QUESTION
PRODUCT STRATEGY:
– Discussion about product strategy with specific focus on product adaptation vs. standadisation, branding, and management of product policy.
PRICING STRATEGY:
– Discussion on pricing strategy should have on the discuss about the factors considered in setting prices, penetration vs. skimming, terms of sale, payment type, foreign exchange risk management, etc).
SOLUTION
Bowling Brilliance is a company that would form a JV with a local company to establish itself in the local market. Now the product here is durable cricket balls that spin and swing. In this case, the JV denotes that the Bowling Brilliance believes in decentralization. This is important as the local company would know how to handle local customers. Following the confederation (Solberg, 2000) alliance would enable the HQ to have better understanding of the way the local market operates. While devising a marketing plan, the local company would have the autonomy to take a call. This would ensure that correct measures are taken.
In this case, the product used is similar in terms of its usage globally. Hence, the company can adapt standardization to a large extent. The features of all cricket balls would also be the same. Thus, the company can benefit from economies of scale. Government norms for importing cricket balls are not stringent in India. However, Bowling Brilliance would face competition from the local unorganized market. In Delhi there are several training clubs and each of them does not target the higher segment of the society. Hence, the local unorganized retail market has good demand for its products. Bowling Brilliance has to create a niche for itself which can be done by building a brand for itself and making the market more organized. The company should ensure it offers superior quality at economical price.
The consumer would be aware of the product only via promotions. The company must adapt to the local language while promoting the product so as to reduce cultural differences (W. Chan Kim & R.A.Mauborgne, n.d.). Further, the need for adapting the culture of the foreign country increases as we move from an industry oriented to a customer-oriented product. In this case, cultural differences would occur only at the touch points. It is important that when a customer enters a retail outlet selling Bowling Brilliant cricket balls, he feels he is buying a cricket ball of superior quality. Brett Lee being its endorser, his fans would identify with his success and brilliance and hence buy the product. At this point, it is important that the sales person is an Indian who answers their queries. The buying experience must be more Indian, though the product is Australian.
Another step towards reducing the cultural difference would be to use the local language for all promotions. For instance, the advertisements with Brett Lee should be created in India’s local language, Hindi, so that it reaches to a larger audience.
The next part of the product strategy includes creating a brand for the product. In this case the product already has a tagline ‘Brilliance is just the beginning’. It is important that the product is promoted efficiently to reach the TA. The company must hire local people in the sales force so that communication between the retailers and distributors became easier. The company would have to identify the local markets situated near cricket clubs or training centers and supply their superior product at competitive price. When a customer first becomes aware of a brand being endorsed by an international cricketer, the brand automatically achieves high recall. The image of Brett Lee would be part of all the packaging and subsequent POS materials. This would further strengthen the brand’s identity in the market.
In the current scenario, marketing is all about offering an experience to the customer. It is important that the company has its own exclusive outlet where the consumer gets the change to bowl and appreciate the quality of the ball. This would have an impact on the customers’ buying decision and create high brand recall. Further, hiring local people and training them about the basic features of a cricket ball would ensure the customer is convinced of his decision. Packaging also forms an important part where the balls are available in sets of 4 or 6. This would give the company another chance to extend its brand identity.
It is important for the company to understand that having its exclusive showroom would incur high investment. Hence, the company should also tie-up with local retailers for selling the product. A local sales force would be crucial in this case to convince and bargain about shelf display and promotions. The distributors would have to be given a margin higher than the local companies. Hence, the product strategy has to be based on a mix of standardization in terms of the product while decentralization for implementing the marketing strategies.
Pricing Strategy
Brilliant Bowling would enter into a JV with a local company. In this case, while the parent company is involved in the production of cricket balls, the domestic company would be involved in its marketing and promotions. The profits would be shared on a pre-decided ratio. It is important to understand the existing price ruling this market. The market for cricket balls in India is very fragmented and unorganized. Most of the retailers offer bundled products like all types of sports equipments. There is barely any company that specializes in offering only cricket balls (http://catalogs.indiamart.com/products/cricket-equipment.html). The price of these products are mostly similar expect few that cater to the higher segment of the society. Most of the cricket training clubs prefer using balls of mediocre quality so as to reduce expenses.
This is the gap which Brilliant Bowling can fill. The company would offer superior quality product at competitive prices. Hence, the company should adopt market pricing. This would enable the company to get acceptance in the market. This is the most important factor for an international company. Once the TA buys the product and realizes its superiority in terms of its quality and durability, then repeat sales would automatically take place. Though this strategy would take a lot of time before the company reaches break even, but the brand would built trust and goodwill over time. Moreover, the company would ensure that the product and its features are in sync with the brand ambassador.
The parent company would only have to bear the cost of exporting the product to India. The JV with a domestic company would reduce its investment to build a new facility, hire talent for top management etc. Further, if the domestic company is already into this trade, then it would have contacts with the distributors and retailers. This would help the company to acquire market share at a faster rate. To stabilize its expenditure and avoid fluctuations in the exchange rate, the parent company can be a part of the forward exchange market.
The company can offer variable prices at larger orders. Further, the company can also work with cricket clubs on contract basis where discounted prices would be given to the club who signs 3 or 6 month contract. Since the business model is B-to-B initially, it is important that the company caters to all types of cricket clubs- those for the elite group to those for the extremely middle class audience. Hence, in the beginning the company must ensure that there is sufficient awareness about its product. Competitive pricing is extremely important in this case.
It is also important that the company realizes what exactly in the demand and supply ratio in this sector. The supplier must always try that the consumer is inelastic to price changes. This means that the quality of the product should be so dominant that even if the price increases at a later stage, the demand remains unaffected. This is the basic formula for a successful pricing strategy.
References:
Carl Authur Solberg (2001). The perennial issue of adaptation or standardization of international marketing communication: organizational contingencies and performance, 10(3):1-21.
Jonathan L. Calof and Paul W. Beamisht(1995). Adapting to foreign markets:
explaining internationalization, 4(3):115-131. Great Britain: Elsevier Science Ltd.
Ho Yin Wong & Bill Merrilees (n.d.). Multiple roles for branding in international marketing. Available from www.emeraldinsight.com/reprints. (Accessed 30 September, 2011).
W. Chan Kim & R.A.Mauborgne (n.d.). Cross-cultural strategies. Journal of Business Strategy.
Richard Fletcher (2001). A holistic approach to internationalization. Available fromwww.elsevier.com/locate/ibusrev (Accessed 30 September, 2011).
Sports Equipment (2011).Available from http://catalogs.indiamart.com/products/cricket-equipment.html.(Accessed 30 September, 2011).
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