Product Development: Nespresso Growth Strategies

The case of Nespresso shows that in a consumerist economy, the successful company perceives its activities through the eyes of consumers. Value in the economy is consumer value, and utility is consumer utility. The new product, Nespresso, creates new opportunities for Nestle and its market position. Thus, the consumer power is not an initiating force. Instead, it is a force that reacts to situations originated and developed by business decision makers — manufacturers, wholesalers, and retailers.

The case of Nespresso vividly portrays that consumers, reacting as a group, eventually approve or reject business decisions, placing management in the uncertain position of predicting consumer reactions. A manufacturer can carry out extensive research, invest vast resources in designing and making a product, offer products for sales in the marketplace, develop supporting marketing programs, and yet find consumers unresponsive (Bearden et al 98). There are few buyers, the product then has relatively little value, and resources have been wasted. Although this approach may appear to decrease economic efficiency, such a system maintains the consumer’s freedom of choice, and has led to the achievement of the highest standard of living known to mankind. But in a market-focused economy, there is a trade-off between more efficient manufacturing processes and the free exercise of consumer choice (Hollensen 22). The major responsibility of Nespresso marketing is to deliver and maintain the highest possible standard of living, to see that products and services offered for sale are those desired by consumers, and to distribute them in the most effective manner possible from the point of view of both consumers and companies. Therefore, the delineation of profitable market segments becomes critical for individual companies. A -continuing goal of marketing management is that of assessing market niches, or groups of consumers, and developing products that are especially appropriate, thereby adding economic value (Bearden et al 76).

The other lessons learned from Nespresso are that the company should carefully select its market and evaluate its potential. This strategy would emphasize changing profit opportunities available for perceptive executives because of the dynamics of marketing environments. Nespresso stresses the necessity of striving for the creation of differential advantage in the marketplace. It underscores the primacy of planning and programming innovation on a continuing basis to adjust company offerings to the changing competitive scene (Kotler and Keller 28). Competition, in marketing terms, refers to the creation of differential advantage particularly by the effective management of innovation to meet changing marketing opportunities. Programmed innovation is the corporate method of achieving continuous market adjustment; competition is its stimulus. Keenly competitive situations stimulate new products, new processes, new services, new ideas, and new techniques as well as price adjustments. The degree of competition is suggested not only by quantitative measures of newness and number of competitors, but also by qualitative considerations. In thinking about competition, Nespresso consumers tend to be retrospectively oriented. They often have past or previous models of competition and competitive situations in mind (Perreault et al 72). They often conceptualize competition in terms of an emerging industrial society rather than a maturing industrial society, in terms of price competition rather than convenience and service competition, in terms of an economy of scarcity with relatively low consumer purchasing power rather than an abundant economy with widespread discretionary purchasing power, in terms of manufacturers and sellers completely controlling and dominating the marketplace rather than an economy governed to considerable extent by consumer sovereignty, and in terms of intraindustry competition rather than interindustry competition. Sometimes they even conceive of competition in terms of an agrarian economy of pure competition rather than a highly industrialized economy where only imperfectly competitive situations exist (Kotler and Keller 55).

For a new product, price decisions are crucial for success. Nespresso did not take into account its pricing strategy and proposed very expensive product to the new markets (both restaurant and household markets). Still, the emphasis on price that stems from past economic situations was misplaced. This does not mean that price competition is no longer important. It does mean, however, that ours is often a competitive situation in which price obscurity and not price clarity is the rule. The general situation where consumers face clearly defined competitive price offerings in the marketplace, and must exercise rational economic judgment by becoming human price calculators, is not the norm. In its stead we find reductions from list prices, trade-ins, coupons, allowances, special discount prices, service variations, packaging differences, and a multitude of brands (Kotler and Armstrong 41). They tend to obliterate price information, to reduce the emphasis on so-called “rational price behavior,” and to alter our concepts of competition. Competitors must be viewed as both instigators and receptors of competition. As instigators, they must perceive their environments, accurately assemble marketing intelligence, and draw inferences about competitive reality. As receptors, they must be prepared to launch counterstrategies to those taken by others. The normal competitive cycle of a business becomes one of programmed innovation and counter-innovation. The stimulus for innovation at any time may be curtailed because of either external or internal resistance. Internal resistance may stem from inertia, lack of capital, fear of counter competitive consequences, or a host of real or imagined obstacles perceived by company personnel. External resistance, which raises the most substantial barriers, includes consumers’ resistance in the marketplace (Perreault et al 43).

In order to reach its ambiguous growth targets, Nespresso should reduce price and attract wider target audience. It may involve students, factory workers and low level managers in service and industrial settings. For Nespresso, the external factors that place a limit on competition and innovation include various types of governmental regulation, accepted industry practices and agreements, and the social and cultural environment. Limits exist beyond which consumer resistance will be great; for example, when a product is totally new, and extensive marketing effort is required to overcome resistance to change (Kotler and Armstrong 55). As factors limit or restrict innovative opportunity, they affect competition directly. Marketing acknowledges that human motivation has an impact on economic and corporate growth and on development. It concentrates on achievement as a significant stimulus for economic advance. Marketing recognizes that consumers, stimulated by the achievement motive, try by increasing productivity to satisfy their desires for consumption and to improve their standards of living. The utilization of resources is not determined merely by availability and technological advancement. To a large extent marketing is responsible for efficient systems of production and for the implementation of much technology. It is impossible to understand our culture without a comprehension of marketing as an institutional force. Nespresso should take into account that marketing is an institution of social influence in much the same sense, but not of the same degree, as the school or the home. It exerts an extensive influence that can lead to the betterment of social and economic life (Perreault 54).

Today, Nespresso’s customers mature and demands more innovations. Under these conditions, marketing becomes an even more significant. Many of the fundamental precepts underlying buyer and consumption behavior are now changing because our basic life-style constraints have shifted. Consumption is no longer exclusively a home-centered activity, since consumption of many goods outside the home has become common. Inherent values of thrift and saving are now challenged by prosperity through spending. It holds that an emphasis on extending consumption, on generating a desire for consumers to increase their store of material possessions, can also be a force for social and cultural betterment. It emphasizes that consumers should not feel guilt-ridden because they lead a comfortable life. Regardless of the viewpoint accepted, it seems clear that Nespresso consumption must not be considered happenstance. In order to proceed on a continuing and orderly basis, we must establish the necessary considerations for consumption. New marketing tools that encourage continuing rather than irregular production, such as sales on a replenishment basis and the placement of consumer orders in advance, must be developed. The roles of aggressive advertising and personal selling become increasingly important in regard both to dollars expended and economic tasks performed. Product development, consumer credit, branding, packaging, and merchandising should be emphasized by Nespresso.

Works Cited

Bearden, William O, Thomas N. Ingram, Raymond W. LaForge Marketing, Prentice Hall, 2005.

Hollensen, Svend. Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 ed, 2007.

Kotler, Phillip, Armstrong, Gary. Principles of Marketing. Prentice Hall; 11th ed, 2005.

Kotler, Phillip, Keller, Kevin. Marketing Management. Prentice Hall, 2005.

Perreault, William D. et al Marketing: Principles and Perspectives. McGraw-Hill/Irwin; 4 ed, 2003.

Al Habtoor Polo Resort: Growth Strategies

Introduction

Dubai is one of the most popular tourist destinations, offering a variety of luxury hotels and entertainment (Oxford Business Group, 2020). However, even hotels with five-star ratings encounter common problems that occur in any part of the world. Al Habtoor Polo Resort is one of such places where luxury appearance is not supported by a significant number of negative comments about the hotel’s service. It is vital for Al Habtoor Polo Resort to review its internal policies and increase the quality of service. Marketing changes may also be necessary to reinvigorate the hotel’s popularity and increase its market share.

Al Habtoor Polo Resort is located in Dubailand, in close proximity to amusement parks, concert venues, and malls. However, it also accentuates the nature of the United Arab Emirates (UAE), allowing visitors to enjoy the views of the Arabian Desert (Al Habtoor Polo Resort, 2018). The primary focus of Al Habtoor Polo Resort is its equestrian-inspired entertainment, including a horse-riding school and a polo academy on the hotel’s grounds. However, it also has common resort offers, such as a spa, several swimming pools, a gym, tennis and squash courts, mini-golf, archery, and more.

Intensive Growth Strategies

Before seeking change outside of the hotel’s own system, Al Habtoor Polo Resort needs to consider possibilities of growth using its current resources. In this case, recommendations for intensive development should be made. It is clear that the hotel has a clear vision of the clients to whom the service is catered. The luxury segment of hotel services and the focus on horse riding seem to be at the center of the hotel’s marketing (Al Habtoor Polo Resort, 2018). Nevertheless, such segmentation does not mean that Al Habtoor Polo Resort cannot offer any new products or find other groups of people to attract.

Market Penetration Strategy

Al Habtoor Polo Resort seems to have a well-established brand that many customers find appealing. However, it is far from a market leader in the luxury sector of hospitality services. It is also not the main hotel for equestrian entertainment. Focusing on the current market and established customer segments, Al Habtoor Polo Resort should:

  • Improve service quality by retraining or hiring new staff, creating strict rules for cleaning and upkeep, increasing the speed of response to customers. These suggestions are based on the majority of negative reviews on popular tourist websites (Tripadvisor, 2021);
  • Increase promotion on social media and traditional channels (Nuseira &Aljumahb, 2020);
  • Offer promotional packages to interest non-buying customers in the targeted group;
  • Make booking, registration, and travel to the hotel more comfortable.

Market Development Strategy

Apart from the established market segment, Al Habtoor Polo Resort can also find new groups of people who may be interested in what the hotel can offer. Here, some new activities may be introduced, although they should make use of the resources that the resort currently has (Richard, 2017). To target a new demographic, Al Habtoor Polo Resort may:

  • Redefine the relationship between clients and animals at the hotel;
  • Pose the resort as a place of respite for animal lovers;
  • Highlight the environmentally-conscious side of the hotel to attract younger clientele;
  • Target families with young and older children who may participate in horse riding;
  • Opening up a new hotel in another location to attract clients who wish to see more than Dubai.

Product Development Strategy

At present, Al Habtoor Polo Resort offers a variety of services to its guests. Some of them are traditional for hotels, such as spas, pools, and other leisure activities (Richard, 2017). Apart from that, the unique nature of horse riding and polo also enrich the products that the resort providers. Nonetheless, returning and new clients may wish to see other features and services that will make Al Habtoor Polo Resort more desirable. The recommendations are to:

  • Create new activities that highlight the location – tours and festivals;
  • Offer competitive horse-riding training lessons;
  • Allow people to visit the stables in order to groom or feed horses;
  • Introduce horse-based activities that allow audiences to watch, not participate (such as professional demonstrations of horse riding and tournaments);
  • Introduce regular competitive polo matches to increase client loyalty and return rate.

Related Diversification

It is apparent that the hotel may not be able to implement new changes without diversification. It is a process of entering new markets to present more products and services to current clients (Nikolskaya et al., 2018). Some common ways to diversify, using related businesses, are:

  • The Beauty industry – a beauty salon is a possible addition to the existing spa-center;
  • Retail – the hotel may sell anything from local souvenirs and works of art to jewelry and clothing;
  • Tourist arrangements – ticket sale, advertisement, and collaboration with other entertainment centers in Dubailand
  • Culture and art – the organization of festivals and exhibitions, art galleries
  • Wellness and health – the hotel can add to its morning yoga programs, introducing hot yoga, guided meditation, and other practices.

Integrative Growth Strategies

In contrast to intensive approaches, integrative growth considers partnerships and acquisitions as a way of improving business performance (Raharja & Arifianti, 2018). Although Al Habtoor Polo Resort can try to implement new diverse products and services alone, it may benefit from acquiring or merging with other businesses. In the hospitality industry, the possibilities of integration are vast, as hotels work with a variety of suppliers and service providers to deliver customers a well-rounded experience.

Horizontal Integration

The first type of integration is horizontal; here, the hotel may acquire or merge with its competitors. For example, Al Habtoor Polo Resort is not the only luxury hotel in Dubai. At the same time, it also not the only resort focused on equestrian-inspired entertainment. Some recommendations for the hotel are to:

  • Acquire several less famous hotels with vast land appropriate for horse riding and polo;
  • Acquire hotel property in other locations outside Dubai and focus on the luxury segment with common hotel activities (Raharja & Arifianti, 2018);
  • Merge with local hotels, such as the JA Resort, as it also has a vastly popular equestrian center;
  • Merge with international hotels that are interested in equestrian-based or luxury hospitality services;
  • Acquire a horse or animal sanctuary as a way of increasing the socially favorable view of the brand.

Backward Integration

Vertical integration involves two possible directions; backward integration refers to the acquisition of businesses that stand before the hotel in the supply chain (Richard, 2017). Hospitality services have many suppliers for their restaurants, rooms, and entertainment activities. Thus, some suggestions for backward integration for Al Habtoor Polo Resort are:

  • A catering business;
  • Furniture manufacturing;
  • Designing agency;
  • Sports supply store;
  • Clothing manufacturer.

Forward Integration

Many steps exist in the hospitality business chain between the hotel and the client. Hotels provide the service, and, on some occasions, clients contact them directly. However, many tourists book hotels with the help of a traveling agency. People also need to purchase tickets and insurance for the trip. Thus, the recommendations for Al Habtoor Polo Resort for forward integration include:

  • A traveling agency (Richard, 2017);
  • A transport company (that delivers clients from the airport or other location to the hotel and back);
  • Media channels that discuss travel (magazines, online publications, TV programs);
  • A travel insurance agency;
  • A website that collects data about customer’s trips, such as feedback, rating, and advice.

Unrelated Diversification Growth Strategy

Finally, the hotel may diversify into entirely unrelated areas, if necessary. Al Habtoor Polo Resort seems to have a business that offers many opportunities for related diversification since it provides many services to its clients. Nonetheless, it can venture into new areas that may yield much capital to pour into the hospitality industry:

  • A healthcare research and development company;
  • Investment products;
  • Communications, publishing, radio, television, and other channels not related to travel;
  • Information technology;
  • Insurance products (Richard, 2017).

References

Al Habtoor Polo Resort. (2018). Web.

Nikolskaya, E. Y., Kovaleva, N. I., Uspenskaya, M. E., Makshakova, N. I., Lysoivanenko, E. N., & Lebedev, K. A. (2018). Innovative quality improvements in hotel services. European Research Studies Journal, XXI(2), 489-498.

Nuseira, M. T., & Aljumahb, A. (2020). Digital marketing adoption influenced by relative advantage and competitive industry: A UAE tourism case study. Marketing, 11(2), 617-631.

Oxford Business Group. (2020). Web.

Raharja, S. U. J., & Arifianti, R. (2018). Competitive strategy in” XYZ” four-star hotel company in Tangerang City, Indonesia. Review of Integrative Business and Economics Research, 7, 117-126.

Richard, B. (2017). Hotel chains: Survival strategies for a dynamic future. Journal of Tourism Futures, 3(1), 56-65.

Tripadvisor. (2021). Web.

Strategies for Growth and Managing & Going Global

Starting new business ventures is not always problematic. Nevertheless, new enterprises present challenges that are significantly different from those of established corporations (Longenecker, Petty & Palich, 2011, p. 31). The complexity of a new venture and the entrepreneur’s preparedness to meet the demands of the new business determine the severity of the challenges encountered. One of the major challenges in new ventures is raising adequate capital. The entrepreneur alone understands the new business, therefore, convincing investors about the viability and profitability of the new enterprise is challenging. Furthermore, most investors prefer established enterprises to the new ones. Established businesses present minimal risks and have certainty of returns to investment (Hisrich, Peters & Shepherd, 2013, p. 73).

Entrepreneurs also experience challenges in assembling a suitable business management team. A business team plays a vital role in complementing the entrepreneur and covering up his or her weaknesses (Hisrich, Peters & Shepherd, 2013, p. 73). The strategic business team should have specialists in the various aspects of the venture. In addition, attracting and identifying good employees is quite challenging. The location of an enterprise is synonymous with success. Getting a location that is accessible and close to the target market is quite challenging. Equally, attracting good customers is challenging. Good clients exhibit loyalty to the firm and its products. On the contrary, bad clients search for loopholes in the enterprise and exploit them. Dealing with competition is yet another major challenge for start-ups. Most entrepreneurs see competition as peril for their ventures. Nevertheless, competitors are benchmarks for creativity, and motivation for innovation (Longenecker, Petty & Palich, 2011, p. 37).

A new firm’s growth strategies should focus on its clients, and the implementation of the business plan (Longenecker, Petty & Palich, 2011, p. 31). At inception, new firms should focus on their core business. The core business comprises of the products, clients, distribution channels and locations that yield revenue. The entrepreneur should focus on attaining the set rate of revenue expansion and customer satisfaction. The entrepreneur should establish the performance indicators, the core customers, the enterprises competitive edge, threats and the available growth opportunities. New ventures should also focus on attracting customers by making high-impact value proposals to the clients. The aim of high-impact value propositions is to create the willingness among the potential customers. This strategy encompasses customer segmentation, creation of appealing high-value propositions and field testing (Longenecker, Petty & Palich, 2011, p. 31).

New ventures also require execution growth strategies. The execution growth strategies provide a supportive environment in terms of organizational capabilities, management performance and strong leadership practices (Longenecker, Petty & Palich, 2011, p. 31). An entrepreneur should build his or her organization’s capabilities to enter the market, create appealing products and provide outstanding customer service. Performance management is also essential for the growth of the venture. It enables the entrepreneur to assess the achievement of the desired outcomes, and take corrective action. Lastly, the entrepreneur should create a supportive environment by providing good leadership to a new venture (Schermerhorn, 2011, p. 46).

Cash flow management is vital to the success of new ventures (Hisrich, Peters & Shepherd, 2013, p. 43). Ineffective cash flow management is a major cause of financial strains in entrepreneurial ventures. An entrepreneur can manage cash flow by ensuring that receipts are more than payments. Cash inflows should be sufficient to ensure funds are available for paying suppliers and reinvesting. The entrepreneur should also make forecasts of cash needs. Forecasts enable the entrepreneurs make contingency plans to deal with shortfalls. Indeed, cash flow management is critical to the survival of entrepreneurial firms (Schermerhorn, 2011, p. 58).

References

Hisrich, R. D., Peters, M. P., & Shepherd, D. A. (2013). Entrepreneurship (9th ed.). Boston, MA: McGraw-Hill Irwin.

Longenecker, J., Petty, J., & Palich, L. (2011). Small business management: Launching and growing entrepreneurial ventures. Stamford, CT: Cengage Learning.

Schermerhorn, J. R. (2011). Introduction to management. New Delhi: Wiley.

SWOT Analysis and Intensive Growth Strategies, H&M

Introduction

SWOT analysis is a strategic planning method that is often applied in product marketing. According to Gürel and Tat (2017), it is used to evaluate the strengths and weaknesses of the internal environment, as well as opportunities and threats of the external environment influencing the businesses. Scientists also emphasize that “strategic management is the process of creating, implementing and evaluating decisions that enable an organization to achieve its objectives” (Gürel & Tat, 2017, p. 994). This paper aims to develop a strategic plan based on a SWOT analysis for the H&M apparel company, providing examples of growth strategies that will help it to reach out to online-sales markets.

Background

The proliferation of online shopping has changed the clothing store businesses significantly. Clothing stores are massively moving to online-sector to maintain a high level of sales and production. Strategic business planning is used while developing growth strategies for market penetration, market development, product development, and related diversification to make this move even more beneficial. When speaking of H&M’s market penetration strategy, one should consider that currently, H&M sells online only on the brand website, localized for several countries.

The effective market penetration strategy is highly beneficial for the competitive advantage of a company. Chandola and Fu (2017) note that “new international strategies involve product innovation and adaptation, pricing tactics along with Integrated Market Communications to target market different from one’s home market” (p. 10). It may require certain efforts and costs for the business, but with the competent use of efforts, they will pay off handsomely.

SWOT Analysis

The external opportunities and threats should be considered when applying the SWOT analysis. Nowadays, the most extensive opportunities for direct sales are provided by social networks – Instagram, Facebook, with their new simplified payment method Libra, and Twitter.

The principal and only potential threat to the company is non-entry into this market. Whereas, the company’s great strength regarding the internal environment is that it already has its pages on social networks. Wherein its weakness is that it is impossible to order or buy goods there. It also makes sense to create brand pages within the local social media in countries where the number of people who use social media exceeds 500 thousand subscribers. Besides, the social media pages should be localized, and presented in the maximum number of languages, just like the company’s brand websites.

At the moment, H&M stores can be found in shopping centers in Europe and North America. Yet, there is an opportunity that online demand for its products will be much higher. Besides, H&M should consider online markets of faraway countries with developed social infrastructure. These are countries like South Africa, Nigeria, Sudan, Morocco, Egypt, Israel, Iran, Iraq, Saudi Arabia, UAE, Oman, China, South Korea, Vietnam, and Japan. The online markets of Brazil, Argentina, and Mexico also have rich potential.

H&M will easily find its niche on Amazon.com, selling in the American and European markets as the delivery services of this platform work only with these territories. Aliexpress.org and Alibaba.com marketplaces should also be discovered since the H&M production is not represented well on these Chinese platforms that attract millions of customers every day. Even though the Swedish brand H&M has its production facilities in China.

Strategies

Presumably, H&M should enter all possible local marketplaces that are having more than 1 million users. According to Alkasim, Hilman, and Bohari (2018), “market development and product development improve the competitive advantage and enhance the performance of manufacturing” (p. 133). Scientists emphasize that manufacturing is the engine of economic growth and development, not only in the developing economies, but in developed countries as well (Alkasim et al., 2018). It is because manufacturing enterprises make a significant contribution to job creation, technology growth, GDP growth, and reduction of poverty.

The key opportunity for market development on the new markets described above is their enormous size and high purchasing capability of potential customers. At the same time, the lack of access to technology among potential buyers is a critical threat to H&M’s online business (Martini, Budhiasa, & Soares, 2017). H&M’s main internal strength is the broad recognition of the brand. That is why the strategy of the market development will be traditional in terms of reaching the audience. The weakness of the H&M brand is the lack of an established scheme for online sales on marketplaces and social media platforms. It also lacks experience in working with a broad and multinational audience.

The H&M brand was established in 1947, and buyers love it for its traditional values. The H&M Group brand family includes H&M, COS (casual), Weekday (casual), Monki (young women casual), H&M HOME (interior brand), & Other Stories (accessories), ARKET (classical), Afound (outlet, online in Sweden). The strategy of eco-friendly product development should be applied to make the brand even more desirable among customers. According to scientists, it will have a positive effect on product development effectiveness, given that there are “increasing levels of municipalities in the business environment” (Katsikeas, Leonidou, & Zeriti, 2016, p.660). However, the importance of eco-friendly focus will weaken in highly complex business conditions.

Diversification of a brand when entering new online markets brings a lot of opportunities. It makes sense to diversify monochrome collections, which some buyers may attribute to the brand’s weaknesses, and develop specific lines for Asian countries like Japan and South Korea that would correlate with the local fashion trends. For countries of South America (Mexico, Brazil, and Argentina) and Africa (Republic of South Africa, Nigeria, Sudan, and Egypt), H&M should provide more diversity in summer clothing.

Moreover, the colors of all the lines could be diversified to become more appropriate for various climatic and environmental conditions. When developing clothing and accessory lines, H&M should also consider that most buyers use technologies such as smartphones, tablets, selfie sticks, smartwatches, shoulder bracelets for running, and action cameras. After all, the sleek design of the H&M brand clothing, as well as the prevailing casual style, combine perfectly with technology.

Conclusion

Thus, a strategic plan based on a SWOT analysis was developed for H&M, and examples of growth strategies that will help the apparel company gain its share of online-sales markets were provided. To summarize it, the key opportunities of online-sales include the enormous size of this market and the high purchasing capacity of its customers. And the main threat of online-sales business is the lack of access to technology among customers. Besides, the critical weakness of the H&M brand is the lack of an established scheme for online sales on marketplaces and social media platforms. It also lacks experience in working with a broad and multinational audience. Wherein, its main strengths are explicit brand recognition and powerful traditions.

References

Alkasim, S. B., Hilman, H., & bin Bohari, A. M. (2018). The mediating effect of competitive strategy on the relationship between market development, product development, and performance of manufacturing-based SMEs in Nigeria. Journal of Business and Retail Management Research, 12(2), 133-143.

Chandola, V. K., & Fu, H. (2017). Market penetration strategy of smartphone companies from China for India market: A multiple-case study. International Journal of Business Marketing and Management, 2(4), 10-16.

Gürel, E., & Tat, M. (2017). SWOT analysis: A theoretical review. Journal of International Social Research, 10(51), 994-1006.

Katsikeas, C. S., Leonidou, C. N., & Zeriti, A. (2016). Eco-friendly product development strategy: Antecedents, outcomes, and contingent effects. Journal of the Academy of Marketing Science, 44(6), 660-684.

Martini, L. B., Budhiasa, S., & Soares, A. (2017). Anticipated effort in modern growth of traditional market development strategy in Bali Indonesia. International Journal of Social Science and Economics Invention, 3(08), 154-158.

Babyshop Company Growth Strategy

Introduction

Babyshop is a renowned manufacturer and retailer of consumer goods. The company was initially established in 1973 in Bahrain and is currently operating in eleven countries globally (Muzaffar 1). Babyshop Company has a headquarter in Dubai since the United Arab Emirates is alleged to be the financial hub for the Middle East regions. Babyshop principally tenders kids’ goods such as trend clothing, infant basics, nursery furnishings and teddy bears along with safety, as well as sanitation products. The company is targeted on parents with young children, namely the newborn babies, toddlers, as well as children up to 16 years. Recently, it has embarked on a growth strategy whereby it opens stores in Kenya, Pakistan and still expects to open more in other countries. This growth strategy is typically aimed at promoting their brand and expanding the customer base.

Choice of overseas market

Babyshop is determined to grow internationally by opening store in North Africa and eventually in supplementary Asian countries such as India, Sri Lanka, and Bangladesh (Muzaffar 1). These regions are duly considered as unexploited markets since both new and old multinational retailers have not set afoot in them. Their populations are growing rapidly due to high birth rates, thus increasing the demand for the available children products. Considering the fact that most of these countries are at the verge of development, their economies are growing fast, and for that reason, the buying power of the consumers increases. Moreover, there is a wide array of cheap and skilled labor within the region that stands a chance of facilitating business operations at minimal costs.

In addition to their closeness to the Middle East, the targeted countries have an advantageous business relationship with the Middle East regions. For instance, Kenya has vibrant business policies with Dubai (Mwakwere 1), whereas Libya continues to be religiously connected to the Middle East. There has been a notable continuous increase in business movement within these regions which accrues to be facilitated by the prominent mutual interest. In fact, the targeted region is in the process of reconstruction after having ended much of the unrest, and now it seems to be a good opportunity for the company. While these countries supremely deal with western companies as expensive to deal with, they are encouraging eastern companies to invest in their economies. Babyshop, in essence, does not need expatriates to succeed in these countries given that scores of well-informed investors from the Middle East are already established in the region.

Market analysis

According to Muzaffar assertions, the North African countries are still young politically because they were at some point forced to be under control of foreign governments (1). There had been a prolonged political unrest, though this appears to have ended in the recent past. It is during this reconstruction period that such countries are trying to align their policies in order to favor economic growth.

The policies are their major investment attraction, and they materialize in favor of Babyshop growth strategy. Regardless of being relatively low, the economy of these countries is expected to grow rapidly due to the vastly ensuing unexploited resources. Kenya, for example, has sufficient agricultural resources, while Libya and Sudan have fuel reserves that can perfectly facilitate the economic growth and increase the spending power of their consumers. Many foreign investors are attracted to businesses related to these resources leaving a wide open door to investors in other fields that are indirectly related to them.

The Middle East is very close to North Africa countries, compared to any other country of interest in the world. Accessing this region is very easy for Babyshop not only because of their closeness, but also because of the favorable business policies that emerge between the regions. Furthermore, Islam is a significant religion in the region, and this made governments to encourage migration into the Middle East. Besides, the geographical location of the region has enabled daily connections through the air, as well as via the sea. The climate in the area also enables business operations during the year, while the scenery appears to be overwhelmingly attracting and more and more people live in the region. The landscape equally favors quick development of infrastructure, such as roads and airports that are deemed essential for the success of any business.

More than any other region in the world, Africa has the highest birth rates and thus, high demand for children products. Despite poor economy of the region, the selected countries have substantial support for the economy, and are expected to continue growing. Children are widely considered as the future of the nation, and thus, they are usually provided with all important necessities. Literacy is relatively high despite the fact that people are aware of these needs. Many young people are skilled laborers, yet employment is very low. Like market rivalry, competition for skilled labor is low making the labor very cheap. Consumers within this region have a taste for foreign products but many retailers of children products are local.

Market entry strategy

For the North African market, the entry strategy should focus on three major components that market segmentation is comprised of, product development and pricing. Unlike most of the developed countries, populations in African countries are well distributed in both rural and urban areas. Most of the poor, as well as uneducated people, are mainly found in the rural regions. Therefore, Babyshop should target on the urban population that is more conscious of new products. This population consists of young people who appear to be more civilized than the older people who are commonly found within the rural settings. Families living in the urban areas should be regarded as potential customers to the children products.

Product development ought to focus on quality given that most of the populations in the targeted regions look for quality. The local competitors have increasingly focused on quality and might threaten the performance of Babyshop. The most effective policy is to develop the products within these countries in order to ensure quality at low cost. The company has better production capabilities and the use of technology can facilitate the development of quality products in comparison to the local manufacturers.

Low price is a major driver of success in any business within any of the African countries. The average income of the consumers is low and forces them to seek for cheap products. Babyshop must have a pricing policy that is low enough to compete with the local products. This could be achieved right from the manufacturing process by lowering the input cost as much as possible.

Conclusion

The economic growth in North Africa is creating new business opportunities for Babyshop. The ensuing opportunities are enhanced by the strategic location, as well as business relation with the Middle East. Such business growth opportunities could be exploited only if Babyshop mainly targets the urban population through quality and cheap products. The best way to achieve this is to integrate technology in its manufacturing processes and similarly utilize cheap labor from the region.

Works Cited

Muzaffar, Rizvi. “Babyshop bucking recession”. Khaleej Times Sunday. 2011. Print.

Mwakwere, Ali. “. Africa Business Pages”. 2006. Web.

Nintendo Company’ Internal and External Growth Strategies

Summary of the key findings

At the moment Nintendo is one of the leading developers of game consoles and videogames in the world. This company operates in a very competitive market; its key rivals are Sony Computer Entertainment, Sega Corporation, Apple, Nokia and so forth. Moreover, due to the intensity of the competition, the bargaining power of the customers is very strong. One of the key challenges, faced by this organization is the threat of substitute products; in particular, we need to speak about game emulators, which enable internet users to obtain their video games without paying any fee to the company1. In 2007, the market value of this company constituted 85 billion dollars2.

The competitive strategies of this enterprise are primarily based on product differentiation, which means that their products are perceived by the customers as unique. The most common example is Nintendo Wii, which was considered to be a breakthrough at the time of its release3. These are the key findings of this research; more detailed information will be presented in the next sections of this paper.

Strategic Direction

At this point we need to describe mission, vision, and values of this organization. According to the information that is presented at their corporate website, its vision can be formulated in the following way: to become the world leading developer of video games by providing only high-quality products and services to the customer (Nintendo Corporation, 2010, unpaged). Furthermore, judging from their corporate philosophy, we can single out the key values of this company:

  1. quality;
  2. uniqueness of design;
  3. attention and respect of customer needs and expectations;
  4. corporate social responsibility (Nintendo, 2010, unpaged).

These are the things that are of the highest priority for Nintendo Corporation. Finally, its mission is to develop video games and consoles that offer the best price quality ratio.

Stakeholders

Mendelow’s Power-Interest Grid was used to conduct stakeholder’s analysis of this company. This method shows stakeholders’ ability to influence the policies of the company and their interest in influencing the strategy (Angwin et al, p 39). Certainly, the key stakeholders of Nintendo are the purchasers of video games and consoles. Given the intensity of competition in this market and a large variety of products, we can say that customers can influence both pricing and production strategies of Nintendo. They have the highest power and interest to shape the policies of this corporation. Another group of stakeholders whose power should not be underestimated is mass media. The thing is that the outcomes of Nintendo marketing campaigns can be shaped by the attitude of mass media toward the company. However, their interest to shape company’s policies is relatively low.

Internal Growth Strategies

The study of internal growth strategies was based on the use of such tool as Porter’s Value Chain analysis. These took help us understand how the company conducts its internal operations and where their key strengths of Nintendo lie. For instance, by using Porter’s Value chain, we managed to single out those processes which are most important for the process of value creation, they are as follows: design of products, manufacturing, and marketing. The first two processes (design and manufacturing) aim to insure that Nintendo’s products meet such requirements as: 1) uniqueness; 2) reliability; 3) user-friendliness. In turn, marketing policies attract people’s awareness to the company’s products and form favorable about them. Thus, we may argue that the core competencies of Nintendo are connected mostly with inbound operations of this firm.

External Growth Strategies

In order to study external growth strategies of Nintendo, we applied such tool as Bowman’s Strategy Clock and Porter’s Model of Five Forces. These tools are particularly suitable for investigating the inner structure of the company and its operations.

In turn, with the help of Porter’s Model of Five Forces, we can point out to such difficulties, faced by this company:

  1. threat of substitute products (emulators) that considerably decrease the revenues of Nintendo;
  2. intense competition from Sony, Apple, Sega, and Nokia 4;
  3. enormous bargaining power of the customers who can choose among a great number of video game developers.

These are the key issues, confronted by the management of Nintendo. The company prevents emulations of their video games and makes everything possible in order to create products that would be perceived as unique.

In turn, Bowman’s Strategy Clock5 has enabled us to gain insights into the company’s competitive position. On the whole, it can be called as a differentiation without premium prices, which means that Nintendo tries to add extra value to their products and make them original or unique on the one hand, without raising prices for them. As a matter of fact, only very few companies are able to do that. This competitive strength of Nintendo can be explained by the fact that this organization has vast experience in this field and can accurately forecast customers’ expectations. Moreover, this company targets a very vast audience: the purchasers of their products belong to different age groups: children, adolescents, and even adults. Furthermore, the percentage of adults, who buy Nintendo video games and games consoles, is continuously rising (Vorder & Brient, 205).

Conclusion

These findings indicate that at the moment, Nintendo can successfully withstand competition of their rivals mostly due to the efficient product design and effective marketing campaigns. The company’s financial success can also be explained by the fact that it pays special attention to the customer needs and expectation. This increases the perceived value of their products and enhances customer’s loyalty.

Bibliography

Angwin. Duncan. Cummings Stephen. & Smith C. The strategy pathfinder: core concepts and micro-cases. Wiley-Blackwell. NY. 2006.

Bowman, Cliff. and Faulkner, David. Competitive and Corporate Strategy. Irwin, 1996.

Nintendo. Co. 2009. Web.

Nintendo. Co. Corporate Website. 2010. Nintendo. Co. Web.

Porter Michael. Competitive advantage: creating and sustaining superior performance : with a new introduction. Simon and Schuster. NY. 1998.

Reuters. “”. 2007. Reuters. Web.

Vorderer. Peter & Bryant Jennings. Playing video games: motives, responses, and consequences. Routledge. London, 2006.

Footnotes

  1. Nintendo. Co. Corporate Website. 2010 unpaged.
  2. Reuters. UPDATE 2-Nintendo sets $85 bln high score, thanks to Wii, DS.
  3. Nintendo. Co. Consolidated Financial Highlights.
  4. Vorderer. Peter & Bryant Jennings. Playing video games: motives, responses, and consequences, p 217.
  5. Bowman, Cliff. and Faulkner, David. Competitive and Corporate Strategy.