INTERNATIONAL MARKETING STRATEGY
Date of Submission:
International Marketing Strategy
Question 1 (20 marks) What are the key lessons that Whirlpool learned from its early entry into China?
There have been some key lessons that Whirlpool has learned from its early entry into Chinese markets. Whirlpool eyed at taking the advantage of globalization (Deschner, 2014). The product brand opted to expand the business in the emerging markets and in the large and concentrated markets. That is the reason why Whirlpool targeted China. The substantial growth that the Chinese market has experienced over the years can be alluring for any multinational that is willing to expand its business worldwide, and in this respect, Whirlpool is no exception. To obtain and attain a competitive edge over the rivals, Whirlpool’s think tank considered it important to penetrate the Chinese market as early as possible. Though market research was conducted and even though thorough analysis of the Chinese customer segments were conducted, to a large extent, Whirlpool, its top management, and its marketing brains failed to understand the actual demand and condition of the market. Whirlpool’s marketing team, unfortunately, failed to gauge the power of the domestic products of China in the context of opposing the entrance of new businesses and preventing the same to flourish within the Chinese markets (casestudyinc.com, 2010). Whirlpool did learn many things through the process of entering the Chinese market in an early manner. While entering China for the expansion of business, Whirlpool was aware of several aspects of the Chinese market, but it seems that the Company should have conducted a more deep analysis of the market to understand and determine its growth aspects and its limitations. What have been observed in the case study is that, after entering the Chinese market, Whirlpool did learn the power of domestic competitors in China. Whirlpool, while trying to make a position of its own in the Chinese market, learned the lesson that it is better not to under-estimate the power of local, Chinese competitors. The Chinese competitors are quite more aware of the core Chinese culture and purchasing norms and that is the reason why before competing with them companies like Whirlpool have to more aware of the local consumer and market culture of China. Moreover, Whirlpool did learn that to adapt to a global formula in the context of doing business in Chinese market needs considerable and often suitable adjustments that must be arranged and adhered to in specific and thorough manner. Finally, what Whirlpool learned is that it is quite critical and difficult to build an effective distribution and sales network in China and in the Chinese markets.
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Question 2 (20 marks) How did market research help Whirlpool refine its marketing strategies?
Market research helped Whirlpool a lot in refining its marketing strategies. The marketing research made the Company understand that they have to adapt to certain product strategies. They have to emphasize more on market segmentation and have to give more importance and put more focus on localization of products and marketing approaches. The market research also made the Company understood that there are some specific needs of the developing markets that have to be met in a thorough and effective manner. The market research helped Whirlpool to gain a stronghold on the Brazilian market by introducing the world’s lease expensive automatic washing machine. The research also helped the Company in focusing more (in Brazil) on patentable technology. The market research also made it possible for Whirlpool to understand that several of its washing machine products in the Brazilian market were not delivering the needful. Spin cycle was taking longer time and clothes were coming out damp. Moreover, capacity of the machines was also smaller. Understanding the liking of the customer segments in Brazil, through marketing research, Whirlpool eventually built washing machine that sit high on four legs and are with yellow start button with blue lettering and the body color was mainly inclined towards being white. Marketing research in the emerging Indian market made Whirlpool understand that he customer segments have inclination towards different colors of the different models produced by the Company. Moreover, the Company had to provide much emphasis on the effective washing of delicate fabrics called ‘saris’. Moreover, the product, in the Indian market, had to be mounted on casters. In the Chinese context, the market research did provide a different perspective and a different context. What the market research did find in the Chinese market that there is an aversion towards the color white in terms of washing machine models. What the Chinese customer segments preferred was not the white color but light blue or gray color. Moreover, the Chinese market needed (as was found by the market research) heavy-duty washing machines with heavy-duty wash cycles having the capacity of removing stains of grease. But the market research in almost all the emerging markets that Whirlpool planned to enter proved some common factors, viz. having washing machines creates a more convenient living environment and it not only saves time but also acts as a status symbol which denotes higher quality of life. Moreover, having a washing machine of top model embodied the owner’s likeness for following the trend and fashion.
Question 3 (20 marks) What market research issues might Whirlpool encounter in countries like Brazil and China? If Whirlpool was to continue its success in emerging markets, in what areas would further research be needed?
The cultural aspect should be considered an issue that might be faced by Whirlpool while conducting market research in Brazil and China. Market research is essential for listening to the needs of the customers; it is essential for ascertaining and determining the differences in preferences that prevail in different cultures and different countries; it is needed for forecasting and it is essential to combine old strategies to newly entered markets. It must be noted that if Whirlpool was to continue its success in emerging markets, in some specific areas the Company would have needed further research. For an example, as it has been observed, in Brazil, the Company had to employ focus group strategy. In this particular process a group of people has to be constituted together to collect information from specific customers and make discussion on their behalf. In Brazil, for instance, Whirlpool had to collect economic data and had to arrange for visits to representative low-income households to better understand their needs and wants in respect of the white products. Such focus group research holds some promise for Whirlpool in the context of improvement. For example, in focus group data transfer is done in a transparent manner and the opinions are formed quickly, saving much valuable time. But there are few disadvantages of focus group and that include the fact that there are few opinions that couldn’t be considered as a generalized view or universal truth. Moreover, to continue its success in emerging markets, Whirlpool has to focus on some further research. For an instance, it has to put much emphasis on the process of observation. How customers interact with the Whirlpool products must be observed and recorded through almost every moment (obviously within a given time span). For an example, as a part of the research and observation process, Whirlpool’s engineers and designers should stand behind a two-way mirror and observe how volunteers use the machines, and such moments must be thoroughly recorded. Furthermore, the engineers and designers must strive for improving appliances that will have distinctive look and distinctive feel. The primary advantage of the observational marketing research process would be that; the observers/researcher would be able to collect non-verbal behavior and data right away. But it must be noted that the primary disadvantage of the observational process is that it only reveals external appearance and it is both slow and the method is quite expensive in terms of research cost.
Question 4 (20 marks) How can Whirlpool segment the international market for home appliances? Using a home appliance of your choice, discuss the segmentation process and segmentation variables you would use.
There is a need on the part of Whirlpool to segment the international market for its home appliances. For an instance, Whirlpool has to indulge in the process of market segmentation for its washing machines in particular as their demand is high. It must be noted that “Market segmentation assumes that consumers have different needs and wants, therefore different products or marketing mixes are required to appeal to them” (MKT891F International Marketing Strategy, n.d.). Hence, Whirlpool has to segment is international market in accordance with its understanding of what the markets across the globe prefer in the context of its washing machines. Whirlpool’s marketing team should strive for segmenting potential customers, for example country groups or individual consumer groups with homogenous attributes who are likely to exhibit similar responses to a company’s marketing mix (MKT891F International Marketing Strategy, n.d.). Moreover, in the context of the segmentation process, Whirlpool has to embrace both the conventional wisdom and the unconventional wisdom. For an instance, from the perspective of the conventional wisdom the Company should focus on macro level differences entailing economic, and cultural factors and it must rely on clustering of national markets putting less emphasis on within-country segments (MKT891F International Marketing Strategy, n.d.). But while embracing the unconventional wisdom, Whirlpool has to recognize existence of within-country differences and has to emphasize micro level differences including behaviroal factors, and it must segment micro markets within and between countries (MKT891F International Marketing Strategy, n.d.). Whirlpool must identify cluster of countries that demand washing machines and it must target different segments in different countries with the same product, i.e. washing machines. Moreover, the Company must identify similar segments present in different countries (MKT891F International Marketing Strategy, n.d.). Also, the Company must use certain variables while targeting global market segmentation like demographics, psychographics, behavioral characteristics and the benefits sought (MKT891F International Marketing Strategy, n.d.). And for demographic segmentation it has to consider variables like income, population, age distribution, gender, education and occupation (MKT891F International Marketing Strategy, n.d.). But even though Whirlpool may indulge in segmentation by income and population, it has be aware of the fact that it is essential to avoid using macro-level demographic data like income as the sole indicator to assess market opportunities because segmenting by income can sometimes become misleading or inappropriate (MKT891F International Marketing Strategy, n.d.). It has been observed that for products with low enough price, population is more an important variable whereas, for some services that are free or available at low costs in developing nations, the purchasing power is higher (MKT891F International Marketing Strategy, n.d.). Also, age can also be considered as a variable in terms of customer segmentation.
Question 5 (20 marks) How might consumer behavior and preferences for home appliances differ between Hong Kong and the European countries? What are the implications on the types of home appliances that are suitable for these two markets?
There might be huge differences in respect of consumer behavior and preferences for home appliances between Hong Kong market and the European markets (Roberts, Kayande & Srivastava, 2015). For an instance, it must be noted that unlike its European counterparts, in terms of purchasing home appliances, Honk Kong is a bit indifferent. It has been observed that the customer segments in Hong Kong are more inclined towards purchasing computer peripherals, medicines, auto parts and accessories, safety equipment, cosmetics and hygiene products, luxury products, tourism and services (Santander, 2018). Unlike the European markets, there is not a huge demand for home appliances in the Hong Kong market. Moreover, it has been observed that though like the European customers, the Hong Kong customers also shape their purchasing habit based on price; in the long-run it is the after sales that matters most for the Hong Kong consumers. Products like washing machine, in the context of Hong Kong market should be of high-quality and should be sold at a competitive price, and safety guarantees are also an important consideration when deciding which product to purchase (Santander, 2018). But this is not the case with European customers who prefer to put more emphasis on the design of the product. Though safety guarantees also matters for European customers, for the Hong Kong customers the worry is much more. Another major difference that can be observed between the purchasing behavior of Hong Kong consumers and European consumers is that, the former are more foreign brand conscious that fits to the Western culture whereas the European consumers are inclined to their domestic products too to a large extent. In this respect it must be noted that “As English-speakers who are open to Western culture, Hong Kong consumers tend not to prefer domestic products. The Hong Kong market is particularly favourable to brands that are endorsed by Asian fashion icons and Western celebrities. It must however be noted that purchasing power is strongly linked to stock market activity and real-estate prices” (Santander, 2018). But there are similarities too, for which there might be some implications on the types of home appliances that are suitable for the Hong Kong and European markets. Companies like Whirlpool must manufacture products that should be equipped with brochures and marketing promotions that impart information in a complete and thorough manner. The consumers of both the markets like innovative products and hence, the manufactured product must have signs and symbols of innovation.
casestudyinc.com (2010). Whirlpool’s Problems in China. Retrieved January 29, 2018, from http://www.casestudyinc.com/whirlpool-problems-in-china
Deschner, V. (2014). Whirlpool’s Globalization. Retrieved January 29, 2018, from https://prezi.com/x9pqkohlxxo_/whirlpools-globalization/
MKT891F International Marketing Strategy (n.d.). Week 10 Lecture. Unit 4 Global Market Segmentation, Targeting and Positioning.
Roberts, J., Kayande, U., & Srivastava, R.K. (2015). What’s Different About Emerging Markets, and What Does it Mean for Theory and Practice? Retrieved January 29, 2018, from https://link.springer.com/article/10.1007/s40547-015-0056-x
Santander (2018). Hong Kong: Reaching the Consumer. Retrieved January 25, 2018, from https://en.portal.santandertrade.com/analyse-markets/hong-kong/reaching-the-consumers