Analysis of Foreign Market
The Brazilian market has attracted large investors and companies especially in the past decade. Erikson (2009) says that after years of high inflation and slow growth in the 1980s and 1990s the country has been able to recover and get back into game with other global players. Economically Brazil experienced its peak in the early 1990s and introduced the new currency “Real” with a fixed exchange rate to the dollar. The most important driver in the Brazilian economy is its export sector which has doubled in the period between 1996 and 2005 from US$52 to US$134 billion (Erikson, 2009).
The country’s comparative advantage is its openness to foreign investors which has boosted the amount of FDI received rendering it a major recipient among emerging markets. The country’s three fold increase of foreign direct investment is attributed to the policy change of the Brazilian government during the last couple of years, which boosted confidence among foreign investors to believe in the country’s positive outlook.
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Erikson (2009) noted that the population of Brazil counted a total of 196.3 million people in 2008 with an annual growth rate of 1.2%. Being heavily populated it is expected that there is big play station market. The play station market is also attributed to the fact that during the last years f4rom 2005 to 2008 the real GDP growth rate was above 3.8%. Silkenat, Aresty & Klosek (2008) noted that Brazil has maintained throughout the years a liberal posture with minimum restrictions on foreigners and their investment in the country. This will therefore enable the marketing of play station in the country.
In terms of infrastructure and social economic factors, a great part of the Brazilian population lives below income communities and they lack basic infrastructure services. The population also lacks adequate housing. Erikson (2009) says that the socio-economic problems that Brazil faces should not be underestimated when marketing the play station. This is because many Brazilians are poor because the country has a poor infrastructure system, a medium range income per capita and a weak education system.
Despite the country’s vast resources and its high growth potential, the country faces various problems are likely to affect the marketing of play station. One big problem is social inequality which excludes large parts of the population from economic progress. Brazil has one of the world’s most unequal distributions of wealth implying that only a small percentage of the richest in the country own more wealth than all the poor people together (Erikson, 2009).
The growth of middle class population in Brazil is explained by many factors. These middle class will enjoy a lower cost structure of the Sony Play Station; combined with expertise in marketing, product design and wide availability to many locations within the country. The proponents of the Sony play station and other related products argue that they should reduce prices and increase competition through innovation and technology. Sony play station products are often at the heart of the media reporting of the industry’s changes due in part to its rapid growth and size. Understanding the risks selling play stations to large middle class population in Brazil on the retail industry is important when analyzing the industry.
The heart of marketing strategy starts with product offering and product strategy. Lamb, Hair & McDaniel (2011) noted that the Sony’s play station as a product includes not only the physical unit but also its package, warranty, after sale service, brand name, company image, value and many other factors. Marketers of the play station in the Brazilian market should view the product in a much larger context.
Sony’s play station success in Brazil will be attributed to a scale strategy based cost cutting to generate steadily its low prices formula and physical growth or market coverage. Ungson & Wong (2008) says that because the play stations core business strategy is formidable, the company is better served by entering the Brazilian market through its business model and especially through joint ventures in ways that accommodate some local requirements. The company is able to compete in the Brazilian market place through its ability to leverage its strong business model into various international opportunities while avoiding massive investment in marketing in a setting that is still largely localized (Ungson & Wong, 2008).
Sony does not sell the play station only but the company will carry out the repairs for the play stations for its clients in Brazil (Pride & Ferrell, 2006). Sony’s Play Station tangible specifications of the play station include its capacity to go beyond customer prospects every time combined with its speed of reacting to client demands are its expectation of new client’s requirements. The indefinable benefits of the Sony play station are do not allow other players to come up with the same type of product hence giving Sony a competitive advantage.
In the Brazilian market a special introductory price is used to get people to try the new play station. The Sony play station will enter the market with low prices and keep them low. Price is often the most flexible of the four marketing mix elements, the quickest element to change. For the play station price is an important competitive weapon and is very important for the Brazilian market because multiplied by the number of units sold equals’ total revenue for the firm (Lamb, Hair & McDaniel, 2008). Sony will provide good value by promoting its product such that it’s tailored to its customer needs. The worth its play station in Brazil is mirrored in its quality charge. Pride & Ferrell (2006) says that Sony Play Station prices must be responsive enough to allow customers of different segments to purchase the play station.
Promotion strategy for play station covers personal selling, advertising, public relations and sales promotion. Lamb, Hair & McDaniel (2008) says that sales promotion directly stimulates sales. Sony will use promotions in the large Brazilian market such as trade shows, catalogs, contests, games, premiums, coupons and special offers (Gitman & McDaniel, 2008). The promotion roles in the marketing strategy is to bring about mutually satisfying exchanges with target markets by informing, educating, persuading and reminding them of the benefits of an organizations or a product. Sony will also use express marketing or selling the play station directly to its customers in Brazil who will order them via their e-commerce platform. Because the play station is packed together, not heavy and it not perishable it will sometimes be transported either via ships or by air from Japan or main distributors in USA direct to the client via Fedex or UPS. Pride & Ferrell (2006) says that fact that the play station can transport to several places for each buyer in Brazil is an advantage in promoting its play station.
In the Brazilian market place or distribution strategies will be concerned with making products available when and where customers want them. Lamb, Hair & McDaniel (2011) says that physical distribution which involves all the business activities concerned with storing and transporting the play station in the retail stores. The Sony subsidiary in Brazil will decide how many stores and which specific wholesalers and retailers will handle the play station in a certain geographic area.
Human resource department in the company is able not only to offer advice and professional preparation to local managers of the play station in Brazil but also ensure that individuals appointed to these positions are aware of company policies as well as sensitive to local culture in the country. The human resource department in the retail stores which will sell the play station will ensure good compensation for its staff, timely and real promotions besides identifying and retaining highly qualified, motivated staff. The staffing also entails reshaping and restructuring the workforce in order to broaden their experience by the acquisition of new skills. The human resource mangers must also train employees on how to balance customer demands for high staff productivity and great customer service.
Evaluation and Control
It will be important to consider the whole financial plan for the revenue generated by the play station. The play station’s invention research in Brazil and the client review will be equivalent to 60% of the yearly advertising funds for the play station (Pride & Ferrell, 2006). The subsidiaries will be in charge of giving feedback of all monetary expenses as well as workers earnings and direct operating costs for their subdivision or market segments in Brazil. The play station’s innovations in the Brazilian market will be assessed on a monthly basis to establish it prospects and profitability.
In addition, Pride & Ferrell (2006) indicated that the play stations research and development expenses will be disseminated over a period of two years through schedule quarters and will be evaluated with the total income produced throughout the same phase. According to Pride & Ferrell (2006), a continuous assessment of real and premeditated activities will be carried out on the basis of each month for the first year and on the basis of three months after the initial completion stage. The Sony’s play station selling investigation team including the advertising manager will give an account of their assessment of authentic and premeditated results directly to Sony’s chief executive officer in Japan.