International Marketing Strategy of a Furniture Company
Category : Marketing Papers
Management of an organization operating through a franchise requires a strong leadership and a close relationship between the parent company and the branches. Furniture firms involve monitored interpersonal relationship management between the center and its global businesses. Employees are motivated to optimize their contribution to the company and acquire experience in the different areas of operation due to the possibility of becoming a marketing manager. If an industry has decided to conquer the international market, there are many choices that will be opened. These options may include the cost, risk and the degree of control that the company will encounter. In entering an international business, it is important that the management of the company should be able to choose a marketing entry strategy so as to make the company be more competitive.
Wade Kincaid began his furniture career in 1924, at the age of 14, assembling drawers for a local furniture company. He worked his way into a plant manager position and was able to raise a small amount of capital, and decided to start his own grocery store. As Wade soon found out that he was not as capable in the grocery business as he had been as a carpenter. After paying back his creditors from the failed attempt at operating a grocery store, Wade decided to try something else and re-entered the furniture industry as a plant manager for another local furniture company. The company continued to grow and launched a line of dining room furniture. The growth was such that at one point, customers would wait as long as 13 months for an order. In order to serve their customers better, Kincaid became the first manufacturer in the industry to have its own fleet of trucks. But improved transportation wasn't enough. In the early 80s, Kincaid was suffering from growing pains. It was decided to go public in 1983, in order to manage the growth with new facilities and further expansion. Kincaid continues to grow, focusing on new market segments and categories while remembering the values that started everything: a commitment to quality solid wood case goods, fashionable upholstery, and the best service that the industry has to offer. The furniture company need have to spread in the global market in order (1998) to describe the organization and culture of the company. The term has evolved to refer to the general business strategy of expansion.
Company Expansion Strategy
The parent company sells to the smaller businesses the right to distribute its products or use its trade name and processes. A contract governs the agency relationship established between the parent company and the franchisees (1992). The franchise contract defines the conditions of the agency and the duration of the relationship. (2004).
Company Management and Marketing Strategies
Organizational culture is the concept that guides the operations as it (1983) operates according to four values: quality, service, convenience and value ( 1995). Organizational culture is part of the knowledge and information transmitted by Kincaid to the franchisees in other countries. Part of organizational culture is the delivery of uniform quality of food and service wherever the branch is located. However, the company also gives leeway for innovation by allowing the branches to integrate culture into its product quality and services increasing market share.
Kincaid integrates a combination of scientific management and human relations approaches in its organizational standards and work ethic. Scientific management is the process of achieving efficiency by actualizing the principles that employees are motivated by economic rewards, a clear delineation of interrelated tasks, and a clear structure of recognized authority that facilitates aspects of the operation. (1964) Scientific management requires the managers of the business to analyze the operations of the business and create objective methods of dealing with problems. This became popular because of the prevalence of disputes among workers and between workers and management with the proliferation of new industries. (1991) The human relations perspective recognized the importance of the non-rational element in the organization behavior such as the development of relationships between workers and the role of an effective leader in facilitating the constructive communication and participation of all members of the organization. (1964) Human relations management considers the techniques of forming problem-solving teams, improved communication by the company with its employees, the offer of employment security, skills and training support for employees and incentives for efficient work. (1997)
Most Eastern European countries are still in the process of completing their transformation from a controlled to a capitalist economy. Full transition and the stability of the political and economic institutions are expected to boost economic development in these countries. (2002) Entrepreneurs in economies in transition usually look towards foreign partners in developing a market for food and beverages ( 2002; 2002). Foreign partners are viewed as significant in providing financial resources, investments in the development of new technology, sharing technological expertise, training locals as managers, introducing quality management strategies, and providing financial and general advice (1995). Business expansion into China offers potential profit and minimization of cost on labor and raw materials as expansion offers mutual benefit to the country and to the foreign business by providing investments and technology to the country and cost-effective operations and profit to foreign business firms. Assessing the potential of a new market for expansion requires the consideration of several factors providing a comprehensive background of the environment that the expanding business firm expect to enter into. Gross Domestic Product is the common measure used to determine the economic condition of a country. GDP has several components, which are consumption, investment, government consumption, exports and imports.
However, the most significant indicator of the movement of the market is consumption. In terms of consumption, there is a high volatility of consumption relative to emerging countries and industrial states (1995), or liquidity constraints especially in economies with an underdeveloped financial system, or consumers are not assured of a constant source of income that increases the tendency to save instead of increasing consumption (2004). The stabilization of the political and economic institutions states provides an environment conducive to economic activities and foreign investments. In choosing a country to invest in, the state with the stable political and financial institutions should be chosen so that consumption is constantly increasing and the potential for profitability is higher. There is also lesser risk in entering a stable economy. Likewise, Culture is an important factor in understanding an industry, because for any organization to operate effectively it must for some extent have a general set of believe and assumptions on how culture will influence the productivity and the success or failure of any company. Culture environment is one of the important principles that influence the organization. (1991) identifies that there are four dimensions that differentiate cultures at a national level which help to understand that people arrive to organizations with their own national culture.
Market Entry Plan
In order to enter in the Chinese market, the company must be able to choose the mode of market entry to be used. In this case, one of the strategies that the company will utilise is going on a joint venture with distinguished food distributor in China. It is said that the joint venture mode happen by having a venture with other bigger and competitive companies. An international joint venture is a distinct enterprise or multi-organizational agreement, created as an alliance between two or more parents organizations working across country borders in designing and managing the venture (1996).
To promote the company and its product, the company will use video advertisements, print advertisements and the concept of e-marketing. These promotion and communication strategy will tend to meet the consumers form different places everywhere; especially those target markets or the consumers in the urban areas.
Today’s market is characterized by highly competitive organizations which are all vying for consumer’s loyalty. Firms are faced with the challenge to maintain their own competitive edge to be able to survive and be successful. Strategies are carefully planned and executed to gain the ultimate goal of all: company growth. However, external factors are not the only elements which influence growth. There are also internal factors, components working within the organisation which shape the direction of the company. Despite the economic and technological conditions that make it possible now to promote products and services in a larger consumer market, there are other factors that still need to be considered for a business organisation reach out easier to their target market. Looking into the characteristics and thought processes of the people still holds as the most significant factor to be looked into by the individuals in the field of sales and marketing. The large scope of market can pose a hindrance to a successful marketing strategy in terms of over generalised definition of the target or niche market. Marketing plans and strategies would be incomplete without paying much consideration to the customers. Customers will and should always be a part of the agenda in any marketing plan of any company. Because of the implications for profitability and growth, customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today's ever increasing competitive environment ( 1999).
The company now face the challenge of making its target consumers respond accordingly to their marketing efforts. Those who understand its consumers’ responses will have a great competitive advantage. The starting point towards this is through the stimulus-response model of buyer behaviour which involves examining the marketing and other stimuli in the consumer’s black box that translates into buyer responses ( 2001). Marketing stimuli often consist of the four Ps of marketing: product, price, place and promotion while the other stimuli may include economic, technological, political and cultural factors which exist in the marketing environment. All marketing communications should be directed to a particular target. This aspect suggests that in implementing marketing communication, the company should clearly identify the targeted constituents and stakeholders to whom the marketing communication strategy should be directed (2002). The purpose of this aspect is for the company to create or apply communication instruments that will encourage the market to purchase or patronise the product. Despite the economic and technological conditions that make it possible now to promote products and services in a larger consumer market, there are other factors that still need to be considered for a business organization reach out easier to their target market. Looking into the characteristics and thought processes of the people still holds as the most significant factor to be looked into by the individuals in the field of sales and marketing.
The large scope of market can pose a hindrance to a successful marketing strategy in terms of over generalized definition of the target or niche market. Today the array of possibilities in applying the marketing strategy of international advertising is unimaginable. Instead of taking the technological barriers as hindrance and drawbacks in the international business operations because of the technological divide that cuts across the people from different social status, looking for avenues of more strategic and effective campaigns and treating such drawbacks as opportunities nay result to favourable outcomes. Hence, knowing the product and its demands in the market as well as the people who will likely avail and take advantage of the offer will open the possibilities for a campaign that will be most ideal in the international selling. The manufacturers and the advertisers should be conscious enough to know the characteristics of their product and its demand in other countries. It is not always the case that a product or service will be used by people from another country just like its success in it country of origin. The fact that there are really products and services that cannot be applied or utilized in a particular country should be a constant thought and reminder to the advertisers and business organization with plans of gaining entrance and share of clients and consumers in other countries. The services and products should be correctly classified as to whether they will be sellable in the new market.
The lifestyle and daily routines of the people in the new target market should be likewise considered to ensure that the products and services offered will be able to enter the new market in a different locality. Conducting researches and market studies on the purchasing power and the consumer behavior of these people will benefit the business organization to conceptualize, transmit and channel the correct advertising message to the target. Hopefully this will eventually attract the interest of the target audience and gain their loyalty to the product or service being made available to them. In entering an international business, it is important that the management of the company should be able to choose a marketing entry strategy so as to make the company be more competitive ( 1986). In the business arena, it is important that an entrepreneur must be knowledgeable about the different marketing strategies that must be utilised in order to make the business prolong its competitiveness and stay in the marketing world, locally and internationally. The management of an enterprise that are considering entry into a foreign market must be able to make decisions focusing on uncertain and changeable circumstances that might be faced (1997).
To successfully enter international market scene, it is important that the management should determine which country to choose ( 1997, 1992). It is a very crucial factor because the economic status of such country will be one of the major factors that can help boost the competitive advantage chooses Hong Kong even though there are lots of competitors to outgrow, because of the economic status of the country (1997) and show the quality of products and services they offer. In this manner, the competition to produce and provide products and services for different consumers is demanded not only in the domestic arena but most especially to the international market (1995). The environment in which furniture industries belong is a kind that must be given enough consideration in order for the company to be recognised in the whole world. Factors, such as consumer segments, political, economic and technological factors (2000) are few of environmental aspects, needed to be determined by as it enters an international market. Moreover, the economic status of the country is also considered as strong since it allows foreign investments to enter the market. In this regard, Kincaid’s expansion and market entry to the country is plausible and that with strategic marketing entry the company may ensure growth in this nation. In terms of technological aspects, the country has been able to adapt modern technologies to ensure growth and development within its territorial boundaries.
Aside, to identify the opportunities that their competitors may not see, the company has to create and distribute knowledge throughout the organization, thus learn faster and exploit faster than their competitors. (1997; 2000) and needs to know what it knows, learn what it needs to learn and apply that knowledge as quickly as possible for sustainable competitive advantage, ( 1998) Party of the business strategy of Kincaid is its effective entry to international market which makes the company become more recognized in the business arena. In addition, the company is able to seek improvement in its business operation and tries to provide innovative products for the target market ( 1996). As mentioned, the company divided its market into three categories which helps them in knowing what the needs of their customers in specific categories are. Entering a new market is a complex decision which must be given focus and attention. With the goal of establishing a business that would be recognized and patronized by consumers, more and more entrepreneurs are trying to enter the market swiftly. ( 1990). One of the motivational factors to enter an international market is the chance given by this investment to make the company become more competitive among its rivals. It can be said that one’s an industry becomes a multinational company, there is an implication that such company has been able to establish a competitive position in the marketplace not only in the local but most especially to the global arena.
In the market arena, it is important that a business firm or company should be able to include global competitiveness in their marketing strategy. The paradox of globalisation has always been one of the great influences for a company to lasts. In order to compete globally or internationally, the management of a firm should be able to choose a mode of market entry that will help them to achieve their goal. All of these modes involve resource commitments initial choices of a particular mode are difficult to change without considerable loss of time and money (1987). Entry mode selection is therefore, a very important, if not a critical, strategic decision. It is a mutual understanding between the entrant and the existing firm to collaboratively work with each other for the expansion of the business portfolio of each company (1987; 1987). An international joint venture is a distinct enterprise or multi-organizational agreement, created as an alliance between two or more parents organizations working across country borders in designing and managing the venture ( 1996). International marketing is a complex process. In order to successfully enter the foreign market the company must see to it that all their resources are ready to face the risks of such investment. In addition, the company must be able to identify different factors that may affect the entry of the company to the marketplace. The company had emphasised the strategic use of technology, strategic management system and a strong and competitive organisational structure as the main reason why it has become successful in its venture of providing its products and services to the country of choice.
It can be concluded that the right choice of market entry mode along with the concept of strategic management and other efficient marketing approach, can make a company succeed in achieving its goal of providing quality products with their target market. However, decisions should be made strategic also. This means, that the company should have the ability to decide which among the market entry mode can be helpful to the company itself and suitable for the international market that the company will consider.
In the social context, it seems that the company has a great opportunity since, analysis shows that the target market is really in need of a new novelty items which can be given as a present for children or friends. In addition, it also indicates that the current situation of the Chinese market is that the customers are fascinated with new gadgets in line with modern technology. It can be said that the social situation of the Australian market is seen as a good target for company that would provide a new technological so as to meet the needs of the customers for a new novelty items.
A company will not be able to gain success if they will not consider legal sector as part of their strategy in entering an international marketplace. Legally speaking, the government of China allows foreign investments to enter their marketplace if they would be able to follow the rules and regulations set by the government authorities of the nation. Hence, if a company would enter their market, they must first consider the approval for a marketing entry which can be obtained from industry governing bodies in the country.
The high economic performance of Australia is attributed from its efficient economic management system and the ongoing structural reform. In year 2003 and 2004, the Government reported a budget surplus of $8 billion, which is one percent of Gross Domestic Product. Economically speaking, it can be said that the Australian market perceived a foreign investment one of the factors that can help them boost their economy. In terms of tax, the nation is imposing tax regulations to be followed by foreign investors.
In any transactions, it is important the company would consider the political aspects, specifically when the firm decides to enter a foreign market. In the Chinese market, the political sector is willing to accept new and innovative product for their people. In this manner, the nation is open for any possibility that a new product like this telephone voice changer will be highly appreciate respectively.
According to (1998), market segmentation is usually used to predict or foresee market opportunities and to identify potential markets for infiltration. According to (1972), market segmentation in international terms can be performed by a two-step process ( 1998). The first step is to identify individual or group of countries with parallel national-market characteristics into subsets. Within the subset, the market can be further subdivided with regards to relevant factors like consumer characteristics. The second step is to make a decision whether to focus their marketing efforts on a few markets then steadily expanding to new areas or to infiltrate large number of potential markets (1998).
Local buying behavior – This means that the company must research on what products do the people in that specific market buy and the reasons for purchasing the product.
Typical Payment Methods – as mentioned, every market is different and unique. If in America, usual payment methods are by credit cards; this may not be the case in other countries.
The Right Media Mix – upon the knowledge of the fundamentals of the firm’s local market target, the firm should then take into consideration the right media mix.
Generally, part of a marketing strategy is the utilization of the marketing mix. The marketing mix principles is controllable variable that is why it can be adjusted on a frequent basis to meet the changing needs of the target market and other dynamics of marketing environment ( 2004). It has been a central question in international marketing strategy why firms succeed or fail in international operations. International expansion is a very serious process in the modern business operations. The operation process of international marketing strategy is usually concerned with several activities like market selection, market segmentation and rate of entry (1998). Upon attempting to expand into international markets, companies must first decide which markets to target. Choosing the right market for expansion is very critical as the choice can affect the market performance of the firm. Therefore, specific ways on venturing on to the international market with the use of the marketing mix already been mentioned above in the part of getting started in international marketing. Business firms are assured of success if they have planned carefully and implemented their marketing strategy so, there should be lots and lots of research made and analysis in order for the success of furniture business.