The report covers aspects of marketing strategies for Ashanti Solutions Company. This company overview is a UK firm that provides services such as promotions, advertising to other clients. The report is generated to show a marketing strategy of a new product entering a new market and covering all its aspects of strategies, competition, risks and benefits in considering such a strategy. The aim is to produce this plan that the company can use for decision making by covering the aspects of market segmentation, targeting strategy and positioning, Porter's 5 Forces in competitive advantages etc.
The report will be applied to the Ashanti Marketing Solutions Limited firm which as a senior marketing consultant will use different aspects in encouraging the firm to provide strategic marketing tools. According to Davies, S. (2011), Strategic Marketing itself is a way of planning ahead and utilising the functions of the firms operations by establishing the strengths and weaknesses in a competitive market. However, in certain options the report will generate ideas of products/ services to be used in entering new markets, using market segmentations and also researching the PESTLE analysis of the external environment. In the end of the report conclusions and recommendations will be drawn for Ashanti Marketing Solutions and how they can improve their business which targets the aim of this report.
Q1 – Recommend a Product and Country to Enter
Ashanti Marketing Solutions Company is a marketing firm that supplies services in promotions, advertising, PR, etc. A good approach for them to use in entering new markets would be to have a new product, this can generate a new aspect of customer, expand the business, and increase market share as well as profit margin. The following below are given the recommendations:
|New Product for Ashanti Marketing solutions||Recommendations||New Country to enter||Recommendations|
|Web design service as part of the company’s services. As Ashanti Marketing Solution already has services such as advertising, promotions, PR etc., Web design encompasses the production and maintenance of websites. This will include such as development of websites, branding, content, visuals interface design, proprietary software; user experience design; and search engine optimization.||New product development for customers that would use web designing as well as the other services that Ashanti Solutions can provide
Targeting customers with a new service. With this new service is beneficial to expand the business, attract more customers and increase profits.
|Germany – a European market to enter with the new product. This selection would be beneficial for Ashanti Solutions as the firm is a UK company the next closest market to enter would be Germany. The economy of Germany is a highly developed market. It has the largest national economy in Europe, the fourth-largest by nominal GDP in the world which is growing fast and has good opportunities for Ashanti Solutions to grow in comparison to the other firms.||
Germany market with this product can be useful as fewer competitors in this market by applying Porter’s five forces.
Increase market share
Expand business in entering new markets
Increase customer and attract potential customers
Market size, market growth, market share, infrastructure is good for the company to enter
Macro-environment are the factors that impacts organisations at an external level which reflect outside of the firms capabilities. This can affect the organisations in areas such as competition, PESTLE analysis and the market identification PESTLE Analysis (2018). As per Ashanti Marketing solutions company a PESTLE analysis must be given before entering a country. PESTLE analysis is a concept in marketing principles. Moreover, this concept is used as a tool to track the environment to launch a product/service etc.
- Political: this applies where the government tends to influence the economy and business environment including tax policies, fiscal policy, trade tariffs etc. as the company entering Germany market, they should first analyze the policies, tax in Germany to give an aspect of how will affect the business, for e.g. Germany tax rate (corporate income tax, solidarity surcharge, trade tax,) approximately 30% to 33%. If it tax increases this will become a threat for the company which would have less profit.
- Economic: These factors include interest rates, inflation rate, foreign exchange rates, economic growth patterns etc. Germany economy has been the fastest growing in Europe with a strong GDP and been the fifth in worldwide economic growth in 2017. This can be very beneficial for Ashanti Solutions because of high demand, market share and gaining of profits. However, if there’s a rise in the inflation rate would affect the way companies’ price their products.
- Social: this tends to reflect in cultural trends, demographics, population analytics etc.in Germany size of population in each area, divisions of markets and customer preferences is information to identify for Ashanti solutions in order to target the product. However, if there’s a high demand in these market for Web designing therefore can be suitable for the company to enter.
- Technological: this affect the operation of the firm in innovation and creativity. The more advanced equipment the company can have the more efficient and effective process would be to operate as is faster and useful. In Germany technology tends to be as similar as the UK however it is costly which means the company needs to set a specific budget in how much they would invest in technology.
- Legal: These are certain laws that affect the business environment and certain policies in a country For example, consumer laws, safety standards, labor laws etc. Legal consideration therefore in Germany should be focused in terms of the consumer laws, employment laws etc. in order to reflect to its impacts.
- Environmental: These factors include all the surrounding environment such as climate, weather, geographical location, global changes in climate, environmental offsets, pollution etc. it is important for Ashanti solutions to research the environment in Germany in identifying the areas, level of pollution, recycling and ecofriendly.
Threats that the company will face can be such as:
Threats would affect the company such as Market risks (availability of inputs, cost fluctuations, competition, customer preferences etc. Operational (maintenance, suitability, safety) employees by having skilful staff in developing web design. Failure to complete project because of failure in design, financing or planning. Environmental or societal impacts of the company’s activities and currency fluctuations, inflation, changes to taxation could all relate to risks. In order to avoid these threats, Ashanti should develop an effective plan by analysing all the aspects of the market, use better research and development programmes and skilful staff.
Q2 – The Three Modes of Market Entry
In order to enter markets such as Germany, there are different models used for companies to decide in which strategy could work for them. In this case will be looking at three modes of entry and choose which one of them could apply to Ashanti Solutions Company. Market entries could affect companies in different ways which is important to collect data for e.g. the level of risk, market size and growth, competitive intensity, availability of distribution channel, issues such as regulation and barriers and so on.
Strategic alliances is where two or more parties agree to a set of objectives in working together but remaining as independent Davies, S. (2011). This may be suitable if organization decides to work together in forming alliances in different projects and markets. However, in the case of Ashanti Solutions using strategic alliances may perhaps work with other agencies in the same industry in Germany market to prepare for projects. In terms of the new product as wed design this model won’t be useful for the company because of the market they are entering.
Mergers, Acquisitions and Joint ventures
Mergers and acquisitions are strategies used to process the ownership of companies, joining together with other business or work on operations and projects. If a company decided to take over another business a merge will occur. If they decide to use acquisitions instead then they would work with other business in specific projects or operations. This can be beneficial as it can increase the company’s market share and also economies of scale – decreasing costs, especially if the merged companies are administratively centralized and rationalized Kotler, P. Armstrong, G., Cunningham, M. H. (2005.
There are two types of mergers: vertical integration and horizontal integration. Horizontal integration is the merging of businesses that are at the same stage of production. Horizontal growth is the expanding of a company’s activities into other geographic regions or by increasing the range of products and services offered to current markets. For Ashanti solutions they could identify other marketing companies already existing in Germany and negotiate in merging with them or forming acquisitions. Vertical integration is the merging together of two businesses that are at different stages of production. The degree to which a firm owns its upstream suppliers (backward integration) and its downstream suppliers (forward integration) Hollensen, S (2010).
Vertical Integration – Benefits
- Gain access to downstream distribution channels that otherwise would be inaccessible
- Better planning, coordination and scheduling
- Reduce transportation costs
- Upstream or downstream profit margins
Vertical integration - Drawbacks
- Potentially higher costs
- Increased bureaucratic costs
- It may inhibit a company changing its suppliers
- Decreased flexibility
Joint ventures are types of alliances that is another strategic tool in order to use in market entries Piercy, N. (2009). In foreign markets types of alliances should apply by management contracts, franchising, licensing or sub-contracting agreements. These depends on the level of the companies joint venture and its market size.
Foreign direct investment FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct control Kotabe, M and Helsen, K. (2011). In terms of entering the German market this approach could be used for Ashanti Solutions Company because they can take full control of the market especially with the new product launching. Also they can benefit from its market share, increase customers and retain profits. Also Ashanti Solutions can benefit from tight control over operations in different countries such as Germany and become a more focused global coordination as well as have access of economies of scale. This can be for a long term to approach as it becomes time consuming as well as can be costly, in terms of financial resources.
Overall, in planning strategic market entries for Ashanti Solutions company, in terms of reducing costs and reduce level of risk in entering markets is best for the company to start with as joint venture. This can be done in forms of franchising, licensing or subcontracting agreement for a safer position in the market. This option can allow the firm to enter Germany’s market, gain market share and increase awareness through their brand name and customer recognition at first before planning further in using other forms of options.
Q3 – Market Segmentation
Market segmentation is the customers are divided into different groups or segments. Companies can therefore decide to create separate products for each segments or same product targeting different segments Tutor2u (2018). This can enhance profit for businesses as by segmenting markets, businesses can raise average prices and can build sales. Through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs.
There are four different categories of market segmentation – these are demographic, geographic, behavioral and physiographic Dibb, S Simkin, L, Pride, W and Ferrell, O. (2012). Demographic segmentation relates to customers income, earning, classification of population, gender, etc. if Ashanti Solutions would approach demographic segmentation, will be able to see customers preferences, incomes etc. in order to target. Geographical segmentation relates to customer divided in different areas and regions such as local, rural, national etc. if Ashanti Solutions would approach this segmentation, can target customers in some specific areas of the market. Behavioral segmentation reflects on how customers tend to behave in the market through price, offers, promotions decision making etc. Ashanti Solutions Company segmenting customer through this segmentation would be beneficial to identify the customer preference and also to retain them through offers and prices. Lastly, physiographic segmentation mostly applies in customers’ attitudes, opinions, interest, perception of products etc. this segment also can apply to Ashanti Solutions simply because the perception of products subjects feedback and understanding of customers’ needs and wants in different markets.
Based upon the segmentations the next stage would be to provide a targeting strategy for Ashanti Solutions Company in Germany market. This strategy is a selection of customer the company can sell products and services too Mbask (2018). Depending on decision making not all firms can choose all segmentations perhaps they could go for one or two. Target a market reflects in segmentation, targeting and positioning which also reflects in marketing mix of the 4 p’s, product, price, place and promotion. In order to build a successful strategy marketing mix each P, must be well prepared. As Ashanti Solutions Company offers a wide range of products and services can be decided to introduce a generic product as in mass marketing or launch a different product for different segments as in multi segment marketing. Because is a new service Web Design entering Germany market, the customer to be targeted can be professionals, other small- medium firms willing to provide designing websites or new set up businesses. This can be segmented by geographical segmentation and physiographic segmentation.
Therefore there are different types of target markets:
- Niche/ concentrated marketing: this aims only to a small proportion of the market where a few customers would be targeted. Ashanti Solution Company would have a well-defined group of customers and meeting specialized customer needs which is the most suitable one they can apply as they target a few segments.
- Mass/undifferentiated marketing: this is where a company sells its same generic product to all of its customers.
- Selective/ differentiated marketing: this is where a company provides different types of products to different types of customer segments. They’ll be targeting different customers with different products. A company may opt to provide different offerings to different consumer segments
Positioning is where the needs of customers and market are identified, the position of competitors and strength and weaknesses of the firm. The purpose of positioning it allows companies to keep ahead of competition and understand its market well. This is classified by the marketing mix of 4 Ps as suggested. Marketing mix for Ashanti Solutions can apply:
Product – new service to launch in Germany of Web design
Price – pricing strategies will be meeting the current market piece of Germany not high and not low with some offers and deals of packages depending on the design of the website.
Place – is the convenience of the customer been able to attend. In the case of the company can be an online service for the customers to suit their convenience.
Promotion – there are different types of promotion tools such as advertising, leaflet, poster, radio, online marketing etc. for the case of the company they should use a mixture of promotions in Germany’s market to increase a level of awareness.
Therefore, to position the new product in Germany, by targeting customers in few segments such as professionals, SME companies, and to use niche/ concentrated market would be suitable at first as well promoting their business in creating awareness of the new product can be costly.
Q4 – Porter Five Forces Strategies
Competitive advantage is important in the market where organisations outperforms its competitors. This may include access to natural resources, highly skilled staff, new technology etc. According to Porter’s five forces, this analyses five stages of competition that can give an overview to the industry they’re in and also helps to identify the strengths and weaknesses in order to search profitability Investopedia, (2018). The five forces are as follows:
Competition rivalry – this force is where a number of competitors in the market of the same industry are and they can threaten the company when entering the market. In relation to Ashanti Solutions Company, other companies that are in the same industry as the organization in Germany can be as a threat. The more of these firms there are the less the power of Ashanti Solutions in this market D. D’Alimonte, (2012). If competition is low than the company has a greater power to sell and increase profits in the market because they have access to their customers.
Threat of New Entrants – this suggest when companies enter new markets just like Ashanti Solutions enters Germany market the competitors can find this a threat. Companies prefer to have less competition in order to gain access to market and not share with other companies.
Power of Suppliers – this shows an approach for the supplies to drive up the price of good and services when competition is high as there would be many organizations competing with each other that lead suppliers to set their own prices which is affected how would cost companies to switch from one supplier to the other Kotler, P. Armstrong, G., Cunningham, M. H. (2005). The fewer the number of suppliers, and the more a company depends upon a supplier the more power a supplier holds.
Power of Customers – this shows how much demand there is in the market rather if is increasing or decreasing, however the ability that customers have to drive prices down because the smaller and more powerful a customer is the more power has.
Threat of Substitutes – this is where companies can substitute’s products and services in the market, e.g. when a product tends to be substituted with another product.Substitute products can replace a product but are not a direct competitor. When a product has many potential substitutes in a market, its competitiveness is reduced.
In terms of Ashanti Solutions, they are entering Germany market as a threat of new entrant for the organisations already existing there where the power of suppliers would increase because they have more competitors to supply and can increase prices of its goods. High costs, high exit costs, and slow market growth all increase the level of rivalry between competitors in the market but the effect of competition is often to reduce profits Kotler, P. Armstrong, G., Cunningham, M. H. (2005). Competitors in a market will always be attempting to gain a competitive advantage. However, the buyers in market become powerful this can set up the prices paid for supplies which can increase the level of competition among suppliers. On the other side where suppliers are powerful in a market they can include high process but if they are too many suppliers can increase competition between them. In Ashanti solution case, because they providing a service, their competition would increase as soon as they enter the market and reach to the buyers. They would gain competitive advantage in Germany because demand the power of buyers and also different areas have different companies.
Overall summary, investigating Ashanti Solutions limited, covering the main aspect of developing a marketing strategy of a new product and in entering a new country has given the understanding of how business can benefit at the same time facing threats and risks in such markets. Developing solutions for risks is the main approach in decision making and problem solving. The recommendations given to the company in terms of analysing the market, investigating and collecting data from the market and evaluating the data from the PESTLE analysis is useful to make good decisions. Therefore, Ashanti Solutions Company should apply a useful marketing strategy.
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