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BSBMKG606 Evaluate International Marketing Opportunities Assignment
International Market is the presence of a company in other countries apart from the one where it was incorporated. It refers to the joint venture, franchising, export or straight entry of the services or products of a firm in another country. The marketing of the firm has to be then developed accordingly so as to meet the requirements of the particular country; this is known as international marketing. The existing marketing strategies can be used by the company or strategies like leadership, social media, website, offers and promotions, offering local products and localization can be used.
SECTION A: International Market Evaluation
The potential of sales via international business is tempting and exciting for a lot of firms, but venturing into the international market without evaluating it and preparing proper plans is risky and might not result in success. Evaluating a market helps an organisation in testing the reliability of opportunities within a particular market chosen (Nebenzahl & Jaffe, 2013). It also helps in determining the marketing strategy to be undertaken by the firm to ensure their success.
A global market review
Previously, the major trading partner of Australia was Britain, who purchased most of the country’s farm produce and supplied consumer merchandise. Currently the major trading partners of the country are South-East Asia, China, Korea and Japan, and it’s economic and trade policies are formulated based on the trading relations with them. The biggest export market of Australia is China and in 2014, 34% of exports by the country were accounted by China. A new free trade agreement has been formulated between these two countries – the China-Australia Free Trade Agreement. It has been implemented since December 2015, and according to that over 86% of goods exported by Australia will enter the China without having to give any duty. These figures are expected to rise by 2019 up to 94% and subsequently Chinese imports will also be free of Australian tariffs. This will provide the country with a competitive edge and bring it at par with the other major nations. The country will also get an advantage in the Chinese market over some chief fibre and food competitors (Chen & Wang, 2010).
Opportunities to enter the Chinese market:
1. Completely Australian owned hospitals can be established in the Hainan, Guangdong, Fujian and Jiangsu provinces and Shanghai, Tianjin and Beijing municipalities.
2. Age care institutions owned by Australian providers can be established in China.
3. Australian companies can provide R&D services and can carry out R&D in China through subsidiaries present there.
4. CBEC or Cross Border e-Commerce has been set up in China that provides tariff exempts to online sellers.
An analysis and assessment of the international business and electronic commerce market factors
According to Malcolm Turnbull, the Prime Minister of Australia, the service and ecommerce industries will renew trade relations between Australia and China. The Australian exporters who work in a small or medium scale can easily access the Chinese markets by using renowned e-commerce platforms like JD.com and Alibaba. They have an enormous potential as the Chinese e-commerce market is estimated to be larger than the United States e-commerce market. Furthermore, Steve Ciobo, trade minister, and the prime minister had led a delegation of the business community of Australia that consisted of a 1000 representatives to China in 2016. Over there they had a 5 day tour spanning ten cities and approximatelyAUD$3 billion was generated in investments and AUD$1 billion was generated in exports (Arkolakis, 2010). This shows how the trade relations with China s beneficial for the Australian economy and is giving it a boost.
The Chinese market is one of the largest in the world because of the country’s massive population. Additionally, it is the fastest growing economy in the world, and provides several openings and viable business opportunities. Since there is an emergence of middle class in the country now, the demand for services and amenities are increasing along with a boom in the travel industry (Mussatto et al., 2010). These fields provide viable prospects for businesses and travel agencies that provide full services have an enormous opportunity. Local businesses, health industry, age care, electricity, wine, grain and red meat industries are some markets that can be entered, shaped and influenced.
A risk and impact analysis of the potential market
Demographic Imbalances – Since China has a vast population, businesses think that the whole population will act as a large customer base. But they don’t consider the fact that approximately 850 million population of the country are impoverished and live a hard life. Furthermore, Chinese people are the world’s largest savers and this could impact the businesses.
Potential for Unrest – The workers in China have to work for long hours and feel that they are underpaid. Due to this and scarcity of skilled workers, the wage rates have been going up for the past 5 years.
Political Challenges – Since the country has been ruled for several decades by the communist party, the cultural and economic institutions as well as the legislations are completely under their power. Due to this the rules and regulations of the country are not as transparent as that of the western countries.
Legal challenges – The foreign and domestic businesses are protected with patents and strict laws. Though a free trade agreement has been signed by Australia and China, the other legal aspects need to be properly checked.
Market Behaviour Challenges – Many mega brands have tried to venture in the Chinese market and had disastrous results. This is because if a brand wants to be recognised in China, then it has to market, advertise, and brand its product with a strong cultural overtone.
Trade Policy Barriers and Economic Instability – Various risks can be faced by a firm due to the country’s macro-economic factors, trade policies, monetary policies and fiscal policies (Kilian & Murphy, 2014). The Yuan has been constantly maintained against the US dollar but according to various foreign economists, the Yuan has been 40% undervalued so if there is a change in the currency then the organisation’s profitability will get impacted.
SECTION B: Marketing International Management Strategy
Wesfarmers – About the Company
An Australian conglomerate, Wesfarmers Limited has its headquarters in Perth and mainly deals in safety and industrial products, coal mining, fertilisers, chemicals and retail. By revenue, Wesfarmers is the largest Australian company and in the financial year 2016, its revenue was AU$65.98 billion (wesfarmers.com.au, 2017).
Objectives and Risk Management
The marketing objectives of Wesfarmers in China are:
Market Research – They carried out a thorough research of the Chinese market before investing in it. The information related to the country’s market scenario can be easily accessed from CBBC and UK Trade & Investment.
Brand Localisation – Several brands have not been successful in China because they think that their products will be as alluring to the Chinese market as they were in their home country. Wesfarmers have modified their products and services and have linked them to the Chinese culture, to suit the tastes and preferences of the local customers.
Marketing Communication – The communication strategy of a company should be devised by keeping the local residents in mind. Because the target of Wesfarmers is the Chinese customers, the company communicates through the medium of Chinese language (Morschett, Schramm-Klein & Zentes, 2015).
Potential risks that Wesfarmers can face are:
Regulations and Trends – The marketing trend of other firms might change, this would affect the firm. So, the company should be alert and keep an eye on the pricing, marketing strategies and launch of new products from its competitors.
Lack of keeping track – If no track is kept of the marketing strategies then Wesfarmers attempts at marketing might fail. So the company needs to keep a track of the successful as well as unsuccessful strategies.
Approach and operational structure:
To perform well in the market of China which is an international market for Wesfarmers, the company needs to focus on their culture according to which the customers’ needs would be identified. There should be an ample investment on human resources, local people should be hired and suggestions should be taken. This will make it is easy to make strategies without intervening in their culture and daily life, making it profitable for the organization. There is a need to connect with the supply chain network of China and render good service and develop new methods to expand its footprints. The company personnel’s outlook should be positive towards the Chinese people and their culture. A good and well trained marketing team must work behind the scenes to create a unified and mind compelling voice for a brand. The internet and television campaigns should be extensive so that it reaches the maximum number of people. The marketing team must consider the holidays and the festivals of China and provide offers on different products in order to increase the sales revenue. During the promotion of the offers, the brand image and the brand value must not change but instead the temper of the promotion of brand should change.
Theoverall achievement of the organisation depends on the performance of the team as a whole and also on the team leader. The effectiveness of a team is based on the execution of a team in well-organized approach where there is a dynamic contribution of the members in both planning and decision building as this will build a good sense of responsibility and lucidity about the work within the members of the whole team to accomplish the aim within the predetermined time.
Communication among all levels of an organization is very important and it is even more important to have clear and effective communication among all the levels of the organization. For perfect communication in the organisation, a strategy needs to be implemented. Along with that clear and proper international marketing goals and strategies should be jotted down and then should be effectively circulated among all the members concerned. If possible the Chinese culture, customs and their level of knowledge should be taken into account for the company’s enhanced profitability. Each of the members should feel that the adopted strategies are concurrent to their customs and local needs.
It is needless to say that market integration is needed in order to promote the products of Wesfarmers in China successfully. To promote and sell the products in the Chinese market a strategy of market integration involving internet, social media, print media, televisions, radio all should be taken into account. Integrating all these promotional sources together would help the organisation to enter into Chinese people’s living room and life in an easy way thereby entering into their market in a seamless manner. This strategy helps to provide the branding experience in a consistent and multi dimensional way. The branding should be made memorable through media as this would make the company’s entry into the market easy.
Section C: Marketing International Management Strategy
Evaluation about product, distribution policies and pricing:
The development of ‘Wesfarmers’ marketing plan and organisational requirements cover the field of product, pricing and distribution policies. The concerns regarding the product are styling, packaging, quality and the product functionality. The pricing of the product should be governed properly so that the profit of the company and the competitive pricing of the product are not affected. The distribution policy of the products in the Chinese market should be maintained in line with the other factors. The Chinese logistics should be handled and the supply chain network of China must be considered while the pricing and distribution of the products are done. Distribution is concerned with how the product reaches the customer and its timely arrival. To ensure a good and efficient distribution policy the inventory management, warehousing, store networks and logistics should be focussed.
Evaluation about overall progress in marketing:
To ensure correct evaluation of the marketing strategy concerning the increase in revenue, quality of the products and timely activity ‘Wesfarmers’ always takes into account a strong business model which includes a robust financial capacity, good human resources, superior corporate infrastructure and strong and sustainable growth (Dinnie et al. 2010). The different industries that Wesfarmers operate include Coles, Target, Kmart, insurance and Home improvement and office supplies. They have gained a lot of profit in the past few years due to their timely active work performance, good quality of products delivered and strong distribution chain. There was a net profit of $2 billion in the year 2012.
Review and analysis of objectives and marketing outcomes:
Since the establishment of Wesfarmers in 1914, the company now has grown to be one of the largest listed companies of Australia. This co-operative of farmers which has its headquarter in Western Australia is involved in different fields of business including supermarkets, departmental stores, coal mining, home improvement and office supplies, chemicals, energy, fertilisers and industrial products (Berthon et al. 2012). The main objectives of the company are to satisfy its shareholders and customers by providing good returns and efficient service. Coles achieved a growth of 16.3% by price reinvesting and thereby driving its volume. Bunning’s (the coal business) had 4.9% growth in 2012 by improving the store networks and customer services and values. Target grew by focussing on its supply chain and lowering the levels of clearance. A great deal of improvement is made by Kmart and office supplies which focussed on product sourcing and stock management. Since there is a large population in China, the organisation gets a very large customer base to take into account and perform accordingly. At the year end 2012, the directors declared a dividend of 95% per share taking up the total years dividend to $1.65 from $1.50 per share.
Impact on International Market by changes in market phenomena:
As the conglomerate has been seeing a considerable growth in the past few years, it has its own view towards the changing market phenomena also. The main focus on which the change of market phenomena is drawn is the demand and supply of markets specifically focussing on the demand curve. The market environment of China is changing rapidly in the modern technological era where the meaningful estimation of the demand function is greatly enhanced. International business involves two or more parties, countries or both the government and private parties together (Leonidou et al. 2010). Due to the change of market phenomena occurring because of the global forces, Wesfarmers have to face the competition in the international market, political developments of other participating countries and other global issues. As a result, stakeholder’s interests are also affected at the local level. So to adhere to the global market (mainly China) Wesfarmers has decided to convert the global forces and opportunities into strong business strategies and take a leap into the global market where it would invest and make offshore acquisitions. But the stakeholders have to be a bit patient because the company is on the process of laying the ground of acquisition in other countries. It has already created a business development office in Hong Kong and human resource is also available with company to spread its branches there.
Review of marketing performance with KPI
The marketing performance of Wesfarmers is superior in comparison to other companies of Australia. If measured in accordance to the KPI of marketing performance in China such as sales revenue, it is important to know how effective the local marketing is. Sales revenue allows us to get the ultimate insight in the profit of the company. Customer acquisition is the basis of measuring their value and thereby increases their satisfaction and lifetime value. In Wesfarmers both the Chinese and Australian customers are valued by incorporating and delivering products in a simple way to satisfy their needs in a timely manner. Another important KPI is the return on investment calculation. This estimation allows building new strategies and planning new budget amounts for the upcoming year. For example, few of the initiatives of COLES is to perform consistently better in the markets that are shown in the figure:
Improvement of marketing performance in international market:
The Wesfarmers made exceptional profit and there was also a six percent increase in the operating revenue in 2012. By increasing the business to business sales and taking online initiatives would help the organisation to adhere more to the global market. The Chinese market serves as a customer base and a land with good sales opportunities for Wesfarmers.
The international market is thus a place of great business opportunities as well as business risks. A company like Wesfarmers which have a strong base of employees, resources, funds and diversity in business have well considered the facts and policies that would help it to remain in the competitive market of China and make a good profit along with keeping a strong foothold in the Chinese market. The superior financial base, employee base, marketing team and customer value of the company makes it a strong player in the international market.
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wesfarmers.com.au (2017), Home. Wesfarmers.com.au. Retrieved 20 February 2017, from http://www.wesfarmers.com.au/