Strategic Global Marketing Plan: Milestone 2 Marketing St, Lecture notes of Accounting

Download Strategic Global Marketing Plan: Milestone 2 Marketing St and more Lecture notes Accounting in PDF only on Docsity! Running Head: MARKETING STRATEGY AND ENTRY MODE Strategic Global Marketing Plan: Milestone 2 Marketing Strategy and Entry Mode INT-640-Q5370: International Marketing Strategy Marketing Strategy: Dollar General and Thailand Dollar General (DG) Corporation is currently seeking to expand its operations internationally and has identified Thailand as its current target market. Currently DG operates more than 16,278 stores in 44 U.S. states with a small-box, low-cost model that targets low- to middle-income consumers (Dollar General, 2020). Target Market In its’ U.S. operations, Dollar General has typically targeted communities of less than 20,000 people, as those communities are typically underserved by market competitors in a diverse and saturated retail market (MarketLine, 2020). As discussed in Milestone 1, when 2 MARKETING STRATEGY AND ENTRY MODE comparing Thailand with one U.S. submarket, Florida, there is population and geographical similarity, while Florida is much more urban than Thailand (CIA, 2020). With a non-urban population of more than 33,000,000 people that represent more than 48% of the total population and a young retail marketplace, Thailand has significant opportunities for Dollar General. Currently, more than half of the retail market is comprised of convenience/corner stores, and the retail market is concentrated to the greatest extent in Thailand’s largest cities, particularly in and around Bangkok (Statista, 2020). The area outside Thai cities is far less saturated, and as a result is a prime target for Dollar General. Coupled with the geographic parameters of the target market is demographic and economic definition. Outside the urban centers in Thailand, wages and opportunities decline, and as a result, the prevalence of retail declines. This decline and the prevalence of more traditional markets (D&B Hoovers, 2020) means that the opportunity for reliable retail stores is quite high, although the low-income nature of the market can be challenging to many hypermarket and other retail businesses. Despite the nature of this market, Dollar General can apply their U.S. rural and suburban model to the Thai landscape, dotting small population centers that can serve as a reliable customer base through localization of offerings and directed marketing activities. Purpose for International Expansion Dollar General has sought to expand its retail footprint as its U.S. footprint has gotten increasingly saturated, between the U.S. market competitors and its own stores (MarketLine, 2020). The company identification of Thailand as a suitable market to continue to grow its operations. With the relatively young retail market and the concentration in the more urban areas of Thailand, Dollar General can bring its offering of a low-cost, discount retail offering to the 5 MARKETING STRATEGY AND ENTRY MODE things”, and a housekeeper to acquire household goods and food, it is obvious why the DG model/experience is not a primary choice for that type of consumer. That is not to say that if DG were convenient that the consumer would never do business there, but rather it would most likely be utilized for an impulse or last minute/emergency purchase. Target Market Entry Mode Kotabe&Helsen (2017) write regarding decision making strategies for entry modes, noting that there are internal and external criteria that affect strategy. Environmental (external) criteria include market size and growth, risk, government regulation, the competitive environment, and local infrastructure. Firm (internal) characteristics include company objectives, internal resources, flexibility, and need for control. The considerations of these factors, TOWS analysis, as well as potential entry modes allows DG to determine an appropriate entry mode for the firm in Thailand. Considering that DG does not directly produce goods, exporting entry modes can be virtually eliminated from the options, as can be contract manufacturing. Additionally, as has been discussed, acquisitions can be eliminated as well as the young retail market does not have the breadth across Thailand to be a viable mode of entry for DG. Essentially, the remaining options for DG are licensing, franchising, joint ventures, or greenfield entry modes, each of which have advantages and disadvantages (Kotabe&Helsen, 2017). Licensing and franchising limits DG exposure, however it also greatly reduces the control, financial benefit, and increases the risk of competitor development in the long-term. A joint venture will improve control for DG, increase resource use and potential for financial benefit, but also increases the potential for conflict. Lastly, greenfield entry requires that DG maximize resource allocation, absorb the highest level of risk, but also gives the company full 6 MARKETING STRATEGY AND ENTRY MODE control of the Thailand operation. While any of these four entry modes are viable on some level, the best fit for DG appears to be a franchising agreement entry mode, at least initially. TOWS Analysis and Market Objectives Looking to the TOWS Analysis (see Appendix), Thai government limitations on FDI in retail business result in the erosion of support for a greenfield entry, a ground of development of a retail business wholly financed by DG in Thailand. This focuses DG entry to methods that can leverage its core competencies as highlighted in the analysis, including supply chain and distribution expertise and a roadmap of success in a U.S. retail market. Additionally, the strong infrastructure in Thailand, coupled with historically low interest/inflation rates create an environment that could be beneficial for Thai investment in the DG presence. Through the franchising agreement, franchisees would have access to those core competencies, DG leverages Thai infrastructure and increases the Thai buy-in, reducing its own FDI footprint, involving potential government barriers, while allowing DG to maintain control of the business function and performance (Kotabe&Helsen, 2017). Lastly, franchising agreements have the potential to increase incomes for Thai people through ownership, and as a result could further increase spending capabilities and revenue. Trade-Offs for Dollar General Undoubtedly, there are trade-offs to this entry plan. As mentioned before, franchising agreements require the franchisee to adhere to corporate policies and operational plans, buying in to the corporate culture of DG. Another potential entry mode, licensing agreements, would reduce that control from the corporation, and potentially lead to undermining of the brand for other licensees, a move that could be destructive to the venture. Even still, both franchising and licensing essentially minimize DG risk due to political and economic instability, and corruption, 7 MARKETING STRATEGY AND ENTRY MODE utilizing domestic Thai expertise with regard to product offerings and store placement across the landscape. Marketing Mix Elements (10) The identification of franchising agreements as the market entry mode allows the firm to explore the role of the marketing mix elements. Product, price, promotion, place, packaging, positioning, and people are marketing mix elements that should be considered and consistently re-evaluated as part of the marketing strategy (Tracy, 2004). Through franchising agreements, DG can offload these responsibilities to Thai franchisors, working with native Thai people to essentially develop from within Thailand effective marketing strategies for business development and success.