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Unit 40 International Marketing Assignment
Diploma in Business
Unit Number and Title
Unit 40 International Marketing Assignment
Task One - Write a memo
LO1: Understand the concept of international marketing for potential foreign markets.
AC 1.1 In your memo to the International Marketing Directorprovides an explanation of why Hilfiger should develop international marketing.
To: International Marketing Director (Hilfiger)
Subject: Importance of adopting an International Marketing Approach
International Marketing is a modern concept which means the application of the marketing principles on a global level. It means that the marketing mix decisions are to be taken not according to the single country but for different countries. Hilfiger should develop international Marketing because it has to establish its manufacturing and other facilities in other countries which are emerging and the company has scope of growth in those countries (Kotabe, et. al., 2014).
The first example that why Hilfiger should develop international marketing is that there are competitive pressures from many other brands which are expanding their markets on a global level like Ralph Lauren and Calvin Klein. They are establishing their business in the countries where there are growth potentials like India, which is a developing country and is the tastes of the consumers is inclined towards western fashion (Kotabe, et. al., 2014).
The second example is that Hilfiger’s business in USA is now saturated. The rate of growth is small because of a limited customer segment and limited areas. To expand the business, and to make an advantage of lower cost of operations, Hilfiger should expand its business in international markets which needs international marketing for success.
Hilfiger will get benefit from international marketing because there will be new potential for revenues and they will get more access to the talent and resources of other countries. They will be able to diversify markets and get new customers to serve. It will also benefit the brand to fight the competition on a global level (Kotabe, et. al., 2014).
AC 1.2 Include an analysis of at least one emerging market in which Hilfiger wishes to operate in terms of PEST (Political – Economic – Social – Technology).
To: International Marketing Director (Hilfiger)
Subject: PEST analysis of an emerging market
PEST analysis is a tool for analysing the external factors in the domestic which impact the business of the company and it is also beneficial to apply it on the global level of business (Cateora, 2011).PEST analysis for Hilfiger fashion in India (emerging market)
- Political factors: It includes the tax regulations which are imposed by the government of India on the foreign brands. The company will have to deal with inflexible labour/ employment laws. The political stability of the country also affects the business of Hilfiger. India is a democratic country, every citizen is free to take own decisions and have right to choose. Hilfiger will get the benefit of this democracy as it will be easy to attract people then. The historical relation between US and India are fine which will also provide an advantage to the business (Cateora, 2011).
- Economic factors: These factors include the economic situation of the country which affects the business of Hilfiger. India is facing high inflation and good economic growth. People have good purchasing power which will benefit the brand in urban areas but still it is lesser than the developed countries. It depends on income of the consumers that what will be the demand of the products of the company.
- Social factors: These factors include the tastes, demographics, lifestyle and trends in the country which influence the growth of business. The trends and fashion in India is inclined towards western fashion which will benefit the business of Hilfiger. Increase in income is increasing the purchasing power of people which is attracting people towards high class brands and quality products(Cateora, 2011).
- Technology factors: It includes the growth and change in technology which benefits the business of Hilfiger. India has abundant labour and now the electricity operated sewing machines have increased the capacity of production. Development of It has increased the efficiency of keeping records and supply chain management. This will
help Hilfiger in lowering down the cost of production.Social factors are the most important factor for Hilfiger because it shows the tastes and demands of people. If there is no demand of the product, there would be no use of establishing business in the country. It is most important to create interested customers for the business then only a business can grow (Cateora, 2011).
AC 1.3 Evaluate international marketing research techniques for Hilfiger new product launch of the new range of Men’s shirt.
To: International Marketing Director (Hilfiger)
Subject: International marketing research techniques for Hilfiger’s launch of the new range of Men’s shirt
Research helps in recognizing the happenings in the marketing environment and also helps in responding to the changes in domestic and international market. Two international marketing research techniques are:
Primary research technique: This technique suggests that the information collected is for the first time and not used earlier for other purposes. It includes quantitative and qualitative research techniques (Sintonen, et. al.,2016).
- Quantitative Research techniques: These are the primary research techniques which help in gaining the customer responses in quantities. For e.g. Surveys through emails.
- Qualitative research techniques: these are the techniques for research which seeks the customer responses in details. For e.g. Observations and interviews.
Secondary research technique: This research technique focuses on the already available information which is also used before. This includes:
- Internal research: This includes numbers of regional product sales, customer complaints, past research papers, etc.
- External research: This includes the statistics given by government, internet or marketing reports (Sintonen, et. al.,2016).
Hilfiger uses both of these Primary and secondary research techniques to gain maximum information about the industry of garments, choice and trends among the consumers and the scope of success of the brand. Hilfiger uses online surveys through questionnaires to get the customer responses about different tastes and needs. It also interviewsdifferent experts of Indian garment industry to analyse the scope of the business and review the sales of other brands and study the past research papers to establish business in India (Kazemzadeh, et. al.,2009).
The advantages of using survey questionnaire are that large sample size can be analysed through questionnaires as it collects quantitative information which is easy to analyse. It has a good control on the quality of data which is collected. It also consumes lesser time. Theadvantages of interviews is that it provides deep knowledge about the Indian garment industry and the advantage of using secondary data is that it is easily available and involves low cost for Hilfiger (Kazemzadeh, et. al.,2009).
AC 1.4 Evaluate how Dubai as a foreign target market will be attractive for Hilfiger's new product
The markets of Dubai are attractive for new businesses as the economy is stable. International players are entering into the markets and are doing well. Tore variety of fashion clothes is produced for the consumers because they are demanding for it. There is a slight rise in the no of shopping malls and sales of luxury brands.Dubai markets will be attractive for Hilfiger’s new T-shirt because the consumers of Dubai are slowly consuming the trends of Western countries and they are getting aware of international brands because of social media and online shopping. Youth is more attracted towards western clothing and prefers purchasing the foreign brands which gives them quality and value of the money they are spending. Dubai market is one of the top ten attractive markets for retailers and that is why Hilfiger can successfully launch its new T-shirt (Doole, et. al.,2016).
The potential advantage the Dubai market will have on this new product i.e. T-shirt is that it is the diversified economy where 70% of the GDP comes from non-oil sectors. Many foreign brands are doing well in Dubai it has a high per capita rate which provides an advantage to Hilfiger to launch its T-shirt because people have high purchasing power. One disadvantage is that setting up a business in Dubai might involve a lot of cost plus the culture is different which can create a problem (Kanna, 2011).It is recommended that Hilfiger should take the help of online business at first to avoid high costs and should conduct market research to know the actual demand of the product and idea of its success (Kanna, 2011).
Task Two –Business Report
LO2: Understand how to make export channel and distribution decisions.
The report will consist of the analysis of different channels through which Hilfiger can expand its business into Dubai.
2.1 Explain how channels evolve in distributing a new design T-Shirt to Dubai
Distribution channels are the ways through which the goods and services transfers from the manufacturer to the ultimate consumer. There are different channels which evolve in distribution. Distribution channels are aimed at satisfying the requirements of the customers and minimising the costs and time (Obaji, 2011).Different channels are evolved in Distribution of a new design of T-shirt in Dubai which are:
- Direct channels: When Hilfiger will directly sell to the customers, it will be known as direct channel. For e.g. opening retail outlets, online sales through websites, etc.
- Indirect channels: When Hilfiger will involve middlemen in between to move the products from the producer to the consumer, it will be indirect channel like wholesalers or agents which increases the cost of the distribution (Obaji, 2011).
Hilfiger uses online channels and retail outlets to sell its new products in Dubai.
2.2 & 2.3 Describe reliable export channels. Include an evaluation of the export distribution channels for T-Shirt
Reliable export channel is the one which is best suitable for doing business overseas and does not possess loss of funds, time and other resources to the company like Hilfiger There are various methods of exporting which includes direct or indirect exports. The choice of type of export is based on the size of company, type of product or business conditions (Obadia & Stöttinger, 2015). The suitable and reliable export types in Dubai market are:
Indirect exporting: In this type, the company’s takes help of commission agents and the export management companies to penetrate into a new market so that the risks can be minimised. This is suitable for smaller firms. The companies pay a commission decided to the commission agents and they provide the products to the foreign firm to sell. In the case of export agents, the company gives control to them to sell their products (Obadia & Stöttinger, 2015).
Direct exporting: In the case of direct exporting, the organisation itself has to understand the changes in the process and they select the market they want to serve and sell by having control of their own. This is suitable for big business firms like Hilfiger and the methods can be the sales representatives, direct sales and online sales. It eliminates middlemen, thus, increasing the revenues of the business. It connects the brand directly with the customer and to launch a new product Hilfiger choses to adopt direct export methods so that it can develop a good place in the market and have more control over its competitors Hilfiger has to make its new product export to Dubai for which it can adopt various methods like online selling channels and retail outlets which includes exclusive stress or big fashion multiband chains. Hilfiger can also establish its manufacturing factories in Dubai to reduce costing and to produce demand specific clothes for the consumers of Dubai (Obadia & Stöttinger, 2015).
2.4 Analyse how foreign manufacturing and investment decisions are made; in your analysis make specific reference to Hilfiger manufacturing and investing in Dubai.
Dubai has earlier experienced in other markets of the world that the self-ownership is profitable in running business in the international markets as they can make the benefits of the advantages of the particular place and it also decreases the cost of transportation of other distribution channels. Ultimately, it decreases costs of the company (Svedin & Stage, 2016).The foreign manufacturing and investment decisions are made after going through the following factors like:
- Customer’s demands andrequirements
- Market information
- Cost effectiveness
- Availability of resources
- Company’s competitive strategy (Svedin & Stage, 2016).
Foreign Direct investment is made by Hilfiger when there are trade barriers or high costs for transportation. It is adopted when the company needs to retain the control over the operations and want immediate responses. It is when Hilfiger will invest directly into the other country than the home country i.e. set up the production units in Dubai. By engaging in FDI, Hilfiger will have ownership on Production, marketing, R&D and on the either resources needed for production.Hilfiger would like to make advantages of location and it would like to invest in foreign manufacturing and investments only if it will lower down the travel and tourism or transportation costs, increase the knowledge about the host country I.e. Dubai, availability of cheap resources, etc. Hilfiger will probably get successful in setting up manufacturing units in Dubai because it is a market full with potential (Svedin & Stage, 2016).
Task Three – Marketing Plan for the Dubai Market
LO3: Be able to present a marketing plan for a foreign market.
LO4: Understand control methods for international marketing.
3.1 Produce a set of international marketing objectives for the T-Shirt
International marketing objectives:
- To integrate different economies
- To take part in the social and cultural exchange
- To create the demand for Hilfiger T-shirts in the international markets and improve welfare of people (Fletcher & Crawford, 2014).
3.2 Create and outline how you plan to enter into the Dubai market.
Hilfiger could adopt various methods to enter into the Dubai markets. This decision has to be taken after considering various criteria’s like resources, competition in the international market, public policies and government regulations, pricing and internal capabilities of the brand/ company (Fletcher & Crawford, 2014).
Entry Modes adopted by Hilfiger:
Direct Exporting- Hilfiger can produce goods in the home country and sell directly to the consumers in Dubai. It provides currency benefits to the company and extends the markets for the brand. The prices remain in control which helps the company to fight completion in the Dubai market with the brands like D&G.
Licensing: Licensing can be referred to an agreement where Hilfiger will get the right of intangible property for a particular period and it has to pay a royalty fee in return. It helps Hilfiger to explore markets of Dubai and the development costs are also low. Hilfiger can fully utilise its well-known name in this case. The products can be sold in the malls of Dubai (Fletcher & Crawford, 2014).
3.3 Identify and include the international marketing mix in planning for the Dubai market.
Marketing mix is the description of 4 P’s which includes Price, Product, promotion and Place. Here, the international marketing mix will be planned for Hilfiger in Dubai.
- Product- The products of Hilfiger should be designed to cater the needs of the target market. The company will have to consider cultural factors, religion, buying habits, lifestyle, etc. for this. The garments or accessories produced should be tailored to the demands and requirements of the people of Dubai and it should take care of the middle east culture (Yeu, et. al., 2012).
- Price-Prices of the products should be decided after considering the economic status of people and their purchasing power. It is a complex task and includes factors like cost of production, transport, fluctuations in exchange rate, etc. But Hilfiger has to keep competitive prices as there is high competition from other global brands.
- Promotion- It shows that what channels the company should use to promote its products in Dubai. The advertisements can be produced showcasing the culture of Middle east and Arabic language can be used to attract more people. It can also make the celebrities of Dubai as the brand ambassadors to attract more customers (Yeu, et. al., 2012).
- Place: It shows that the products are distributes at the right place and at the right time. Hilfiger uses direct channels like licensing or online channels to sell their products. They can also open exclusive retail stores.
3.4 Review relevant ethical and environmental issues ininternational marketing within Dubai
Ethics shows what is right and what is wrong. It is the set of principles which helps in taking rightful decision making. It means that Hilfiger has to take care of morals, ethics and fairness in promotional activities, products and also in pricing decisions.In case of products, the company has to take care of the environmental standards during the manufacturing of products. They also have to adopt waste management approaches and have to deliver fair and quality products as promised to people (McKinley, 2012).
- Price fixing should be according to the standards. The company should not charge prices above the standards.
- The company should not mislead people through promotions. They have to take care of the culture and social environment of Dubai.
- The company have to consider human rights and should not harm labour or workers in Dubai(McKinley, 2012).
- The processes should be corruption free and employmentpractices should be followed. The company should consider the development of Dubai in mind.
4.1 Explain why international marketing planning should be monitored.
It is very important to monitor the international marketing planning so that the activities which are carried on in the other country, the launch of new T-shirt, should match the aims and objectives of the business. It helps in gaining the information about the benefits which are received by public and by the company by the launch of new t-shirt. It is also important so that any change in the internal or external environment of the business ORGANISATIONof Hilfiger can be considered for making changes in the strategy business strategy for launching the new product (UAEMinistryofEconomy, 2016).It is very important to maintain communication so that the competition could be met among the different international brands and strategies can be modified according to the needs and requirements.
4.2 Analyse ways of controlling export channels
Export channels are the ways through which the goods can be sold from one country to other country i.e. from the producer to ultimate consumers. Exports can be controlled with Dubai through Export credit Insurance in Dubai. This helps the company in controlling the risks of defaults in the payments. So, the exporters can follow the terms of purchase orders and can receive the payments on time. The claims can be made through this credit insurance of exports when Hilfiger suspect a loss or the delays are made in payments for over 30 days. It benefits the company and if can be explained with and example, if suppose the profit margin of the company is 5% and a customer defaults on a debt of $50000 then the company will have to create more sales i.e. around $1000000 to recover the lost profits but an export credit insurance manages the sales ledger and provides compensation in the case of non-payment(UAEMinistryofEconomy, 2016). Export credit Insurance can help Hilfiger to focus on its business rather than on defaulters. It helps the company in managing risks effectively and their balance sheets are also safeguarded. On the basis of Export credit Insurance the companies can obtain funds from banks and can target new markets knowing that their payments are secured because of Export credit Insurance(UAEMinistryofEconomy, 2016).
4.3 Describe barriers to international marketing
Global competition has become strong and the businesses are pursuing their activities in international markets to grab opportunities in the overseas markets.
- Cultural issues: the cultural issues can be the barrier to the business if it does not fulfil the cultural backgrounds and needs of the people. The companies need to adopt the culture in its products and processes. Language can also be the barrierin promotions and in business.
- Foreign governments: The rules and regulations by the government are to be followed. The legal system is to be followed by Hilfiger while doing business in Dubai. All the laws like labour laws, commercial transactions law, commercial company’s law, etc. are to be followed so that business can run smoothly.
- Market entry methods: Some entry methods can create a barrier for the company which has to dealt carefully (Lehmann & Winer, 2008).
- Ideology: the basic ideology of people in Dubai will affect the business of Hilfiger. For e.g. where in one country laying off extra workers is taken as ideal, the other country is totally against it. This is the difference between different ideologies of nation.
- Currency: the currency of Dubai is different and the company has to deal in that currency for smooth international business.
Structure of the market: the structures of the markets are different in different countries and it can pose a problem to Hilfiger to carry out activities in international business in Dubai (Lehmann & Winer, 2008).
4.4 Evaluate methods of communication with key international marketing personnel.
Various methods of communication with important international management personnel are:
- Email: communication can also be done through emails. This is a quick method and cost effective but it lacks the real sense and reactions.
- Meetings: The communication can take place through meetings where the key personnel are present and discuss every aspects of the business to take a mutual decision for the business. It can be done face to face by sitting around the table or through online medium. The benefit is that it considers the views of all the members and improves the decision of the business but the disadvantage is that it involves much time and costs (Kotabe, et. al., 2014).
- Video: The communication can be done between the business professionals of two countries through videos. It can also be used for promoting the brand and for the purposes of training and orientation. The advantage is that visual displays are more understandable than the audio ones. The disadvantage is that there is a difference of time zone between two countries and extra training and facilities are needed for smooth running of video (Kotabe, et. al., 2014).
Hilfiger is interested in doing business in Dubai for which effective communication can be done through emails and online meetings. Both are the most used methods whichhelp in taking correct decisions for the business at the right time.
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