Narsee Monjee College of Commerce and Economics S.Y.

BMS Division - B

International Marketing Launch any product in any country Product Chosen: Watches Company: Aristocracy Watch Co. Country: U.S.A

Presented By:

Rahul Bhagat 62 Noopur Dhruv 69
Ritu Jhaveri 85

S.Y.BMS – B Narsee Monjee College

International Marketing Group 5 Aashay Samant 95 Vishal Zaveri 109

Overview: Trade is increasingly global in scope today. There are several reasons for this. One significant reason is technological—because of improved transportation and communication opportunities today, trade is now more practical. Thus, consumers and businesses now have access to the very best products from many different countries. Increasingly rapid technology lifecycles also increases the competition among countries as to who can produce the newest in technology. In part to accommodate these realities, countries in the last several decades have taken increasing steps to promote global trade through agreements such as the General Treaty on Trade and Tariffs, and trade organizations such as the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and the European Union (EU). Several trends in international logistics have become evident over the last two decades. On the economic side, exchange rates have ceased to be as significant a factor as they were previously because more demanding product specifications have made it difficult for firms to switch suppliers, at least for relatively specialized products. On the other hand, for commodities (such as steel), which are made around the World, over-capacity often exists for a variety of reasons (e.g., some countries such as Russia and Brazil are currently experiencing bad economic periods with a resultant shrinkage in domestic demand) and since different suppliers’ products can easily be substituted for those of others, price pressure becomes intense. Note that in very capital intensive industries, firms may be forced to sell at a price not much higher than the variable costs of production, which may lead to charges of "dumping" in foreign markets. Additional trends include improved infrastructure (roads, airports, and other transportation facilities as well as communications opportunities) and a subsequent move toward global manufacturing to take advantage of areas of lower labor cost as well as economies of scale. Finally, because of increased recognition of the importance of quality and cost effective procurement, purchasing managers have assumed a greater role. Advantages & Disadvantages of Going Global: There may be several reasons why a company goes international. The company may be responding to a demand it discovers in another location. It might see its competitors going to that location. Rules and regulations may be too harsh in home country and working environment may be more favourable overseas. Cheaper production costs may force it to set shop in another country. It may sometimes be better to launch operations in a country before your competitor does. The government

Y. and other factors. There are complex interactions between a company and its host countries because of national sovereignties. 3 . social and cultural environments. SAARC and EU may confront the company. Regional economic integration and the activities of institutions such as ASEAN. legal. There are also some disadvantages to international expansion.S. depth and reliability between countries. Companies face a multiplicity of political. cultural and national differences.BMS – B Narsee Monjee College International Marketing Group 5 of that country may be providing incentives etc. Saturation of home markets may also force a company to seek out new markets. Economic. economic. Geographical distance. widely disparate economic and social conditions. and other differences make communication difficult between the MNE and its subsidiaries. marketing and other information required for strategic planning varies in availability. variations in business practices. Differences in industrial structure and business practices make analysis of future competition difficult to undertake.

S. The idea was to make watches that would be seen as style and fashion accessories rather than just utilitarian devices. Its strategy is to serve the upscale niche markets of the watch industry. achieve a sustainable 55% profit margin.Y. The factory 4 . and eventually produce luxury watches in addition to the initial. for the short-term future. but do not think they can afford them or do not know where to purchase them. We found that it was not safe even at the bottom of the pyramid. It is the firm's intention to build and export its products to the United States and to make Aristocracy Watches the number one selling European watch in the Western U. The success of the Greater Zürich Economic Area as one of the most important in the world is due to many factors: The very low tax rate and the possibility for foreign companies and private persons to optimize their tax burden by personalized tax agreement with the Tax Authorities is surely one of the key points. moderately-priced line. stylish goods.S. It will capitalize on the Swiss engineering and manufacturing used to build the watches. The grey market with cheap Chinese imports and the unorganized sector had cornered a sizable chunk of the low-end market. To do this the company's long-term goals are to achieve a 20% market share in the U.S. Production will take place in Switzerland and sales and marketing are focused on the United States. build brand image and brand equity through marketing. There are many untapped potential markets within this industry that desire high-quality.BMS – B Narsee Monjee College International Marketing Group 5 Introduction Aristocracy Watches' is a start-up watch producer and distribution company. The Company Aristocracy Watches will be a privately-held international corporation. The Greater Zurich Area is Switzerland’s economic center and home to a vast number of international companies. The Swiss factory will be located at Zurich.A. Having a factory in this area will help to reduce the burden of taxes and hence achieve a quicker break-even.

The "night" watch will be all black including the face with minimal white writing for the numbers on the face and will feature white hands as well. The watches will be initially sold in upscale watch stores in Los Angeles and San Francisco.Y.  To eventually produce luxury watches in addition to the moderately priced line. The strap would be made of steel.  To achieve a 55% profit margin.BMS – B Narsee Monjee College International Marketing Group 5 will be 1. The strap would be made of leather.S.000 square meters and should be large enough for the first three years of the company's growth. The price per watch is expected to be around $600$1200. and clocks for luxury automobiles built in Europe.  To achieve a 20% market share in the U. pricing will be adjusted to be directly competitive with the other major competitors. therefore customers will see the inherent value in the watches The pricing strategy will be to initially undercut our main competitors by 10%. Aristocracy's sales force will consist of franchisers and two freelancing sales representatives. A luxury watch is the current main focus for a future product. Then. Objectives: To make Aristocracy Watches the number one selling European watch. wall clocks. The Products The initial product line will be elegant analog watches with sporting characteristics.  5 . The "sport" watch will be made of a durable steel and hard rubber combination that will provide both style and durability. Other future products could include alarm clocks. the "sport" watch and the "night" watch. The watches will be shipped to and distributed from our warehouse at 343 Palm Avenue in Los Angeles.S. The company plans to release two versions. California. Aristocracy Watches will be built to last a lifetime . able to be used to depths of 100 meters under water.battery replacement every ten years will be the only necessary maintenance. using a market penetration strategy.

the purchase of mid-level and high-level European watches has increased by 50 percent in the U.  Achieve 100% customer satisfaction. luxury watches. It is the aim of Aristocracy to capitalize on its high quality and reasonable price while pursuing the innovative styles necessary for brand building.S. The company will build its image as a quality watch first. One of the most important recent trends is that potential watch buyers are willing to spend higher amounts on watches because of the enhanced image appeal. Therefore. The Market Entry into the high-end watch industry comes as a propious time. and this trend is expected to continue.  Devoted Swiss work force. is growing faster than ever. and then will begin selling higher profit. Keys To Success: To succeed Aristocracy Watches must:  Build and sell high quality products. experience. Potential watch buyers are willing to spend moderate to high amounts on watches 6 .S.  High quality at a moderate price. Over the past two years. a company that can build a substantial brand image in this industry gains a significant competitive advantage.  Build brand image and brand equity through marketing. Comparative Analysis: Aristocracy Watches will have the following sustainable competitive advantages:  Swiss technology.BMS – B Narsee Monjee College International Marketing Group 5 Mission: Aristocracy Watches is a watch company that produces wrist watches for sale in the United States .initially in California.  Elegant and ergonomic styling.  American marketing skills.Y. and reputation. particularly the upscale markets. The watch industry. proficiency.

Y. population (284.998 398. watch market provides lots of opportunities for shrewd players. U. However. the competition is based more on quality than price unlike the discount market.073 6.835 15.S.421.3 0.6 0.658. the world-famous Swiss watches account for 8% of exports and command 50% of the world market. the U.S.4 12.818 % of population 100.000) is from the U.9 3. Census Bureau.242.626 34.800. licensing arrangements.359. together with a globally more hectic pace of life.460.5 2. Current total U.1 12. has increased demand for the faithful wristwatch.228 35.826. Yet this intensely retail-driven scene is complicated by a maze of outlet types (including the Internet).906 211. and what seems like a million brands.305.5 7 .BMS – B Narsee Monjee College International Marketing Group 5 because they can make the customer look good . (By themselves.S.190 2. In addition. Total population Total population White Black or African American American Indian and Alaska Native Asian Native Hawaiian and other Pacific Islander Some other race Two or more races Hispanic or Latino 281. the upscale niche market that Aristocracy Watches has targeted is competitive because of the competitors and the discerning consumers it serves.956 10. and is based on current growth rates applied to the 2005 Census figures. Valued at $6 billion+ in 2001. so now is an ideal time for entry.1% 5.and hence feel good about themselves.S Market Analysis: Consumers' heightened fashion sense. Watches and machinery represent about 42% of the total Swiss export value.475.) The upscale watch industry is currently in a growth period.0% 75.S.

Consumer media habits also differ dramatically.BMS – B Narsee Monjee College International Marketing Group 5 Age structure: 0-14 years: 20.050/female 29.S..6% (male 15. "The nail that sticks out gets hammered down.035) 65 years and over: 12.995.2% (male 100. Advertising is accepted as a fact of life in the U. the marketing strategy will be to stand out.S.) Cultural Environment  Language barriers: All the marketing and advertising has to be done in English since this language is spoken by all Americans.991. excelling above the group is often desirable.152. newspapers appear to have a higher reach than television and radio in parts of Latin America. has a very powerful media structure.S. Advertising regulation: Countries often have arbitrary rules on what can be advertised and what can be claimed. U. this is allowed.777.477/female 21.S.. Comparative advertising is banned almost everywhere. an ad that featured a man walking in to join his wife in the bathroom was considered an inappropriate invasion in Japan. However in U. advertising tends to emphasize directly why someone would benefit from buying the product.365.S. indirectness: U. which is based on the contrast to people’s experiences. Local attitudes toward advertising: People in some countries are more receptive to advertising than others.2% (male 31.S.858. and Australia. advertising tended to be shown in more traditional roles in the U.S." So. Values also tend to differ between cultures—in the U. than in Europe or Australia.g.195) (2007 est.438) 15-64 years: 67.S. while in Japan. Gender roles: A study found that women in U. Media infrastructure: Cable TV is not well developed in some countries and regions. compared to other countries  Directness vs. tends not to travel well. as for the Aristocracy watches.     Some cultural dimensions of U.  8 ." In the U. Symbolism often differs between cultures. Cultural barriers: Subtle cultural differences may make an ad that tested well in one country unsuitable in another—e.Y.S. "The early bird gets the worm" while in China " The first bird in the flock gets shot down.752/female 101.S. and humor. and not all media in all countries accept advertising.

than Europeans. traditional culture: U. subject to some reasonable standards of diplomacy. Britain and Hong Kong are lower. in general. collectivism: To what extent do people believe in individual responsibility and reward rather than having these measures aimed at the larger group? The U. Individualism vs. Britain.Y. countries with lower uncertainty avoidance tend to be more tolerant of risk. femininity involves a somewhat more nebulous concept. Few countries are very low in any absolute sense.S. while "feminine" values involve harmony and environmental protection. The U. is close to the middle.      Uncertainty avoidance involves the extent to which a "structured" situation with clear rules is preferred to a more ambiguous one.S. slightly toward the masculine side. "Masculine" values involve competition and "conquering" nature by means such as large construction projects. This is the case in the U.S..S. considering sexual overtones. ads tend to employ contemporary. 9 . and the Netherlands rate toward individualism Power distance: To what extent is there a strong separation of individuals based on rank? Power distance tends to be particularly high in Arab countries and some Latin American ones. low context cultures: In some cultures. and the U.S. particularly the French. you are expected to say it directly.S. Masculinity vs. Popular vs.  Sophistication: Europeans.S..  High vs.g. demand considerably more sophistication than Americans who may react more favorably to emotional appeals —e. often including current music while those in more traditional cultures tend to refer more to classical culture. but relatively speaking. an ad showing a mentally retarded young man succeeding in a job at McDonald’s was very favorably received in the U. while it is more modest in Northern Europe and the U.—if you have something on your mind.BMS – B Narsee Monjee College  International Marketing Group 5 Explicitness: Americans tend to allow for considerably less explicit advertisements.S. popular culture. but was booed at the Cannes film festival in France. is in the lower range of the distribution. "what you see is what you get"— the speaker is expected to make his or her points clear and limit ambiguity.

1 and 0.865 February 2007 (thousands) currently it is 6. Total number of employed was Previously. professionals and middle management with large work autonomy with household incomes varying from the high 5-figure range to commonly above $100. although it is not the world's highest.21 trillion in 2006. economy has maintained a reasonably high overall GDP growth rate. and high levels of research and capital investment.724 (thousands) in March 2007. The U.S environment is.326 in 2005.S. currently it is $27.Median household income was $46. consumer debt.1 percent from 2004 after adjusting for inflation. Since 1967. This is the first annual increase in real median household income since 1999. high-rung politicians.000 10 . It is a mixed economy where corporations and other private firms make the majority of microeconomic decisions while being regulated by the government.Y. The next class includes the upper-middle class which constitute 15% of the total population. The income of this group usually lies in the bracket of $500.784 February 2007 (thousands) Total number of persons unemployed previously 6. and a large current account deficit. Previously it was $27. real median household income was up 30. Social Environment The capitalist class constitutes the top 1% of the total population of the USA. and entitlement liabilities for retiring baby boomers that have already begun entering the Social Security system.640 (December 2005). a low savings rate. This class is further divided into the Superrich and the rich which constitute 0.000+ per year. These are highly educated.BMS – B Narsee Monjee College International Marketing Group 5 Economic Environment The economy of the United States has the world's largest gross domestic product (GDP).S. Major economic concerns in the United Sates include national debt. actors & celebrities heirs with high income and other high net-worth individual. most commonly salaried. external debt.9% respectively.152.9 percent. In December 2005. $3. per capita real disposable personal income (at a seasonally adjusted annual rate) increased $89. a low unemployment rate. The US economy also maintains a high level of productivity (GDP per capita). The statistics shown below give us a view of how economically stable the U. This includes top-level executives. up 1. the first year for which household income statistics are available.

have always had a healthy trade relationship. Similarly. American firms may be disliked in parts of Latin America or Iran where the U. For example. 11 . oil companies which invested in Iraq or Libya became victims of these countries’ misconduct that led to bans on trade.S.BMS – B Narsee Monjee College International Marketing Group 5 These are the targets for the company. Political Environment The political relations between a firm’s country of headquarters (or other significant operations) and another one may.S. either had a colonial history or supported unpopular leaders such as the former shah. As it can be seen. there is a huge potential market of people with the ability to pay for a luxury watch product like Aristocracy. Similarly.S.Y. become a major issue. the US does not have any political issues with Switzerland and has a healthy trade relationship with the country. through no fault of the firm’s. India and U.

"chic" and "hip" product.S. The division reflects the differences in marketing strategy that will be used to target each different market.397 229.000 25. • The "Followers" who follow trends and buy products that everyone else has.563 21.000 2003 105.020 27.800 203.250 20.000 20.BMS – B Narsee Monjee College International Marketing Group 5 Target Market and Market Segmentation The market segmentation is divided into the leading target markets.000 26.15% 2002 100.261 2006 121.551 54.050 2004 110.497 220.250 52.457 12 .Y.941 22.000 50. • The "Trendsetters" who enjoy being the first on their block to have a new.121 30.000 195.388 23.000 51. • Still fashionable senior citizens.632 211. • Wealthier college students.763 53.465 2005 115.060 28. Market Analysis Potential Customers Trendsetters Followers Older Adults Others Total Growth 5% 2% 5% 4% 4. • Older adults who simply have good taste and a sense of style.

In the U. is growing faster than ever. but there is room in this market for a new company as brand loyalty is not high on potential consumers' reasons for purchasing.Y. In addition. Industry Analysis The watch industry. Both of these firms have strong brand equity. market we will be using franchising and we will be using it to sell our products through their franchisee 13 . using raw materials imported from India. Our next closest competitor is DKNY. Aristocracy Watches will be built to last a lifetime . advertising will be increased during the Christmas holiday season. Buying Patterns Consumers often only buy a new watch every 5 to 10 years.S. Therefore. particularly the upscale markets.battery replacement every ten years will be the only necessary maintenance. Potential watch buyers are willing to spend moderate to high amounts on watches because they can make the customer look good .and hence feel good about themselves.BMS – B Narsee Monjee College Market Analysis (Pie) International Marketing Group 5 Competition Our main competitor is Swiss Army Watches. therefore customers will see the inherent value in the watches. yet they purchase them often as gifts. Entry strategy Aristocracy Watches will manufacture their watches using Swiss craftsmanship and engineering.S.

therefore additional sourcing of watches will not be necessary. the sourcing of parts for the manufacturing of the watches will play a constant role in the firm's profitability. Promotion Mix The upscale niche market that Aristocracy Watches has targeted is competitive because of the competitors and the discerning consumers it serves. pricing will be adjusted to be directly competitive with the other major competitors. 2.particularly The Los Angeles Times and The San Francisco Chronicle. and sales programs to make the public aware of the watches. Full-color brochures will be distributed at the various outlets where the watches are sold. However. The price per watch is expected to be around $600-$1000. and then through advertising once the company begins to increase cash flow to an acceptable figure. The intended retail outlets are full price and full service. Price Mix Our pricing strategy is very straight forward.S. using a market penetration strategy. 1. Sourcing Aristocracy Watches will only sell watches produced at its Switzerland factory. therefore Aristocracy will not need to use an extreme price penetration strategy to gain a foothold in the market. The pricing strategy will be to initially undercut our main competitors by 10%. public relations. Outlets that achieve the highest figures in sales will receive 2% discounts in order to encourage increasing sales. as the exchange rate is very beneficial for those purchasing with Swiss Francs. 14 .A. Then. After considering our expenses that we will have to incur and on the basis of break-even point. and San Francisco. Advertisements and public relations pieces in local newspapers . Promotion will be initially spearheaded by public relations because of its low cost.Y. Initially. we have decided to price our watches.BMS – B Narsee Monjee College International Marketing Group 5 outlets. The company will use advertising. most parts will be sourced from India. Aristocracy watches will be sold in upscale stores in the USA and especially in areas like L.

000.e.BMS – B Narsee Monjee College International Marketing Group 5 Place Mix We are entering the U. Also the company plans to set up a website where people can place orders online and they will receive their product with the other channel that we will be using in future i. so there will be a few shops in some upscale malls.000 $10. and the rest will be long-term loans.000.000 per month. and a strong cash account.S.Y. research and development. while projected sales are three to five (or more) times that figure.000 $10. $30. which sell the products.S. The Break-even Analysis shows Aristocracy Watches will be able to make a steady profit by the second year.000 $20. exports. by export and franchising. The break-even point is only $12. Startup Costs Start-up Requirements Start-up Expenses Legal Stationery etc. The majority of the start-up costs will consist of rent.000 $10. initial inventory. Owners equity will be provide $171. Financial Considerations The company's start up costs will be ~$226. Brochures Consultants Insurance Rent Research and Development $20.000 15 .000 $500 $3. They have to pay the price of the watch as well the shipping charges.000 will consist of short-term borrowing.

S.000 $70.000 $55.000 $71.000 $100.000 $20.000 $35.000) $80.000 $100.000 $25.000 $5.000 $7.Y.000 ($91.000 $226.000 $135.BMS – B Narsee Monjee College International Marketing Group 5 Expensed Equipment Other Total Start-up Expenses (1) Start-up Assets Needed Cash Balance on Starting Date Start-up Inventory Other Current Assets Total Current Assets (a) Long-term Assets (b) Total Assets (a & b) (2) Total Requirements (1 & 2) Funding Investment Investor 1 Investor 2 Other Total Investment Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Current Liabilities (3) Long-term Liabilities (4) Total Liabilities (3 & 4) (i) Loss at Start-up Total Capital (e) Total Capital and Liabilities (e & i) $10.000 $0 $171.000 16 .000 $5.000 $135.000 $0 $35.500 $91.000 $30.

000 $0 $500.000 FY 2010 $1.515.066.000 $0 $1.BMS – B Narsee Monjee College International Marketing Group 5 Sales Forecast The following table and chart show our present sales forecast.Y.307.000 Break-even Analysis Break-even Analysis Break-even Analysis: Monthly Units Break-even 120 17 .000 $0 $1.066.000 $0 $1.515.307.000 FY 2009 $500.S.000 FY 2009 $1.000 $0 $610.000 FY 2008 $410.000 $0 $410. Sales Forecast Sales Sales Other Total Sales Direct Cost of Sales Sales Other Subtotal Direct Cost of Sales FY 2008 $1.000 FY 2010 $610.

00 $70.BMS – B Narsee Monjee College Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost International Marketing Group 5 $20.S market saturates we would divert our concentration to the currently developing markets of Asia and Latin America.400 $170. the batch number. protection. preservation and presentation. this polythene bag is carefully packed in cardboard boxes. Labeling is an important aspect. The hard plastic we use would be within the permissible limits and in line with the ISO 14001 norms.000 Packaging and Labeling Packing:Everything we use in packaging would be recycleable and the package itself would be be such that it would be reuseable.S. The US labeling laws require the manufacturing date. 18 . the watches will come with a “law label” which is a tag that is attached to most electronic items in the US having all the required information Product Life Cycle (PLC) Our product would be initially being at the introduction stage but within 2 years we expect to reach the growth stage. country of origin (if not made in the USA) and the price to be put along with the name of the manufacturer.00 $12.Y. So we would be creating a very dynamic company with heavy investments in R&D.e. The wrapped goods are now ready to be packed in containers. Instead of labeling.This is in line with our cause to same environment and with our “Go Green Campaign” The product is carefully placed in recycleable polythene bags. Labeling:Labeling would be done after taking care of the legal norms regarding labeling. As such it serves the three purpose of packaging i. Packaging:These boxes are wrapped in hard plastic sheets this makes them safe from damage in transit. Moreover as the U. We would be constantly upgrading our products and bringing in new features and design so that our sales never decline but keep increasing.

market evaluation. This project has truly taught us a lot about what a company goes through when it wants to expand internationally 19 .Y.BMS – B Narsee Monjee College International Marketing Group 5 Conclusion: We have covered all the aspects of international marketing. the 4 p’s and the break even analysis have been examined and scrutinized thoroughly by us. the entry strategies.S. The database and research required about the host country.

census. http://www. London: Piatkus.thetimes100. Ideology and Symbolic Expression (Theory. and Modern Sociology: from Adam Smith to Max Weber. 1982 • • • Kotler. The10-Day Culture & Society). Marginalism. 1991 Websites: • • • • • http://en. London: The Macmillan Press. London: Sage Publications Ltd.php http://www. 2001 Promotional Culture: Advertising. Andrew. Philip. Marketing Marx. Steven A.wikipedia.BMS – B Narsee Monjee College International Marketing Group 5 Bibliography: Books: • http://www.unu. 2005 Wernick. New Jersey: Prentice-Hall Inc 20 .

BMS – B Narsee Monjee College International Marketing Group 5 21 .S.Y.

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