Market Success and Entry Strategy - Research Paper Example

Market Success and Entry Strategy Introduction For any kind of business perspective to be fruitful, it is imperative that the goal, mission and the purpose of the business is clearly chalked out. There are many strategies, realistic business objectives and a thorough and deep study of the nature of market is essential. All these aspects should essentially meet a need in the market or in the global market. The most important and crucial decision in this regards is whether a company should introduce a particular product or it should introduce the company per se in the market place. The first and foremost step is the analysis of the market size and demand. The market according to the various segments are divided and categorized. For example, for an automobile market, the division of the market can be as according to the taste, demand and preference of the consumers. The consumers in one group of consumers are different from the other group and each represents a separate entity. The characteristics or the dimensions on which a market size is determined are geographic, cultural, social, economic and psychological factors. The market potential of a new consumer product is tested. The acceptance level of the product would decide the money that product will make in the market. There are various factors, which affect segmentation in a consumer market. Geographic is one such factor, where a country is segmented on basis region, city, urban, rural and climate. Demographically market is segmented on the basis of age, family size, gender, household income, life stage, occupation, education, religion, race, generation and social class. Further, segmentation can be done on the basis of lifestyle and personality traits. On an individual level market can be segmented on the basis of attitude, belief and perception of products, product awareness and usage pattern. On the basis of the geographical location of the company, the cultural value of the people residing, purchasing power of the company, different segmentation of the market is done. In India there are different regions and places which have their own taste and food habits. The paper provides an insight into the various market entry strategies that can be adopted by Hangout Plaza in India.     Market success analysis In any country the buying or the purchasing power is depends mostly on the infrastructure, currency, quality of the product and employment level. In mostly all agricultural based society, the production of a commodity, information to other available resources is very less. The resources like the labors, professionals or the working class has a major impact on the success of any foreign company in any country. In India the distribution of labor forces is unequal. Most of the professionals reside in the urban areas. Hangout Plaza is a fast food chain of restaurant. It offers mostly burgers, chicken pizzas, which will not be accepted by the rural population. In India, the cost of labor is low. In order for the company to be able to market their product smoothly they should employ the local population. The skilled, unskilled labors can be deployed to gain the confidence of the locals and to get the work done at a cheaper rate. The regulations and the duties imposed by the government also play a major part in shaping the business of a company in the international market. The Government's red tape policies are often a hindrance for nay foreign company. In India, the government is quite liberal in allowing the foreign companies to enter. India has many U.S. base hotels which are operating since a long time (FAO, 1997).   The political, economic and social factor poses a serious problem risk for any new company in the global market. For Hangout Plaza, there are many competition threats from many other fast food chains of hotels. Since there is no clear cut strategy to decide and ascertain which strategy can be useful for assessing the competition threats, the need to understand and calculate the same becomes more tedious and tough. India has an open economy. This increases competition and allows more entrants in the market. Competition triggers wrong movement by any company like wrong segmentation. Competition has some advantages as it lowers the prices of the commodity and lets the finest one to survive (Stevens et al., 2012). Market entry strategy There are many strategies which can be devised by any foreign country to enter the home country. The first and foremost is the Foreign direct investment approach. This allows the firm to have a greater control on its international business operations. This yields greater profit to the foreign country. The disadvantage of the foreign direct investment is that it requires more complex form of management for its regulation. Licensing and Franchise Licensing is the method of regulation wherein one country agrees to let other country to manufacture, sell, using the technicalities, and adopting the know-how or some other expertise offered by the licensee. This technique is quite similar to franchise strategy. For example in Zimbabwe, a company named United Bottlers has the license to manufacture and sell coke as their product. There are many advantages of licensing or franchise. It does not require much expertise. Less cost in incurred and the policy implementation is also quite easy to handle and maintain. It is an excellent way to set up business in any foreign country. Risk is also less due to manufacturing techniques. Both the parties involved get maximum benefit (Stevens et al., 2012). The disadvantages are less participation and the exact return from marketing cannot be calculated. At times the companies become rivals. This requires a considerable amount of planning, investigation and management. Joint Venture Another entry mode would be through joint venture. In this case two or more investors share ownership and they share the right amongst them. There are some advantages of joint ventures would be the sharing of the knowledge and transferring of knowledge, sharing of investment and infrastructure and the loss is also shared amongst the two countries. They however have some disadvantages- the lost capital may be difficult to recover. The companies may have some difference in opinion and last but not the least the expected benefit can be different. Turnkey Projects The turnkey projects are also a entry mode where the contractor and the foreign country agrees to work on every detail for the foreign client. There are some advantages of turnkey projects like they are less risky to handle than foreign direct investment. The knowledge gained is more in the turnkey projects. The disadvantages are it may give rise to competitor, the contractor losses interest in the foreign country. Exporting Exporting is the most reliable and a traditional way of operating in a foreign market. It can simply be defined as the marketing of goods and services in one country into another. There are many advantages of exporting strategy. The manufacturing can be done in the home ground. THE production can be handled and done smoothly and is less risky. Exporting can be very lucrative, especially 'if it is of high value added produce. Market entry implementation strategy A company has to choose an entry mode to gain access India is one of the most emerging countries in today's global market. There are some regulations imposed by the government of India to safeguard the local companies (FAO, 2012). There are many procedures in which an organization can enter a foreign country. Hangout Plaza is a U.S. based company. The nature of production can be different than in India. Thus exporting will ease the procedure of making the products and thus selling in the markets of India. With the virtue of exporting technique, Hangout Plaza will have the leverage to understand and study the Indian market. This will let the investors of the hangout Plaza to be able to invest effectively. The disadvantage of exporting would be that the company has to be at the mercy of the local community. Hangout Plaza should have a clear defined plan and strategy for pricing, promotion or dealing with government's rules and regulations. There are two types of exporting - Passive and aggressive exporting. In the passive exporting type, an exported waits for the chance of exporting to come by. In an aggressive exporting a detailed and extensive study of the market is done. The marketers try to approach the government to launce their product. Company's marketing efforts can be differentiated by their marketing activity. Exports can be direct as well as indirect exports. In direct exports the company chooses an agent, distributor for the selling of their product. Hangout Plaza can use the technique of direct exporting. There should be a contract between the exporter, government, the host country and transporting agencies. The agents and the middle man plays vital role. The logistic procedure has to be taken into consideration. Booking air ticket, listing the goods to be transferred, proper documentation has to be done effectively and efficiently. Piggybacking is another method of exporting where little exporting skill can do wonders in the home country. Some other methods of exporting are the barter system and the buyback policy. In the buyback policy the goods are produced and sold at a cheaper rate and exchanged with any commodity produced in the home country. In the buyback policy of exports there is no strict policy by the government. There are chances of monopoly in the home country. In the exporting system, the deals are done in tandem with the rules and regulations of the government. A contract is signed between the two parties. The risk of losing money or cheating from either of the country is reduced. References Stevens, R.E., Sherwood, P.K., Dunn, J.P. and Loudon, D.L. (2012). Market opportunity analysis – texts and cases. Oxon: Routledge. FAO. (1997). Market entry strategies. Retrieved on 3 March 2013 from http://www.fao.org/docrep/W5973E/w5973e0b.htm Read More