Marketing Strategy of Vermont Teddy Bear - Research Paper Example

Marketing Strategy Q 1) In the engagements of any business the marketing aspect is vital. This is the basis of how the products produced by the company or firm will be introduced in the new environment. The marketing of the products will entail the making of a way for the new products to be introduced in a new market that is either with or without similar products. This requires the involvement and utilization of specific marketing strategies that are aimed at the successful recognition and acceptance of the new products. Since its inception in 1981, Vermont Teddy Bear has not ventured into the international business. The firm will have to follow five stages in their internationalization marketing strategy process. To begin with the firm will have to perform a domestic marketing which involves the marketing of the needs of the other country (Javalgi & White, 2002). Based on the four principles of domestic marketing, the firm will have difficulties in internationalizing its business activities through promotion that is based on knowledge. The firm will have to promote and market their products based on the ethically socially accepted and designed strategies according to the guidelines of the target country. Despite this, the firm will have to ensure that the marketing messages and strategies are able to have a competitive advantage and focused on the product at hand while paying attention to the advertising guidelines of the target country. The marketing strategy will have to be evocative to the target audience. The firm will face challenges in the building of loyalty among the target audience as it will have to ensure that its products do not wear out on fashion by ensuring that the branding system will build a magnetic loyalty (Jeannet & Hennessey, 2004). The firm will ensure that a periodic consumer behavior is assessed to identify which brand has more loyalty and the reasons behind it. The firm will also have to strategically analyze the effect of the class system to the firm’s products if they do exist in the target country. This will include the economic status of the target community and the spending behavior. The analysis will be able to determine the demand trend of their products. The laws in regards to the environment and recycling have to be followed. This will include the adaptation and mainstreaming of the corporate social responsibility in regards to the firms business activities in the target country. This will enable the firm to meet the genuine needs of the consumers (Keegan & Schlegelmilch, 2001). Vermont Teddy Bear will face yet difficulties as it will have to employ the extension of the marketing strategies that it uses domestically to the target countries. In doing this, the firm will have to consider the global context of the target market. The firm will thus have to conduct a company, customer and competitor analysis in order for it focuses on the strategic issues. The firm will have to anticipate that the findings of the population size, distribution channels and growth will be favorable and be able to support the growth of their business. In doing this the firm will consider the inflation rates of the target market as well as their expenditure activities. The firm in the international marketing strategy will strive to ensure that the products are met the cultural environment of the target market. The challenges that might be reveled could result in the challenges for the firm to b e able to operate (Malhorta, Agarwal, & Ulgado, 2003). The political environment in the target countries may not be a favorable environment for the firm’s activities. The political alignments that conceived the common European market and a common European currency might have dramatic effects in the firm’s activities. Despite their being a common market, some of the business regulations may not be favored or agreeable to some nations. The charging of tariffs is benefiting more at the expense of the others (Richards, 2000). The firm might have economical difficulties as different regions have different economic conditions. It is vital for the firm to identify the respective characteristics before investing. The gross national and domestic products of the target nations may not be favorable to harbor the firm’s activities. These have to be investigated as they are the vital indicators of the performance and strength of the target market economy. In addition the firm will have to do an analysis of the purchasing power level of the target foreign market. This is vital as the economic variables that exist in a market can be dynamic and thus have adverse effects on the business (Czinkota & Ronkainen, 2003). In addition, labor costs of the target market may have adverse effects on the firm’s business activities as this will determine the size on the labor force and thus affect the level of production. The analysis will have to consider the availability of labor and the costs. Moreover, the firm will have to bear in mind the of the capacity level of the labor force that is available and be able to assess the financial input that is required to bring the labor force to the required standards that are able to have products which will have a competitive advantage. Much of concern that will impact on the internationalization of the firm will depend highly on the trade laws that exist in the target market. The conditions and laws in setting up a business might be costly. The ownership and tax regulations on ownership of the business might have a negative impact on the firm as it will determine the amount of returns that the firm will be able to achieve. The policies and legislations have to be analyzed to assess if they are favorable for the setting up of a business (Cateora & Graham, 2002). Lastly, the socio-cultural aspects of the target country market may not be favorable for the penetration of the firm. Each target market has it’s a socio-cultural collection that is unique and specific. These socio-cultural aspects are what permeate into the life aspects and the business activities that exist in the country. Political as well as economic agreements on the business but they cannot influence the culture of the people to the advantage of the business activities. The firm’s products may not be in line with the way of life in the target country. It might not be the culture of the target market to purchase teddy bears for occasions that are perceived memorable to them. Some of the cultures may even forbid the purchase or use of such commodities as they could be a taboo. The symbols that the community that the firm might be targeting might be different from what the firm offers and it might not be easy for the firm to change tactic to meet their needs (Clark, Rajaratnam & Smith, 1995). 2) For the firm to identify the right country to internationalize the business, a marketing research has to be carried out. The rational for the research will be to identify a conducive country for a Teddy Bear firm investment. The paper will aim at the collection of data that will be able to provide vital information to r the decision making in internalization of Vermont Teddy Bear Industry (Hollensen, 1998). Objectives The marketing research will identify the relevant issues that will be vital to internationalize Vermont Teddy Bear firm. The marketing research will analyze the literature reviews by researchers to identify the ideal factors that will favor the establishment of the firm internationally among the target market countries (Hollensen, 1998). The aspects to be considered in the research will include; Economic status of the selected countries, Socio-cultural aspects, Political/legal aspects, Technological aspects, Market size, Segmentation, Competition, Consumer behavior, Products, Pricing and Distribution and promotion. Research design The research will have to concentrate on secondary data sources on internalization of businesses of the selected countries. The materials that will be relied upon will be from selected and reliable research works that will be on the internet and in text books. The study will also incorporate the business journals and weekly reviews as the yare best suited to provide information expenditure habits of the target market. The journals will offer a good point to harvest the ethical and socio-cultural aspects of the target community. The electronic media will offer more reliable information as the sites are regularly updated (Hollenson, 1999). Expected results The secondary data will be able to reveal the strategic issues of internationalization of the selected countries thus will be able to provide new set of information and the unique problems of doing business in the selected countries. The information acquired will be able to offer the competitive trends of the selected countries and offer solutions on new considerations which will include the organizational strategies and innovative measures and techniques that will be employed. In addition to this, the research will offer insight on the opportunities that are presented by internalization in the selected countries and the laws that regulate the investment and private sector firms in the countries. Socio-cultural and the political aspects that might have an impact on the internalization of the business will also be analyzed and thus offer a best approach in terms of marketing and innovation processes that will be employed. Lastly, the firm will be enlightened on the labor laws and the terms of employment. These will include the availability and the cost of labor thus the ability to be able to analyze and determine the profitability and growth of the business in the selected markets (Ekeledo & Sivakumer, 1998). Data analysis The data collected will be analyzed and represented in forms of reports and graphs that will give a clear picture on the internationalization trends and activities in the selected countries. This will be able to give reliable information for the firm to select the suitable country to internationalize its business (Johanson, 1997). Q3) For Vermont Teddy Bear to penetrate in various foreign markets there are several factors they need to consider widely. Most importantly, the company marketing department need to focus widely on the various culture and after understanding them develop a substantial marketing mix namely; product policy, pricing, distribution and promotion. Joshi (2005) asserts that, this marketing mix should meet international strategy so as to maintain the same leading position like in their local market. Proper marketing mix within the company is one of the key factors in the internalization of Vermont Teddy Bear. Pricing The company need to realize that for it to venture into foreign markets it should understand that pricing is the key element which is known to generate turnover for the organization. It is important for the company to develop pricing strategies that will ensure all company objectives are achieved. The following pricing strategies can be effective towards addressing the company, its customers, competition and collaborators (Joshi 2005). Pricing strategy Definition Example Penetration Here, the company is expected to set a low price so as to increase sales and attract customers. Once this has been achieved the prices are gradually increased. Vermont Teddy Bear set a low price to attract foreign customers. Later, the company increases the price as consumer base increases. Optional The company may decide to sell optional additions along with their products so as to increase turnover. Vermont may decide to concentrate on one gram within the local market so as to boost markets for the launch of other products within foreign markets (John 2008). Premium The price set on particular products should reflect the exclusiveness of the product An example of products that are suitable for this strategy is calyx & corolla segment. Competition The company should focus on setting prices in relation to their competitors’ prices. Vermont may decide to lower or maintain same price like competitors so as to attract new customers Value Cost of production and distribution act as a factor in deciding the price of commodity (John 2008). If the desired market by Vermont is one whose cost are changing often, the company will constantly alter its price decision Bundle The organization group some of its commodity where they are sold at a reduced price The company may decide to merge teddy and pajama gram so as to attract customer in their desired foreign markets. Skimming Here, company set an initial high price where later it gradually reduces so as to make the products assessable to the foreign market The pajama gram prices are reduced where a premium is charge at the launch in foreign markets and then lowest price is offered at the end of its life cycle Product policy The company should carry out research on the similar product it distributed within the desired foreign markets and it’s from this that it is required to come up with single or multiple products that will have a tweak in the same market. According to John (2004), Vermont should ensure that various specifications in their products should relate to the satisfaction of customer focusing on culture. In their pajama gram segment, the company should realize the clothing adapted by different cultures. For instance, if it is focusing to sell pajama in Asia it should ensure that the pajamas are not explosive as the culture of this foreign market does not allow most part of the body skin to be exposed (John 2004). After concrete research on a particular foreign market, it is expected that Vermont should sort it desired products depending on the five characteristics namely; packaging, brand name, styling, features and quality (Jim 2002). There are three main ways in which Vermont Teddy Bear can decide to use its product strategy. First, the company should decide on the extension procedure where through the use of same products in its home market it ventures into foreign markets. This can be advantageous if within the desired foreign market the same strategy is not followed. Secondly, the company may decide to use the adaptation procedure. Jim (2002) asserts that, here, changes are made in the product marketing mix so as to suit foreign market. Lastly, Vermont can use the invention procedure. Here, the products are designed right from scratch incorporating the culture and behavior of the desired international market. Promotion Jim (2002) asserts that, the company needs to redefine its promotion strategy so as to compete with competitors. Change of promotion strategy should widely correspond to desired customers and their respective culture. There are various promotional tools that are very effective in marketing of products globally. These tools include; personal selling, publicity, sales promotion and advertising (Jim 2002). The following diagram gives an overview of the various ways that can be adapted by Vermont Types of promotion Explanation Advertising This is the use of non personal that is paid to establish communication by way of mass media. Public relation This will require Vermont to develop positive relationship with the foreign organizational media public. Sales promotion According to Anderson (2003), the company can adapt the use of money coupons or special offer so as to increase and attract sales. Personal selling Vermont should focus on selling a product by use of one on one service Direct mail This method will assist the company in utilizing its resource in order to attract desired customers (Anderson 2003). This gives an indication that when response rates increases then there is the creation of chances to improve sales within foreign markets Internet marketing This is considered to be the cheapest and fast method that Vermont can promote and sell it products globally (Anderson 2003). Distribution/placement This refers to how the company will distribute its products within the desired foreign market. According to David (2008), Vermont needs to understand that it ought to distribute the products at the right place and time. Ensuring all its products that are; teddy, pajama, calyx & corolla, tasty gram and B-t-B are effectively distributed will ensure that the company of leveraging operational and marketing strengths thus becoming the sole gift service industry (David 2008). Distribution can either be direct or indirect as shown below; Depending on the various products segments offered by Vermont, the company may decide to use one or all the following distribution strategies: intensive, exclusive and selective (Michael 2003). In intensive distribution, the company can select products from its various segments and distribute them at low price for example the teddy bears. In exclusive distribution, it can design the wholesale/ corporate to only have one single outlet so that it can only limit the customers who can purchase it due to availability. According to Anderson (2003), the price should be high. On selective distribution, special and expensive gives are only distributed on chosen retail outlets. Waren (2001) asserts that, selective distribution can blend well with calyx and corolla segments. Within global markets, Vermont should always select an intermediary who is vast with the culture of desired customers so as to credibly identify targeted audience (Anderson 2003). Finally after focusing on the named global market mix, the company should incorporate strategies that guarantee international branding. Waren (2001) asserts that, the same branding used in New York, Philadelphia and Boston should not be used international. Culture and social norms of a desired foreign market should be incorporate to fit into international branding strategies. Brand name may require changing especially if the foreign market language is different to that of local market (Waren 2001). This can be achieved by way of spreading of private label brands globally, co-branding and umbrella branding. Q4) Vermont Teddy Bear Company demonstrates potential growth in the future hence it is important for that for constant review and redesigning of the company strategic plans, goals and visions. As the chief executive manager of VTD I would consider developing a new line of products in order to achieve a market advantage over my rivals. The first step towards this is to select a team from either the company or from outside to oversee the entire process of developing the new product. Product innovation starts with developing an idea that best suits the conditions of the market place and will attract as many customers as possible. Having considered all the products and services the company offers, it is quite evident that the company misses a loyalty club for constant customers and staff of the company. Many companies throughout the world are investing more and more in developing loyalty clubs as a strategy of retaining customers and to develop good relationships with them. In addition to this, a customer loyalty club enhances communication between the customers and the company and provides a one-to-one marketing capability (Stauss et al 2001). A customers loyalty club refers to a communicative union of individuals or organizations which is created and operated by a company and is aimed at providing direct communication with its members. The club strengthens the emotional ties with customers and increases their loyalty to the company. According to Stauss et al (2001), there several factors that needs to be clarified before implementation of the plan. To begin with, it should be noted that customer loyalty clubs are operated and initiated by the company and not by the consumers. The main purpose of the club is to offer customers real and perceived value of products and services by making optimum use of both non-financial and financial benefits. The company can collect information from members of the club which might be important to improve its performance. The club also aims to enhance communication of customers with the company on issues that affects them and activates them to recommend others on the products and services offered by the company. Product development goes through various stages as illustrated below; Idea development As earlier mentioned, the company management in collaboration with the HR office will select a multidisciplinary team to be fully devoted to the operations of the new product which is a Customer Loyalty Club (CLC). Thomas (2011) asserts that idea generation is a systematic and continuous process of searching for avenues or opportunities for the new product. It involves researching for new ideas and methods of making the plan successful. Ideation also involves taking a SWOT analysis of the company, knowing the market and consumer trends, evaluating competition, determining the influence of external forces and the effects of other shareholders such as suppliers. This will assist the team to determine the features to incorporate in the club and the best strategies to use. The team will be required to clearly define the goals of the club right at the outset of the project. It should be noted that the core goal of starting up the club is to increases the market share and the profit revenue. Other vital goals include attracting new customers, retention of existing customers, creating ka strong customer database, improving company performance, improving customer support and public relations and finally to have effective communication channels between the customers and the company. There are four main methods that the team can apply in generating ideas for CLC. The first is dimensional analysis which entails listing of all the physical features or characteristics that make up the club. This can be achieved by undertaking research studies on CLCs that are already in existence and determining what they comprised of. Once this has been attained, ways of incorporating creative ideas into the club can be exploited. The next method is problem analysis. This is a need-assessment technique whereby the team will identify tastes and preferences of their target groups in order to develop new ideas for the plan. Benefit structure analysis is the third method of generating ideas. It involves determining customer’s desired benefits from the club and hence the team will assess deficiencies in many CLCs and make sure the VTB CLC provides such for such services. The last method is Scenario analysis. The team will be required to make projections on expected changes in consumer behavior and environmental factors hence make provision for them. Screening of ideas The objective of this stage is to eliminate all the unsafe and unsustainable ideas and concepts that might not be helpful in achieving success. This process is done before any resources are devoted to the project and prior to communication with outsiders about the project. Screening checklists are available and they provide preliminary evaluation of the new product by comparing ideas that have been identified with the actual attributes of the product. Screening of ideas also entails determination the effectiveness of the new product in the target market, competitive pressure market trends, and size of market. Product Development and testing This involves converting the ideas that have been identified into a physical form and undertaking test marketing whereby the product is brought out to the public to test its viability. At this stage, the team will need to utilize the concept of 4’Cs. Company: The issue of protecting the intellectual property of the company will arise and other data base patents. Assessment of the benefits of the new product to the company is also important. Consumers: Reaction of customers towards the product should be determined. Competitors: Analysis of reaction of rivals will be appropriately analyzed and necessary action taken. Channels: The team will be required to identify opportunities that will popularize the club as fast as possible. The product will be commercialized at this stage whereby the product is ready to be introduced to the wider market which is done best by rolling it out in waves. This implies distributing the product at different times in different areas (Ernst 2002). Business and financial analysis At this point, the team will find out if the objectives of the project are in line with the vision and mission of the company as a whole. Nambisan (2002) maintains that this can only be achieved by having discussions with the company’s top management, marketing manager, purchasing officers, distributors and other staff. Estimations of the amount of subscription fees and other fees will be done at this stage. The team will determine if it can form partnerships to run the club or whether it will license it out. References Cateora, P, & Graham, J, 2002, International Marketing. NY, Mcgraw-Hill. Clark, T., Rajaratnam, D. & Smith, T, 1995, Toward a theory of international services: marketing intangibles in a world of nations. Journal of International Marketing 4(2) pp.9-28. Czinkota, M. & Ronkainen, I, 2003, An international marketing manifesto. Journal of International Marketing, 11(1), pp. 13-27. Ekeledo, L. & Sivakumer, K, 1998, Foreign market entry mode choice of service firms: a contingency perspective. Journal of the Academy of Marketing Science, 26(1) pp.274-292. Ernst, H. 2002. 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