Market Selection and Entry Mode

MCristal Cristal Corporation International Marketing Executive Summary This report analyses how Cristal Corporation chose the United Kingdom as its European lauchpad for its MCristal mobile phone. MCristal phones use the Near Field Technology (NFC) to enable cashless money transaction. Cristal Corporation chose to do a Strategic Alliance with T-mobile to overcome some amount of foreign market hurdles. The company also needs to partner with large retail chains like Tesco, Aldi, and with the airline companies etc. to invest in NFC interface machines. The report also analyses the company’s marketing mix of product, price, promotion and place. Table of Content Introduction In today’s world of highly paced environment with a constant need to be in the frontline of technological advances, owing the newest mobile phones with the latest features is a must have that people line up for hours to get. The product that I am going to introduce is currently focused and available in Japan with European countries and USA trying hard to replicate the same success in their own countries. The name of the product is the M-Pay enabled Cristal mobile phones, simply called MCristal. The product, although based on the use of real technology, is fictional. M-Pay uses the Near Field Communication (NFC) technology. The NFC works with short range frequency that gives a signal from, in this case, the customers mobile phone to another terminal (3). With this technology, via M-Pay, one can pay for goods and services cashlessly, by MCristal. The mobile phone will have a chip inserted in it that will store debit card, credit card information and/or prepaid voucher card on it. It will have a ? 200 pounds per transaction limit. You could use the mobile phone to pay for wide range of purposes from paying for groceries to paying for a plane ticket. All one will have to do is, touch the mobile phone on the cash-less payment point, insert a four digit personal pin number on the mobile phone to approve and complete the transaction. (2) The idea behind the creation of the MCristal is that there is a higher chance of leaving your wallet behind than your cell phone. This product from the fictional Japanese technology giant: Cristal Corporation. This company, founded in the 1979 has grown rapidly into one of the forerunners of technology in the 21st century. Not only has it invented technology to ease the everyday life of individuals but it also uses new technology to create new software and new products. Its cell phone range, with its latest features, rival that of Sharp and Panasonic in Japan. It now wants to introduce its range of MCristal phones in the European Market. This report will analyse which country Cristal Corporation should focus on launching its phones, how it should enter the market and how it should handle its marketing mix. Country Selection {draw:frame} {draw:rect} Stage One: All countries Since the company Cristal Corporation wants to introduce its MCristal phone in Europe, we start with a list of all the 27 member states of the European Union. Out of these countries, we will narrow it down to those countries that have a mobile cell subscription of more than 10,000,000, whose per capita income is more than $30,000 a year and whose urban population is more than 5,000,000. Stage Two: Priliminary screening: Macro Analysis After narrowing it down, we are left with 8 countries: France, Germany, Greece, Italy, Netherland, Spain, Sweden, United Kingdom (Appendix). At this stage, we should do a preliminary screening taking into account the macro criteria of social, legal, political, economic, technological and environmental influences on the outcome. Below is the ideal pestle for the ideal country. Ideal Pestle for the Ideal country Social: The country that we are focusing on should have a high materialistic culture where individuals attach values to products and where people are perceived to have a higher status due to the products they own. The country should also have a large demographic in the range of 16-60. Legal: While looking into the legal aspect of the country, we should look into the various local domestic, international and home domestic laws. Domestic laws: Since the company is trying to penetrate a new country and also going for a strategic alliance with another company, there may exist potential legal problems. The potential country thus shouldn’t have high level of bureaucratism and red tapism as we would want to move in efficiently and with the least time wasted. Also, the local laws shouldn’t ban or discourage new entrants into their country thus overprotecting their own telecommunication industry and the local companies in that industry. International Laws: Since the company wants to penetrate into the European market, it will have to follow the norms and laws set aside by the European Union and will have to abide by any quotas or restrictions imposed. Besides quantity laws, it will have to follow the quality laws as well. Home Country laws: Besides these two, the company will have to also follow laws set by it’s home country. There may be cases where the home country may ban the company from entering a country due to the instability of the said European country. Other than that, the home country will also have its own quality standards, allowed export quantity, price allocation etc. which will have to be followed by the company. Political: The company should focus on those countries that have had a stable government continuously over the years. The company also requires the country to be a democratic country, leaning more towards capitalism than socialism. Economic: The country that the company should focus on should have a high GDP (of over $30,000). This is necessary in order for the individuals to pay for the MCristal Phone. Technological: The country should use a high level of technological advanced/innovated products in its daily life. Environmental influences: The target country should be a developed country with a high level of infrastructural facility. Majority of the population should live in urban areas. As this company needs to work with various different types businesses ranging from grocery stores to transportation companies and to develop cashless transaction points, there is a need for high infrastructure availability in the country. Taking these factors into consideration, we preliminary screen the countries using the Risk analysis table below. 1=Low; 2=Some/Little; 3=Medium; 4= Risky; 5=Very Risky Stage 3: Weighted Environment Criteria After elimination in stage two, we are left with France, Germany, Italy, Netherland, Sweden and the United Kingdom. In this stage, we now assign weights to certain environmental criteria. The Criteria that we have chosen are a) Advancement in Telecommunication b) Market share of the top mobile service provider. Advancement in telecommunication is important as, being a new product and using a new technology, to implement that into a new country there should exist already established norms and standards in telecommunication. The company will have to collaborate with (at least at the beginning) with one service provider. Thus, there is a need for the top network service provider in the country to have a large market share. ,2,3,4,6 = Ranks 1,2,3,4,5,6= Ranks Stage 4: Final Selection Criteria From the previous stage, we are left with France, Italy and the United Kingdom. We have eliminated Germany, Netherland and Sweden because although the country may be good at a certain factor, it was found to be lacking at the other factor and for this company to be successfully established in a country, there nee ds to be a balance between the two factors. In this stage, we shall eliminate based on the demand for high technology mobile phones. Thus, the ranked preference of the country to enter is: United Kingdom France Market Entry Mode As the company needs to partner with a mobile network service provider, it will consider those entry modes which offer an affiliation with another company. Thus, we have identified three possible modes of entry. These are Joint Venture, Strategic Alliance, and Merger and Acquisition. The chart below shows the criteria of judgement for these three modes of entry. 1,2,3 are the ranks From the above table, we can see that there exists a tie between Joint Venture and Strategic Alliance. The company will choose the Strategic alliance. The biggest mobile network provider for the United Kingdom is T-mobile (4) with total number of subscribers more than 32 million. A strategic alliance between Cristal Corporation and T-mobile will open up the existing customer base of T-mobile for Cristal Corporation’s advantage. Marketing Mix Product: The M-Pay enabled Cristal Phone is the first of its kind in the United Kingdom. This product provides a platform for mobile payment facility for various entities like at grocery stores, for airline tickets, train tickets etc. At a later stage, the technology may be adapted to remove the necessity of even buying tickets etc. Product Adaptation: The mobile phone and the M-Pay device will be in English language and not in Japanese so that the customers can use the product efficiently. Assessing Product suitability: Competive advantage: Since the product doesn’t have any competitors at present, it will gain monopolistic advantage. Market Acceptance: The product combines already available technology in a new form. United Kingdom, being high on the materialist factor, will at least give the product a try. Also, since it is high the materialistic factor, individuals have the want to own the newest technology products like the MCristal phone. Profit Potential: The sale of the phone plus the 1% commission charged on using the M-Payment will be the main profit making avenue for the product. Further investment: The company needs to invest in NCF interfaces for major chains of supermarkets, airlines, train etc. There is a possibility of sharing the cost of installing the NCF interfaces with the other companies as it is for the benefit of both. Managing International Products: Packaging: The MCristal Phone will come in a white box with blue borders. In the middle, there will be plastic see-through covering through which you can see the cell phone inside. The packaging will have the Cristal Corporation logo on the top left hand corner with the words MCristal under it. On the back of the box, specifications of the product will be mentioned. On all four sides of the box, the name of the product, the version of the product will be mentioned in black. The material used will be 100% recyclable cardboard which will be glossed over to give a shine. The separators inside the box will be made of 100% recyclable plastic too. Image, branding and positioning The image of a brand or product is different from one country, one group, one segment to the other. The following discusses the image of the M-Pay Cristal phone. Country of origin effects Since the country of origin is Japan, which is considered as a highly techonogized country in the world, the perception of the product is favourable. Moreover, a lot of new technology comes from Japan and is introduced to the rest of the world. Thus, even the stereotypical outlook of Japan is favourable for Cristal Corporation. Product Image: The product, being a cell phone with the latest in technology i. e. the M-Pay facility, using the NCF technology will have a good product image. Company Image: The company, a pioneer of different technologies has a sound company image the world over. Thus, any new product introduced by it will have a good image. Brand Category: The product is a mixture of an attribute brand and an aspirational brand. Attribute brand: Not only will the product set itself aside from other mobile phones, it will also create a platform for the company to release its line of mobile phones in UK. This particular product is centred mainly around the M-Payment facility. Aspirational Brand: Since this is a new concept there is a positive, even a curious image created in the minds of the people. The product is a status product. Owning the product will create or make people be perceived as a part of a different, higher social status. Place: The product is manufactured in Cristal Corporation manufacturing factory, Beijing Wang Mobile Communications, in Beijing, China. This factory is responsible for the design, sourcing, research and development of the Cristal mobile phones. Once manufactured, the product will be flown to London where it will be stored at one of Cristal Corporations intermediary’s’ units. Here, the product will be sorted into different groups depending on where in the UK it is being sent. Besides London, the product will be flown to Birmingham, Leeds, Glasgow, Sheffield, Bradford, Liverpool, Edinburgh and Manchester. Thus, it is important for the company to attain an intermediary who has storage units in these cities. From the city intermediary’s storage unit, the product will be distributed to the T-mobile stores and to the stores that sell T-mobile network facilities. Promotion: The target audience of the product are those individuals who are between the age of 18 and 60. This segment represents the active wage earning segment and thus will be able to afford the mobile phone. These people lead a university or a working lifestyle and thus will be the ones who purchase grocery, airline tickets etc. the most. The main objective of the Cristal Campaign will be to identify new customers, further increase the value of the brand image and to help establish the product. The media strategy to be used should be a combination of advertisement, sales promotion, sponsorship and public relation. The advertisement should be youth oriented, showing the ease of payment through the MCristal. International celebrities that have a major appeal to the youth and the older part of the market segment should be contracted. A celebrity like Penelope Cruz would fit the bill here. T-mobile and Cristal Corporation could introduce a special price or a special promotion where for example, the first 1000 purchasers will get 1000 texts free and 1000 minutes free. T-mobile and Cristal Corporation can also sponsor charitable events like for Breast Cancer research etc. o that a social responsive side is developed for the brand. It should also sponsor events like football matches so that their name and logo is well displayed, attracting attention from individuals. Pricing Strategy: The MCristal will be introduced under two different price ranges: If the customer is out rightly buying the handset and using the T-mobile pay as you go network service, the price of MCristal will be for ? 185. Although there aren’t any real competitors in this field as yet, the high end mobile phone companies can be considered as a competition. The Blackberry Bold 9750 costs ? 35 pounds a month and the Sony Ericsson Statio costs ? 30 a month. The Nokia 5800 costs ? 195 to buy outrightly. Thus we see that the MCristal is in the same price range as the latest T-mobile phones. Recommendation and conclusion Although penetrating the market with this type of a new technology may be a challenge, it being time consuming with large initial investment in NCF interface machines, in the long run, the potential profits to be reaped from this are too high to be ignored. This technological innovative product could majorly replace the use of cash in the day to day life of individuals. However, since the technology isn’t patented to Cristal Corporation, it may be easy for other companies to replicate the work of MCristal thus reducing the monopolistic advantage that it had in the beginning. Thus, the company should create advantages wherever it sees them from the beginning of its entry into the United Kingdom.