Marketing strategy play a most vital part for each organisation in order to getting success in the market. Various types of marketing strategies are existing in the retail industry which can be utilised by retail companies in order to getting desired success. In the report the company has been chosen which is Morrisons organisation which is a British multinational organisation and want to enter into China's retail market. In this report, country's retail industry environment will be discussed by using PESTLE analysis. In addition to this, the study will be discussed about various market entry options and market segmentation approach to sustain in China's market. Beside from it, the report will also be discussed about porter's generic strategy to understand the market.
PESTLE Analysis China's Retail Industry:
In terms of China country, there are numbers of political factors existing in the nation which is making great impact upon its retail sector in the country (Cronin-Gilmore, 2012). Several types of legal trade rules and regulations are presented in china legislation provision which is furnishing effective guidelines to its retail sector to doing their business activities in respective manner.
The retail sector in china is not considered to be a prestigious industry by the Chinese government and is therefore not sanctioned like the heavy industry sector in the UK. China does not see a need to restrict the development of the industry. It can be said that, there are number of opportunities arisen towards retail sector growth in the nation. In addition to this, modernisation is also important factor for country's retail industry, the national government of the country is making changes in the share of its traditional street markets. The major reasons for doing so it to expand retail networks of chain supermarket into western province in China. Chain has open market system and its government allow several multinational brands in the Chinese retail market (White, 2010). It is increasing opportunities for several foreign brands in the sector to enter into nation.
Economic growth of the industry also play major role in for increasing growth of the country. In this regard, GDP growth of the country is frequently increasing in the nation because of several types of corporation making contribution in growing up the industry in Chinese retail market. However, domestic demand is to remain strong for future of the industry in country as well as, in case of high consumption of retail product and services in market, there are huge scope of various retail business to enter into country's retail sector. In addition to this, taxation policies and rate of the corporate income tax in China is 25%. Several domestic and foreign companies are working in retail sector and they are filling taxes as per government policies towards corporate field (Wensley, 2010). Apart from it, large number of fresh productions are being done in the nation and it is very essential for to find local suppliers capable of furnishing product and services as per international quality of standard in business. Thus, there are huge scope of entering into Chinese retail market and getting appropriate growth in firm. Economic growth of the nation attract several types countries in the industry.
There are several types of social prospect in the country which is making impact in the growth of retail sector in the nation. In has been seen that, China is one of the biggest population growing country around the world and they have large numbers of consumption of each products and services. So it can be said that, they have high volume of using of various retail products and services which making great impact on the growth of industry in China. In addition to this, other social element is, people of the country belongs from different-different regions and they have different types of culture which affect their buying behaviour in market. In modern time, it has been seen that, people aware to use of products and services as per modern needs in the market (Baker and Saren, eds., 2016). Apart from it, peoples are health conscious and they used to figure out various issues which incurred in their health, so they use several types of grocery and retail products which provided by premium brand in market.
In case of retail industry of China country, it can be said that, various types of technological factors are making great impact on productivity and profitability of the industry in this sector. In retail sector, several types of distribution technologies are implementing in various retail outlets and they have opportunities to raise in their productivity by using technological mechanism in industry. In retail industry, there are various types of technological tools are being using by organisations in respect to furnishing retail product and services in effective way. In China, several types of innovation is being generated by nation's people. Suppliers channels must be connect to the distributor and company in proper manner so that can easily sell their products. In this case, Various types of IT tools are using by organisational professionals in case of making engagement with each other in market.
This is also one of crucial factor for retail business sector in the country, there are numbers of legal factors can be seen in China which is making great impact on China's retail sector (Harris and Rae, 2010). Various types of government legislations are policies have a direct impact in the performance of foreign companies which is operating in retail sector in China. The government's policies of monopoly control and reduction of buyers' power can limit entry to the sector with such controls as license requirements and limits on access to raw materials. Thus, legal factor are generating huge scope for retail companies in the nation.
This is also one of the vital factor, environment has been chaining frequently in the China which making affect the corporation field of nation. China government has been recently released a government regulations for controlling waste and also instructing that, abolished plastic bags so that waste management can be executed upon the industry of the nation. In addition to this, recycling of various production also affect the business growth in the industry.
Market Entry Options:
Varied of strategy are presented here by which Morrisons organisation can enter into China country market in effective way. Following ways for enter into foreign market:
Strategic alliance is also one of the important strategy for Morrisons firm in respect to entering into international market (Stokes, 2011). This approach is also known as strategic partnership is an agreement between two of more entities to purse a set of agreed upon goals and objectives needed while remaining independent organisation. Morrisons firm can use of strategic alliance strategy in China market by making strategic collaboration with top Chinese retail industry in the UK. It could be said that, ion case of enter into international market, they can make strategic alliance with top retail brands of the country. In this case, there is most disadvantage of this approach is that. There is risk of conflict between partners and it makes negative impact on productivity and profitability of the business. With the assistance of this approach, Morrisons enterprise can share costs and utilise members strengths in order to functioning of its various business activities in Chinese retail industry.
Mergers and acquisitions:
This is one of the best approach for Morrisons business in order to entering into Chinese retail market of the country in relevant form (Kotabe and Helsen, 2014). With the help of this approach, Morrisons need to make collaboration with top retail brands of China and there are some effective approaches of sharing of companies assets and values to each others. It includes numbers of transactions such as merger, acquisitions, consolidation, purchase of assets and companies are involved. In this approach, Morrisons can share their important assets and functions of business to each other and gain appropriate success in market. In merger, the board of director for two companies approve the combination and seek shareholders approval. It can assist the firm to running their business function in China retail market.
Franchise is also necessary strategy for each organisation in order to gaining proper success in international market (Neti, 2011). In case of Morrisons firm, its business professionals can establish new retail outlets in form of franchise in Chinese retail market which assist them to provide their quality of retail product and services in foreign market, so it could be said that, this is also one of the bets option for Morrisons firm to entering into China market in respect to increasing in selling of their new retail product and services.
Joint venture is one of the best strategy by Morrisons firm can make partnership with involvement the creation of a third independently managed company (Paswan, Blankson and Guzman, 2011). When two organisations are agreed to work together in specific market which is called joint venture. Morrisons company can agree on serving its retail service in Chinese market by making collaboration with top brands of China retail firm and opening their company outlets in market in order to provisions of market.
Partnership is also crucial strategy and one of the common strategy to emerging into foreign markets around the world. It can be said that, Morrisons firm can make partnership with several small size of retail companies in China and supply them their various new retail products to China for selling in the country's market. With the assistance of this method, Morrisons can enter into new market and increase sales of their valuable products and services in Chinese retail market.
This is one of the best approach for Morrisons business in order to getting success in domestic and foreign market. This is a marketing terms in terms of referring to the aggregating of prospective buyers into groups, or segments that have common needs and response similarity to marketing action. It could be said that, market segmentation enable Morrisons organisation to target different categories of consumers who perceive the full value of certain products and services from differently from one another (Shankar, Carpenter and Farley, eds., 2012). This is an most effective approach for Morrisons firm by which its professionals can dividing the market of potential customers into different groups and segments on the basis of specific characteristics. There are some effective ways by which the firm can classify their markets in particular manner.
On the basis of gender, this is also one of the simplest and important approach of market segmentation which can use by Morrisons' strategic business developed in order to classify their consumers as per their interest and demands from male and female for different-different level (Popkova, Dubova and Romanova, 2013). So in this case, the marketers to business can use of marketing and communicational strategies in order to determine their interest and as per their interest they need to divide its retail products and services in China market.
This is another best approach for market segmentation of Morrisons firm. Its marketer professionals require classifying their consumers in China as per different age groups. In case of retail industry, they have several types of retail products which can be liked by various types of age group people. They need to provide retail new products as per different age group of peoples.
In modern time, lifestyles of peoples has been changing frequently and they are adopting modern and western lifestyles (Lee and Carter, 2011.). In case of China, county's peoples are using various types of status, interest, hobbies, religion, value and other bases. Which assist them to provide retail products and services in the market as per its requirements of Chinese people's lifestyle.
Occupation is also necessary terms for market segmentation for Morrisons business, in Chinese market, there are different-different types of peoples are living and they all have different kinds of occupation (Armstrong, Kotler, Harker and Brennan, 2015). So as per their occupation section in the market, so according to their income level, they will buy several types of products and services. So its professionals need to categories its various products as per consumer's occupations.
4 Porter generic model
Portter generic strategies
Michael porter is an economic researcher in the successful of the business examined the competitive behavior. The ways companies their competitors the maintained long term advantages. He created Porter's Generic Strategies is three interconnected concepts. Many organization is use the key operating procedure. A company chosen market scope across competitive advantages. In industry determine a firms profitability above the industry average. Average profitability in competitive advantages in the long run. Michel porter the industry strengths is three heading cost advantage, differentiation and focus. The focus strategy has two variants is cost focus and differentiation focus. These are applied at the unit level of the business.
Cost leadership strategy -
In industry cost leadership the low cost procedure a firm set and the depend on the structure of the industry is the sources of cost advantages. Porter's Generic Strategies competitive advantages the ways of gaining (Shankar, Carpenter and Farley, 2012.). In strategies reducing cost and increasing profits while charging a firm industry average prices. The strategy is low cost procedure is given level of quality. Target a broad market is usually the cost leadership strategy and the ways of cost advantages by improving process the firms acquire. A competitive advantages is based on cost leadership. The focus strategy markets able to achieve an lower cost the segments and a group significant market share.
Differentiation leadership strategy –
Differentiation method is used the industry is the development of products and attractiveness to engage customer. Is a strategy the development of a product and services is a valued by the customer is unique attributes is better that a different product of the competition. The product and services is depend on the is nature of the industry involved features, support, functionality and brand image the customer value. Its need of the organization to make success of a differentiation strategy.
In the strategy is good research, development and innovation, the ability of an organization is the deliver is product and services is high quality and the market understand the sales and marketing the benefits of the differentiation offerings. Differentiation strategy is need to the large organization with their new products development process (Paswan, Blankson and Guzman, 2011). Competitors risk associated a differentiation strategy limitation include is change in the customer taste. Is the strategies is need to the follow of the delivering high quality products and the marketing and promotion teams of defining the brands.
Focus strategy –
Company use the focus strategies in particular markets. The unique need of a customer is understanding the dynamics of marketing and the markets is develop low cost of products. Focus strategies is instead laying efforts towards one niche market. Company choose the strategies are taking deliberate risk. Using a focus strategies enjoys high degree of customer loyalty and the loyalty discourages the competing firms directly. The succeed of an organization in a focus strategy is range of product development strengths they know very well the relatively segments of narrow market including limitation and changes in the target segments.
Morrisons want to expand its market in China therefore it can adopt differentiation strategy. With the use of this strategy company can add value to their product through the uniqueness of the product. It allows firm to change premium price from its customers. There are different ways through which it can be accomplished in China market. As it is required substantial and sustained marketing investment (Kotabe and Helsen, 2014). These methods include branding, superior quality of the product, Consistent promotion support and wide range in different channel. One of the risk which is related with the differentiation of strategy is imitation by competitors. Reason for selecting this strategy among all of them is that it can help in enhancing sale through selling differentiate product in the market. If product possess some unique features then it can easily grab attention of large number of customers. This strategy provide opportunity to sale product which are completely different from their competitors. Morrison company is expanding its business in China. There are many competitors who are selling same type of products. It is not easy for Morrisons to capture market with existing product. Hence, with the use of differentiation strategy it will become easy to enhance profit and sales in new market.
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