A Report critically analyzing the impact of a foreign market’s cultural environment on international marketing mix strategy decisions.

1.0 Executive Summary

The Gulf Cooperation Council (GCC) perfume industry is approximately, Dh eleven million per year; this is about 20% of globals market. Perfume sector deals mainly with firms which produce perfumes whether alcoholic, oils or non-alcoholics fragrances. In the United Arab Emirates (UAE), perfume sector is in its maturity phase with merely a few surviving companies in the market (such as Ajmal, Rasasi, Al Haramain and Swiss Arabian), following Gulf war instability that has impacted this domain. These firms dominate UAE market and also competitive advantage as a result of unique marketing strategies and dynamics (Arthur et al, 2010). The paper goes ahead to evaluate reviews, the tactical scheme for UAE Perfume Company with the goal of understanding the dynamics and structure involved internalization. Whereas UAE Perfume Company has purposed to enter the Italian company that is mainly dominated by quality perfume brands, the company has to go a notch higher and embrace modern technology in bid to align its brand. Carrying a macro and micro-environmental analysis before entering this new market would be the best approach for the company (Arthur et al, 2010). Macro-environmental analysis will enable the firm to assess variables needed while intending to operate in Italian market. Such variables include; political, economic, social and technological. In bid to evaluate micro-environmental factors, the company will use Porter’s five forces model that evaluates, purchasing power, buying power, new entrants, threats of substitutes and so forth.

A Report critically analyzing the impact of a foreign market’s cultural environment on international marketing mix strategy decisions.

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2.0 Introduction

Internationalization will be a main opportunity for UAE Perfume Company. Moreover, this would present an appropriate ability for the economy of UAE when it comes to increasing returns and market share. Because the web has become an international communication channel, UAE Perfume Company should take advantage of it as it expands to Italian market (Charles et al. 2009). For example some of its local rivals such as Rasasi has embraced online marketing which has allowed the firm to develop new products within a short time, reducing communication costs and increasing efficiency of employees through enahnaced partnership. Moreover, the company should not ignore youthful buyers since they are the majority of Italian market.

3.0 Product Analysis

3.1 Product description

Arabian Perfume epitomizes the magnificence as well as quality of Arabian sand. In addition, Arabian Perfume will provide a wide-ranging premium scents for both conventional and modern responsiveness (Hayden, 2006). Arabian Perfume is an actually scented heritage.

3.2 Value positioning

Value positioning will be an essential factor aspect for UAE Company because it will not only assist the firm in the identification but also satisfying unmet needs of the target clients. Moreover, value placement will be imperative for UAE Perfume Company because it will equip it various benefits for the Arabian Perfume including;
· Developing a robust disparity between the firm and its rivals
· Enhancing number and superiority of possible leads
This will require an effective value position that not only explains but also demonstrates the company’s tangible operational results. Owing to the fact that value positioning has the power, it will provide the necessary attention for Arabian Perfume in the new market.

A Report critically analyzing the impact of a foreign market’s cultural environment on international marketing mix strategy decisions.

4.0 Comparative Environmental Assessment

4.1 Macro-Environmental Analysis using PEST Analysis

4.1.1 Political

UAE perfume Company, which is based in Dubai has to develop strong economic ties with Italy in this regard. The fact that both Italy and UAE are strong business associates, an aspect that demonstrates strong business ties hence favorable business environment for Arabia Perfume to burgeon in Italy. Whereas UAE perfume organization will use online systems to encourage its brands in Italy, it has to adapt to the Italy’s copyright policy (Moschis, 2004). The Italian Authorities have formulated Consumer Protection policy that safeguards clients who are particularly engaged in on-line relations and have little control with the seller.
4.1.2 Economic:
Italy’s recent financial woes stemming from economic crunch and poor financial reporting are likely to threaten external business from taking root. While the economic meltdown will often constrict buying muscle, the luxury business has been performing relatively well. The financial crunch led to psychological stress, an aspect that would create a high demand for make-up.

4.1.3 Social

While Italy represents a modern society, Italians like most societies are not fast to embrace change. As such, the entrance of UAE Perfume Organisation into the foreign market should be embedded on how the market operates. Perfume business is a critical category of the economy owing to its growing use particularly in hurting times. To enhance clientele consciousness concerning the Arabian Perfume product, UAE Perfume Company has the obligation to recognize the brand’s existence. Moreover, the company’s marketing approach ought to evolve in a way that conforms to the attachment and connections across the Italian Market (Moschis, 2004). Nonetheless, whereas the cosmetics business is boosting sales by introducing items that put into consideration the needs and expectations of clients, based on cultural orientations, skin and hair as well as genetic orientations, most clients might not as well be informed about Arabian brand of perfume promotions. In this respect, UAE Perfume Company is expected to promote through various outlets (Kabalarian, 2005).

4.1.4 Technology

Modern technological tools have been embraced almost everywhere to enhance the existing share of perfume share in the luxury market. This is to say, UAE Perfume Company will be required to adopt technology to be able to line up its brand and also remain on the edge over its competitors. Furthermore, an online occurrence for UAE Perfume Company would be instrumental especially with the advents of e-commerce when it comes to accelerating profits in this industry. In addition, UAE Perfume Company will be required to use the online marketing approach to make perfume a remunerative business and to remain relevant across a highly competitive market.

A Report critically analyzing the impact of a foreign market’s cultural environment on international marketing mix strategy decisions.

5.1 Micro-Environmental analysis (Porters Five Forces)

5.1.1 Rivalry

Perfume sector is extremely competitive. Some of firm’s potential rivals in the Italian market include; Gucci, Armani, Prada and Versace. Due to intense competition in the market, there is the need for huge amount for hiring and recruiting competent employees and technology. Rivalry in the Italian market is likely put weight on this organisation (Porter, 2005). As such, it important for UAE Perfume Company to;

5.1.2 Buyer Power

Considering that UAE Perfume Company has a number of potential competitors. Moreover, emphasizing on distinctiveness strategy will increase the firm’s customer base. Customers are numerous – no client has a meticulous effect on cost (Porter, 2005). Nonetheless, with respect to UAE Perfume Company buyer power is important thus interaction with production department is associated to what a number of analysts refer to monopsony. Obviously, there are not many monopolies, although under certain conditions there exists indiscretions between clients and producers.

5.1.3 Threat of Substitutes

Substitute goods are products from assorted industries. In this case, perfume sector is largely competitive and costs of products are made with respect substitute items; this contributes to increased demand for perfumes because buyers have a variety to choose from (Porter, 2005). Economically, this will impact on the UAE Perfume Company’s fiscal portfolio.

5.1.4 Suppliers’ power

Suppliers can be influential in the event that they put they increase costs or alternatively decrease. Consequently, if the suppliers’ products have fewer substitutes, it increases the likelihood of powerful suppliers (Porter, 2005). In this regards, UAE Perfume Company has to ensure that its suppliers squeeze the product by ensuring differentiation of Arabian perfume this will make it hard for its rivals to imitate as switching costs will escalate.

5.1.5 New entrants

If UAE Perfume Company becomes successful and profitable after a given time frame in the Italian market, its domestic competitors including Ajmal, Rasasi, Al Haramain and Swiss Arabian can follow suit in turn increasing rivalry. Moreover, replication of the company’s mode entry in the international markets by its competitors is a threat.

6.0 Market Entry Strategy

For an international business to be successful proper planning is necessary. In this case, it will entail identification of customer requirements in Italy and offering them promptly. Following the 2008 financial crisis and instability in the Gulf region, perfumes have been declining. At the moment the international marketing is increasing at a remarkable pace, perfumes at taking their rightful position in the market (Porter, 2005). Furthermore, markets for perfumes have increased following their preference in global markets. This has made perfume firms to implement marketing strategies to reach their target audience. Internationalization of products requires appropriate approach that should give them an opportunity to compete with products in the global market. For this reason, Arabian Perfume will use emphasizing on distinctiveness as an appropriate entry strategy in the Italian market. This mode is preferred because it presents different results with respect to taste and incentive among clients to buy perfumes. This will involve categorizing of the product to make it distinct from other perfumes. With increased product categories, the volume of sales increases as well. At times, the product will undergo relabeling that presents clients a sense of freshness. Nevertheless, the company has to exhibit ingenuity, accuracy, skillfulness and pricing.

A Report critically analyzing the impact of a foreign market’s cultural environment on international marketing mix strategy decisions.

7.0 Operational Issues

7.1 Target Market

 
When examining international market, a company requires realizing location of targeted clients as well as products offered in that market based on the accessibility of products. Owing to the fact that global markets are multifarious, UAE Perfume Company will have to conduct a detailed research and assessment of taxation policy, ROI and inflation rates in Italy. In addition, the firm will assess the ability of market to expand, demand of perfumes compared to the firm’s stock, intensity of the market (densely or sparsely), political and legal influences. Other aspects, the company will assess are cultural aspects including language, work habits, and religious practices in the Italian market.

7.2 Market Segmentation

The firm will be concentrating on its clients they have developed confidence as well as new ones. Considering that the company’s senior manager is a specialist in this sector, the firm expects to widen its segment. Consequently, to increase its target market, apart from exclusivity mode, the company will conduct regular promotional activities and offering special discounts to its regular customers.

7.3 Competitive analysis

New entrants such as UAE Perfume Company in Italian market will face intense completion from established brands including Gucci, Armani, Prada, Versace and so forth. In this case, UAE Perfume Company will have to discourage potential rivals from entering the sector so as to safeguard its market share. The higher the costs to enter a sector, the higher the entry barriers and the fragile are competing forces (Shimp, 2008). Thus, greater entry difficulties are likely to prevent UAE Perfume Company potential rivals from the sector even with increasing profits. Established perfume brands in the Italian market including Gucci, Armani, Prada and Versace have complete benefits due to reduced cost structure. These benefits are a result of advanced creation procedures from patents, management of certain inputs necessary for manufacturing like raw material, labor, tools or leadership abilities and accessibility to monetary aid from financial institutions since existing firms represent lower risks compared to new entrants like UAE Perfume Company. Even though the procedure of filling bottles with oil is not costly, production of oils are enormous. This is the main challenge to entry that majority of upcoming firms in international market face. Accordingly, the above benefits decrease the possibility of threats from external entrants.

7.4 Marketing and Human Resources Strategies

UAE Perfume Company has a centralized system of managers who make main decisions for the company’s workers. For that reason, the communication channels are extremely multifarious; with workforce proposals undergo various approvals prior to execution. Nonetheless, UAE Perfume Company is flexible in addressing change in the event that several strategies are executed. The production unit will comprise of competent employees working under an expert’s assistance (Rose, 2006). On the other hand, the administrative manager will tackle administrative related activities of the firm as an experienced team complimented with high-tech offices will deal with monitoring as well as managing operations in the Italian market. The research and development (R&D) facility will be controlled by top phytochemists in the sector. The success of UAE Perfume Company depends largely on skills, resources and thorough understanding of the sector. The firm’s senior manager has been a key player in creating several perfumes for the firm and is a verified specialist (Rose, 2006). Additionally, the senior manager has been successful in selecting the competent personnel and has fostered a group of experts that fully understand the complexity as well as the art of oriental scents. This group has been instrumental in setting up the company’s brand. The Arabian Perfume can be used by all genders.

9.0 References

Arthur, G.A., John E., Thompson, Jnr., and Strickland, A.J.III. (2010). Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases 17th Edition. Boston: McGraw-Hill/Irwin. p.149.
Charles, P., Kedia, Ben, Kroll, and Wright P. (2009). Strategic Profiles, Market Share, and Business Performance: Industrial Management, May 1, pp23-28.
Hayden, C. J, (2006) How to get Clients, America, AMACOM Division American Management Association.
Kabalarian P. (2005). Choosing a successful business name. Available from: <http://www.kabalarians.com/../kalex-intro.cfm> (accessed 29thth May, 2014)
Moschis, G. P., (2004). The Nature of the Market and Marketing Strategies, Greenwood, Greenwood P. GRP.
Paley, N., (2009), A Guide to Marketing Strategies, Italy, CRC Pr.
Porter, M. (2005). Competitive Advantage: Creating and Sustaining Superior Performance.
Rose, J. J., (2006) General Practices on Small Firm Sections and Solo by the A B A, America, American B. Association.
Shimp, T.A. (2008). Advertising, promotion, and other aspects of integrated marketing communications. Connecticut: Cengage Learning.

By admin in Essays on October 30, 2015