The concept of the marketing mix
Today it is believed that marketing has reached its fourth stage, where companies are opting for personal marketing orientation. With the current technology market tools has increased and brought consumers close to the companies. Companies no longer have to limit their marketing strategies on broad market segments, but, they can concentrate on personalized marketing that are more effective and responsive to the customers. The concept of globalization has become the modern form of modern business and therefore many firms have gone international.
Therefore this paper will focus on E-plus Company a German firm in its attempt to broaden its market share by investing in India. The German mobile phone service provider E-Plus has decided to go international in expanding its business by opening its branch in India and offer the same services. The company is seeking to expand its market to India and to other neighboring countries. Due to the high population in India the company will be having a larger market share and demand for this service keeping in mind that there are only few service providers like the AirTeL mobile service provider.
The first motivation for this multinational corporation company to go international is that there are no so many
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Another motivation is the large population that is in India that is seen as big market opportunity that firms can venture in regardless of competition that may exist because there is still a large market share firms can acquire. The other motivation for the company to start its business in India is the cheap labor that can be acquired in the country because the standard of living in India is also low and many people are well educated to be able to work there.
The standard of living in Germany is high and thus workers have to be paid highly to be able to meet this standard compared to the low standard in India. Moreover the other motivation is the growing economy in India that is able to attract investors in the country to invest so their economy can continue to grow further.
The general climate for foreign investment in India is very favorable given the fact that there economy is growing at a very fast rate. If the economy is growing at a fast rate then that means that any investments made in that country will also grow at a fast rate and returns can be achieved over a very short time. One of the incentives that India is offering is the law taxation on the services that E-Plus will be offering in the country hence they can also offer low call rates to their customers to be able to access their services.
The other incentive is their terms of agreement in the tender where India is also offering a low amount to tender for them to start the business. This low amount tendered will allow the company to spend less in terms of setting up the business and also earn their returns at a very first rate to be able to start earning their profits. There is also no so much political influence over companies in this region such that the country could dictate on how the company will operate and have so much power on the company by having more than fifty percent of the shares in the market.
India also has another big incentive where it does not own any shares in the company nor do they take any control of the company shares in the stock exchange of India. It has also allowed the company to float its share in the international markets for foreign investments opening ways for further investments even beyond the Indian borders. However, the major problem with ownership is that the company controls the services and measures have been put in place to allow for favorable pricing of all call and internet services that are to be offered by E-Plus.
The Indian government has setup the Indian Communication Commission that controls the way communication companies run their operations in the country and licenses all companies to operation after having met all required objectives or measures put in place to start up such a business. (Proctor, 2000)
The Indian government also allows a certain number of shares to be floated internationally so that most of the profit the company makes will not be taken to the mother country of India or internationally but remains in the country of investment that is India. India allows profit repatriation so that most of the profit remains home so that it can help to improve the economy to grow from these foreign investments. In addition, Indian members must be included in the board of directors so that they can be able to participate in the day to day running of the activities of E-plus Company.
The major problem that E-Plus Company faces in investing in India is infrastructure that they have to setup because the road transport system is so poor that transporting the resources will be a major problem that the company will face. The road networks are said to be in bad state e.g. there are no tarmac roads and their railway system is reported to be inefficient because it’s so slow. Therefore, it will be hard for the company to set up its base stations in the remote areas that are not accessible by road or railway lines. The railway line is not modern hence it is a very slow means of transport to support the carriage of raw materials and products to the base station in most parts in India.
The transport of the company’s product like prepaid airtime and other accessories will also be faced with a lot of problems. E-Plus also wants to offer internet service to their customers but they will also be faced with the problem of communication because we have poor means of communication like no fibre optic cable that has been laid, poor telephone lines that have been vandalized and no satellite communication that has been established in India.
Basically the entire transport and communication lines in India are substandard or have not been established hence the E-Plus company will have to incur the expense of improving or setting up new systems. This infrastructural facilities need to be setup to assist in telecommunication of both voice and data to all parts of India. (McDonald, 2001)
The landscape in India is not favorable because of rough terrain and the recurrent floods that takes place time to time and sabotage the entire telecommunication lines that are the basis of communication for the mobile service providers. The company will also be forced to setup and use point to point communication because there is no any satellite communication or suitable infrastructure available in India. This satellite communication would have been the best solution for the company to cover a wider area or all of India with its services at a lower cost than having to set up many base stations.
Setting up this base station will cost the company a lot of money to cover the very large landscape of India larger than Germany that could have been cheaply and easily covered by the use of satellite. Materials for setting up this infrastructure and telecommunication system is not locally available in India hence the company will be forced to incur extra cost of importing all the raw materials needed to setup the entire firm and its base stations.
If the materials were locally available it could have been cheaper for the company to setup this entire infrastructure easily. The recurrent floods and strong winds will force the company to build strong structures to withstand all this and be able to face extra expenses for extra damages. India terrain is also flat and hence it hinders point to point communication locations that are usually setup in the highest regions to cover a wider area. Therefore in essence, E-plus will be forced to setup more base stations to cover a wider and larger area. (Knight, 2007)
The workforce is locally available but the technical team has to be sourced from abroad because they are familiar with technical management of the machines and Information technology infrastructure. It may cost the company so much money to train the local workforce on how to handle, operate, repair and maintain the machines or infrastructure thus they would prefer to source expertise to work on the machines. The non technical team is locally available for hire at a reasonable or cheaper rate because there are well educated people from the local universities with vast education from the other firms.
The E-Plus company is facing a lot of competition from the local firms that also offer mobile telephone services within India like the AirTeL Company that has dominated in India as the leading mobile service provider with favorable prices to the customers for along time. Though we do not have so many companies in India there is still stiff competition that E-Plus will have to face from AirTeL to be able to venture into the Indian market and gain competitive advantage.
AirTeL has already built a strong base in the market and covered the entire India with over twenty million subscribers which is a high target to meet thus E-Plus company have to come up with strong strategies to acquire more subscribers to beat the score set by their rival and be able to offer better services than them in the market place. This also means that they will have to offer their call rates and services at much cheaper or favorable prices when they venture into the market so as to be able to acquire more customers than their rivals. E-Plus will also have to offer efficient or better services both for data and voice calls than all its competitors out there.
The company should also come up with better distribution channels in their services and products to beat their rivals in the market. It should come up with sublets or distribution points all over the nation so that it can supply these products directly to the distributors who will in turn supply them directly to the market or consumers. These sublets are the authorized deals by the company to sell their products or services to the consumers and ensure that they are evenly distributed to the market. The company should also ensure that the distribution channels are able to cover the entire country so that the services can be accessed easily and at a faster rate. (Lee and Carter, 2005)
E-Plus should also form local partnerships or joint ventures with other companies to distribute their services or products within the market. They may offer transport services of their products all over India or they may do marketing and promotion for the company so that their products can be evenly distributed within the Indian market. The service network has to cover the entire nation and thus the company should ensure that it sets up base stations that cover each location of the country hence covering the entire nation.
Another better solution that could also challenge their competitors is to setup a satellite that covers the whole nation in their distribution of call services and internet access at a faster rate. Lastly, they could partner or enter a joint venture with a company that could setup these base stations for distribution of their services.
India occupies a large area that is almost twice that of Germany the origin of E-plus and thus they have a larger market for the sale of their services compared to Germany geographical area. This large area is densely populated with almost a hundred million people meaning that the potential size of the market is large to venture into regardless of the competition. Even though the country has almost a third of its population being poor or comes from the low class people, the other classes i.e. both the middle and high class could afford to acquire the services. Therefore the socioeconomic status in India does not affect the venture of E-Plus in to the market that could afford to buy their services and products at favorable prices. The high class and middle class dominate and this is a clear sign that the company could benefit from such a venture in this densely populated market of India.
Indians are known for their rich cultures, rituals and traditions but this could not affect the market for mobile service because there are no taboos or any implications set by the people on the use of the product. Research indicates that the services are well received by the people and there is a demand for better services in the market. Cultural issues have not affected the market for telephony services in India and thus E-Plus could venture into this rich market with less difficulty.
However, there could be some social issues that could affect the market like the standard of education in the country. Some of the people in the country have no access to the education and hence they may not embrace the use of these services because they do not know how to use them. Another issue is that the people do not have a high demand on the use of the internet that could be offered by the company due to already existing poor infrastructure hence this could greatly affect the performance of this product to the local people of India. They do not rely on the internet and some have even never had access to this service because they are based in the slums. (Lovelock, 2006)
When we come to the legal or bureaucratic environment of the E-Plus company in investing in India we could term it favorable. India’s legal right for a company to invest there are favorable because they are good terms of trade and investments into the country. There are no sanctions imposed for the companies operation in the country and the company is lowly taxed for its services and products. One is allowed to locally manufacture their products or those who need to outsource or import their products or services are allowed without heavy taxations.
It is a bureaucratic country that allows investors to offer their services without and strict legal issues or agreement being imposed on them. The tender agreements are fairly favorable and there are also some legal laws that protect the company from being strictly under control of the government. Indian communication commission issues the certificate for communication and oversees the operation of the companies as an independent body with no private or internal influence to the company. Due to the low taxation that will be subjected to the company by the government, E-Plus will be able to offer services and products at affordable and fair prices to its consumers.
The Economic and political climate for foreign business is also good because the economy of India is also growing at a faster rate or percentage. This show that most people are living in good standards and are able to afford the services that E-Plus could offer in their market. Its shares could also trade at a good price in the stock exchange market that has also gone international meaning that the shares could also be sold internationally.
The political climate is considered favorable because there is no any unrest in the country like war and terrorist attacks. Government has no control in the markets and operation of the foreign investment companies and therefore market mechanisms determines the prices in the market place. Politicians do not have any influence in the foreign businesses and the government does not own any shares nor restrict the shares that are floated in the local market. It only restricts the repatriation of all the profit to the foreign country but ensures most of it is invested locally. (Bitner and Booms, 1981)
E-Plus should also come up with planned strategies for marketing and distribution of their products and services. The first plan should be to set up the main headquarters in the main city of India that will oversee all operations of the company. Base stations should also be erected in all areas within the country or a satellite should also be installed in space to cover the entire nation in their services. This will ensure that people in all areas of the country can access the call services and internet access at all points within the country.
Secondly the company should establish outlets, sublets or distributors who will be supplied with the products so that they can evenly distribute the products to on a daily basis to consumers all over the nation. It may be done through joint venture or partnership with other companies that could offer marketing services. Lastly the company could come up with advertisement for their products and services including their tariffs and rates. Promotions and campaigns could also be established to market and sell their products that could be done through road shows, promotion ruffles and sponsorships.
It is prudent therefore for E-plus Company to share majority ownership with the rest of the equity from a local partner as the form of ownership. With the company having majority ownership it would have all control of the business running and would be able to achieve its global achievement of being just an investor in the country with its own regulatory requirements. The company will only subsidize for those services sold locally and assign competent experts in the relevant area like sales and distribution.
Thus the company will enjoy full profit on its part being a major global strategy for the main company based in Germany. E-plus will also enjoy full policy implementation and amendment for its business with its investment in the shares since the risks involved are shared and thus E-Plus will not have to bear all risks or loses that may be incurred having the rest of equity from a local partner. (Hoyer and MacInnis, 2001)
One political risk could be the government having control over the shares and regulatory requirements. If the government takes fifty or more share of the company then it means that this could control the running of the business hence causing the risk of the business attaining the goals and objectives set. The country will have more profits in the shares they own hence all or most of the money will be invested locally. E-Plus should ensure that all legal laws of the country give full or most of the ownership of shares to the company and that the political climate has no influence.
A business risk that the firm could be exposed to is competition from other local firm offering the same service like mobile services like E-Plus. E-Plus should come up with good marketing strategies through promotions on incentives like free airtime. It should also offer affordable prices that are lower than its competitors at different tariffs.
The E-Plus company should first conduct a market survey that includes knowing the demand for the service in the market, the economic and political climate of India, the infrastructure available, the social cultural issues that could cause effect, the Demographics and Socioeconomic status and competitors in the market within a short time. It should set all goals and objectives to be implemented which should allow the firm to enter into a joint partnership with a local company to subsidize services.
The company should start by setting up the entire infrastructure including base station or satellite within a year to start operation. It should also perform marketing and sales activities through promotions and advertisements thoroughly for the company to venture into the market. Such a plan will therefore enable E-plus Company to finally expand its services and products within a short time until it realizes the set performance levels as aspired into venturing India’s market. (Barlon, 2006)
Therefore marketing concept is an important aspect for any company including E-plus Company. With cut-throat competition being observed in the markets, a company has to come up with marketing strategies that can make it maintain its market share. As Kotler, (2005) observes, “today’s world consumers have become more informed and require more information on buying creativity in marketing is very important and necessary; it enables a company to come up with appropriate marketing techniques that are relevant to the market.
It also makes the company to save on costs and at the same time help the company to achieve its objectives”. E-plus should be able to get and stay at the top through provision of quality products that are able to satisfy the needs of the customers in India. The company has to undertake through marketing of its products that will enable it capture wider segment of the market in India. E-plus marketing technique of concentrating on brand image is unique and very successful. However, marketing is a continuous process and for the company to maintain its market share it has to continue carrying out constant marketing research in order keep pace with the ever challenging business environment. (Kotler, 1988)
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