Challenges to market entry
Discuss about the International Orientation and Small Business.
In the current competitive business scenario, every organization focuses on the international expansion of business operations because it is one of the important ways to get high growth and development. But, on the other hand, global marketing management is a crucial task for a company at the time of international expansion of the firm (Cornwell and Kwak, 2015). The current research report is based on international marketing management of a selected organization. The Study has chosen Perlis Plantations Berhad (PPB) which is one of the leading organization of retail industry of Malaysia. It engages in food production, agriculture, waste management, film distribution, property investment and development. Now, for high growth and development of the business, the company wants to expand its business operations in India which is one of the Big Emerging Markets (BEM) of the world. The current research will focus on different challenges which might be faced by PPB at the time of market entry. Along with this, it will include description and application of Multinational Marketing Information System for marketing management of the company. Further, the research will focus on pricing and communication strategy of PPB. Including this, challenges associated with the branding process of the organization are also describing in the following paragraphs of the report.
PPB focuses on international expansion and diversification of the business, and regarding this, it has decided to enter in a Big Emerging Market. India is one of the fastest growing countries which has a huge scope of growth and development. So, for increasing the profitability of the business PPB wants to enter into this market. The company wants to start its operations with flour products. India is the second largest population country, so demand of flour products is very high which encourage PPB group to expand its business in this BEM. But, at the time of expansion organization might face different challenges which can affect their business operations in the international market (Katsikeas, et.al, 2016). So, the company needs to pay attention towards these challenges.
Export, Licensing, Franchising, contract manufacturing, joint venture and Equity stake or Acquisition are important ways to enter in an international market. Cost is considered as major challenge which may affect the profitability and growth and development of PPB in India. Hoppner and Griffith, 2015 has concluded that “understanding foreign preferences is one of the challenging tasks for the organization and due to this reason company cannot offer competitive and attractive products to international consumers” (Hoppner and Griffith, 2015). As per this statement PPB might face problem in determining needs and requirements of foreign customers. Mazanec, et.al, 2015 has asserted that “Organizations may face problem in understanding international culture” (Mazanec, et.al, 2015). Indian people follows different cultures as per their religions and communities so understanding these culture considered as a major problem for PPB group. If the organization will not be capable to understand these cultures than it cannot offer flour products as per the needs and requirements of customers.
Waterfall approach
India and Malaysia follow different regulatory framework for commercial business. Similarly, Johanson and Mattsson, 2015 has concluded that “At the time of international expansion company can face problem in understanding foreign regulations” (Johanson and Mattsson, 2015). As per this findings different overseas rules leads unexpected costs which may affect the profitability of PPB. Therefore, managing cost is also one of the major challenges for the organization at the time of international expansion. As per the review of the company it has reflected that PPB group does not have lots of experiences of international extension so, managers of this company do not have global experience. Therefore, lack of knowledge of the international market is a major challenge for PPB. The Big Emerging Market might change commercial laws, financial policies and currency exchange rates, etc. These changes may have adverse impacts on organizational policies of PPB in the Indian market. On the other hand devaluation in the currency will have a direct impact on profitability and organization’s revenue in the Indian market. Along with this, political and environmental challenges can affect the business operations in a negative manner (Keegan and Green, 2015). Overall, all the above-discussed challenges are considered as foremost problems for PPB at the time of starting its business in Indian Market which might have a negative impact on international marketing management of the company. Consequently, for appropriate management, the company needs to take appropriate action to overcome these challenges.
Waterfall and Sprinkler strategies are significant for entering into a new foreign market. In which, waterfall approach is appropriate for those companies which want to introduce a product sequentially in different markets. But on the other hand, sprinkle strategy is appropriate for those organizations which want to launch their product in a simultaneous way in multiple markets. But, this tactic increases the requirement of resources for entering into the number of foreign markets. So, as per the above discussion PPB wants to start its business in the Indian Market only. So, waterfall approach will be best because it will help in managing different challenges also. It is an appropriate strategy because it provides appropriate time to understand the market which helps PPB in developing suitable marketing mix to satisfy the needs and requirements of Indian customers (Gomes, Barnes, and Mahmood, 2016). Along with this, waterfall approach focuses on the optimum utilization of the available resources so, managers of PPB can maximize the use of available resources. Including this, they can leverage their experience. Using the waterfall approach companies can take advantages of transfer of managerial and technical skills from one market to another. PPB group can outsource its skilled and experienced managers of Malaysia to India which can overcome the problem of lack of experiences. Therefore, Waterfall approach is one of the best strategy for PPB to start its business operations in the Indian market and it will play important role in managing challenges of the foreign market.
Pricing and communication strategy
But, at the time of entering in the market organization needs to focus on packaging and pricing strategy of the flour products. At present PPB offers 1kg packaging Pau, superfine and Self-rising flour to Malaysian customers. But for attracting Indian customers, PPB should start half kg packaging which will help in increasing sales in the international market (Duan, Huang, and Shou, 2015). Including this, Indian population follows traditional culture, so agriculture image on packaging will help in attracting customers.
The high cost of investment is also one of the chief challenges and to overcome this problem PPB can enter into Indian Market with the indirect exporting strategy which helps in reducing investment. Along with this, in this strategy, there is no need to develop an export department, and organization can work through independent intermediaries so, sales force have enough experience to handle Indian customers which provide advantages to increase revenue of flour products for the organization. Afterward, Company can decide to handle their export department or subsidiary branch which will improve management of sales, distribution, warehouse, promotion and customer service (Lohrke, et.al, 2015). Therefore, the indirect export strategy will play important role in understanding the Indian market by which company can develop an appropriate strategy to start direct exporting or manufacturing activities.
Along with this, Kotler, et.al, 2015 has concluded that “Licensing, joint venture, and direct investment are appropriate ways to enter into a foreign market” (Kotler, et.al, 2015). PPB Company can use licensing and joint venture which will enable company to avoid export barriers, tariffs, quotas, etc. In which, contract manufacturing is the best option, and as per this strategy PPB can develop a industrial contract with a subcontractor or local manufacturer that offer a chance to start business operations in a faster manner with less amount of risk. Overall, above discussed strategies will help PPB in managing challenges at the time of entering into Indian Market.
Multinational Marketing Information system (MMIS) can define as a computer system which integrates with the other functional information system to resolve different problems relevant to management activities of the company. It includes different components such as marketing intelligence system, formal marketing research system, product, place, pricing subsystem and integrated mix subsystems, etc. It can be used by PPB for determining needs and requirements of Indian customers by which company can formulate the marketing mix and provide appropriate flour product to Indian customers (Meyer and Peng, 2016). Along with this, it is used by the organization for managing order, analysis of the market, determining price of products and developing appropriate strategies for improving marketing performance in the foreign market, etc. It is beneficial for PPB to gain a competitive advantage in the Indian market. It also provides flexibility to responding against competitors in foreign countries and markets. It helps in maintaining information of every customer and reduce the total cost of operation. MMIS develops a strong association with customers. So, all are the major benefits of MMIS and due to this PPB should use this system for managing marketing operations at international level (Richter, et.al, 2015).
Indirect export strategy
The price of the flour product is one of the major factors which can affect the purchase decision of Indian customers. So, PPB needs to focus on pricing decision at the time of entering in this BEM. There are numbers of external factors which may influence the pricing decisions of the organization, so PPB needs to pay attention towards these factors at the time of making the pricing decision. Major objectives of pricing decisions are to increase growth and market share of the organization and manage expenses with the immediate profits. Along with this, an appropriate return on investment is also a major objective of PPB behind the pricing decision (Bhasin, 2016).
Pricing decision is one of the imperative element of the marketing mix of PPB which can be easily controlled by the organization. For effective pricing decisions organization needs to integrate this element of marketing mix with the other remaining elements of international marketing mix. This decision is based on goals and objectives of the company, characteristics of Indian customers, and level of competition and different phases of flour product life cycle.
Figure 1: Factors that can influence pricing decisions of PPB in Indian market
The cost of manufacturing, transportation, tariffs, handling charges and fees, market destinations, distribution strategy and marketing of flour products are major factors which may influence pricing decisions. On the other hand, PPB needs to pay attention towards different internal factors such as productivity of the manufacturing units of PPB. By the production, capacity organization can price their products and services (Sylvestre, 2010). High productivity leads low cost which can provide an opportunity to earn the profit by charging suitable price. But, in the case of low productivity organization needs to make necessary technical changes in manufacturing facilities which lead high cost. Due to this reason, PPB cannot charge the high price for their flour products. So, at the time of making pricing decisions, the organization needs to pay attention towards these internal factors also. PPB can control these internal factors, but there are number of external factors which cannot controlled by this organization such as tariff charges and excise duties, etc. So, the company needs to monitor the external environment of the Indian market before making final pricing decisions. This decision is based on the cost of flour products and there are number of fiscal and monetary policies which may affect the cost of the products, and services of the organizations. Along with this, exchange rate and interest rate are also important factor which needs to be considered by PPB. Along with this, marketing is one of the major activity for attracting customers in the foreign market (Carraher and Paridon, 2015). The cost of marketing may influence the price decisions, so for reducing marketing cost, PPB needs to use social media marketing which is an appropriate communication channel with low cost. Mode of transportation may influence the total cost of the flour products so; the organization needs to include the conveyance cost at the time of pricing decisions making process.
Conclusion
Increasing profitability of PPB is one of the major objectives behind this global expansion of the business. So organization needs to set the price by appropriate return on investment. Including this, the company needs to decide the price at a precise level that insures to generate appropriate sales revenue to cover production and marketing cost of flour product. Therefore, pricing decision should focus on cash inflow and outflow of the organization (McDonald, 2016). Therefore, all the above-discussed factors need to be considered by PPB at the time of making pricing decision in the international market.
For taking pricing decisions PPB can use different pricing tactics such as skimming strategies, penetration pricing, and geographic pricing, etc. But, PPB wants to introduce flour product so the company can use penetration pricing because it will be the strategy for attracting large number of customers in Indian market. In this BEM organization will face high competition from existing food production firms (Dinnie, 2015). So, for reducing the level of competition and increasing the total sales revenue, the company needs to charge the low price at the time of starting a business. The low price will lead increment in demand of the products and services which will help in increasing the total profitability of the organization. Therefore, market penetration is one of the best pricing strategy at the time of entering into the Indian market.
Morschett, Schramm-Klein and, Zones, 2015 has defined that “Integrated marketing communication (IMC) can define as a strategy which helps in expansion of the traditional and modern ways to communication to convey a single message to all stakeholders of the organization” (Morschett, Schramm-Klein and Zones, 2015). As per this statement PPB can integrate a number of promotional channels to communicate the appropriate message to all customers about the flour products of the organization. On the other hand, Rana and Sharma, 2015 has concluded that “IMC is known as an approach for attaining marketing objectives of the organization by coordinating different promotional methods” (Rana and Sharma, 2015). According to this, PPB can integrate different methods of marketing such as public relations, personal selling, sales promotion, digital marketing, traditional marketing and social media marketing to get maximum communication impact on stakeholders in BEM, India. But, using integrated marketing communication technique is not an easy task for PPB because there are some specific numbers of difficulties and problems which may affect the communication process of the company in the international market. For instance, Lack of knowledge and experience of marketing manager of PPB about the advertising channels is a major difficulty in international market (Sinatra, Singh and von Krogh, 2016). Due to this problem message may not reach to the target audience which can reduce the level of awareness of customers about the flour products. All these have direct negative impact of sales, market share and profitability of PPB in the international market. IMC require a proper encoding of message as per the level of sophistication of target customers of Indian market. If target audience will face problem in understanding message of PPB than it is also considered as major problem for integrated marketing management of the company. Lack of knowledge about the customer’s culture is the barrier for integrated communication strategy (Martin, 2015). Including this, the high requirement of effective advertising is a major difficulty for integrated communication strategy of PPB. For instance, there are some religious rules and regulations due to this reason Beer and wine manufacturers cannot advertise and sale their products in Muslim countries. Similarly, religion and culture have direct impact on communications strategy of PPB. So, for resolving all these issues organization needs to use global communication strategies (Riasi, 2015).
For instance PPB should use the single message for entire globe with the different language, name, and colors. Therefore, the company can use the different language for the same message as per the needs and requirements of customers. So, PPB should use the same information which is for Malaysian customers, but the company needs to encode this message in the Hindi language because Indian customers follow the Hindi language. Along with this PPB can adapt the same theme for the entire globe but needs to pay attention towards the basic rules and regulations of the local market. For food products company can also use the celebrity marketing in which company can choose the general superstar of the Bollywood (Wagner and Eggert, 2016). It will assist in attracting customers. Including this, the company can also use digital marketing such as email marketing and social media marketing which will help in increasing customer to customer communication as well as these strategies are effective in targeting mass clients in less time. So, these are also important communication channels which can be used by PPB in IMC. Therefore, all the above-discussed strategies will help PPB in resolving differences and difficulties in integrated international marketing communication (PPB Group, 2016).
The brand is not just a sign, a name, a symbol, and a logo but an identity of the company and it is difficult for an organization to develop the brand name or reputation. It helps in earning customer loyalty which plays important role in gaining high market share in the long run. But, the number of challenges are linked with this branding process which may affect the reputation of the organization. A strong brand equality is beneficial for greater loyalty, larger margins, no changes in sales in case of changes in the price of products, etc. (Global Branding: Issues and Challenges, 2013). Packaging and labeling are important part of branding process. Inappropriate packaging and labeling may affect the brand name and reputation of the organization. So, for managing this challenge PPB needs to focus on the eco-packaging of the flour products which will help in reducing the negative effect of packaging on the environment as well as also help in the sustainable development of the organization. Including this, in the case of food products organizations needs to give all information about the nutrition, serving size, etc. These labeling requirements also affect the branding process in positive and negative manner. So, PPB should follow all instruction of packaging and labelling which are preferred by the Indian government. Along with this, customer’s perception of the quality of new products and services of the foreign company is a major challenge for branding process of the company (Aaker, 2011). So, PPB organization needs to offer flour product to Indian customers as per their needs and requirements which will help in attracting them. Along with this, language and culture differences is also one of the major challenge which may create difficulty in translation of the brand name of PPB. So, for the new international market company needs to use the English language which is a Universal language and help Indian customers to understand the brand name of the company. Along with this, the understanding culture of Indian population is also one of the major challenge. Therefore, all these are known as a major challenge for branding process of PPB (Baker and Saren, 2016).
For overcoming all the above-discussed challenges and making a strong brand image in the Indian market, PPB should use appropriate branding strategies. For developing a good brand image, PPB needs to make consistency in quality and performance in the international market. Along with this as per the changes in the client’s taste and level of competition organization should pay attention towards the innovative practices with strong customer relations. This strategy will help in creating brand loyalty in customer’s eye. Emotional appeal is also one of the major ways to communicate the brand message to consumers. Regarding this, PPB can sue different communication channels such as television, newspapers, the internet, social media and magazines, etc. Including this, Organization needs to conduct research on customer’s culture which will also help in making brand strategies for flour product of PPB. Economic, legal and political condition vary from one country to another (Coviello, 2015). So, PPB should focus on advertising rules and regulations of Indian Market. Further, developing a strong distribution channel alliances in the Indian market is also one of the major requirements for developing a strong brand image. Therefore, using all these strategies PPB can overcome all the challenges and develop a strong brand name in the Indian market.
Conclusion
The current research project has concluded that PPB might face a number of challenges at the time of entering into the Indian market and these include cultural issue, rules, and regulations, unexpected cost, lack of international experience and changes in commercial laws and currency, etc. But, all these challenges can manage by taking appropriate strategies of market entry such as joint venture with the local manufacturer of food products. Afterward, research has concluded that MMIS is one of the operative systems for resolving global marketing issues. Along with this, pricing decision of PPB group can be influenced by different factors such as transportation cost, tariff charges, fees, documentations, etc. In addition; the report has found that lack of knowledge about the target audience, their culture and communication channel are major difficulties of marketing communication strategy. Social media marketing and other promotional channels can help in resolving these issues. Along with this, eco packaging, appropriate labeling, quality products and promotion are main strategies for developing a strong brand image of PPB in the Indian market.
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