The Benefits of Cycling in Thailand - Assignment Example

 The Benefits of Cycling in Thailand Executive Summary This report begins with a background introduction of Powerbike which has positioned itself as a well growing and expanding business in Thailand. The company provides differentiated bicycle products in Roi Et. Powerbike faces stiff competition from various domestic and international firms that provide similar products and services. Thailand business environment provides a favourable environment for Powerbike to thrive. Powerbike targets its market both demographically and through psychographics. Powerbike needs to adopt a favourable promotion plan to achieve a larger market share. Contents Introduction…………………………………………………………………………..4 Organization………………………………………………………………………….5 Product/Service Description………………………………………………………….5 Competition…………………………………………………………………….........6 Differentiation of Power bike’s/ Service from Competitors…………………………6 Market Description……………………………………………………………..........7 Macro/ Micro Environmental Factors…………………………………………………9 Segmentation, Targeting & Positioning…………………………………………………10 Promotional Plan…………………………………………………………………………11 Future Expansion to Bangkok………………………………………………………….15 Conclusions…………………………………………………………………………….17 Bibliography…………………………………………………………………………..18 Introduction With the increasing rate of global warming, various governments are coming up with strategies to curb this trend. Different strategies are drafted in order to reduce the rate of carbon emission in the atmosphere. Motor engines are cited as one of the major contributors of carbon gas emission. This has resulted to rising sea level and desertification in different parts of the world. As a result, people have opted to use means of transport that emit few gases or none at all. In Thailand, government has even gone ahead to intervene in issue in order to reduce the number of bicycle users. This provides an opportunity for the bicycle producers to make high profits as many people will look forward towards purchasing the bicycles. This paper will, therefore, analyze the market prospects, target customers, consumer buying behaviors, how to position the product in the market and segment the market. The main aim of this paper is to have an insight details concerning the market, population and demographics in the area that may affect the performance of the product in the market. Nevertheless some of the assumptions are that the market forces will be constant, and no risks will face the market. In addition, some of the limitations that we may encounter are lack of accurate data concerning the population and the number of purchases made in a day. In order to gain data and current information, we will use secondary data. This will reduce any traces of errors which might mislead business trying to invest in the country. In addition, we will have to forecast future trend using the experiences in the market. This will help us in coming up with the appropriate strategy to use in penetrating the market. Organization Power bike organization was founded in 2006 by Ning and Nui in Roi Et. Power bike organization is one of the leading accessories and cycle retail shops in Roi Et. Powerbike is operated as a family (Ho and Madden-Hallet, 2010, p. 51). Nui and Ning had developed an extensive concern for cycling since they were young. Their parents owned a retail shop that supplied bicycles in Roi Et, where Ning and Nui learnt how to ride bicycles and to fix them (Ho and Madden-Hallet, 2010, p. 52). Nui and Ning’s marketing and accounting accomplishments are among the factors that motivated them come up with the company. Products / Service Description Powerbike Company, being one of the leading retail cycle organizations in Roi Et, offers various products to the market. Powerbike Company provides a wide variety of products that range from mountain, road to specialty bikes. In addition to their repairs and accessories, the company offers different products at different prices. The company offers mountain bikes, racing bikes, children’s bikes, women bikes, hybrid bikes and bicycle motocross bikes (Ho and Madden-Hallet, 2010, p. 51). In addition to the products offered, Powerbike offers bicycle maintenance and repairs. These repairs are done effectively and suitably by highly skilled people. The dexterous employees provide repairs to all parts of bicycles to the satisfaction of the customer. Powerbike provides these services at friendly and affordable prices (Ho and Madden-Hallet, 2010, p. 51). Competitors Every business that comes to existence has competition. Even after, Graham Bell invented the telephone in 1876 and his gadget still faced competition and had to fight for market share. It had to compete with the other forms of message delivery (Schenck 2005, p. 49). Pride and ferrel (2007) describes competitors as the business entities that strive for a greater market share. Thailand is a ripe target market due to the massive traffic jams. The major competitors in Thailand include LA bicycles, Suzuki, KCI Bicycle, Jardine Cycle, Carriage company, Asia Cycle company, Deestone International Company, Ecobrand, Exim International, Ecolux International Company, Electric Vehicles (Thailand) Company, Faddy bike company, Krughthai Plaspack company, M.P.Toys company, ProBike, Thai Bicycle Industry, Vee rubber, Honda, Kawasaki and Electra Bike shops. They offer mountain bikes, road or racing bikes, children’s bikes, women bikes, hybrid bikes and bicycle motocross bikes. All organizations in a market vie to satisfy the customers. This creates a competitive environment in the market (Boone & Kurtz, 2011, p. 66). All the organizations in Thailand try to supply the needs of the customers to attain a higher market share. This competition can be equated to the cell phone market with providers such as the Verizon, T-mobile and AT&T in the United States (Boone & Kurtz, 2011, p. 67). In such a competition, product prices play a significant role. Differentiation of Power bikes/ services from Competitors George et al (1992) defines product differentiation as a situation where consumers comprehend two or more products as close, but not perfect, substitutes (p.133). In principle, Thailand market contains a group of power bike products that are close substitutes. Coca cola is another global company that has vastly differentiated its products from those of its competitors (Schenck 2005, p. 51). Powerbike produces different Powerbike products which include the mountain bikes, racing bikes, women’s bike, children’s bike and hybrid and bicycle motocross bikes. This ensures that different target groups are reached at and that the different needs of consumers are achieved (George et al., 1992, p. 134). In a market characterized by product differentiation, the firms have to choose the quality of products to produce and how much to spend on the selling costs as well as establish costs (George et al., 1992, p. 135). Powerbike products have uncompromising quality. This is evidenced by the long lasting mountain bikes which can cope with nay terrain. The women’s bikes are made for comfort and with ladies’ saddles. This means that the saddles are high quality to make the Cycler at ease. Powerbike provides its products and services at low and affordable prices. For convenience, Powerbike offers its products on cash on delivery basis. It only extends credit services to its trusted customers. Market Description Boone and Kurtz (2011) defines a market as one f many assortments of institutions, social relations, infrastructure, systems and procedures where individuals pursue exchange (p. 10). According to the CIA world Fact Book (2012), Thailand has an estimate of 66 million people. There is an estimate of 500, 000 bicycle owners in Thailand who use them as alternative transport means. Over the years, the population of Thailand has been on the increase. Powerbike targets the different age groups with its differentiated products. According to CIA World Fact book (2012), Thailand has three main age groups. The first group is the 0-14 years which makes up 21.1 percent of the total population. The second group is 15-64 years, which makes up 70.4 percent of the total population. The 65 years and above age group makes up 8.5 percent of the total population. The pie chart represents the percentage market share of the different companies in Thailand. Powerbike intends to use retail stores and shops in distributing their products across Bangkok town. In Rio Et, the company uses various strategic retail shops in reaching the available market. Macro and Micro Environmental factors Powerbike’s micro environment consists of the personnel and technology available. Macro environment consists of the political system, economic environment, suppliers and demographics. Thailand demographics favour Powerbike Company. This is because the country has witnessed an increasing population growth rate. An increase in population growth rate with high birth rates implies high sales. This is because of the governmental campaign which requires all children to have a bicycle (Ho and Madden-Hallet, 2010, p. 53). The contemporary condition of public transport plays a part in the operations of Powerbike. The increasing massive traffic jams leave the people with no option but to use bicycles as an alternative transport means. Bicycles are able to maneuver through the heavy traffic jam and save on time (Ho and Madden-Hallet, 2010, p. 50 & 52). The political environment has played a significant role in the operations of Powerbike. The government policies to reduce pollution through the institution of a division committed to tackling pollution in the country have helped in promoting bicycle purchases within the country (Ho and Madden-Hallet, 2010, p. 2).. The government has also come up with “No child without a bicycle” campaign (Ho and Madden-Hallet, 2010, p. 52). Tourism promotion in the country has also improved the operations of the whole bicycle market. The government promotes the bicycle sector through promotion of the tourism sector. The government promotes the ‘Bangkok Cycling Tours and urges tourists to use bicycle transport to have a magnificent view of the Thailand sights and culture (Ho and Madden-Hallet, 2010, p. 2 & 4). Segmentation, Targeting and Positioning These are the most salient issues that firms and companies wrestle with in the choice of an initial target market. They also play a critical role in marketing strategy a company develops to achieve its set goals (Boone & Kurtz, 2011, p. 247). The rationale behind targeting and segmentation is to identify groups of consumers who share similar needs and buyer behaviours in respect to what the company offers. Lamb et al. (2011) defines market segmentation as the process of breaking down a market into groups of customers who have analogous requirements for a product or service (p. 134). Most markets have heterogeneous demands. A company may find it hard to satisfy and serve all the markets and instead may target a market. Coca cola is one example of a Universal company that targets different soft drink markets. Pride and Ferrell (2008) asserts that Coca cola segments and targets its market according to age and price and geographies (p. 167). Effective market segmentation and targeting will allow Powerbike to position itself well in the Thai Bicycle market. At Roi Et, Powerbike segments its market through the pricing, gender and age elements. Powerbike provides its products in different sizes to suit the different age groups in the country. The organization also differentiates its products to suit the needs of all genders. The women’s bike targets the women market. Because of the increased need for a healthy life, Powerbike has targeted different age groups. The aged can be urged to use Powerbike products to prolong their life and be physically fit. Powerbike also segments and targets its market psycho graphically. Because of the change in lifestyle and attitudes towards bicycle use, Powerbike has profoundly targeted individuals who want to enjoy the health benefits and want to avoid the massive snarl ups that are building within the cities. People’s attitudes and lifestyle have been changing over time. This can be attributed to the increased promotion by the government to reduce pollution and the use of bicycles as an alternative means of transport. In positioning itself well in the market, Powerbike will need to conduct a market research to gather information on how its competitors position themselves in the market and identify its micro segments based on the analysis of the data (lamb et al. 2011, p. 136). Powerbike may need to use focus groups in order to identify the various needs of the customers. Promotional Plan The main aim of a company’s promotion plan is to breed brand awareness and loyalty among the customers. Schneck (2005, p. 135) describes a promotion plan as a problem solving activity that is aimed at encouraging customers to behave in line with the economic interests of the company. A promotion plan involves making a featured offer to customers within a time limit. Companies use different promotional methods to communicate with the consumers. These different communication methods are combined to form the promotion plan (Schneck, 2005, p. 140). A promotion plan consists of advertising, direct marketing, and personal selling, public relations and sales promotion. A promotional plan may also be termed as a promotional mix or a marketing mix (Boone & Kurtz, 2011, p. 234). Customers are always exposed to various messages before they can understand a brand. All these promotional tools should give similar message to consumers to avoid conflicting messages. The promotional tools have merits and demerits. An effective promotional plan balances the weaknesses and strengths of different elements of the promotional plan. Bicycle industry in Thailand is filled with competing companies and organizations. Because of the high competition, Powerbike cannot only rely on one promotional tool but will need to employ various promotional tools in different degrees (Boone & Kurtz, 2011, p. 235). Powerbike will need to employ nearly all the marketing communication tools to be able to create their brand awareness and to gain a higher market share. Powerbike will need to come up with a favourable message to the consumers. The message will put into consideration the benefits that an individual will accrue to an individual by using bicycle both as means of transport and for recreation. For effective promotion plan, Powerbike will need to employ various promotional tools to attain a high brand awareness and loyalty. The tools will include advertising, personal selling, sales promotion, direct marketing and public relations. i. Advertising Pride and Ferrell (2008) define advertising as a paid non personal message to a selected audience through mass media aimed at attaining higher brand awareness (p. 128). Advertising can be carried out through both audio and visual forms. Audio advertisement is carried out through the radio while Visual advertisement is carried out through the television, cinemas, bill boards, news papers and magazines and posters (p. 130). Each of these forms of advertisements has various merits and demerits. Companies have to consider the most desirable form of advertising. Powerbike can consider using the Audio Visual as it has more advantages than the audio advertisement. In an audio, visual advert, Powerbike can endorse a cycling celebrity. Endorsing a celebrity enables customers to familiarize themselves with the celebrity, especially the young age group (Lamb et al, 2008, p. 196). Adidas tries to use celebrities in marketing their products. The advert can show the celebrity in a race where he races happily and comfortably in a Powerbike without any mechanical problem, while the other athletes are frowningly in discomfort and experience mechanical problems. This advert will shows that Powerbike manufactures bikes with care and are comfortable and do not breakdown easily. Alternatively, Powerbike can use posters in a newspaper or a magazine showing a celebrity riding in a race or a mountain or holding it. Audio visual advertising reaches a higher number of people at the same time and is appealing to the audience. An audio advert could involve a commentator in a race who talks about how a certain racer keeps speeding with little fatigue and less mechanical problems. Powerbike can also use two scenarios, one of two young people brought up together with one of them having an interest in cycling and the other scenario of the two years later after growing older. The advert can show the one who had an interest in cycling as still strong and energetic at old age while the other in a severe health condition and bed ridden. This advert can show the importance of cycling and the need to purchase Powerbike products. ii. Personal selling Boone and Kurtz (2011) defines personal selling as a personal communication directed at informing customers of the products of the company and convincing them to buy the products (p. 188). Though expensive, it is the most effective communication tool (Boone & Kurtz, 2011, p.192). This can only be effective by employing highly skilled personnel (Lamb et al, 2011, p. 213). Powerbike can employ personal selling within Roi Et to help in attaining high sales and a higher market share. iii. Sales promotion Powerbike could offer incentives and offers to encourage customers to conduct themselves in a way to buy their products. Pride and Ferrell (2008) define sales promotion as a marketing tool that uses incentives and offers to entice customers to purchase their products (p. 145). Powerbike could offer an accessory when one purchases a bike. For example, if anyone purchases a racing bike, the company will offer a helmet or gloves. Powerbike could also provide a 20 percent discount for anyone who purchases two bicycles or for purchasing a bicycle and an accessory. iv. Public relations Public promotion is any activity that leads to a third party mentioning a company’s product or service (Pride and Ferrell, 2008, p. 147). Public promotion involves activities such as sponsorships and corporate social responsibilities. Powerbike’s involvement in sponsoring sporting events can create an excellent rapport and reputation for the company. Such activities will enable Powerbike cling a higher market share in the bicycle industry (Pride & Ferrell, 2008, p. 147). Public relations are effective marketing communication tools. v. Direct Marketing Schneck (2005) describes direct marketing as personal presentation to consumers where they respond by filling coupons or sending emails. Powerbike may decide to use direct marketing because the company can give direct feedback to customers and the company can receive direct responses from the customers. This will aid the company in identifying the various needs of consumers and adopt their products. Such a promotional mix will give a rough and ready definition of the contribution of each of the promotional tools to the promotion mix and will help achieve marketing objectives (Schneck, 2005, p. 136). Future Expansion to Bangkok All businesses come to the existence with the main aim of earning profits and increasing their profit share. Profit share increment falls under the plans of any business. Before any business can come up with strategies on its future developments, it needs to analyze its decisions carefully. Before expanding, a business may need to consider the location of the new expansion site. Before expanding to Bangkok, Powerbike may need to evaluate its pros and cons (Ho and Madden-Hallet, 2010, p. 52). The bicycle market size in Bangkok is monumental. This is because of the high population, the presence of traffic jams, a favourable political climate and universities and the need for people to enjoy health and environmental benefits (Ho and Madden-Hallet, 2010, p. 52). Bangkok, the largest city in Thailand, has an estimate of 6.3 million people. The vast Bangkok region has a population of approximately 11.9 million people. Though Thailand consists of destitute people, the prices of bicycles are relatively low. Such low prices allow a high rate of bicycle ownership within the city and its environs (Ho and Madden-Hallet, 2010, p. 52). After a thorough analysis, Nui and Ning in Ho and Madden-Hallet (2010, p. 4) assert that Bangkok provides a suitable location for their business because of the massive snarl ups. Bangkok is notorious known for its traffic jams. An individual can easily be held for hours in a traffic jam. Bicycles can easily maneuver through the traffic jams and save on a great deal of time. This presents Powerbike with a great opportunity (Ho and Madden-Hallet, 2010, p. 52). Nui and Ning established that the political environment favour the development of the bicycle industry. The government has formulated policies that provide opportunities to the bicycle industry and to Powerbike. The No Child without a Bicycle government campaign presents Powerbike with a great opportunity. The government also promotes the ‘Bangkok Cycling Tours campaign. The government encourages the tourists to use bicycles in touring the city sights (Ho and Madden-Hallet, 2010, p. 52). Because of the need for physical fitness and environmental care, Nui and Ning believe that the university students in Bangkok will provide a significant market to the bicycle industry. Bangkok has a number of public and private universities. Conclusion Countries need to embrace alternative transport means in order to reduce pollution and to ease traffic jams within the cities. For strategical and effective position in the market, a business needs to segment and target its market appropriately. Powerbike needs to position itself in the bicycle market in Thailand by creating brand awareness and loyalty through the various promotional tools. Powerbike is located in a favourable environment that presents it with opportunities for expansion. References Boone, L. E., & Kurtz, D. L. 2011. Contemporary Marketing. Cengage Learning. CIA World Fact Book (2012, May 29). Thailand Demographics. Central Intelligence Agency. Retrieved May 29, 2012, from http://https://www.cia.gov/library/publications/the-world-factbook/geos/th.html George, K. D., Joll, C., & Lynk, E. L. 1992. Industrial Organisation: Competition, Growth and Structural Change. Routledge. Ho, H. W., & Madden-Hallett, H. 2010. Case Study 11- The Benefits of Cycling: A marketing opportunity for Powerbike in Thailand. Mraketing cases in The Asia-Pacific Region, 50-53. Lamb, C. W., Hair, J. F., & McDaniel, C. 2011. Essentials of Marketing. Cengage Learning. Pride, W. M., & Ferrell, O. C. 2008. Foundations of Marketing. Cengage Learning. Schenck, B. F. 2005. Small Business Marketing for Dummies. John Wiley & Sons. Read More