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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.
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. This approach is evident in Haier’s strategy with their small, low-energy washing machines tailored for Chinese consumers. By focusing on customer service and market research, Haier can identify further global niches, like over-sized washers for clients in Pakistan.
Focusing on global market niches can lead to higher profit margins. Niche customers typically are willing to pay a premium price for products that specifically meet their needs. Moreover, global niche marketing can help Haier sustain its competitiveness against established brands like Bosch and Whirlpool.
Step 2
Decision for focussing on global mass markets
Answer
On the other hand, entering global mass markets could offer Haier a larger customer base. This strategy would involve adjustments to the marketing mix and understanding various local market needs. However, global markets can be unpredictable and margins are generally tighter, impacting profitability in the long term.
Additionally, the market for white goods is highly competitive, especially with established brands having loyal customers. Haier's entrance into mass markets requires it to demonstrate strong pricing strategies and product reliability to gain customers’ trust.
Step 3
Recommendation
Answer
Ultimately, while both approaches have their merits, Haier should consider focusing on global niche markets. This approach aligns with their past successes and offers higher profit margins due to less competition. By developing innovative products that cater specifically to niche markets, Haier can establish itself further and build a loyal customer base, ensuring sustainable growth.