeks to expand its business operations in two of the fastest developing countries including India and Brazil. In order to assess the key objective, the discussion hereunder includes critical assessment of the selected countries along with justifying the choices with regard to the business offerings of H&M. In addition, the report also analyses the two distinctive marketing environments of India and Brazil, in which, the products of H&M will be marketed. A critical emphasis has also been delivered towards comparing and contrasting the strategic marketing challenges that might arise while the organisation will operate in these targeted business markets. At the end, the report ensures to recommend a relevant and justifiable market entry mode and operational strategy for H&M for each targeted nation. 2. Justification of Market Choices for H&M 2.1. Brief Description about the Organisation According to the current business performance of H&M, the organisation has built its strong brand image by delivering designed fashionable garments and sports apparels following the competitive pricing strategy across different developed and developing national markets. Founded in the year 1947, H&M is a Swedish manufacturer and marketer of fast-fashionable apparels for the customers, irrespective of their age groups and income levels (H&M Group, 2014). Currently, the organisation operates across 55 global markets with more than 116,000 numbers of dedicated employees. Moreover, H&M has also been recognised to achieve major recognition from its online apparel retail stores that are currently playing a crucial role for the organisation in 12 different nations across the globe (1H&M Group, 2014). 2.2. Analysing Key Rational Factors of the Selection of Target Markets The selection of markets has been one of the crucial and major strategic decisions for the organisations to build long-term sustainability. In relation to the competitive environment in the emerging clothing and apparel business industry, an appropriate selection of target markets help organisations to get accustomed with their strong brand position (Rugraff & Hansen, 2011). In this report, the target business environments selected for H&M are India and Brazil respectively. In correspondence, the following discussion will critically analyse the key rationale factors behind the selection of these emerging markets for H&M. 2.2.1. Economic Performance The economic performance of the selected target markets has been prioritised, as the major consideration for H&M to market its fast-fashion goods. The products that are generally marketed by the company demand a feasible and considerable affordability of the targeted consumers. To be precise, H&M fundamentally deals with designing and manufacturing of apparels for different customers irrespective of their income level parities (Saxena, 2012). India: With regard to the current economic performance of India, the country is counted among the fastest developing nations in the world. According to the current economic performance of the country, increasing growth of Gross Domestic Product (GDP), balanced annual inflation rate along with transformative changes in Foreign Direct Investment (FDI) statistics have obtained wider attention from the global marketers (The World Bank Group, 2013). According to the current statistics, the average Per capita GDP has been observed to achieve US$ 1255.25 in 2012-2013 with a growth of 10.26% than the record of 2011-2012, i.e. US$1135.92. Therefore, significant growth with stability in its GDP rate can be further attributed as a major factor to encourage H&M’s expansion in the country (Ministry of Statistics & Programme Implementation, 2014). Brazil: Concerning the economic development trends witnessed in relation to Brazil, the country can be observed to have gained the attention of various foreign investors, due to its robust economic performances. The economic environment of Brazil has achieved long-term financial growth in terms of GDP, currency rates, lower interest rates and higher growth of middle-income level populations. In this context, the government incentives towards maintaining continuous growth of the national economy with regard to the Foreign Direct Investment, along with other different economic developmental dimensions in order to substantially increase the level of annual FDI inflow within the country (Rodriguez 2005). 2.2.2. Socio-Cultural Factor India: The substantial augmentation of economic performance has also been recognised to bring transformative changes in Indian markets. The changing trends of using products of foreign brands can be regarded as a major opportunity for H&M to obtain a large group of valuable users in the nation. In addition, adequate openness towards accepting fast-fashion merchandise from different renowned global brands also depicts the changes taking place in the socio-cultural domain of the country (Saxena, 2012). Brazil: Brazil has long been witnessed as the commonly targeted market for the organisations dealing with street-fashion apparels. The socio-cultural environment of the nation tends to involve major scope for the global brands in terms of marketing their products. Moreover, the greater influence of the western countries along with appropriate blend of population from different developed countries can provide a major support to H&M for obtaining strong sustainability while doing business in Brazil (Rodriguez 2005). 2.2.3. Industrial Openness and Resource Availability Industrial openness in India can also be regarded as a major aspect, which can further facilitate H&M to effectively perform its business operations. The continuous economic reformation as well as rapidly increasing investment and trade liberalisation provides major support for both India and Brazil to achieve their superior trading power within the global economy. In relation to the present business scenario, both the nations have been identified as favourable markets to accommodate multinationals and allow them to sophistically perform their vivid range of business operations (Export-Import Bank of India, 2011). The adequate availability of resources along with increasing number of low cost but high skilled professionals in India has also acted as a major factor to facilitate H&M in expanding its business operations to the country. Additionally, the gradual process of minimising trade barriers, industrial deregulations as well as opening trade facilities for the global marketers have emerged as the major and remarkable factors in both India and Brazil that can further empower the organisation to proactively execute its functions in both these markets (Neogi, 2013). Moreover, there are various other factors including greater availability of potential workforce, considerable lower amount of employee wages, and sophisticated environmental aspects are few of the major aspects that can substantially build a strong and sustainable image of H&M in both India and Brazil (The World Bank, 2013). 3. Analysing the Marketing Environments of the Nations Over the past few decades, the business environments of both India and Brazil have been attaining wider attention of the multinationals due to their extensive capability of providing competitive advantages to the organisations from different parts of the world. Illustratively, it becomes apparent that similar to different emerging market environments, India has also undergone dramatic renovation in its institutional and competitive business environment. The transformational growth achieved by both India and Brazil has been accustomed due to various influencing factors of both these nations (Chung & Enderwick, 2001). Accordingly, a few of the key actors playing a decisive role in both these countries have been briefly analysed below. 3.1. Demographic Passage of the Nations With reference to the current business scenario, it has been critically identified that the demographic contexts of both India and Brazil present the key determinants behind their radical transformation in the recent decade. In this context, the explosive growth of population along with fiercely growing numbers of middle-income level groups can be regarded as a major demographic scene for both the nations. In the context of India, emerging population and rising numbers of middle level income groups have created a major opportunity for the foreign marketers to expand their business units into the country (Saxena, 2012; Rodriguez, 2005). Correspondingly, the demographic scenario of Brazil also tends to involve an increasing numbers of middle-level income groups that can substantially enable H&M to successfully perform its marketing practices (Rodriguez, 2005). 3.2. Trade Policies and Legal Obligations The trade policies along with legal obligations of the host countries have long been witnessed as a major set of factors determining long-term sustainability of the multinationals. In relation to the current trade policies and legal obligations of both India and Brazil, the nations conserve sophisticated set of factors that not only influence multinationals to build their strong set-up, but also to ensure adequate motivation to the organisations to expand their subsidies across the different states within the country. In this context, adequate trade liberalisation regarding strategic measures and practices of the foreign entrepreneurs can be duly accepted as a major aspect in the trade policies of both India and Brazil. Moreover, deregulatory decisions in terms of both trade inward and outward policies in both business environments of India and Brazil would substantially facilitate H&M to establish its strong brand position (Pathak, 2009). 3.3. Infrastructural Development Throughout the last two decades, the business environments in both India and Brazil have radically transformed their infrastructural facilities towards betterment. The availability of transportation systems along with wider domestic connectivity in both India and Brazil has been observed to facilitate the foreign companies to increase their trade operations substantially. Therefore, it can be considered that the rapid transformation of the infrastructure development would also be considered as a major key element for H&M to gain the required opportunities when expanding in the global markets. Correspondingly, the strategy of continuous development of the infrastructure would further facilitate the company to avert risks that might be generated due to the ineffective infrastructure facilities and scarce resources while performing its wide range of business activities across these two emerging business locations. 3.4. Technological Advancements In relation to the modern business environment, technology has emerged as one of the key attributes for the nations that can increase the interests of the multinationals while seeking expansion of subsidiaries in a targeted host country. In relation to the present day context, both India and Brazil has experienced continuous development within their technology domains. The streamlined Information and Communication Technologies (ICTs) that facilitate modern organisations to successfully perform their administrative, operational, managerial and promotional activities can also be considered as a major set of factor in both India and Brazil. In this regard, the technology based strategies can further be attributed to help H&M in performing its wide range of operational and marketing activities while conducting business activities in Indian and Brazilian markets. Nevertheless, the evolution of internet networks across each parts of both the nations can also enable the company to obtain adequate support in promoting its products online (Ondracek & et. al, 2012; Saxena, 2012). In addition, there are numerous other factors, such as free trade policies used for linking inward and outward transactions along with changing tariffs in India and Brazil, which have also been recognised to further help H&M to successfully perform its different operational and marketing activities (Leonard, 2013). 4. Comparison and Contrast of the of the Strategic Marketing Challenges in Both Nations As can be observed from the above-conducted discussion, marketing environments of both India and Brazil provide major opportunities for the multinationals. However, a number of risk factors can disrupt the foreign marketers while performing their different marketing activities in these two emerging nations. In this regard, the following factors critically compare and contrast different marketing challenges that might reduce the potential competitiveness of H&M while conducting business in these nations. 4.1. Keeping up with Changing Marketing Trends Dealing with challenges associated with trends is one of the common and phenomenal challenges for the multinationals while operating subsidiaries in the foreign markets. In relation to H&M, the organisation might face major challenges due to the changing marketing trends in the Indian street-fashion market. As the marketing trend of the nation involves different influencing factors, including changing demands of the fast-fashion apparels along with vast cultural differences of the customers, it might also convey major strategic challenges for H&M in the Indian markets. However, the probability of strategic challenges associated with marketing trends in Brazil is considerably lower than India, as the country is highly influenced by the fast-fashion apparels market (Saxena, 2012). 4.2. Brand Management Brand management or branding of different products to be offered by H&M in the Indian market can also be considered as a major challenge for the company. In this regard, adequate economic assistance, adaptive culture along with emotional appeal of the consumers can significantly influence the strategic marketing practices of H&M. However, in the context of branding related challenges, the Brazilian marketing environment might induce risks associated with the lower economic levels of the population. Therefore, branding can also be regarded as a major strategic challenge for H&M in order to successfully obtain its strategic marketing objectives (Saxena, 2012). 4.3. Connecting In the context of the recent marketing environment, connecting organisations via technology with customers and with other marketing partners is often observed to create major obstacles for the multinationals while operating in the overseas locations. In case of India, H&M might undergo the challenge of connecting people with the various offerings of the organisation due to ineffective range of communication tools (Pathak, 2009). In this regard, the marketing activities of H&M might face major challenges to communicate its fast-fashion products in different sub-urban areas. However, in the context of Brazil, the strategic marketing practices of the organisation might experience constraints in connecting with the other marketing partners. The organisation may also face a major challenge of building strategic alliance due to insufficient assistance delivered by local organisations, who are also dealing with fast-fashion apparels within the nation. 5. Recommending Market Entry Mode and Strategy for Operating in Each Market Organisations, in the present competitive business world, tend to incorporate adequate measures upon building effective strategies, especially while seeking for expansion of their business units into different overseas markets. An effective entry strategy significantly incorporates various decisions in relation to the influencing factors persistent within the host country (Chung & Enderwick, 2001). In general, the macro-environmental factors, such as political, economic, social and technological attributes, form the major considerations for global marketers that are needed to be identified prior to making decisions when entering into any foreign market. In this regard, it is widely observed that multinationals commonly opt for joint ventures, mergers and acquisitions, licensing and franchising, as well as contract manufacturing techniques among others when penetrating an international market such as India or Brazil (Lambin, 2007). 5.1. Entry Mode Strategy for Indian Market with Justifications With due regards to the current marketing environment of India, it is suggestive that forming of a strategic alliance would prove as an effective strategy for H&M to build its strong position in the emerging fast-fashion industry of the nation. The practice of forming strategic alliance in the emerging fast-fashion business sector of India will also facilitate H&M to widen its scope of expansion in new markets and generate a new segment of customers across the country. Moreover, the strategy will also help the organisation to minimise potential risks that might be derived from the changing political scenario along with future economic challenges of the nation (Pathak, 2009, Saxena, 2012). On the other hand, the entry mode strategy for H&M in Brazil will centrally focus on licensing and franchising strategies to accumulate adequate growth of its different brands across the country. In this context, the licensing and franchising strategies of H&M would enable the company to increase brand awareness on the customers. Moreover, it will also enable the company to substantially reduce various risks that might arise from the competitive fast-fashion rivals existing in different growing markets of the nation (Leonard, 2013). 6. Conclusion Since the last two decades, the international marketing environment has been undergoing a major revolution in terms of acquiring interests of the global marketers. In relation to the present economic transformation of these particular nations, it can be widely accepted that the multinationals operating in diverse locations contribute a significant portion of the economic transformation to the host countries. Correspondingly, when considering the stable economic position of both India and Brazil, it can be apparently observed that the nations have been found as quite successful in grasping the attention of the multinationals. The most encouraging factors discussed in the above sections, such as economic transformation, socio-cultural environment along with industrial openness and greater availability of valuable resources in both India and Brazil, can significantly support H&M to establish its strong brand position. The nature of the marketing environment in both India and Brazil provides major set of opportunities for the global marketers to build their long-term sustainability. In this regard, the countries include a major set of influencing factors that reacts to build a sophisticated nature of their marketing environments for the multinationals. The demographic scene, and trade policies and obligations of both India and Brazil have been identified as major determinants for H&M in order to successfully achieve its commercial objectives. In addition, the advanced technological aspects and continuous evolution of the infrastructure facilities are also few of the major considerable factors that can substantially provide a major support to the organisation while performing its fast-fashion apparel business in both India and Brazil. With due regards to the possible risk factors and challenges, both Indian and Brazilian marketing environments will require distinctive entry mode strategy for H&M. In order to achieve the desired business objectives in the Indian market, forming a strategic alliance with few major emerging fast-fashion apparel marketing companies within the nation would play a crucial role for H&M. On the other hand, the licensing and franchising strategies suggested for the Brazilian marketing environment would lower various potential risks that might negatively affect the organisation during its international expansion. References Chung, H. F. L. & Enderwick, P. 2001. An Investigation of Market Entry Strategy Selection: Exporting vs. Foreign Direct Investment Modes—A Home-host Country Scenario. Asia Pacific Journal of Management, Vol. 18, pp. 443-460. Export-Import Bank of India, 2011. Openness and Growth of the Indian Economy: An Empirical Analysis. Occasional Paper No. 150, pp. 5-99. Food and Agriculture Organisation, 2014. Chapter 1: Introduction to Global Marketing. The Evolution of Global Marketing. 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