Mkt550 Global Marketing For Entry Assessment Answers

Answer

Market Entry and STP Strategy

Introduction

In this particular study paper, the market entry strategy of Woolworths in the target market of Australia has been elaborated in a detailed way. The reported study identifies the three of the best market entry strategies to be considered in this case and provides a brief analysis of picking up the most convincing strategy. Evidently, the advantages and disadvantages of the realistic market entry strategies have been presented to formulate the most effective market entry strategy in the target Australian market (Lamont, 2012). After selecting the best realistic market entry strategy for the operation, the study identifies the potential target markets in the Australian retail industry.

In order to serve the target market segments, the best practices and marketing strategies have been discussed in the study as well to find out how Woolworths can penetrate the Australian market using the market entry strategy and STP strategy. The strategic approach towards each of the target market segment has been described in the study recommending the positioning strategies as well. In the meanwhile, the study paper reflects the stance of the management of Woolworths determining the market entry strategy and STP strategy suitable for the target market of Australia.

Part 1: Market Entry Strategy

In order to explore the Australian target market, three of the most reliable market entry strategies i.e. licensing, joint venture, and ownership has been described in this particular section. In the reported paper, each of the market entry strategies has been illustrated in a comprehensive way evaluating the most effective strategy suitable for the target market. 

Licensing Strategy

The concept of licensing is one of the most formidable market entry strategies to be considered in the study. In the meanwhile, by using the strategy, an organisation offers a firm the permit to use the trademark, manufacturing style, processing, and effective marketing facilities to make a market entry in a target market (Pehrsson, 2014). Licensing is moreover similar to franchise operation where licensors have to come to an agreement with small companies already operating in the target market in order to expand their business (Masiero, Ogasavara and Risso, 2017). For instance, Coca-Cola Corporation has utilised the strategy in Zimbabwe by offering manufacturing license to United Bottlers. In terms of advantages and disadvantages of the market entry strategy, the same has been illustrated as follows.

Advantages and Disadvantages

By adopting licensing strategy, low-risk manufacturing and business operations can be initiated in the foreign target market (de Bettignies and Gainullin, 2013). Another significant advantage of the strategy is effective marketing as both the parent company and receiving business partner have shown their interest in it. In terms of disadvantages, the participation of new firm can be limited depending on the length of the agreement (Raff, Ryan and Stähler, 2012). Furthermore, control of the business has to be shared. Therefore, returns from different segments can be limited.

Joint Venture Strategy

A joint venture (JV) can be identified as another considerable market entry strategy to explore a target market. In this particular market entry strategy, a new company has to be formed in which two or more investing companies have shared the control and ownership of the entire business rights and process (Mantecon, Song and Luo, 2015). Precisely, JV strategy is an extensive form of market entry strategy where participation of the companies is greater in compared to licensing (Avenel and Barlet, 2014). Effectively, using joint venture strategy, the risk factors of entering a new market has been limited to some extent.

Advantages and Disadvantages

In a joint venture strategy, the involved partners can use the risk sharing advantage associated with the method. Moreover, the JV strategy also offers to combine the local knowledge and the international marketing concepts to improve the business proceedings. In the meanwhile, one of the best advantages of using the market entry strategy is the joint financial strength due to the merge of the two partners (Raff, Ryan and Stähler, 2012). In terms of limitations of the entry strategy, the participating firms have to share the control of the management that can create issues at times. Also, the different views of the business partners can impact the expected benefits from the business.

Ownership Strategy

Most effectively, ownership is the most convincing market entry strategy if a business can offer substantial managerial efforts and capital. In ownership, the company has got cent percent of control of the business as participation is extended to the highest (Ferreira, Ornelas and Turner, 2015). By adopting the entry strategy, any business organisation can take control of the business without compromising other factors affecting the growth and sustainability (Masiero, Ogasavara and Risso, 2017). Evidently, in case of unstable market conditions, ownership strategy should be avoided as the firm has to deal with the risks alone. 

Advantages and Disadvantages

One of the most comprehensive advantages in ownership strategy is the full control of the management. Evidently, the 100 percent control over the management and communication channel can overweight the limitations that can be found in licensing and joint venture strategies. Moreover, in case of emergency, the firm can recover the invested capital from the business at will. As far as the limitations are concerned, the entry strategy demands massive capital and managerial commitment to operate the business in a new target market. Also, the entire risk has to be taken by the firm single headedly (Ferreira, Ornelas and Turner, 2015).

Based on the above discussion, Woolworths should consider ownership strategy as the most effective entry method in the Australian target market. By comparing the strategy with licensing and JV, it can be stated that both the other two strategies have not offered the entire control of the management to Woolworths. Also, by engaging in a JV, the organisation can open up the possibility of fresh competition in the near future. Therefore, on the basis of the argument, joint venture strategy should be avoided in this case. On the other hand, although licensing will cost low capital investment and low-risks, the control of the business and growth structure will be limited. Hence, to get the independent business channels and managerial control, Woolworths must adopt the ownership entry strategy in the Australian target market to get the fastest market penetration and business growth (Lamont, 2012). Effectively, the total control of the resources and managerial efforts can provide better coordination for Woolworths in the identified target market.

Part 2: STP Strategy

In order to start a business in a new market, the company need to develop an effective Segmentation, Targeting and Positioning (STP) strategy. The STP strategy helps the management of the firm to target a particular market segment in order to seek success in the new market (Greenstein and Mazzeo, 2013). The segmentation, targeting and positioning strategy for Woolworths Supermarket in Australia has been presented herein below:

Segmentation

Segmentation is the first step of the STP strategy that helps the company to categorise the market on the basis of four different factors such as demographic factors, geographic factors, psychological factors and behavioural factors (Greenstein and Mazzeo, 2013). The segmentation strategies of Woolworths have been discussed in details herein below:

• Demographic:On the basis of the demographic profile of the Australian market, the customers can be segmented on the basis of their age, gender and income. For instance, child care products must be offered by the company to serve kids below 5 years of age. Additionally, the customers with age between 21 and 50 will expect different sorts of products. Moreover, a separate segment must be maintained for both male and female consumers (Amuah, 2013). Finally, the market can be segmented on the basis of the income of the demographics such as high income people, middle income people and lower income people.
• Geographic:As per the geographic factors, the market can be segmented in two different ways such as consumers from urban region and consumers from rural region (Zia and Kumar, 2016). As Woolworths operates in the Supermarket industry, it is highly recommended to serve products for the urban region people by developing new supermarkets in the major city areas.
• Psychographic:Furthermore, the market can be segmented on the basis of the lifestyle of the consumers, the personality and values for the products. For instance, fashionable products must be offered for trendy people who love to change their style according to the market trend (Zia and Kumar, 2016). In the same manner, branded products must be offered to the consumers who like quality products.
• Behavioural:On the basis of behavioural factors, the market can be segmented according to the way people use the product (daily basis, weekly basis and monthly basis), how the consumers are loyal to the firm and benefits that the consumers are looking from the products (Amuah, 2013).

By considering the above discussion, the Australian market can be segmented by Woolworths on the basis of demographic factors (income of the people) and geographic factors (region that drives maximum demand) as it is a supermarket business that offered a large range of products for all types of consumers.

Targeting

The second step that comes under the STP strategy is to filter and choose the most appropriate target market from the market segments. The choice of target market depends on several factors such as size of the market, number of seller serving the market, the growth potential of the market and demand for the products served by the company in the chosen market (Zhou, 2008). On the basis of these factors, Woolworths should target high income level people as it serve branded products with high quality that will help the company to charge a higher price for its products. The living standard of the consumers with high income enables them to bear the high cost of the commodities that are served by the company. As Woolworths sells its products to a range of customers the high quality of the product will help the company to serve the high income level segment (Stewart and Myers, 2008). Additionally, there are few supermarkets that serve the customers with premium quality products for which the companies can charge a higher price. Furthermore, the organisation will target consumers from urban region who can afford high price products as compared to people in the rural region (Ellson, 2014). Hence, the primary target market for the Woolworths will be the higher income level people and the secondary target market will be the consumers living in the urban region such as major city areas.

Positioning

Woolworth’s primary strategy is to serve high quality branded products that differentiates it from other rivals in the Australian market. Furthermore, the primary target market for the organisation is the high income level people who can afford premium quality products at a higher price (Doyle and Saunders, 2015). Hence, the positioning statement for the company for the primary target market is as follows:

Woolworths is a supermarket that meets all requirements of the consumers for daily products such as foods, groceries, clothes and electronic items. The company will offer products for all range of people irrespective of their age and gender (Jaffe, Berger and Jamieson, 2012). The products of the company will be different on the basis of the market trend and changing demand of the consumers. Being a one stop solution for the premium range of people, the company can seek competitive advantage in the target market.

Conclusion

By considering the above analysis, it can be seen that Woolworths is a supermarket chain business and the ownership strategy is the most suitable market entry strategy for Woolworths in Australia due to its high control over the business and increment in the level of profitability. Moreover, the company can segment the consumers in the Australian market on the basis of their demographic profile, geographic features, psychological attitudes and behavioural factors. Furthermore, the primary target market for Woolworths is the high income level people due to the higher quality of brands and products offered by the company. Finally, Woolworths position itself as a high quality product offering supermarket that charges high price for its premium range of products.

References

Amuah, H. (2013). The Role of Creativity in the Market Segmentation Process and the Benefits of Strategic Global Positioning. SSRN Electronic Journal.

Avenel, E. and Barlet, C. (2014). Vertical Foreclosure, Technological Choice, and Entry on the Intermediate Market. Journal of Economics & Management Strategy, 9(3), pp.211-230.

de Bettignies, J. and Gainullin, B. (2013). Competition, Licensing, and Innovation Strategy. SSRN Electronic Journal.

Doyle, P. and Saunders, J. (2015). Market Segmentation and Positioning in Specialized Industrial Markets. Journal of Marketing, 49(2), p.24.

Ellson, T. (2014). Culture and positioning as determinants of strategy. 3rd ed. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.

Ferreira, D., Ornelas, E. and Turner, J. (2015). Unbundling Ownership and Control. Journal of Economics & Management Strategy, 24(1), pp.1-21.

Greenstein, S. and Mazzeo, M. (2013). Differentiation strategy and market deregulation. 4th ed. Cambridge, Mass.: National Bureau of Economic Research.

Jaffe, L., Berger, P. and Jamieson, L. (2012). Comprehension, positioning, segmentation and purchase probability. Omega, 20(1), pp.51-57.

Lamont, D. (2012). Global strategy. 5th ed. Oxford: Capstone.

Mantecon, T., Song, K. and Luo, H. (2015). The Control and Performance of Joint Ventures. Financial Management, 45(2), pp.431-465.

Masiero, G., Ogasavara, M. and Risso, M. (2017). Going global in groups: a relevant market entry strategy?. Review of International Business and Strategy, 27(1), pp.93-111.

Pehrsson, A. (2014). Strategy competence: a successful approach to international market entry. Management Decision, 42(6), pp.758-768.

Raff, H., Ryan, M. and Stähler, F. (2012). Firm Productivity and the Foreign-Market Entry Decision. Journal of Economics & Management Strategy, 21(3), pp.849-871.

Stewart, D. and Myers, J. (2008). Segmentation and Positioning for Strategic Marketing Decisions. Journal of Marketing Research, 35(1), p.128.

Zhou, Z. (2008). Destination Marketing. Journal of Segmentation in Marketing, 2(1), pp.131-141.

Zia, M. and Kumar, N. (2016). A Three Dimensional Vertical Differentiation Model: Implications for Segmentation, Targeting and Positioning. SSRN Electronic Journal.