Strategic Marketing

Strategic Marketing

EXECUTIVE SUMMARY
The following report is conducted upon OYO, a well renowned hospitality organisation,
intending to expand its services within South Africa. While facilitating market expansion, the
company has also decided to start restaurant services along with the provision of accommodation
to customers. The report is divided into 4 main sections, namely, macro environmental analysis,
market entry modes, segmentation & targeting and generic strategies. The macro environmental
analysis reveals that governmental incentives provided to foreign companies and strong
economic conditions of South Africa would provide support to OYO in facilitation of market
expansion within new country. However, there are certain negative aspects also associated with
the macro environment that pose threat to the operations of entity into new market. Out of the
different modes of market entry available to the firm, it has been analysed that joint venture
serves to be the most effective. Further, it is seen that segmentation of new market is being done
by the entity on the basis of demographical aspect. At last, it is seen that the firm is willing to
adopt cost leadership strategy while facilitating expansion into South Africa. This strategy is
being utilised with a view to reduce the overall cost of operations for OYO in new country and
thereby use the surplus funds for effective areas of business operations.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
Overview of the company......................................................................................................1
Macro environmental analysis................................................................................................2
Modes of market entry............................................................................................................3
Concept of market segmentation, targeting............................................................................5
Porter's generic strategy..........................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Strategic marketing can be referred to as the manner in which an enterprise creates a
distinct image of itself in the mindset of customers. For this purpose, the organisation makes use
of effective marketing practices and other associated tactics. This provides assistance to the
entity in appealing to the audience effectually. This results in placing a positive influence upon
the behavioural patterns of consumers, thereby persuading them to make a purchase. With this,
the corporation is able to inflate its existing level of revenues as well as profits.
The present project constitutes comprehensibility of strategic marketing as applied by
OYO Group. The management of this organisation is considering expanding its services within
South Africa by incorporating a new restaurant in the premises of hotel. The following report
consists of macro environmental analysis with a view to gain knowledge of the threats and
opportunities present at selected market place. Further, it includes modes of market entry;
concept of market segmentation & targeting and porter's generic strategies applicable to the
company.
Overview of the company
OYO Group is recognised to be a hospitality organisation that was found during the year
2013. The primary motive of this firm is to stipulate the services of budget hotels for family,
corporates and individuals. The guests derive satisfaction from services provided by the entity as
these charge reasonable prices from them. By leveraging low pricing strategy, this renowned
hotel group has expanded its services within approximately 250 cities within countries such as
India, UAE, China, Nepal and many more such nations. Looking upon the success of hotels with
the passage of time, the management of the group has decided to introduce its services within
South Africa along with incorporation of a restaurant within the premises to attract a larger base
of audience. The location selected within SA to carry out expansion of business operations of the
entity is Durban. To execute this expansion in an effective manner as per the organisational
expectations, OYO Group needs to do strategic planning. This will aid the entity in deriving
favourable results from the expansion and thereby inflating the existing market value and
goodwill of the company at international scale.
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Macro environmental analysis
It is important for a firm to constantly analyse its macro environment with a view to
identity the pertinent opportunities as well as threats at market place. Macro environmental
analysis is regarded to be a crucial part of the strategic planning procedure. In this regard,
PESTLE analysis is an important business management model which is taken into use by
companies across the globe in a bid to gain comprehensibility of the environment in which they
carry out their operations. OYO Group is making use of this strategic planning tool to execute
planning for expanding into Durban, South Africa. This analysis is thus presented as follows:-
Political: This factor encompasses aspects such as political stability, governmental rules
and regulations, level of corruption etc. In relation to South Africa, it is analysed that the
government of this nation is stable and thus its policies stay consistent for years. This creates
opportunity for OYO group to expand in this nation and thereby enhance its stake at global level
by providing restaurant along with accommodation services of high quality. Yet another
opportunity is the ease with which a firm can do licensing within South Africa. However, it is
determined that the level of corruption prevailing within the confines of this country is high
which may persuade the respective hospitality group to get indulged in unethical and illegal
practices. Any such instance would result in loss of goodwill for OYO Group in new market.
Economic: This includes aspects like economic development, inflation rate, rate of
unemployment, foreign exchange. South Africa is Africa's second biggest economy. This tends
to create opportunity for the respective hotel group to expand in new market by capitalising upon
the resources of this nation. Increase in rates of commercial properties within SA would enhance
the level of rivalry for OYO Group. However, the firm can still gain an edge over other rivals
with the help of its new restaurant services.
Social: This involves aspects like needs and expectations of people, social status,
consumer demographics, trends, ethnic backgrounds etc. In this relation, it is identified that the
rate of unemployment within the confines of South Africa is acknowledged to be quite high. This
tends to create opportunity for OYO Group to hire labour at cheap rates. Further, the entity can
offer a variety of cuisines catering to the tastes of consumers, in order to inflate its market share
at international level.
Technological: This factor of macro environmental analysis encompasses advancements
that take place within the technologies being used by companies functioning across the globe.
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With respect to South Africa, it is determined that this nations is not effectively developed in
relation to technologies and the government also does not invest funds in R&D. This tends to
serve as a threat for OYO Group as it is considering to expand its services within SA while
introducing a restaurant within the premises. The companies carrying out their operations within
this nation do not make extensive use of technologies and this creates opportunity for OYO to
facilitate disruption of restaurant services by incorporating unique technologies in food
production.
Legal: This includes laws and legislations such as Health & Safety, employment laws,
GDPR and many more. South Africa is a liberal country and thus the firms operating within its
confines have the leverage to act within the interest of law. This creates opportunity for OYO
Group to function within the new market in an effective manner. However, an adverse shift in
any of the hospitality or employment legislations may serve as threat for the firm.
Environmental: This factors examines the extent to which a company acts in the interest
of nature and adopts eco-friendly policies. High rate of natural resources is an opportunity as the
new restaurant will not face any problem related to availability of fresh vegetables, fruits and
other things required by restaurant. This would create opportunity for the entity to offer high
quality food to guests. Further, the entity can invest in CSR activities to gain support from
government as well as customers.
Modes of market entry
The respective hotel is increasing its number of outlets by expanding in south Africa by
adding on restaurant services along with their hotel. While talking about current stake it can be
said that OYO group has huge number of customers in hospitality sector in all the countries
where it operates its businesses. On the other hand, if it seen on the restaurant services, the
respective zone is new for OYO group. In order to enter into South Africa effectively, it is
essential for the company to adopt right market entry strategy so that they can easily establish
their business in the decided country effectively. Market entry strategy are termed as the range of
options that allows the company in entering into a new country with minimum chances of issue
or loss. Some of the main market entry strategies for OYO group while entering into South
Africa are stated as below:
Direct Investment: Direct investment is termed as the effective investment made by the
firm or particular individual in other businesses whose operation are going on in another
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countries. With reference to OYO group, it can be said that the company is planning to expand
its operational activities in South Africa. Here, the respective company can go for direct
investment marketing entry option. The respective market entry option is highly important for
the company as it increases number of sources of option for the OYO group which will make
them relax from the financial issues. On the contrary, the same strategy has its own drawback
which simply means that if the planned strategy do not goes well then there are probable chances
that invested money could get wasted.
Strategic Alliance: It is the most common strategy that is adopted by businesses while
expanding their business in another country. According to this strategy two or more company
indulge into contract which ensures that they can use each other’s resources and assets while
executing their businesses in order to gain maximum benefits. The respective strategies seem to
look best suitable option for OYO Group as they can easily collaborate with the local restaurant
of South Africa and continue their own business in that nation. The core benefit of this strategy is
that OYO can easily reach to its respective customers. In addition to this, the respective company
can also make use of range of resources owing by the partner. This simply makes their
functioning easier in South Africa. Whereas, main drawback of strategic alliance is that it
develops possibilities of loosing confidentiality due to partners access over their resources, assets
and other trade secret.
Joint Venture: Joint venture is termed as agreement under which two or more firms or
entities combine together and develops one new business entity. The respective strategy is also
good as in order to incorporate with it OYO group can tie up with one of the popular restaurants
of South Africa. The respective strategy is the short term activity but still binds indulge
companies to share profit and losses as per their invested ratio. Usage of this strategy will allow
OYO group in accessing to the new market zone quickly. Along with this, it will also provide
contribution in sharing their respective expenses and risk too while executing business activities.
On the other hand, main disadvantage of Joint Venture is that developed company could face
issues as well as conflicts due to completely different perception of the partners.
On the basis of above specified market entry modes, it can be said that Joint venture is
determined as the best market entry option for OYO restaurant. Here, the respective restaurant
could indulge into the tie up with Malis Indian Restaurant. The main reason behind choosing this
restaurant is their existing belongingness to the India. Along with this, it can be further said that
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it would be quite easier for the OYO restaurant and Malis Indian restaurant to work
collaboratively as there are negligible cultural difference which directly reduces chances of
conflicts and contributes in establishing their business activities in effective manner.
Concept of market segmentation, targeting
Market segmentation is defined as an activity with the help of which overall consumers
as well as market get segregated into sub parts. This form of division is totally based upon
overall market characteristics. In relation with OYO group it has been identified that entity is
expanding their organisational operations in South Africa. In order to ensure effective
functioning organisation segregate whole market. Mentioned below are four types of market
segmentation:-
Demographic: In this form of segment market is mainly divide on the basis of gender,
income, family, eduction, race, age and more. In context with OYO group organisation
segregates their customer as per this segmentation.
Behavioural: This form of segmentation duly divide market since consumer behaviour
that directly influence purchase, usage, lifestyle and more. It has been identified that OYO by
targeting customer base of youngster and providing them with the benefit of eat outside and
visiting restaurants can ensure their organisational goals.
Psychographic: In this segment organisation divide their customers on the basis of
personality traits, opinions, vales, opinion and more. In context with OYP group organisation can
duly segment their consumer range in South Africa as per according to the defined factors.
Geographic: In this factor, entity segment consumer since geographical boundaries. It
has been identified that consumers can give preference mainly to their surrounding restaurant
when they visit eating places on regular basis.
It has been identified that by undertaking different types of market segmentation into
account OYO can accomplish their goal to expand their business operations in South Africa. In
addition to this, organisation can also target their customers as per in accordance with income
basis. Further it has been identified that organisation target mainly middle class and below
middle-class people. While it has been determined that individuals does not preferred to spend
their money on expensive places. Thus, it has been analysed that organisation by offering
qualitative products and services to customers in affordable price range can duly attract attention
of customers in well defined manner.
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Porter's Generic Strategy
Porter's generic strategies are termed as the range of strategies which provide support to
company in gaining competitive edge. There are mainly four types of Porter's generic strategies
which could be considered by OYO Group so that they can select best strategy as per
requirement. All the four strategies pertaining to this strategic planning tool are described in a
brief manner as below:-
Cost leadership strategy
Here, main focus of this strategy is to offer products and services at lower prices. In order
to adopt this strategy, it is important for the manager of OYO restaurant to offer its food items at
lower price so that can attract maximum number of customers towards them and enhance their
profitability.
Differentiation strategy
The main emphasises of this strategy is to provide unique products and services to the
customers which are not offered by any other firm within the same industry. The main motive of
this strategy is to grab attention of customers with the unique offering. In order to acquire this
strategy it would be required by manager of OYO restaurant to offer completely unique range o
products to the customers so that they can attain higher level of satisfaction. Along with this,
these customers will often visit the same restaurant again and again focus enjoying same
experience.
Cost Focus
This strategy simply states that businesses are required to offer their product and services
at lower price as compared to their customers in same region and industry. With reference to
OYO restaurant, it has been determined that the company will make use of his strategy.
According to this, they will surely offers all of their product range within South Africa at lower
prices along with the higher quality in comparison of their competitors or other rivalry.
Differentiation focus
This strategy focuses on providing highly differentiated products and services to its
customers within the specific zone. In context of OYO restaurant, it has been analysed that the
manager of respective restaurant could go for this strategy by providing additional benefits to
customers in their every visit to the restaurant. This will allow them in influencing interest of
customers to visit the same restaurant again and again all the time.
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On the basis of above analysis, the management of the respective hotel group is
considering to apply cost leadership strategy while facilitating expansion within Durban, South
Africa. This strategy would provide assistance to the corporation in reducing the overall cost of
operations and thereby maximising the profits in new market place.
CONCLUSION
On the basis of information considered in the report above, it can be concluded that
strategic marketing is important for every firm as it provides the opportunity to inflate the
existing market share as well as brand value of company. In addition to this, it has been inferred
that macro environmental factors place significant influence upon the organisation considering
expanding its business in another country. The factors hold opportunities as well as threats for
the business operations as well as new offering of entity. Besides this, it is acknowledged that
Joint venture is one of the most effective ways to gain entry into a new market. Furthermore, it is
recognised that cost leadership is an effectual strategy for a business striving to facilitate
expansion in a new country as it aids in reducing the overall cost of operations.
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