Professional Documents
Culture Documents
Individual Assignment
MARKETING PLAN
Module Code & Title: BSB10186-3
Prepared By: Reshan Jayawardane [CB005529]
Date of Submission: 30/05/2016
Instructor: Dr. Bandara Wanninayake
Submitted in partial fulfillment for the
Degree of Bachelor of Arts (Hons) in International Business Management
Word Count:
Assessment Criteria
Allotted
Marks %
C1
Q1
30
C2
Q2
30
C3
Q3
40
C4
10
Total Marks
Penalty for exceeding the word limit
Final Marks
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100
Earned
Marks %
Acknowledgment
First I would like to thank my lecturer Dr. Bandara for giving me the support and the courage to
do this assignment and to complete this assignment successfully without any doubts.
On behalf of that I would like to take this opportunity to thank my friends for giving me
maximum support and for encouraging me to work on this assignment when I faced many
difficulties.
Finally, I would like to thank my parents for guiding me and for giving their encouragement to
fulfil my dreams and their support for this report to do my best in this.
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Table of Contents
1
Introduction..............................................................................................................................4
1.1
1.2
Company Background.......................................................................................................4
1.3
Market Drivers................................................................................................................12
2.1.1
Cost drivers..............................................................................................................13
2.1.2
Competitive Drivers.................................................................................................13
2.1.3
Government drivers.................................................................................................13
2.1.4
2.2
PESTEL Analysis............................................................................................................14
2.3
Cage framework..............................................................................................................16
2.4
3.1.1
Market segmentation...............................................................................................20
Segmentation Base.........................................................................................................................21
3.1.2
Market Targeting......................................................................................................22
3.1.3
Market Positioning...................................................................................................24
3.2
Marketing Mix................................................................................................................24
3.2.1
Product.....................................................................................................................25
3.2.2
Price.........................................................................................................................28
3.2.3
Place.........................................................................................................................32
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3.2.4
3.3
Promotion................................................................................................................33
Conclusion......................................................................................................................34
Advertisement........................................................................................................................35
Reference...............................................................................................................................35
Tables
Table 1: 12Cs frame work for China and Australia..................................................................9
Table 2: Country attractiveness of china and Australia...........................................................14
Table 3: Country compatibility for China and Australia.........................................................14
Table 4: PESTLE analysis for China.........................................................................................19
Table 5: Cage Framework for China.........................................................................................21
Table 6: Market Entry Strategies...............................................................................................24
Table 7: Maket Segmentation for China....................................................................................26
Table 8: Marketing Target..........................................................................................................27
Table 9: Product for China.........................................................................................................30
Table 10: product levels...............................................................................................................32
Table 11: Output of extra production........................................................................................34
Table 12: Extra Fixed Costs........................................................................................................34
Table 13: Extra variable cost per unit........................................................................................34
Table 14:Place Strategies.............................................................................................................37
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Figures
Figure 1:Harrel & Kiefer (1993) model.....................................................................................14
Figure 2: Internationalization drivers.......................................................................................15
Figure 3: Configuration & Coordination..................................................................................17
Figure 4: Cage Framework.........................................................................................................19
Figure 5: Market Entry...............................................................................................................21
Figure 6: Market Segmentation..................................................................................................24
Figure 7: Market Targeting........................................................................................................25
Figure 8: positioning map...........................................................................................................27
Figure 9:Marketing mix..............................................................................................................28
Figure 10:Product levels..............................................................................................................30
Figure 11:Channel of distribution..............................................................................................35
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1 Introduction
1.1 What is International Marketing?
International
marketing
consists
of
across
the
globe
manufacturing
and
facilities
The company focus on two countries which will be introduced in an overseas market by
following Market development Strategy (a firm is expanding into new markets using its
existing products) using the Ansoffs Matrix model. Ansoffs Matrix is a marketing planning tool
which use to determine its products and market growth (quickmba, 2016).
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Source: edrawsoft
Using Market development strategy, new markets for the product will be a good strategy for
firms if their core competencies are related more to the specific product than to its experience
with a specific market segment (quickmba, 2016).
The two countries were evaluated using 12Cs in terms of market size, growth, level of
consumption, GDP, etc.
China
Australia
Factors
Country
2015
Long term orientation with a
score of 87
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2015
Long term orientation with a
score of 21
Culture
Concentration
80
The total population of 1374.6
million in 2015
56.6% of the population is urban
in 2016
The median age is 37.3 years
Altogether there are 3,000
television stations across the
Communication
36
The total population of 23.8
million in 2015
89.3% of the population is urban
in 2016
The median age is 37.6 years
There are 104 television stations
In 2000, 48 daily newspapers
were published.
world
In 2005, more than 1000 kind of
daily newspapers were
published.
Currency
Stability
Capacity
Channels of
Contractual
28844 in 2014.
There are 507 airports in total
2013
There are 2,030 merchant
2013.
There are 41 merchant marines
distribution
world (2010)
12 major seaports are available
Legal obligations
2015 is 7.2%
According to Ministry of
2015 is 2.8%
There are 4 types of
obligation
Caveats
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Consumption
substances
Due to consumer concern about
2000.
strength
Competition for cane furniture
Choice
in China.
Competition for cane furniture
Commitment
Access to market
After considering all the factors discussed under the 12Cs framework, country wise China is in
the top level compared with Australia due to high purchasing power parity and imports and low
inflation. According to culture, Chinas long term orientation is higher than Australia as they
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encourage thrift and efforts in modern education as a way to prepare for the future. In Australia
individualism is higher than China where all the Australian people does their work individually
whereas Chinese people does their work together as a group. When considering the factor of
concentration, China ranked as number one for total population in the world (geohive, 2015)
however urban population in Australia is higher than china, where Australia ranked as 2 nd
developed country in the world (Kanapi, 2015). With regarding to communication factor, number
of television stations and publishing daily newspapers in China is higher than Australia which
shows Chinese people use media than Australian people. Capacity wise Chinas disposable
personal income is higher than Australia which shows that Chinese people have more money to
purchase goods than Australian people. According to channels of distribution, total number of
airports and from ranking china is leading compared to Australia. Also china ranked 3 rd in the
world having a massive total number of merchant marines compared to Australia. However,
number of seaports in Australia is higher than China. This shows china can import and export
their products in massive quantities. When it comes to caveats, import tariff rate in china is
higher than Australia.
After considering these factors, the author has used Harrell and Kiefer model to differentiate the
two countries and select the suitable country to enter to the market.
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The above rating scare is given from 1 5, This tool is useful to determine the suitable country
for the market expansion based on country attractiveness and country compatibility.
Country Attractiveness
China
Australia
Factor
Rank
Weightage Weighted
Market Growth
0.5
Value
1.3
0.4
Value
1.5
Commercial
0.3
1.2
0.3
0.3
Infrastructure
Economic
0.4
1.2
0.2
0.5
Freedom
Country Risk
0.1
0.6
0.1
0.2
Total
Rank
Weightage Weighted
4.3
2.5
Country Compatibility
Factor
Rank
China
Weightage
Weighted
Value
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Rank
Australia
Weightage
Weighted
Value
Market Share
Marketing
5
5
0.5
0.6
1.9
1.7
4
3
0.6
0.5
1.1
0.8
Ability
Product &
0.4
0.6
0.1
0.5
Positioning Fit
Quality of
0.2
1.2
0.3
0.5
Distribution and
Service
Total
5.4
Table 3: Country compatibility for China and Australia
2.9
After considering the two countries based on the factors, it shows that the Chinese market has a
potential with regard to Australia. However, cane furniture is already there in the Chinese market
which leads to high competition and it will be an opportunity and challenging for Lanka Cane
Furniture to expand their business in the Chinese market.
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Market Drivers
International Strategies
Cost Drivers
Government Drivers
Competitive Drivers
developing. Considering all those facts there is a huge demand for Cane based furniture products
from households and hotel industry.
2.1.1
Cost drivers
When it comes to deciding to expand business into another country the most common
Cost driver is based on economies of scale. When furniture is produced to export to
China the total production will increase, then the production cost will decrease because
when purchasing raw materials in bulk suppliers will give discounts. This will lead to
decrease the production cost. Furthermore, the cost of surviving in the industry will
increase in the short run when entering the Chinese market due to advertising and to
promote into the market.
2.1.2
Competitive Drivers
This is important to identify infant companies involved in production of cane furniture
when expanding it to the Chinese market. It will be helpful if the company invest and
focus in infant companies to cut extra cost of transport and can be act as an independent
company in China without depend on Sri Lanka production.
2.1.3
Government drivers
These are mostly set of regulations and rules which is set by the government of a country.
As a result, this will affect the country to do business successfully specially when
expanding and conducting business activities into the country. There are few tariffs,
barriers and bans are taken by the Chinese government for their own safety and to
improve their country. permitted, restricted and prohibited goods are examples taken by
the Chinese government.
2.1.4
The drivers which were mentioned above gives a clear idea whether the company should
internationalize or not in order to choose an entry mode.
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Description
Impact
Economical
high
Political stability index (-2.5 weak; 2.5
strong) for 2014 was -0.46 which was
Positive
stable.
GDP growth in 2014 was 7.3%
GDP in china was worth 10.35 billion US
Positive
dollars in 2014.
Current interest rate PBC (peoples bank of
China) is 4.34%
Unemployment was 4.7% in 2014
8% of the population currently shops
Social
Negative
Positive
Positive
Positive
Positive
Positive
Environmental
Positive
Positive
Positive
Negative
Negative
Negative
The CAGE framework identifies the cultural, economic, geographic and administrative
differences of China when compared to Sri Lanka. This framework provides a broader sight on
distance and offers a different perspective on the geographic location with the risks and
opportunities which are associated with the global arbitrage.
Factors
Cultural Distance
China
Languages: Mandarin
Religions: Buddhism, Taoism, Confucianism, Islam and Christianity.
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Economic Distance
Geographic Distance
Administrative Distance
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entry strategy and different firms adopt different market entry methods to enter the same market
or by the same firm in different markets (Doole & Lowe, 1999).
The following diagram shows the market entry strategies available to enter the market in China.
Market Entry
Strategies
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Explanation
Franchising
investment (+)
Opportunity to build greater
benefits. (+)
Difficult to manage the local
resources (-)
Less investment required (+)
Combines resources of two
companies (+)
Overcomes ownership
cultural distance and
restrictions (+)
Difficult to manage (-)
Maximizes scale; uses
existing facilities (+)
Speed of entry (+)
Trade barriers and tariffs add
to costs (-)
of a second manufacturer.
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3.1.1
Market segmentation
Market segmentation is the key of robust marketing strategy development ... it involves more
than simply grouping customers into segments ... identifying segments, targeting, positioning and
developing a differential advantage over rivals is the foundation of marketing strategy (Dibb,
2000). The segmentation process is as follows,
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Figure
6:
Market Segmentation
Source: segmentationstudyguide
Households
Base
Geographic
Demographics
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Hotels
Office Premises
Country: China
Country: China
Country: China
Regions: Urban/
Regions: Urban/
Rural
Suburban
Suburban
Age: 23 - 65
Age: 30 65
Age: 25 - 65
Income: Average
Income: Medium
Behavioral
purpose
Departmental stores
Departmental stores
Departmental stores
Frequency of use:
Psychographic /
infrequent
Lifestyle: Businessmans
Lifestyle: Businessmans
individuals
and Entrepreneurs
and Entrepreneurs
personal
Characteristics
Table 7: Maket Segmentation for China
Source: Authors work based on Clarke & Wilson, 2009
After evaluating the segments based on the characteristics, the target market will be chosen.
3.1.2
Market Targeting
Target market is the process of evaluating, deciding and selecting which segments to follow
(Cant, Strydom and Jooste, 2009). Lanka Cane Furniture has to decide which segment they are
going to provide to. The following strategies could be used to select the target market.
Market
Weightage
Customer Profile
Households
Hotels
Office Premises
Market
Size
Growth Rate
Expected
7.6
7.6
8
8
7
8
8
7
Profitability
Competitors
New entrants
7.3
8
8
8
7
8
7
8
to market
Substitutes
7.3
products
Power of
buyers
Power of
6.6
suppliers
Company goals
Competitive
7.6
8
8
8
8
8
7
8
74
71
Attractivenes
s
Competition
Company
Objectives
advantage
Total
81
Table 8: Marketing Target
Based on the results of the above table, Households has the highest score and therefore, Lanka
Cane Furniture will be focused on this segment.
3.1.3
Market Positioning
After the segmentation and targeting is complete, the product needs to be positioned. According
to Pride & Ferrell (2008), Product positioning is maintaining and creating a certain concept of a
product in customers minds. According to Lanka Can Furniture, their positioning statement is
We want to be the best furniture dealers. Therefore, LCF would be positioning its cane
furniture based on the price and quality, where high prices would be set for the high quality
furniture. The following figure shows the market positioning of LCFs furniture.
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3.2.1
Product
Kotler (2011) defines product as,
anything that can be offered to a
market for acquisition, attention,
use or consumption that might
fulfill
expectations
requirements.
Furniture
is
Lanka
recognized
and
cane
as
Marketing Consideration
Customer buying behaviour
Price distribution
Promotion
27 | P a g e
Product levels
Core product
Description
This is used to fulfill customer requirements
E.g: for sitting purpose, to fill the empty
Basic product
space
The basic product given by LCF to their
Expected product
Augmented product
affordability
Additional features, attributes and benefits
that serve to differentiate the product from it
competitors
E.g: Customer service, money back gurantee,
discounts, free home delivery within the
department location
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Potential product
3.2.2
Price
Price is one of the vital elements of the marketing mix as decisions are made regarding the
revenue which will received from the customers for their products. According to Kotler (2011),
price is the amount for a product and service and also the sum of values that customers using or
exchange for the benefits of having the product or service. There are several factors affecting the
pricing when setting up a price in an international market such as company level, country
environment and market related factors. Lanka Cane Furniture should focus on these factors
when setting up their prices for the cane furniture that theyre going to launch.
Factors
Company level factors Marketing objectives
Description
To improve the awareness of
the product through different
channels of media by 2016.
Introduce special offers and
discounts for the consumers
who are buying furniture in
Business objectives
bulk by 2016.
To increase sales and profits 20%
by 2019.
To capture a market share of 15%
by 2020.
Product positioning - Making Chinese people aware of
Brand
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Country environment
Exchange rate
Inflation
Government
regulations
Market
factors
Customer
expectations
China as well.
Customers seek for popularity of
the product. Therefore, when
demand of their product increase
the motivation level of the
customer will also increase.
3.2.2.1 Actual Price calculations for Lanka Cane Furniture overseas expansion project
Items
Wicker double beds (Black)
Wicker double beds (Red)
Wicker single beds (Brown)
Wicker king size beds (Green)
Fixed cost
Depreciation
Salaries for labors
Rent on additional plant
Purchase machinery
Delivery and warehouse cost
Technical service staff
Bank charges
Total Fixed cost
Amount (USD)
15,000
25,000
40,000
50,000
3,000
20,000
7,000
160,000
160,000
= 106.666
1500
Total costs per unit = Fixed cost per unit + Variable cost per unit = 106.6666 + 65 =
171.666666.
Lanka Cane Furniture expects to adapt a full cost pricing method, with 20% of profit mark-up
Therefore,
Selling price per unit = Total cost per unit + (Total cost per unit x 20%)
= 171.66666 + (171.66666 x 20%) = 205.9
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= $ 206
3.2.3
= $306
Place
The main objective of choosing the right place is to reach the target market. Since the product is
new to the Chinese market, Lanka Cane furniture wouldnt know how the consumers will react
when they launch their product to the market. When it comes to making decisions about
marketing mix it arrives how the product will be distributed to customers. Place/Location is
essential for Lanka Cane furniture for them to deliver their products to their customers on time.
By having an agent in China will be an advantage for Lanka Cane furniture to decide where to
locate the business in china. For Lanka Cane Furniture the selective distribution would be
initially used for the distribution of cane furniture.
Figure 11:Channel of
distribution
Source: Authors work
Distribution Channel
Value Creation Chain
Home country
Factories to manufacture the
Host country
Centralize locations
product (Stores)
(Shopping malls,
Departments )
Agents
Directly
Having a quality management Employee training
Table 14:Place Strategies
Source: Authors work
3.2.4
Promotion
This is an important element for the companies to reach their target audience to make them
aware the value of the product introduced in the market. The following shows how Lanka Cane
Furniture can use promotional tool to promote their cane furnitures and to make the customers
aware of their new product in china.
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3.2.4.1 Advertisement
Newspaper advertisements
Lanka Cane can sell their furniture at a reasonable price and during seasonal days Lanka
Cane can give offers, discounts for their furniture. (such as buy one and get one free)
With every dinning set get a free small Cane table for free.
Currently it has been a hit in Sri Lanka for getting Angelo Mathews for many products
available in Sri Lanka, likewise china can come up with their own celebrities to promote
Lanka Cane furniture.
Lanka Cane Furniture uses mobile marketing to encourage their customers to visit their
products in Sri Lanka (to know information about the product, to know where they can
purchase the product, to know any offers are there for the given products, to get the
location for the nearest shop to buy the product.... etc) by an application.
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4 Conclusion
A business can open up new paths to grow in term of increased profitability and sales through
internationalization. Therefore, this report has focused on the key areas where a business has to
take, how to overcome risks and challenges when it possibly arises during the expansion.
Therefore, as per the conclusion if a business analyses its external environment and identifies the
risk factors then it will be prepared with most appropriate strategies in order to make that
business successful.
5 Advertisement
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