Global Marketing
Table of Contents
Marketing Communication and Promotion Strategy. 8
Marketing Communication Media. 11
Executive Summary
Lucky Strike is an American cigarette brand, which is owned by the British American Tobacco. The brand had a superb performance in the 1930s. However, it suffered several setbacks over the years. It was only last year that it started having a good impact in the market, courtesy of the Mad Med Show that showed actors smoking the Lucky Strike brand. Because of the positive sale figures propelled by the show, the British American Tobacco can increase global sales by venturing into the Chinese market. In the recent past, many western companies are finding the Chinese market too lucrative to shun. Accordingly, Lucky Strike is expected to do well in the market. This marketing plan lays out the approach that British American Tobacco should use to launch the brand in China.
Chinese Culture
The Chinese have a long and rich culture spanning over 5000 year. The growth of the Chinese culture, from the Zhou dynasty to the modern era, with its technological developments, continues to intrigue and pose serious challenges to multinationals planning to venture into the market (Glasse, 2010). Confucius philosophies have a big impact on contemporary Chinese people. His teaching on self-guidance and respect for ancestors created a society that places much emphasis on respect for parents. Therefore, Chinese give much credence to what their parents or ancestors considered important. Further, the doctrine of collectivism is rife in Chinese life, which is a further application of Confucius thought. Collectivism holds that people are motivated by norms and values held by the larger society. Personal ambitions are repressed in support of the wider values that a groups ascribes to, thus making it hard for one to chart their own course. In short, the Chinese culture is complex, full of myths and more collectivist (Glasse, 2010). The Chinese consider group conformity more important and valuable than personal preferences. The Chinese view punctuality as a virtue. They have more respect for family values, as opposed to Western societies. Therefore, the international marketer should delve deep into the Chinese ways and values in order to develop a marketing campaign that will appeal to their needs. Nothing that goes against their cultural way of life will be accepted. This might be disappointing for the company entering the Chinese market.
The Economy
Various sources (Liegsalz 2010, Peng 2010, Foreign Investment in China, 2009) reveal that FDI in China has been growing steadily over the years. This should not be surprising at all because China has a huge population as well as other resources that remain unexploited. In addition, the country has been pursuing open market policies for the last three decades. Additionally, the country’s efforts to woo investors have contributed to the rise in FDI (Liegsalz 2010, Peng 2010, Chen, 2011). Indeed, this development has also seen a rise in the number of FDI studies on China being undertaken in the last two decades. Further economic growth in China will continue to rely heavily on FDI and policy-making initiatives that will propel inward investments.
FDI has numerous benefits, both for the host country and the MNE (Liegsalz 2010, Peng 2010). FDI as well as the development of given industrial sectors is associated with a growth in infrastructure that supports the modern market economy. In addition, the country’s entrance into the WTO in 2001 has contributed to a rapid increase in imports, exports and FDI inflow (Foreign Investment in China, 2009). In essence, the country’s economic potential is a major motivation for western companies that are increasingly facing shrinking domestic markets (Chen, 2011).
Political Climate
The Chinese Government is a socialist regime whose political prospects are rather unpredictable. Most of the governments’ affairs are conducted in secrecy, which makes it difficult not know what the communist regime is thinking at any given time (China Political Risk Management, 2009, Glasse, 2010). There is a possibility of nationalization of industries. In addition, confiscation, contract repudiation, expropriation, and currency inconvertibility are a common phenomenon in China. Government bureaucracies, red tape, and corruption are normal in China (China Political Risk Management, 2009). Indeed, it is a well-known fact that government official demand and receives bribes before accepting any proposal to start operations in the country. It is also difficult to know the right direction in terms of the legal frameworks because of the constant wrangles between the central government and the provincial and local establishments (Glasse, 2010). This makes it difficult for new players to know what the rules of engagement are in any given situation (China Political Risk Management, 2009). Therefore, the prevailing political climate in China poses a huge challenge to any western company because of these identified risks.
Entry Mode
Based on the OLI (Ownership, Localization, and Internalization) framework, it is possible for a company to evaluate the most effective mode to enter a given market. Companies can choose an array of entry modes depending on several parameters. For the chosen company, the most visible entry mode would be through WFOEs (Wholly Foreign-Owned Enterprises). The growth of WFOE in China has risen in the past because of opening and restructuring (Wouters, Wilde and Defraigne, 2012) of the Chinese market to allow foreign investments. The most appropriate method would be establishing a processing plant in the country. The company can decide to build a new plant or acquire an existing one.
The Target Market
The campaign will be directed at people between the ages of 25 and 54 years, within the US and China. This age group is most likely to hold executive-level jobs. They will find the Lucky Strike cigarette being representative of their tastes and preferences. Lastly, the dynamics of the workplace and the high prevalence of smoking and drinking will greatly appeal to outlandish middle class.
Competitor Analysis
Competition in the cigarette market is intense in the Chinese market. One of the serious competitors that Lucky Strike is set to face is China Tobacco. This is a state-owned giant manufacturer that enjoys a virtual monopoly in China. The company’s total revenue accounts for about 30% of the global market, and it has a plethora of brands in China and abroad. Challenging such a company will not be an easy task for Lucky Strike. Apart from the conventional cigarette market, Lucky Strike will also face a host of electronic cigarette manufacturers such as Shenzhen Seego Technology Co. Limited (Shenzhen Seego Technology Company, 2014). The Chinese consumers are increasing becoming health conscious, and therefore, any new product in the market will be thoroughly evaluated before they make any conscious move to include it in their list of preferences. In addition, the e-cigarette is also getting preferential treatment in other countries because of its immense benefits compared to conventional cigarette. This might lead to a change of tact by Lucky Strike as it tries to re-invent itself in the home country as well as in the Chinese market. Lucky Strike will also face competition from Marlboro, 234, Camel and Kool, which have a wide presence in China.
Marketing Mix
The Product
Lucky Strike is a premium US brand that has an appeal to the upper class. In the new market, the brand will be positioned as a premium brand for people who want to explore various tastes. Various flavors, including a menthol flavor will be incorporated in the product line to add to the brands’ toasty flavor. This is will create more interest to the Chinese consumers and add value to the marketing effort.
Place
Lucky Strike will be marketed through various retail outlets. There are several retailers that carry foreign brand in their shelves, and these will be used more to carry the brand. In addition, independent distributors, in various regional and local localities will be identified to store and distribute the brand (Kotler., Kartajaya and Setiawan, 2010).
Price
The pricing strategy will reflect the position of the brand in the market. As a premium brand, the price will be slightly higher than local cigarettes (Kotler, Kartajaya and Setiawan, 2010). However, it will be pegged on other premium products such as Marlboro, 234, Camel and Kool.
Promotion
People are always exposed to tobacco ads in various ways. Although some Chinese authorities do not allow for advertising via the TV, Newspapers, posters, or billboards, wherever possible, these media will be used to pass on the message to the target group (Kotler, Kartajaya and Setiawan, 2010). Stealth marketing will be used to create a buzz about Lucky Strike brand. Point-of-sale outlets will be used as the most convenient avenues of passing the messages to prospective consumers. Product giveaways, price discounts will be instrumental in the promotional effort.
Marketing Communication and Promotion Strategy
The marketing communications methods are important. The effectiveness of the marketing strategy depends on the communication methods employed by a company. Therefore, it is important to ensure that the communications methods used are effective in reaching the target market (Kotler., Kartajaya and Setiawan, 2010). The communication techniques will include personal selling, advertising, public relations, internet marketing, and promotions.
Personal Selling
Personal selling is a one-on-one interaction with the customer. The idea of caring for the customer, in terms of meeting his or her needs, is important. The customer needs to know that the advertising person is not targeting his or her money only, but also caring for the customers needs (Kotler, Kartajaya and Setiawan, 2010). In personal communication, the advertiser has a one-on-one communication with the customer. It is at the interaction level that the marketer will get to know the customer’s reaction to the new brand.
Advertising
Advertising of tobacco products is prohibited in many jurisdictions. However, some locations do allow outdoor campaigns. These areas will be used to advertise Lucky Strike in China. Advertising of the new cigarette will mean that the company takes up various tasks and choose the media that will carry the message. Advertising will focus on informing the target audience about the new brands and the Mad Men show, which has several advertisers smoking the cigarette. Various media will be chosen to carry the advertisements including posters, flyers, and billboards in locations where outdoor advertising is allowed. The advertising message will focus more on the value of the new brand as opposed to established ones. In recent years, more and more Chinese people are focusing more on value and quality rather than patriotism (Kotler, Kartajaya and Setiawan, 2010). This new trend will give Lucky Strike a platform to appeal to the health conscious customer segment.
Public Relations
Public relations are involved in promoting of products using various methods that include various print media (Kotler, Kartajaya and Setiawan, 2010). The company usually does not have to pay for the service since someone may pick a story from the success of the company’s products and write on local or national print media or audiovisual media. The information, thus, reaches a larger audience, especially those who buy a certain magazine or newspaper. Using national magazines or newspapers will increase the market coverage, as opposed to local papers. The message can be carried in the form of a commentary on the role of multinational enterprises and how they have influenced the country’s economic growth. The commentary can give a wide coverage on new and upcoming companies, where Lucky Strike might feature. Those who read the commentary will know that a new cigarette brand will available in their shops soon.
The Digital Media
The digital platform is quickly taking over the conventional means of communication (Sacristan 2013). Innovations in technology have revolutionized the way in which consumers use media such as TV (Young, S. K. and Abreu, 2010). Internet marketing has become a great marketing venture since most of the people nowadays are connected to the internet. In the China, about 65% of adult user visit social networking site (Zhang, Wang and Alon 2011). Other age groups have also continued to report an increasing use of the internet in the last 5 years (Zhang, Wang and Alon 2011). Marketers will be able to send direct mail to customers email addresses and get feedbacks easily.
Promotions
The company will engage its staff in various promotion ventures around the country. This will increase the customers’ desire to buy or taste the new brand. Getting the customers’ attention is the key in marketing, and the company will have to use promotional tactics effectively to create demand for the cigarette. In the context of severe restrictions on the TAPS approach, point-of-sale environments will be instrumental in passing on the message to potential buyers (Kotler, Kartajaya and Setiawan, 2010). Posters will be placed strategically in retail outlets. In addition, signs and audiovisual material will be placed in strategic positions to catch the eyes of potential customers. In addition, discounts and products giveaways will be used as promotional tools in the retail outlets.
Marketing Communication Media
The choice of the marketing media is critical in reaching the targeted audience. The success in the marketing of the new brand rises and falls on how the chosen media is harnessed (Kotler, Kartajaya and Setiawan, 2010). Various media will be used in marketing the brand. These will include the television, radio, and print media like newspapers, magazines, journals, posters, and flyers among others. The logic behind such media is their ability to deliver the message to the customer persuasively and without distortion. The message delivered through the channels should be clear and concise to enable the customer to efficiency decipher the message. The choice of any media will depend on viewership or circulation in the country.
Print media will be critical as an important avenue of reaching the right groups with the right message. The print media is very important since it has the advantage of keeping the information for a long time, as opposed to audio and audio-visual media. Print media has a wide coverage as people may read the flyers at any one time (Kotler, Kartajaya and Setiawan, 2010). The disadvantage is that some people may choose to throw the fliers they have been given in dustbins. In addition, posters are a great way of disseminating information since they are posted in conspicuous places where people get to view them. Advertisements will be put on newspapers, journals, flyers, magazines, and posters among many others. Print media are prone to tear and wear quickly. Print media especially the newspapers are dependent on the buyers since not all the people buy newspapers.
In using flyers and posters, a small area may be covered at a time. People are handed the flyers and posters are put on the walls in public places where people congregate most of the time like bus stops (Kotler, Kartajaya and Setiawan, 2010). This will ensure that a large part of the population is reached. The media are able to stay for longer periods if not tampered with by vandals. Posters and flyers can be effectively used to pass across the message in certain areas. For the effective use of the print media, the company will focus on developing strategies to come up with a method of reaching areas that need more posters than flyers.
Another approach would be using below-the-line activities (BTL) to give support to the mainstream media efforts. Flash mobs, people who congregate in certain pre-planned areas such as shopping malls and traffic junctions, will also be targeted. With posters held high, the groups will chant “Lucky Strike, coming soon.” The sales team will then disperse immediately after drawing the attention of the onlookers. In addition, another group of people will target people in the trains and buses where they will interact with people and discuss the about the brand. In another effort to initiate interest, placards, with the name, Mad Men Show Coming Soon, will be held the arrival lounge of Chinese main airports during peak hours. These efforts will significantly generate interest among the passengers and likely influence their likelihood of watching the new show that has main actors smoking the Lucky Strike brand.
References
Chen, C. (2011). Foreign Direct Investment in China. London: Edward Elgar Publishing.
China Political Risk Management, (2009). China Monitor, Retrieved from http://www.chinariskmanagement.com/Political.html
Foreign Investment in China. (2009). USCBC, Retrieved from http://www.uschina.org/info/forecast/2007/foreign-investment.html
Glasse, J. (2010). Foreign Business in China Political Instability. Retrieved from http://www.faqs.org/abstracts/Business-international/
Kotler, P., Kartajaya, H Aand Setiawan, I. (2010). Marketing 3.0. From Products to Customers to the Human Spirit. New York: John Wiley and Sons.
Shenzhen Seego Technology Company. (2014). About Us. Retrieved from http://www.szseego.com/
Wouters, J., Wilde, D. T. and Defraigne, P. (2012). China, the European Union, and the Restructuring of Global Governance. London: Edward Elgar Publishing.
Young, S. K. and Abreu, C. L. (2010). Internet Addiction: A Handbook and Guide to Evaluation and Treatment. New York: John Wiley and Sons.
Zhang, W., Wang, H. and Alon, I. (2011). Entrepreneurial and Business Elites of China: The Chinese Returnees who have Shaped Modern China. London: Emerald Group Publishing.
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