Target Market for Dishwashers in the United States and Southeast Asia - Research Paper Example

Role of Marketing Manager and number: Table of Contents Introduction 3 Four Utilities of Customer Value for Dishwasher 3 Target market for dishwasher in United States and in Southeast Asia 5 Competition in the US and Southeast Asian market 6 Segmentation Targeting and Positioning of Dishwasher in Southeast Asia 7 Targeting the Foreign market 9 Environmental trends in foreign market affecting sales of the product 10 Product Campaign based on 4P’s of marketing 10 The U.S. and International Ethical Marketing Considerations 12 Conclusion 13 References 14 Introduction A shift in consumers from low income group to middle income group has been recognized due to an increase in the disposable income of the consumers. The increase in disposable income of the consumers has led to a shift in the purchasing behavior of consumers with regard to various consumer products (Future Market Insights, 2014a). In this research paper, the role of marketing manager is presented for introducing a product in a foreign market which already exists in the United States. The product chosen for this paper is dishwasher which is a common appliance in majority of home kitchens in the USA and foreign market chosen where the product has sales opportunities. The foreign market chosen for this research paper is Southeast Asian market comprising of Indonesia, Thailand and the Philippines. Four Utilities of Customer Value for Dishwasher Form utility: Form utility refers to the product or service offered to customers by a company. The marketing team carries out a widespread research about customer needs to develop a pattern for a product or service in order to derive form utility. The product development team then develops a product or service that provides customers with important business benefits like improved productivity, lower costs, competitive advantage and easier installation and meets the needs of the customers (Armstrong & Kotler 2014). The marketing team creates form utility by converting customer needs into product or services that carry value. In this paper, the product offered to the customers is dishwasher by the company. After conducting extensive research, the product development team developed two types of dishwasher based on application, one directed for residential use and the other one directed for the food services industry sector. The residential dishwasher created utility in the form of time management, better cleaning, and saving energy and water. The industry dishwashers created utility in the form of increase in productivity, lower manual labour costs, competitive advantage, better cleaning and lesser amount energy and water consumption. Possession utility: The utility of possession offers the customers ownership of the product or service which allows them to obtain benefits in their own business or in daily usage. If the customers are able to increase productivity of their own product after using the product or service offered to them by the company, then the possession has given them a strong benefit and possession utility is maximised (Armstrong & Kotler 2014). The dishwasher creates possession utility both in the residential sector and food services industry sector. In residential sector, dishwashers are an added advantage to the hectic work life schedule of the household consumers while in the industrial sector; it increases the productivity of the hotels, restaurants and cafe. Time utility: The utility of time is ensured by making the products and services available to the customers when they need them. Logistics plays a significant role in improving the time utility. An efficient supply chain is required to ensure that the products are delivered on time. Delay in delivery of products may adversely affect the customers own productivity and efficiency of the company. Companies like Bosch, GE electric and Electrolux that offer a wide range of dishwashers have efficient and well structured distribution network that provides timely delivery of goods required by the consumers. Electrolux provides free nationwide shipping, whereas, GE has an industry-leading distribution network (General Electric Company, 2015). Place utility: Place utility is created by ensuring the availability of a product or service in a location that is suitable to the customers. Place utility in the distribution of dishwasher is created by the eminent dishwasher companies in the United States through departmental stores like Sears, Best Buy Company Inc., Home Depot and Lowe’s Inc. They provide the product in a location that is convenient to the customers. Along with the brick-and-mortar retailer, the internet retailers also play a significant role in creating place utility for the dishwashers. Target market for dishwasher in United States and in Southeast Asia United States (US): The target market for dishwasher in the US can be divided into many sectors like domestic households, food services industry sector comprising hotels, restaurants and cafe, hospitals, hostels of schools, colleges and universities. Southeast Asia: The primary target market for dishwasher in the Southeast Asian countries such as Indonesia, Thailand and the Philippines would be the food services industry comprising of cafe, restaurants and hotels. It would be a failure if the dishwasher company in the initial stage concentrates on the household sector as their target market because, in the US dishwashers are a common appliance in the majority of home kitchens, whereas, in Southeast Asian countries dishwashers are a luxury good that cost an average of $730 per unit which is more than the monthly cost of a fulltime maid in countries like Thailand, Indonesia and the Philippines (Glyph Language Services, Inc. 2015). The growth in the market for dishwashers in Philippines has been limited as the majority of households wash their dishes manually. The lower and middle-income group considered washing dishes manually is more cost efficient while higher income households employ maids. The growth in the local market for dishwashers is affected by this culture (Tompson & Kennedy, 2013). Maximum consumers continue manual dishwashing in spite of the accessibility of lower priced dishwashers in the country. However, growth (CAGR) in this category is expected to be 2% from 2015 to 2019 (Future Market Insights, 2014b). Dishwashers are being accepted and used by Thai consumers more than in the past, but are still not particularly popular like other consumer appliances (Future Market Insights, 2014b). Dishwashers were considered luxury appliances and demand for dishwashers was limited to high-income households in large cities or emigrant families in Indonesia (Euromonitor, 2015d). Competition in the US and Southeast Asian market United States: A high sales in dishwashers was recorded in 2013 and 2014 stirred by homeowners who initiated a multistage cooking appliance replacement cycle. With an estimated 37% market share, Whirlpool Corp led the volume of sales in dishwasher in 2014 (Companies and Markets, 2015). The different companies that sell dishwashers in the United states and pose a threat to their competitors are Bosch, KitchenAid, Siemens AG (home appliances), General Electric Company, BSH Household Appliances Manufacturing Pvt. Ltd., Dndy Group, AB Electrolux, Heartland Appliances, Whirlpool, LG Electronics ,Sears Brands LLC and IFB industries Ltd. Due to high level of competition, the home appliances industry is experiencing partnerships across the value chain in order to expand database and strengthen sustainability in the long run. Eco-friendly and climate control dishwashers leading to energy efficiency has been developed by Siemens AC (home Appliances) (Companies and Markets, 2015). On the other hand, Whirlpool introduced 6th Sense Live Technology dishwasher which can be connected to local Wi-Fi network with the product in order to provide smart grid system (Whirlpool. 2015). This system provides instruction to the dishwasher in terms of low consumption of energy. The competition in the dishwasher industry in the United States of America is strong, in addition to traditional competitors such as Electrolux, Maytag, Kenmore and GE there are new and expanding foreign competitors such as Samsung, Fisher and Paykel, Bosch and LG (Euromonitor, 2015a). The customer base of the United States of America is differentiated by large refined trade customers who possess many choices and demand competitive products and prices. Competition in the market is based upon various factors such as cost, selling price, distribution and other financial incentives, performance innovation, product quality and features. Southeast Asia: In Philippines, the local market for dishwashers is dominated by multinationals namely Indesit Company and General Electric. Indesit Company’s share in 2014 was 42%, higher than General Electric whose market share was 32% (Euromonitor, 2015b). The brands sold in local market are imported and there is no local brand of dishwashers in the Philippines. In Thailand, Electrolux was the leading company with 30% share in dishwashers in 2013, followed by Smeg and Bosch & Siemens Home Appliances (Euromonitor, 2015c). In Indonesia Electrolux, Wahana Hasil Usaha and Tecnogas were the leading dishwasher companies in 2014 (Euromonitor, 2015d). Segmentation Targeting and Positioning of Dishwasher in Southeast Asia Foreign Market Segmentation Market segmentation involves grouping your various customers into segments that have familiar needs or will react similarly to a marketing action (Keega, 2008). Every segment will react to a different marketing mix strategy, with each offering alternate growth and profit opportunities. The foreign market can be segmented on the following basis: Geographical Segmentation is done on the basis of continent, country, state, province, or city that the customer group resides. The customer group for dishwashers in this case resides in countries like Indonesia, Thailand and the Philippines. Demographic Segmentation is done on the basis of characteristics of the customers. The attributes of demographic segmentation are age, gender, income bracket, education, job and cultural background (Armstrong & Kotler 2014). The foreign market for dishwasher can be segmented on the following demographics: Income bracket on the basis of lower income group, middle income group and higher income group. The different types of dishwashers like Built-in Under counter dishwasher, Drawer dishwasher, Portable free standing dishwasher and Counter top dishwasher can be differentiated by features on the basis of income group (Advameg, Inc., 2015). Gender-wise segmentation can be done in order to target the working males and females. Age-wise segmentation can be done in order to target the middle aged and the youth. Psychographic Segmentation: It is done on the basis of the lifestyle of the customers. The attributes of psychographic segmentation are social class, lifestyle, personality, opinions, and attitudes of the customers (Armstrong & Kotler 2014). The foreign market for dishwasher can be segmented on the following psychographics: Social class: The middle class and upper middle class consumers can be considered as prospective buyers. Lifestyle: Consumers with hectic work life can be targeted as prospective buyers. Behavioural Segmentation is done on the basis of the behaviour of the customer. The attributes of behavioural segmentation are brand preference, prior purchases, online shoppers and shopping centre customers (Armstrong & Kotler 2014). The foreign market for dishwasher can be segmented on the following behavioural attributes: Online shoppers: the online shoppers can be attracted through various promotional schemes. Ensure search engine optimization for prominent visibility in the virtual market. Shopping centre customers: attract the customers of the foreign market through different promotional activities. Targeting the Foreign market After segmentation is conducted, depending on the abilities of a company, resources needed to enter a market and considering the competitor’s capability, the target market is decided. Two strategies are adopted for selecting the target market for dishwashers: Concentrated Targeting: In this approach, a particular market is selected on which the marketing efforts are targeted (Armstrong & Kotler 2014). In this particular case, the initial target market for dishwashers should be concentrated particularly on the food services industry sector consisting of the cafe, restaurants and hotels. Multi-segment Targeting: In this approach, different marketing strategies are prepared for the different market and focus is given on two or more market segments segments (Armstrong & Kotler 2014). For dishwashers, when the introductory stage is successfully accomplished then the product can be targeted towards different segments of the market such as households, hospitals and hostels of schools, colleges and universities. Positioning in foreign market Positioning is developing a product and brand image in the minds of consumers. Improving a customers perception about the understanding of product or service is also a part of positioning (Constantinides 2006). The positioning of dishwashers in the foreign market must be done by focussing on the additional features offered with the main product. For example, Companies like Siemens AG (Home Appliances) have developed eco-friendly and climate control dishwashers leading to energy efficiency as a whole. On the other hand, Whirlpool introduced ‘Whirlpool 6th Sense Live Technology’ dishwasher which connects local Wi-Fi network with the product in order to provide smart grid system (Whirlpool, 2015). The smart grid system feature is programmed in such a way that it ensures the dishwasher saves time and energy consumption. Environmental trends in foreign market affecting sales of the product A significant issue for the financial and corporate world is the health of the planet. The environmental trends affecting the emerging markets are deforestation, food security, energy security, air pollution, urbanization, population growth, climate change and water scarcity (Miles, & Covin, 2000). Simultaneously, the risks due to the emerging environmental trends which may affect the sales of the product in the foreign market are financial risk, market and product risk, reputational risk, operational risk and regulatory and legal risk. The Thailand government in the year 2005 introduced the National Energy Strategy to employ the energy resources of the country, to support the development of new technologies and renewable sources (Singhapakdi, et al., 2000). Those companies engaged in developing the renewable energy of the country as well as producing or installing energy efficient technology will receive benefits from the government and enjoy certain financial incentives (International Finance Corporation). Product Campaign based on 4P’s of marketing Considering the 4P’s of marketing, the product campaign for dishwasher is developed: The first P refers to the product; ‘dishwasher’ that is offered in this marketing campaign. The different features of the product need to be considered like, functionality, quality, packaging, brand, safety and warranty. While establishing the product during the campaign, certain aspects like the target customers and the competitors of the product need to be considered. The second P refers to the price that is ‘how much’ money is charged from the buyers of dishwasher. The pricing aspect should include financing, discounts and allowances. While determining the price, following factors need to be considered such as, material costs, competitor pricing, product value and market conditions. Pricing also includes the cost incurred on different promotional activities. The right pricing strategy helps the company to reach its financial goals and fit the marketplace. The third P refers to the place, it means how the product i.e. dishwasher must reach the customers in order for them to purchase it. In case of online marketing, place or location refers to how easily customers can find the business through the internet (Keegan. 2008). Search engine optimisation of dishwasher must be carried out to help people find the product virtually. For the physical presence of the dishwasher in the foreign market, the product must be available in the department stores of Indonesia like Matahari, Pasaraya Grande, Metro, Sogo and Debenhams (Expat Web Site Association Jakarta, Indonesia. 2015). The fourth P refers to promotion which means to publicise the dishwasher in order to sell it. Promotion is a single term used to group together all communication activities intended to increase the sales of a product (Armstrong & Kotler 2014).. For the promotion of dishwashers in the markets of Indonesia, Thailand and the Philippines advertising through different media, personal selling involving relationship marketing and sales promotion consisting of consumer promotion, trade promotion and sales force promotion are used. The effectiveness of the promotional methods can be assessed by measuring the different behavioural effects like increase in user base, purchase frequency and decrease in price elasticity of demand. The U.S. and International Ethical Marketing Considerations The application of marketing ethics into the marketing strategies, marketing efforts and processes is known as ‘ethical marketing’ (Marketing-schools.org, 2012). It upholds responsibility, fairness and honesty in all advertising. Ethical marketing is not a directory of rules, but a general set of guidelines to aid companies as they assess new marketing strategies. International ethical marketing advises marketers to comply with regulations and standards established by governmental and professional organizations, maintain transparency, consumers should be treated fairly, advertising must be clear and distinct, personal ethics should be pursued by the marketing professionals and during marketing decisions ethics should be discussed explicitly (Sullivan, P., Smith, M., Esposito, M., 2012). International business ethics is an intricate issue as ethical standards are different depending on the location. In Corporate governance, issues like working conditions, targeted marketing, bribery and corruption are dealt with prime importance to set up an ethical perspective on which it can work. Importance of corporate responsibility in large organizations from developed nations is increasing and the way they operate in third world countries. Due to corporate governance, large organizations are emerging their own systems of dealing with ethical issues. Ethical corporate governance is concerned with encouraging organizations to be clear in their operations, finances and performance in domestic and international markets. The transparency forces companies to maintain accountability with respect to the stakeholders. Environmental issues, human rights and increase in the global standard of living are encompassed by companies who claim to be socially responsible. Conclusion In this research paper, it is attempted to analyze the market opportunities of dishwasher in the markets of Indonesia, Thailand and the Philippines which is a ordinary appliance in the United States. It is inferred from the research that sales volume of dishwashers is expected to increase in Indonesia, Thailand and the Philippines with 1%, 7% and 2% CAGR respectively. By adopting the segmentation, targeting and positioning strategy, the marketing manager attempts to successfully introduce the product in the foreign market among the competitors. References Advameg, Inc. (2015). Industry Leaders. Retrieved from http://www.referenceforbusiness.com/industries/Retail-Trade/Household-Appliance-Stores.html Armstrong, G. & Kotler, P. (2014). Marketing: an introduction. New York: Pearson Education. Companies and Markets. (2015). Dishwashers in the US. 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Using geographic information systems for locating potential customers of a small business. Entrepreneurial Practice Review, 2(4). Whirlpool. (2015). Dishwashers. Retrieved from http://www.whirlpool.com/Kitchen-1/Kitchen_Dishwasher__Cleaning_Dishwashers-3/102110034/ Read More