Sunday, March 30, 2014

Blog Post #10: You Want the Risk? Can You Handle It?

How many companies do you know that operate internationally? There are so many that it is actually really difficult to come up with a list of them. There are the obvious ones like Coca-Cola, McDonald’s, Samsung, and Apple. You probably have engaged with more than one of these companies in one way or another in your life. However, there are a number of not so-obvious (check out this list on Forbes. For my purposes the numbers don’t matter, just look at the number of small companies operating internationally) ones, too. How do all of these companies, big and small, decide to go international, though? How do they grasp the attention of people from different places with the same products? Bottom line, the decision for a company to operate internationally is one of the biggest decisions a company can make, and it can be for better or worse.


With so many choices, how do you know which market to enter?
It may seem to you like jumping into the international marketplace will provide you with endless opportunities for growth, and to a certain extent it does. I am here to say, “Whoa there, ke-mo sah-bee, tap the brakes. These are treacherous waters that you are about to navigate here. It is best to be as prepared as possible before making the call to enter the international market.” There are a number of factors that come into play when attempting to understand the international marketplace. Some of the main factors include the international trade system, the economic environment, the political-legal environment, and the culturalenvironment. All of these factors should be considered when deciding to make the plunge into foreign markets.

What I want to do, though, because it interests me the most, is to focus my discussion on the economic environment. I have provided links to the other three factors (in the previous paragraph) that I mentioned so that you can explore those a little more if you so desire. While economics is a very complex field, I believe that analyzing the economic environment of a foreign market when deciding whether or not to enter that market is much simpler than analyzing the cultural environment of that market from the perspective of a foreigner. In addition, the political-legal environment can be jargon-laden and tough to navigate and comprehend. Within the economic environment, there are two main factors that aid in deciding whether or not to enter a foreign market. These factors are industrial structure and income distribution.

Income distribution is fairly straightforward: do most people in the market have low, medium, or high incomes? Is the low class growing or shrinking? Is there a large wealth disparity? These questions all play into the decision making process when entering foreign markets. Should you raise or lower your price in the new market? Should you keep it the same? How similar is your domestic income distribution to that of the new market? These are many of the questions that come into play when considering income distribution.

What really interests me within the economic environment is industrial structure. What types of business drive the economy of the marketplace that you are looking at? There are at least four types of industrial structures, and they are: subsistence economies, raw material exporting economies, emerging economies, and industrial economies. You can probably make some educated guesses about what these four structures specialize in. Subsistence economies focus mainly on agriculture while raw material exporting economies focus on exporting natural resources. Emerging economies experience fast manufacturing growth leading to overall growth and industrial economies are well established economies that are major exporters of many goods and services. Where do you think the United States fits in? China?


What the average day in a subsistence economy may look like

Along with the habits of the industrial structures that I have just described comes certain types of people with certain income distributions, cultures, and expectations. This is what makes the decision to enter a new market so complex. It is hard to know if a product that is wildly successful Mexico will be wildly successful in Sweden. However, with the right analysis and restructuring of marketing strategies, that successful Mexican product can become wildly successful in Sweden. Entering new markets is all about balancing the risks and the rewards. The risks are often high, yes, but you will never know of the success you may have in a new market if you never go there. The question to ask yourself is: “Is the risk too much for me?”

Monday, March 24, 2014

Blog Post #9: Evening the Playing Field

I want to apologize to those who looked for a blog post last weekend, since I did not end up writing one. It was Spring break for everyone at Saint Michael’s College, so I decided that I was going to give myself a break from any and all work. It was a great week-plus of not doing too much at home with family. One thing that I did do, though, was seal up a summer internship focused on marketing with Goodwill Northern New England (special thanks to Jane!) in Portland, Maine! I get started in May and I cannot wait. I am going to be able to work with and learn from some great people who have a lot of experience in fields that I am interested in while building my own experiences. I can check getting a summer internship of the goals list now!

Enough about me, though, time to move on to the real post. Being in my hometown of Biddeford over my break got me thinking a lot about small businesses. Biddeford is a coastal town (technically a city) in Maine with a population in the low twenty thousands. Like almost anywhere else in the United States, small businesses are everywhere. Specifically, two small businesses that I thought about more than others were two restaurants, Pizza by Alex (which I’ll call Alex Pizza from now on, it’s the local thing to do) and Palace Diner. Alex Pizza is so popular that it is essentially a pilgrimage site for people who know it. Palace Diner, which I went to over break, I was told by the woman behind the counter, is the third oldest diner in the country. It is a tiny diner that seats fifteen that has always been a popular spot downtown.


Palace Diner: A tiny place that holds on 15 people! The 3rd oldest diner in the country

Pizza by Alex: A place that everyone in the Biddeford area is incredibly familiar with

Both businesses are certainly small businesses in my mind, and they have been around for a long time. Why is this? Big businesses can often flush out small ones, and often because they generally have greater access to resources (money) than small ones. I realize this is a generalization, but it is often the case. There are many reasons for this, and I could create a whole blog about what makes small businesses successful, but I want to focus in on one factor that can be a leveler of the playing field between big and small businesses. That factor is social media.

It is no secret that social media has taken over our worlds. Example number one: you are reading this blog. Chances are, you have at least a Facebook, Twitter, LinkedIn, Instagram, or Vine account. This is the first reason that social media is a leveler of the playing fields: there is a possibility of reaching almost anyone. This is great for small businesses, because the thing is that they do not need to reach everyone. Small businesses like Alex Pizza and Palace Diner only need to reach out to their surrounding areas, in this case the Southern Maine area (let’s face it, people from Massachusetts are not going to travel to Maine to get pizza or some home fries).

The second reason that social media is a good leveler of the playing field between big business and small business is because it is free to create a profile. Sure, as a small business you may have to pay someone to maintain the profile, but social media is essentially free exposure for a business. If you can keep a social media profile maintained as a small business, you have the same tools as the big businesses on social media. Your reach may not be as large as a small business, but that is not what is important. What is important is that there is a reach at all and that it is consistent.

*Check out Palace Diner’s and Pizza by Alex’s websites and social media pages. I have linked their Facebook pages here so you can see what they’re doing online/with social media:

Pizza by Alex Facebook | Website

Palace Diner Facebook | Website

Sunday, March 9, 2014

Blog Post #8: Hover Boards and the PLC

I want a hover board. I want a hover board really, really badly. I mean, how cool would that be? I am not much of a skateboarding fan, but floating skateboards could be a true game changer for me. Okay, I understand that you may be a little confused about why I am talking about hover boards, but if you are then you may not have seen this viral video (also seen below) advertising the all new HUVr board.


It has recently been revealed that HUVr is a hoax, which I kind of figured but quietly hoped that it was not. It was certainly too good to be true. Before getting to my reason for bringing up the HUVr board, though, I want to say that it is quite impressive that these people got celebrities like Tony Hawk, Terrell Owens, and Moby to make a pitch for their fake hover board. It is a genius way to get people to believe almost anything (if the celebrity is relevant and has credibility, which I am not sure if Owens or Moby have, but that is beside the point).


What I want to do with this post is to introduce the concept of the product life cycle (PLC) and hypothetically use the HUVr board as an example to guide you through it. The product life cycle is just that; it is the course that a product takes through its life. It is the profits and the losses, the good and the bad. There are five stages to the PLC I am going to take the HUVr board as if it was real and guide you through each step of the PLC process. There are five stages of the PLC and they are: product development, introduction, growth, maturity, and decline. Check out the graphic below for a better understanding of the PLC.


Click to Enlarge: Characteristics of PLC stages
Product Development Stage of HUVr
Product development is the first stage of the product life cycle. During this stage the company does not make sales because the product has not been made yet. Due to this, this stage can be quite costly because things like research and development generally pile up expenses. For the HUVr board, this probably would add up very quickly because of the technology research that would need to be conducted. HUVr would likely have a lot of scientists answering questions for them and refining their hover technology.

Introduction Stage of HUVr

Introduction is the stage of the product life cycle where the product has already been completed and is first being put into the marketplace. In this stage companies do not usually have high sales and companies are generally spending large amounts of money on promotion. In the case of the HUVr board, this is where the product would be at if it was actually real. The video showed a completed hover board that most people did not know about yet. People would be largely skeptical (as I was) and only innovators would likely buy in at this point. It is easy to get frustrated during this stage due to the lack of profit, but it is important to stay consistent with the established strategies because it is normal for a new product to grow slowly. You do not want to sacrifice long-term success for short-term success because you got too antsy.

Growth Stage of HUVr
The growth stage of the PLC is characterized by consumer satisfaction with the introduced product. People begin to learn more and more about the product and they buy in, causing profits to rise (possibly quickly rise, too). Oftentimes this causes competitors to enter the market because they see potential for profit. In the case of the HUVr board, it is likely that it would take quite some time for competitors to acquire the technical skills and knowledge to develop a fully-fledged hover board, unless they had already been developing one. HUVr would want to keep their promotional expenses at around the same level because they want the buzz about their product to keep going. At this stage it may be feasible for HUVr to improve their board and possibly create some new models so as to attract new customers and keep current ones interested. HUVr may even want to consider entering new market segments.

Maturity Stage of HUVr
The maturity stage is when companies generally begin to face challenges. Although profits are usually the highest in this stage, this is when consumers can begin to become bored with the product and look for something new. I do not see how this could happen with a HOVER BOARD, but it could happen. If sales started lagging, it would be important for HUVr to consider finding new users for their product, changing characteristics of their product, and/or changing elements of the marketing mix. HUVr could consider maybe launching hover roller blades or something like that. They could also cut costs and try to market it to children, for instance. The maturity stage essentially decides whether a product will continue on or flop and not be heard from again.

Decline Stage of HUVr
Finally, the decline stage of the product life cycle is when consumers begin to turn away from your product due to different tastes, competition, or outdated technology, for example. Sales can and usually drop drastically in this stage. Companies in this stage either decide to drop a product, cut costs and push forward, or keep things as is. Keeping things as is can lead to significant losses if not repositioned well. The decline stage would face HUVr if they were unaware of the changing characteristics of their market. HUVr could attempt to reposition the brand by showing HUVr as being an awesome retro thing to have and do, for instance.

Understanding the intricacies of the product life cycle can lead a company out of a rapid downfall at times. The system cannot be completely mastered, though, as many products fail to reach the growth and maturity stages. If you are aware of where your product is in the PLC, it can be useful because it can tell you about the options that are available to you if your product is either flourishing or failing. Would you be able to make the HUVr board a star?