International Expansion Is One of the Growth Essay

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  • Subject: Business
  • Type: Essay
  • Paper: #75935597

Excerpt from Essay :

International expansion is one of the growth strategies that are embraced by companies in order to improve their bottom-line/profitability. In this paper, we present an elaborate international marketing strategy for Red Bull energy drink. The marketing plan begins with an introduction into the concept of international expansion and marketing and a brief overview of the company. A review of the main conclusions and recommendations is then presented. This is then followed by a discussion of internalization strategy. In this section, the context as well as context and reasons for the firm's internationalization initiation or expansion decision, as well as a discussion of the stage of internationalization at which your chosen firm finds itself. The next section is a discussion of the foreign market segmentation and targeting strategies. Under this section, we justify our choice of a market concentration or diversification strategy, incremental vs. simultaneous entry, the number of countries you will be penetrating or expanding into, and the specific country (ies) we have chosen to focus upon. We also explain our international market screening process. An environmental analysis then follows. This is carried out using the SWOT and PESTEL tools. A description of the market and the company is also carried out.

This is then followed by an elaborate international marketing objectives presentation on the basis of the SWOT analysis. The foreign market entry strategy is also presented. The next is the product mix presentation section. This is then followed by a recommendation and conclusion section.

Introduction

In an elaborate effort aimed at maintaining a competitive edge and profitability amidst intense competition within the domestic markets posed by both local companies and international firms, several companies are forced to adopt an international expansion strategy in order to experience growth, corporate development as well as increased profitability. As consequence of such realities, the past few years have seen a rapid increase in the number of multinational companies seeking to set foot and market their products in emerging economies line Brazil, Russia, India as well as China (BRIC countries) as noted by Fan (2008). In this paper, we present an elaborate and detailed international marketing plan for Red Bull, the premiere energy drink.

Internationalization

Red Bull has for a long time been fascinated by the concept of internalization. At the moment, the company is dominant player within the American and Western European markets. The Asian markets like China and India presents a virgin ground for Red Bull products. The company should therefore launch its products in China due to its enormous potential in regard to population and their spending power.

Foreign Market Segmentation and Targeting

The selection process for the international market

Before Red Bull decides on the specific international market to launch its marketing campaign in, it must first of all involve itself in a rigorous selection process. This is important for the company to avoid making poor decisions that might make it to take very stupid approaches and hence negatively impact its performance. As Hollensen (2004) noted, there is a need for the company to evaluate its target country on the basis of general as well as specific criteria of the concept of international market segmentation.

The general criteria to be used in the evaluation of target country include a review of the product, market and marketing factors. For Red Bull, there is a need for the development of sub-segments in each of the countries that have been selected. The general and specific criteria are indicated below:

Geographic locations

The location of a given target country is important since it has a direct influence on the culture, nature and size of the target market. In our case our choice of China is based on the very fact that it is the 3rd largest country in the world with the largest population in the world also being found in the same country.

The most suitable location is the northern part of the country. This is because it forms the center of the Chinese civilization. The country also has several waterways that can help in supporting overseas shipping.

The northern part of China is the most appropriate site to establish the Red Bull. This is because its make the nerve of the Chinese and most of the dwellers are civilized compared to other parts of China. It also has a good number of water points which can be used in assisting the shipments of products to other countries around the globe. However, the Chinese's climate is extremely different with other climates in the region. For example, China usually experiences sudden natural disasters such as Monsoon across and Typhoon especially along the southern and eastern coasts.

Language

Most of the people in China speak Chinese, since it's their national language. But there are presence of other various groups of Chinese like Mandarin, Wu, Min and Cantonese since there are a number of groups in the region and cities. This factor can never be ignored since corporations need a very effective communication for the sake of negotiation, persuasion as well as dealing with various forms of written contracts. These must be done in the language of the host nation. Effective language is noted by Lee (2011) to be important since it helps in reducing the misunderstanding between the company and its stakeholders (clients etc.).

Political factors

Political factors must be considered since they directly impact the operations and profitability of corporations. China, being as communist state has very strict rules and corporate laws that have a very strong political backing. The laws, regulations and policies which the Chinese government enacts may directly influence the operations of Red Bull.

Demography

The population of China is noted by PRB (2012) to be 1,311 million citizens. A majority of this population (68%) is aged between 15-64. 20% of the population is under 14 years old while the rest of the population is aged 65 and over. This is of great benefit to the Red Bull company since its target market is the young individuals. The Chinese population is also noted to have upgraded its earning potential to that of upper class. This has resulted to a large number of newly rich. This is due to the rapid growth of the Chinese economy. The number of Chinese millionaires is expected to double in the coming years as compared to 2011 (Moore, 2011).

Economy

The last couple of years has seen China rise as a significant player in the global politics and economy. In 2010, it attained the fete of being the world's second largest economy. The nation is flouted by many to have overtaken the U.S.A. In regard to its GDP.

Lifestyle and trend the growth rate of consumer trend in China was dramatic raised for the past decade. The new generation's way of life differs a lot from traditional Chinese. They are more confident and tend to accept and adapt to new trends. Besides, their personality has shifted towards being became more adventurous (Project China, 2012).In addition, healthy eating trend are presently in vogue. . The living standard of Chinese people is also higher and better than before.

Technology

The invention of the internet has seen several people in China and globally adopts the use of internet and e-commerce in their daily lives. Millions of Chinese citizens spend hours on the internet. The youth are the largest majority. Technology has also influence commerce and advertisement/marketing. Online marketing is the in-thing.

Environmental Analysis

The need for screening of the target country

Additionally, comprehending the nature of the given market can be a major determinant of the product's success or failure. In light of this fact, the screening of the country should be carried as well before bringing in the product to the Chinese market.

Preliminary screening

Preliminary screening is the external screening base which is carried out on criterion like the nation's import policy, its gross national product index as well as economic trend. In regard to the opinions of Hollensen (2004), the screening of the target market or nation can reduce the 'risk of entering' the given preferred country. Additionally, there is another major indicator which can help marketers assess the nature market risk factors-Business Environment Risk Index (BERI). The BERI indicator is the index that is used in assessing the 'general quality of a nation's business climate' .This can then be used in the assessment of the country's risk.BERI is very important in the international market screening process.

There exist other criterions as well as indicators of the Chinese market. These indices can be effectively being employed in the making of decision in the international market selection process. The gathered information is important to marketers since it can help them in deciding whether or not to investment in the given country/market as well to come up with the appropriate strategies.

The very first one is China's import policy. Red Bull as a company must comprehend the Chinese import policy prior to launching its product and marketing campaign in the country. It is critical for the company…

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