MK4111 International Marketing Management Assignment Sample
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Executive summary
The report is based on doing critical evaluation and analysis of international marketing strategy for the lush business organisation. Five questions have been answered through this report by using various strategic models and frameworks. The first portion of the report is based on doing critical evaluation of the Lush’s company international market and selecting the country where the business has to be expanded. The second portion of the report is based on analysing the cultural differences with the application of Hofstede’s cultural dimension theory. The third portion of the report is based on Product development done by the organisation. The fourth portion is based on doing promotion of the products by suggesting various promotional techniques. The fifth portion is based on identifying the most suitable entry strategy for the Lush business organisation.
Introduction
International marketing has become a major aspect for every business organisation as it helps in exchanging products and services across international borders for earning more profits and revenues. The report is based on critically evaluating and understanding the scope of international marketing for the Lush business firm. Various marketing models or theoretical frameworks have been implemented for critically evaluating the case of Lush business organisation. The report is also based on developing future international marketing strategies for the business firm.
1. Critical evaluation
1.1 Critical review of Lush’s international market
The Lush business organisation was founded in 1995 and the firm is best known for selling organic handmade cosmetic products and soaps. The Lush business firm has been operating in about 46 countries of the world (Statista.com, 2021). Asia has been considered the most significant market for the Lush Company because 21% of the company’s total revenue comes from this continent (Lush.com, 2021). The products developed by the organisation are free from animal testing and are developed from organic materials. (Refer to Appendix 1)
1.2 Country suitable for expansion
The country of China has been considered best suitable for the expansion of Lush business because companies can get skilled and talented labourers at cheap costs in this country. On the contrary, the technological advancements in China can contribute effectively in business processes of the organisation. Lack of regulatory compliance and low taxes in China makes it the best suitable country for multinational firms to manufacture their products with ease. The production of fruits and vegetables in China is about 588.26 million metric tons (Statista.com, 2021). The company can easily get access to raw materials of their products in this country.
1.3 PESTLE analysis
| PESTLE | Analysis | Impact |
| Political | ● Government is people republic of China
● Unstable government ● Low tax rates imposed on businesses |
Positive and negative |
| Economic | ● Largest manufacturing economy of world
● Inflation rate of China 2.68% (Statista.com, 2021)
● GDP rate of China is $15.42 million |
Positive |
| Social | ● Total population of China is 1,439,323, 776 (Worldometers.info, 2021)
● Population of China 18.47% equivalent to total world’s population ● Labour costs- $5.51 |
Positive |
| Technological | ● Global technology leader
● Second highest technology expertise in world ● Use of AI in beauty industry |
Positive |
| Legal | ● China’s wildlife protection law 1989
● Labour act 1994 (Ilo.org, 2021) |
Positive |
| Environmental | ● Increase air pollution
● Ranked low on environmental performance index ● Water shortage |
Negative |
Table 1: PESTLE table for Lush business organization
(Source: Developed by author)
Analysis
The PESTLE tool has been sued for analysing the external business environment for Lush business organization in China. The table depicts that political, economic, technological and legal factors of China can impose a positive impact on the business of the Lush Company. On the contrary, the political instability and environmental pollution prevailing in the country can impose a negative impact on the business of the organisation.
1.4 Porter’s five force analysis
| Porter’s five forces | Analysis |
| Threat of new entrants | The threat of new entrants is high for the business organisations operating under the beauty industry because many companies have been coming with new cosmetic products in the market. |
| Threat of substitutes | The threat of substitutes is low for the Lush business organisation because they manufacture organic cosmetic products that don’t cause any harm. |
| Bargaining power of suppliers | The bargaining power of suppliers is low for the organisation in Chinese market because there are many suppliers available for the purchase of raw material. |
| Bargaining power of customers | The bargaining power of customers is high because customers are more focused towards using cosmetic products developed from natural ingredients that doesn’t cause any harm to them. |
| Competitive rivalry | The competitive rivalry is high in the beauty industry (Khurram et al. 2020). This is because many firms have been focusing towards manufacturing organic cosmetics for gaining more consumers’ insight. The major competitor of the Lush organisation is “The Body shop”. |
Table 2: Porter’s five force analysis for analysing competitive environment of Lush Company
(Source: Developed by author)
1.5 SWOT analysis
| Strengths
● High recognition of brand ● Innovated and organic cosmetic products ● Meets customers needs |
Weaknesses
● Decreasing sales in outlet ● Increasing competition ● High price of cosmetic products |
| Opportunities
● Global expansion ● Provide online shopping facility ● Enhance customers satisfaction |
Threats
● Threat from “The Bodyshop” organisation ● Increasing competition on online shopping platform ● Lack of resources |
Table 3: SWOT table for Lush business organisation
(Source: Developed by author)
Analysis
The SWOT tool has been used for analysing the strengths, weaknesses, opportunities and threats of the organisation. The strengths and opportunities of the organisation can contribute to international expansion of Lush business in countries like China. The company needs to work upon improving their area of weaknesses and threats for gaining more advantages in the global marketplace.
2. Cultural differences
2.1 Understanding culture of specific country/market
The organization has been suggested to expand their business into the market of China and for doing this the organisation needs to first analyse the cultural differences. In the viewpoints of Jiang et al. (2019), cultural differences are defined as various beliefs, languages, behaviours and practices that distinguish the people from each other in common society. China has been considered best suitable for manufacturing the cosmetic products of Lush because here they can get cheap labour and great accessibility to the raw material required for manufacturing of organic products. Lush is cruelty free company that don’t do animal testing of their products. The company can manufacture their products in China and sell it to other countries of the world by adopting Export strategy.
2.2 Applications of Hofstede’s cultural dimension theory
The applications of “Hofstede’s cultural dimension” theory can be best implemented in the business of Lust for identifying the cultural differences that can prevail during the international expansion of business. According to Rojo et al. (2020), “Hofstede’s cultural dimension theory” helps in understanding the differences in culture across different countries of the world where the business has to be expanded. The nine dimensions of culture get described by this theory that needs to be analysed and evaluated for measuring the cultural differences of the organisation. The Lush Company needs to focus upon analysing the culture of Chinese people so that they can easily interact with the labours and encourage them to work for their company.
3. Product
3.1 Adaptation into the international market
The organization can adapt into the international market of China by doing certain development and advancements in their products. The strategy of “Product differentiation” has been adopted by the business organisation of Lush that helps the organization in getting good competitive advantage in the global marketplace. As stated by Salazar-Ordóñez et al. (2018), the strategy of “product differentiation” is the strategy that helps the business organisation to differentiate their products and services from their competitors. The organization also needs to focus upon adopting the process of “Product standardisation”. “Product standardisation” is defined as the process of maintaining uniformity of the products that are being sold in different marketing sectors (Wilkins et al. 2019). This has helped in making the adaptation of the Lush Company easy in different international market sectors.
3.2 Other factor needed to be considered for adaptation
The other factor that needs to be considered for business adaptation in the International market is price. The Lush business organisation offers their cosmetic products at premium price to their customers. They test their products on humans only and their products provide successful results. The premium pricing strategy adopted by the business organisation helps in overcoming the high labour costs and raw material costs that is required for manufacturing of cosmetic products (Geng et al. 2017). The organisation can adopt the strategy of “Price skimming” for attracting the customers from China.
3.3 Product life cycle analysis
The technique of “Product life cycle analysis” can be used for analysing the progress of a product throughout its life span. The “product life span is measured when a product manufactured by the organization goes through five different stages. These stages are “development”, “introduction”, “growth”, “maturity” and “decline” (Horvat et al. 2019). The Lush organisation needs to do complete analysis of their product’s life span and do certain innovations in it for maintaining its growth and maturity level.
3.4 BCG matrix
The BCG matrix is basically a product portfolio matrix that is specifically designed to develop long term strategic plans for the business organisation. The BCG matrix is used by the business organisations for measuring the strategic position of a business firm in the global market (Madsen, 2017). The business of Lush business organization can be placed under the stars category. This is because their business has been operating under the high growth markets and requires high investment for expanding the business into different markets.
3.5 GE matrix
The GE matrix helps the business organisation to evaluate their overall strength. The GE matrix helps in prioritizing the investments among various business units (Joeng and Yu, 2019). The Lush business organisation can implement this model in their businesses for measuring their strengths and cost investments that can help them to expand their business on a global level. This model can be used for doing effective marketing of Lush bran and their
4. Promotion
4.1 Future promotional strategy
The Lush business organisation can adopt the promotional strategy of advertising through social media platforms. Social media marketing is defined as the use of various social media sites for promoting and advertising the products and services manufactured by the organisation (Dwivedi et al. 2020). The Lush company can make their own social media account and advertise their cosmetics on it. About 882 million people in China use social media and these people can be easily targeted by the Lush business firm to sell their products to them (Statista.com, 2021). This can help the firm in generating a huge consumer base.
4.2 Specific activities in promotion campaigns
Some of the specific promotional activities that will be effective in future are advertising, sales promotion, digital media and public relations. These activities can be adopted by the Lush organization for effectively promoting their organic cosmetic products among the people of China. The strategy of sales promotion is a type of marketing strategy that can be used for promoting the products using short term initiatives for enhancing the demand and sales of products in foreign markets.
4.3 SERVQUAL model
The SERVQUAL model is used by the business organisation for meeting the quality needs of the customers (Ahmed et al. 2017). This is done by doing complete quality analysis of the business organisation and meeting the needs of the customers. This model can help in contributing in the promotional activities of the Lush business organization. The Lush Company can use the application of this model for measuring the satisfaction level of the customers that they have targeted in China. (Refer to Appendix 2)
4.4 Distribution and channel management
The process of distribution and channel management is used for transferring the products from manufacturers to the customers. The Lush business organisation can adopt this process for distributing their organic cosmetic products to the customers living in different locations of the world. Various advertisement techniques and digital media techniques like social media can be best used for enhancing analysing the needs of customers and building their satisfaction level.
5. Entry strategy
5.1 Suitable entry method
The most suitable market entry method for the Lush business organization is Exporting. As stated by Samiee and Chirapanda (2019), exporting refers to the sales of products and services across the international and national borders for gaining more profits and revenues. Direct exporting is easy suitable for Lush business organization because it can help in executing sales of their products in the selected international market of China before completely establishing their business there.
5.2 Critical evaluation of entry strategy
The main advantage of exporting marketing strategy suggested for the business of Lush company is that it makes the entry of business in foreign markets more efficient with low risks. The exporting marketing strategy helps in creating brand awareness among the customers before completely penetrating into the foreign market (Azar and Ciabuschi, 2017). On the contrary, the exporting marketing strategy doesn’t let the organisation get complete knowledge of the foreign market. Exporting through different transportations imposes a negative impact on the environment. The Lush business organisation will not be able to possess complete control on the business if they are exporting their products in China.
5.3 Possibilities for Lush
There are different possibilities that can be considered by the Lush Company for establishing their stores in different locations of foreign markets. The Lush Company can focus upon establishing their stores in the main transport locations of the country like airports and railway stations of the selected country. These locations have been considered suitable as the stores of the company can get a good consumer base in these locations and tourists visiting from other places will also get attracted towards the products manufactured by Lush Company.
5.4 Ansoff matrix
The Lush business organisation can be recommended to use the applications of “Ansoff matrix” tool to analyse and expand the growth of the business firm. According to Loredana (2017), “Ansoff matrix” is also known as a market or product expansion grid that is used by businesses for planning appropriate growth strategies for their organization. The four strategies provided by “Ansoff matrix” are “product development, market penetration, market diversification and market expansion. Among these strategies the organization needs to follow the strategy of product development and market expansion for expanding their business effectively in foreign market of China.
5.5 Ethical culture of company
The main business value proposition of the Lush Company is based upon executing ethical business processes by using natural products in their cosmetic products. The company does not test their products on animals because they don’t want to harm the wildlife just for the sake of their experiments. About 2% of the Lush business profits gets donated to charity. The staff members of the organization are also committed to various ethical principles of the organisation.
Conclusion
At last it can be concluded that the international expansion of the Lush business organisation is only possible after attaining complete knowledge of the foreign market and target customers. Various strategic tools and theoretical models can be implemented within the business organisation of Lush for making the expansion of business more efficient and easy. The company’s organic products and ethical culture makes it more reliable and convenient to expand their business into foreign countries like China. Business expansion in China will help the organization in getting cheap labour and a huge consumer base.
Reference List
Ahmed, R.R., Vveinhardt, J., Štreimikienė, D., Ashraf, M. and Channar, Z.A., (2017). Modified SERVQUAL model and effects of customer attitude and technology on customer satisfaction in banking industry: mediation, moderation and conditional process analysis. Journal of Business Economics and Management, 18(5), pp.974-1004.
Azar, G. and Ciabuschi, F., (2017). Organizational innovation, technological innovation, and export performance: The effects of innovation radicalness and extensiveness. International Business Review, 26(2), pp.324-336.
Dwivedi, Y.K., Ismagilova, E., Hughes, D.L., Carlson, J., Filieri, R., Jacobson, J., Jain, V., Karjaluoto, H., Kefi, H., Krishen, A.S. and Kumar, V., (2020). Setting the future of digital and social media marketing research: Perspectives and research propositions. International Journal of Information Management, p.102168.
Geng, S., Li, W., Qu, X. and Chen, L., (2017). Design for the pricing strategy of return-freight insurance based on online product reviews. Electronic Commerce Research and Applications, 25, pp.16-28.
Horvat, A., Granato, G., Fogliano, V. and Luning, P.A., (2019). Understanding consumer data use in new product development and the product life cycle in European food firms–An empirical study. Food Quality and Preference, 76, pp.20-32.
Ilo.org (2021) “China. Labour Act – ILO” Available at: https://www.ilo.org/dyn/natlex/docs/WEBTEXT/37357/64926/E94CHN01.htm#:~:text=Labourers%20shall%20have%20the%20right,welfare%2C%20and%20submit%20applications%20for [Accessed on 13 March 2021]
Jiang, T., Li, H. and Hou, Y., (2019). Cultural differences in humor perception, usage, and implications. Frontiers in psychology, 10, p.123.
Joeng, M.E. and Yu, S.J., (2019). A Study on the Strategy of IoT Industry Development in the 4th Industrial Revolution: Focusing on the direction of business model innovation. Journal of Intelligence and Information Systems, 25(2), pp.57-75.
Khurram, A., Hassan, S. and Khurram, S., (2020). Revisiting Porter Five Forces Model: Influence of Non-Governmental Organizations on Competitive Rivalry in Various Economic Sectors.
Loredana, E.M., (2017). The use of Ansoff matrix in the field of business. Annals-Economy Series, 2, pp.141-149.
Lush.com (2021) “Lush Cosmetics company” Available at: https://lush.com/ [Accessed on 16 March 2021]
Madsen, D.O., (2017). Not dead yet: the rise, fall and persistence of the BCG Matrix. Problems and Perspectives in Management, 15(1), pp.19-34.
Rojo, J., Everett, B., Ramjan, L.M., Hunt, L. and Salamonson, Y., (2020). Hofstede’s cultural dimensions as the explanatory framework for performance issues during clinical placement: A mixed methods study. Nurse Education Today, 94, p.104581.
Salazar-Ordóñez, M., Rodríguez-Entrena, M., Cabrera, E.R. and Henseler, J., (2018). Understanding product differentiation failures: The role of product knowledge and brand credence in olive oil markets. Food quality and preference, 68, pp.146-155.
Samiee, S. and Chirapanda, S., (2019). International marketing strategy in emerging-market exporting firms. Journal of International Marketing, 27(1), pp.20-37.
Statista.com (2021) “Number of shops of the Lush Cosmetics Limited group* worldwide in the year ending June 30, 2019, by country” Available at: https://www.statista.com/statistics/892429/lush-cosmetics-limited-shop-numbers-by-country/ [Accessed on 15 March 2021]
Wilkins, S., Butt, M.M., Shams, F. and Pérez, A., (2019). Product standardisation in the food service industry: post-purchase attitudes and repurchase intentions of non-Muslims after consuming halal food. Journal of Strategic Marketing, 27(3), pp.210-226.
Worldometers.info (2021) “China Population” Available at: https://www.worldometers.info/world-population/china-population/ [Accessed on 14 March 2021]
Appendices
Appendix 1: Number of Lush stores present in different countries of the world
Appendix 2: SERVQUAL Model
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