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Evaluate these two options and recommend which approach is most suitable for Haier - Edexcel - A-Level Business - Question 2 - 2018 - Paper 1
Question 2
Evaluate these two options and recommend which approach is most suitable for Haier. Haier is aiming to continue its global expansion in the white goods market. It c... show full transcript
Worked Solution & Example Answer:Evaluate these two options and recommend which approach is most suitable for Haier - Edexcel - A-Level Business - Question 2 - 2018 - Paper 1
Step 1
Decision for focussing on global niche markets
Answer
A global niche market is a specialized segment of a global market for a good or service. In Haier's case, this can be achieved by adjusting the marketing mix to meet local needs through product design.
- Customer Service and Research: A focus on customer service and market research will help Haier identify further global niches, allowing for targeted growth. This is evident in Haier's approach of introducing low-energy washing machines tailored to specific markets.
- Pricing and Customer Willingness: Customers in these segments may be willing to pay a higher price, which allows Haier to establish a strong competitive edge against established brands like Bosch and Whirlpool.
Focusing on niche markets may lead to higher profitability, but it could also limit potential sales over time.
Step 2
Decision for focussing on global mass markets
Answer
Mass markets represent a much larger global market for goods. They typically involve a higher volume of sales but require different strategies and considerations.
- Understanding Local Markets: To successfully enter global mass markets, Haier must conduct detailed market research to understand local consumer needs and preferences. This could involve modifications to product offerings.
- Competition and Pricing: In the mass market, competition is stiffer, and lower prices might be necessary to attract customers. Haier must leverage its potential cost advantages from its operations in China to maintain competitive pricing.
Step 3
Recommendation
Answer
Considering the evaluation of both options, it may be more suitable for Haier to focus on global niche markets because they allow for specialization and can yield higher profit margins. Furthermore, Haier’s successful product customization and market research capabilities can be effectively utilized in such segments. However, it is essential for Haier to also keep an eye on opportunities in the global mass market to ensure balanced growth and adaptability.