Executive summary
As a firm expands its products abroad, it has to market them so that the sales in the foreign market can be more and the people can be aware of it. This, therefore, means that a firm should focus on the world market instead of the domestic market. This paper will primarily look at the international markets and the strategies which firms look at when deciding on the foreign market which they will venture into. The paper shows the PESTLE analysis which is the external environmental factors that companies need to look into when getting new markets because it shows the broader picture of the market. It also shows the international marketing mix which is an imperative concept in the modern marketing of products and which provides multiple paths which firms can take when venturing into the markets is also looked at. It involves the price, product, promotion, and place where the product will be marketed. This report helps in understanding the foreign market and how to enter the markets. Firms should use these criteria when venturing into the markets so that they become successful.
Introduction
In today’s world, trade is increasingly becoming global. One of the major reasons for this development is due to advancement in technology which has made transportation and communication to be easier, therefore, consumers from different countries can access the best products from all over the world without having to travel to a specific country to get them. The increased technology has increased competition as countries strive to compare which one of them produces the newest technology and therefore countries have taken steps to promote international trade through different agreements such as General treaty, tariffs and getting involved in organizations such as the World Trade Organization (WTO) and The European Union (EU). The purpose of this study, therefore, is to analyze the international market and the strategies a firm can use to introduce a new product in them. It looks at the PESTLE analysis and the marketing mix of Japan which make it conducive to market products in them. The objectives of the study are to identify all the external factors which affect markets such as politics, economy, legal, and environmental factors affecting markets and the four Ps of marketing of international markets. Limitations encountered during the study are the short period given to conduct the study, limited data on the topic, and the research methods used only provided limited information on the topic.
Background and situation analysis
The Kitenge is an African garment that is often won by women and there are also designs that are made for men. Kitenge is a Swahili word and the fabric is commonly made from cotton which contains wax prints and is often multicolored, it is similar to kanga but is thicker and its patterns and symbols presents feelings, moods, cultures, and the rich tradition of the native African people. Kitenge attire has very many uses; they can be used as a baby sling which is used to carry children, a headscarf to be wrapped over the head, and as body clothing as a dress or trousers. Kitenge is very impressive and they are decorated with a variety of colors, slogans, or even patterns which makes them colorful and attractive. The clothing was previously won by the native traditional people in the African countries such as the Maasai community in Kenya but now the product is widely used by other communities and has also become an export product to many other countries in the world such as China. Kitenge is used to make clothes bags and other garments and is exported by companies such as the Kitenge community shop based in Kenya.
Market description and analysis
As firms enter into the foreign market, they answer the question of which foreign market they will be entering into, how they will enter, and the best time to enter the market. Once the questions are answered, it is then important for it to understand the markets segments in the foreign market. International expansion of a business represents its success and its ability to meet foreign market demands which are needed in operating in foreign markets. Operating abroad is very demanding financially and a firm needs to adjust operation standards so that they can fit in the foreign business practices. A firm, therefore, needs to analyze the market to be aware of the distinct features of foreign markets and be able to address the risks involved effectively. Firms need to maintain their competitive edge for success and strategies can be carefully planned to gain the ultimate goal. The marketing environment directly affects the firm, it includes supplies, consumers, and the stakeholders (Ohmae 1999).
The Japanese market has a great potential for Kitenge wear since it is a broad market and has great technology and economy which will ensure that the marketing of the products will be successful. Before entrance into the Japanese market for Kitenge wear, the firm has to consider several external factors which impact the process of marketing the product into the external market. The external analysis of the market involves the political, economic, social, technological, legal, and Environmental (PESTLE) analysis.
PESTLE analysis
The PESTLE analysis is specifically designed for scanning the business environment and it analyzes the external macro-environment in which the product and the firm are going to operate in. PESTLE helps the firm to understand the bigger picture of the environment in which the firm will operate and the opportunities and threats available and also helps the firm find ways in which it can minimize the threats and take advantage of the opportunities. The factors which compose PESTLE are beyond the business’ control but they are very important when deciding to introduce a product in the market.
A firm needs to take into account the PESTLE analysis before introducing a product into the market. This is because one, good use of the PESTLE analysis is that it ensures that what the firm is doing will align positively with the powerful forces of change in the new environment and therefore when a firm takes advantage of the change in the market, it is likely to be more successful and enter into the market well. The second reason is that good use of the PESTLE analysis makes the firm avoid taking actions that are likely to lead to failure of the product in the market for reasons which are not within the firm’s control. PESTLE analysis is very good and important especially in a new product or a service in a market because it helps the firm to adapt to the realities which are in the market and not to rely on assumptions that may be inaccurate.
Political factors
A firm can be successful, be trusted, and gain a good reputation in the foreign market if it considers the legal and political factors in its strategy (Paliwoda 1998). The firm needs to follow the policies and regulations which are given by the government so that it can be considered legal. Political and legal aspects are such as tax policy, employment laws, environmental regulations, political stability, and trade and tariff regulations. Currently, Japan has a stable political environment with prime minister Yasuo Fukuda serving the country on an LDP ticket. The government is seeking to reform the fiscal policy since the nontransparent relationships which they have created are creating obstacles to the reform process. The legal environment which governs competition in Japan is in line with the norms for the industrial countries, however, entry of new firms is stymied in practice by the zoning and planning complexity on the ground and there is a high bureaucratic system for regulations and licensing. Another concern is the lack of sufficient distinction between the government as a provider and as a regulator in the provision of utility (Datamonitor 2007).
The current government however has attempted to enact major foreign investment and privatization laws that will be a boost the economy of Japan. The government has maintained a stable fiscal policy due to its focus on public expenditure reform and on improving the supply and demand gap to overcome inflation in the country. Due to this, therefore, it is clear that the political environment of Japan is stable for foreign investment to take place therefore introduction of Kitenge in the market will be easy for the firm as the Japanese government has ensured good foreign market investment opportunities for foreign investors.
Economic factors
According to (Briggs 1994), there are certain economic aspects that a firm needs to look into when strategizing on entering a foreign market. The foreign country has to have a stable economy, as well as the firm itself since the economic goals of a firm, create an axis where other objectives revolve. The economic factors which a firm needs to consider involve the context in which the firm belongs as it helps to determine the competition and demand for the product. The general economic status of the country about other industries is also considered. Generally, the economic factors looked at are the economic growth, the interest rates, exchange rates and the inflation rates, the working hours, cost of living, availability of required resources, and availability of credit and minimum wage.
The Japanese economy is the sixth-largest exporter and importer and is also the largest international creditor in the world. Manufacturers, suppliers distributors, and banks in Japan have good cooperation called ‘keiretsu’ and its industrial strength is the most advanced and the largest in the world. Despite the technical recession which took place in 2004, Japan’s economy still recorded growth and it recovered due to high domestic demand (Datamonitor 2007). The economy of Japan, therefore, is very conducive for a new market entry and since Kitenge does not have direct competition, it will have a good and ready market. The interest rates in Japan are conducive for foreign investments and they have enough resources and credit sources therefore the market entrance of Kitenge will be easy. The inflation rate in Japan is very low which means that its currency has a high value and is more stable compared to other foreign markets therefore investing in Japan and introducing a product such as Kitenge will ensure a good price for it and therefore the firm will derive a high-profit rate.
Social factors
The social and social-cultural factors in a foreign market are very important and businesses must emphasize these factors which are found in the markets. The firm and its products have to operate and comply with the social systems of the country in which the product intends to be introduced so that it can gain a good reputation from the people of that country and the product as well as the firm will have a good public image and therefore facilitate a good market. The cultural aspects are essential and there is a need to understand the different needs of different cultures in the world (Senter &Edmons 2002).
It is important to know the population growth rate so that one can know whether there will be enough population of customers to buy the product, age distribution is also important depending on the product. Kitenge is mostly won by women although in current times it is worn by all the age groups, therefore, age is important. The career attitude of the people, religion and consumer behavior is also very important as they determine whether the product will move at a high or a low pace once it’s in the market. The population of Japan is high therefore meaning that Kitenge will have a good customer population. The population of women is also higher than that of men and since it is mostly won by women, the market will be conducive and facilitate fast sales.
According to the 2006 data of population, it showed that women were more than men.
Technological factors
According to (Flexible 2005), technology is very important in a market and therefore organizations and firms should analyze the technological status of a market and whether it is up to the standards of the products that the firm wants to introduce. The complexities which are faced in meeting or achieving the success of a business through increased effectiveness, efficiency, competitiveness, in conjunction with innovative application of the modern and upcoming technology has increased the awareness of business managers and technology towards approaches that are more strategically oriented to manage and plan the industry the firm is venturing into. It is very important therefore for firms that have the intention of introducing a product in foreign markets to know the technological status of the country so that they can utilize the technology in improving their business deals and the markets. The firm should look at the distribution and the communication channels which are available for conducting businesses and enhancing markets (Kublin 1995).
The rate of technological change should also be looked at, the technological incentives, automation, and outsourcing decisions. Japan has good and up-to-date technology which enables it to have a good economy and have quality products. They have a competing technology development, have manufacturing maturity capacity, good information and communications channels, and have innovation potential. Availability of such advanced technology will enable the firm entering the Kitenge market to have a good opportunity for advancing the market and also come up with new ideas and innovations for Kitenge. Technology also enables new products to be well communicated to the market, enable good transportation, and provide tools that are used in the marketing process. The technology available in Japan will therefore enable Kitenge to sell well and enter into the market in style.
Legal requirements
It is very important for a firm seeking to enter its product into a new foreign market to know all of its legal requirements. Current and future legislation, international regulations, employment law, the regulatory bodies and processes, competitive regulations, industry-specific regulations, and consumers protection legal issues should be well known by the firm so that it can determine how the market regulations will impact the product and its entrance into the market, (Axtell 1994). The legal requirements in Japan for a new market entrance of a product are conducive and give a good market for the products. Due to the few legal requirements, Kitenge will therefore have a good chance of entering the market and venture into the segments which are more promising and where the product will be sold at a high pace.
Environmental factors
An organization or a firm should look into the environmental factors in a foreign market and determine whether the products that they want to introduce in the market will adapt well to the conditions. The ecological issues should be looked at and international, national, and local environmental issues should also be determined. The environmental regulations of the country should also be considered so that if an organization is dealing with products that are likely to cause environmental harm can seek permission and directives from the legal authorities (Onkvisit & Shaw 2004).
Customer values, investors, staff attitude, the managing styles in the foreign market, global factors organizational culture, and staff attitude should also be considered. This will ensure that the environment is conducive for the new product in the market and it will help it to adapt at a faster rate. Japan markets have good values and they have good cooperation which allows new entrants to fit well in their industries, Kitenge therefore will enter into the textile industry of Japan well and be able to adapt to it.
Marketing mix
When an organization or a firm is launching a product in foreign markets, they should standardize and adapt their marketing mix into the foreign market or use the marketing mix standards which are used around the world (Brake, Walker &Walker 1995). Marketing mix involves the evaluation of the price of the product, the place where it will be sold, the promotional methods to be used, and the evaluation of the product itself.
Product
Inputting the international product strategies, the firm should focus on meeting the needs of the target market so that more sales of the product can be realized. Products are most important in the marketing mix since they show the firm’s production capability and have a great influence over another marketing mix therefore product policies and strategies should be put first. Firms should consider the cultural background of the consumers, their buying habits as well as their level of disposable income so that they can tailor their marketing mix strategy to suits the needs of the customers.
When Introducing Kitenge in Japan market, the firm should put into consideration all the factors regarding the product and then tailor them to what the Japanese people want it to be. In the world today, consumers travel more, shop and communicate internationally and watch satellite television therefore the firms do not need to adapt products to local markets since it increases costs and weakens the global scale of the product. However, organizations need to think local and act global depending on the product being taken to the market. For example, Those markets in Japan which need the Kitenge with dull colors should be given their taste while others who need it in bright colors should be given the bright colors. According to the environmental analysis of Japan, it shows that Kitenge will have a good market in Japan due to the good economy.
Promotion
The international promotional strategies require the firms to adapt promotional strategies or standardize their strategies and the promotional messages. the promotional and advertising messages in the foreign countries may be adapted by the businesses and firms marketing their products in the countries due to the language barrier. The messages used locally may also have to be changed because they may be offensive to the foreign markets. The firms need to consider their variety of colors depending on the market. For example, the messages for marketing Kitenge in Japan should be bright and especially red because the Japanese people like bright colors. White colors may also be used for selling to mourners in Japan. The media level should be taken into account where the firms should consider the level of penetration of media and the level of control that the government has over media (Proctor 2000). Japan also has good technology which is number one in the world meaning that there are up to the advertising and promotional strategies for a firm to use when promoting its products.
Pricing
The international pricing strategy involves setting a price for the product and although some people say that low prices ensure higher sales, they should know that customers are not only after the cheap products but also look at the quality of the product (Lazer 1971). The pricing process involves price determination which refers to activities and processes carried in arriving at the price and price administration which refers to activities carried out in fitting the basic prices to certain sale strategies which are determined by geographical locations, the position, and the distribution channel and special sale distributions in the markets (Kotler & Armstrong 2004).
The firms venturing into the international markets have to take into account the traditional price considerations which include fixed and variable costs and competition where the price depends on the competition found in the foreign market. In Japan, Kitenge is likely to have a high price because the competition is minimal and they have a good value of money where their inflation rate is low according to its economic situation. The pricing strategy may also depend on the objectives of the firm, the positioning strategies which have been set as well as the willingness to pay and also the target groups which the firm has set. Transportation costs should be considered, tariffs that might have been paid, and the currency which the firm expects to be paid due to the rate of inflation and the pricing decisions. The firms should also consider the local incomes, what are the PDI and income levels, the general economic situation of the country, and the influence which it may have on the pricing strategy. However, with the current technology, pricing has become transparent since goods can be purchased online while using the local currencies (McCarthy 1960).
Place
Finally, the international distribution or placement strategy may require intermediaries’ involvement. According to (Kotler &Armstrong 2004), placement involves the activities which the firm of Organization undertakes to make the product available to the customers in the markets and places at which the consumers can get them. For example, Japan has a total of five different wholesalers in which a product has to go through before it reaches the markets where the final consumer is. The firm which wants to market Kitenge, therefore, needs to have an intermediary so that the distribution strategy of Kitenge to the final consumers can be easier. Japan also has a good environment that is conducive for wearing Kitenge and looking at all of its PESTLE analysis, it is the ideal market for Kitenge.
Entry strategy
After a firm has chosen the best market for its product based on the marketing mix and after the PESTLE analysis, it can use a simple form of entry strategy into the foreign market by exporting the products using direct or indirect methods. These areas use of agents for direct methods and countertrade in the case of the indirect method. The other more complicated forms of entry are through international joint ventures or the export processing zones (EPZ). After the firm chooses how to venture into the market, specific channels have to be specified by the firm so that the process can begin. According to (Czinkota 2007), there are major issues that an organization or a firm faces when it wants to venture its products into the international markets. These are such as marketing which involves the segments in which the products or the Organization will start the marketing strategy, ways in which to manage the efforts for marketing in the foreign market, and ways in which to enter the market which involves either intermediaries or direct entry.
Another issue is the sourcing where the firm decides how it is going to obtain the product to be marketed abroad, it decides to either manufacture the products themselves or buy the product from other manufacturers then resell it into the international markets. The final issue faced by firms when deciding on the entry into the international market and to market the products abroad is the investment and control where it decides whether it will use a joint venture, look for a global partner, or by the acquisition means. A firm has also to look at the export marketing mix which involves the type of the product, product price, Place of marketing, and promotion.
Conclusion
In conclusion, businesses that have the intention of expanding their products to the foreign markets should first carry out a comprehensive study of the external environment of the foreign country so that the product can be able to fit well in the environment and capture a good and consistent market. When firms want to market their products in foreign markets, the political stability, the level, and stability of the economy, social factors, availability of up to date technology, legal factors, and environmental factors should be considered so that the firm can be able to know whether the foreign market will be favorable to the products.
Marketing mix analysis is a fundamental step that a firm should take so that it can achieve effective strategies and overall business success. The firm should also consider the marketing mix which involves the price the product will be sold at, the promotional strategies, the product itself and its features, and finally the place where the product will be marketed.
Recommendations
Marketing of Kitenge in Japan requires strategies by the firm which will enable it to successfully venture into the market and establish a strong ground for Kitenge. The firm should consider the international PESTLE analysis especially the external environment of Japan which involves its political stand, legal factors, environmental factors, economy, and social factors. Japan has a conducive PESTLE for a new product therefore Vitenges should be introduced there since the competition is low and there is a high potential market.
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