In 1999, two friends, James and Paul came up with an idea of establishing a joint business. The issue was raised by Paul as they were sharing drinks as usual. After contemplating on the kind of business to establish, they realized that demand for clothes in Chicago was high and as a result they agreed to open a textile manufacturing company by the name Jampa Textile. After working with the company for four years, Eric; a relative of James saw the opportunity in the business and negotiated a franchise deal allowing him to selling the company’s merchandise in California. Demand for the company’s merchandise in the United States increased leading to Paul and James thinking of venturing into the international market. With time, they have started venturing into the global market through franchising. However, the company has been faced with challenges of gaining market share in different international markets due its inability to standardize its operations.
Think “global act local” is an important topic as it helps organizations come up with strategies to standardize its operations across all foreign markets where it has established itself. The company also learns on how to customize its marketing strategies in various regions based on national, regional and cultural practices of the target market so as to avoid opposition. For companies with an aim of competing in international market, they are required to be more global. Their management ought not to view the global market as different entities. Instead, they need to take the global market as a unit entity. This will help organizations in standardizing their distribution and selling mechanisms to allow them to suit international markets. As more organizations shift from local to global markets, they are also adjusting their strategies from developing into global companies to establishing global operations during their establishment. The idea of “think global act local” is increasingly being used when coming up with strategies for organizational internationalization.
The objective of this paper is to look at some of the challenges being experienced by Jampa Textile in its effort to extend its services to the global market and give some of the strategies it can use to overcome these problems.
Marketing mix of the company
One of the problems that have led to the company failing to effectively gain market share in the global market is its poor marketing mix. The company has not given much attention to the imperativeness of using the 4Ps marketing mix established by McCarthy in 1975. These are the product, place, promotion and price1. Despite the company venturing into the global market, it has been very hard for it to come up with strategies of standardizing its products across the world. This has made it impossible for the company to adapt to market environment in different countries. Effectiveness of a business in acquiring global market share lies behind its ability to adapt to customer preferences and customs of the target market2. There are different religious and cultural beliefs that prohibit use of certain clothes among the people. These are such as wearing short dresses among the Muslims. Failure by the company to adapt to these customs has made it hard for Jampa Textile to venture into markets mostly dominated by Muslims.
There have been problems in enhancing the quality of its products supplied across the world. The company’s quality assurance team has been reluctant in ensuring that all its clothes are manufactured using the same design, fabric and dimensions based on the target age and gender3. The team has not been conducting regular check ups in all its distribution centers to ensure that products distributed meet the required quality and standards. As a result, some of its products have been realized to be of low quality only after reaching the market. This has cost the company with respect to reduction in sales volume and public perception4. One of the factors that have been identified to cause this problem is the lack of the company to train its new employees on the standard design, fabric and dimensions to use for specific category of clothes.
Despite the company venturing in global market, it has not been able to locate its distribution centers in strategic places where it is possible to access the target market. This has made t hard for the company to overcome competition from other textile selling companies that have well established themselves in global market5. There are numerous markets that show the potential of growing. These include Chinese and Japanese markets. However, Jampa Textile has made no effort to establish itself in these markets before they become competitive. The move by the company to venture in such markets after its rivals have already established themselves has led it gaining limited market share due to stiff competition.
Despite standardization helping organizations in reducing operation costs, it is important for organizations to adapt to the environment in the market. One of the ways in which organizations need to adapt to the market environment is with respect to pricing strategies. Instead of the company having uniform pricing strategies in all markets, a company need to established different pricing schemes for different markets6. This is a good example of local action rather than global. To be competitive in global market, organizations ought to set their prices based on product demand in the market, costs estimate and price offered by competitors. With every organization aiming at increasing its global market share, it is imperative to use product demand in setting prices. Companies need to set prices of their products depending on price perception of the target market. In setting its products prices, Jampa Textile has made little effort to consider these factors. Failure to consider its competitors has led to the company offering its clothes at higher prices in global market thus being unable to attract more customers7.
In global market, product promotion requires an organization to be aware of varied differences and cultural oppositions it is likely to meet in various countries. This helps the company localize its promotional strategies to avoid these challenges8. It would be risky for an organization to assume the various local markets and features that may lead to its products failing to perform well in these markets. Some of the market considerations to bear in mind include ethnic and religious beliefs of the target market, usage pattern and shopper thoughts towards the product9. Despite Jampa Textile making an effort in standardizing its textiles, it has mad e little effort in localizing its advertising campaigns based on the target market. The same advertising slogan used in home country has been carried to other markets world wide. This has resulted to the company not being able to draw attention from most of the people as they do not understand the meaning of the advertisement.
For some markets, it is imperative to use organizational staff in promoting products. These are especially those that the target consumers have limited knowledge on technology. Using technology in product promotion in such markets would lead to the company reaching a limited number of audiences10. In such cases, organizations ought to have public relation officers responsible for answering questions from consumers as well as advising customers on the benefits of the company’s products. In Far East, people highly prefer to shop in organizations that show courtesy. This calls for need of public relations staffs within organizations operating in these countries. This has not been the case with Jampa Textile. The company has no public relations staffs. As a result, most of the customers in Beijing have failed to return to its branch store once they shop. Unlike back in America where customers just shop and leave the store, customers in Beijing need to associate with organization’s staffs and get to understand more about the products and their usage11. As the company does not have staffs to cater for this, most of the customers in Beijing have shopped and left without all their needs being addressed. As a result, the company has lost most of its market share to rival companies which have ensured that they have public relation officers to cater for these needs.
To help Jampa Textile improve its marketing mix thus being able to effectively participate in global market, the company need to make changes in its product, distribution mechanisms, pricing strategies as well as promotional strategies12. In as much as the company tries to standardize its products across the globe, it needs to put into consideration some of the cultural and religious beliefs of different markets and adapt to them13. For instance, despite the company using the same fabric and design in manufacturing clothes targeted for ladies, it should ensure that it does not supply the Muslim markets with short dresses as it is prohibited by the religion. Doing this will help the company to effectively exploit the market. The company needs to have quality assurance teams in all its distribution centers to ensure that products distributed meet the market environment14. The team ought to ensure that all clothes that do not meet specific requirements of a certain market are not allowed into the market.
Currently, the company has a limited number of distribution centers in its foreign markets. With international markets looking promising, the company requires to open more distribution centers15. This will help in discouraging competitors from venturing into these markets. Based on the lessons it learnt back at home, the company needs to open more branches globally. In United States, Jampa Textile used to open between 100 and 200 branches every year regardless of demand in the market. This went a long way in placing the company in a good position where it overcame competition from its rivals. Establishing more branches in the global market before competition increases will help it gain market share hence being able to overcome competition from new entrants.
To effectively compete in global market, Jampa Textile needs to conduct market analysis of the different countries it has ventured16. This is to gain information on consumer perceptions towards its products. As the company aims at increasing its market share, it needs to use product demand rate in different countries to set prices for its products in those countries. Based on consumer perception of the product, the company will be able to set prices higher in some markets than others. His is especially in those markets that consumers perceive the products to be of high quality. In addition to considering consumer perception, the company needs to also consider its competitors in setting its prices. Offering products at higher prices than its competitors has led to the company not increasing its market share globally. Through analyzing its competitors, Jampa Textile will be able to establish competitive prices for its products. The company also needs to analyze the lifecycle of its products to help it set prices. For markets that are in the process of developing to maturity such as the Chinese and japanese markets, the company can offer its products at higher prices. This will help it increase its profit margin. On the other hand, markets that are in the decline stage such as the home market in United States, the company can lower prices of its products to regain its lost income.
To come with viable promotional methods in international markets, the company needs to localize its communication approaches. By analyzing cultural, religious and other factors influencing the market, it will be possible to come up with promotional strategies that adapt to the market environment. There is a need for the company to come up with mechanisms that globally brand its products but advertise them locally to effectively meet the needs of the target market. In cities such as Beijing where consumers prefer courtesy, Jampa Textile needs to ensure that it has deployed public relations staff in its stores to help in addressing questions emanating from the customers as well as informing customers on how to use the products.
For Jampa Textile to effectively exploit the global market, it requires a strong marketing mix. With its main objective being to ensure that it offers standard products with respect to quality and design globally, the company needs to ensure that its products adapt to local market needs. This is with respect to cultural and religious practices of the target markets. Limited distribution centers in international markets have cost the company in increasing its market share. The company requires increasing the number of distribution centers in the international market. This is to help it reach a wider market thus increasing its market share. Making considerations of factors such as customer preference and product lifecycle will help the company set the right price for its products. It is also imperative to consider prices of substitute products to ensure that its products are well received in the market. Before coming up with promotional strategy, the company needs to have clear knowledge of the cultural and ethnic practices of the target market. This is to ensure that it provides public relation staff in markets where customers require working directly with organization staff. In markets where customers do not need to have direct interaction with organization’s staffs, it can use technology in promoting its products.
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