Market Entry of a New Product in China - Case Study Example

Name) (Instructor) (Institution) (Course code) (Date) Executive Summary The main purpose of this market is to analyses the situation of the company at the moment and to determine how to reach our customers. It also acts as the platform for evaluating market tactics and ways to up the game. This marketing plan begins with a critical analysis of the current market situation so as to enable us to chat the way forward. All the information needed to make constructive decisions will only be found by reviewing internal and external environments of the firm. We shall also put a critical analysis of the company’s strengths, opportunities and major threats and weakness. Our key strength is that we have a team of vibrant, competent and committed staff members with knowledge and expertise. While our main weakness is that we have not done much in the marketing and advertising. In addition, we have a lot of opportunities as that our product’s features are relatively new in the market. Our main goal is to become the leading supply of cheap but sophisticated air purifier in the whole of china within the next three years. As by our market strategy, we want to channel a lot of energy, resources and time in marketing our product in order to conquer the market with ease. We have a clear strategic plan to maximize all the marketing avenues in the media and otherwise in marketing and promotion. The implementation and the way to control all the strategies are clearly captured in this particular document. All other necessary information is captured here as this document will be referred from time to time. Description of Daily Life and Lifestyle People of China have varied lifestyles and ways of living. These variations are based on the geographical regions. Majority of them are casual laborers who work in industries and mines. Others are business people while a small percentage are career people. Most of the masculine jobs are handled by while many women do domestic chores (Blog.eteacherchinese.com). Many Chinese people are vegetarians, but they also eat snails and dog meat. A good number own single family houses while many rent houses. There are also very many recreational places such as swimming pools and stadia. A good numbers of people own mobile phones and can access internet with low cost (Blog.eteacherchinese.com). Competitive and Environmental Analysis My product will be marketed in China which is in East Asia. The country has been plagued with a lot of air pollution (Poddar, M. Ellis and Ozcan). The country has good transport systems and better forms of communication. Consumers in the country have excellent buying habits especially new and sophisticated products especially in urban areas. Our product will be sold through supermarkets and retail shops. This is because there are a lot of them in urban centers. This is also where similar products are normally found. China is a BIG Cake Since 1978, the Chinese government has implemented a comprehensive and strategic Opening-up policy which involved permitting increasing foreign direct investments and global trade to ensure a progressive economic development. These policies have proved the county’s socio-economic development and have given the residents a considerable impact (Gerdes, p.57). China has become one of the biggest markets for businesses which from the whole world. Entry Points: Beijing and Shanghai Shanghai: Quality and fashion Shanghai is one of the most urbanization cities in China. It is located on the east tip of Yangtze River Delta and halfway along China's eastern coastline. Due to its advantageous geographical location, Shanghai has become a large and prosperous port city (Travelchinaguide.com). Many of foreign brands start to hit the Chinese market from here. People who live in Shanghai are also more used to facing new products, cultures and concepts as well as they like to follow the world fashion trend; they pursue the better life style and proud of being the leader city in China. Due to the high consumption ability of shanghai citizens, they start to have more requirement about the goods; the most important consideration is not the price, instead of are the quality and fashion. Beijing: Classic and quality Beijing is the capital city which is located in the north of China. It is regarded as the political, educational, and cultural center of China. With a history of more than 3,000 years, Beijing has been an integral part of China's history (Beijingtrip.com). Because of the historical background, Beijing people have lived in this atmosphere and proud of to be the capital citizens; they prefer to pursue the product which is more classic and quality. According to China Business Review Beijing residents may not pursue to consume the most fashion style products, but they would like to choose the products that are valuable and match their profile. To reach our potential customers, we shall use both print and broadcast forms of advertising own by private and government of the country. This is because we will reach more than 60% of the target group. Our prices will be competitive in the market. Our customers will get good value for their money Our product has certain features that competitor’s product lack such as the use of modern technology, packaging, and branding. It is also pocket-friendly and portable. It will be advertised in all leading media houses and billboards. We shall distribute using agents across the country. We expect to capture 60% of the market share within the next two years by growing the market share by 10% in every three months. Market Entry We are committed to conquering the market though there are risks which include lack of enough capital for the marketing and promotion. We intent to channel the proceeds we get from the first sales in to do more marketing. We will not do the exporting first until we have exhausted the available market in China. We also intend to work with other players in the market if the licensing bodies accept so that we cut on the cost of manufacturing. This will be achieved through joint ownership so that we can manage contracts with ease. MARKETING PLAN Our product is called Post Modern Air Purifier. This name was coined when we consider what people like. It shows that is efficient and manageable. We intend to build a main warehouse in the capital city of Beijing. Our product uses modern technology and is packaged well. It is portable and easy to operate and saves energy and it has the ability to retain energy. When the machine breaks down it requires a technocrat to repair. Unlike so many available products, our product is made using HEPA and UV. It also occupies small place in the room. And has an internal battery that can save power up to 5 hours. We plan to channel more resources to advertising and promotion. We shall use television, newspapers, online platform, flyers, brochures, and road shows. Distribution Strategy (Macro) Our means of distributing our product will by sea because of the nature of our product. Sea is relatively cheap and a big number will be transported at once. Unlike air which carries small quantities of the product although it is fast. Unlike air, the sea does not often have cases of accidents. We shall comply with all the necessary laws. We shall also acquire all the necessary documentation such as bill of landing, dock receipt, commercial invoice, shipper’s export declaration, statement of Origin. We shall work with shipping consultant to advise us on matters of Origin of port and destination. Distribution Strategy (Micro) We shall engage our product manufacturers to advise our warehouse constructors so as to come up with a very good warehouse. We intend to distribute our product to retailers and wholesalers basing on their financial muscle. We shall work very closely with import and export agents to ensure that there is the steady supply of the product in the market. Pricing strategy The company, in its budget, will ensure all the anticipated expenses are captured so that all payments are made before determining the prices of the product. The budget will factor in wholesale, retail markups, import taxes and customs duties Our payments will be made by consignment and checks. Government Participation We shall work closely with all the government agencies. We will adhere with the laws of the land. We also expect the government to provide with a good business environment. We shall follow all the business regulations such as the acquisition of trade licenses and all other requirements. Budgets and Profitability Analysis We expect our finance department to work on all product costs both fixed and variables. Other expenses such as distribution, selling, advertising, currency and other expenses will be factored into the budget. We shall also ensure that expenses of assessment of feasibility and breakeven and incorporated so that we have a very comprehensive budget. The product My product to be marketed in china is a new air purifier. It is called Post Modern Air Purifier. This product has unique features compared to air purifier currently available in the Chinese market. First, Post Modern Air Purifier has been made is a way that there is an excellent merger of High-efficiency particulate arrestance (HEPA) filter together with ultraviolet (UV) ionic sterilizer which is ideal for fighting harmful bacteria, and other micro-organisms that are very harmful to the health of people and other animals. This air purifier does not emit any harmful radioactive rays like the traditional ones. Post Modern Air Cleaner has ability to clean the air faster. This is because the machine is set in a manner that the doors are constantly opening and closing hence thorough cleaning of air in done all time long. The machines also operate quietly. This is ideal for those people who require tranquil and serene environment. The machine is also recommended for homes and offices where people need a lot of concentration and little noise. It is also worth noting that the machine has a port for inserting perfume kit which then act as a sprayer. In addition, the machine is portable and has an attractive shape. The price of getting one is pocket-friendly to our consumers. The combination of the two means that people with low income can afford what is good and attractive without much strain. The reason why I chose this product is that China is a nation that has been adversely affected by air pollution. Global Burden of Diseases conducted a study in 2010 which indicated that about 1.2 million people die prematurely due to polluted air. Cultural Analysis China is located in East Asia, with an area of about 10 million square kilometers. It is the third largest country after Canada and Russia. China is characterized by plains, plateaus, mountains and hills. These physical features occupy two-thirds of china. Qinghai-Tibet is the highest step with a height of about 4,000 meters. A lot of mountains have an average height of 5,000 meters (Travelchinaguide.com). China is divided into four regions namely North China, South China and North West China and Qinghai-Tibet. This geographical distinction has brought about the difference in culture and languages. China has 56 tribes with Han Chinese making 91.59% of the total population of China. The remaining groups account for 55 minority ethnic groups (Fifth National Population Census 2000). These ethnic groups live in their individual lands. China is characterized by the humid subtropical climate which is hot, humid in summers and very cold during winters. China, experiences a mean of 10 degrees Celsius for a period of 8 months (Travelchinaguide.com). China’s Population As at July 1st, 2014, the population was estimated to be 1,393,783,836. This is about 19.24% of the world population. 54 % of Chinese live in urban areas while the remaining 46 %in the rural areas. Age structure Close of half of the population falls between the age brackets of 25-54 accounting for 54%. 0-14 years accounts 17.1% of the population 15-14 translates to 14.7%, 55-64 years accounts for 11.3% while the remaining 9.6% are those above 64 years The number of males is slightly higher than that of females owing to 1 child policy where couples preferred having a baby boy rather than a girl. The couples could terminate the pregnancy if they found out this they were expecting a girl child the Americans believe to be God’s chosen (Antimoon.com) Economy a. Stage of development: Drive to maturity b. GDP: 9.24 trillion USD as at 2013 c. GNI (total and per capita): $6,560 d. GINI: 37.0 e. Imports: electronic equipment, oil, ash, slag, ore, machines, pump, engines, technical equipment, medicine etc. worth $1.96 trillion (2014) f. Exports: office machines parts, telephones, computers, integrated circuits, broadcasting equipment. Worth US$1.623 trillion g. Trading partners: USA, South Korea, Hong Kong, Germany, and Japan h. Currency Exchange rate: $1 - 6.21 Chinese Yuan 1 Euro equals 6.63 Chinese Yuan. Foreign Investment Local governments in china have opened up to foreign investors since 1979. They have put in place measures that encourage the foreign investments in the countries. They do this through offering of incentives and providing tax breaks. Despite the central government refusal to buy this idea, the local governments have not given up their efforts. The central government has constantly tried to discourage foreign investors. According to the National Bureau of Statistics of China, Foreign Direct Investment increased to $ 348.80 million in the first three months of this year. FDI in china has averaged $387.67 from 1997 to 2015. In 2014, it reached a high $1195.62 million and lows of $18.32 in Jan, 2000(Tradingeconomics.com). China's major industries include mining and more processing. They mine iron, steel, coal, and aluminum. There are also a number of processing industries which process ornaments, chemicals fertilizers petroleum and foodstuffs. Automobile and transportation machinery are also made in China including. Transportation is cheap and readily available and it ranges from the old means to modern ones. Me transport includes cars, trains, motorcycle, aircraft, vans, minibus, buses, rail among others. Means of communication in china involve the use of mobile phones and use of computers to relay information. The prices of accessing the networks and calls are pocket-friendly and it is about CNY0.2 per minute. The use of television and radio is also big in china. In 2014, 66.9% of global shipments accounted for Chinese exports and it amounted to $ 2.344 trillion. Monetary Fund statistics indicates that the Chinese GDP amounts $17.632 trillion. In 2012, China was rated the world leading nation to trade with other nations beating the United States. The import trade value in 2012 stood at $1.82 making an increase of 4.3 percent from 2011. Doing Business in China Since China is an emerging economy every entrepreneur is craving to do business in the country. However, there are a lot of restrictions and barriers that makes it hard to operate a business there. Religions and Impact on daily life China has a lot of religions namely: Christianity, Buddhism, Islam Taoism and Confucianism among others. These religions have altered the people’s ways of living through the prohibition of consumptions of certain commodities. The religions dictate what one is supposed to consume and what to where to go. According to the latest survey, about 17 million people from all works of life have converted into Buddhism. This is the widely accepted religion in China followed by Confucianism. References Beijingtrip.com,. 'History Of Beijing China'. N.p., 2014. Web. 24 Apr. 2015. Blog.eteacherchinese.com,. 'The Chinese Way Of Life In Modern China | Eteacher's Chinese Offical Blog'. N.p., 2014. Web. 24 Apr. 2015. Chinabusinessreview.com,. 'Understanding Chinese Consumers | China Business Review'. N.p., 2011. Web. 24 Apr. 2015. Gerdes, Sina. Western Food In Shanghai. Chinese Consumption Patterns And Globalization In China. Munich: GRIN Verlag GmbH, 2014. Print. Poddar, Amit, Cameron M. Ellis, and Timucin Ozcan. 'Imperfect Recall: The Impact Of Composite Spending Information Disclosure On Credit Card Spending'. J Consum Policy 38.1 (2014): 93-104. Web. 24 Apr. 2015. Tradingeconomics.com,. 'China Foreign Direct Investment | 1997-2015 | Data | Chart | Calendar'. N.p., 2015. Web. 22 Apr. 2015. Travelchinaguide.com,. 'Chinese Culture: Ancient China Traditions And Customs, History, Religion'. N.p., 2015. Web. 22 Apr. 2015. Read More