Strategic Marketing Report

This report analyzes Oyo Group's strategic marketing plan for expanding its hospitality services into Durban, South Africa. It examines the macro environment using PESTLE analysis, explores different market entry modes, and identifies the most suitable option for Oyo. The report also delves into market segmentation, targeting, and Porter's generic strategies, ultimately recommending a cost leadership strategy for Oyo's restaurant venture in Durban.

STRATEGIC
MARKETING

EXECUTIVE SUMMARY
This report explains about strategic marketing and its contribution improving the
performance and quality of services provided by the company. It is considered as the way
through which organisation normally differentiate themselves from their respective competitors.
This can be done effectively by providing value added services to its customers. Current report is
based on Oyo group, which is offering hospitality services that is hotels in India and its periphery
countries. This company is now expanding its business in Durban, South Africa with new
restaurants.
The analysis of macro environment is included under which all the factors like political,
economic, social technological, legal and environment are mentioned along with opportunities
and threats. This analysis help company to determine various opportunities that support them in
expanding business in new country and also keep them safe from threats that may affect their
operations.
Along with this, different modes of market entry such as direct investment, strategic
alliance, joint ventures are explained. Thus, according to the company joint ventures is best
suitable mode of market entry as it will help the organization in expanding its business in new
country.
It further discusses about market segmentation, which will help the company in finding
out its potential customers. Here, customers for the company are targeted on income basis
(demographic).
Lastly, with the help of porter's generic strategy OYO group can focus on different
elements while expanding its business like cost leadership strategy , cost differentiation strategy,
cost focus and differentiation focus. In this assignment, Oyo group have chosen cost leadership
strategy in which they planned to provide their services at nominal price with high quality.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................5
TASK...............................................................................................................................................5
Overview of the company......................................................................................................5
Macro environmental analysis................................................................................................5
Modes of market entry............................................................................................................8
Concept of market segmentation, targeting..........................................................................10
Porter's generic strategy........................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategic marketing is a way that assists an organisation to effectively differentiate itself
from major competitors in similar industry. These kind of activities assist in providing
consistently better services to customers as compared to other rivalries (What is Strategic
Marketing, 2018). The strategy can be developed for market expansion, product development
and customer relationship planning that aid in maximising business profit opportunities. This
report is based on OYO group, which is offering services in hospitality industry i.e. hotels. Now
this company wants to expand their business/market in South Africa. For the implementation of
these ideas, organisation needs to analyse market condition of the particular country as well as
requirement of those services. Therefore, this report is going to cover macro environmental
factors that can affect business operations. For further, it considers mode of market entry that
will determine best possible option for business expansion. This report also includes description
about market segmentation and targeted market for expansion. Further discussion about new
porter's generic strategies is evaluated which helps firm in its future success.
TASK
Overview of the company
OYO group is a hospitality company which was founded in the year of 2013 by Ritesh
agarwal. Main objectives of this organisation is to provide budgeted hotels for family and
individual's who wants better services on an average cost. Through average cost strategy, OYO
group has grown with over estimated 8500 hotels in around 230 cities in numerous countries
(Oyo, 2018). Now the organisation is planning to expand their business operations. For this, Oyo
group is expanding its business by opening hotel along with the restaurant services in South
Africa on the ground of Durban. For this expansion, firm needs to make a strategic planning in
order to establish their business in Durban, South Africa.
Macro environmental analysis
PESTLE analysis is a part of macro environment which is helpful in analysing market on
the basis of few factors that have influence over business (Zalengera, 2014). In context to Oyo
group, the company is expanding its business by opening Oyo hotels with value added service
that is restaurant facility in Durban, South Africa. With the help of PESTLE analysis, Oyo group
can evaluate relevant understanding over their new business in South Africa. Therefore, PESTLE

analysis of South Africa has been conducted in order to evaluate relevancy of Oyo group in this
country. All of these factors are described as below:
Political factor: This factor is normally related to government stability, legislative bills,
health and safety law and many more legislation which are related to political condition of
operating country. Government of South Africa is liberal which is beneficial for foreign
companies to get permission from the government to establish their business in South Africa in
less period of time. As Oyo group expanding its business in Durban (South Africa) with new
services restaurant, opportunity and threat of this factor is described as below:
Opportunity: Liberation of government should be considered as an opportunity to get the
license in less period of time which is around 2 months. This will save time of the company as
they are not required to wait for performing their business activities in South Africa. As a result,
they can achieve break even point in less period of time and it will also assist them attracting
more number of domestic investors.
Threat: Excessive involvement of corruption is itself a threat for Oyo group. This
company may face threats from other firms who use bribe for influencing government officials.
Their rivals may earn competitive advantage by using corruption as source, like pat bribe to
income tax officer instead of paying tax to government. In order to overcome this threat, Oyo
group should develop their contract with highest authorities of the government so they can avoid
the negative impact of corrupt system.
Economic factor: This factors includes inflation rate, taxes and recession. In context to
the South Africa, the country is ranked on 4th position in 47 countries of Sub-Saharan Africa
region. The economical condition of this country is not so good as its increasing instability of
political condition is reducing growth the company within the country.
Opportunity: Economic growth rate of South Africa was going down but now it is getting
improved. Government has taken many decisions for improving ease of doing business specially
for foreign investors. This will result in maximisation of profitability of the Oyo group in South
Africa. It will help organisation in sustaining a better position at market place in future period of
time.
Threats: Instability of political condition is a major threat for Oyo group, as the country
will not be able to convince investors to invest in their business in South Africa. Because, this
country is not stable and there are probable chances that rules and policies related to taxation

policies might change. As a results, investors will not invest in the company. Oyo group may
face major troubles in finding more investment for their business in upcoming time like Series B
or C funding. In order to overcome this threat, Oyo group can sign a contract with the financial
institution's available in Durban. These financial institutions will provide them desired amount
which will be mentioned in the contract. In return of this, Oyo group will give them interest on
loan amount or few percentage in ownership.
Social factor: This factor involves social status, demographic areas (location), trends,
frequent needs, ethnic background etc. Unemployment rate of this country is high which results
in increasing poverty ratio. In addition to this, social culture of South Africa is highly active
towards the food which are based on non vegetarian dishes. Citizen of the country prefers
barbecue and restaurants while celebrating functions and other get together.
Opportunity: High rate of unemployment is an opportunity for Oyo group as they can
hire required staff by paying less remuneration. This will directly reduce operational cost of the
company as they will not be required to spend much money on employees salary.
Threat: Culture and trends in South Africa is changing rapidly. It is the major threat for
the Oyo group, as they are already new in the market and it will consume time to adapt it and
perform their business activities according to the culture of South Africa only. And if in any
case, recent trend of the country will change then they may fail to cope up with changes.
Company can hire a research agency who can provide them details about present and future taste
and preferences of potential customers (Rastogi and Trivedi, 2016).
Technological factor: Advancement in technology is refer to the major factor which
have high influence overall growth of business. South Africa is still not developed properly in
terms of technology as organisation and government are not investing money in research related
to technology. But it has been identified that this country is improving its command over
technology by expanding its number of internet services providers.
Opportunity: More number of internet service provider ensures that people of South
Africa can use internet everywhere. It is an opportunity for Oyo Group, their mobile application
can get accessed by customer from any part of the country. Service users, who are not from
Durban, can use mobile internet and Oyo application from finding suitable restaurant. This help
customer in analysing what company is offering and what are its products range along with
prices. As a result, it will increase popularity of the company with usage of application.

Threat: South Africa is less developed country in terms technology. It is a threat for Oyo
group, because if they use latest technology in their restaurant services then they will definitely
need some technical resources and expertise like skilled employees who can perform and
manage the work of restaurant effectively (Kolios and Read, 2013). Unavailability of appropriate
resources may reduce productivity of the restaurant services offered by Oyo Group. So, in order
to overcome this OYO can use their existing technical staff that can provide training to newly
hired employees for developing a better team in new country.
Legal factor: This factor is related to the political factor but it includes recent trends in
legal laws too. South Africa imposed different taxes and duties like customs, skill and
development tax, capital gains tax and many more. South Africa is liberal country where rules
and regulations are very less. But, government of South Africa has applied restriction in quantity
of import/ export.
Opportunity: OYO can easily conduct its business activities because legal system of
South Africa is much more relaxed and helps organisation to establish their business in effective
manner. Less legal troubles will result in spending less amount of money on insignificant
penalties and government formalities.
Threat: Restriction in quantity of export and import of products are the major threat for
Oyo Group as it will interrupt the organisation in bringing some special product from the native
country. This legal law might affect company in serving their best food items along with the
room services. In order to overcome the same threat, it is important for organisation to find some
suitable domestic suppliers.
Environmental factor: Environmental factor is mainly based on relevancy of industry in
relation to environment (Kolios and Read, 2013). It simply means that how environmental
changes impact over the business and its growth. South Africa owns large agricultural land and
other natural resources.
Opportunity: More availability of agricultural land is an opportunity for new restaurant as
they will not face any problem related to availability of fresh vegetables, fruits and other things
which are required by restaurant during its processing. As a result, they can get better quality of
raw material at low cost.
Threat: Main threat that may arise for Oyo group is that waste management. They may
have to spend huge amount of money in disposing the waste which will be generated by the

hotels and restaurants of Oyo group. Company can hire a successful waste management company
for getting a recycling services. They can also opt the option of developing an advanced disposal
system.
Modes of market entry
Oyo group is expanding its business in South Africa by introducing room facility along
with the service of restaurant. . It is considered as an value added service for Oyo group which
they are expanding in South Africa in order to increase its command in new country. Presently,
the company offers hospitality services to its customers in India, as well as other countries too.
But opening restaurant is completely new area for this organisation. Thus, it creates needs for the
organisation to adopt one suitable market entry option which will help them in establishing their
own business in South Africa. It can be evaluated that, market entry options helps organisation to
enter into a new country in order to expand their business with less chances of loss. Some of the
best suitable market entry options are described as below:
Direct Investment: It is an investment made by an individual or firm in one country with
the interest of investing in business which are located in another country. It is differentiated from
the concept of foreign portfolio investment with the notation of direct control on the business
activities (Blonigen and Piger, 2014). For example: if OYO group is expanding their business
operations in South Africa and they are directly investing into their new restaurant services
which will be offered to the resident of South Africa. Market entry is beneficial for Oyo group as
by opting this option company will have full control over their financial and other operational
decisions. Because through this option company is individually arranging their own
infrastructure and other required resource at their own. So, they dont have to involove other
person in decision making process. On the other hand, major drawback of this entry mode is that
it might be riskier as if planned strategy does not work then the company can lose its invested
money.
Strategic Alliance: In this, two organisation binds between an contract in order to work
together by using their resources, assets etc. for mutual benefits. Strategic alliance is best suitable
option for Oyo group, as the company can tie up with already existing restaurant in South Africa.
The main advantage Strategic Alliance for the mentioned company is that the organisation can
easily access to the skilled employees (Shi, Sun and Prescott, 2012). As both the companies can
take advantage of each other’s resources for performing their business activities. For example:

Oyo group can hire some of the management staff from strategic partner’s company. This will
save the time of recruitment of Oyo group as at the time of expansion they will definitely require
good staff who can manage their operational activities. Major drawback of this market entry
strategy is that it creates chances of loosing confidentiality as both the partners are using their
asset resources and many trade secret too.
Joint Venture: It is a business agreement between two or more companies in order to
formulate one new company. In relation to Oyo group, the company can tie up with another
company for the purpose of establishing their business in Durban, South Africa. In this, both
companies shares profits, losses, expenses etc. on the basis of their sharing ratio which was
agreed by them in the starting. Joint venture is a short term commitment which do not bind
participants for longer duration (Chang, Chung and Moon, 2013). In context to Oyo group, the
company can take advantage of being part of Joint Venture as it will help in accessing new
market with specialised human resources, finance, technology etc. It is simpler as partners
entered into a joint venture can use resources of each other for performing business activities in
effective manner. This entry mode shares risk as well as costing among respective partner.
As per the above mentioned mode of market entry it has been identified that Joint
Venture is best suitable entry option for Oyo restaurant while expanding their business in
Durban, South Africa. It can be said that Oyo group can tie up with Malis Indian Restaurant as
this food provider already belongs to India. This will be helpful Oyo group as they will get
support of a business which is familiar with the city as well as similar kind of business too. As a
result Oyo group can establish a new restaurant with the stated Indian restaurant.
Concept of market segmentation, targeting
Market segmentation is termed as the activity through which whole market or customers
are divided into some parts or sub groups. This division is totally based on characteristics of
overall market (Weinstein, 2013). In context to Oyo group, the company is expanding its
business in South Africa for which they are segmenting their whole market. Main suitable type
of market segmentation is described as below:
Demographic: This segmentation divides market on the basis of age, income, race,
nationality, family, gender, education and so on. It can be said that while expanding businesses
organisation often target its customers among the stated segments of market. In relation to the
Oyo group, can divide its customers on the basis of demographic segmentation. Demographics

are helpful in segmenting market in order to target its customers according to their needs and
requirement.
As per the above mentioned market segmentation, it can be said that while expanding
business in South Africa, Oyo group can segment its customers on the basis of Demographic
segmentation. This can further target income zone in demographic (Hassan and Craft, 2012).
According to the overall analysis, the company is mainly targeting middle class and below
middle class people. Because, middle class people of South Africa is not giving preference in
buying expensive products and services. For this, Oyo group is providing reasonable room
services along with restaurant facility in order to attract middle class people. This influences
interest of people in visiting Oyo restaurants as they are availing services at reasonable prices.
So, it can be said that by opening restaurant with high quality of services will definitely influence
interest of targeted middle class customers. As they will be able to experience good services in
their budget only. In future, potential customer of Oyo group will be targeted as high class
people of Durban, as the company is also availing organic food product to customers. These
potential customer will help organisation in gaining high range of profitability as profit margin
of organic product is high. As a result, with more number of high class customers Oyo group
can generate huge amount of profitability.
Porter's generic strategy
Porter's Generic strategies roams around four major sections that helps in expanding business at
large level.
Cost leadership strategy
Cost leadership strategy mainly emphasises on targeting large market place with lowest
price. In this main focus of the company is on increasing its number of customer by availing
them best class services at lowest prices. In relation to Oyo group, the company influence
interest of its customers by offering low cost restaurant services without compromising with the
quality in South Africa. This strategy will not only attract people belong to middle class and
lower middle class people but, it will be beneficial in persuading customers of higher class. As
the company is not compromising with the quality of food products and other services which are
offered in the restaurant (Tansey, Spillane and Meng, 2014).
Differentiation strategy

This strategy mainly associated with driving strategies for OYO group to make diversify
strategies and plans according to restaurant scale and scope of business. Potential dealers are
requiring finding out for determining the strategies and plans and categorising the product lines
and scopes. The restaurants dealers are required to consolidate as per scope and criteria of their
organisational scale and offered with different offers to enhance profitability with different
strategies. Durability and support system to expand the business in African regions is a
challenging task that expands the business scale and reduce the predictability of business.
Cost Focus
As OYO Group is planning to expand its business in Durban, South Africa, it is essential
that company analyses the dynamics of market and unique needs and preferences of customer. It
is imperative that OYO group develops a strategy to deal with the competitors present in the
hotel industry. Thus, they use cost focus strategy to provide the products and services of the
company at uniquely low cost prices when compared to the rivals within the same industry
(Teeratansirikool and et. al., 2013). OYO group along with providing hotels services are opening
up restaurant in Durban with a unique marketing and cost strategy so that they can deliver quality
services to the customer at lower prices than rival companies and tend to create a strong brand
loyalty among people in South Africa.
Differentiation focus
It concentrates on fulfilling demands of narrow markets. Durban International Film
Festival is one of the most renowned festivals of the world. Moreover, people visit from all over
the world to attend this festival for the love of films and film-making. OYO can use this as an
advantage by providing free tickets to the customers visiting them during their the time of this
festival. This unique strategy would allow the hotel to increase its customer base rapidly
(Harding, 2017). Moreover, it would help the hotel to associate itself with various creative fields
that would definitely contribute towards enhancing the firm's reputation. In addition to this, the
firm would also be encouraged to enhance its creativity to attract more customers in Durban.
As per above stated different strategies of Porters Generic model, it has been founded that
Cost leadership strategy is best suitable option for Oyo group while expanding its business in
South Africa. The stated strategy is adopted as it provides product and services to the customer at
lower cost. It can be said that cost leadership is beneficial for Oyo Group as it will helps the
organisation in attracting customer’s of new country due its low pricing strategy. This strategy is

beneficial for new restaurant, launched by Oyo group as Durban is growing very frequently and
it’s citizen are giving more preference towards attaining better experiences. This will attract
localize as well as visitor of chosen city of South Africa adapt to food services within their
budget.
CONCLUSION
From the above mentioned report it has been concluded that strategic marketing helps
organisation to differentiate themselves from the existing competitors in terms of capital and
services. Macro factors are included in order to analyse impacts which can hamper business
activities and it consist of elements like political, social, economic, technological, legal and
environmental. Other than this, among different modes of market entry Joint venture is best
suitable option for new company who are thinking of expanding their business in new country. It
has been observed that segmentation of market can be done on the basis of demographic type of
segmentation in which customers are targeted on income basis. It has been identified that cost
leadership is an effective strategy for gaining competitive advantage while expanding business
new country or area.

REFERENCES
Books & Journals
Srdjevic, Z., Bajcetic, R. and Srdjevic, B., 2012. Identifying the criteria set for multi criteria
decision making based on SWOT/PESTLE analysis: a case study of reconstructing a
water intake structure. Water resources management. 26(12). pp.3379-3393.
Zalengera, C., 2014. Overview of the Malawi energy situation and A PESTLE analysis for
sustainable development of renewable energy. Renewable and Sustainable Energy
Reviews. 38. pp.335-347.
Pestle, W. J., Crowley, B. E. and Weirauch, M. T., 2014. Quantifying inter-laboratory variability
in stable isotope analysis of ancient skeletal remains. 9(7). pp 102844.
Rastogi, N. I. T. A. N. K. and Trivedi, M. K., 2016. PESTLE technique–a tool to identify
external risks in construction projects. International Research Journal of Engineering
and Technology (IRJET). 3(1), pp.384-388.
Kolios, A. and Read, G., 2013. A political, economic, social, technology, legal and
environmental (PESTLE) approach for risk identification of the tidal industry in the
United Kingdom. Energies. 6(10). pp.5023-5045.
Blonigen, B. A. and Piger, J., 2014. Determinants of foreign direct investment. Canadian
Journal of Economics/Revue canadienne d'économique. 47(3). pp.775-812.
Shi, W., Sun, J. and Prescott, J. E., 2012. A temporal perspective of merger and acquisition and
strategic alliance initiatives: Review and future direction. Journal of Management.
38(1). pp.164-209.
Chang, S. J., Chung, J. and Moon, J. J., 2013. When do wholly owned subsidiaries perform
better than joint ventures?. Strategic Management Journal. 34(3). pp.317-337.
Tansey, P., Spillane, J. P. and Meng, X., 2014. Linking response strategies adopted by
construction firms during the 2007 economic recession to Porter’s generic
strategies. Construction management and economics. 32(7-8). pp.705-724.
Teeratansirikool, L. and et. al., 2013. Competitive strategies and firm performance: the mediating
role of performance measurement. International Journal of Productivity and
Performance Management. 62(2). pp.168-184.
Griffin, R. W., 2013. Fundamentals of management. Cengage Learning.
Harding, S., 2017. MBA management models. Routledge.
Weinstein, A., 2013. Handbook of market segmentation: Strategic targeting for business and
technology firms. Routledge.
Hassan, S. S. and Craft, S., 2012. Examining world market segmentation and brand positioning
strategies. Journal of Consumer marketing. 29(5). pp.344-356.
Dietrich, T., Rundle-Thiele, S. and Kubacki, K., 2017. Segmentation in Social Marketing (Vol.
1). Singapore: Springer.
Online
What is Strategic Marketing. 2018. [Online]. Available
through:<https://blog.daviesbdm.com/what-is-strategic-marketing>.
Economic Freedom. 2018. [Online]. Available Through:
<https://www.heritage.org/index/country/southafrica>.
Oyo. 2018. [Online]. Available Through: <https://www.oyorooms.com/about>.