International marketing entry strategy for the Red//Green Company

Thai market attractiveness determination & strategic implications

Essay , 2006 , 30 Seiten , Note: 1st

BWL - Offline-Marketing und Online-Marketing

Market analysis is an important instrument in assessing the attractiveness of a particular market, since it is utilised to decide whether to enter a foreign market in terms of international marketing strategy. It is necessary to apply a market analysis in order to determine and examine the appropriate approach to enter a market. This essay provides a scan of the Thai market attractiveness for the Danish medium-sized enterprise Red//Green, in order to recommend a market entry strategy. The first section focuses on the application of the 12C framework in order to draw up a market attractiveness profile, combined with a risk evaluation of the Thai market. The second part determines the attractiveness of the Thai market with respect to the information and relevant factors gathered from the 12C model. Interpretation of those factors will then be used to allocate a determination of a suitable market entry strategy for Red//Green. In addition, a marketing strategy according to the 4Ps will be addressed to identify opportunities and possibilities of how to develop the Thai market.

Table of Contents

1. Introduction

2. Market Profile Analysis
C – Country:
C – Concentration:
C – Culture/Consumer behaviour:
C – Choices:
C – Consumption:
C – Contractual obligations:
C – Commitment:
C – Channels:
C – Communication:
C – Capacity to pay:
C – Currency:
C – Caveats:

3. Risk Evaluation
3.1 Political Risk
3.2 Economic Risk
3.3 General Business Environment Risk

4. Thai Market Attractiveness to Red//Green

5. Market Entry Strategy Recommendation for Red//Green
5.1 Product
5.2 Price
5.3 Place
5.4 Promotion

6. Conclusion

7. References

8. Bibliographies

Table of Figures

Figure 1: Flag & Coat of Arms of Thailand

Figure 2: Map of Thailand

Figure 3: GDP Real Growth Rate and Outlook

Figure 4: Inflation and Policy Rates, 2004 – 2006

Figure 5: Short-term Political Risk Rating 2006

Figure 6: Long-term Political Risk Rating 2006

Figure 7: Short-term Economic Risk Rating 2006

Figure 8: Long-term Economic Risk Rating 2006

Figure 9: Business Environment Risk Rating 2006

Figure 10: Risk Interaction Diagram 2006

Figure 11: Risk and Control in Market Entry

1. Introduction

Market analysis is an important instrument in assessing the attractiveness of a particular market, since it is utilised to decide whether to enter a foreign market in terms of international marketing strategy. It is necessary to apply a market analysis in order to determine and examine the appropriate approach to enter a market. This essay provides a scan of the Thai market attractiveness for the Danish medium-sized enterprise Red//Green, in order to recommend a market entry strategy. The first section focuses on the application of the 12C framework in order to draw up a market attractiveness profile, combined with a risk evaluation of the Thai market. The second part determines the attractiveness of the Thai market with respect to the information and relevant factors gathered from the 12C model. Interpretation of those factors will then be used to allocate a determination of a suitable market entry strategy for Red//Green. In addition, a marketing strategy according the 4Ps will be addressed to identify opportunities and possibilities of how to develop the Thai market.

2. Market Profile Analysis

A market profile analysis will assist in determining the attractiveness of the Thai market to current and potential participants, as well as highlighting the dynamics of the market which Red//Green should be aware of before entering into the market. The objective of the market profile analysis is to enable Red//Green “to use the environmental information built up in the system to identify opportunities and problems in the potential marketing strategy” (Doole and Lowe, 2004, p.113). In this section the 12C model will be used to analyse the Thai market in order to determine information which will be used to recommend an international marketing plan for Red//Green.

C – Country:

Thailand’s population amounts to 65.76m and about 10.78m live in Bangkok, Thailand’s capital and largest city (International Monetary Fund, 2006). The total GDP (PPP) for 2006 was $583.747bn and the GDP (PPP) per capita aggregate $8,876.73. The Thai currency is Baht (฿) and the inflation rate, estimated in 2006, accounts for 4.9 % per annum (IMF, 2006).

Figure 1: Flag & Coat of Arms of Thailand

illustration not visible in this excerpt

(Source: CIAFactbook, 2006)

Thailand was a constitutional monarchy ruled by the Thai King Bhumibol Adulyadej until the mostly peaceful military coup on 19th September 2006, which ousted the former Prime Minister Shinawatra from political rule. According to Business Monitor International (2006), the cabinet has been replaced by an interim government. The coup brought an end to months of political uncertainty, following annulled elections in April 2006, which left Thailand without a functioning parliament. The military junta has promised democratic elections in October 2007. Thailand is a member of the Association of South East Asian Nations (ASEAN) economic grouping, and its associated free trade area AFTA (Business Monitor International, 2006). Thailand is also a member of the Asia Pacific Economic Cooperation (APEC) forum (Datamonitor, 2005) and it concluded a Free Trade Agreement (FTA) with Australia and Singapore. Thailand concluded a FTA with Peru, New Zealand and is negotiating with the USA and Japan (Financial Times, 2006). Furthermore, Thailand has been a WTO member since 1995, according to the World Trade Organisation (2006).

Figure 2: Map of Thailand

illustration not visible in this excerpt

(Source: The Economist Intelligence Unit, 2006)

C – Concentration:

Thailand’s major industries are located around the capital city Bangkok, which forms the biggest conglomeration of inhabitants in Thailand of about 10.78m people including the metropolitan area. Bangkok is also the economic centre of Thailand and it generated 43% of the country’s GDP (PPP) in 2005, according to Datamonitor (2005). Phuket, located on the east coast of Thailand, is one of the largest centres for tourism in the country, attracting approximately 5m tourists annually. Furthermore, the city of Chiang Mai, the second largest city in Thailand (700,000 inhabitants), is the largest congested area in the northern part (Euromonitor, 2006). In general, 47.2m (about 76.3%) Thais live in rural areas, whereas 14.6m (about 23.7%) live in the urban areas in 2005 (Euromonitor, 2006). In respect of Red//Green’s target audience (social, active and sophisticated), the population by age group of female and male between 30-59 accounts for approximately 20.9m (in 2005), which represents nearly 1/3 of the population. In 2015 this target market segment is estimated to increase by 25%, which aggregates 25.5m people.

C – Culture/Consumer behaviour:

94.6% of the Thai population is Buddhist, followed by 4.6% Muslim, 0.7% Christian and 0.1% other religions. Thailand’s predominantly Buddhist culture values patience and respect for status of age and authority (US Department of Commerce, 2006). Ethnic groups are divided into 75% Thai, 14% Chinese and 11% other ethnic groupings. Thai is the major spoken language, followed by English (CIAFactbook, 2006). In 2003, 30.6m people gained primary education, 11.6m received secondary education and 4.6m achieved a higher education degree (Euromonitor, 2006). The mean disposable household income in 2005 accounts for ฿222,444 (£3193.29) per household, which is estimated to increase to ฿236,772 (£3398.98) in 2010. Thai consumer expenditure doubled between 1990 and 2000 and a similar trend is expected to continue in all market sectors, according to Euromonitor (2006).

C – Choices:

Competition between branded clothes is especially intense in the catchment area of Bangkok, where brands like Levi’s, Esprit, Hugo Boss, Lacoste, Giodarno and Louis Vuitton have been established. Branded goods are mostly sold in large malls or department stores which offer a range of different brands, hence there is a potential choice of substitute products available. The higher oil price has increased supply and transportation costs, which is passed to the consumer through higher product prices (Euromonitor, 2006). This has weakened the domestic consumption, so too has Thailand’s long-running political uncertainty, which has resulted in an import constraint; imports accounted for $107bn in 2005 (CIAFactbook, 2006). Furthermore, the Thai government has introduced a policy to save energy, as a measure to cope with the higher oil price, by cutting opening hours to 10am until 9pm, which decreases the amount of time spent on shopping. Shopping malls are targeting middle to high-income consumers with more relaxed lifestyles and a strong sense of family. The Thai consumer is also getting more sophisticated about shopping. Outdoor market places are a crucial issue regarding the competitive environment, because a considerable amount of goods will be copied and sold at those markets for consumers with a low disposable income.

C – Consumption:

Clothing is a major shopping item for consumer in Thailand, hence clothing of good quality at reasonable prices are some of the best buys. In Thailand, the way people dress depends on many factors, such as status, location, and age. Thais usually shop for clothing on weekends or national holidays and dress up more with branded items for special events, such as concerts, dinners or dates (Euromonitor, 2006). Higher income groups prefer wearing silk in order to express their status and to show their wealth. Branded clothes are mainly bought in department stores or hypermarkets, where the branded items are available (Euromonitor, 2006). As mentioned above, there is a threat of substitute products, as branded clothes are mainly available in shopping malls or department stores. Thais aspire to wear branded products and fashion which usually follows the Japanese trend of being dressed neatly and clean. The average expenditure on clothing per capita in 2003 accounts for ฿6,234.7 (£89.50 per capita). According to Euromonitor (2006), sales of fashionable apparel, especially clothing, are expected to grow due to the government’s Bangkok Fashion City campaign. This campaign intends to help create more new fashion designers, resulting in more product variety and suppliers. Therefore it is estimated that the clothing market faces an increase in growth to 89% by 2010, with an estimated value of ฿68bn, according to Euromonitor (2006).

C – Contractual obligations:

Legal obligations regarding employment policies are relatively light and most labour legislation falls under the civil and commercial code, the Labour Relations Act and the Social Security Act (Business Monitor International, 2006). Furthermore, organised labour movement is weak and accounts for less than 2% of the Thai work force. The total labour force amounts to 35.36m (CIAFactbook, 2006) and the unemployment rate mounts up to 1.8%. The Thai Chamber of Commerce enables entrepreneurs and large corporations from different countries to make contracts and interact directly with government agencies, trade associations and international organisations. Three types of business organisations are recognised in Thailand; limited companies, partnerships and joint ventures. The Thai authorities have not changed the level of taxes since last year. There are four different major types of taxes in Thailand, according to Business Monitor International (2006). The corporate tax (30% with a profit remittances tax of 10%), individual tax (ranging up to a maximum 37%), indirect tax (VAT of 7%) and withholding tax (10% on dividends, 15% on interest and royalties). Thailand’s Alien Business Law of 1972 defined the scope of foreign participation in Thai business activities, which states that there are no restrictions on the amount of foreign investment a foreign cooperation may bring into Thailand. The degree of government involvement is dependant on the size of the firms and on the degree of environmental protection.

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• Hochschule: University of Lincoln (Faculty of Business & Law)
• Veranstaltung: International Marketing Strategy
• Note: 1st
• Autor: MSc International Marketing Strategy Benjamin Bach (Autor:in)
• Erscheinungsjahr: 2006
• Seiten: 30
• Katalognummer: V76929
• ISBN (eBook): 9783638808637
• ISBN (Buch): 9783638810951
• Sprache: Englisch
• Schlagworte: International, Red//Green, Marketing, Strategy, Market entry, Markteintritt, Strategie, 4 P, 12 C Modell, Marketing Mix, Markt Profil Analyse