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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 serves a specific segment of a global market for a good or service, adapted to local needs. For Haier, focusing on global niche markets could lead to success in segments like low-energy washing machines tailored for Chinese consumers. This strategy allows Haier to capitalize on their strong customer service and market research, which can identify untapped niches, such as specialized products for non-Western households.
By addressing the needs of customers willing to pay premium prices for tailored solutions, Haier can enhance profitability and build brand loyalty in these segments. However, potential limitations include the restricted growth opportunities that come with niche markets, which may not yield significant profits in the long term.
Step 2
Decision for focussing on global mass markets
Answer
Focusing on global mass markets presents a larger opportunity compared to niche markets. This strategy involves marketing more broadly, appealing to customers in emerging markets as their income grows and their demand for household goods increases. Selling in mass markets may bring higher sales volume, even at lower profit margins per item. However, competition becomes intense, particularly from established brands like Bosch and Whirlpool.
Haier must ensure it offers highly competitive pricing and understand the local markets to address varying consumer needs. The challenge lies in balancing the production costs with selling prices to avoid compromising profitability, which can impact long-term success.
Step 3
Recommendation
Answer
Considering both options, Haier should primarily focus on global niche markets as it aligns better with its current operational strategy and brand identity. The company has the advantage of tailored products and customer-centric service that niche segments require. This approach will allow Haier to solidify its position in selected markets while building brand loyalty and potentially generating higher profit margins.
However, Haier should also explore opportunities in mass markets, taking a measured approach to test product viability across different consumer demographics. A simultaneous focus could ultimately provide a balanced portfolio for sustained growth over time.