International Marketing of Safari Motors - Essay Example

Introduction In the recent past, trading activities has become increasingly global in some way because of the need to gather and increase the company's financial bases. This has been attributed to increased growth and sophisticated approaches that organizations are using nowadays to conquer markets. (Hollensen, 2004) Due to modernization and advancement in technology, most businesses are beginning to explore international markets for better profits and opportunities. In the recent past, trading has become increasingly global in some way because of the need to gather and increase the company's financial bases. Advancement in technology including communication efficiency and better international relations has contributed to the promotion of the international trade. Competition has however become a great challenge to the success of international trade but most companies are rising to the challenge. To achieve greater investments and better market opportunities in the international market, it is necessary that primary and secondary market research is done to ensure that information regarding the country is achieved. (Hollensen, 2004) This paper will therefore look into the requirements and plans needed for a company (Safari Ltd) to enter market successfully. The main issues that will be addressed by the paper will be; marketing across borders, risks and opportunities that the company will face and country analysis using SLEPT and size of the Chinese computer manufacture market. Profile of the company-Safari motors Safari motors is computer manufacturing company in the United States located in Texas. This company offers a wide variety of products including the manufacture, assembly, and maintenance of computers. The company has risen from being a retailer of used computers to become one of the improved companies in the sector. It boasts of a financial base of $ 120Million. The company has been for the past two years getting recognition and that it believes it has met the needs for the domestic market and now it needs to explore the international market. Changing nature of international environment There have been many changes on the way international market environments have been behaving especially in terms of diversity. The international marketing environments are usually done through the use of a STEP or PEST analysis procedure. (Hollensen, 2004) This analysis is worth because it determines whether the organization will be fairing well or not. For the purposes of this paper we shall use SLEPT marketing tool to analyze the Chinese market China China is the fastest economically-growing country in the Asia currently and is considered to be very developed come the next decade. Accompanying a rapidly growing economy is the increase in environmental pollution and this pollution is contributed by foreign companies which have heavily invested in China. Currently it is number two economy in Asia. (Lee and Carter, 2005) Ready market With an increase in the economic growth rate of the Chinese economy, most sectors will require computers to improve on its technology and service provision. The manufacturing sector in Chinese has grown bigger in the last few years demanding more usage of the computer software and hardware. The introduction of internet and other communication services such as the mobile phone sector, has taken the country by storm. With an increase in the need for internet access, comes an increase in the need for computer hardware and software. A study conducted by Coopers limited (UK) in China has shown a rise in the need for internet among the Chinese urban population especially the youth. (Lee and Carter, 2005) SLEPT analysis This is an analyzing tool which is used to examine a business environment it stands for social, legal, economic, and political. Social Forces within the society such as media, family and friends have affected the way an organization sells its products. Most of the customers in china believe that products made from America are of high quality or low quality or any other country as such. Social factors affect our attitude, opinions and interests on the way we view products from certain companies. Culture is a problematic issue for many international marketers because it is inherently nebulous and normally difficult to understand. It is possible that employees of a company can violate the cultural norms of the Chinese people without knowing hence the people in China becomes uncomfortable with the behavior. In china for example, there are many festivities that are strictly observed in addition to other religious believes such as the Xian Hum day. Chinese culture is the most elaborate and diverse in terms of religion, food, clothing and lifestyle. The company must therefore be able to adjust skillfully to the culture here depending on the marketing strategies to be applied by the company. (De Monte, & Lafayette 1994) Legal The way the company operates in terms of operating rules of law. The company is engaged in legal business practice of marketing alcohol products which is permitted by law. One of the legal shortcomings that safari company will face when carrying out business in China especially when it applies to technology industry is the complex and dissemination of the government bureaucracy which deals which technology trade and in particular importation of technological to the country. The high number of government entities and government-quasi official who have jurisdiction or semi jurisdiction over tariffs, licensing, tariffs, quality control and verification of origin is a bit confusing. Though, the government of china is undertaking some steps to slowly remove the remaining controls in the industry to make it more attractive and business friendly. (De Monte, & Lafayette, 1994) Economic Various economic factors are indicators of the changing international environment. These economical factors include; Fiscal policy rates, interest rate policy, currency exchange rates, consumer factors, quotas imposed on the product , import tariffs, inflation rate and national interests, expenditures, consumer wealth, etc. It is possible that the climate economy of the host country dictates how the consumers of the products behave in the society with reference to foreign organizations. If an economy is booming, recessing or recovering, the confidence of the consumer will automatically change. China is one of the countries which have realized high economic achievements. The country boasts of a well developed infrastructure, international relations, good education system and a large population capacity. (Lars, 2007) Political Political factors may have a direct and indirect effect on the performance of the company. Some of the decisions made by the government of the host nation or the target market may impact negatively on the operations of organization. Political stability of the target country is usually very important when it comes to international marketing. A favourable political environment ensures that foreign investments are safe and secure. Inflation rates are part of the political situation and they are supposed to be on low levels. Monetary regulations are also part of the political issues that form part of the host nation's responsibility to ensure that investors and international companies get access to the currency they feel like. China, just like their neighbors Japan has soft control for prices of specific products that are considered delicate and sensitive to the domestic industries. The products that are manufactured, produced and exported directly from country are given some kind of protection from financially powerful international companies this aspect may hinder the marketing of safari company in china. . (Lars, 2007) Opportunities An opportunity in this aspect can be defined as any event, development, or a feature of the external environment which creates conditions that are favourable or advantageous to the business in relation to a particular objective or set of goals to be attained. It is an attractive venture for a company's operations which if exploited will lead to a significant upward change with desired results such as increase in profits margins and growth. (Hollensen, 2004) There are many opportunities that exist for Safari Company in relation to Chinese markets. Chinese market is consider to be among the biggest in the world and with the high economic development that the country is witnessing currently, consumer purchasing power continue to increase and the market continue to enlarge. The Company has an excellent developed financial base as compared to their rivals implying that they don't have financial problems in opening branches in potential markets within China The technological innovation, for example, that of e-commerce has been utilized and has resulted to expansion of the market share of the company thus increasing their profits and enhancing growth. (Hollensen, 2004) Size of market The Chinese market is one of the largest in the world today. The main factors that contribute to the high ready market provided by the developing economy and the high population Due to this fact, more and more companies engaged in the computer hard ware manufacture are heading for the country and the larger Middle East region at large. This will be the main challenge for the safari company and depending with the marketing strategies and approaches, it is possible to get some of its market share. Most of the schools, institutions, organizations and private companies are able to purchase the computers. (Hollensen, 2004) Risks A risk can be referred to as an environmental development or event which will present problems or challenges likely to hinder the achievement of organizational objectives, for example, competition, high interest rates, government legislations, declining real income among others. Safari Company is will face stiff competition from its local computer and technology companies which are long established in the country. Rivals like the Heineken Company, thus there has been a drop in the market share thus a reduction of their profits. The marketing strategies of Safari Company will have to be reviewed in order to cope with the increasing competition. For it to continue succeed in Chinese marketing managers will have to incorporate recent technological investigations like doing business online. (Hollensen, 2004) Tariff barriers, quotas, voluntary export restrains, subsides to domestic products, non- tariff barriers etc. are challenges the Safari company will be facing in trying to market its products in an Chinese international market. Emergence of other companies eyeing the same market is another challenge to the company, other challenges are; advancement in technology whereby most customers are demanding for better technological components that conform to changing field and track demands. (Hollensen, 2004) International marketing strategies International or common marketing strategies are a pattern of activities that seek to achieve the objective of the organization and adopt its scope, resources and operations to environmental changes, it is normally a long term plan of action designed to achieve a particular goal (Lee and Carter, 2005) Any marketing strategy distinguishes a course of action by its hypothesis that a certain future position offers an advantage of acquiring a gain in the competitive market. There are different marketing strategies that are suited to different marketing environments. (Lee and Carter, 2005) Marketing strategies for industrialized countries In this case, the marketing strategy is so complicated and financially suited to be implemented. We know that in China, the country has sophisticated and effective method of controlling inflation, currency conversion, import controls, corruption among other things that affect international marketing. The following is marketing strategy suited to that Safari Company will use in entering the Chinese market. (Lee and Carter, 2005) Joint ventures The joint ventures are forms of market entry that allows for technology sharing and joint product development. The main advantage of joint ventures is to get proper political connections that will allow for favours to be achieved. It is usually suitable when; a company do not want to commit a lot of capital in the foreign market and it is also an easy entry method. (Lee and Carter, 2005) Safari Company thus will look for a Chinese company it can have a joint venture with, which will be able to meet the demands in china. The main issues that are usually sorted out during the discussions for joint venture are; agreement periods, pricing methods, ownership and control, local firm capabilities and technology transfer. (Lee and Carter, 2005) Promotion methods Promotion is an important marketing tool which is commonly used to market new products in a foreign country. The process requires huge investments especially when it comes to advertisements. There are various forms of promotion; personal selling, publicity, sales promotion or advertising. The various methods used in convincing the customers to buy the brand, product or the services provided by the company. Any promotion for a product that is already known by the customers is not very expensive as such. (Steven, 2002) Pricing a) Penetration pricing- the price for the car can be set to be lower than what is offered by other competitors so as to gain a market share in China b) Economy pricing- cost of marketing and manufacture are kept at a minimum hence becomes a no frills low price for computer hardware c) Premium pricing- use of high price which indicates uniqueness about Safari products. This approach is applicable where a substantial competitive advantage is in existence such as for luxuries but not for computers d) Others-price skimming, psychological pricing, product line pricing, optional product price and captive product pricing Product branding Product branding is a key factor in determining the selling trends in that country. In China for example Safari Company can be renamed after a populous Chinese personality to increase perceived value of the customer towards the product. A good brand name should be; easy to remember, easy to pronounce, legally protect-able, easy to recognize and attractable. There are different kinds of brands that can be applied by Safari limited. These are; premium brands, economy brands, fighting brand and licensing brand. (Steven, 2002) Supply chain and distribution The supply chain and distribution channels will be spread in all the provinces in the country. This will however depend on the demand and product penetration rate. China is a very big country with very many provinces hence the need to contract companies to assemble and distribute the products to all the parts where customers demand them. (Steven, 2002) Conclusion In the recent past, trading has become increasingly global in some way because of the need to gather and increase the company's financial base. Secondary research is important before a company launches it products in a new market because it gives it vital information about the market situation of a country. The Chinese market is one of the biggest in the world especially when factors such as population, economic and social prospects. This company has a chances therefore of getting a fair share of the market if it considers all the marketing strategies suggested above. References De Monte, & Lafayette B. (1994) Cultural Chinese Etiquette & Ethics in Business, Illinois: NTC Business Books Hollensen, S. (2004): Global Marketing, a Market-Responsive Approach, 2nd Edition, Essex, and Pearson Education pp 212-231 Lars P (2007): The Global Marketplace; retrieved from; http://www.ConsumerPsychologist.com; accessed on 5/12/07 Lee, K and Carter, S., (2005), Global Marketing: Changes, New Challenges and Strategies. 1st Edition, Oxford Press. pp 177-188 Loren B, et al (2007): Growth and Structural Transformation in China, in China's Great Economic Transformation , Cambridge University Press, New York, Steven, T. (2002): International market segmentation: issues and perspectives, Intern. J. of Market Research, Vol. 10, 18-26 Read More