MKTG602 Case Analysis Report

MKTG602 Case Analysis Report Instructions

This is an individual assignment. It focuses on a Case from an International Marketing textbook.The Report is worth 30% of the total marks in this Unit.

What You Should Do

Note that the Report does not simply involve summarising the Case and answering the Case Questions that appear at the end of the Case. You should:

  • Include a brief profile of the organisation in the case
  • Provide a summary of the case
  • Identify the keyissue and any secondary issues in the Case (separate them)
  • Identify what the case is illustrating about International Marketing and link it to what is being covered in lecture topics
  • Locate two appropriate academic journal articles (see the Recommended Journals in the Unit Outline as a starting point)
  • Briefly profile the two chosen academic articles* and discuss how they can be related to the case
  • Recommended solution to the key issue
  • Personal conclusions that are drawn about International Marketing, based on the Case

Case Examples

Case 11: Australian Banks – Global Opportunities (Pg411-418)
Case 13: DiBetta Coffee – Modifications for New Markets (Pg478-451)
Case 14: IKEA – Ready to Localise for the Indian Market (Pg513-517)
Case 15: Rebuilding a Brand: Malaysian Airlines (Pg557-560)

The Report

The Report should be uploaded to Turnitin before the deadline on the set due date (see the Unit Outline for these). It should have an ACU cover page with full details provided, and should be in A4 format. It should follow the structure detailed below and overleaf, and include a Table of Contents (with page numbering), to assist readability. All pages in the main body should be numbered.

Structure for the Report

  1. Introduction (100 words)
  2. Brief profile of the organisation in the case (100 words)
  3. Brief summary of the case (200 words)
  4. Identify and discuss the key issue in the case (and why) (200)
  5. Identifyand discuss the secondary issues in the case(and why) (200)
  6. Discuss what the case illustrates about international marketing/lecture topics (300 words)
  7. Identify and profile the chosen two academic articles from the literature (100 words) *
  8. Identify possible linkage between the two academic articles and the case (200 words) *
  9. Recommended solution to the key case issue (and linkages) (200 words)
  10. Personal conclusions that can be drawn from the case(150 words)

Bibliography

 

MKTG602 Case Analysis Report Sample Answer

IKEA – Ready to Localise for the Indian Market

Introduction

International marketing refers to the company’s marketing activities outside its local territory. Although similar marketing concepts are used, there are various aspects in the foreign market that may make it hard to use similar marketing techniques used as standards methods for the company. A company trading in the foreign country should focus on making profit. In this regard, it may need to adjust some of its ways of doing business to fit the new foreign market. This may be due to variation of life and culture of people living in the foreign nation compared to the local country. This paper reviews international marketing with regard to the Case Study 14 provided in the test book.

Brief IKEA Profile

IKEA is the biggest furniture retailer company in the globe. It is a value-driven firm with a life at home passion. The company vision is to develop an improved daily life many people in the society. The company business notion is to give an extensive range of functional, well-designed home furnishing products to enhance the affordability of majority in the society. Based on 2014 statistics, the company had 315 stores distributed in 27 nations. The company had 1002 suppliers of home furnishing originating from 51 nations. However 59% of the company production was carried out in Europe, which contains 222 stores of the total 315. The company has 217 million of catalogues, printed in 30 different languages (Ikae.com, 2014).

 Case Summary

In the selectedcase, IKEA, an international furniture retail company is focusing on entering in the Indian market. India has high rate of growing middle-class population in the country, which are the company’s targeted customers. India is also among the fast growing economies in Asia, which goes hand in hand with the growing customers spending. The country’s furniture market is also anticipated to grow by 26%, between 2014 and 2019, and thus, creating a good chance for the company to grow (Flerdner& Crawford, 2017, p. 513). However, the company is expecting to face various challenges that include competition from both local and international companies, need to focus on the Indian furniture taste and preference, especially those initiated by Indian culture, and need to change the company’s model to fit the demand of the locals, especially with regard to pricing and products delivery to remain competitive (p.514). Most of middle class individuals in India prefer products sold at lower prices and with delivery and assembly services in case of furniture, thus the Do-it-yourself (DIY) model may never work here. If this is implemented, the transport and assembly cost will be added to the product cost, increasing the product prices, an aspect that will not fair very well with the company (p.514).

Key Issues in the Case

One of the key issues in this case is understand the Indian furniture market, identifying aspects that differ from the company’s business model and business approach. The company basically employs DIY strategy which may not work in India where customers prefer getting after sale services that include the transportation and assembling. This goes hand in hand with the pricing issues where the company will need for additional charges for transportation and assembling. This may reduce the company’s competitiveness based on the fact that there are local competitors who offer similar goods at a cheaper price, and include these services for free. Another key issue is the variation of the Indian’s furniture taste and preference from what the IKEA has in its catalogue. Indians value culture and hence they may consider products that have cultural aspect in them other than those that are 100% westernized. The company may therefore need to create a new catalogue for the country. The above identified issues are considered as key issues because they directly affect the company’s ability to impress customers in this market. They highly determine how the company should carry its operations in the country to be able to compete with existing local and international companies and to maintain its international legacy.

Secondary Issues in the Case

One of the secondary issues is the patent. The company has unique designs that are likely to enhance its competitive advantage in the market. However, India does not have a patent law to help it protect its designs. This means, its products may be imitated sooner or later after venturing into the Indian market. This was experienced in China which has similar intellectual property rights as those found in India (Flerdner& Crawford, 2017, p.515). Another secondary issue is the company’s ability to breakeven in this market. Pricing is the major factor in this market. People prefer quality products at low prices. The company then has to develop a strategy to satisfy customer needs and expectation and make profit. This may force the company to reduce its production cost, mostly by sourcing more raw materials in the country and producing more differentiated products to cater for all, including those with high preference for low prices. However, it is not clear whether the new measures will help the company to break even in the country, and when this will happen (p.515). Another secondary issue is the selling strategy. IKEA local competitors can comfortably sell their products online. However, no foreign direct investment (FDI) is allowed to do online selling in the country, this limits the company operational level (p. 515). The following issues are secondary because they are probable to affect the company business operations later and not when in the first stages of venturing into the Indian market.

Case Illustration of the International Marketing Topic

International marketing refers to business activities performance which direct the company’s services and goods flow to consumers, utilizes over one country for a profit. The main difference between local and international marketing is the environment in which the plans of marketing are implemented. The foreign marketing uniqueness comes from different unfamiliar issues and different strategies essential to cope with varying uncertainty levels faced in the foreign markets. This is clearly illustrated in the selected case. Although IKEA has been using DYI strategies in Australia, this strategy cannot work in India. Consequently, the company must change its business model to fit Do-it–for-me DIFM. This also changes the company’s marketing strategies to fit this business model and other related aspects that include product pricing with DIY and DIFM system. International marketing is also impacted by uncontrollable environmental elements. One of these elements is culture. Marketers are required to adjust to the new culture of a foreign country. The cultural adjustment task is possibly the most important and challenging experience that international marketers’ encounter. Culture forces international marketers to change their marketing efforts to fit the culture of the new market environment (Ghauri&Cateora, 2011, p.14). The cultural marketing challenge is also demonstrated in this case. The company has an extensive catalogue which it uses to communicate its products specifications to its potential and existing customers in the world. This catalogue is written in different languages to address the cultural aspect of language variation. However, despite the language aspect, the company will need to change or add more designs in its catalogue to fit Indian cultural furniture design aspect. This change will go hand in hand with the change of some of the marketing aspects to fit the new Indian culture. The country also restricts ecommerce from FDI, and thus, the company cannot adopt this marketing strategy despite using it in other countries.

Identifying and Profiling the Two Selected Academic Articles

The two selected academic journals include Otuedon (2016), and Abdin (2008). Abdindiscusses how culture influences international marketing. According to the author, culture contains high effect on international marketing, and thus a marketer has to conduct an in-depth survey regarding the local culture, prior to providing a product to the market. The author cites effective communication as one way of enhancing international marketing (p.2). Otuedon (2016) evaluates the key factors which impact price in the market and aspects which influence channel strategies and structures and as the debate over international advertising localization and standardization (p.42).

Linkage between the Articles and the Case

Abdin (2008) evaluates various cultural aspects that influence international marketing. According to him, the company can develop a standardized international marketing strategy. However, there are aspects of this marketing strategy that must be changed for it to fit in the specific locality. Abdin gives an example of language, where he emphasizes that marketers must have the local tone and language to do marketing well (p. 9). This is clearly applicable in the translating the IKEA catalogue in Indian language (Hindi) to ensure that they clearly understand the products descriptions and the available forms of transaction or means of payment. He also addresses the assimilation aspect of cultural value where people can resist new cultures to maintain their old culture (p. 11). This can be related with the requirement of Indian’s cultural aspects in the furniture design.
Otuedon (2016) reviews factors that impact global pricing decision which according to him include cost, price demand elasticity, competition, nature of industry or product, distribution system, and production facility among others. This relate with the need to change the products pricing based on distribution system. IKEA feels that it should include transportation cost for those who opt for DIFM model. In addition, the company considers localizing the production for Indian’s products by sourcing the products locally, to be able to reduce the products cost and adapts the design culture required. The main aim of reducing cost is to improve its competitiveness among other local companies in the industry (p.43).

Recommended Solution to the Key Case Issue

The best strategy to employ to understand the Indian furniture market is to conduct an intensive survey. The survey should focus on the targeted customers; middle class people, with intention of identifying their taste and preference with regard to the furniture design, quality, method of distribution. The survey should also focus on solving the issue of products pricing with relation to the method of delivery. The research should try to identify what is more important to customers between prices and quality, and pricing and after sale services. This will help the company to know what should be slightly compromised to adhere to the customers’ likes and dislikes. For instance, if price is a main issue compared to quality, the company can consider developing affordable products with lower quality standard from the expensively designed products. The survey should also consider determining whether customers would be willing to pay extra cost for DIFM model. This will give the company the best strategy to follow with regard to products distribution. The company also needs to investigate on the variation in the targeted customers taste and preference with regard to the products design. Although there are those who would prefer westernized designs, there are those who would like to see their cultural aspects integrated in the western design. Thus, survey on people preferences in design would be important to identify the commonly preferred design and the population ration in the preference of each design.

Personal Conclusion

International companies face a number of challenges while venturing to new markers, especially in conservative countries where culture is highly embraced, and in developing economy where lifestyle is considerably different from developed nations. To succeed in doing business in such countries, international companies need to conduct a thorough survey on aspects that may influence their business and determine whether it is possible to succeed in the new market. Beside legal restriction that must be experienced in any international market, these companies need to consider other factors that include cultural aspects, consumer’s behaviours with regard to quality, prices, after sale services, and competition. The success of IKEA in Indian market is highly determined by how well the company will manage to address the challenges presented by the identified factors. A thorough survey is needed to ensure that the company has the right information regarding the new market, to be able to satisfy the market and to outshine others competitors in the market.

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