Global Marketing: Market Entry and STP Strategy

Global Marketing: Market Entry and STP Strategy


Question:
Discuss about the Global Marketing for Market Entry and STP Strategy.

Answer:

Introduction

The current report revolves around the international market entry strategies. It is evident that due to the dynamic nature of the environment, the organizations are in the rush of developing their strategies to increase market share and profit margin (Sleuwaegen & Onkelinx, 2014). There have been a number of strategies to penetrate in the global market. However, due to the increased competition in the market, the company cannot take the risk of applying the traditional global entry strategies. The firms need to focus on advanced strategies that lessen the impact of potential risks and provide the opportunities to gain success in the international market (Cavusgil et al., 2014). Thus, in order to understand the effectiveness of the global market entry strategies, the current report considers the plans of business expansion in the global environment of Australian Nature Honey. The company is all set to get into the global market with its developed products and services. However, getting into a global environment requires the organization to go through multiple stages that come in the form of strategies. The report provides a deep understanding regarding the stages involved in the strategies.

Summary of Previous Report

The previous assignment provides an insight regarding the capability, internal and external resources, current and future of Australian Nature Honey. The report also provides a deep understanding about the markets where the organizations is successfully running its business. The market analysis conducted in this particular assignment indicates that the firm is determined to enter into the Austrian market with its 100% Pure Honey product. In order to expand the market, the organization emphasized on the business-to-business market (B2B) and Business to customer (B2C) markets. In addition, with the help of effective supply chain practices the firm minimizes the risks associated with the approaches applied. The market analysis on some targeted nations implies that the Austrian embrace the quality of honey developed and produced by Australian manufacturers.

The assignment also provides the data that demonstrate that Austrian market is comparatively smaller than the other nations. In addition, it has also been identified from the analysis that a large part of Australian population is fond of 100% natural products (Laufs & Schwens, 2014). This is probably because European food and beverage organizations come with the added preservatives and chemicals. However, in order to expand the business in the targeted markets, Australian Nature Honey may face a tough competition due to the strong presence of Chinese Honey Exporters. Therefore, it can be mentioned that Australian Nature Honey could successfully accomplish its objectives sine the product of Australian Nature Honey is largely embraced Austrian people.

Screening of the Market Selection

Market selection is one of the significant approaches that organization needs to consider while focusing on a particular market. However, the company needs to be aware of the certain external risks that are associated with the opportunities. Following are the stages that should be implemented while getting into a new market.

Five Stages of Overseas Market Selection Process

The section is built with a particular purpose of outlining the significant techniques that an organization should consider for getting into a particular environment in the global environment. Five different stages associated with the “international marketing entry evaluation process” should be implemented by the organization for gauging the prospective markets. The implementation of the sages involved in the market entry strategy helps the organization to gain certain opportunities.
Stage of overseas market selection process
Figure 1: Stage of overseas market selection process
(Source: Buckley, 2014)
Stage 1- Country Identification- This is one of the critical stage should carefully chosen while implementing the goals and objectives while getting into the global market. In order to expand the business in international environment and expand the services, Australian Nature Honey should identify the potential country for running the operations that is based on the overview of the market. In this context, Wach and Wehrman (2014) commented that an emerging market has a number of distinctions from the domestic market. Notwithstanding, As the company is determined to get into the Austrian market, Australian Nature Honey needs to focus on some necessary similarities between the domestic market and Austrian market.
Stage 2- Preliminary Screening- It is observed that preliminary screening is necessary for the company pay a serious attention to the Austrian market in order to provide ranks or weights.
Stage 3- In depth Screening- The countries that put this on the third level in overseas market selection process can be conceptualized as feasible for getting into a new market. Thus, it is significant that in-depth information about Austrian market is derived; thereby marketing-decisions could be effective.
Stage 4- Final Selection- As mentioned by Shi et al., (2014), the activities performed in this stage indicates that a potential selection of the countries is done now. This stage also highlights the positions and the market share of the potential competitors in the same industry. In such context, Australian Nature Honey determines the position of Chinese Honey Exporters.
Stage 5- Direct Experience- As commented by De Beule, Elia, and Piscitello (2014), the marketing heads of the company need to focus on or travel the targeted market to observe the firsthand nation’s culture and business practices. This stage drives the market personnel of the company to gather all necessary data about the target market.

Justification Behind the Selected Country

It is earlier discussed that selection of the country is mainly based on the availability of the opportunities recognized by Australian Natural Honey as the outcome of population, acceptance of products of Austria. The market analysis conducted in the previous study indicates that a large population in Austria prefers natural products and they embrace 100% pure honey products. In addition, the company would not have to face any barrier in selling and distributing the products as the bulk amount of the population in Austria is involved in commerce and trade. Moreover, it is also identified that the analysis on the Austrian market discloses that the people in Austria have knocking of exporting the imported products to the perspective market around the Europe. This could also provide some benefits to the company.

Objectives

The major purpose of developing the strategies that helps to target, segment and position the market is hence considered as the organizational objectives. As the natural products are widely embraced by the people in Austria, the company gains the significant opportunities to establish the expanded business. In addition, hence, another objective of Australian Nature Honey is to gain the profits meeting the needs of customers by providing them 100% natural products.

Alternative Market Entry Strategy as the New Company

Hence, different market entry strategies and the selection process have been elaborated here. It is necessary for an organization to select the strategies carefully as the company may face different barriers while getting into a new market. Moreover, the strategies of getting into a foreign market are different that the strategies usually applied in the domestic market.

Target Market Selection and Positioning

Segmentation: The segmentation of the market may involve Australian Nature Honey to emphasize on the natural products, as a bulk amount of Austrian population prefers 100% natural products (Buckley, 2014).
Targeting: As the people in Austria have embraced the natural honey, the firm could mainly focus on both sub-urban and urban areas families. In addition, as the per capita income of family is not much high or low, the emphasis should be on the upper-middle class families.
Positioning: The organization needs to position its brand image in the foreign market as the natural products providing high quality of nature honey at the reasonable price. The implementation of the techniques could provide faire returns to the company.

Realistic Market Entry Strategy

As commented by Hilmersson and Jansson (2012), there have been different global market entry modes available for the organizations to get into a market or penetrate the market a particular market. In addition, there have been a variety of ways based on which Australian Nature Honey could get into the foreign market. However, it is also evident that strategy of one market works differently in all markets of the global environment. In this context, Piercy (2014) commented that direct exporting could be the most appropriate strategy in one market whereas in another market, the firm may have to build a joint venture.  Hence, some significant market entry options available to the company and selected market have also been discussed.
Direct Exporting: It is observed that direct exporting is an option where the products are sold directly into the targeted market. Many organizations turn to agents or the distributors to penetrate further in that market. Moreover, the agents and the distributors often work closely with the firm in implementing the strategies. These agents and the distributors become the face of the company. Therefore, in this context, the selection of agents and distributors is tackled in the same way when the organization hires the key personnel. The overall technique of direct exporting comparatively provides low risk to the organization from the perspective financial exposure whereas the strict foreign investment limitations can be avoided. Notwithstanding, there have been certain chances where the firm could observe vulnerability concerning the execution of different tariffs as well as potential conflicts with global distributors (Wei, Zheng, Liu & Lu, 2014).
Franchising: As commented by Ashourizadeh, Rezaei, Schott and Vang (2014), franchising is type of expansion strategy contributing to the rapid expansion of the firms. The strategy specially works for the organizations that have a repeatable business model and these models are easily transferable to other segments of the market. Two different caveats are necessary while applying the franchise model. Firstly, the firm must have strong brand recognition that could be utilized internally. Secondly, the firm may create its future competition in the franchisee. As commented by Meyer and Estrin (2014), a franchise could provide franchisee with a particular level of independence where they could operate its business. However, it is also identified that a franchisee is not entirely independent. The franchisees have to run the business in accordance with the procedures as well as the restrictions mentioned by the franchisors.
Partnering: As mentioned by Musso and Francioni (2014), partnering is also kind of necessity while getting into the global or particular foreign market. It is also observed that partnering could be more relevant or useful approach in the markets where the culture including the business and the social is different than the culture of the domestic market. Through partnering, the firm could gain the benefits of accessing to people and knowledge. This means the firm could mitigate the risk as well as minimize the potential mistakes. However, the conflicts of interest may arise; this means some decisions or the actions appropriate for partnering but it could be unfavorable for the organizations.
Thus, in order to get into the Austrian market, Australian Nature Honey could implement direct exporting as the firm could have greater control over the market within a short time. In addition, the direct exporting can easily be established by forming own subsidiaries in the importing nation.

Cost Effective Generic Strategy -

  • In order to penetrate in the foreign market, Australian Nature Honey could implement low cost strategy for its natural honey. In addition, the firm needs to focus on high quality of products.
  • The competitor Chinese Honey exporter is focusing on the population that belongs to the high-income range. Thus, focusing on the low cost strategy may provide significant extent of competitive edge.

Recommendations for Preferred Strategy for Australia

Market Entry Mode

Different market entry models are developed relying on the nature of the global market, whereas the direct exporting is chosen for Australian Nature Honey because of the low financial risks. Thus, at the time of strategic formulation, the organization needs to provide the opportunities that are associated with the markets. These opportunities must have the capability to incentivize the business further (Laufs & Schwens, 2014).

Target Market and Generic Strategy

The market segmentation technique needs to pay attention to the customers who have honey consumption habit. Therefore, the technique behind producing the natural honey would provide the priority to all the age groups including the children and adults. Furthermore, ensuring natural products with high quality materials could help the company to reinforce its market position in Austria.

Generic Strategy

To promote the representation of foreign market interest, Australian Nature Honey should work closely with its distributors and agents as the aspect of direct exporting technique. Thus, this process of selecting the agents and distributors need to be managed in the same way like dealing with other personnel in the organization.

Reference List:

Ashourizadeh, S., Rezaei, S., Schott, T., & Vang, J. (2014). Entrepreneurs’ human and social capital: direct and reinforcing benefits for export.International Journal of Entrepreneurship and Small Business, 21(2), 246-267.
Buckley, P. J. (2014). International integration and coordination in the global factory. In The Multinational Enterprise and the Emergence of the Global Factory (pp. 3-19). Palgrave Macmillan UK.
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.
De Beule, F., Elia, S., & Piscitello, L. (2014). Entry and access to competencies abroad: Emerging market firms versus advanced market firms. Journal of International Management, 20(2), 137-152.
Hilmersson, M., & Jansson, H. (2012). Reducing uncertainty in the emerging market entry process: on the relationship among international experiential knowledge, institutional distance, and uncertainty. Journal of International Marketing, 20(4), 96-110.
Laufs, K., & Schwens, C. (2014). Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda. International Business Review, 23(6), 1109-1126.
Meyer, K. E., & Estrin, S. (2014). Local context and global strategy: extending the integration responsiveness framework to subsidiary strategy.Global Strategy Journal, 4(1), 1-19.
Musso, F., & Francioni, B. (2014). International strategy for SMEs: criteria for foreign markets and entry modes selection. Journal of Small Business and Enterprise Development, 21(2), 301-312.
Piercy, N. (2014). Export Strategy: Markets and Competition (RLE Marketing). Routledge.
Shi, W. S., Sun, S. L., Pinkham, B. C., & Peng, M. W. (2014). Domestic alliance network to attract foreign partners: Evidence from international joint ventures in China. Journal of International Business Studies, 45(3), 338-362.
Sleuwaegen, L., & Onkelinx, J. (2014). International commitment, post-entry growth and survival of international new ventures. Journal of Business Venturing, 29(1), 106-120.
Wach, K., & Wehrman, C. (2014). Entrepreneurship in International Business: International Entrepreneurship as the Intersection of Two Fields.International Entrepreneurship and Corporate Growth in Visegrad Countries, 9-22.
Wei, Y., Zheng, N., Liu, X., & Lu, J. (2014). Expanding to outward foreign direct investment or not? A multi-dimensional analysis of entry mode transformation of Chinese private exporting firms. International Business Review, 23(2), 356-370.

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