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This investment report focuses on Protector & Guud Limited (PAG), a multinational company that is located in the United Kingdom (UK). The company sells domestic cleaning items, toiletries, deodorant soap, bathroom and kitchen cleaning products. This investment report that is to be presented to the management of PAG centres on economic analysis, mode of entry, political and business entry challenges.
China’s current population is about 1.4 billion people. This provides a good market opportunity for PAG to utilize the population, and roll out their services. Being the second largest economy in the world, and also the fastest growing in terms of the manufacturing industries, China represents a better ground for business opportunities for an enterprising company in the country (Keegan 2007, p.62). Therefore, it is believed that China has approximately fifty percent of its population in the rural areas and twenty percent of this population lives below the poverty line. Certainly, there is enough population in China to use the elaborate communication network. This gives a great opportunity for products and services targeting different population needs.
China’s population is huge, the biggest in the world estimated at more 1.4 billion, and it has yet to reach its peak in 2030. Despite the low fertility rate because of its one-child policy, the tremendous population explosion maintains its population growth. Consequently, it resulted to a high population density per square kilometre, reaching more than two thousand persons per square kilometre, in the most thickly inhabited counties and cities like Wuhan (Bussey, 2007). Therefore, China’s economic reforms have also started at a rapid rate in the urban centres (Piercy 2005, p.76).
In making a marketing decision, the company has to look at the economic variables, such as inflation, Gross Domestic Products, industrial production, population growth and structure. A steady rise in the population may provide a good opportunity for putting investments. This is because of the availability of the threshold that has the capacity to utilize the services that the company may have. In addition, the company may also be convinced that, the economy of the country is stable due to the increase in the Gross Domestic Product and the Industrial Added Value. Such would mean that people may have the ability to use the products and services of the company. However, the only worry that the management of the company might consider as a threat is the increasing rate of inflation in the country. It is evident that the rate of inflation rose from 4.9 percent in 2010 to a margin of 5.4 percent in 2011 (Tong 2011, p.1). This trend might not be healthy for a company. Despite this inflation, the company might negotiate with the government of China to allow it to operate assuming that the inflation would be short-lived. The company may not be interested in re-locating to another country, but only hope to convince the Chinese Authority to allow the company to operate in the country.
Mode of entry
The first strategic mode of entry PAG used was an analysis of the entire population in China that formed the targeted market. This makes it one of the main considerations that the PAG had to make when developing their entry strategy. As one of the strategies, there is a need to know the characteristics and categories of customers (Piercy 2005, p.84). For example, the PAG considered the needs of their offline customers who walked into the premises to purchase the cleaning products. Such customers constituted the largest portion of potential clients because all the PAG made most of their sales across the counter. Secondly, the PAG needed to understand the needs of their respective customers. It begins with the understanding that, the customers` needs differ from the needs of traditional consumers. Online consumers seek the same trusting relationship, which can be acquired through brand identification on the internet with the businesses they shop at frequently. Various marketing strategies helped the businesses identify the needs of their online clients and gain a better understanding of how to market to their needs. Conducting an internet market segment approach uses different procedures to categorize possible or definite customers into groups with comparable needs and characteristics (Merrihue 2004, p. 38).
Moreover, PAG should focus on its brand and consumer relationship strategies to succeed in China. Consumer relationship with branding is one of the concerns that many marketers and scholars have contributed to. Following the varying views on the matter, this research will also explore the relationship between the two issues as to whether they are directly related or not, and their importance to PAG Limited and its entry in China’s market. This entails whether the consumers have direct relationship based branding of different cleaning products, which they offer. It is an interesting to make such consideration because the PAG shares certain relations given the specifications of the brand.
Focusing on brand analysis, consumers are considered as the last people who use the commodity will always associate the required product with its brand. The reason for this is that brand is the general design, name and symbol with an intension of making the consumers identify the products in the market (Piercy 2005, p.81). Identification of goods and services is facilitated by this product brand. The brand enables the consumer to make a judgment as to what extent the item is proffered in the market. These symbols also create more awareness on the PAG’ products thus help to distinguish them from any other competing sellers around.
Branding in a business helps in ensuring that customers or any other prospects make PAG products as the real solution to their own problem. The PAG also requires understanding that a good brand helps in achieving many issues in convincing the consumers about the product. The brand delivers a very clear message on the products. It also helps in confirming the credibility, ability to connect the target prospects in an emotional way, motivates any buyer, and it also strengthens the loyalty of the user so that the buyer will continuously buy the products. In order to be successful in branding, PAG ought to understand the needs and wants of the customers in China’s targeted market. This is entrenched through public contact at any given opportunity when a new product is launched into the Chinese market.
Challenges presented by political and business culture
In order to device a global marketing strategy, the company needs to have a cautious and structured approach, because the risks are high and the process is quite complex. When the company transcends national boundaries, they face a host of constraints. While some of them are quite obvious, others are not. Differences in legal, economic, demographic, political, regulatory, and technological environment are easy to understand. However, understanding the cultural diversity is the biggest constraint for PAG’s crossing their geographical boundaries. In order to venture successfully in China, PAG also needs to embrace online marketing. One of the political challenges to be met is that China is neither democratic nor liberalized nation. China is still viewed as a Southern state, despite its economic status has undergone several changes, particularly constitutional transformations since the first one was promulgated in 1954 (Bussey 2003, p.47).These constitutional changes are responsible for bringing in some levels of democracy to the Chinese people. Therefore, it is agreed that in the next thirteen years China will be able to achieve a full democracy, in case amendments in the constitution are implemented. Such political and political changes are likely to boost PAG business, especially in the future.
Focusing on business cultural challenges, PAG limited needs to know the characteristics of customers; this begins with the understanding that, the customers` needs differ from the needs of traditional consumers. Various marketing strategies can help businesses identify the needs of their online clients and gain a better understanding of how to market to their needs. Conducting an internet market segment approach uses different online procedures to categorize possible or definite customers into groups with comparable needs and characteristics. These tools allow marketing managers to plan their strategies accordingly to capture the attention of their target consumer (Merrihue 2004, p.39).
In conclusion, PAG will need to venture and remain in the Chinese market, but buy a small competitor to have local touch and acceptance. This would go a long way to continue its insistent pricing strategy and pull up its mind to work. Therefore, advertising and pricing are to be lowered by 20% on all possible means. The result might be to change policies to have good relations with the government to avoid the possible political interference. With this kind of information, the company can build products that suit such customers and bring them into the consumer group of the company. Increasing the number of customers would also mean an increase in the information available, which can be used to come up with a new product that caters for specific target groups. The data captured in these systems can be used to analyze market demands and be used to create a new product for giving groups or one that satisfies a given need. Such products would increase the revenue base of the company. PAG can collect information about users of different websites, which it can then use to target groups which visit such websites.