Modern International Expansion - Essay Example

International Expantion Introduction Today, international marketing is proving to be of ever-increasing importance to companies of all sizes, to their customers, and to national economies. Worldwide, most companies are now selling to, using materials or equipment from, or competing with products from other nations. For many companies, including middle-size enterprises, international sales provide additional profits and are all that enable some companies to make any profits at all. Marketing in the UK will give AIU broad opportunities. Primarily, it can be a source of competitive advantage. On the other hand, AIU should take into account national culture which affects all international and export marketing activity. Of concern to the manager are the influences of the religious, family, educational, and social systems of a society. Often these are manifested in the values, attitudes, and motivations of people and can affect business customs such as personal manners, colors, advertising, 'gift' giving and receiving, and pride and status. Background of the Country The UK is a country with old traditions which include both conscious and unconscious national values, ideas, attitudes and symbols that shape employees behavior. The UK consists of four main parts: Wales, England, Scotland and Northern Ireland. The combination of language and religion creates a unique culture and traditions. At its deepest level, however, British culture comprises a set of basic assumptions that operate automatically to enable groups of people to solve the problems of daily life without thinking about them. The influence of Christianity and other religions in the UK had always extended for beyond the comparatively narrow of organized and private ownership. Religious organizations are actively involved in voluntary work and the provisions of social services. The UK is a leading industrial country which has a great influence on international economics and politics. The country has a service-based economy and a large private sector. In contrast to other European counties, the UK has not yet adopted the euro currency. "A member of the EU, it chose to remain outside the Economic and Monetary Union for the time being" (The World Fact Book: the UK, 2006). The country has a population about 60,609,153 million who lives on 242,514 sq km. An average expectancy of life is 81 years for women and 76 years for men. GNI per capita is $33,630. GDP is $1.83 trillion. It is reported that GDP shows the lowest growth rates over the last 12 years. "GDP grew by 0.6 per cent in the first quarter of 2006, with growth unchanged from the last quarter of 2005. The level of GDP is now 2.2 per cent higher than the first quarter of 2005" (GDP Growth. The UK, 2006). 17% of population lives below poverty line. Demographics will help to analyze market potential, its perspectives, and segment the UK market. Demographic segmentation is based measurable characteristics of the population such as income, age distribution, gender, education, and occupation. A number of global demographic trends-fewer married couples, smaller family size, changing roles of women, higher incomes and living standards, for example-have contributed to the emergence of global market segments. In the UK, 17.5 % of the population are children from 0-14, 66.8% people from 15-64 year old and 15.8% - 65+. The majority of the population are white people - 54.85 million; people of Asian origin is about 2.38 million. Population growth rate is about 0.28%. In agriculture works about 1.1%, in industry - 26% and in service market - 72.9% (The World Fact Book: the UK, 2006). Cultural Concerns Need to Be Considered Great Britain is a country of old traditions and strong family values. Cultural preferences are quite apparent in food preparation and consumption patterns and habits. Taking into account the nature of the product AIU is going to market, these cultural preferences will play a core role in strategic planning. A solid understanding of food-related cultural preferences is important for AIU that markets food products globally. In spite of the fact that "fast food" is gaining increased acceptance in this country, the UK families follow old traditions and prepare home-cooked meals. The English desire comfort in clothing, heating, and home facilities. They are fun loving and appreciate radio, television, beer, wine, and other products that add to the enjoyment of life. Apple pies and apple sauce is a part of British culture and traditional food for millions of people. Very stolid eaters, the English like traditional foods such as farm products, for example, ready-scrubbed new potatoes, where freshness and presentation are very important. Some may question whether strong coffee, spirits, high-fat meats, cheese, and potatoes - all favorite foods of the English - constitute a very healthy diet (Mason, 2004). The main concern for marketers is a country of origin. Many consumers in the UK prefer to buy UK products ignoring foreign ones. Country of origin effects refer to the extent to which the place of manufacture influences product evaluations. The USA country of origin affects consumer perceptions of product quality and has a significant influence, beyond advertising and marketing techniques, on the acceptance and success of a product. In theory, country of origin based stereotyping may be universal in nature; however, the degree to which it is applied and the prominence given in the evaluation of the product varies. In spite of this fact, strong brand image and health-conscious appeal will help AIU to attract potential consumers (Johnson, Scholes, 1998). So-called national stereotypes and buyer attitudes toward particular countries of origin can affect the way in which export prices are interpreted in foreign markets. The UK customer reactions to price and the judgments that customers make will be conditioned by their perceptions and attitudes toward the product. For example, if the image of the exporting country held by buyers is favorable and the price of a product can be high. Product Line to Be marketed in the UK and Rational for Choice AIU is going to market one of its best products, flavored apple source. This product was selected according to eating habits and national preferences of the UK consumers. The nature of customer needs and wants in this market affect the effectiveness of AIU marketing effort. Certainly, looking at these together with customer characteristics and interests provides the basis for determining which products should be, in the first place, considered and, second, which products should constitute the product mix. The product line selected for the UK should be "kept standard", because there is no substantial differences between the USA and the UK consumption patterns. The only thing which can be changed is type of packages for restaurants and snack bars in order to reduce price of the product. Most of them are interested in big packages using ready-made apple sauce for pies, etc. (McDonald, Christopher, 2003). Target Market and Types of Messages To increase sales, behavior segmentation will focus on whether or not people buy and use a product, as well as how often, and how much they use or consume. Consumers can be categorized in terms of usage rates-for example, heavy, medium, light, and non-user. AIU can segment consumers according to brand loyalty: potential users, non-users, ex-users, regulars, first-timers, and users of competitors' products. The target market will involve working class families and middle class families who prefer to buy ready made apple sauces for everyday consumption, and restaurants and snack bars. The advertising appeal is the communications approach that relates to the motives of the target audience. Taking into account national preferences and cultural peculiarities "reason why" advertising will be used. This type of advertising is effective because it combines features of two different philosophies: "rational" advertising and "unique selling proposition". The rationale means that people are motivated and persuaded to buy the products. Obviously, this approach does not take cultural considerations into account. For example, ads based on a rational approach depend on logic and speak to the audience's intellect. Unique Selling Proposition is the promise or claim that captures the reason for buying the product or the benefit that ownership confers (Reason-why advertising, 2005). AIU can also use health appeal as the core of its massages. The English are hard working, earn a good living, and spend freely. They appreciate the good things in life. To the English, 'good for you' means pleasurable. He or she will buy if the taste pleases. To the English, the vitamin content and energy value of some foods are more important than taste. At the same time, however, vitamin content and energy value have the connotation of health food. What this can suggest, however, is that the effectiveness of an appeal in a foreign market may vary within the country and product class. For this reason, it appeals to logic of a potential consumer. Also, messages can use certain emotional appeal to touch the heart of the intended audience. The company can use the following message: "HEALTH +Vitamin C + Excellent TASTE = AIU's APPLE SAUCE". Strategic Plan To enter the market, AIU should accept a marketing tactic taking into account: benefits, consumption patterns of a particular target group, demographics and psychographics (McDonald, 2002). To resist competition, AIU should use flexible bonus schemes for repeat buyers to create a core of loyal supporter. The company should open its agency in one of the big cities in the UK in order to control sales and analyze market potential and market response. AIU should employ professionals in food industry who are able to achieve specific organizational objectives and concerned with the co-ordination of work activities on the UK market. In this company people will be brought together on the basis of defined roles within the structure of the organization. The objectives for AIU is to initiate co-operative marketing with restaurants and big retailers in the big cities around the country, to hire sales staff both currently identified and unidentified to implement sales lead follow-up strategy, to increase market share, to expand regionally with both media and sales personnel, to constantly achieve cost benefit through an expanding provider network. The plan will include the following steps: 1) aggressive adverting campaign aimed to popularize the brand and attract low and middle income customers; 2) contracting with supermarkets including Tesco, Mark and Spenser, etc. 3) contracting with snack bars and restaurants around the country Advertisements will be placed in the local and national Press, on TV and radio, and consumers will be encouraged to order directly by telephoning or writing to the supplier of the goods or by filling in a coupon which may be incorporated in a Press advertisement. The advertisement must be informative enough to enable potential customers to make a decision to purchase. The use of demographic descriptors can be helpful in identifying commonalities. The Choice of Press issues should be based on readership: Sunday newspapers and color supplements are invariably passed around the family for reading (See Appendix A). Nevertheless, flexibility is the most important marketing requirement, which is essential for the expansion of opportunities, and plays an important role in making and breaking the competitive positioning on the foreign market. References 1. GDP Growth. The UK. (2006). Retrieved from http://www.statistics.gov.uk/cci/nugget.aspid=192 2. Johnson, G., Scholes, K. (1998). Exploring Corporate Strategy. Hemel Hempstead: Prentice Hall. 3. Mason, L. Food Culture in Great Britain. Greenwood Press. 2004 4. McDonald M. (2002). Marketing Plans: How to Prepare Them - How to Use Them, 5th edn, Butterworth-Heinemann, Oxford. 5. McDonald M., Christopher M. (2003). Marketing: A complete Guide. Palgrave Macmillan, 6. Reason-why advertising. (2005). Retrieved from http://101publicrelations.com/blog/reasonwhy_advertising_000167.html 7. The World Fact Book: the UK (2006). Retrieved from http://www.cia.gov/cia/publications/factbook/geos/uk.html Appendix Appendix A Implementation of the First Advertising Campaign (in Wales) Send Direct mail - twice a month; Cinema ad - 7 times a day; Radio ad - 10 times a day; Advertising in local Press - once a week; TV ad - 3 times in the evening; Posters in transport; Display stands; Calendars and wallcharts. Read More