Introducing a Product into a New Market in a Foreign Country - Case Study Example

International marketing (HSV Grange (WM3)) Student’s Name: Instructor’s Name: Course Code: Date of Submission: Executive Summary This analysis was based on the idea of introducing a product into the new market in a foreign country. The product that was considered in this case is the HSV Grange (WM3) luxurious car which is a product of Holden Special Vehicles Ltd. HSV is an Australian based company specialised in manufacturing different types of cars for the market. The analysis has also tackled the various elements to be taken into account while segmenting the market and which include the middle and upper income earners in the society. This is because it is a luxurious product that may be considered a want and therefore can be purchased by individuals that consider the product suitable for them and want to identify with their class. Further, the analysis has gone a step further to identify the specific countries which the company intends to venture into and which include Germany, Japan and France. However, Germany has been recommended as the best choice because of the economy that is well advanced and issue of class. Finally, there will be some challenges in entering the market because of a number of reasons like barrier in communication, acceptance and relationship building. Use of strategic alliance has been proposed as the best approach to entering the market. Table of Contents OECD Factbook. (2012). Economic, Environmental and Social Statistics, retrieved on 3rd December 2012, available at: 11 1.0 Introduction Every business in the current world is looking for different ways that it can make its business a success. While many businesses are finding it difficult to grow further in the local environment because of the stagnated market share and increased number of competitors, some are venturing into foreign lands for more market opportunities as one of the best strategies to ensure growth and sustainability (Harkness and Mohler 2003). However, entry into global market is not always a smooth move because differences exist between the local business environment and that of the target market and which can be explained in terms of economic, cultural, geographic, demographic, political and legal issues. The intention of this study therefore is to present a situation where a common product is being introduced into a foreign country and the various aspects that have to be tackled. The product under consideration is the HSV Grange (WM3) luxurious car launched in 2011 in Australia. 1.1 The Company HSV Grange (WM3) is the luxurious car that is being manufactured and marketed by Holden Special Vehicles Ltd. HSV is an Australian based company specialised in manufacturing different types of cars for the market. The company was established in 1987 and works as a partner of Holden Group which is a family of different car manufacturers in different parts of the world. The company’s strength lies on the large capital it has managed to raise and huge infrastructure that it has developed alongside numerous car models that it has managed to develop for the market and which include Commodore and Caprice as well as Ute (NetCarShow.com 2011). 1.2 The Product The HSV launched the HSV Grange WM3 luxurious car in 2011 in Australia. This is the car model that is considered most luxurious ever been developed in Australia in the recent past and has gone further to attract different customers from different quarters who are interested in this new type of car. This is a more restyled luxurious car from the previously manufactured HSV Grange in 1987 as the flagship. This model shows many upgrades which led to the latest HSV Grange WM3. This is a highly advanced car model in terms of technology and luxury. For instance, the luxury car has an advanced new styling and increased power as well as extra technology that make it a passionate product any customer may wish to drive. In brief, the company is characterised with new and exciting technologies that support driver interface, liquid propane injection (LPI) and side blind zone alert. These are the features that have defined the product proposition in the market (NetCarShow.com 2011). 2.0 Market Segmentation It is believed that the target market for this car model is the middle and upper income earners in the society. This is because it is a luxurious product that may be considered a want and therefore can be purchased by individuals that consider the product suitable for them and want to identify with their class. With this in mind therefore, the product will target mainly the working and business class people and those people who may be considering class an important factor in their lives. Market segmentation will therefore consider choosing particular markets based on their incomes and willingness to use the car for the purpose of their lifestyle. The customers for this luxurious car are likely to come mainly from developed countries when the economic power may permit the purchase of the luxury and very costly car for use. This means therefore majority of countries in Europe, United States and Asia-Pacific could make major former market segments. The company major competitors and that are likely to affect the company prospects in terms of revenue include the BMW, Toyota, Honda, Isuzu and many more that may also be interested to hit the market with the most luxurious car. However, while the majority of the market consumers may be willing to own this luxurious vehicle in the market, some limitations may come into play and more especially in terms of technology applied and that is difficult to use and also the price that many people may not be comfortable with. With this regard therefore, it is expected that considering other options for the same service will be most appropriate and this may include rally bicycle and other cars from rival companies that may be considered to be offering equally luxurious travel service. 3.0 Target Market The car is expected to be used by different customers. First among the targets are the wedding couples who may prefer to have an experience of comfort and superior experience. The other target market is the local tours. This includes those people who may wish to travel in this car while making local tours. Finally, the most important target market that could not be left out is the celebrities who include the musicians and sportsmen and women. This is because of the kind of lifestyle these groups are assumed to lead. 4.0 Attractiveness Factors The analysis of the new markets is intended to determine if a given target market is suitable for a particular company product and which in this case is HSV Grange WM3. A number of factors such as economic, cultural, geographic, demographic and political and legal are considered in the analysis (Nisbett 2003). A. Economic This product is relatively expensive for the majority of the customers and therefore it will only sell well where the income for individuals is relatively high a scenario that is possible in the developed economies. B. Cultural Culture is also a big issue in this case. This is because different groups perceive luxury differently and as a waste of time and resources and therefore influencing the consumption level of an individual. C. Geographic The cost of production is considered to be a major factor here. This is because the production of the car model is greatly depended on the quality of minerals the country has. If the required raw materials like minerals are readily available, then it is expected that cost of production will be sustained. D. Demographic First and most important point to note is the fact that the car is very expensive and what is expected is that a majority of the customers must have good sources of income that can support their purchases. On the same line, this product is more suitable for the urban class and therefore it’s expected that consumers will be situated in urban centers. E. Political and Legal Political and legal issues are an important factor in this case. This is because it is expected that different countries have different business environments and those that affect the performance of a foreign company. Despite the fact that trade liberalization is now a common thing, the company will have to observe prevailing foreign direct investment policies especially with regard to entry and taxation. 5.0 Countries to be considered To make the company dream of excelling and making the HSV Grange WM3 car become the favourite of many and also boost the company brand and consequently grow its revenues and ensure long-term sustainability, targeting some specific countries as market destinations is considered critical. The three target markets for HSV Grange WM3 include Germany, Japan and France. These three countries provide very different environments which require critical analysis to determine which one is most suitable. For instance, having placed in one trading block with Australia, Japan could make very significant market for the company. First, this is because the countries has well grown economy and can have a good number of customers who will be willing to buy the car which costs about $75,000. Further, the country presents a great opportunity for the company because of its geographical location (OECD Factbook. 2012). However, the major challenge that the company is likely to face in placing its product in the Japanese market is high competition as the country enjoys massive production of cars by locally based companies. In the case of France, the market opportunity exists given its large population of about 66 million people and its stable economy. However, the big challenge the business culture where people prefer using French as their official language for communication and also the stiff competition from the country’s two major car manufacturing companies which are Renault and PSA Peugeot Citroen both of which are world-class companies. On the hand, Germany is also considered one such potential market for the HVS car. This is because a part from being a strong economy, in Germany, class is a big issue and therefore the product could very suit the market. At the same time, the economy is grown to support individual incomes. Germany is mainly dominated by the Bavarian Motor Works (BMW) Ltd. This means therefore competition may not be that strong as long the right entry strategy is used. However, the major issue likely with this destination is racism something that has been founded on culture and therefore may hinder acceptance of products that are not locally produced. The other weakness for selling the car in Germany is the distance between the two countries which may require heavy investment to transport the cars into the new market. 6.0. Target Country The chosen target country for the HSV Grange WM3 is Germany. This is because despite all the three countries showing almost similar scenarios, the country has great potential that is yet to be taken advantage of from its strong economy and culture of class. The HSV Grange WM3 is considered an expensive life and is expected that in the Germany society, it will give identify to those individuals who real value aspect of class and status. This is the environment that will favour the car model and compete favourably with the BMW Group. 7.0. Major Challenges The challenges that must be overcome include communication barrier, acceptance and building relationships first. This is because a strong relationship is the foundation to business success in France. 8.0 Market Entry Strategy Strategic alliance is the most preferred approach to entering this market. This is because forming an alliance with a local based business will give the company an opportunity to introduce its product into the market in a systematic manner. This will help the company have its product accepted in the market before fully understanding and gaining significant market share. 10.0 Conclusion This analysis was intended to study the concept of introducing a product into a new market in a foreign country. The product that was considered in this analysis is HSV Grange WM3 which is a luxurious car that was introduced into the Australian market in 2011. The introduction of this car into other market is expected to boost the HSV revenues and the market share as well. The three target markets that were under consideration in this case include Germany, Japan and France. The three countries showed potential for growth. However, Germany was chosen and this because of a number of reasons of reasons which include the strength of the economy and the issue of class that is likely to favour this kind of car. References Harkness, J. and Mohler, P. (2003). Cross-Cultural Survey Methods. London: Wiley. NetCarShow.com (2011). HSV Grange WM3, retrieved on 9th December 2012, available at: http://www.netcarshow.com/hsv/2011-grange_wm3/ Nisbett R. (2003). The Geography of Thought: How Asians and Westerners Think Differently ... and Why, Free Press OECD Factbook. (2012). Economic, Environmental and Social Statistics, retrieved on 3rd December 2012, available at: http://www.oecd-ilibrary.org/economics/oecd-factbook-2011-2012_factbook-2011-en Read More