Wiggo: Marketing Feasibility Report

Executive Summary

Upon considering the strengths, weakness, opportunities, and threats of Wiggo in Europe, expanding to global platforms is one of the incredible opportunities available to the organization. In the implementation of this plan, Wiggo needs to be aware of the external factors, which may influence its operations as it is revealed by PESTLE analysis. Wiggo wants to distribute its products online with the help of e-business approaches such as customer-to-customer (C2C) and business-to-customer (B2C). The best approach to implement this strategy is by seeking a strategic partnership with Taobao.com. This organization has managed to secure a large market share in the online retail business in China.

By investing in the creation of brand awareness, Wiggo can attain marketing objectives of winning a retail market share of 40% in the Chinese retail market within the first five years of its operation. High expenditure of financial resources is required in realising this objective. However, this issue is not a challenge since financial resources are readily available. The company has been successful in the European markets. It has adequate human and financial capital base to successfully place itself in the Chinese market. Wiggo requires committing 3.5 million US dollars in the implementation of the marketing plan.

Introduction

Wiggo, which is a hypothetical retail company, is a rapidly developing organization. Currently, the organization has 2500 retail stores located in different nations across Europe. As organizations including the competitors of Wiggo such as Aldi and Lidl continue to expand globally in markets such as the USA and Russia where they seek to take advantage of economies of scale, Wiggo cannot afford to be left behind. Wiggo struggles to secure an incredible market share in the retail market locally and globally amid the high competition from organizations such as Aldi, Netto, Biedronka, and Lidl. In the global platforms, Wiggo seeks to expand its operation to focus not only on the European markets, but also on the international markets by opening up in the Asian retail market. Apart from opening physical stores to the Asian consumers, the company also intends to exploit the Asian market by engaging in online selling and procurement.

In a broader perspective, marketing entails market research, market segmentation, setting of marketing strategies, evaluation of the marketing environment through SWOT analysis, and even positioning of marketing strategies among others (Kotler et al, 2009, p.56). This paper considers these aspects of marketing planning in the discussion of the marketing planning for the Wiggo brand in the Asian market. Although Wiggo anticipates attracting high clientele in the Asian market, it is not sure about its reception. Consequently, the strategic approach of entering this market with a high probability of success is to concentrate first on the Chinese market before expanding to other markets such as India, Japan, and Malaysia among others.

Situational Analysis

Organizations operate in an environment dominated by competition and various other challenges that limit their ability to operate effectively. This underlines the importance of conducting situational analysis in the process of developing an effective marketing planning (Hill & Westbrook1997, p.46). Situational analysis encompasses carrying an internal analysis of an organization, which helps to unveil the core competencies of the organization to enable it exploit new markets with success. PESTLE and SWOT analyses come in handy in this assessment.

Internal Analysis: Core competency

Wiggo has managed to establish a strong online selling in the bid to exploit technology to enhance its success in the market place that is rapidly evolving. This core competency of Wiggo is enhanced through the interception of B2C and C2C. This implies that the two main functions of business: buying and selling, are conducted via technological interventions of the internet. Therefore, it is anticipated that Wiggo marketplace’s target population will be characterised by different buying behaviours in comparison with the physical marketplace, which embraces the face-to-face interaction with organizational selling agents and consumers. Embracing online marketing helps Wiggo Company to increase its speed of delivering services to consumers. This strategy is yet another core competency of Wiggo.

External Analysis: PESTLE Analysis

A number of factors, which operate ether internally or externally, influence the decisions made by Wiggo. From the PEST EL organizational analysis approach, these factors are political, economic, social, technological, environmental, and legal factors (Gerry, Kevan & Whittington 2005, p.105). For Wiggo, political environment affects the operations of the company via taxing policies since the organization must pay taxes from its profits. The management must also comply with environmental regulations, tariffs, and employment laws established within various nations where the company has established outlet stores. The main challenges of the company are that these policies are different in different nations. Wiggo has no control over these policies in the effort to have harmonised financial budgeting approach.

The operational economic environment of Wiggo is characterised by enormous competition and influx of new brands by the existing competitors such as Aldi and Lidl who are seeking to acquire part of Wiggo’s market share. Social factors act as an immense success factor for Wiggo Company. The company promises its customers to deliver high quality products. Ensuring supply of fresh products, especially the groceries, is a major issue. Incidences of complains that the company sells groceries that have been refrigerated for a long time have been experienced in the recent past. Technology is yet another essential factor that Wiggo Company believes is essential for its long-term success.

The company handles a large amount of information relating to purchases, sales, and even the workforce data. With the ever-changing technology, the company encounters challenges of increased costs of running businesses articulated to the needs of keeping software application updated in the effort to ensure that the organization remains competitive in terms of its effectiveness in handling all its information.

Wiggo is highly concerned about its environmental impacts. The manner of disposal of product wrappings is an issue of great concerns to the company. This concern is of important interest since Wiggo Company operates in nations that have different policy frameworks to guide in the disposal of products and product-associated wastes. For instance, while operating in the UK market, Wiggo is required to comply with the recently established legislation on the minimum wage and legislation. These two aspects require firms to recycle their wastes as a measure of being environmentally green. Such legal provisions have the impact of raising the costs of running the business of Wiggo.

SWOT Analysis

In the daily operation of any organization, situations are encountered, which act as strengths, weaknesses, opportunities, or even threats to the success of any organization (Hill & Westbrook1997, p.47). For Wiggo Company, strengths include the company’s ability to offer high quality products, pursuing the low-price strategy, and/or ensuring that operation costs are minimal. The company has also managed to establish a strong presence in the German market.

Amid these strengths, Wiggo Company encounters some weaknesses such as the relatively small brand in regions where competitors have managed to establish a higher presence. For instance, while Wiggo has 1000 outlets in Germany, Aldi has 8000 outlets. Wiggo has not established any presence in the global markets. Pursuing the low-cost strategy makes some customers consider the organization an outlet for cheap products together with items that are of low quality.

Opportunities available for Wiggo to capitalise on in the effort to enhance its success include the introduction of its brand in the international markets where its competitors have relatively low presence. Such markets also need to be dominated by retail organizations that have relatively lower economies of scale in comparison with Wiggo. They include the Asian markets and African retail markets. Another opportunity for Wiggo is more investment in the promotion of its brands to create more consumer awareness. This strategy can help the company to deal effectively with competitors in the local markets.

Wiggo has a major weakness in that it cannot cater for all consumers who look for complete ‘retail shopping experience’. The organization has the threat of changing government policies and regulations for the retail industry in different nations where it operates together with engagement in price wars with its competitors. This case is a disadvantage to Wiggo Company since it has a smaller market share. Hence, it cannot race competitively with the larger brands, which lower the prices below levels that make Wiggo run unprofitable due to the disadvantages of economies of scale in comparison with the larger brands.

Marketing Objectives

New Product: New Brand Description

Wiggo will be introducing a new brand in the Chinese retail market. Hence, the organization has to maintain strong brand inventories. Brand inventories are aimed at availing comprehensive profile of the manner in which products and services that are sold by a given organization are branded and/or marketed. With regard to Hill and Ettenson (2005), profiling a product or a service “requires marketers to catalogue in both visual and written form products or services, their names, logos, symbols, characters, packaging, slogans, or other trademarks used therein” (86). The outcome of any product profile requires accurate, precise, comprehensible, and a reflection of the status of a product or service brand.

For Wiggo Company, brand inventory constitutes some of the essential elements of brand audits that permit the examination of the origin of brand equities of an organization. Brand inventories serve the principal purpose of helping to profile branding approaches deployed by an organization for its goods and services (Holt & Quelch 2004, p.68).

Marketing objectives: SMART Approach

Marketing objectives are effective if they are measurable and attainable. Indeed, the SMART approach to marketing objectives of organizations requires marketing objectives to be “specific, measureable, attainable, relevant, and time bound” (Doran 2001, p.35). Currently, Wiggo has not yet established its presence in China. However, its marketing objective is to position its brand in the Asian retail market so strongly that it will secure a market share of 40 percent in its first five years of operation.

In the first two years, Wiggo will be attempting to create awareness of its presence in the Asian markets. Within these two years, the objective of the company will be to gain a market share of 8 percent. In the next two years, after people are aware that the company exits, the objective will be to raise its market share to 30 percent through intensive advertising and other promotional strategies including the funding of local competitions. These promotions are expected to help to raise the market share of Wiggo to 40 percent in the fifth year of its operation in China.

Considering the past performance of the company in the European markets, the above objective is achievable. In the first year of the operation of Wiggo in the European market, it gained a market share of 11 percent. Competition here was so intensive compared to the Chinese market. Wiggo has also the advantage of low price in comparison with other organizations operating in the retail industry in China. Hence, there is a high probability for consumers to consider Wiggo as offering a better deal in the industry. The success rates of these objectives will be measured by percentage sales in dollars made by Wiggo in comparison with the total annual sales made in the retail industry. Marketing objectives also need to be realistic (Shahin & Mahbod 2004, p.226). For Wiggo, gaining a large market share will require the organization to open many stores.

Marketing Plan

Market Segmentation

For a firm to succeed in placing its brand strongly, it needs to precisely determine its market segment. Market segmentation encompasses division of consumers into subsets that comprise the common needs in terms of consumption of goods and services offered for sale (Yelkur 2007, p.106). Once segmentation is done, appropriate market campaigns are set to target the subsets. For Wiggo, market segmentation can be accomplished in two main ways: demographic segmentation and psychographic segmentation.

Demographics refer to the characteristics of people such as age, religion, gender/sex, and social class among others (Menon et al. 1999, p.22). Psychographic segmentation is based on the reason why people buy products and services. As Xiaoni and Prybutok (2008) reveal, “by creating psychographic profiles, marketers are able to understand the motivation and the conscious drives of a target audience” (p.9). In terms of segmentation, psychographics encompass people’s opinion, interests, and opinion variables.

From the context of demographic segmentation, through new media, Wiggo’s target group comprises the young people who are highly accessible to social media and internet-based buying and selling systems. Studies show that the internet is highly embraced by people whose ages lie between 10-45 years (Maktoba, Ian & Sonny 2011, p.227). This means that such people are more likely to use social media networks such as Facebook, twitter, and MySpace among others. These are the main people who are targeted by products sold online through partnership with Taobao.com in the Chinese market. The attitude and interest of people for different products are dependent on various variables such as preferences (Armstrong 2001, p.252).

From the paradigm of psychographic segmentation, the target populations are the Chinese citizens and other people from different nations residing in China. These segments are divided into the middle class and working class persons. These people are more likely to consume a wide range of products offered by Wiggo in China ranging from food staff to electronic products. They are also likely to shop in super markets as opposed to small stores (Simon 2007, p.125). While targeting this group of people, it is important to maintain high quality products in the stores since the middle-class and the working-class people are highly responsive to quality standards of products and services (Philport & Arbittier 2007, p.68).

Brand Positioning and Differentiation

Brand positioning is enhanced through the development of unique identifiers of an organization so that the images of the products and services offered by the organization are invoked in them when customers see the identifiers. Customers not only buy a product or pay for a service but also pay for the brand image (Holt & Quelch 2004, p.69). According to Keller (1998), brand image is a “perception of customers when they see a brand reflected by brand associations in their mind” (p.27). This implies that brand positioning refers to the manner in which an organization wants its customers to think about its products or services.

Brand differentiation refers to the unique symbols or any other means of identifying and distinguishing an organization from other organizations even though two or more organizations offer similar products or services (Hill & Ettenson 2005, p.85). Organizations not only sell products or charge for their services. They also sell their brands. Several elements identify brands. They include the brand name, logo sounds, tagline, tastes, and scents among others. Wiggo endeavours to protect its brand name consisting of the name Wiggo Company. Any attempt to use a brand name possessing these two names amounts to a legal challenge by the organization.

This measure will ensure that the brand of Wiggo Company in the Asian market remains unique. Wiggo Company will also use a unique logo in the Asian market in the attempt to make the target market perceive it as uniquely Chinese. This logo is made up of golden arches with the brand name ‘Wiggo Company’ ruining across the centre of the arches. Wiggo Company will use the slogans “I like Wiggo shopping experience.” This slogan is meant to solicit for happy thoughts among customers whenever they do shopping at Wiggo in China.

Marketing Mix

Successful marketing of products or brands requires the creation of a good mix of brand or the product, price, place, and suitable strategy for communication. Marketing mix embraces the various choices that organizations make to ensure that their products or services are availed to the marketplace at the right price while using the appropriate promotional strategies (Menon et al. 1999, p.19). A brand needs to present good features (Rust, Zeithaml & Lemon 2008, p.115). For instance, the brand must be appealing to the target market segments.

Product

In China, Wiggo presents a collection of products represented by the brand of the Wiggo Company. Hence, the success of Wiggo brand in the new market is a measure of the success of the organization’s products. Creation of a strong brand is critical in the retention and attraction of new customers in the Chinese retail market (Maktoba, Ian & Sonny 2011, p.227). Ensuring that customers are connected and/or maintained requires the creation of a dialogue that is sensible with the customers. “The importance of brand in a business strategy affirms a paradigm of calculating its economic value called brand equity” (Holt and Quelch 2004, p.73).

Brand equity encompasses a long-term investment that Wiggo Company has to manage effectively since it is the measure of economic value for the company. Without effective management of the brand equity for Wiggo in China, it is practically impossible to gain optimal profitability in the new market.

Pricing Strategy

Price is an important aspect of marketing Wiggo brand in the new market since the organization uses the strategy of low price to penetrate into the market. According to Khosla, “the price of products involves the examination of customer perceptions, rival products, and the costs of manufacture” (2010, p.220). The price of a product is a set such that an organization is able to cover its direct and indirect costs while earning a profit margin. Price for the products that Wiggo offers in China needs to be set such that that target market population will buy large enough number of products for the company to make significant profit margins that would make it break even and/or deliver value to its shareholders. However, for the first two years of its operation in China, the focus is on securing market share. The central issue during these three years is to break even.

Targeting Strategy

Wiggo China will utilise pricing and advertising as the main strategies for targeting. In terms of prices, Wiggo Company has been known to offer competitive prices for its products in the European market over a long period. The plan is to extend this strength of Wiggo to China. Since China is an emerging economy, customers are anticipated to be highly sensitive to price (Wirtz & Bateson 2000). Consequently, the company expects to attract and retain large family patronage within the Chinese market place. In case of advertising, marketing strategies will consider a particular target audience to help in the designing of the target characteristics. The goal is to run advertisements that are effective in attracting target market identified in the market segmentation section.

Promotional Strategy

An organization seeking to establish a strong brand within new markets needs to invest in the promotion of the brand in the effort to create customer awareness. Incidences of negative profiling of Wiggo’s products in the European markets are spread through the social media and the internet. Hence, in the effort to build a strong brand in China, which will overcome any challenges in the future, social media and the internet form important promotional media that the company should give the first consideration. In fact, through these new media, it is also possible to reach a large number of people globally with minimal expenditure of the organization’s financial resources (Abhamid & McGrath 2005, p.46).

Social media is a low-cost promotional strategy. Customers share promotional information with minimal efforts of an organization. Minimisation of costs is crucial for Wiggo’s low pricing targeting strategy to work effectively. Apart from using traditional media such as newspapers, magazine, audio, and audio visuals to alert people about the presence of Wiggo in the Asian market, the point-of-sale promotion will also be deployed.

Target Markets

Wiggo’s target market embraces all demographic sections on the population. These sections include gender, age, race, nationality, and income among others. The target market must be satisfied by the products and services offered by an organization (Yelkur 2000, p.109). Essentially, Wiggo will target youngsters with its online selling strategy in partnership with Taobao.com. The objective of Wiggo Company is to move a large number of products possible in China though the low pricing strategy. Hence, Wiggo China needs to stock different products, which meet the needs of all classes of people amid their demographic or psychographic characteristics.

Distribution Plans

Wiggo will distribute its products through physical stores and online channels. The physical stores will be established first in the major cities of China. Online distribution of Wiggo products will be conducted through partnership with Taobao.com. Customers will order products and/or make payments through Taobao.com. Wiggo will then receive orders in bulks from Taobao.com. It will also check through them and/or make the necessary logistical arrangements to deliver products to consumers. The choice of Taobao.com as a distribution channel is very crucial to the success of Wiggo in China. According to Xie and Hu (2013), the company is the main key player in the online retail selling in China (p.88).

Hence, even though the organization will be sourcing the products from Wiggo China, consumers will continue perceiving the products as being sold and delivered by an organization with which they have established long-time loyalty. The strategic arrangement between Wiggo and Taobao.com in enhancing distribution of Wiggo products is effective since both organizations will gain. While Wiggo will benefit from the online selling service by a strong brand that is already present in China, Wiggo will help in supplying high quality products, thus aiding Taobao.com in logistical arrangements. Wiggo is well experienced in logistics

Marketing Mix: Global and E-business

E-Commerce or e-business is an important innovation that has helped many organizations to successfully position, promote, and even distribute products and services effectively globally with high savings on the costs of running any business. Studies, for instance, those of Indjikian and Siegel (2005) and Li and Zhao (2011) show that e-commerce can create diverse and valid revenues streams to various global organizations through the development of new markets. Meeting new challenges for propelling business growth requires channels for information sharing. E-commerce helps to provide these channels.

Taobao.com operates two main e-commerce platforms. These are business across C2C and B2C. During the first quarter of 2008, more than 6200 people joined Taobao.com. A large number of this group covers mostly online shopping population (Taobao Marketplace 2013). During the first quarter of 2008, Taobao’s transactions were in excess of 18.8 billion with an annual turnover in excess of 433 million by 2007.

According to a 2007 third-party authority research, Taobao occupies more than 70% of China’s online shopping market share (Taobao Marketplace 2013). For C2C market, Taobao occupies more than 80% in terms of market share. Since Taobao brand is developed with the mindset of promoting local tastes and preferences, any attempt to compete with the organization, especially a foreign retail organization such as Wiggo in the online business, calls for efforts to change Taobao.com’s loyalty among local Chinese consumers. The best strategy for Wiggo is to refrain from engaging in competition and strategic partnership.

Marketing Budget

The implementation of market plan is done through a process involving expenditure of financial resources. The table below shows the marketing budget for Wiggo Company in the Chinese market.

Table 1: Wiggo Market Budget Plan.

Conclusion

Marketing planning is an essential activity that an organization seeking to penetrate into new markets needs to conduct in the effort to determine the potential and feasibility of the new markets. In the paper, Wiggo, a hypothetical company operating in Europe, seeks to reach global markets by opening new physical retail distribution stores together with engaging in online distribution activities in Asia. To determine the appropriateness of this strategic decision that is meant to increase the profitability of the organization, the initial plan is to implement a pilot market plan by establishing operations in China before extending to other countries within Asia.

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