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MODULE TITLE: GLOBAL ECONOMIC ENVIORNMENT AND MARKETING ___

MODULE NUMBER: SOE11729 2014-5 TR3 002 __________________________

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Coursework 2

GLOBAL ECONOMIC ENVIRONMENT AND MARKETING (40190077)

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Executive Summary

Pte Ltd is a company specialising on smartphone originated from China, its main

product is RAISER, a sophisticated smartphone, developed from user feedbacks.

Currently EXIA is trying to expand its market to Singapore, this report is the company

marketing plan in order to successfully sell its product in Singapore. In regards EXIA

to external analysis, Porter 5 forces, PESTL and customer analysis will be introduced,

this is to examine company capability in facing international market environment and

all its actor. The customer analysis will be done by using the Geert-Hofstede cultural

dimension to define Singapore culture and ultimately understanding Singaporean

consumer behaviour. While core competences is used in internal analysis, related to

product and company proficiencies in market, additionally S.W.O.T analysis is used

as well. Thus after determining company market objectives, the strategy is being

formulated for entering Singapore market. In strategy design, methods used are Ansoff

matrix in aiding company growth and Global Integration Responsiveness Framework

to determine how well strategy integration against local (Singapore) response and

marketing mix is decided. Finally the strategy implementation and control will

examined. All of these discussion will be correlated to the marketing theory to give

better understanding in marketing theory importance in deciding a marketing plan.

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Index

Page

1. Introduction 4

2. Corporate Mission, Objectives, an Strategy

2.1 Company Background 4

2.2 Company Vision and Mission 4

2.3 Business Objective 5

3. External Analysis

3.1 Macro Environment 5

3.2 Porter 5 Forces 7

3.3 Customer Analysis 10

3.4 Competitors 12

4. Internal Analysis (Core Competences) 13

5. S.W.O.T. Analysis 14

6. Marketing Objectives 14

7. Strategy Formulation

7.1 Proposed Strategy 16

7.2 Marketing Mix 18

8 Strategy Implementation

8.1 Strategy Implementation 19

8.2 Strategy Control 22

9. References 23

Appendix A 27

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1. Introduction

Singapore as one of multicultural country has attract many foreign and local

investor to develop business in Singapore. EXIA Pte Ltd as one of China existing

electronic devices manufacturing company, specifically in mobile phone products.

Founded in 2008 EXIA Pte Ltd has produce and sold over 1 million of its smartphone

unit called RAISER in China. As one of many credible company, EXIA is trying to

expand its business to Singapore mobile phone market, offering quality and affordable

product.

This report will discuss company background, objective, main analysis in

marketing strategy, market segmentation and product branding adaptation in entering

new market. In regards to those notion, cultural analysis and comparison will be

discussed as well, between Singapore and China, in order for effective Singapore

market establishment.

2. Corporate mission, objective, and Strategy.

2.1 Company Background

EXIA Pte Ltd was established 7 years ago in China, Headquartering at Beijing,

operating mainly on producing smartphone for China market. The owner passion of

technology improvement along with its hardworking partners and employees has been

poured into EXIA most outstanding product named RAISER. Throughout its

operations, EXIA has sold over 1 million units of RAISER since 2008.

2.2 Company Vision and Mission

This company aim to become leading mobile phone manufacturer and vendor

internationally, with aspiration of generating economical yet high-quality smartphone

for global consumer enjoyment. This can be achieved by constant development of

technology and effective as well as efficient manufacturing through hard-work and

dedication, with mind-set of serving for the betterment smartphone users.

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2.3 Business Objective

Company growth and profit increment

Offers consumer on reasonably priced good quality product

Expansion on market starting from Singapore

Market Strategy preparation for expansion

Brand awareness

3. External Analysis

3.1 Macro environment

In order for EXIA to enter Singapore market, there are some considered

aspect, international market environment is affected by Social/Cultural, Legal,

Economic, Political, and Technological factor (see figure 1), understanding these will

help in developing effective marketing strategies, determining successful company

operation at international scale (Doole and Lowe, 2008). Another model is PESTEL

which is similar to this model except, it includes Environmental factor (i.e.: Climate

change), since it is not great concern for current situation, thus its introduction is not

necessary.

Figure 1. International marketing environment influential factors (Doole and Lowe, 2008, figure 1.1 pp 7).

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The main concern for entering Singapore are Social/Cultural, Economic and

Technological. Cultural factors which affect consumer behaviour. Through recent

interest increment over smartphones in Singapore, Singaporean become gadget

obsessed, particularly youngster, willing to spend more on electronic gadgets,

because cars and properties are extremely expensive in Singapore therefore is

unattainable by youngster, resulting consumption on affordable items rise since

youngster shift the attention from cars and properties to smaller luxury items (Coclanis,

2009). This can be utilized by this company to increase brand recognition among

Singaporeans, by circulating and sell its smartphones in the market.

Economic wise, developed country like Singapore has strong welfare

standings, revealed below Singapore ranked 9 in GDP per capita, and with high GDP

per capita creates stronger economy thus pubic buying power, it relates to capability

of individual on making purchase on number of items in the market, associated greatly

on economy condition (Boundless, 2013). In accordance to Singapore, higher buying

capability could lead to higher consumption on electronic products which predictively

smartphones sales escalation and profit growth.

7

Table 1. GDP Capita Singapore World rank (Statistics Times, 2015)

In technology area, with cutting-edge internet connection and communication,

EXIA may use this for company advantage for e-advertising, e-customer service and

online shop for potential and existing client. However some existing concerns are

competitor progress on technology development, reflecting on rivalry pace in research

and development.

3.2 Porter 5 forces

In order to understand whether RAISER smartphone will be profitable Porter’s

5 forces analysis is presented, it is a competitive position model assessment for new

product, understanding further on where product business power and competitive

position lies (Porter, 2008). The 5 forces are shown in figure 2.

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Figure 2. Porter’s five forces (Comindwork Weekly, 2013)

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Figure 3. EXIA Pte Ltd 5 forces analysis

Two most alarming forces are Competitors and new entrants, first of all, new

entrant is considered at high level since Smartphones high variation in specification

(screen size, processor, OS, and so on), which provide niche market for new company

to participate in. Secondly, joining this market is not difficult as smartphone has

become common things than specialised product, therefore most electronic company

manages to fabricate such product, and the component for it can be supplied easily

because of convenient distribution network. Rivalry factors is a dangerous factor for

company entering new markets, as these brands has been recognised by public more

than EXIA.

Supplier and buyers are referred as middle level factors, for supplier case,

barraging level on materials such as frame, screens, and body is low since there are

many alternative and made according to industrial standards, leads to low swapping

cost. As for electrical parts such as processor units and RAM has higher bargaining

power, because there are less company manufacturing these components (NVDIA,

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Samsung, and Apple exclusively for IPhone). As for buyers is not a big threat, since

there are vast number of potential consumer. However, price is a main concerns, EXIA

will set price lower than competitors to create loyalty for new customer, and affecting

high cost of changing for the current customer.

The factor that least considered are substitution item, Tablet, despite similar

functionality, is more inconvenience in usage then smartphones due to its size,

accessories compatibility and accessibility from storage.

Overall this company competitive position is at medium level, after taking

account into swift emerging market and demands on new sophisticated phones, this

line of business may provide a considerable profit margin.

3.3 Customer analysis

Singapore culture is slightly different comparably to China, affecting buying

pattern, product responses and consumerism behaviour. Chinese culture comparison

and Singaporean is shown below in figure 3.

Chart 1. China and Singapore Hofstede cultural dimension comparison (The Hofstede Centre, 2012)

In interest of market segment identification and company targeting, analysing

these differences in culture is compulsory, shown below is comparison analysis on

Singapore and China Culture

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Table 2.1 Singapore and China Hofstede cultural dimension analysis (Jandt, 2007).

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Table 2.2. Culture and Consumer behaviour Correlation (Kau and Jung, 2004).

As for long term Singaporeans are less thrifty then Chinese however expecting

quicker results in purchasing behaviour.

3.4 Competitors

EXIA have many competitors in Singapore market, since currently many

smartphone product is circulating in Singapore such as OPPO, Huawei, and XiaoMi.

Their product is sold at cheaper price than others, have more brand recognition level

than RAISER and mostly manufactured in China, sharing similarity with RAISER. The

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Competitors is presently trying to increase product quality and developing new product

with better technology which give probable disadvantage to EXIA if newly released

phone sold at low price.

4. Internal Analysis (Core competences)

For competing against others in market, a firm must hold potential in

Sustainable Competitive Advantage, acquiring four attributes: value (ability to deliver

what customer values), rarity (exclusive, scarce in terms of its capability), inimitable

(hard to be copied) and non-substitutable (cannot be change to other items for its

function) is necessary to achieve SCA potential (Barney, 1991).

Table 3 V.R.I.N analysis on EXIA Pte Ltd.

EXIA company value is strong research and quick technology development

dedication which the public desires in quick-pace technology progress era.

Technology innovation capability and resources to produce this smartphone is

advanced thus creates rarity in the world, resulting a uniquely designed product. The

fast development of new product improvement is inimitable since it generates causal

ambiguity to competitors in terms of knowledge on achieving quick progress. The

proficiency in quick innovation and research become non-substitutable due to

competitors incompetency to counter this company advantage (due to the 3 previous

core competences) and driving the profit down.

The only considerable weakness is Brand name itself since it is not well-known

in Singapore market, hence it may lost to competitors in brand awareness. When

purchasing product consumer brand awareness will affect consideration on choosing

brand, and buying-decision, it is likely unknown brand are ignored, and judge to exhibit

low quality than famous one (Macdonald and Sharp, 2003). This firm advantage is the

sole product its offering, creating focus on customer service and product development,

moreover, the company purposes is serving magnificent technology to people within

reasonable pricing.

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5. S.W.O.T. Analysis

SWOT analysis is corporation internal strengths and weakness diagnosis, its

prospects for development and enhancement, as well as the external threats of its

survival (Harrison, 2010). Below is shown EXIA S.W.O.T. Analysis.

Table 4. S.W.O.T. analysis of EXIA Pte Ltd.

6. Marketing Objectives

Marketing objective is corporate goals accomplished from its marketing

actions (Riley, 2015), divided into two: short and long term. Long term objective is

strategic marketing with longer period in defining the firms marketing activities, while

short term objective is tactical marketing with concerns over day-to-day basis events,

shown below is the comparison (Drummond and Ensor, 2006).

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Table 5. Comparison on strategical and tactical marketing (Drummond and Ensor, 2006, Table 2.1 pp 23).

Table 6. EXIA Long-term objectives

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Whereas the short term objective are:

Table 7. EXIA short term objectives

7. Strategy Formulation (marketing Mix).

7.1 Proposed Strategies

One of the option for strategy are adopting Ansoff Matrix: a marketing

planning instrument used in deciding business product and market growth (Ansoff

Matrix, 2013), below is the example diagram:

Figure 4. Ansoff Matrix Diagram (Business Fundas, 2011).

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Since RAISER is an existing product entering new market hence the strategy

opted will be market development. The next step is to determine market development

method, using Integration Responsiveness Framework analysis. Pressure for global

integration relates to forces requiring global business strategic coordination in

international operations, using its resources to achieve unified system so that the

actions are incorporated across national boundaries, while Local Response pressure

refers industry forces demanding domestic (depending on circumstances) strategic

decision, obliging management response on local market and industry setting (Roth

and Morrison, 1990), the framework matrix is shown below.

Figure 5. Global Integration Responsiveness Framework (fInnovation, no date)

In order to reduce big cost on setting up factory/branch company in Singapore,

the product nature will not be changed (smartphones effortlessly accepted globally

without core product alteration) however to achieve better responsiveness, the market

development strategy implemented will be multi-domestic strategy, meaning EXIA will

export smartphones produced in China to Singapore without any core product

modification, but adapting the brand to local culture for consumer behaviour due to

differences between China and Singapore. Brand adaptation is adapting company

marketing strategy to local cultural and socio-economics situations (Ghantous and Aix-

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Marseille, 2008), mentioned previously that culture and socio-economics affects both

consumer behaviours and buying power, hence adapting the brand to Singaporean

will increase local responsiveness and effectiveness of marketing strategy. The

product name will be changed to HWATA (huat-ah) for Singapore Market, huat-ah

means wishing someone to be prosperous/to prosper in Hokkien (Aw, 2015). In year

2000 Singapore population consist of 77% Chinese and 40% consist of Hokkien

dialect group (Lee, 2001), it is also the fourth largest language spoken in Singapore

by 2014 (Index Mundi, 2015) hence using this dialect as a brand name will create

higher local response, especially the words means to prosper, wishing consumer to

be prosperous by using this smartphone.

7.2 Marketing Mix

EXIA is company operating on product base therefore the marketing mix will

be 4Ps: Product, Price, Place and Promotion. Product is marketing element that

provide connection between company and its client by satiating customer wants and

needs, in this case is smartphone. Next is price, situated when the product is believed

to be at proper value by consumer. It is the company image operations, product appeal

judgement scale for purchaser, and a competitive tool used as product comparison

and observed value across different firms. EXIA smartphone pricing is set to low-

medium, aiming at attracting client from all-level economic conditions and showing that

EXIA as an efficient company which demonstrate dedication in serving client instead

of gaining enormous profit. Third element is Place/Distribution, associated with system

of moving product to final customer. There are concerns in choosing distributors

namely: types, trends influence and image. In order for EXIA to gain Singaporean

attention of its smartphones, final element is applied, Promotion, product benefits and

excellence must be communicated to distributors and final buyers, it is vital to deliver

marketing information. The method includes but not limited to sales promotion,

salesperson, public relations, and packaging. (Burnett, 2008).

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Figure 7. EXIA product marketing mix.

8. Strategy Implementation and Control

8.1 Strategy Implementation

First Strategy application is Promotion Plan, the main purpose is notifying

potential customer of product existence by exploiting promotional tool such as:

Advertising through social media network (Instagram, Facebook, and

Twitter), Local media (TV, Newspaper, Magazine, Leaflets), public

spaces (MRT, Bus Stop, Billboard), Local Celebrity Blogs, Local public

figure endorsement.

Events such as Product launching, ITShow, COMEX, PCShow, SITEX,

Road show to shopping-mall in Singapore.

Advertising is crucial in brand-awareness, high level of advertising spending

shows how a company is investing in the brand, implying superior quality, while

repetitive advertising increases likelihood of brands being in consideration of

consumer choices and being selected (Yoo et al., 2000).

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Next is distribution strategy, the product is distributed with indirect channel

through the local retailer (Challenger, Newstead, Courts, and Harvey Norman) and

mobile phone network provider (SingTel, Starhub, and M1). Otherwise more direct

option where consumer is able to purchase through EXIA online store and the item will

be shipped to purchaser. Using indirect method, producer has more market

penetration chances, new market acquisition and distribution cost reduction, whereas

direct method offer quicker information flow between producer-consumer and

producer retain full control over the product disposal, prices level, and services (Szopa

and Pekala, 2012).

Third is Pricing Strategy, the strategy used is penetration pricing, method to

penetrate market quickly by setting lower price, enabling verbal communication

promotion to obtain early large sales and market penetration. This method is most

used for high-tech product where the life-cycles are short and new invention are

regularly introduced (Spann et al., 2014). Application can be done by setting cheaper

initial price released by 20% for 3 months from Singapore product release date or

giving extras: battery, power-bank, microSD and screen-protector. Otherwise

establishing contract with local mobile phone network, stating: for 24 month contract

with network provider handset priced will be reduced by 35%.

Finally the product strategy, the purpose is to display HWATA users friendly

Use-Interface, outstanding performance, durability and battery-life. Using the product

positioning: scheming act on company product and image to set a typical place in

consumer minds (Karadeniz and Cdr, 2009), it targets low-medium economics level

market segment and youth which prefer cheaper alternative smartphone. There are

two more considered strategy which is product-scope (number of product company

sold) and new-product for future, depending on how the product sales, EXIA will

determine whether to adopt with single product improvement over old one or multiple

product (new product innovation/differentiation) (Smith 1991). Another thing to note is

the product packaging (one of actual product), it is important since packaging is the

first thing consumer see before buying decision, packaging also hold, protect,

identifies product, as well as assisting handling and commercialisation (Ampuero and

Villa, 2006). HWATA packaging is shown below, the red colour showing appreciation

for both countries Chinese community, the colour is preferable in Chinese culture

which symbolise happiness and prosperity (Qiang, 2001). Additionally by providing

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great augmented product such as longer product warranties and superior customer

care compared to competitors HWATA can compete against the rivals despite being

a new entrants in Singapore.

Figure 8. Marketing Product level (Marketing Teacher, no date).

Figure 9. HWATA Smartphone Packaging

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Figure 10. HWATA Smartphone

8.2 Strategy control

Control is required to monitor and evaluate marketing strategies being

implemented to identify the needs for changes for successful business objectives.

Control Methods that could be used are (see Appendix A for details):

Market research : information gathering to evaluate and monitor

marketing performance as well as defining marketing opportunities and

problems (Proctor and Jamieson, 2012) for Product and Promotion

Control

Market share analysis: examination of shares percentage in market for

total product sales volume in a period of time in a country (Singapore)

(Cooper and Nakanishi, 1988) for Pricing

Binding contract for Distribution control

All of this method will help EXIA in determining product acceptance level in

Singapore, the effectiveness of marketing strategy executed, and Competitors

activities. These results will benefit EXIA not only in achieving objective that is brand

awareness but also future strategic planning, decisions in business survival as well as

expansion.

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APPENDIX A

Market research can help in various factor: competitor condition and market

standing against company product, reviewing how effective promotion is,

product future opportunities and threats, current product weakness and

strength, how product is accepted by public.

Market share shapes the evaluation of pricing in market. Similarly to sales

analysis, it can define the number of product being sold (i.e.: if sales is in small

amount meaning the pricing is too expensive, otherwise if Sales is enormous in

number, pricing is too cheap.) and circulating in market compared to other

brands, and

Distribution can be controlled by contract with retailer stating percentage the

profit that retailers gains, minimum requirement of display model in store, the

retailer to smaller shop sales channel, minimum stock availability, exclusive

package differentiating from one retailer to another, and so on.