Internationalization of businesses has become a common practice in the global market. This paper considers marketing strategy of Mulberry Company that intends to venture in to the Chinese market. Roger Saul with his mother founded this company in 1971 and later opened a factory in Somerset, England in 19731. The company begun as a British lifestyle brand well known for its leather products, including binocular bags, women’s wear, men’s wear, and footwear. The company has managed to open stores throughout the UK and in different foreign markets, such as Australia and the United States. In England, the company hired youths as trainees and later gave them a chance as employees. Mulberry has grown in number of employees, profitability, diversification, and assets. This report provides an analysis of the Chinese market in relation to the parent Mulberry Company to provide strategies for market entry.
2. International expansion strategies
2.2. Macro environment issues
2.2.1. Political environment
The political environment has various characteristics, such as taxation, internal relations, spending of the industry, and the stability of the government. The government of the republic of China is stable and offers much support for foreign investment to attract overseas investors. Taxation of foreign businesses in the country is not high because of their efforts to support foreign investment3. There are, however, regulations since the country is a member of Asia-Pacific Economic Cooperation. Thus, the company has to adhere to the rules of engagement.
2.2.2. Economic environment
The economic environment is associated with changes in interest rates, inflation of the economy, and the GDP. China is one of the greatest performing economies in the world. The GDP of the country experienced a 10.5% increase in 2010 from the previous years and later to 9.2% in 2011. In addition, inflation in the country dropped to 3.3% in 2010 compared to the previous year and later to 5.4% in 20112. This shows a quick, economic recovery from the financial crisis that hit the world at the end of 2008. Therefore, China offers a competitive, economic environment for the Mulberry Company.
2.2.3. Socio-cultural environment
The socio-cultural environment concerns consumer’s lifestyles, income level, preferences, and demographics. China ranks as the most populous nation in the world. In the early 2012, the country marked a population of 1,343,239,923 people. In addition, 92% of the populations were Han Chinese. The average age in China is 35.5 years and a substantial percentage of the people, around 47%, live in urban areas with the rest living in rural areas. The population size and the average age can offer a robust market for Mulberry Company’s products, since they are more appealing to the middle aged than the old.
2.2.4. Technological environment
China boosts its advanced technological infrastructure and services. As a result, the use of technological gadgets is at its peak in the country, since it locally manufactures most of these products. A research carried out in 2011 showed that there were approximately 859 million mobile phones in use in China. Yet, on the other hand, the number of internet users was 389 million within the same year. Technology wise, China is particularly convenient because the company is bound to benefit from services that rely on the internet, such as online marketing.
3. Micro environment issues
3.1. Competitive intensity
The company has well trained employees. This is because it hires them on a job trainee basis and trains them well to equip them with appropriate skills. The company has employee security and access to skilled labor since they only use skills that they gain from the training.
The company has enjoyed cheap and local availability of raw materials. The company has identified potential suppliers who ensure that supplies are also in time. This is enhanced through the communications that have been established between the company and the suppliers. Therefore, production in the factory at Somerset has been streamlined because of the strong supply chain.
The company also enjoys quick and secure transport systems. The company has its own security system and well armed guards to ensure that goods on transit are safe. Additionally, it has carriers for distribution of goods in the UK and small cars for emergence uses. When it comes to shipping, the company usually teams up with other firms to reduce the shipping costs.
3.2. Marketing infrastructure
Mulberry Company has a strong marketing team. In the UK market, the team is headed by the domestic sales and marketing manager. In the international markets, the team is headed by the external sales and marketing manager. The team is well trained to ensure that they carry out marketing research and employ the right strategies to get customers and build the image of the brand.
The company has its own website where it conveys all the latest products and news to customers. Mulberry has also begun using the social network to reach customers and communicate with them via the internet. This is crucial as it helps identify the needs of customers, thus, effective marketing strategies are employed in line with the identified needs.
On the other hand, Mulberry has its own vehicles painted with the logo and the name of the company for publicity purposes. This is crucial as it enhances transit marketing. The vehicles are also crucial as they ensure that the marketing team is moved with ease from place to place.
3.3. Customer characteristics
There are different characteristics of customers in the Chinese market with some being in favour of Mulberry brand while others remain loyal to local brands. The first notable characteristic is that there is a growing interest in foreign brands among the consumers. This is probably because most of the natives are adopting western culture, which is viewed as modernization.
Customers in China are also fast to notice and purchase trendy clothes and footwear. This is especially common among the young generation who are the majority in the country than the old. The older generation is usually paying more attention to the quality and durability of the product.
Customers are also less price-sensitive when it comes to purchase of clothing in China than other countries. This is explained by the fact that the fashion-purchase behaviour that they have adopted. Therefore, the bargaining power of customers is low.
There are customers who prefer items that many people have purchased mostly or what is highly fashionable. These are customers from eastern countries while those from western countries prefer unique attires. In addition, customers from western countries will be more interested in quality and durable rather than fashionable attires.
4. Company Issues
4.1. Competitive strategies
The company has different competitive strategies that have contributed enormously to its success in different markets. One of the competitive strategies is the low-pricing strategy. The price of the company’s products is low compared to other brands from some countries such as Italy and China. This has been enhanced because of the low production costs since the raw materials are cheap and easily available in England. The price of the company’s products is, therefore, competitive in comparison to other products.
The company also gives guarantees to customers who purchase its products. This marketing approach is not common for other companies that sell clothing. The company has managed to achieve this because it retails its products through stores that are opened in different identified potential markets. This gives confidence to customers not only to make but also return purchases, thus, enhancing customer loyalty and retention.
The brand is widely known in the UK, which is its domestic market. This has enhanced the growth of the company both locally and internationally. Mulberry has even been ranked as one of the top companies in the London stock exchange. As a result, it has encouraged people to purchase additional shares, and enabled the company to internationalize and take advantage of potential markets of the world.
Diversification is a strategy that spreads risk within an organization. Mulberry brand offers different types of leather products for both women and men. In addition, the company has both footwear and clothes. Therefore, when one product fails the company will still benefit from others in the market, thus, avoiding total loss. The company has also opened many stores in different countries. Consequently, the assets of the company are acting as a security against unforeseen disasters.
4.3. Standardization vs. Adaptation
The company has quality standards that have ensured that the products it makes are attractive and offer customers value for their money. Leather products are also widely known for their high quality and durability. The company has managed to adapt to the competitive environment through the high quality of its products.
4.4. Organizational structure
The organizational structure of the company is decentralized. This is usually crucial for a company that is operating in different markets and markets that are located on large distances. CEO of the company controls all the activities from the home country (U.K.). On the other hand, each country of operation has managers to deal with affairs in that region. There is the human resource manager in England who deals with the needs of employees that are trained by the company. All managers are headed by the CEO. In Somerset, there is a sales manager who deals with the local market while, in the U.S, there is the company’s external sales and marketing manager. Every store has its manager who is responsible for all the internal activities. This organizational structure has enhanced transparency and accountability in the company.
4.5. Mode of market entry
The mode of market entry strategy that will be adapted by Mulberry brand is direct market entry. This will be used because China supports and encourages foreign investment. In addition, the market has been established as highly potential because of the high population and rapidly growing economy. The company will, therefore, open its own stores at strategic points in the country.
The performance of Mulberry has been prominent in the previous years. This is evident because it is listed among the top companies in London stock exchange. In October 2012, the retail sales of the company were 13% of the company’s total sales. Additionally, it registered high growth in profits at the end of 2011 that totaled £36 million, with a 54% growth rate compared to the previous year.
4.7. Short, Medium and Long-Term Strategies Employed
Promotions and campaigns are short-term strategies that are used by the company. The company uses these strategies while venturing into a new market. Low pricing is a medium-term strategy employed by Mulberry. Some of the long-term strategies that it has employed are training of employees. The company trains young people in England and later offers them employment opportunities.
5. Marketing Mix
Since customers, in China, are more concerned about fashions, Mulberry will come up with different and latest designs and ensure that their prices remain constant. In addition, the entry price will be low to attract customers and increase awareness of the brand. The price will also be controlled by the quality of the company’s products.
The company will open stores in the major cities of the country including Hong Kong and Beijing. The company will start opening other relatively small stores in the urban areas to reach a wide market in China after establishing these two leading stores. The distribution of products will start from the mother company, then to the two leading stores in China and finally to the small stores.
5.3. Product Management
In the Chinese market, there are many local and foreign leather products. Mulberry will create a differential feature by adding professional designing to its products. The company will also maintain high quality of the products. On the other hand, the Mulberry will also major in medium sized leather attires since the young people are the potential and target groups.
5.4. Marketing Communications
Consumers in China are usually eager to get the latest promotions. Mulberry will have different promotions as a market entry strategy. These will involve the use of the media and billboards. The company will also make use of loyalty cards in order to encourage return purchases. The staff of the company will also have a unique uniform for identification. This will also be enhanced through transit advertising since the company’s vehicles are easily identified.
The world has become a global village and, as a result, created avenues for globalization of businesses. This should not be done blindly as there are many risks associated with the venturing into global markets. Therefore, a company must carry out a marketing research in the identified market to establish its viability. China is a considerable market for Mulberry brand because of its population and government support and encouragement for foreign investment. The market is highly potential because of its population structure and the rapidly growing economy. The company has also its own competitive advantages which it should utilize purposely to win the Chinese market.
Mulberry should carry out a quality marketing research in China to establish its viability. This should involve competitor analysis. Mulberry may employ a committee to do this if the marketing team proves slow or inefficient to carry out the activity. The research should be both secondary and primary.
The company should also draw pragmatic budgets for the marketing venture. This is crucial to ensure that the venture does not fail because of the lack of capital. Budgeting should also ensure that there is perfect pricing to enhance profitability since this is a for-profit business.
Additionally, the company should also streamline its production so that there are sufficient supplies for the new market. This will also ensure timely venture into the market, which is crucial in maximizing profits.
8. Plan of Action
In entering the Chinese market, Mulberry should begin by carrying a marketing research. Research is crucial to help identify potential locations of the business. It will also help to identify the right market entry strategies. After carrying out a marketing research, Mulberry should carry out budgeting. The budget will determine the prices of different products. Production should be increased to obtain enough products to supply the new market with. On the hand, stores in the new country should be prepared to receive goods. Logistics should be then directed to the new market ready for business. The company should initiate marketing strategies to build the image of the brand and attract customers.