Marketing Strategy of Thyssenkrupp Expansion in Brazil - Business Plan Example

Marketing Strategy of Thyssenkrupp Expansion in Brazil Table of Contents Table of Contents 2 2.0 Situation Analysis: 3 2 SWOT: 4 2.2 PESTLE Analysis of Brazil: 5 3.0 Marketing Strategy and Objectives: 6 4.0 Segmentation, Targeting and Positioning: 7 5.0 The Marketing Programmes: 9 6.0 Control and Evaluation: 11 7.0 Conclusion: 12 Works Cited 13 Name of the Student Name of the Professor Date Marketing Strategy of Thyssenkrupp Expansion in Brazil 1.0 Introduction: With the growing competition in the corporate segment, business houses are engaging in a constant strategy evaluation process for ensuring market and business sustainability. Internationalisation has become one of the most extensively followed programmes by the business firms for business expansion and growth (Hirshleifer and Hirshleifer, 16-19). This report will focus on the expansion and sustainable policy followed by German multinational conglomerate ThyssenKrupp for entering the Brazilian market. Their production and services have been divided into two parts namely, materials and technologies (Group, ThyssenKrupp.com). Although known as one of the leading steel producers of the world, their Brazil venture will be mainly for increasing the output of elevators and escalators in the growing market and infrastructure of Brazil. 2.0 Situation Analysis: The situational analysis for ThyssenKrupp’s Brazil venture will focus on evaluating the internal strengths and weaknesses of the company and comparing them with the Brazilian market with the help of a PESTLE analysis 2.1 SWOT: Strengths: ThyssenKrupp is presently operating in more than 80 countries with employee strength of over 150000 (Group, ThyssenKrupp.com). Huge network of brands within the conglomerate consisting of 720 firms. Focuses on geographical diversity and has over 2200 manufacturing sites all over the world (Group, ThyssenKrupp.com). Primary focus on research and development and with a team of more than 3000 experts operating in 85 development centres (Group, ThyssenKrupp.com). Weaknesses: Brand equity of the firm is falling in the local and international markets because of the numerous pending lawsuits against the business house (Ghoshal, 425-440). Low risk taking tendency results in losing potential opportunities. Opportunities: Efficient strategic development planning process that includes change management process, portfolio optimization and performance enhancement in global market with international expansion policies (Aaker, 39-43). Strategic contracts with Governments of nations, securing a direct entry into the foreign markets. Threats: Extreme competition from Schindler Holder Inc., Mitsubishi Corp., United Technology Corp. Shortage of renewable materials is increasing the production cost. Threats from domestic firms (Eggert and Ulaga, 107-125). 2.2 PESTLE Analysis of Brazil: Political: The Brazilian Government mainly focuses on monetary policies for boosting the growth of the business sector of the nation. Furthermore, an US investment of $240 billion has strengthened the local economy. However with rising prices, the inflation rate of the country is expected to further reduce to 4.39% in the next 2 years. The Government of Brazil also suffers from prevalent corruption which impacts their relationship with foreign business houses (Deane, McDougall and Gargeya, 2007) . Economical: According to the Foreign Direct Investment (FDI), Brazil is currently ranked as 5th above Germany (6th) (Foreign Direct Investment (FDI) Confidence Index, Atkearny.co.uk). But, they have slipped from their previous position of 3rd in the year 2013. The industrial segment of the economy forms 28% of the total business sector of Brazil and focuses on developing strong monetary policies (McEvily, Eisenhard and Prescott, 713-723). Rapid growth of infrastructure of the nation is also an added advantage of operating in Brazilian market. Social: The Brazilian population is increasingly dominated by the middle income group forming 50% of the overall population. However, Brazilian population is open to foreign market products and investors which create a significant opportunity for foreign investors to enter the market (Ghoshal, pp- 425-440). Technology: In comparison to other BRIC nations, the technological growth in Brazil is slow. However, the information and technology of the country is experiencing rapid growth and has developed efficient communications systems. Also the rate of adaptation of Brazil has been measured as $99 (Goerzen and Beamish, 1289-1306). Legal: Every business firm operating within the geographical jurisdiction of Brazil has to register with the Trend Board. The registration process of a foreign company takes around 4 months to complete. Foreign investors have limited authority for participating in the media, financial, insurance and public health sectors. The tax policies differ from state to state which complicates the process of tax filling (McEvily, Eisenhard and Prescott, 713-723). Environmental: It is mandatory for business houses to contribute towards the development of the Amazon basin. Manufacturing organisations must develop or have an eco-friendly combustion technique for reducing their carbon footprint. 3.0 Marketing Strategy and Objectives: From the situational analysis, it can be gathered that ThyssenKrupp has the organisational resources and financial strength to invest in the Brazilian market. The growing infrastructure of Brazil, government support for foreign investors, adaptable consumer base are some beneficial factors for ThyssenKrupp. The first marketing objective of the company will be to identify the consumer behaviour and the factors influencing the consumer behaviour of the country. This will allow the company to understand the consumer response towards the products and develop them accordingly (Ghoshal, pp- 425-440). The next objective of ThyssenKrupp will be to position their brand in the market by establishing extensive communication with the consumers of the local market. As analysed in the PESTLE analysis, Brazilian customers are known to be open to new products and services in the market. However, this also signifies the limited brand loyalty among them. In order to ensure a sustainable growth and consumer support, ThyssenKrupp must position their brand in the consumer perception efficiently (Collis, 49-68). The final objective for ThyssenKrupp will be to gather information regarding the competition level in the local market. ThyssenKrupp generally avoids taking risks in unknown markets, knowing their competitors and consumers will reduce the risk factor and bring the company in its comfort zone. 4.0 Segmentation, Targeting and Positioning: Segmentation: The segmentation process of the Brazilian market for ThyssenKrupp will be primarily based on geographical and occupational categories. Brazil being a Latin American country, the geographical differences can influence the business process prominently. According to Eesley and Lenox (765-781), the geography of a place influences the choices made by its inhabitants. This will provide ThyssenKrupp with essential information regarding the local markets and consumer segments for focusing on. It is important for them to identify the value of their products in the local and the international markets. Brazil’s geographical location will also create future opportunities for ThyssenKrupp to enter the US market (Gruca and Rego, 115-130). Brazilian population primarily comprises of middle income groups of people. ThyssenKrupp should focus on the business and infrastructural population of the country. Targeting: As the products and services developed by the company are primarily for B2B, they will focus on the high income group such as domestic and foreign business owners, investors, landowners, real estate markets and infrastructure plans for infrastructural development. In order to do so, they can incorporate the society classification tools implemented in Brazil. This tool segments the population on various grounds based on A to E level classification (Social Classes in Brazil, TheBrazilbusiness.com). The nature of the products and services of ThyssenKrupp will target the segment that includes investors, business owners, landowners, etc. Thus, the target consumers of the concerned business are segmented in class A and B. Figure 1: Social Classification model for Brazil (based on gross monthly income of households) (Source: TheBrazilbusiness.com) Positioning: Positioning the brand in the market and consumer perception will be one of the fundamental functions to be carried out by ThyssenKrupp for ensuring sustainable business process in Brazil. The positioning process will begin with identifying the competitors operating in the market. The primary competitors operating in the Brazilian market are Schindler Inc. Orona and Canny Elevators (Horstmann and Moorthy, 337-365). Last year, Mitsubishi announced the acquisition of Brazilian elevator and escalator manufactures LGTech Mitsubishi Electric Enters Brazilian Elevator and Escalator Market, Mistusbishielectric.com. (Anderson and Vincze, 321-336) opined that for positioning a brand in a foreign market, acquisition or alliances of the existing firms operating in the market can be used. Considering these factors, the positioning of ThyssenKrupp will be based on diversifying their product and service features from their competitors. They can reflect their high brand equity to the consumers with the help of promotional and communication plans (Hunt and Morgan, 1-15). 5.0 The Marketing Programmes: The marketing programmes for ThyssenKrupp have been developed in relation to the marketing mix: Product: ThyssenKrupp has aimed for manufacturing escalators and elevators in Brazil considering the success of the existing manufacturers in the domestic market. Latin American countries such as Argentina, Mexico, Brazil has reflected huge potential for growth in the past three years with a constant economical boost up. ThyssenKrupp can bank on this early opportunity by creating a steady manufacturing base in Brazil and entering the US market (Matsuda and Hirano, 138-145). On the other hand, the rapid industrialisation and growth of infrastructure in the country reflects high opportunity for the selected products. Place: The selected place for development of the manufacturing units will be Bahia and Mato Grosso. These places have been selected based on their geographical suitability. State of Bahia is a coastal state within the country of Brazil. It can be considered as the gateway for ThyssenKrupp to enter the main markets of Brazil such as Sao Paulo and Rio (OSullivan and Abela, 79-93). Mato Grosso, on the other hand is based near the borders of Bolivia and Paraguay which will creates a platform of ThyssenKrupp to reflect their products and services to other Latin American countries. The selected locations help in focusing on the domestic and international growth probability of this company. Promotion: The promotional activities of ThyssenKrupp will mainly rely on television ads and social media communication. The company will initially target to create customer awareness and reflect their high international brand value to the potential customer base (Brusoni and Prencipe, 209-216). Apart from these, organising meetings and events with business owners, investors and government officials for reflecting the quality of their services and products will also be an added feature in the promotional strategy of ThyssenKrupp. Price: The pricing process of ThyssenKrupp is generally developed in accordance to the consumer purchasing power and market suitability of their products. For instance, in markets with high sales the products are priced based on the market rate but in markets where the number of sales is low, the product price is set high to meet the operational expenses. For Brazil, the pricing strategy will focus on premium pricing and price skimming (Brusoni and Prencipe, 209-216). The premium price will be set during the initial launch of products that will develop encouraging consumer perception. Figure 2: PLC with Premium Pricing Figure 3: PLC with Price Skimming (Source: Collis, 49-68) (Source: Collis, 49-68) 6.0 Control and Evaluation: The control and evaluation of the marketing plan of the company will be formulated so as to manage and ensure the achievement of the marketing objectives set for the expansion of ThyssenKrupp in Brazilian escalator and elevators market. Objective 1 S = Specific Indulging in online and offline market surveys among the target consumers. M = Measureable The samples considered for the survey should have a minimum of 500 respondents in each group. A = Attainable Can be conducted online via e-mail surveys and offline by hiring employees from the market segments. R = Reliable The results of the surveys will reflect the customer nature which must tally with current market condition of Brazil’s escalator and elevator industry. T = Time based The survey process must be completed within a time period of 4 months. Objective 2 S = Specific Developing communication means and company profile in the local market places. M = Measureable The communication will include media events, press releases, business meetings and social events inviting each target customer groups at a time. A = Attainable ThyssenKrupp have to develop good communication with the customers by engaging in social media interactions and business meetings. R = Reliable The results of the communication will provide the company information regarding the potential scope of growth in the market. T = Time based The communication process will be continued for the first two years of business initiation. Objective 3 S = Specific Identifying the market size and the number of local and foreign competitors in the market. M = Measureable Collecting recent reports based on the concerned industry and observing the market growth. A = Attainable Communicating with service users will provide them the information regarding the preferred brands in the industry. R = Reliable The information regarding the market competition will allow ThyssenKrupp to develop their positioning strategy effectively. T = Time based The competitor identification and analysis process will be conducted for a period of 1 year. 7.0 Conclusion: The researcher has developed the above report based on German conglomerate ThyssenKrupp. The company has established huge brand equity in the international market. Now with the growing trend of business expansion, they are trying to enter the Latin American market of Brazil. Brazilian market is one of the fastest emerging economies and has a rapidly growing infrastructure which has created demand for escalators and elevators. ThyssenKrupp’s primary strategy is to build proper communication with their consumers and create consumer brand awareness. This will develop an appropriate consumer brand perception and create a competitive advantage for the company in the local market. However, ThyssenKrupp must consider taking some measureable risks to cash on the potential growth opportunities. Works Cited “Foreign Direct Investment (FDI) Confidence Index”. Atkearny. n.p, 2014. Web. 9th September 2014. “Group” ThyssenKrupp.com, ThyssenKrupp AG, 2014. Web. 7th September 2014. “Mitsubishi Electric Enters Brazilian Elevator and Escalator Market”. mitsubishielectric.com. Mitsubishi Electric Corporation, 2013. Web. 7th September 2014. “Social Classes in Brazil”. The Brazilbusiness.com. The Brazil Business, 2014, Web. 7th September 2014. 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