A comprehensive market entry plan outlines a company’s proposed strategy to deliver goods into a new target market. The company may make choices regarding which methods to use based on which would be most beneficial to the business (Agriculture and Consumer Protection, 1997, n.p.). The market entry strategy for the Wheelman Gas Skateboard addresses the entry mode and initial location of entry into foreign market of Chile.
There are certain necessary considerations for businesses as they contemplate selling products to new customers in foreign markets. One significant consideration is the entry mode, which must take into consideration the new foreign customer base, the new regulatory environment of the foreign country, and the challenges faced by new international competitors (Arnold, 2003, n.p.) Because of the size and age of Wheelman, we have elected to use export/import and trading companies in order to enter the market in Chile.
The election of export/import and trading companies offers numerous benefits for Wheelman. First, this strategy affords Wheelman to “substantial local operating knowledge” while posing little financial risk for the company (Arnold, 2007, n.p.). This strategy is also attractive to companies with lacking international experience, as the responsibilities for international functions become the responsibility of the export/import or trading company (Arnold, 2007, n.p.). The noted drawbacks of this approach – reduced control over foreign operations, underserved representation from agents and challenges with commission structures ---- are not significant enough to rule out this arrangement (Arnold, 2007, n.p.). Wheelman will rely on the local agent to facilitate entry into Chile.
The Wheelman Gas Skateboard is a product that can easily be introduced into both the recreational entertainment market and the athletic market segments. It is an unconventional skateboard by design, and we anticipate that it will quickly attract visual attention from potential customers. Because of this, we believe that it will do well in a larger city with high concentration of people. We have identified Santiago, Chile as the primary location for market entry. Given the population of the area, this should help build a new, excited customer base in a new country.
However, before entering an international market, it is important that the company become familiar with the potential location to modify its market entry plan, as well as contemplate on-going business activities in the country. As YEC Women (2011) explains, it is important to understand the respective country’s “culture, customs, needs, and unspoken rules” (n.p.). As part of the Market Entry Plan, we have completed this exercise for Chile.
Chile is a traditional Spanish culture with established business etiquette. However, Chilean businesspeople employ a management style is generally similar to those of their North American counterparts, making the transition into Chile very easy (“Business Culture in Chile”, n.d., n.p.). However, it is important to remember that much like other traditional Spanish cultures, Chileans tend to be very formal during business activities, and their business relationships are largely influenced by personal relationships and family connections (“Business Culture in Chile”, n.d., n.p.). Properly establishing and maintaining these relationships is an important consideration into the Marketing Entry plan.
The Chilean economy and business climate also make it an attractive location for Wheelman operations. The country operates under a four percent average tariff rate, and foreign businesses are generally welcome in the country (“Chile”, 2014, n.p.). According to the 2014 Index of Economic Freedom (2014), although financial services for small companies is slightly more challenging, the “dynamic financial system facilitates high levels of bank usage and provides relatively efficient access to financing” (n.p.). Utilization of an export/import and trading company is also confirmed by the fact that, although it is relatively easy to form a company in Chile, business licensing requirements are both a costly and lengthy process (“Chile”, 2014, n.p.). While it may be desirable to ultimately incorporate in Chile, the proposed arrangement makes sense for the immediate future.
The culture in Santiago, Chile also appears to be receptive to the introduction of the product. There is one large established skate park in Santiago, and a large skateboarding population throughout the city (Centi, 2012, n.p.). The local police also do not discourage public skating throughout the streets and plazas, so street skating is very prevalent in Santiago (Centi, 2012, n.p.). However, there are a limited number of skateboard retailers in Chile, with two primary skateboard brands sold in the country. Upon evaluation of the market, it appears as though Santiago, Chile is a good place to launch the Wheelman Gas Skateboard.
Each of these elements compose a part of a three-stage process in marketing. First, companies should identify the segment through data collection (or which types of customers exist in the market) (Perner, 2010, n.p.). Next, the company should target the segment (select which customers in the market are important to the company) (Perner, 2010, n.p.). Lastly, the companies should appropriately position themselves within the market (implement product by customizing it for the segment and then communicating their plan) (Perner, 2010, n.p.). Each of these elements is imperative to a successful product launch.
Wheelman has to make the choice as to which marketing strategy to employ. In doing so, it may choose to focus on one or more segments of customers, while leaving other segments alone Perner, 2010, n.p.). In making decisions regarding segmentation, companies may rely on different variables, such as demographics, lifestyle and values, and behavior (Perner, 2010, n.p.). Because of the relatively high price point of the Wheelman, demographic variables need to be considered. Disposable income is absolutely a factor, and the Bushpig needs to be marketed to a group that can ultimately afford to purchase it.
The target audience for this product in Chile will be much the same as the target audience in the United States -- young, athletic people who enjoy skateboarding and outdoor activities. The sales potential is high in this demographic because the product connects directly with their own interests, and this group is expected to spend money doing things that they enjoy. While this segment is already relatively well-served in internationally, there still appears to be room to expand on the existing skateboard market in Santiago.
In reaching these target customers, we will approach the audience through the use of non-comparative advertising. As previously discussed, the Chilean culture is unique and there are certain cultural factors which may cause them to view comparative advertisements as aggressive and manipulative (as opposed to simply persuasive and informative) (“Business Culture in Chile”, n.d., n.p.). As reported by Manzur et al. (2012), comparative advertisements actually turn away Latin American consumers, and this decreases the effectiveness of the advertisement (Manzur et al., 2012, p. 278). This cultural constraint needs to be considered when appealing to the target audience.
In 2009, International Marketing described that “positioning process” creates a place for the product as that product is being compared by consumers to those of its competitors (n.p.). Wheelman will position itself as a “Customer Intimate Firm” in Santiago. Customer intimate firms are regarded as firms that work to meet the specific needs of an individual consumer (Perner, 2010, n.p.). Products from Customer Intimate Firms are regarded by consumers as reliable and exactly what the customer wants in a product (Perner, 2010, n.p.). This is the exactly the international reputation that Wheelman is seeking to develop with its customers in Chile. While Wheelman’s reputation regarding its operations and technologies are still important, they are not the primary focus of its international positioning in this new market.
A well-planned marketing mix should incorporate the concept of the 4 P’s. The 4 P’s of the Marketing Mix include product, price, place and distribution, and promotion (Sorger, 2013, p. 57). When used in combination, these components create a comprehensive and effective marketing plan.
The first “P” in the marketing mix is “product”. A product is something that is produced in respond to consumer demand (Sorger, 2013, p. 57). According to McCarthy’s theory, marketers work to position the product, and then exploit both the product and the brand (qtd. in Sorger, 2013, p. 57). Marketers need to keep in mind not only the product, but the life cycle of the product, and coordinate marketing activities accordingly (Sorger, 2013, p. 57). This is the primary objective of the marketing mix.
Our product is called the Wheelman Gas Skateboard, also called the Wheelman Bushpig. It is a unique gas-powered skateboard and can hold up to one quarter of a gallon of gas (travelling up to 30 miles before refill) (“Wheelman Gas Skateboard”, n.d., n.p.). The board is powered using a 50cc 2-Stroke engine with a 195lb max load (“Wheelman Gas Skateboard”, n.d., n.p.). The Wheelman is versatile, in that riders may ride “regular or goofy footed” (“Wheelman Gas Skateboard”, n.d., n.p.). The product is offered in a number of custom colors and designs (“Wheelman Gas Skateboard”, n.d., n.p.). Consumers may also upgrade the Wheelman installing high performance parts, such as an air filter or carburetor to provide more horsepower (“Wheelman Gas Skateboard”, n.d., n.p.). Given this information, marketers have extensive and appealing information with which to market the board.
Because the product is the primary focus of the company’s positioning in Santiago, the uniqueness of this product will also be key to marketing activities. There are no other products sold domestically like the Wheelman in Santiago, Chile. This alone should set the Wheelman apart from its competitors.
The second “P” in the marketing mix is “price”. The price is what the customer agrees to pay for the product, and generates revenue for the company (Sorger, 2013, p. 57). Pricing influences marketing strategy and should be considered in the marketing mix, especially as it relates to the perceived value of the product (Sorger, 2013, p. 57). This is an especially challenging area for companies, particularly for expansions into international markets.
In establishing the Wheelman in Chile, the company should explore various pricing strategies. According to Johansson et al. (2012), a company’s approach to pricing may be based on cost, competition or customer value (n.p.). Cost-based pricing focuses on the actual cost of the product, while competition-based pricing is focused on the prices of comparable products within the market segment, and value-based pricing fluctuates in response to consumer demand (Johansson et al., 2012, n.p.). Wheelman will be implementing value-based pricing in Chile, as it is noted as the best approach for implementing price in a business market (Johansson et al., 2012, n.p.). Value-based pricing allows for a certain degree of change, much like those which can be expected in the international roll out of this product.
The third “P” in the marketing mix is “place (and distribution). The place is where the product is offered, making it convenience for customers to purchase (Sorger, 2013, p. 58). When marketing a product, companies need to consider the distribution pattern and incorporate this into the marketing mix.
Wheelman has elected to use export/import and trading companies in order to enter the market in Chile. This arrangement lends itself to selective distribution, where only a few agents will work with Wheelman to distribute the Bushpig (Sorger, 2013, p. 79). As explained by McCarthy, this strategy is generally implemented in marketing plans for specialized or niche market goods, much like the gas-powered skateboard (qtd. in Sorger, 2013, p. 79). The selective distribution is expected to actually increase demand for the product in Chile.
The third “P” in the marketing mix is “promotion”. Promotion is the way that a market communicates information regarding a product to the consumers (Sorger, 2013, p. 57). These methods of communication include advertising, promotions, various public relations activities and even word-of-mouth (Sorger, 2013, p. 57). Wheelman will utilize a variety of these methods to communicate information regarding the product.
Social media will initially be the primary method of promotion in Chile, as the culture in the country is heavily driven by social connections (“Business Culture in Chile”, n.d., n.p.). This campaign will eventually be followed with television, radio and print advertisements. This includes advertising aimed at the target audience in a Chilean sports magazine called, HD Sports Magazine (found at www.hdsports.cl). However, because of the expense associated with these types of marketing campaigns, this campaign will be delayed into the second year of operations. Wheelman also expects significant promotion based on word-of-mouth, again relying on the social nature of the society. Given the demographics of Santiago and the popularity of skateboarding within the community, we anticipate that news of the new board will spread quickly through the close-knit community.
Lastly, the company expects to see significant results in Chile as a result of the marketing plan. The company anticipates substantial expenditures during the first year relating to expansion into the international market, product positioning and other promotional activities. These intensive marketing efforts are expected to adversely impact profit margins. However, by year two the company is expected to realize increased market share, resulting in increased sales, as a direct result of the company’s marketing activities in Chile.
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