Table of Contents
- Four utilities of customer value for Dishwasher
- The target market for dishwashers in the United States and Southeast Asia
- Competition in the US and Southeast Asian market
- Segmentation Targeting and Positioning of Dishwasher in Southeast Asia
- Targeting Foreign market
- Environmental trends in the foreign exchange affecting sales of the product
- Product Campaign based on 4P’s of marketing
- The US and International Ethical Marketing Considerations
A shift in consumers from low-income groups to the middle-income group has been recognized due to an increase in the disposable income of the consumers. The increase in the consumers’ disposable income has led to a shift in consumers’ purchasing behavior concerning various consumer products (Future Market Insights, 2014a). In this research paper, the role of a marketing manager is presented for introducing a product in a foreign market that already exists in the United States. The product chosen for this paper is a dishwasher, a standard appliance in the majority of home kitchens in the USA, and the foreign market chose where the product has sales opportunities. The overseas market chosen for this research paper is the Southeast Asian market comprising of Indonesia, Thailand, and the Philippines.
Four Utilities of Customer Value for Dishwasher
Form utility: Form utility refers to the product or service offered to customers by a company. The marketing team carries out extensive research about customers’ needs to develop a pattern for a product or service to derive form utility. The product development team then develops a product or service that provides customers with essential business benefits like improved productivity, lower costs, competitive advantage, and easier installation and meets customers’ needs (Armstrong & Kotler 2014). The marketing team creates form utility by converting customer needs into products or services that carry value. In this paper, the product offered to the customers is dishwasher by the company. After extensive research, the product development team developed two types of dishwashers based on application, one directed for residential use, and the other one headed for the food services industry sector. The residential dishwasher created utility in the form of time management, better cleaning, and saving energy and water. The industry dishwashers created utility by increasing productivity, lower manual labor costs, competitive advantage, better sanitation, and a lesser amount of energy and water consumption.
Possession utility: The utility of possession offers the customers ownership of the product or service, which allows them to obtain benefits in their own business or daily usage. If the customers can increase their product’s productivity after using the product or service offered to them, then the possession has given them a significant benefit, and possession utility is maximized (Armstrong & Kotler 2014). The dishwasher creates possession utility both in the residential sector and food services industry sector. In the residential area, dishwashers are an added advantage to the hectic work-life schedule of household consumers. In contrast, in the industrial sector, it increases the productivity of hotels, restaurants, and cafes.
Time utility: The utility of time is ensured by making the products and services available to the customers when they need them. Logistics plays a significant role in improving the time utility. An efficient supply chain is required to ensure that the products are delivered on time. Delay in the delivery of products may adversely affect the customer’s productivity and efficiency of the company. Companies like Bosch, GE electric, and Electrolux offer a wide range of dishwashers with an efficient and well-structured distribution network that provides timely delivery of goods required by the consumers. Electrolux offers free nationwide shipping, whereas GE has an industry-leading distribution network (General Electric Company, 2015).
Place utility: Place utility is created by ensuring the availability of a product or service in a suitable location. Place utility in the distribution of dishwasher is created by the renowned dishwasher companies in the United States through departmental stores like Sears, Best Buy Company Inc., Home Depot, and Lowe’s Inc. They provide the product in a location that is convenient for the customers. With the brick-and-mortar retailer, internet retailers also play a significant role in creating place utility for the dishwashers.
The Target Market for a Dishwasher in the United States and Southeast Asia
United States (US): The target market for dishwashers in the US can be divided into many sectors like domestic households, food services industry sector comprising hotels, restaurants, and cafes, hospitals, hostels of schools, colleges, and universities.
Southeast Asia: The primary target market for dishwashers in Southeast Asian countries such as Indonesia, Thailand, and the Philippines would be the food services industry comprising of cafes, restaurants, and hotels. It will be a failure if the dishwasher company in the initial stage concentrates on the household sector as their target market because, in the US dishwashers are a standard appliance in the majority of home kitchens, whereas, in Southeast Asian countries dishwashers are a luxury good that cost an average of $730 per unit which is more than the monthly cost of a fulltime maid in countries like Thailand, Indonesia and the Philippines (Glyph Language Services, Inc. 2015). The growth in the market for dishwashers in the Philippines has been limited as the majority of households wash their dishes manually. The lower and middle-income group considered washing dishes manually is more cost-efficient, while higher-income homes employ maids. The growth in the local market for dishwashers is affected by this culture (Tompson & Kennedy, 2013). Maximum consumers continue manual dishwashing despite the accessibility of lower-priced dishwashers in the country. However, growth (CAGR) in this category is expected to be 2% from 2015 to 2019 (Future Market Insights, 2014b). Dishwashers are being accepted and used by Thai consumers more than in the past, but are still not particularly popular like other consumer appliances (Future Market Insights, 2014b). Dishwashers were considered luxury appliances, and demand for dishwashers was limited to high-income households in large cities or emigrant families in Indonesia (Euromonitor, 2015d).
Competition in the US and Southeast Asian Market
United States: A high sales in dishwashers was recorded in 2013 and 2014 stirred by homeowners who initiated a multistage cooking appliance replacement cycle. With an estimated 37% market share, Whirlpool Corp led the sales volume in a dishwasher in 2014 (Companies and Markets, 2015). The different companies that sell dishwashers in the United States and pose a threat to their competitors are Bosch, KitchenAid, Siemens AG (home appliances), General Electric Company, BSH Household Appliances Manufacturing Pvt. Ltd., Dandy Group, AB Electrolux, Heartland Appliances, Whirlpool, LG Electronics, Sears Brands LLC and IFB Industries Ltd. Due to the high level of competition, the home appliances industry is experiencing partnerships across the value chain to expand the database and strengthen sustainability in the long run. Eco-friendly and climate control dishwashers leading to energy efficiency have been developed by Siemens AC (home Appliances) (Companies and Markets, 2015).
On the other hand, Whirlpool introduced the 6th Sense Live Technology dishwasher, which can be connected to the local Wi-Fi network with the product to provide a smart grid system (Whirlpool. 2015). This system includes an instruction to the dishwasher in terms of low consumption of energy. The competition in the dishwasher industry in the United States of America is intense. In addition to traditional competitors such as Electrolux, Maytag, Kenmore, and GE, there are new and expanding foreign competitors such as Samsung, Fisher and Paykel, Bosch, and LG (Euromonitor, 2015a). The customer base of the United States of America is differentiated by large refined trade customers who possess many choices and demand competitive products and prices. Competition in the market is based upon various factors such as cost, selling price, distribution, and other financial incentives, performance innovation, product quality, and features.
Southeast Asia: In the Philippines, the local market for dishwashers is dominated by multinationals, namely Indesit Company and General Electric. Indesit Company’s share in 2014 was 42%, higher than General Electric, whose market share was 32% (Euromonitor, 2015b). The brands sold in the local market are imported, and there is no local brand of dishwashers in the Philippines. Electrolux was the leading company in Thailand with a 30% share in dishwashers in 2013, followed by Smeg and Bosch & Siemens Home Appliances (Euromonitor, 2015c). In Indonesia, Electrolux, Wahana Hasil Usaha, and Tecnogas were the leading dishwasher companies in 2014 (Euromonitor, 2015d).
Segmentation Targeting and Positioning of Dishwasher in Southeast Asia
Foreign Market Segmentation
Market segmentation involves grouping your various customers into segments with everyday needs or will react similarly to a marketing action (Keega, 2008). Every part will respond to a different marketing mix strategy, with each offering alternate growth and profit opportunities. The foreign market can be segmented on the following basis:
Geographical segmentation is based on the continent, country, state, province, or city where the customer group resides. The customer group for dishwashers, in this case, lives in countries like Indonesia, Thailand, and the Philippines.
Demographic segmentation is done based on the characteristics of the customers. The attributes of demographic segmentation are age, gender, income bracket, education, job, and cultural background (Armstrong & Kotler 2014). The foreign market for a dishwasher can be segmented on the following demographics:
- Income brackets based on the lower-income group, middle-income group, and higher-income group. Features can differentiate the different types of dishwashers like Built-in Under counter dishwasher, Drawer dishwasher, Portable freestanding dishwasher, and Countertop dishwasher based on income group (Advameg, Inc., 2015).
- Gender-wise segmentation can be done to target working males and females.
- Age-wise segmentation can be done to target the middle-aged and the youth.
Psychographic Segmentation: It is done based on the lifestyle of the customers. The attributes of psychographic segmentation are social class, lifestyle, personality, opinions, and attitudes of the customers (Armstrong & Kotler 2014). The foreign market for a dishwasher can be segmented on the following psychographics:
- Social class: The middle class and upper-middle-class consumers can be considered as prospective buyers.
- Lifestyle: Consumers with hectic work life can be targeted as potential buyers.
Behavioral segmentation is done based on the behavior of the customer. The attributes of behavioral segmentation are brand preference, prior purchases, online shoppers, and shopping center customers (Armstrong & Kotler 2014). The foreign market for a dishwasher can be segmented on the following behavioral attributes:
- Online shoppers: online shoppers can be attracted through various promotional schemes. Ensure search engine optimization for prominent visibility in the virtual market.
- Shopping center customers: attract the customers of the foreign market through different promotional activities.
Targeting the Foreign Market
After segmentation is conducted, depending on the abilities of a company, resources needed to enter a market, and considering the competitor’s capability, the target market is decided. Two strategies are adopted for selecting the target market for dishwashers:
- Concentrated Targeting: In this approach, a particular market is chosen to target marketing efforts (Armstrong & Kotler 2014). In this case, the primary target market for dishwashers should be concentrated, particularly on the food services industry sector, which consists of the cafe, restaurants, and hotels.
- Multi-segment Targeting: In this approach, different marketing strategies are prepared for the various markets, and focus is given on two or more market segments (Armstrong & Kotler 2014). For dishwashers, when the introductory stage is accomplished, the product can be targeted towards different parts of the market, such as households, hospitals, and hostels of schools, colleges, and universities.
Positioning in a Foreign Market
Positioning is creating a picture of the product and the brand in consumers ‘ minds. Improving a customer’s perception of the understanding of product or service is also a part of positioning (Constantinides 2006). The positioning of dishwashers in the foreign market must be done by focussing on the additional features offered with the main product. For example, Companies like Siemens AG (Home Appliances) have developed eco-friendly and climate control dishwashers leading to energy efficiency. On the other hand, Whirlpool introduced the ‘Whirlpool 6th Sense Live Technology’ dishwasher, which connects local Wi-Fi networks with the product to provide a smart grid system (Whirlpool, 2015). The quick grid system feature is programmed in such a way that it ensures the dishwasher saves time and energy consumption.
Environmental Trends in the Foreign Market Affecting Sales of the Product
A significant issue for the financial and corporate world is the health of the planet. The environmental trends affecting the emerging markets are deforestation, food security, energy security, air pollution, urbanization, population growth, climate change, and water scarcity (Miles, & Covin, 2000). At the same time, the risks associated with the evolving environmental trends that may affect the sales of the company on the international market are political, business and company risk, reputational risk, operational risk, and regulatory and legal risk. In 2005, the government of Thailand launched the National Energy Strategy to use the energy resources of the country to promote the production of new technologies and renewable sources (Singhapakdi et al., 2000). Those companies engaged in developing the renewable energy of the country and producing or installing energy-efficient technology, will receive benefits from the government and enjoy specific financial incentives (International Finance Corporation).
Product Campaign Based on 4P’s of Marketing
Considering the 4P’s of marketing, the product campaign for the dishwasher is developed:
The first P refers to the product; ‘dishwasher’ that is offered in this marketing campaign. The product’s different features need to be considered, like functionality, quality, packaging, brand, safety, and warranty. While establishing the product during the campaign, certain aspects like the target customers and the competitors of the product need to be considered.
The second P refers to the price that is ‘how much’ money is charged from the buyers of the dishwasher. The pricing aspect should include financing, discounts, and allowances. While determining the price, the following factors need to be considered, such as material costs, competitor pricing, product value, and market conditions. Pricing also includes the expenditure incurred on different promotional activities. The right pricing strategy helps the company to reach its financial goals and fit the marketplace.
The third P refers to the place; it means how the product, i.e., the dishwasher must reach the customers in order for them to purchase it. In the case of online marketing, place, or location refers to how easily customers can find the business through the internet (Keegan. 2008). Search engine optimization of the dishwasher must be carried out to help people find the product virtually. For the physical presence of the dishwasher in the foreign market, the product must be available in Indonesia’s department stores like Matahari, Pasaraya Grande, Metro, Sogo, and Debenhams (Expat Web Site Association Jakarta, Indonesia. 2015).
The fourth P refers to a promotion, which means to publicize the dishwasher to sell it. Advertising is a single term used to group all communication activities intended to increase the sales of a product (Armstrong & Kotler 2014)… For the development of dishwashers in the markets of Indonesia, Thailand, and the Philippines advertising through different media, personal selling involving relationship marketing and sales promotion consisting of consumer promotion, trade promotion, and sales force promotion are used. The effectiveness of the promotional methods can be assessed by measuring the different behavioral effects like an increase in user base, purchase frequency, and decrease in price elasticity of demand.
The US and International Ethical Marketing Considerations
The application of marketing ethics into marketing strategies, marketing efforts, and processes is known as ‘ethical marketing’ (Marketing-schools.org, 2012). It upholds responsibility, fairness, and honesty in all advertising. Ethical marketing is not a directory of rules, but a comprehensive set of guidelines for companies as they assess new marketing strategies. International ethical marketing advises marketers to comply with regulations and standards established by governmental and professional organizations, maintain transparency, consumers should be treated fairly, advertising must be clear and distinct, the marketing professionals should pursue personal ethics, and during marketing decisions, ethics should be discussed explicitly (Sullivan, P., Smith, M., Esposito, M., 2012). International business ethics is an intricate issue as ethical standards are different depending on the location. In Corporate governance, issues like working conditions, targeted marketing, bribery, and corruption are dealt with prime importance to set up an ethical perspective on which it can work.
The importance of corporate responsibility in large organizations from developed nations increases and the way they operate in third world countries. Due to corporate governance, large organizations are emerging their systems of dealing with ethical issues. Ethical corporate governance is concerned with encouraging organizations in the domestic and international markets to be transparent in their operations, finances and performance. The transparency forces companies to maintain accountability concerning the stakeholders. Environmental issues, human rights, and an increase in the global standard of living are encompassed by companies who claim to be socially responsible.
In this research paper, it is attempted to analyze the market opportunities of dishwashers in Indonesia, Thailand, and the Philippines, which is an ordinary appliance in the United States. It is inferred from the research that the sales volume of dishwashers is expected to increase in Indonesia, Thailand, and the Philippines with 1%, 7%, and 2% CAGR, respectively. By adopting the segmentation, targeting, and positioning strategy, the marketing manager attempts to successfully introduce the product in the foreign market among the competitors.
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