Diversification or market development in china?
Diversification or market development in china?
Diversification is a form of innovation. It can be related-producing products in a field in which you know or unrelated which is the reverse of the latter. It is defined in Ansoffs matrix as high risk compared to a lower yet still medium risk of market development. This is a strategy in which companies market their existing products but in a completely new market. Both can potentially lead to high profitability if successful. In China, these are the main two entry strategies that have shown to have a satisfactory success rate in helping to crack the Chinese market.
Market development is a strategy that must be supported by incredible in depth market analysis. Knowledge and appropriate handling of information is vital in succeeding. A piece of advice that was realised too little too late by Revlon; their brand was completely inappropriate and out-of-place in the Chinese market. A common mistake amongst multi-nationals has recently been highlighted as “selling the same products and assortments and expecting the Chinese consumer to find it relevant. The key is to focus on local market research and be sensitive to local beauty issue,” a mistake that Revlon had subjected itself to. This has led to the quick and disappointing exit of Revlon from China, but however has laid the path for other multinationals in knowing how to avoid being forced into exiting from the market. In this case, Revlon perhaps should have adapted a strategy of diversification, particularly focusing on localisation, in order to satisfy consumer needs and wants, enabling it to effectively penetrate the Chinese market, saving costs and increase the opportunity for huge growth. On the other hand, this example should not deter potential multi-nationals from pursuing a market development strategy. The world famous brand, Nike, has successfully transitioned the same products into China without a hitch. The brand is increasingly popular in the Chinese
Diversification is a form of innovation. It can be related-producing products in a field in which you know or unrelated which is the reverse of the latter. It is defined in Ansoffs matrix as high risk compared to a lower yet still medium risk of market development. This is a strategy in which companies market their existing products but in a completely new market. Both can potentially lead to high profitability if successful. In China, these are the main two entry strategies that have shown to have a satisfactory success rate in helping to crack the Chinese market.
Market development is a strategy that must be supported by incredible in depth market analysis. Knowledge and appropriate handling of information is vital in succeeding. A piece of advice that was realised too little too late by Revlon; their brand was completely inappropriate and out-of-place in the Chinese market. A common mistake amongst multi-nationals has recently been highlighted as “selling the same products and assortments and expecting the Chinese consumer to find it relevant. The key is to focus on local market research and be sensitive to local beauty issue,” a mistake that Revlon had subjected itself to. This has led to the quick and disappointing exit of Revlon from China, but however has laid the path for other multinationals in knowing how to avoid being forced into exiting from the market. In this case, Revlon perhaps should have adapted a strategy of diversification, particularly focusing on localisation, in order to satisfy consumer needs and wants, enabling it to effectively penetrate the Chinese market, saving costs and increase the opportunity for huge growth. On the other hand, this example should not deter potential multi-nationals from pursuing a market development strategy. The world famous brand, Nike, has successfully transitioned the same products into China without a hitch. The brand is increasingly popular in the Chinese