A promotional strategy is essential for any business in entering a new market. The promotional strategy will aim to direct the promotional activities in line with the business’ overall company aim.
It is effective to adopt an integrated marketing strategy where all elements of marketing are in line with the organisations wider strategy and to take a market orientated approach (Jobber and Lancaster, 2003) QKC will have differing aims in the short, medium and long term and the promotional strategies will need to compliment these defined plans and evolve overtime, from point of entry or short term promotions through to being established in the market and therefore the long term promotional strategy.
A product life cycle can outline the various stages a business will transcend through. In the short term, QKC, aim to enter the US market and build customer clientele. Marketing is effective if the organisation has a differential advantage and concise target market (Jobber and Lancaster, 2003) British carpet has a good reputation for being quality and seen as a status symbol, which generates both a functional and emotional need for QKC products.
Moreover, there is a gap in the US market for a carpet manufacturer who produces good quality Axminster carpet. Furthermore, a target market in the US has been defined. Axminster carpet is more desired by the contract market and demand will, “be spurred by increases in non residential construction and motor vehicle production. ”(Reuters, 2009), therefore, the contract market is the division QKC should focus on initially. In defining a promotional strategy for QKC, in the short term a focus should be on personal selling.
Personal selling is well suited to promoting to a contract market, and can be fully integrated with the marketing strategy, with the aid of a differential advantage and target market (Jobber and Lancaster, 2003) The contract market is likely to require the positive attributes that personal selling offers, promoting close relationships with customers; and personal service is an characteristic that the US market appreciates. QKC products are pricey and are likely to incur objections from prospects, personal selling will enable sales people to offset objections with validations.
Expressing the quality and life time value of products to rationalize price and highlight the benefits of their differential advantage. As QKC is just starting in the US market it will be ideal for them to delegate sales activities to agents in the US. An agent is a firm or individual, who will obtain orders on behalf of an exporter (Jobber and Lancaster, 2003) an advantage of this, is that a local sales force in the host country will understand the local culture, norms and customs. Moreover Local agents will be further acknowledged on potential prospects .
This could save time and costs on extensive market research, and gaining prospects using directories or cold calling. Personal selling will also aid in the development of long term aims of QKC, as it will serve information gathering, and future sales can be generated from customer recommendations. Furthermore, it will initiate the formation of Key Accounts and customer relationships. In the medium term, QKC should aim to build their customer base further and wider, and develop existing relationship with customers.
With the gained knowledge from previous promotions, in the medium term, QKC should invest in direct marketing and database marketing. Direct Marketing will target contract customers, and will involve the production and dispersion of catalogues/brochures, which advertise the QKC product range and features and could incorporate sales promotion in the form of a coupon that will generate inbound sales and potential prospects for the sales force. In the medium term, QKC is also likely to be in the position to build a database and this will facilitate promotions.
Direct marketing could be incorporated further to include e-leaflets/brochures which can be distributed to a wide range of business’ and organisations, through mail or e-mail, to save costs. In the long term, QKC will want to widen their customer market, geographically and by customer type. Aiming to target retailers, as well as their established contract market. QKC could set up a website, with details of their product range and company information. Furthermore, Direct Investment in terms of establishing sales subsidiaries, QKC’s own sales division would be ideal in the long term.
With a base in the US, the sales division could fully utilize focused training and motivation techniques accustomed to QKC business philosophy and centralised around the QKC product and aims. QKC will need to form a strategy for entering the US market. QKC is a small Enterprise and their finance and resources is fairly limited in contrast to Multi National Corporations that dominate the global market. Strategies available to firms vary including direct investment in the host country, through; building green sites to exporting and joint ventures (Griffin and Pustay, 2010).
QKC will be best suited to the exporting route as a strategy for entry, and specifically indirect exporting. This involves QKC working with export houses and agents within the US; they will act as intermediaries and facilitate purchases within the US market. (Jobber and Lancaster, 2003) Using indirect exporting for QKC will give QKC an opportunity to learn the US market before potentially establishing direct investment in manufacturing, it can be viewed as a “creeping commitment” (Griffin and Pustay, 2010).
This will generate less risk for QKC as Export agencies will have built up many contacts and existing relationships and can utilize these in order to sell QKC to most effective purchasers. As, stated QKC has no experience in exports, and the UK is an existing net exporter in quality carpets, so experienced and successful export companies are likely to exist. Furthermore, the import tariff for Axminster carpet is relatively low, and therefore this option of entry strategy is made even more viable.
This entry strategy also ties in with our promotional strategy of personal selling, using agents and export houses. Moreover, by manufacturing in England and then exporting to the US, QKC will be heralding the “Made in England” prestige. A Marketing plan will incorporate different elements of the marketing mix, and as mentioned previously the need for a well blended marketing mix is integral for a successful marketing plan as all elements play pivotal roles in the marketing orientation.
As QKC will be venturing to a foreign market, there will be greater emphasis on addressing the marketing mix and developing it to meet the demands of the US market. Product is “anything that is capable of satisfying customer needs” (Jobber, 2010) QKC has established the product they wish to offer the US market, and acknowledged that quality Axminster carpet, is a desired product in the US market. QKC already have a reputable brand name and image that can be standardized across international markets. However, it would be in QKC best interest to adopt an element of customisation.
The US market is wide and diverse and potential customers will possess different desires. It is essential that they tailor their product to the specific local needs of the US market. As stated in the case study, QKC do not employ specialist designers but operate on a freelance/contractual basis and possess strengths in their ability to be flexible in coping with new trends. QKC will benefit from sourcing the skills of designers in the US, to aid in the customisation of the carpets, in line with customers requirements.
As well as including the option of customisation, the breadth of variety in colour and patterns should be extended and matched to the trends of the US market. The product offering can be fully developed to include after care services, and warrantees. This will be especially important in eliminating cognitive dissonance and perceived risk, and building customer relationships. Price will need to be addressed in concerns with their emergence in the US. Price is an important part of the marketing mix as it will serve as the source of revenue for QKC.
Quality is a unique selling point for QKC product and to enable this differentiation price will need to reflect this. Also, Costs incurred for exporting, tariffs and subcontracting activities in the US will need to be considered in determining a price for the carpets offered in the US. The Case study outlines that QKC is unable to compete on price in the UK, and that their products are expensive. A premium price strategy will be ideal. In the US market there are fewer competitors who supply superior British carpet, to compete with on price, and a demand for Axminster carpet exists.
The price can be used as a further differential advantage adding value for the customer in terms of a price-quality match (Jobber, 2010). A premium price positioning strategy can support the brand image, and a high price can provide consistency within their marketing mix. Moreover, the use of discounts and a variety of credit options can be used further to attract more sales. Place within the marketing mix, is the element that refers to the method by which a customer attains a product (MFP Website Marketing, 2011).
For QKC, initially their target market is contract customers; and this will mean direct delivery of products to the business, without the need for a retailer intermediary. This is a task that should be carried out by indirect export houses, as recommended previously. The use of a catalogue/brochure and internet website will aid this delivery process. The internet offering extended benefits such as relatively low cost for exceptionally broad market coverage. It is necessary to realise that in the long term QKC may need to adapt distribution channels and adhere to the differing needs of customer.
For example a consumer is likely to want only one variant of your product and expect to purchase it immediately. A retailer is likely to want limited stock of a number of variants and not expect to pay for 60 days” (MFP Website Marketing, 2011) In addition, Promotion will need to be addressed. It will incorporate sales promotion, personal selling, public relations, advertising and direct marketing. As stated previously in the recommendations for promotional strategies, it will be effective for QKC to evolve in their promotions as the business develops in the US market.
QKC will need to ensure that the promotions used throughout their development serve promotions function, which is, ”Informing, persuading and influencing the consumers purchased decision”, (Boone and Kurtz, 1992) The external environment will affect promotions, and this element of the marketing mix will be affected by the customer type, with organisational and consumer buying decisions differing (Jobber, 2010) Promotions will also be affected by the geographic area and in the US the requirement for American English in advertisements and promotional literature will need to be accustomed.
There is a common perception that there is a need for a revised marketing mix to include extended elements of the marketing mix, including Physical Evidence, Process’ and People. A diagram of this is displayed within the appendix A. These extended elements will need to be addressed also for QKC. QKC is contemplating moving into other foreign markets including Australia. This would be a reasonable proposal for QKC in the intermediate term. Australia has very similar culture, legal, accounting and regulatory practices as the UK and US” (UKTI, 2011). This will mean that sales management in Australia by QKC can be fairly standardized with the practices used in the US, meaning less costs on customizing marketing efforts.
Australia is English speaking and therefore this further compliments the prospect of standardizing the marketing effort. Additionally, Australia’s economic growth averaged 3. % for the past 10 years and is predicted to grow at around 4% for the next two (UKTI, 2011), indicating that there is potential sales opportunities within Australia, with more building construction. Moreover, its proximity to the world's fastest growing region, the Asia Pacific, will offer further expansion opportunities for QKC in the future. However, distribution costs will need to be considered as the distance from the UK to Australia is vast. This could mean delays in delivery for customers and extra costs.
This may mean that more thought into setting up manufacturing subsidiaries in Australia will be required and that sales promotions will be used more to counteract delivery times. A move to Brazil has also been considered by QKC. Brazil is the fifth-largest country in the world and one of the world’s most rapidly developing economies. (UKTI, 2011). Brazil is located in fairly close proximity to the US and therefore products can be distributed between the countries easily.
Labour and land costs are low in Brazil compared to the US so manufacturing and sales subsidiaries could be based in Brazil and resources used in the US, to save costs. However, due to differences in business culture, language, legal and political activities in Brazil to the US or UK, marketing efforts are unlikely to be standardized, and extra resources will need to be employed to customize marketing and promotions to the Brazilian market.
I advise that a move in to Australia for QKC would be more viable in the intermediate term, as it will truly widen their global presence, and aid future expansion. The decision to progress to the US is a prosperous venture, with QKC operating inefficiently in the UK with excess manufacturing capacity and the UK market not stimulating demand to fulfil this, future prospects here are not appearing promising. With an effective marketing orientated approach and aid from outsourced professionals, QKC looks set to crack the US market and reap future benefits.