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Executive Summary
ABC System Plc is luxury boat manufacturer of Australia. Beside the domestic market the company would like to drive for export part of its products in any of the three counties such as China Hong Kong or Singapore. Due to complexity of international marketing, the firm is thinking to have some imperial studies to overcome risk exposure. Marketing in a new country is much more difficult and challenging than starting a business in a new country. International marketing management implies the idea that introducing, packaging, placing, communicating and promoting a product in a location or a country out of the boundary of the home. Singapore is an island country with a bridge connection with Malaysia. The country has a broader gathering of tourist and has a greater boating opportunity. Due to China have almost 35 luxury boat manufacturers, China already in the Singapore market with its low cost luxury boats. On the other hand there are both US and European suppliers of boat are working for long time. This market factors have taken into account to prepare this report with consideration of required past data. To prepare the report this paper has been enlighten on Country and Market Analysis, Marketing Strategies & plans, Market Mixing, environmental Scanning, SWOT analysis, Positioning, Product Strategy, Pricing Strategies, segmentation and Brand Equity.
Introduction
When a company becomes a multinational, it faces lots of new threats, challenges and some opportunities. If the possibilities of the future opportunities do not exceed the costs and threats, a company should not expand its business to the country. To overcome all the threats and challenges of new entry, the company must consider some factors of the present condition of the selected country. Not all the countries in the world are suitable for all kinds of business. A marketing manager would be successful internationally if he keeps these four things in mind and communicate these 4 things to the customers four ‘C’s: Consumer solution, customer cost, convenience and communication (Kotler and Keller, p. 234).
In this report, the problem is to introduce luxury boat in a new country. There are four primarily selected countries: Singapore, Hong Kong, South Korea and Taiwan. The international marketing manager is libel to select any of them. International marketing is a challenging job to market a luxury product like the luxury boat. This paper would develop marketing strategies and plans at first. Then it would have to scan the environment of the new selected country where it trying to market luxury boats. It would also create customer value, satisfaction and loyalty. After that it will go to analyze the markets and select the target market segment. Then it would emphasis to create a strong brand and brand equity setting product and pricing strategies is the next. Then it would go to select the mass media communication to promote product and select the new market entry mode.
Problem of the product report
The company is expanding rapidly and become an established supplier of luxury product in the domestic market. As because the ultimate goal is to earning the maximum profits using the minimum resources, now it try to hold strong position in the international market. To become a multinational company, there are certain things to be remembered such as market economics, competitors, consumers and current position of the company. The most important thing is the differences among the domestic market and the market of the selected country.
It is essential to select a country from Singapore, South Korea, Hong Kong and Taiwan. The problem has come with its original look firstly by the analysis of the countries. Singapore is famous for traveling. Travelers from all over the world used to spend their leisure times in this country. South Korea is not a loving place for travelers but have some opportunities regarding their strong economic condition. Threats from North Korea and other various political problems are affecting the economy as well as the prosperity of the country. Hong Kong is a newly established country and after the independence from China, it becomes able to show great opportunities for its strong and fruitful economy. But as a new country, it will take some time to be attracted by the visitors from all over the world. The other country, Taiwan, is not famous enough for tourism.
The most common feature among these countries is the presence of sea and the internal river flowing lands. All the countries have sea all over, which is an important factor for selling luxury boats.
Country Analysis
History
Singapore, The land of prosperity and unity, was first explored on the 3rd century. Then it was named as “Pu-luo-chung” that is “Island at the end of peninsula.” From history it is found that it was ruled by the Malayan Buddhist Empire of Sumatra. It was finally founded in 1819, and became separate from Malaysia and got independent in 1965.
Population
Singapore’s population is approximately 3,612,000 (june2006). In the beginning, most of the people were Malays. After the arrival of Sir Stamford Raffles, there were established a British Trade Post. Then Singapore became a magnet for the people of the rest of the world. Now there are various types of people who made this country as a cosmopolitan state. The list bellow shows the percentage of the various groups of people.
Financial consideration
Though Singapore is a small country, it has taken carefully planned approach for the development of the economy. It has traditional strength in entrepot trading, shipping and tourism but now it becomes diversified its banking and financial sectors also. Singapore has a rich GDP of 141 billion US dollars. Its per capita GNP is 34,868 US dollars. (1998). It is a natural blessing of economic conditions with its good geographic location, improved infrastructures, dynamic communication system, political stability and a well organized workforce. These are the main economic strength of the country. The currency of Singapore is “Singapore dollar” (SGD or S$). I dollar is equals to 100 cents. All currencies are in notes and coins, which are being issued by board of commissioners of currency.
Government, Logistics and Politics
Singapore is a republic and has a parliamentary system of government using Westminster model. All members of the cabinet must be an elected member of the parliament. Legislation is passed in parliament. Here is a tradition that every law proposed in the parliament is being passed. Here, the ruling party does not ordered the majority of the parliament and does not holds the reign of the power. There is a Post for the president but this is just for a figure. He works as the head of the state but does not have any decision making power. All power is preserved in the cabinet. Prime minister is the head of the cabinet and act as the head of the government. The cabinet is responsible for all government rules and regulation.
Culture and religion
The presence of different kind of culture, the religion of Singapore is also interesting. Buddhist and Christians are in leading numbers along with Hindus and Muslims. Here, religion most often cross its racial nature and merge in some unusual way.
Present situation of Singapore
The present condition of Singapore is quite supportive for doing business. It is being certified by various reports like, World Wealth Report, World Economic Report and so on, that Singapore is now the ideal place for multinational companies to do business. It has a strong economy with stability in currency price and with no political violence. The growth rate of Singapore is almost in two digits. People of the country are still welcoming foreign products and companies and show their loyalty for world famous brands.
Market Analysis
Briefings about market of Singapore
Singapore is one of the most well-known countries of Asia. The economic and political importance of the country is doubtless. This country is famous for their medical support and world class health related facilities. People from all part of the world think the hospitals of Singapore as synonymous as best quality and reliability. The economic condition of the country is much more stable than any other countries in the world. It has been experienced by the people of the world that the value of “Singaporean Dollar” is much more constant than any other currency in the world. “Merrill Lynch” and “Capgemini” said in their “World Wealth Report 2007” that High Net worth Individuals (HNWI) reported Singapore as the one of the top countries in the world who has a double digit growth. The report stated that these HNWI are the willing to pay top-currencies for luxury collectables such as high-end yachts.
But the main reason for choosing Singapore is the present business condition and the value of tourism in Singapore. In between 1970 it had full employment and higher skilled jobs became much more available. Singapore is now building its “External economy”. Marketing luxury boats product in Singapore is not only easier in Singapore but also profitable. The easiness has come from the flexible rules and regulation of the government imposed to the business. Any one with a legally established product can easily enter in the market of Singapore. Marketing Luxury Boats in Singapore will be satisfactory. The renowned Singaporean media and the friendliness of the people of Singapore are helpful for introducing and promoting Luxury Boats in this country. As because people all over the world has come to Singapore frequently, people of Singapore show great support to foreign business and foreign products.
The other important nature of Singapore is that it has globally renowned tourism facilities. Peoples from all over the world come here for passing their vacation. Tourism is one of the main pillars of the Singaporean Economy. The scenic beauty of Singapore is lovely to the tourists of the world and there are many famous tourist spots, for example the Singapore Botanic Gardens. The mostly loving places of the tourists are the sea beaches of the country. Tourists came to see the sea beaches and enjoy swimming, fishing, boating, sun-bathing and rooming in the sea beaches.
Singapore’s island has world famous for their scenic beauty. Some of these islands have favourite and world class tourism establishments for instance theme parks and Sentosa Island. Other islands have fame as camping spots, resorts, museums and motels. But a common feature of these islands is the facilities of water sport activity. Entertaining, interactive, funny and practicing, these words are not adequate to explain the tourist attraction of the country. Singapore is also famous for shopping. Therefore, many people also come here for shopping and also spend some days in traveling and boating.¹
According to the view of the general tourist agencies of Singapore, travelling by boat is the most common actions performed by the tourists of Singapore. As a result, the demand for Luxury boats in Singapore is much more than any of the above stated countries. There are many travel and tourism agencies in the country and all the agencies included the boat travelling in their package. Some of the agencies own their own luxury boats and other have to hire boats from various boat renting agencies. So, the possibility of making profit is higher and risk is lower to marketing luxury boats in Singapore.
Moreover, Singapore is one of the busiest ports in the world. The port can afford 700 ships at a time. It has facilities of 650 hundred shipping lines and connections with more than 800 international ports. There are 10 running refineries which turns it as the largest oil-refining centre of Asia. These ports facility is one of the main key reasons of choosing Singapore to expand luxury boats.
Marketing in Singapore
To introduce Luxury boats, the trade policy of Singapore has two basic principles, First of all the free market system and then an outward orientation. About 96 percent of imports considered as duty free. There is no control over the foreign exchange. Singapore remains widely open for global trade and investment. The trade to GDP ratio is 273 percent and foreign investment commitments are of 5.2 billion US dollars.
Luxury boats in Singapore
After the opening of Suez Canal in mid 1860, Singapore became famous for ships and boats. In 1869 a new technology first introduced here named steamship. The country is still trying their best to diversify in the types of boats. Because of being a famous place for boating and for the demand of boats, in time to time many exhibitions of luxury boats are organized in Singapore. Recently in the last of April “Boat Asia 2008” was organized at the “Marina at Keppel Bay” in Singapore. The Exhibition came to an end with a great success. In this exhibition, the participants companies show there full effort and some of the local companies agree that Singapore will become a leading Yachting destination. For the above causes, it can see that the country is the blessing place for marketing luxury boats.
Marketing Strategies of Luxury Boats in Singapore
Formally and informally, people and firms are engaged in a large number of activities which can be called as Marketing. It is an organizational function and collection of some procedures for creating, communicating and delivering value to consumers and for managing customer relationship in a systematic way which is beneficiary to the organization and to the stakeholders. Marketing Management is the art and science of choosing selected target markets and keeping, performing and growing the customers through creating, delivering and communicating customer values. (Kotler and Keller, p. 27)
Marketing the luxury boats in Singapore is a systematic process. It has to follow some scientific processes as stated in the definition of marketing management. It consist a lot of steps and tasks. The rapid growth of the company in the domestic market has driven to enter in the global market. As the selected market is Singapore’s boat market it has to clarify our visions and process of entering in the market. Then it has to decide marketing program.
A. Market Mixing Strategy
- Developing marketing strategies and plans
As an important part of marketing, developing marketing strategies and plans come to the action. Customer values are the important factors here. As the company has the boat renting agencies, individuals, business firms, tourism agencies as its customer. The luxury boat should be marketed to attain the maximum customer satisfaction. The company can do value exploration, value creation or value delivery as a part of holistic marketing orientation (Kotler and Keller, p. 25).
To develop a strategy at first it is needed to define our corporate mission. In this case the ABC System Inc.’s mission is to expand our luxury boat business globally and establishing ourselves as a strong producer of luxury boats. Secondly, the company has to establish strategic business units consisting of suppliers and retailers. Thirdly the company has to assigning recourses to the SBUs. Finally the company has to assess our growth opportunities. In this case it has to consider whether intensive, integrative or diversified growth is possible or not. As the company is trying to introduce a current product in a new market, it has to follow product development strategy.
As a part of its strategy and planning the SWOT analysis would be.
SWOT analysis
Strength
- Company’s main strength is their experience of producing and selling the luxury boats in the domestic market. It knows the techniques and processes well enough to expand the same business in a new country. It can share its experience of producing luxury boats with its new business units.
- It has a strong position and brand awareness in the domestic market. This position will help the company in our new competitive. When the customers will be informed about our situation in the domestic market, they will confidently purchase its product.
- It has enough resources and technological knowledge for further expansion.
- It’s recruiting system and training program is very much effective. Company has hired and promoted superior R&D engineers to be equipped for the future.
- Another important strength is the training program. It is proved that the training programs are much more effective.
- A large part of the whole workforce of this company has been occupied in research and development.
- The last but not the least strength is its great concern for their customers. The unparallel design philosophy is a resourceful strength of our company that provides corporate competitiveness and draw customers attention.
Weakness
- As the company is trying to expand our business to a new country, it has lack of experience in working in the new environment. Singapore as a new country, company has to struggle against new environment and for this new situations and new problems.
- The company is not a well known in Singapore. So at first it has to face some problems to establish them as a good company. In first instance customers may not ready to buy its products.
- It has lacking of trustworthy suppliers and retailers because it is new in the territory, it will face to select the good supply chain process and collection.
Opportunities
- Singapore is a blessing land for boating and yachting. ABC System Inc has a great opportunity of take the attention of the customers. There are many customers waiting for the Luxury boat and the company would be there to deliver them the right product.
- As because the economic condition of Singapore is better, the company can have a good amount of profit. After the introduction of luxury boats, the company can achieve a good market share by its effective marketing strategies.
- As a foreigner company it has the opportunity to get customer loyalty. These loyal customers would help the company in the future run and increase strength continuously.
- There is also chance to enjoy duty free opportunity.
Threats
- Singapore is a well-known for boating and yachting. Therefore, there are a lot of established companies who are doing there business with much more prosperity. As a result, we will have to face a strong competition from the existing companies. The threat of competitors can put adverse effects on expand the business.
- The new environment may become an intolerable threat. There may be hundreds of factors arise as threat in time to time in a new country.
- Government may become a threat for the company. If it become hostile to the company or pass and apply any new rules and regulations which may become harmful for the company.
B. Positioning and market mix:
ABC System Plc can position its items in a clear, distinctive and particular way in the target customers mind relative to the competitors, by using perfect positioning module. Thus, it should express the distinct benefits and features of the items in the target markets. Thus it can position the luxury boats products as the best quality and reliable appliances.
Then it would analyze the two important markets, the consumer market and the business market. When it analyze the consumer market, it will keep in mind the cultural-sub cultural-social class related factors of the customers. As an outsider it should have knowledge about the reference groups, customer’s life styles, roles and status and other important factors.
After analyzing the customers it should do some motivational works. It can arrange some seminars and symposiums where it can invite boat sellers and boat buyers from all over the world. It can arrange some exhibitions of luxury boats. It is essential because the product is the first element of marketing mix which indicates a full description of the company’s products. Products also include services. (Kotler and Armstrong, p. 124).
Identifying market segments and targets
Kotler, P and Armstrong, G (2006) states that segmentation is the procedure by dividing a market into distinct groups of buyers with considering different needs, characteristics, or behavior. The company should introduce a mass marketing strategy for achieving the largest potential market. It should keep in mind that our customers will be of some kind of different and they are both individual boat lovers and also some industries that have some business with the boats.
It should pay our great attention to our demands and expectations of our customers in domestic market. The Grassroots marketing is effective here. This is an approach of going much closer to the customers and market personally. The people who have a huge amount of money as earnings are our possible customers. The customers who have a great interest on boating are also our core customers.
Setting Product Strategy
ABC System Plc can differentiate luxury boats as core, basic, expected and augmented product. At first it has to give the core benefit. It has to design their boats in a way that will ensure the maximum floating and with a maximum guaranty of strength. Then it has to turn these core benefits into a basic form. Boats must be able to float, have accommodation facility and assurance of maximum life. Then it should give importance to the expectations of its customers and make product to the expected level. Market research is important to analyze customer behavior. It should increase expenditures by 20% to improve knowledge of the consumer – decision process and to monitor competitor moves. Then it must move on to make our product as an augmented and it should give all the means of facility and add all the features to be a luxurious one.
Developing of Pricing Strategies and Programs
It also provides lower and fair price of its products. In order to attract more customers or maximize its profits it offers gifts and free provisions for all customers. At first it has to set the pricing objectives, then determined the demand, estimating costs, analyze the competitors cost and price and then select and communicate the final price. However, its price is fixed on value for most of the luxury boats products and this mostly reasonable as well as affordable. That means, ABC System Plc offers just the right combination of quality and good service at a fair price. It may also introduce less expensive versions of its established brand name.
Advertising plays a fundamental role to maximize the profit. ABC System Plc has concerned in this issue. As a result, it will start new advertising campaign to supports the positioning strategy, emphasize higher – price units in the ads, increase the advertising budget by 20%. Moreover, it has includes some social issues in their advertisement policy which demonstrates their values on society. It also helps to raise their profits.
C. Segmenting and Targeting Strategy
- Scanning the environment
After that, our company should require to scan the related environment to attain some related information. It has to collect information about the people, the government, the habitat, the likings and disliking of the people, legal aspects, and about the preferences of the customers. There are lots of differences between local rules and international rules and regulations. Company’s R&D department has to do some research works here. They have to select the data sources: primary or secondary both can be used. Their research approaches should be observational which focus group research or survey. They should use questionnaires, shadowing or consumer journey as research instrument. We can use the sampling method also. But here the sampling size and sampling plan will have to be univocal. A pilot survey can be affective here.
After collecting the information, it should analyze and interpret the findings and use the relevant information to get a solid scene about the present environment. Here ABC System Plc should consider its sales and market share analysis, marketing expense to sales analysis, financial and profitability analysis. The ultimate result will, we can be able to forecast the market demand.
- Creating customer value, satisfaction and loyalty
Customers are not the profit creator for an organization but they are the main purpose of the organization. As because our customers are more or less business oriented, customer satisfaction can be a key factor of success. When this company will start marketing of luxury boats in Singapore, it has to create customer value, ensure their satisfaction and achieving their loyalty. However, customer value is depending on the products and service value, personal value, image value, the investigate expenditure, time and energy cost, and spiritual cost and so on.
For achieving the customer value it has to confine these values and costs. It should make the boats easier to get for the customer. Company can use retailers and distributors to make its luxury boats and boat products available in almost everywhere in the Singapore. To ensure sells and after sell assistance, it will have to establish many sells and customer care centres in almost everywhere of Singapore. Company will promise the high quality of on-water and out-water sectors for its boats. Its value proposition will be the best quality in a cheaper price with world class assistance.
For reaching the total customer satisfaction, it should get a good knowledge regarding the customer expectation. It will introduce the total quality management (TQM). If company can do so, it can maximize the customer lifetime value (Porter, p. 83).
- Analyzing and Selection of Market Entry Mode
In order to enter in the new market, it is essential to choose one particular entry mode. There are various categories of entry modes. However, to develop the market of luxury boat products in Singapore, company will consider four of them. These are exporting, licensing, Joint ventures and direct investment strategy which is discussed as follows-
Exporting
Exporting means the promotion and direct sells of a locally manufactured product in a foreign market. This is a well-established and conventional form of strategy to acquiring foreign markets. It does not need any investment in foreign production entities. Most of the cost incur here are considered as marketing costs. Exporter, Importer, transport provider and government are the four players here; therefore coordination among them is very important.
Advantages
- Here the risk and investment is much lower.
- If company uses this strategy, it can enter to the market faster than any other strategy.
- It can maximize our scale as because it is using their existing facilities.
Disadvantages
- The cost will be higher for trade barriers and tariffs.
- Moreover, transport cost may be higher.
- Company has to visage limit access to local market information.
- The company will be treated as an outsider in the new country.
Licensing
Licensing is a strategy of permitting a company in a target market to use the resources of the licensor. These properties are usually of intangible in nature, for example brands, copyright and manufacture techniques. The licensor gets a fee from the licensee in exchange of the rights. Our company can earn a great ROI because of the little investment required. But it may have to loose the potential returns from manufacturing and promotional actions.
Advantages
- Company can reduce their risks and investment to a great extent by licensing.
- Speed of entrance will be ensuring for the company.
- It can earn higher ROI throughout licensing.
- It will be capable to avoid the trade barriers.
Disadvantages
- Company will loose its control over the use of the assets.
- Company will have to consider the threat of unwanted competition from the licensee. That is the licensee may become our competitor.
- Knowledge spillover is possible here.
- There is a limitation in the license period.
Joint ventures
In order to develop target market and distribute luxury boat products in Singapore, company will consider five general goals in a joint venture and these purposes are the market entry, allocation of risk plus award, combined product improvement and in compliance to government policy.
Advantages
- Our company can overcome the ownership limitations and cultural distance.
- We can be able to have higher resources as because we combine with the others.
- This strategy will minimize company’s required investment
Disadvantages
- It is a difficult to manage various features.
- It is essential to have to share the controlling power.
- Here the risk is much higher than exporting and licensing.
- It is possible that partner may become own competitor.
Direct investment strategy
Foreign Direct Investment (FDI) is the last strategy where a company has direct rights of properties and services in the target country. Here the company has to move its resources comprising assets, technology and employees or starting entirely newly using the resources of the selected country or through acquisition of an existing entity in the new country.
Advantages
- Employees can acquire better knowledge of local market.
- Company can be able to apply specialized skills.
- It will diminish knowledge spill over.
- It can get the whole profit for ourselves and do not need to share it with others.
Disadvantages
- It has to face a higher risk here than any other strategy.
- It has to have more resources and investments.
- Company may suffer problems to manage the local resources.
Recommendation for market entry mode
From the above four market entry mode, it can be recommended that direct investment strategy is best for this company. As because it has a huge experience to run the business in our country, its employees have no lack of knowledge. Above all, it has good investment also. As a result, this strategy will fit for this boat company.
After discussing target market, market segment, positioning, environmental and financial issues it can strongly recommend that Singapore is the perfect place to expand its Luxury boat business. It is obvious that, the geographical and economical condition of Singapore will help enough to maximize our profit. However, the basis of the facts that Singapore is the best place for its expansion of business is discussed as follows-
- Marketing mix: The resources needed are available in Singapore. ABC System Plc can have access in a readymade market. Therefore, it can develop our product marketing mix with all illegible features.
- Competition: ABC System Plc is going to join in a competitive market. Here, various companies are now selling their products, but it will provide quality products in lower price.
- Legal consideration: ABC System Plc will consider that it does not create any harm to any one. And for legal strength, it will not violate any rules and regulation in Singapore.
- Financial consideration: Singapore is a rich country and its economic prosperity is doubtless. It should select to finance in and from local market. This will help us to overcome currency conversion related problems.
As a new environment our company should analyze the market carefully and to do the research work effectively it should increase budget for the R&D department. Thus our company can make a clear assumption about the demand of the customers. It should take direct investment strategy as new market entry mode. It has to do promotional work such as increase budget for advertising and for some motivational work to motivate our customers to create a profitable business field in Singapore.
Conclusion
From the above analysis it can be said that it is a high opportunity for investing, though it have to face some barriers to entry in the new market. Competitors may create problems. It should have to take some risk in order to reach its goals. However, managers and other employees will manage all obstacles with their honesty, dignity and prosperity. This company will use its resources in a way that it can get the best outcomes from the limited resources. It should always consider that customer satisfaction is the ultimate goal of this company. This company will look after that it will not create any environmental harm or other negative consequents and its services will secure.
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Footnotes
1.Marimari.com, Inc.
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