In the recent past, trading activities have become increasingly global in some way because of the need to gather and increase the company’s financial bases. This has been attributed to increased growth and sophisticated approaches that organizations are using nowadays to conquer markets. (Hollensen, 2004) Due to modernization and advancement in technology, most businesses are beginning to explore international markets for better profits and opportunities.
Advancement in technology including communication efficiency and better international relations has contributed to the promotion of international trade. Competition has however become a great challenge to the success of international trade but most companies are rising to the challenge. To achieve greater investments and better market opportunities in the international market, it is necessary that primary and secondary market research is done to ensure that information regarding the market of a foreign country is achieved. (Hollensen, 2004)
This paper will therefore look into the requirements and plans needed for Bolton PC Company to enter a foreign market successfully. The main issues that will be addressed by the paper will be; marketing across borders, risks, and opportunities that the company will face and country analysis.
Profile of Bolton PC Company
Bolton PC Company is a computer manufacturing company in the UK located in Bolton This Company offers a wide variety of products including the manufacture, assembly, and maintenance of computers. The company has risen from being a retailer of used computers to become one of the improved companies in the sector. It boasts of a good financial base. The company has been for the past two years getting recognition and that it believes it has met the needs for the domestic market and now it needs to explore the international market. (Bolton PC, 2007)
Hofstede (1991) defines cross-cultural marketing as the strategic practice of marketing between consumers who have a different culture that differs from that of the marketer, at least by one of the major cultural issues, for example, religion, language, education, living style, and social values and norms. Cross-cultural marketing calls for marketers to be conscious and sensitive to the differences in culture, and to respect the consumers’ cultural rights in different cultures and in the marketing places. Marketers have to realize that consumers deserve the right to their culture. Thus, for the marketer to be a conqueror in cross-cultural marketing they have to create a marketing mix that meets consumer’s cultural values and norms. (Hofstede, 1991)
Cross-cultural communication reviews how diverse cultural people try to communicate to each other when carrying out business. The analysis then tries to give out different guidelines that can enable a company to be able to communicate effectively with foreign consumers. Communication also can be enhanced between the different cross-national people.
Culture normally defines the shared function of a group of people or a society. Though all members of the group or the society may share the same cultural experiences, the final cultural behavior is normally modified by an individual, through the personality, life experiences, and upbringing of that individual. Thus, cross-cultural analysis is important in understanding human adaptation so as to improve communication. Cross-cultural analysis frequently reviews “elements” such as time, space, orientation, competitiveness, communication, power, etc. as some of the complementary attributes in culture. Hofstede distinguishes these different elements between cultures, according to him there are five major aspects;
- Power distance: This measures the degree to which society members accept unequal distribution of power in that society.
- Individualism: This aspect shows the manner in which people take care of themselves and their close families; this is in contrast with collectivism.
- Masculinity: This aspect puts focus on the attainment of material success as opposed to femininity which focuses on giving care to others and the quality of life.
- Uncertainty avoidance: This aspect measures the degree to which individuals consider being threatened by ambiguity and uncertainty and try avoiding the situations.
- Confucian dynamism; This is a measure of long-term orientation against short-term orientation, which tends to measure the virtues that are related to the past for example respecting traditions. (Hofstede, 1991)
China social-cultural aspects
The cross-cultural issue is a challenge for many international marketers because it is inherently nebulous and normally difficult to understand. It is possible that employees of a company can violate the cultural norms of the Chinese people without knowing hence the people in China will be uncomfortable with the behavior. In China, for example, there are many festivities that are strictly observed in addition to other religious believes such as the Xian Hum day. Chinese culture is the most elaborate and diverse in terms of religion, food, clothing, and lifestyle. The company must therefore be able to adjust skilfully to the culture here depending on the marketing strategies to be applied by the company. (Lee and Carter, 2005)
The socio-cultural forces in any country may completely affect the way business is conducted in one country. The Chinese people have a culture that stresses collectivism than individualism and have strong family ties. Thus the individuals take family consideration before they make any purchase. (Cullen, & Boteeah, 2005)
Attitudes and beliefs
China is among one of the countries with unique culture and beliefs. The country is well known for its diverse but strict cultural understanding of food, religion, family beliefs, lifestyles, etc. All these factors must be inherently taken care of by detailed preliminary research on the specific cultures that must be incorporated. A nice idea would be to employ as many of the locals as possible to be able to quickly integrate the two cultures adequately. (Alden, D. L. et al. 1993)
Country analysis- The UK
The UK is one of the respected countries in the world in terms of its political, economic, and social ability. It is considered a unique country with a unique lifestyle, art food, morals culture, and fashion. In addition, it also holds an all-important seat in the United Nations Security Council responsible for decision-making in all global security matters. The UK is the second-largest economic country in Europe is considered a key member of the European Union
Culture differs in different parts of the world the UK has a strong western culture which has a strong emphasis on individualism and democracy. The country is well known for its diverse but strict cultural understanding of food, religion, family beliefs, and lifestyles among others. All these factors must be inherently taken care of by detailed preliminary research on the specific cultures that must be incorporated.
The key for Bolton PC Company succeeding in the Chinese market is to understand how the Chinese people who are the potential customers make their decisions on how they spend their money especially when it comes to technology products. An essential part of marketing computer items to Chinese people will be in understanding how much they value computer technology. Today, Chinese people enjoy high economic growth and the purchasing power of the Chinese people have highly improved.
With rapid advancement occurring in information technology, a lot of Chinese people are seeking for latest computers and information technology equipment to improve their communications and be at par with the global trend. Today the Chinese people what to access facilities such as the internet from the comfort of their own homes
Consumers’ behavior is affected by the product origin, Usunier (1996) suggests that cultural aspects of collectivist and individualist affect consumer behavior. According to Usunier (1996), consumers who have collectivist behavior favor products which are from the local (home) country than those coming from foreign countries. The Chinese consumers are observed to be more collectivist, thus the company will have to offer a marketing mix that will be more attractive to the Chinese consumers. (Usunier, 1996)
Cultural aspect implications on marketing mix
Promotion methods in relation to cultural aspects
Promotion is an important marketing tool that is commonly used to market new products in a foreign country. The process requires huge investments especially when it comes to advertisements. There are various forms of promotion; personal selling, publicity, sales promotion, or advertising. The various methods are used in convincing the customers to buy the brand, product, or services provided by the company. Any promotion for a product that is already known by the customers is not very expensive as such, but a new product on the market will require extensive promotion.
This is an object or service that a company produces or manufactures particularly on large scale with precise amounts. (Kotare and Helena, 2004) A company should have a large collection of products that it sells to the market. The products cater to different tastes of consumers. In relation to the marketing implication in the Chinese market, Bolton PC Company should come up with high-quality products that can attract the Chinese. The characteristics of a company’s products should be well defined to meet the needs of the consumers; the packaging of the product has to be culturally sensitive to entice the customers to buy the products. (Doole and Lowe, 2004)
Promotion includes all communications that a company uses in marketing its products. We have four different elements in promotion; includes advertising, point of sale, word of mouth, and public relations. (Keegan and Schlegelmilch, 2001)If a company incorporates all four elements then a certain level of crossover does occur. Companies have greatly used this marketing mix to its full advantage.
Bolton PC Company should incorporate all the four aspects of promotion to see it capture and retain a big share of a new market. Bolton PC Company should promote its products by using captivating adverts that entice the Chinese market to buy its goods. It should be noted that advertisement is a very powerful marketing tool that is used to create more market for a company; Bolton should emphasize advertisement. (Keegan and Schlegelmilch, 2001)
The amount that a customer pays for a certain product is its price. This amount is determined by various factors which include product identity, competition, market share, and the perceived worth of the product by the customer. Bolton PC Company should different pricing matrix; penetrating pricing and low pricing should be used as Chinese people are very price sensitive. (Keegan and Schlegelmilch, 2001)
- Penetration pricing- the price for the computer and computer accessories can be set to be lower than what is offered by other competitors so as to gain a market share in China. Bearing in mind that the Chinese consumer is more price-sensitive than quality.
- Economy pricing- the cost of marketing and manufacture are kept at a minimum hence becomes a no-frills low price for computer hardware
- Premium pricing- use of high price which indicates uniqueness about Safari products. This approach is applicable where a substantial competitive advantage is in existence such as for luxuries but not for computers
- Others-price skimming, psychological pricing, product line pricing, optional product price, and captive product pricing (Keegan and Schlegelmilch, 2001)
This stands for, a location where the products from a company are found and purchased. This in many cases refers to distribution channels of the company which can be physical stores or even virtual stores found on the internet. In order to make more sales in the Chinese market, the company should open more distribution outlets to reach a higher number of customers. The Chinese people as earlier noted are cultural like getting things close to them. Customers will feel valued if the product is close. Research reveals that when a product is easily accessible the volume traded will increase. (Kotare and Helena, 2004)
Global marketing communication
Different marketing communication is used in the market to promote and communicate the product to the customer. All over the world, different methods are used depending on the company chosen and the type of customer. Marketing communications involve advertising and personal selling among others. We shall examine personal selling a communication tool that the company can use.
Personal selling as a communication mix
Personal selling involves a salesperson selling products or services to a customer. The salespeople are supposed to equal specific goods or services they are offering to the customer’s needs. Presently, personal selling entails developing long-lasting relationships with the client. In contrast to other marketing communication instruments such as advertisement, personal selling seems to;
- Use less resource, and pricing is mostly negotiated
- Products that are sold and services seem too complex (e.g. technology)
- Client/ prospective requires specific information
- Some contact is created between the seller and the buyer after the purchase and thus a relationship is built
- At times the purchase may be big
In most cases, personal selling has five definite stages which it follows before it is completed, though in some cases they may be exceptions. The main five stages are outlined below;
- Making the first contact.
- Making the sale call.
- Objection handling.
- Closing the sale. (Baker, 2000).
Prospecting is basically looking for potential new clients. The potential clients need to be “qualified” otherwise the salesperson will have to look elsewhere; the potential client should be in need of the product to qualify.
Making the first contact
The salesperson’s preparation before meeting a client fall under this point, for instance, the salesperson will make some preparation before calling or e-mailing. Such preparations can be ensuring that it is the right time, sending information before meeting e.t.c.
This time a salesperson should be excited about the product or services he/she intends to sell to the customer. The salesperson should focus on the product and should let the client talk much.
This implies the way the salesperson will handle obstacles that clients present. The salesperson should have tactics of handling the obstacles to leave the potential customer satisfied.
Closing the sale
This is the most important part as it will ensure the whole process is successful or not. Thus, it is important that the salesperson learn how to close a sale and how to summarize to ensure that a sale is made.. (Baker, 2000)
Applying the direct communication mix to the Chinese market
The company will have to create a good brand image of its product to capture the Chinese market. Consumer attitudes towards a product such as a computer might influence the way the salesperson will present the company products, at the same time this will also have to influence the way the company will recruit its salespeople. The company should thus recruit Chinese salespeople who are fluent in the Chinese language and who understand the culture of the Chinese people. This will ensure that the company’s direct communication selling succeeds. Another aspect is that the Chinese people value close relationships ad they will be happy to be visited by the salespeople. (Baker, 2000)
Market entry modes
Since the company has decided to enter the overseas market a variety of options were open to the company. These options vary with cost, risk, and the degree of control that can be exercised over them in terms of security. Bolton PC Company can use the following entry methods to enter the Chinese market.
A direct method of business can be applied where there is the expansion of operations in markets where competition is less but the currency-based exchange is not possible. In this method, you may agree to build a plant in china and then operate it as a full entity in the country. (Chee and Harris, 1998)Direct methods have the following limitations; it is difficult to set price and service quality and also there is a bit of inconsistency in specifications and delivery of products. This method of exporting entails that Bolton PC Company builds a plant in a certain country and either distributes or manufactures their products and then operates as a full entity in the target country. Direct methods have the following disadvantages
It is difficult to set price and service quality
- ‘Dumping’ may occur
- Inconsistency in specifications and delivery
- Quality may not be of international standards becoming so costly to the customer and the company.
The indirect marketing of products involves the marketing of goods produced in one country into another through agents or other marketing agencies. In this case, there is no direct manufacturing in the intended country but significant investments in marketing are required. Bolton PC Company can therefore manufacture their products in the main country i.e. in the U.K and export them directly to the target country.
The advantages for this method are; production is home-based hence less risky, gives an opportunity to learn markets abroad, potential risks of operating abroad are minimized. The only disadvantage of this method is that the company is at the mercy of unscrupulous agents who make more profit than the company itself. (Chee and Harris, 1998)
This method of marketing entry does not require that the company invests in production facilities in the country and therefore, it is cheaper. The company can set an office in a particular target market and it controls all its operations. It is usually not expensive especially in terms of costs. The only costs that will be incurred are the marketing, transport and government expenses. This kind of marketing requires the full cooperation of the following players; the exporter, who will be in this sense Bolton PC Company., importer in the target country, transport agents, and the government trade officers.
(Keegan and Schlegelmilch, 2001)
Licensing and franchising
Franchising is about the application of economic endeavors in the area of products and services from manufacturing, supply, processing, distribution, and marketing. The company can be able to subcontract services from one company to be able to ease expenditures. On the other hand, licensing is not a standard document but depends on the parties involved; it can change in terms of how it is structured. It is a document to show the commitment of each and every member of the party. Both franchise and licenses are legal vehicles that are used to conduct businesses among different parties hence able to protect themselves from any legal suits or disagreements. The company can thus enter into a franchise with willing parties. (Cullen & Boteeah, 2005)
Joint ventures are forms of market entry that allow for technology sharing and joint product development. The main advantage of joint ventures is to get proper political connections that will allow for favors to be achieved. It is usually suitable when; the market power, resources, and size of the partner are small compared to the industry leaders. If Bolton PC Company can merge or have a joint venture with any company which is still junior in china and then boosts its market power, it will be able to meet the demands in that particular region.
The main issues that are usually sorted out during the discussions for joint ventures are agreement periods, pricing methods, ownership, and control of the local firm. Bolton PC Company should implement the last entry method, the joint venture method. This is because the entry method is;
- Cheap to implement as it does not require a lot of initial capital outlaw
- The method requires fewer licensing procedures
- It will incorporate the local technology which is vital in attracting the customer
- The method is more culturally sensitive and it is important in the Chinese market because of its value to local products.
From the above, it is certain that the company will be more successful in entering the Chinese market.
Marketing is the most important aspect of a business, a well-coordinated marketing strategy ensures that a company captures and even extends its sales targets. Culture plays an important role in modern business, globalization has made international trade increase and so has cross-cultural aspects have become more significant.
For any business company to succeed in a foreign country it must understand the most fundamental cultural aspects of the local community, these aspects are language, religion, education, social beliefs among others. different marketing entry strategies can be undertaken by a company when entering new markets, but it is important that this marketing be responsive to cultural aspects o those people for the company to succeed. However, differences that exist among regions, nations, and ethnic communities in pertaining cultural aspects remain obvious.
Bolton PC Company has to incorporate the cultural different aspects of Chinese people in their marketing mix so that it can conquer the new market. At the same time, the company should get into a joint venture so that it can easily enter the Chinese market and utilize the local expertise in its marketing strategies and product manufacturing to be more culturally sensitive. This will ensure that the company succeeds in the Chinese market.
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