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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. For Haier, developing products tailored to smaller, specific consumer needs in regions like China can unveil new growth opportunities.
By prioritizing customer service and extensive market research, Haier can identify these unique global niches, such as those requiring low energy consumption. This approach not only establishes a stronger market presence within these specific niches but can also lead to higher customer loyalty, as consumers appreciate products that reflect their values and needs.
Although global niche markets may have limited overall sales, the possibility of attaining a higher profit margin per sale makes this strategic direction appealing. However, potential risks exist if relying solely on these niches, as they may not provide significant growth over the long term.
Step 2
Decision for focussing on global mass markets
Answer
Focusing on mass markets entails targeting larger consumer bases, which for Haier could mean expanding beyond existing markets like the United States and Europe. However, this strategy presents challenges.
The competition is fierce, particularly from established brands like Bosch and Whirlpool. Although mass markets can yield higher sales volumes, they often involve thinner profit margins and necessitate substantial investment in marketing and distribution. Furthermore, as Haier enters these markets, understanding and adapting to local consumer behavior will be crucial to success.
In the long run, while this approach can lead to greater profitability if executed effectively, it may also introduce risks associated with higher operational costs and the potential for inadequate market penetration.
Step 3
Recommendation
Answer
Based on the analysis, Haier's approach should prioritize global niche markets rather than global mass markets. While global mass markets offer extensive growth potential, the competition and pressures within these markets can dilute brand value and profitability.
By effectively capturing niche markets, Haier can leverage its strengths in product design and customer service, ensuring that new product offerings resonate with specific consumer needs. This strategy not only fosters brand loyalty but also establishes Haier as a key player in specialized segments, creating sustainable growth opportunities.
In conclusion, the focus should be on understanding unique customer demands and maintaining adaptive product development to cater to these niche markets.