På mit 3 semester havde jeg et ret spændende eksamen indenfor marketing. Jeg har aldrig brudt mig om faget eftersom jeg ærligt talt synes, at det er et rigtig pige-fag. Så længe man “argumenterer” kan man aldrig gå galt i byen. Hvert fald ikke på universitets niveau. Det fascinerende ved marketing er dog, at man har mulighed for at “tænke ud af boksen”. En egenskab som er et must i dag for de fleste globale virksomheder.
Jeg interesserer mig meget for affiliate-marketing samt søgemaskineoptimering, og der er tydelige tendenser der peger på, at hvis man skal kunne følge med i udviklingen og den konstante konkurrence, så kræver det at man ligger i toppen på Googles side 1 på de vigtigste søgeord.
Hvordan ligger man i topppen af Google? Udover de nødvendige off site og on site faktorer indenfor SEO, så er værdi skabelsen blevet langt vigtigere de sidste par år. Google straffer flere og flere hjemmesider som ikke skaber værdi til den besøgende, og lader andre komme til som gør. Med andre ord KRÆVES det at man tænker ud af boksen, hvis man vil differentiere sig fra andre konkurrenter der har de samme ydelser/service/produkter som en selv.
Og det er lige præcis her, at marketing kan sit kram. Der er ingen tvivl om, at hvis man fanger den rigtige vinkel med sin marketingsstrategi, så er man et skridt nærmere succes.
Jeg fik 10 i min marketingseksamen. Noget rigtigt må jeg have gjort 🙂
Green Toys Inc. should definitely consider a higher degree of international expansion of their products. Even though they operate in a niche market and as I stated in question 1 that they are a Born Global they have many opportunities in expanding their products. Before Green Toys Inc. considers expanding they have to consider many factors. Internationalization is unlikely to be successful unless the company prepares in advance. If it is unsure whether or not the company should internationalize or stay home, one can look at Solberg’s nine strategic windows figure 1.1 (below). The figure consists of industry globalism which the company in principle cannot influence. Here the strategic behavior of the firm depends on the international competitive structure within an industry. Another important factor is the company’s preparedness. This factor is determined by the company. I would argue that Green Toys inc. is well prepared and that it has the ability to carry out strategies in the international market place. Because of this I would consider their preparedness as mature.
The fundamental reason for Green Toys Inc. beginning to export is of course money. As within most company’s money is not the only factor. Table 2.1 in Global Marketing gives an overview of the major internationalization motives. Proactive motives are the ones that stimulate the company to go abroad. Reactive motives are the ones that show where there will be difficulties. Green Toys Inc. has a good chance of getting more profit and growth because there are many niche foreign market opportunties.
- Profit and growth goals
- Managerial urge
- Technology competence
- Foreign market opportunities
- Economies of scale
- Tax benefits
- Competitive pressures
- Domestic market
- Unsolicited foreign orders
- Extend sales of seasonal products
- Proximity to international customers
Which markets should Green Toys expand to? As stated in the material there are “two worlds” of spending. The high-spending markets in Western Europe, North American and Japan where birth rates are low, and the low spending markets Asia Pacific, Latin American and Middle East and Africa where birth rates are high. I would argue that Greens Toys inc. could internationalize in both. Everything is possible if the company has the right strategic plan. Since I have to choose I would take the risk and pick China that is placed in Asia Pacific.
Before I argue why I have chosen China I want to state that Western European countries would perhaps be a better choice to internationalize to first. This is because the gap between the US culture and Western Europe is much smaller and because this part of the world has many well educated online blogging moms that is a big costumer segment for Green Toys Inc. But if Green Toys Inc. chooses the right internationalization strategy I believe that they could earn more money in China because of the growing market and their way of raising and spoiling children as stated in the text.
Before Green Toys Inc. starts its entry into China is has to do research. This is called global marketing research. Global marketing research minimizes the risks in a new market entry (Hollensen, 2007:155). Information of global marketing research can be found in table 5.1 page 156 in Global Marketing. This information can be obtained through qualitative and quantitative research. Both methods have advantages and disadvantages and it can therefore sometimes be difficult to choose which one is the best alternative. But for complex problem solving on a complex subject qualitative would be advisable.
There are however macroenviromental factors that can be a hindrance when Green Toys Inc. wants to internationalize to China. One of them is the political environment in its home country where the company is based. The other is in the host country where the company wants to internationalize to. In this case China. Se figure 6.1 (below). These political limitations can be import restrictions, tax controls, local content laws and so on. I will answer how Green Toys Inc. can manage political/legal barriers in question 3.
The social cultural environment plays an important role when a company wants to enter a new market. Especially if there is a big cultural difference between the home country and the host country. According to Edward T. Halls High-and low-context cultures concept figure 7.3 (below) we can state that China and America are almost places in their own separate ends of the model. This means that when entering China Green Toys Inc. need to research upon Chinese culture.
I have stated that Green Toys Inc. should enter the Chinese market. In the following I will discuss which entry mode I believe would be the best.
Before Green Toys Inc. wants to internationalize its products it can use different theoretical approaches that would increase its chances of success. The Network Model (Hollensen, 2007:70) would be useful. Green Toys Inc. started back in 2006 so I would argue that they today probably have a professional business network. The Network Model is known as the relationships of a firm in a domestic network that creates bridges to other networks in other countries. This is a very important factor when dealing with China. I will come back to this later in my discussion.
Green Toys Inc. needs now to find out the best way to enter the Chinese market. Market entry modes depend on the company’s size. For most SME’s like Green Toys Inc. the market entry represents a critical first step, but for experienced and bigger company’s it is not about how to enter a new market but how to use the opportunities more effectively by their existing network (Hollensen, 2007:292). An important point to remember is that there is no ideal market entry strategy. In other word there are different market entry methods that might be adopted by different firms entering the same market. It depends a lot on the context and situation. Figure 3 (below) illustrates three different entry modes when a company wants to internationalize markets. There are export modes, intermediate modes and hierarchical modes. There are different degrees of control, risk and flexibility associated with each of these three.
Before choosing an entry mode it is a good idea to ask what kind of strategy should be used for the entry mode selection. According to our curriculum book Global Marketing: 296 there are three different rules.
Naïve rule: The company uses the same entry mode for all foreign markets. This rule ignores the heterogeneity of the individual markets. The naïve rule is often used by small scale enterprises. Pragmatic rule: The company uses a workable entry mode for each market. In the early stages of entry the firm starts doing business with a low-risk entry mode. So if the entry mode does not work or is not profitable, the firm will find an alternative entry mode that works. The pragmatic rule is often used by small scale enterprises. Strategy rule: This strategic rule requires all alternative entry modes are systematically compared and evaluated before any choice is made. This rule normally used by Large Scale Enterprises because it takes time and money to research the different markets.
I would argue that Green Toys Inc. uses the pragmatic rule because of the low risk. If they do not succeed with their first entry into China, they can adapt and find out what they did wrong and give it another try.
The entry mode decision is a very complex matter. A company’s decision of an entry mode is the result of many often conflicting forces. The Choice of entry mode “should be based on the expected contribution to profit” (Hollensen, 2007:297). As figure 9.1 shows (below) there are 4 factors influencing the entry mode decision: Internal factors, external factors, desired mode characteristics and transaction-specific behavior.
According to figure 9.1 (above), if Green Toys Inc. has many pluses it should go with a hierarchical mode. This is normally seen in big companies that have a lot of international experience, are risk averse because of financial stability, have high product value and have small sociocultural distance between the targeted markets and so on. If the company is smaller and has many minuses it can either chose the intermediate mode or export mode. My conclusion to the above figure is that Green Toys Inc. chooses the entry mode with the majority of either pluses or minuses. I believe that Green Toys Inc. should go with an Intermediate mode because China is a special country that has several important factors that a company has to have in mind. Green Toys Inc. is not a big company and they have many barriers when entering China like sociocultural differences. In intermediate entry modes there is no full ownership involved, but ownership and control can be shared between the company and a local partner.
These modes include different forms of arrangements like licensing, franchising, management contracts, joint ventures and so on. In figure 11.1 (below) are the most relevant intermediate modes. These arrangements between companies take place when companies possess some sort of competitive advantage and are unable to “exploit this advantage because of resource constraints, for instance, but are able to transfer the advantage to another party” (Hollensen, 2007:330).
The most used intermediate modes are contract manufacturing and joint venture. Contract manufacturing is used by e.g. Nike and United Collars of Benetton. They both relay upon a contractual network of small overseas manufacturers for their clothes, shoes etc. In other words contract manufacturing is used when a company wants to outsource to an external partner, one that specializes in production. This shows that the intermediate entry mode is a good choice when dealing with China. Companies that want to do business in China have to understand the complexity of Chinese history and culture.
The key to doing business in China is flexibility, patience and persistence. Factors one normally sees when dealing in emerging markets. I would recommend Green Toys Inc. to use Licensing and franchising. Under this agreement Green Toys Inc. grants rights on its products and brand to a Chinese for a specific period of time. In return the Chinese company receives a royalty. The Chinese call this form a contractual joint venture. Most companies consider this form of entry of low risk. This is because there is now upfront investment which minimizes the risk – ideal for Green Toys if it happens that this was the wrong entry mode. When entering China it is a good idea to do it through Hong Kong. The citie gives opportunities because it is much more liberal than the rest of China and it therefore is easier to deal with policies etc.
Regardless of which entry strategy the company chooses there are several factors that are important to have in mind. One of them is cultural and linguistic differences. These affect all relationships and interactions inside the company with costumers and inside the government – therefore understanding the local business culture is critical for a success. Political and economic issues are also an important factor. Policies can change over time and Green Toys Inc. therefore needs to determine their level of investment and find out how much of their earnings they can repatriate. One of the most important cultural factors in China is Guanxi. This basically means that Green Toys Inc. needs to have a Chinese contact that can put in a good word for the company. Business in China is relationship based and therefore it is best to have an introduction from a Chinese representative. As I stated in the beginning of question 2, Green Toys Inc. can use the Network Model to perhaps get established an contact in China.
Because I also stated in question 2 that Green Toys Inc. could internationalize to Western Europe, I will therefore propose a marketing mix for this region.
Marketing mix is often referred to as the four “Ps” which stand for product, price, place and promotion (Hollensen, 2007:415). Greens Toys Inc. has effectively blended these four factors because we have seen that they have a marketing program that gives satisfying goods in the US market. Let’s have a look at Green Toys Inc.’s product. Every product has a “life cycle and a growth phase that is eventually followed by a decline in profit” (Hollensen, 2007:427). This is because the product reaches its market saturation level. In order for the company to retain its competiveness in the market, product differentiation is necessary. Green Toys Inc. operates in a niche market and has a very different product than its competitors. Already here they will have an advantage in Western Europe. Next step is deciding the products price. This can be a complex matter because pricing is influenced by supply and demand and which strategies the company uses when pricing its products. I would propose Green Toys Inc. to use skimming. Skimming is a known pricing strategy – a skimming strategy is if Green Toys Inc. targets “a costumer segment that is willing to pay a higher price for a product than the mass market” (Hollensen, 2007:480).
When this segment has filled its need to purchase, Green Toys Inc. will start lowering the price of the product to the next costumer segment. So the term skimming means that Green Toys Inc. is skimming the top of each segment that wants to pay the highest price for the product. Placement is how Green Toys Inc. will get their products to the costumers. One or more organizations involve in the process of making their product available to the costumers. These organizations can be distributors, wholesalers, retailers and so on. Green Toys Inc. can use the normal store based retailers but the internet is a new growing channel, which takes me to promotion. Promotion is another important factor when creating the marketing mix. This covers how Green Toys Inc. will promote or create awareness and interest for their products. One can consider this as a form of advertisement where their product or service is placed in ads, movies, videos, music and so on. Sports is an excellent example, Nike uses famous sports athletes to advertise their products making the demand even higher. Because I daily work with affiliate marketing I know how much “more sale” affiliate marketing can do for a company.
I would suggest Green Toys Inc. to develop an affiliate marketing platform for bloggers and smaller companies. As stated in the material Green Toys Inc.’s biggest costumer segment are well educated parents that use the internet at lot. By giving bloggers and companies commission it would be a cheap and fast method to spread the news about their products. It is however important to remember that each country is unique and that it is not possible to make a marketing mix plan for entire regions. By looking at figure 2 (below) one can establish Green Toys Inc. needs to make different marketing plans as each country has different aspects.
When the marketing plan is ready Green Toys Inc. has to translate the strategy into action. This is done by making decisions in the company who is responsible for the implementation of the activities and when they will take place. In order for a marketing plan to be successful it needs to have a well-planned budget. Green Toys Inc. therefore needs to have adequate resources to meet the performance objectives my strategic market plan.
Hollensen, Sven, 2007: Global Marketing. 4th edition. Prentice Hall