The selected countries include Dubai and Myanmar where Costco does not have a business. The political, economic, social, cultural and legal indicators that helps in deciding the best market for entry by the company is analyzed below:
Dubai:
Political: Dubai does not have political parties but indulges into active politics. The country has flexible policies for both expatriate and the local population put forward by Dubai government that helped the country to emerge as one of the global city across the world.
Economic: Dubai represents an open economy with no exchange controls and trade barriers and is dependent on profits earned by the real estate projects. This has led to an increase in the foreign trade at an average rate of 11 percent thereby showing that it is one of the popular choices of most businesses for opening their head office and conduction of the annual meetings and conference (El Mallakh, 2014).
Social and Cultural: The state has subsidized healthcare and education programs that satisfies the needs of the people and helps in the maintenance of peace. The country is liberal and open in the terms of the social factors. This implies there is no strict policy for covering the head and the body of women and drinking of alcohol
Legal: In terms of the legal indicators, Dubai has certain great policies in the form of no federal income or corporate tax (Mitchell, 2016). The country also does not have any sales tax or value added tax along with no restrictions on the foreign trade and the exchange controls. Businesses only need to get a license.
Myanmar
Political: The country has an open democracy and economy and has civilian led government. This in the long term can lead to an increase in the foreign direct investments, ensure better lifestyle and lead to an increase in the income.
Economic: Although the country has a GDP growth of about 7.7 percent, it lacks appropriate infrastructure that acts as drawback for the foreign direct investment (Beeson, 2014). The country not only has a lower labor cost but it also lacks skilled labor. Myanmar is considered the least developed countries.
Social and Cultural: There has been an increase in the income of the middle class and they remain in a position of spending more. The people have a busy life in the urban areas and people remain more influenced by the social media than the traditional media.
Legal: The country had outdated laws. The country also stood weaker in the real life execution and operation procedure. In addition, the country also had a high corruption index and ranks 171st amongst the 190 countries in determining the index related to the ease of doing business (Crouch, 2014).
Based on the indicators mentioned Costco should first enter the Dubai market due to its strategic location and easier access to close to 2.2 billion consumers. The country also has a central time zone that combines the business hours of the East and the West and acts as the most suitable getaway for the imports and the exports of the region. As per the reports in the year 2011, the country had an increase in the trade revenue by 5.8 percent that determined its economic performance (Al Faris & Soto, 2016).
Current Situation of the Company at the Global Level:
Products: Costco represents one of the top retail brands of United States having wider range of the product offerings based on the customer needs. These includes, caskets, art, clothing, computer software, books, furniture, wine, home appliances, home electronics, solar panel, jewelry, pharmaceutical goods and perishable items like fresh fruits, dairy, flowers and vegetables(costco.com, 2018). The products are packaged in bulk and are sold to the large families or business.
Customers: Costco especially targets the middle class and the smaller businesses. The retailer believes in the philosophy of providing the customers higher quality goods at most competitive prices (costco.com, 2018). The performance of the company highly depends on North American business. In recent times, the management of Costco took necessary steps for attracting the younger customers to the stores.
Competitors: The primary competitors of Costco include Walmart Stores, Inc and Target Corporation. The net income of Walmart is $15 billion that is quite higher than the income of Costco. Walmart has a dividend yield of 3.1 percent that is higher than the yield of Costco and Target. Walmart has a higher turnover rate that portrays that the retailer effectively maintains its current inventory and clears obsolete or outdated items (walmart.com, 2018). The dividend yield of target also stands at 2.9 percent higher compared to Costco. Target has a lower turnover ratio of inventory that put forward the fact that it has more dated inventory compared to Costco (target.com, 2018).
The communication objectives that Costco seeks to accomplish include (Naeem, Bilal & Naz, 2013):
Creation of awareness: This is important when a company makes an entry into the market since it enables in informing the people about the existence of the products or the services. This includes broadcasting of print ads or commercials that not only depicts the company image but leads to a constant repetition of the slogans, jingles and the brand name. The sole objective of the company remains in becoming memorable and known.
Changing of Attitudes: The Company can resort to advertising for clearing misconceptions developed in the market due to negative publicity of its services or products. It is a vital communication objective for a company making an entry.
Influencing the Intent of Purchase: This communication objective is adopted for motivating the customers in making a purchase. This is done through persuasive advertising that emphasizes on the superior benefits of the products in relation to the competitors. In doing this, it is however vital in striking a chord with the want and need that triggers the customers.
Stimulation for Trial Purchase: This communication objective includes making product samples or free trials available so that customers are persuaded in making a purchase. The focus remains in taking the risk away and in getting the customers in experiencing the brand.
Driving a Switch in Brands: This communication objective drives the consumers towards making a switch to the products of Costco instead of the buying the products of the competing brands.
Foreign Target Market: Costco targets the middle class and the upper middle class sector of the new market. In recent times, the consumers in Dubai were cost conscious that had led to a rapid change in the purchase behavior (Bayat, 2013). The consumers however remained loyal to the preferred brands but bought them in lesser quantity. This helps in the consumers in believing that they were capable enough in reducing spending across all the types of retail that included the discounted stores, convenience stores and the hypermarket. Therefore, if the retailers like Costco invest in the analytics for decision-making then they can significantly outperform the peers.
Effective Communication with the Customers in the Target Market: Although Dubai is one of the digitally connected nations but the consumers follows a reserved approach towards the digital marketing. Close to eighty-four percent of the consumers makes the purchases at the stores that also plays a key role in the creation of product awareness (Petersen, Kushwaha & Kumar, 2015). This is because seventy seven percent of the consumers learn about the products at the store outlet. Therefore, advertising and word of mouth are the effective communication means which Costco can undertake with consumers in target market.
Media Strategy and tactics: The media strategy refers to finding the right path for transferring or delivering the message to targeted customers. This can be done via a television, radio or hoarding. The tactics adopted might be in the form of jingle, slogan or a simple message. Costco needs to adapt to these changes for making an entry into the foreign market.
Media Strategy and Tactics:
The strategy adopted includes text messaging via the cell phones, websites, and distribution of catalog, outdoor advertising and magazine and newspaper advertisements. For capturing Dubai market Costco needs to adapt to these changes.
Strategy and Tactics
It is important in determining the messages that Costco wants the professional to portray to the target market. The medium for disseminating the message might include press release, direct communication with the press and the consumers. Costco needs to adopt these means for making a mark in new market.
Sales Strategy and Tactics:
The strategy involved by the sales people is to convince the consumers in purchasing the products. Here, the sales man needs to make use of a personalized approach tailored for meeting the customer’s needs along with a demonstration of the benefits. To adopt the tool Costco need to implement these changes to its domestic strategy for communication.
References:
Al Faris, A., & Soto, R. (Eds.). (2016). The Economy of Dubai. Oxford University Press.
Bayat, A. (2013). Life as politics: How ordinary people change the Middle East. Stanford University Press.
Beeson, M. (2014). Regionalism and globalization in East Asia: politics, security and economic development. Macmillan International Higher Education.
costco.com (2018). [online] Available at: https://www.costco.com/ [Accessed 10 Jul. 2018].
costco.com (2018). [online] Available at: https://www.costco.com/membership-information.html [Accessed 10 Jul. 2018].
Crouch, M. (2014). Rediscovering Law In Myanmar: A Review of Scholarship on the Legal System of Myanmar. Pac. Rim L. & Pol’y J., 23, 543.
Cutlip, S. M. (2013). The unseen power: Public relations: A history. Routledge.
El Mallakh, R. (2014). The Economic Development of the United Arab Emirates (RLE Economy of Middle East). Routledge.
Mitchell, K. (2016). Dubai, UAE. In Architecture and Globalisation in the Persian Gulf Region (pp. 205-230). Routledge.
Moriarty, S., Mitchell, N. D., Wells, W. D., Crawford, R., Brennan, L., & Spence-Stone, R. (2014). Advertising: Principles and practice. Pearson Australia.
Naeem, B., Bilal, M., & Naz, U. (2013). Integrated marketing communication: a review paper. Interdisciplinary journal of contemporary research in business, 5(5), 124-133.
Petersen, J. A., Kushwaha, T., & Kumar, V. (2015). Marketing communication strategies and consumer financial decision making: The role of national culture. Journal of Marketing, 79(1), 44-63.
Shannahan, R. J., Bush, A. J., Moncrief, W. C., & Shannahan, K. L. (2013). Making sense of the customer’s role in the personal selling process: a theory of organizing and sensemaking perspective. Journal of Personal Selling & Sales Management, 33(3), 261-275.
target.com (2018). [online] Available at: https://www.target.com/ [Accessed 10 Jul. 2018].
walmart.com (2018). [online] Available at: https://www.walmart.com/ [Accessed 10 Jul. 2018].
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