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When exploring the foreign market analysis and entry of a new business, the most fundamental consideration to make is usually the strategic marketing.
The latter has been regarded as one of the most effective processes that businesses rely on in order to grow the sale of their products.
Various studies reveal that the effectiveness of international marketing strategy calls for a closely coordinated and a highly analytical application of market analysis and entry. It requires effective identification of the best methods of addressing market entry strategies.
Sun and Wu (2011, p. 338) indicate that understanding a marketing environment is critical for a business when establishing better and effective relationship with consumers.
This can be attributed to the forces and factors of a marketing environment comprise which may also impact the ability of a firm to develop relationships with customers.
This paper provides an evaluation of Airedale Air Conditioning Company and its international marketing practice in both India and Saudi Arabia.
Since there are various entry strategies for new businesses, it is vital to mention that each business entity may experience unique challenges when integrating the marketing mix strategies.
The sustenance of Airedale business in India will greatly rely on its ability to provide product variations such as design and product inventions through innovative techniques.
Its marketing function should mainly be how customers in India will regard its products and their effectiveness. Markle (2011, p. 285) indicates that a business should always focus on satisfying customers’ diverse needs.
Market selection and environmental analysis
Choice of Airedale Air Conditioning Company and international market
Airedale Air Conditioning Company is one of the most successful British air conditioning manufacturing companies. Since its inception, the company has acquired great experience in the manufacture and provision of IT cooling solutions, precision air conditioning and chillers.
The company was formed in 1974 and has since been able to make huge sales from its products worldwide. In 2004, it made sales of up to £ 38.2 million from air conditioning products (Johnson 2001, p. 275).
The market selection for this case study is south Asia (India). The choice of this geographical location is critical in marketing of Airedale air conditioning products due to demand for similar products and a large customer base.
Studies indicate that a market environment is a location in which a business experiences similar conditions of competition over same products as shown below:
Marketing environment
It is worth mentioning that market environmental factors are divided into three significant levels which include a national environment which is also the macro-environment, a meso-environment, commonly understood as the industry a business is in, and the internal or micro-environment.
Airedale Company supplies its products to the USA and other countries faced with diverse and adverse political issues. Political stability or instabilities within the environment a business intends to market its products may affect its marketing activities.
Due to this, entering into this international market requires a keen analysis of the market to tackle the tough changing political environment. This requires adjusting and re-strategizing its marketing plans and actions.
Figure 1: A diagram showing a marketing environment
Environmental analysis of India and Saudi Arabia
Airedale Company has been able to enjoy massive benefits from the sale of its products both in the local and international markets.
Toegel and Barsoux (2012, p. 52) cite that in international marketing, a business’ success in promoting or publicizing its products and services indirectly or directly relies on the various forces in its environment.
At this point, it is imperative to highlight that at Airedale Co., marketing decision-makers have been keen in diagnosing and analyzing critically its local and international business environment.
PESTEL Analysis of Airedale Company
Political environment
India has been ranked as the leading populous democracy in the whole world. It has seven union territories and 28 states with the capital city called Delhi. Politically, the Indian government plays a vital role in the growth and development of business in the region.
Its government intervenes in business matters being conducted in its borders by determining to what extent demerit and merit goods or services are provided.
Valentine (2012, p. 41) cites that these interventions call for a business to devise strategies that focus on diagnosing and analyzing various political factors in the international circle.
Economic environment
An economic environment plays a major role in the growth and expansion of a business’ international marketing activities and sale of products. Johnson (2002, p.11) indicates that economic factors include inflation rates, interest rates and economic growth.
The latter has been a major pillar of success for Airedale Company marketing activities in the USA. India’s economic environment is made up of impacts of profitability, competitiveness, pricing factors, situations of supply and demand dynamics.
Other factors impacting this environment include financing decisions, criteria of investments and policies related to taxes and money. Even so, in 2008 its GDP was at $ 1.25 trillion with a growth of 9.4% in the financial year ending in 2007.
Economic challenges like those in India may negatively impact the promotions and sales of Airedale products because buyers may easily stop purchasing its products or shift to alternative and cheap products.
Socio-cultural factors and buyer behavior
Relying on social ties and understanding diverse cultures in marketing is an effective means of success in international marketing. Allen (2001, p. 54) indicates that the effectiveness of international marketing largely depends on satisfaction of consumers.
India is a nation with unique culture, social ties and great use of technology. An understanding of these aspects in marketing enables an organization intending to expand in this region to come up with marketing ideas that meet the social and technological demands.
This will enable a consequent passage of the same information of product effectiveness to others.
In its international marketing endeavors, Airedale Company has strongly relied on the strategy of marketing through people and social media in a community to pass their product experiences to others who would equally seek to achieve the same.
On the same note, buyers of Airedale products in China and the United States have great preference for air conditioners for personal and commercial use. They prefer high tech equipment for their cooling processes as opposed to other regions.
In Africa, for example, preference is low due to varied economic development. Research indicates this is a factor that is determined by economic status of a region and the level of development. This could be the same case for India, which is fast adapting to current technology.
Technological environment
Modern marketing operations demand the application of better technological considerations to ease operations while promoting objectivity.
Allen (2001, p. 54) notes that technology remains the greatest force that determines the direction of marketing activities and operations conducted by businesses.
Indian businesses have massively benefited from technological developments in terms of manufacturing, marketing and distribution of their products.
There are several companies in India that market their products online and more people are able to access their air conditioning product information online and make correct decisions on whether to visit the company physically of via its website.
Legal environment
India’s legal environment has been considered as an indispensable factor for the success of any business. Its legal aspects provide a statutory framework, policies and structures for businesses to operate in.
Moving business to India will require Airedale to understand these crucial aspects and make them fit within the marketing objectives of the company.
This is important because for a business to experience healthy business operations, it should understand its rights and responsibilities as per the legislations adopted by a country.
India adopted the Companies Act of 1956, Trade Unions Act and Industries Act of 1995(1) among others that have various requirements a company must adhere to. The PESTEL analysis is shown below:
Marketing mix strategy
Developing an international marketing mix is an important aspect that is critical towards the success of a business in selling its products abroad.
Streeter (2003, p. 71) notes that this requires businesses to conduct market research so as to gain a thorough knowledge of how global markets operate.
Bowman and Gatignon (2010, p. 50) assert that information gained from the research aids a business in determining product designs, customer preference and cultures.
Effective articulation of analysis of international markets to gain better approach of marketing mix by Airedale Air Conditioning Company forms the best platform on which it understands its market environment, designs its products based on customer needs, and explores newer market niches.
Appropriate marketing mix methods are critical for determining whether a business ought to sustain a global marketing standardization. Indeed, this is vital in the sense that an organization gets to choose whether to conduct product invention or simply retain its products.
The emerging global effect driven by forces of demand and supply calls for more articulate market analysis aimed at outdoing competitors.
Product
In international marketing, determining the nature of a product or a service is very important for a business that intends to capture a market.
Bowman and Gatignon (2010, p. 122) indicate that some of the factors which a business must strategize include brand name, warranty, packaging, support and repairs, safety of the products, style and effectiveness in functionality.
Over the years, Airedale Company has effectively cut a niche and built its brand on both products and services in the US market and other parts of the globe.
Figure: A diagram showing a cool alpha product from Airedale Company
Its products include precision air conditioners like Alpha Cool, EasiCool and Smart Cool; IT products like Echo, InRak and OnRack, and chillers which include DeltaChill Free Cool, OptiChill Free Cool and TurboChill Free Cool.
Figure: a diagram showing an EcoChill 6-46kW R410 product by Airedale Company
At Airedale Company, the element of its products can be summed up as the product of nature. It focuses its marketing energy on devising a wide range of improved products.
Price
Pricing as a marketing mix is very important in setting up pricing decisions. In international marketing, understanding the market economy is critical because it determines how to establish prices and make huge sales.
Proper pricing of products has always been a key consideration for companies in international markets because it determines their affordability.
Airedale Company should establish a clear method of determining prices of its different products in a manner that customers in India can be able to afford. It should be able to strategically analyze its decisions on price discrimination, flexibility, bundling, seasonal pricing and wholesale pricing.
Promotion
Promotion involves communication between a business and customers after entering a market with the right products.
Palmer, Dunford and Akin (2009, p. 129) indicate that promotion is one of the most important aspects in marketing practice because it informs consumers on the products available in the market and their prices.
Promotion is a practice that is affected by the culture of a host country. India has diverse communities having different cultures.
Being a cultural phenomenon, analyzing its culture is necessary in order to ensure effectiveness in international marketing practice and avoiding negative response from customers.
Besides, the cost of promotion in India might be different when compared to advertising in other international markets.
Place
The cost of a product is mostly determined by the cost of transportation from one place to another. Janicijevic (2010, p. 100) notes that one-fifth of the cost of transportation is normally attached to a product.
Therefore, place is an important factor that is concerned with making goods available, storage and transportation.
Following the continued expansion of population across the globe, making products more available, especially in countries where it has its stores involves strategizing for a distribution system.
The company will be forced to build stores in India or plan to spend on transporting goods from USA, China or Africa to this destination.
Airedale Company marketing management has ensured that it caters for cost challenges by creating large stores in its three major locations in Africa, China and United States.
The determination of place in international marketing requires analyzing the marketing environment. Marketing in other regions is an activity that demands distribution of products to various retail outlets and markets.
Using an effective distribution channel has become a central pillar for the marketing practice of Airedale Company as it has aided it in doling out its products far and wide and capturing the market.
Hopkins (2009, p. 30) argues that some of the key strategic marketing decisions businesses make regarding a destination like India include setting up distribution centers, effective distribution channels, warehousing, channel members, reverse logics, transportation, inventory management and market coverage.
Management based on evidence can be used, as shown in the chart below:
Strategy and tactics
In order for a business entity to succeed in an overseas location, it is necessary to include the strategy and tactics in its marketing mix. In other words, it is not proper to undertake the ordinary mode of marketing when reaching out the external markets for the first time.
The tactic employed should be effective enough to include strategic focus.
When the latter is put into consideration, any new business entity started will be treated as a unique establishment that ought to be independent. Hence, business tactics and strategic focus are integral factors that cannot be done away with.
Positioning and the target audience
The target audience is primarily the clientele base which supports the operations of a business entity. When market positioning is done in the right manner, then it will be possible for a business entity to reach out to clients or the target audience.
Proper market positioning will even be more productive if it is taken as part and parcel of the marketing mix. Bowman and Gatignon (2010, p. 60) indicates that setting up a budget is a strategy aimed at availing resources for meeting the high costs of international advertising.
This goes hand in hand with market positioning. At Airedale Company, promotion includes advertising conducted in the media such as newspapers, internet and television.
An effective place strategy as Johnson (2002, p. 8) highlights is critical in easy distribution of products, a factor that enhances the capacity to link consumers with respective products.
The same position is reflected by Bowman and Gatignon (2010, p. 45) who posit that levering demand for continued market dominance, branding and profitability can be attained in cases when distribution is conducted properly.
Market entry strategy
In international marketing, conducting an analysis of the best market entry mode remains crucial because it allows a business to weigh its options carefully.
The need to make correct entry into new and foreign markets has become one of the most vital strategic marketing decisions facing many businesses intending to expand to foreign countries and compete favorably in the international market.
Strategic management scholars indicate that different businesses have diverse strategic orientations that reflect the manner in which they are willing to organize, control mechanisms, prioritize resource allocations and take risks.
International market entry techniques adopted by businesses vary and are mainly categorized into different types such as complete ownership, joint ventures, franchising, contract manufacturing and assembly (Ahenkora & Peasah 2011, p. 279).
The entry mode opted by a business entity depends on equities such as acquisitions and joint ventures, and non-equity entities like licensing and exports.
The use of Social networking tools
Studies reveal that social media has become an important platform for businesses to carry out their marketing practices (Winer 2009, p. 110). It is a tool that both local and international businesses use to reach potential consumers in the global marketing arena.
Winer (2009, p. 110) points out that the advertisement of products and services began with the increase of the social networking users and it later became an open door for large business firms to launch their advertising platform.
In India, the use of social media like Facebook, Twitter, LinkedIn, among others, are widespread and businesses that are using social media for marketing effectively reach many people.
Entry into India and marketing Airedale’s products to the larger population will be effectively conducted by adopting the strategy of social network marketing.
Indeed, social media platforms will become a key base where Airedale Company’s online promotion of products and competition for advertising will thrive. This will subsequently enhance its ability to reach the broad market of South Asian region easily.
The high technological revolution has pushed several international marketers to adopt social media as powerful and potential platforms for establishing marketing links (Winer 2009, p. 112).
The use of traditional methods of conducting marketing will not be profitable for Airedale Company due to the fact that it is expensive and time-consuming.
The strategy of using social networking tools will be critical in the sense that through these tools, the company will establish a solid marketing foundation in India.
Besides, it will enable it to reach out potential buyers and sellers. As a matter of fact, appropriate engagement and better approach to customers through social media will aid it in making large volume of sales.
It is evident that conducting foreign market analysis and articulating effective marketing mix in organizations enable adequate understanding of markets, designing products based on customers’ needs, and exploring new market niches.
Careful application of marketing mix, product, price, promotion and place enables greater cooperation and response to consumer needs.
How the assignment has enhanced my life
After conducting this research study, I learnt a lot about the foreign market analysis and entry. Throughout my life, I have been thinking how I can become an international business person. I had never had such a clear insight on how a business can be started and run in a foreign nation.
When I was in the process of researching and compiling the report, I continually developed additional interest on this subject area. I have now decided that even if I start off a small business enterprise in the near future, my final goal will be to reach out into the international marketing arena.
Conclusion
The paper calls for lower pricing so as to meet diverse economic capabilities of the Indian communities, creation of diversified products, aggressive promotion and continued assessment of competitors.
Airedale Air Conditioning has been using direct export as one of the modes of ensuring that its products enter the new markets. Experience and availability of resources have been key factors that influenced it to adopt this method of entry.
Its strategy has also been centered on an analysis of pricing, export documentation, physical distribution and market research. The effects of the analysis have been critical for Airedale Company’s distribution and marketing practices.
References
Ahenkora, K. & Peasah, O 2011, ‘Crafting strategy that measures up’, International Journal of Business and Management vol.6 no. 10, pp. 278-283.
Allen, M 2001, Analyzing the organizational environment, Select Knowledge Ltd, Oikos, UK.
Bowman, D & Gatignon, H 2010, Market Response and Marketing Mix Models: Trends and Research Opportunities, Now Publishers Inc, Hanover, MA.
Hopkins, M 2009, ‘8 Reasons Sustainability Will Change Management (That You Never Thought of)’, MIT Sloan Management Review vol. 51 no. 1, pp. 27-30.
Janicijevic, N 2010, ‘Business processes in organizational diagnosis’, Journal of Contemporary Management Issues vol. 15 no. 2, pp. 85-106.
Johnson, B 2001, Laxton’s Building Price Book 2002: Major and Small Works, Reeds Educational and Professional Publishing, Jordan Hill, Oxford.
Johnson, L 2002, ‘Issue selling in the organization,’ MIT Sloan Management Review vol. 43 no. 3, pp. 8-9.
Johnson, L 2002,’Design thinking – a new mental model of value innovation’, Strategy & Leadership, vol. 38, no. 3, pp. 5-14.
Markle, GL 2011, ‘Constructions of citizenship among multinational corporations’, International Journal of Business and Social Science: Special Issue, vol. 2 no. 24, pp. 283-293.
Palmer, I., Dunford, R & Akin, G 2009, Managing organizational change a multiple perspective approach, McGraw Hill, Boston.
Streeter, B 2003, ‘Sweet deal’, American Bankers Association. ABA Banking Journal vol. 95 no. 11, pp. 69-74.
Sun, T. & Wu, G 2011, ‘Trait predictors of online impulsive buying tendency: a hierarchical approach,’ Journal of Marketing Theory and Practice, vol. 19 no. 3, pp. 337-346.
Toegel, G. & Barsoux, J 2012, ‘How to become a better leader’. MIT Sloan Management Review vol.53 no. 3, pp. 51-60.
Valentine, L 2012, ‘Wealth management: revenue solution? ABA Banking Journal vol.104 no. 3, pp. 40-44.
Winer, RS 2009, ‘New communications approaches in marketing: issues and research directions’, Journal of Interactive Marketing, vol. 23 no. 2, pp. 108-117.
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