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A'kin Market Entry Strategy in the Selected Market

Essay by   •  August 3, 2011  •  Case Study  •  1,395 Words (6 Pages)  •  1,882 Views

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6.0 Recommendations

6.1 Market Entry Strategy in the Selected Market

Direct exporting is the first choice for A'kin to enter China, and Chinese agents will be used to help A'kin to better manage its product distribution. While using direct exporting, A'kin is able to avoid the cost in establishing manufacturing operations and know-how stealing. Experience curve or location economies can also be realised. Although transportation cost and tariff will be added in variable costs, product quality can be totally controlled by the company (Dowling et al. 2009). With emphasizing on 100% nature from Australia feature which meets the current market needs, customers has low confidence on products which made domestically in China. The advantage of this 100% nature feature will bring the market's attention to A'kin and customers will have higher willingness to pay for a higher price as long as the quality of the products they purchase can be guaranteed. Furthermore, by being a small to medium enterprise, A'kin can only handle a lower degree of risk and has limited cash in hand compared with its competitors. Direct exporting can minimize potential risks and it is especially suitable for companies wishing to operate its business overseas to ensure that they have sufficient capitals in hand since they can fully control the price. Main reasons for A'kin to use Chinese local agents are discussed in the following:

● Market research can be helpful to some extent, especially in communist countries like China. With many uncertain factors existing in the market, including high degree of government control, various cultures among different ethnic groups, complex political and legal regulations, A'kin will experience a significant degree of difficulities while entering the Chinese market. Using local agents can help A'kin to eliminate language barriers and also supplement A'kin's weaknesses, such as the lack of information or experiences.

● Having a good 'guanxi' with Chinese agents will reduce the obstacles faced in dealing with Chinese local officers and therefore A'kin can establish their market position much faster and smoother.

● Taking the long-term future planning into account, sharing the same vision with Chinese agents can help A'kin to do research in other markets within China and therefore have the ability to identify possible opportunities and threats early. With this favourable support, it can save company's time and avoid unnecessary cost.

Internet will also be used by A'kin in its direct exporting. The number of Internet users in China is continuously to grow. According to the China Internet Networking Information Centre (CINIC), Chinese Internet user population has increased to 24% between June 2009 and June 2010. The number has been risen to 420 million which accounted for 32% of the total Chinese population. Among China's total Internet user population, 140 million consumers have engaged in Internet retailing (Euromonitor 2011). Therefore, A'kin can use Internet as a tool to have a better coverage over its Chinese market.

6.2 International Marketing Mix

6.2.1 Product

One of the weaknesses of A'kin is its limited choices of baby products, and it may experience a great failure while serving such a big market in China. A'kin should be more localized and launch wider range of merchandises that aim to different skin types in Chinese market. Since the climate in the southern part of China (where Shanghai is located) is humid, products like baby powder can be introduced to meet the local market need. A'kin can customize local assortments to catch more personal attention. For instance, catering to the gift-giving custom among Chinese people, A'kin should design "gift box" which contains various mixture of its products. Besides, 'country of origin' sign should be labeled clearly meaning that the sign 'Made in Australia' should be stated clearly on the products' packaging. More importantly, the firm has to make sure that its packaging and product explanation have to be written in Chinese.

6.2.2 Price

Chinese people often see price as a measurement to indicate a product's quality. As A'kin positioned itself as a brand between medium to high level, a corresponding price should be set as a reinforcement to its high quality image. Many Chinese parents are price insensitive and more willing to pay a higher price on baby products. A'kin may adopt skimming pricing strategy since the intensity of price competition is low and only limited competitors existing

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