Market Entry Strategy: of Haier - Case Study Example

Executive Summary The report shows the entry strategy which Haier looks to adopt while working in the international arena. The evaluation of the different options based on PEST analysis along with the targeted market and segment present USA as one of the viable options. This will help Haier to ensure that they are able to enter the correct market and using the strategy of strategic alliance will ensure risk reduction and maximize returns. The overall analysis helps to understand the market entry strategy which will be focused by Haier so that chances of being successful in the international market can be achieved. Table of Contents Introduction 3 About the Product 3 Market Segmentation 4 Target Market 4 PESTEL Analysis 5 Overseas Potential Destination 6 First Choice of International Market 7 Challenges in international market 7 Market Entry Strategy 8 Conclusion 8 References 10 Introduction The report focuses on Haier a Chinese multinational organization which manufacturers white goods and appliances in over 96 categories. The report looks at examining the organization i.e. Haier which will concentrate on its product, mission and other aspects. This will be followed by proper market segmentation and target market which the organization looks to aim. Based on it a PESTEL analysis is being conducted which will help to understand the type of country they would look to work in. This will be followed by analyzing the different overseas potential market based on the needs and requirements of the organization. This will be followed by analyzing the preferential market which will be aimed at and the market entry strategy will be decided based on it. The overall analysis will thereby help to understand the market entry strategy which will be focused by Haier so that chances of being successful in the international market can be achieved. About the Product Haier is a China multinational organization dealing in white good products and provides customers with over 96 categories to choose from. Haier aims to become a world leader in their field of white goods and aims towards supplying quality products for its customers. Haier aims towards customer satisfaction and looks at delivering products and customers based on the needs and requirements of the customers. The prime reason for choosing Haier for the analysis is the opportunity that the player presents and will help to develop a framework through which future opportunities for the business can be identified. Haier deals is a wide range of products which includes refrigerators, air conditioners, water heaters and basic kitchen appliances along with includes televisions, mobile phones and computers along with laptops. The organization also looks to provide different products intelligent home appliances, central air conditioners, interior decorations, medical equipments etc. The wide range of offerings and being successful in the domestic market provides an opportunity to move in the international market and ensure better chances of being successful. Market Segmentation Market segmentation is an important aspect of business growth and performance as it helps to segregate the market into smaller sizes which helps the organization to target the correct segment and multiplies the effectiveness in the marketing strategy. Haier on this aspect has segmented their market based on geographic locations, distribution, price and demographic. Haier to ensure strong distribution and availability has segmented the market based on geographic and looks towards developing the required distribution network so that goods can be provided to even far off customers (Ireland, Hoskisson and Hitt, 2007). The organization has also ensured medium range pricing so that maximum market segment can be aimed at. This can be seen from the fact that Haier designs its refrigerator in such a way that it consumes less electricity and ensures better cooling. This has helped to multiply the process of carrying out different activities as demographic factors based on different regions have been considered. This has helped them to segment the market based on their product requirements and has multiplied the overall process of developing their market. Target Market Haier based on their different offerings looks at targeting both the household sector and the business clientele sector. For the household sector Haier looks to offer both brown and white goods and appliances which can be used at home. For the business sector Haier offers business solutions and equipment component for corporate and business solution provider. The company has also aimed to target a larger share of the market and aims towards pricing its products in such a manner that the middle level segment of the population can be easily attracted (Doole and Lowe, 2001). In addition to it Haier has also developed specific products which are aimed towards the higher segment and lower segment of the society thereby helping them to gain a presence in all segment of the society. To be able to ensure that the targeted market is clearly tapped the organization has looked at developing proper distribution network and priced its products in such a manner that overall effectiveness in the target market strategy is gained. PEST Analysis The PEST analysis is an external analysis which looks towards examining the external environment and will help to determine the manner in which the external environment has an influence on working condition of the organization. The external analysis for Haier is based on China, Japan and USA and is as Political Japan & China reflects the same set of values and political system which has an influence on the working of organizations whereas USA is developed on a different political system which has resulted in different rules and regulations to be framed. A look at the political stability shows that USA has a more stable government as compared to Japan which has thereby ensured proper use of goals and time to ensure that the strategies are properly used. Economic The economic condition requires stable growth rate along with increasing disposable income so that people have the required resources and money which will enable the purchase of different products. China, Japan & USA have a stable economic condition with increasing disposable income (Phillip & Gary, 2001). The development of infrastructure and polices which aims towards better future and increasing income provides an opportunity for Haier to be able to ensure better growth rates and will be able to ensure that people tend to purchase the different products being offered to them. Social The social custom prevalent in China, Japan & USA shows an increasing demand for quality products which helps to meet the different needs and requirements of the different segment of the society (Czinkota & Ronkainen, 2004). This has been aided by a high level of education and the intention to enjoy life and have the necessary luxuries provides an opportunity to tap the market and ensure better satisfaction of the different needs and requirements of customers. Technological All the three countries i.e. China, USA & Japan are technologically advanced and provide the opportunity and scope for the development of new and better technology which will simplify life (Czinkota & Ronkainen, 2004). This will tend to increase the demand for such products and services and will ensure that the market for such products increases and helps to satisfy the different needs and requirements of the customers. Overseas Potential Destination Haier based on their products being offered and the market they look to tap can look towards developed countries like Japan and USA or a developing country like USA. Haier has an option of choosing from the three above mentioned countries because the different offerings and products will provide an opportunity to tap a larger market. Further, since the product will be aimed towards a large market and requires country with large disposable income it provides n opportunity to choose from USA, Japan & India due to the wide opportunities that the market presents for the products. First Choice of International Market Haier should look at choosing USA as compared to the other options which are available because of the following reasons United States is more stable and pragmatic with an increasing demand for appliances and products which thereby provides an opportunity to be able to capture a bigger market Customers in USA are more inclined towards branded products which will help Haier to develop a pool of loyal customers based on quality offerings The completion in USA is less as there are few players from the domestic arena and Haier will have to compete with only the international players which is not the case with other countries Home appliance market of US is anticipated to grow at a higher rate of 1.92% CAGR by 2016 in comparison to Japan which is expected to grow by 1.62% by the end of 2016 and India by 1.56%. Challenges in international market Working in the international market will present different challenges for Haier which has to be dealt effectively so that proper strategies can be implemented. Some of the challenges before Haier are Dealing with the exchange rate for currency as Haier in China has a fixed exchange rate and will now have to deal with fluctuating exchange rate which thereby increases the risk for the business Working in the international arena will require dealing with different cultural, social and societal aspect which multiplies the complexities and makes it difficult for the business to be carried out effectively (Coughlan, Stern & Adl Ansary, 2006) Increase chances of failing in the international arena could lead towards huge fatalities as it could lead towards huge financial loss and also tarnish the brand image of the organization. Market Entry Strategy Haier while looking to work in USA needs to enter into strategic alliance with different distributor and brand retail players so that they are able to penetrate the market and provide an opportunity through which bigger markets can be taped (Bangs, 2002). This will provide an opportunity to use the already developed market channels and will ensure that the entry strategy becomes effective. The use of strategic alliance will ensure that both Haier and the strategic partners will be able to use their strength and develop the overall business model. This will multiply the overall effectiveness and will ensure that the process will look towards ensuring that the chances of failing reduces and will thereby ensure better market penetration. Conclusion The report thereby highlights the market entry strategy that Haier looks to adopt based on the different offerings and present the different dimensions though which overall effectiveness will be achieved. This will require using the already developed chain through strategic alliance and ensuring that the business tends to offer quality products so that more and more customers can be attracted. This would help to reduce the risk and would ensure that the business will be able to maximize the different opportunities that the business presents. References Bangs, D. (2002). The market planning guide: creating a plan to successfully market your business, product, or service, Sixth Illustrated edition, Kaplan Publishing Coughlan, A., Stern, W. & Adl Ansary, E. (2006). Marketing Channels, 7e, ISBN 9780131913462 ISBN 10:0131913468 , Pearson Education Czinkota, M.R. & Ronkainen, I. A. (2004). International Marketing, 7th edn. South-WesternPublishing:Australia. Doole, I., and Lowe, R. (2001). International Marketing Strategy. 3rd Edition, Bedford Row, London, Thomson Ireland, R. D, Hoskisson, R. E, and Hitt, M. A, (2007). Competing for advantage, Cengage Learning Phillip, K. & Gary. A. (2001). Principles of Marketing, 9th ed. Upper Saddle River, NJ: Prentice Hall, p.245 Read More