Free Channel and Pricing Strategies Essay Sample
According to marketing theory, there are several steps that lead to a good marketing strategy. These steps represent the activities that are required to design and implement sound marketing strategies. Generally, the details of these steps may vary but most of them cover 4 aspects, which refer to marketing mix –product, price, promotion, and place/distribution. Concerning the market expansion into a foreign country, the distribution strategy plays important role to succeed in the market. This study elaborates how Pet Park, LLC, an enclosed dog park facility, that let dog owners to train their dogs to socialize. This facility also offer training opportunities along with discounted grooming and boarding options for loyal customers.
As each target market of foreign countries has different characteristics, regulation, and also market potential for a pet park. The chosen markets are China and USA. We will elaborate each target market to see which market should be explored first to gain both profit and awareness.
Government, political, or governing bodies
In terms of legal entities, China has government bodies that help to reform the foreign direct investment (FDI) policy in late 1970s when the country’s National Legislature of an Equity Joint Venture Law was designed to offer foreign firms and individual legal path for direct investment project. The rules and regulation in the early 1980s describe an atmosphere of welcoming foreign investors. This change attracts international attention to start investing in China as stated in the Chinese laws and regulation. In addition, according to William A. Fischer (2005) corporate governance in China represents the country’s practice on external conflict between the political interests of the state which, despite exiting from the economy, is still a major owner of assets, and the economic interests of corporate actors, is bigger, more vivid, and more complicated in China than perhaps any other nation. In contrast to China that opens their foreign investment, the US counterpart tightens the foreign investment as the government increases the government scrutiny that causes delays. Foreign Investment and National Security Act of 2007 (FINSA) enlarges the scope of the Committee on Foreign Investment in the United States (CFIUS) to examine whether foreign investors threaten national security (White & Case LLP, 2012)
Unfortunately, there is a high level of risk for foreign enterprise, it is the difficulty to obtain sufficient information regarding to business and legal data of its transaction partners in China. It is hard for foreign companies to be sure that the companies in China (the ones we propose the deal to) are in a good business and legal status (Mclain 1995).
Concerning the market for pet-related business, we find that Chinese pet market is growing as the number of household raising pets is increasing. The country estimates there are about 150 million pet dogs, which is the attractive market for Pet Park LLC. As this market is still growing in China, which accounts for $US870 million ($926 million). As Pet Park LLC has fewer they should find the unique value that customers would appreciate. Under such circumstances, Pet Park LLC should customize their brand to offer a certain value that others lack. In turn, it helps the company to have best deal with their distributors. In terms of pricing, Chinese growing market in a competitive sphere should be tackled by allocating their resources to make sure that they do not fall too far behind of the leaders of the market in price or other respects. This suggests that in dealing with distributors, Pet Park LLC should design purchasing schedule that cope with monthly or annual demands and thus helps the company to have best deal with distributors since distributors can have exact schedule on the distribution of particular products.
Meanwhile, regarding the economic issues, within the past five years, the world economy experience many shocks due to subprime mortgage issue in the US (2007-2008) and liquidity problem in Europe. Despite this situation, China has experienced the fastest economy growth. The two factors contributing to this development are: improved literacy and reduce poverty ratio. Some analysts predict that China would be the largest economy by 2020, surpassing the US economy. The economy growth is threatened by the inflation that may causes the purchasing power to lower but on the contrary low inflation make the purchasing power of currency higher. When a country experiences high inflation, the state government will make policy to increase interest rates. With this interest rates increase, hence society tends to save money in bank than use it to effort.
In addition, the most important issues in international business within the 20th century are currency and exchange rate risks. In the late 20th century, it has been clear that exchange rate risks considerations are critical for business survival. This risk highlights that companies need to perform foreign currency risks assessments regarding the business activities. Most companies generally apply some of the financial tools that would protect them from foreign currency risk exposure, like futures, forward contract, etc.
Unlike Chinese pet industry that is still growing, the US counterpart has larger market that accounts for $US43 billion ($46 billion) on their pets this year. Because of tight competition with other large provider, the selection of channel method in the US could consider following items:
- The company should first be aware of the qualities of good distributors by asking them the list of their current customers. Typically, good distributors fill orders quickly and accurately and help build market for retailers’ product. They aggressively sell products in markets that retailers cannot reach.
Afterwards, the retailers should prepare their product-market calculations. Product packaging, methods of shipping and many other factors must be considered in order to attract the best distributors. The company must also prepare a good price that would still provide good profit margin for retailers, distributors and themselves (Norman, 2006)