M&K Company in UK has been enjoying continuous expansion of its sales volume over the past few years ago. Artificial hip joint product is a product produced by M & K trading company in United King Dom for the last fifty years. The product is a metallic alloy product and strong abrasion ceramic and it’s for surgical operations .Over the last ten years, it has recorded an increased demand worldwide, making the production company to expand the production level. However, recently the company faced stiff competition in the market and thus it intend to tap the USA artificial Hip Joint market, which is so far have not been fully tapped by its competitors. The company intends to explore new market in the USA market, however it expects high competition.
Objective of the study.
The main objective of the study is to find out how the company will explore USA market expected to increase the sales volume of the company, increase profit and promote the reputation of the product in the region. However, the company will have to make the key strategic decision before they export their product. Secondly, another objective is how the managers must harness and employ modern export development strategies aimed to minimize the cost of production, save time and promote motivation among the employees. In addition to that, the company aims to investigate how to make proper and accurate export sales forecasting in the new market identified.
Introduction of the study
Pertaining to the study, the report adequately subdivides the export strategies of the Artificial Hip Joint products in several topics. In order for the company to achieve the full export market harnessing, they should adequately fulfill all the key export elements outlined in the process. The report adequately contains all the topics outlined below having been researched on. The company if follows carefully all the details will eventually increase the sales volume and profits. In the research process the data was collected through both primary and secondary methods. In the primary method, we visited the various markets of the product in the USA and directly observed measures and ways of improving sales volume of the Artificial Hip Joint product. In addition to the observation, we also interviewed some of the trades and buyer of the product in the market. They gave different views pertaining products differentiation method and how they would like the product to be. Information of the product market was also obtained from the secondary sources such as books and magazines in USA.
Discussion of the study-PESTLE
Environmental factors influence
There are several environmental factors identified to influence the introduction of the product in the new market. The factors emanate from the external forces of the company. These macroeconomic factors were found to either lower or increase the sales volumes. It is advisable for the managers to adequately observe the relationship of the product and the factors before introducing the product in the USA Market. These factors include;
Political factors-These include all legal formalities relating to the government and other observed legal institutions in the USA market was found to operate in different legal policies from the UK market. The taxation rate was found to be higher than those in the UK hence this will affect the profit level of the company. Secondly, the company has to observe the rules lay down by obtaining all necessary policy documents vital for the entry in the market. It was necessary to obtain a license from the chamber of commerce of the USA.Thus the company in introducing the product in the market must observe the political factors available.
Social- cultural factors-These are factors relating to the people way of life.USA people were found to possess different cultures hence in the introduction of this product in the market it was found necessary to adhere to the cultures and religious background of them. Most of them are Christians hence the product was found to have the little objection in the market. Thirdly, the product was also going to be influenced by economic factors such as the income level of the people. Most of the people in the market were an averaged income people hence the prices should be relatively set below those in UK market to attract new customers and keep at bay the competitors.
In addition to that, the technological factors also were found to influence the introduction of the product in the market. These factors include internet, online retailers and website advertisements found to be highly used by the competitors of the product; hence it was necessary for the managers to use these methods in promoting the product. Lastly and not the least, environmental factors such as the surrounding of the company sale outlet in the new market are also going to influence the sales volume. The managers should find the secure place for storage of the product to avoid loss. The market was found to be highly secure; hence the environment is safe for export of the product.
Bargaining power of the customers.
The bargaining power of the customers was found to be influenced by certain factors of the market such as the product differentiation and the quality. Product differentiation refer to distinguishing a product bases on the peoples character and preference, age, geographical location, size of the market or even gender. It’s aimed in making the product more attractive in the targeted market and to eliminate competitors. In our research, an analysis the market of this product in USA has several competitors where the product is sometimes imported form Asian countries while at the same time some of the Artificial Hip joints are made locally by home countries.
Existence of the substitutes
There are numerous substitutes in the market found to influence the product in the market. As the substitute can pose a difficulty moment in the introduction of the product, its recommendable from the research analysis, we carried out to use product differentiation. As it will be relatively to enter the market the company should export a differentiated product characterized by a different product brand and unique in nature. Some of the product differentiation method that can be used in the market includes; single differentiation method where they can produce a variety of a single product enabling the customers to have the wider choice of the product. This will enable the product enter the market at a high demand and thus the company tap the market. Thus eventually the company will find a market share in the company and export the product.
Accessibility of the market
It was found that the accessibility of the market was easy only is the right channel was used and main source of the product differentiation will be high quality, need to eliminate ignorance of the product in the market by the customers and lastly the promotion of the product. Note that the aim of the product differentiating will be to create a uniqueness of the product in the market, leading to a reduction of the competition of the product in the USA market. This techniques help the company to win the confident of the customers through the new product hence eventually the product is exported in the area. However, the ethical issues of ensuring the legislative policies are observed and the right of the already existing functional hip joint products .This helps to ensure that market conflicts are avoided as a way to ensure that no price war in future.
Players of the market
The market has several players in the market which includes government, competitors and the consumers. In addition to that we have the society, which holds the largest share of the market. The company must relate well to these entire players in order to introduce the product peacefully in the market. For the government, the taxes must be paid while for the competitors, the company should use the right competitive methods. Lastly, the company should ensure that quality products are provided to the customers.
Market development stages
Various development stages were identified to speed up the company introduction of the product in the market. The managers must ensure that the segmentation method chosen is measurable in cost so that the company does not make losses in the introduction of the product. Moreover, the company should ensure that the chosen market stages earn a profit to the company. This helps to ensure all the cost are met and the aim the company is achieved. In addition to that, other factors considered are it must be stable such that after a certain time period do not vanish. It should also be internally homogeneous, where it must be a combination of all people, cultures genders and age. Externally, it should be heterogeneous meaning its cutting across all market sides. The best development stages include introducing the product slowly in phases as you monitor the market. As the market grows, increase the volume until the product fully dominates the market.
Existence of the economic trading blocs
The research analysis reveals that there was no trading blocs relating to the market for the Artificial Hip Joint product, hence the company managers should not care about the blocs as they will not affect the product. The reason behind this was that the market had not been fully tapped by competitors.
Market segmentation involves the customer being classified into various groups of either gender age culture geographical area product size based on the amount of cash they have among other issues. The main purpose of the market segmentation is to classify those customers with similar need and demand together such that eventually the company can know how to produce the product on various designs, prices and qualities. Managers targeting to introduce their product in a new export market must know that they will meet customer of different categories where most of them have different financial abilities, cultures and different tastes of the product.
From the research analysis we carried out the Artificial Hip Joint product market in USA is occupied by different group of people but the product was demanded by all people regardless of their age culture and geographical regions. The market segmentation method that can adequately serve the introduction of the product in the market entails:Geographical segmentation where the company should first target various geographical regions such as urban centre as they are highly populated and contains more medical facilities in high demand of the product.
The market environmental factors such business structure, financial level of the people, social-cultural and technological matters. Secondly, the company can also enter the new market using psychographic segmentation, where it was identified that the customers have different thoughts and psychological believes on the product. To achieve the objectives its vital to produce the product suit different styles and values of the people. In USA, the people were identified to possess different style and hence the need to produce different sizes, shapes and colored product. To add on that, other segmentation method fit for the mission was demographic method where the product is to be produced based on the gender and age of the people, where in USA, we observed that individuals are mainly middle-aged and thus there was need to target them first. From the analysis young people occupied a smaller percentage and thus the company should not produce a lot of the Artificial Hip Joint product quantity. Certain criteria are vital to consider in selecting which export market strategy to use. First, the company should consider
In the research analysis it was identified that for the product to perform well in the export market of USA, various channels must be used to tap the market from the competitors .The product must e distributed in a manner as to help the company minimize the cost, increase the sales volume and the product to reach as many customers as possible. Short trade channels are less costly but meet the demand of large-scale consumers only.
Channels are various distribution paths used in the transfer of the goods from the producer to the consumers. Channels form one of the vital issues that any exporter should adequately research on before making any attempt of exporting the product to another market. Usually, it affects the prices of the product and even time hence proper cost-benefit analysis must be done. Most of the suppliers think that immediately they produce the product and move them to the wholesalers then their work is complete but this is not the case. They should ensure the product reach to the end users. The company must make a decision based on the channel membership, channel motivation and lastly the nature the product. Some of the marketing channel identified t be viable in the product distribution in USA include, intensive, selective and the extensive distribution. An intensive distribution involves the product sold together with their convenient products where one the product t is a leader and thus sells the other product. The advantage of this distribution channel is that lower costs are incurred and even a poor product can inevitably sell. However, this method is not suitable for the Artificial Hip Joint product.
Secondly, in selective distribution, both the individual sand the producers are actively involved in the distribution process. In this channel the retailers are allowed to stock the product for commercial purposes hence for our products the company should consider use the channel as the retailers will help in facilitating the marketing of the product. In exclusive distribution method the consumers have the good only through.
Authorized dealer are awarded exclusive rights of the distributions of the product hence here the product is made only in selected people in certain areas. For our products it was found that this channel can also do well but has a limitation of the good not reach all the consumers.Just like how the sale volumes and profit performance are controlled and managed, distribution channel demand the same attention in order to avoid them being hacked by the competitors. Moreover most of the organizations currently uses more than one distribution channels as a way of promoting marketing of the product in the region. Effective management of the channels used will enable the product beat the market.
Other channels that can be used in the distribution of the product include even distributing the product directly from the manufacture to the consumer .However this will happen where we have large scale consumers of the product and who can buy from the producer. However, for our product this channel is not effective because the product is not use at home but for surgical purposes. Secondly, the product will be distributed by the use of other channel like from the producer, to wholesaler then to the retailer and lastly to the consumers.
From the research contacted on the USA export market, it was found that it’s vital for the company market to ensure that there is adequate monitoring of the various sectors in the process. More emphasis should be put on the distribution channel and the market differentiation methods in order to achieve an increased sales volume. The company of this product should always ensure that once a market is tapped on the area it should be highly maintained to avoid the competitors regain it.
The employees should also be monitored on the performance and only those who adequately know the areas should be used as they can help in selling the products policies .This helps to boost up the sales volume and as a result more profit is made. Monitoring may also involve the marketing manager observing the marker performance of the product and taking appropriate measure in ensuring that the products tap the new market. In monitoring the company must be aware to ensure that a graphical representation of the product is drawn for future decision making. Effective monitoring of the market and the product reveals that the product can have its market volume demand in the market by over 20% of the market share.
Export financial matters
The amount of finance used in advertisement, employment of the employees and other expense in the export process determines the sales volume, hence proper sales and finance forecasting and budgeting need to be made. Numerous researches have been conducted pertaining how an organization can distinguish domestic and export sales forecasting, however no clear distinction have been adequately found. Based on a survey conducted in the market it was found that exporters and manufacturers uses certain sales forecasting techniques which are affected by certain factors. The main aim of having a good sales forecasting was to ensure that the profits and sales to be made is determined in advance. This information was found to help the company knows whether that they will incur losses or make profits if things goes well in the export of the product in the USA market.
Certain factors were found to influence the sale forecasting techniques .They includes factors such as cost of exporting the goods from the company’s premises to the USA market. More over it was found that the sale volume expected to be obtained was also determined by the government policies in the country as they were different from those of UK. To on that, the sale techniques were found to be highly dominated by the quality of the product hence the company should ensure that the product was of high quality to meet the demand of the high competitive USA market.
However the accuracy of the sales predictions was found not to be determined by the techniques used but the amount of the attention made on the formulation of the sales projection. This means that the manager of the company must not rely on the sales techniques but on the care applied by the sale marketing manager and the respective marketing employees. More over other factors are the quality of the data collected on the field and the methods of data recording and presentation. Managers should know that incorrect data if collected and used will lead to wrong sales forecasting that will eventually call them to make wrong decision of the export strategies to use.
Sale operations usually was found to vary from different geographical locations in the market environment but it was commonly found that they highly depended on sales a strategy and plans the company will set on the market hence the manager should heavily ensure that correct measure are followed in the setting up of the strategies to use in the export strategies. Other various that may have contributed in the variation include compensation, sales quota and the levels technology and the sales communication.
The managers must adequately ensure that the variation is dealt with to avoid any loss occurrence in the market. To achieve authentic work of the sales and marketing department, there should be a good connection between the department and other nearby departments such as finance, human resource and the IT department. Good sales operations will help to motivate the employees, and the managers. Lastly it will guides the managers in aligning the resources available into the best way possible using the sale forecasting as the main benchmark.
Factors considered in the investing into foreign market by the company.
The M&K Company considers certain factors in investing in USA export market.The factored were critically analyzed and the managers should keenly, put them in consideration as they explore thee market. They include:
I). supply chain model
According to various studies carried out pertaining to selection of management agents and distributors of the product it was revealed that well trained agents and managers are necessary. They need to know adequately how to communicate with the consumers and how to convince them so as to agree the product over that of the competitors. Under export of the product to the artificial hip joint market to the manager must ensure that the product distributed is of high quality and the agents have been motivated buy having good remuneration. According to the survey carried out, it was revealed that the distributors must have proper knowledge of the culture and language of the American citizens in the area. The distributors should have tactical knowledge and possess the required office attributes such as respect, confident, honesty and more over a heart of forgiveness .This will help the agents and the distributors adequately win the confidence of the people and thus end up. It’s important for the managers to know that the employees need to be rewarded so that they get motivated in their work hence those in the market need to be awarded good salary. There was also need to have the employees being trained properly hence before export was fully implemented then the staff must be trained.
II). Cost management analysis
Proper costing of the product was found to be an essential element in the study for helping the managers in setting the price to charge the product in the market .The cost incurred plus their certain percentage profit level should ensue that the company win the market from its competitors. Prices of the product was found to be highly dependent on the cost of the product while in the exporting process hence they must minimize the products costs as much as possible. From the research analysis carried out the company must use the shipping system in transport of the product. In addition finance must be provided to the exporting activities of the product to ensure good branding of the product and advertising in the areas is carried out. If this will be fully implemented then the company will reap a high demand of its product immediately.
Market expansion policy
In the USA it was found that the markets possess a strong intellectual right and thus there was no need to worry about the product. Otherwise the company should have a good planning and branding measure that help to avoid forgery of the product. The only market expansion policies to be keenly observed are those given by the US government pertaining new company and product entry.
In any introduction of the product in the market, the managers must ensure that proper plans are made on the products introduction. The managers must comply with the work in this report work, otherwise they are also free to make any instrumental changes not highlighted in the report that is meant to promote the product in the market to the highest degree possible. However its necessary to ensure that all rules and regulations are adhered to in order to ensure that the product beat in the market well and counter down stiff competition in the market for the future benefit of the company in the future. Lastly and not the least , the managers in the introduction of the product must make necessary calculation of the finances and time so as not to make the company incur losses at the expense of harnessing new export market. Environmental factors highlighted above must be strongly observed buy the managers to achieved good results in future.