Strategic Market Entry: Coles Supermarket Expansion in Hong Kong

This report provides an in-depth analysis of Coles Supermarket's market entry strategy into Hong Kong, China. It summarizes the initial market assessment, including financial, competitive, and economic considerations, and outlines the five stages of overseas market selection. The reasons for choosing Hong Kong are explored, focusing on competitive advantage, brand establishment, and market demand for quality products at low cost. The report details the firm's objectives, target market, positioning strategies, and alternative generic strategies. It evaluates different market entry modes, such as export-based, manufacturing-based, and relationship-based approaches, recommending the latter for its potential to foster strategic alliances. Furthermore, the analysis incorporates Dunning's eclectic paradigm and Williamson's transaction cost approach to inform the market entry decision. The target market primarily includes housewives and cooking enthusiasts, with positioning strategies emphasizing high-quality products at competitive prices. Finally, the report discusses market segmentation, targeting procedures, and positioning tactics for each target market segment, aiming to enhance Coles Supermarket's brand presence and market share in Hong Kong. Desklib provides access to similar solved assignments and resources for students.

Assessment 2 – Market entry
of Coles Supermarket in Hong
Kong, China
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Table of Contents
Introduction.................................................................................................................................................2
Summaries of assignment 1.........................................................................................................................2
Screening of the market selection................................................................................................................2
Stages of overseas market selection.........................................................................................................2
Reason for choosing the country.............................................................................................................3
Objectives....................................................................................................................................................3
Market entry strategy...................................................................................................................................4
Target market..............................................................................................................................................5
Positioning...................................................................................................................................................5
Market selection process.............................................................................................................................6
Target market selection process...................................................................................................................6
Positioning for each target market...............................................................................................................7
Alternative generic strategies......................................................................................................................7
Recommendations for the preferred strategy for a country..........................................................................7
Evaluation of alternative strategies..............................................................................................................8
Table 1: Alternative market entry strategies............................................................................................8
Alternative target market, positioning, and marketing mix strategies..........................................................9
Table 2: Alternative target market strategy.............................................................................................9
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11
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Introduction
The paper will provide information regarding the stages of market selection and a reason for
choosing Hong Kong market for their firm. It is seen that the firm Coles supermarket wanted to
expand their business in Hong Kong and for this reason, the appropriate modes of entry will
briefly be discussed in this paper. Furthermore, the target, generic and positioning strategies will
be explained and analysed briefly in this context. Moreover, some recommendations are also
provided that will help the firm to expand their business in the coming days.
Summaries of assignment 1
Assignment 1 evaluates the international marketing strategy of the firm Coles supermarket that
was going to expand their business in Hong Kong market. In other words, the report also stated
about the various types of market analysis in concerning to growth rate, population, market
barriers, and drivers. Besides this, Porter's Five Forces, operational and SWOT analysis are also
done which thus help the firm to gain the competitive advantage over other companies in the
market. Furthermore, in assignment one, both the external and internal environmental factors are
also briefly discussed which provides an idea of the overall environment of the market.
Screening of the market selection
Market selection is necessary to start a business in the international market. The company chose
Hong Kong market for expanding their business of Coles supermarket, and before selecting this
market, they make a view of financial, competitive as well as the economic conditions of the
selected area (Marchi, Vignola, Facchinetti, & Mastroleo, 2014).
Stages of overseas market selection
The five stages of the foreign market selection process are as follows:
a) Domestic regulation and management preferences– In this stage, the company has to
evaluate the type of international market that has enough potential to increase their business
growth in coming days (Tirole, 2016). Besides this, the firm has to exclude all other
international markets that do not provide them enough profit for their business.
b) Initial entry assessment– in this stage the company focus on the macro environmental factors
of the global market that provides least attractive social and political environments.
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c) Competitive environment- Before choosing the market for expanding their business, the firm
has to focus on the substantial barrier that may cause massive competition for their products.
In other words, after knowing the market environment, the firm can easily avoid those
market that gives them huge competition (Mathews, Bianchi, Perks, Healy, &
Wickramasekera, 2016).
d) Market responsiveness- In this stage, the company determines the marketing effort of the
overseas market that help them to gain a satisfactory market share. They also identify the
optimal and costs problems of expanding their business in the international market.
e) Internal trade-off analysis- this stage is considered the final stage of market selection as in
this stage the unattractive market are excluded, and a market that fulfills the firm's objectives
are chosen.
The market selection in new millennium catering is mainly based on the clustering markets in
concerning to the cultural similarities and also by the influence of technology and e-commerce
advances (Rezaei, Nispeling, Sarkis, & Tavasszy, 2016).
Reason for choosing the country
One of the main reason for choosing Hong Kong from the Coles Supermarket company is to gain
a competitive advantage and also to establish their brand in China. According to the market
analysis, it is seen that the people in this market wanted the best quality products at low cost
(Laufs, & Schwens, 2014). Hence this is also one of the reasons for expanding their firm in this
market. The company selects this market because Hong Kong has the highest level of population
which thus increases their profit and market share too. In other words, the political and economic
factor of this market is quite stable, and this is also considered as one of the reasons for choosing
this country.
Objectives
The mission statement of Coles Supermarket in Hong Kong is "Supermarket that has customers
value and provides superior and convenience products and service."
The main objectives of this firm are:
 To provide useful quality products at low cost
 To gain the competitive advantage in this country
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 To enhances their brand name and become one of the leading supermarket firms in
Hong Kong
Market entry strategy
The market entry strategy or the mode of entry of this Coles supermarket in Hong Kong are
based on three methods of entry which are as follows:
Modes of entry Justification
Export-based entry This mode of entry is best chosen by the company because it provides a
minimum commitment of resources in concerning to products and services
offered by them. Four types of export-based entry are present which are
indirect export, direct export, licensing and by franchising (De Villa, Rajwani,
& Lawton, 2015). The main advantage of chosen this entry mode as the loss of
the company business will be less while one major disadvantage is that the
firm did not correctly establish themselves as the permanent firm in this area
after choosing this mode of entry.
Manufacturing-based
entry
In this type of entry, the company can manufacture their products through
Foreign Direct Investment (FDI) process, and they can acquire re with other
established company's in Hong Kong (Ang, Benischke, & Doh, 2015). In other
words, they can also make the joint venture with the other established firm in
that area, and by these modes of entry, it will be easier for the Coles
supermarket to expand their business. In other words, if the acquisition or joint
venture with other firm is not legally done, then it may create the problem for
the Coles supermarket in future.
Relationship-based
entry
By this types of entry modes, the company can quickly expand their business
in the Hong Kong market. This mode of entry is chosen because it helps the
firm to make strategic alliances with other companies so that if any problem
occurs in coming days, then they can quickly solve it (Ripollés, & Blesa,
2017).
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Thus from the three modes of entry, it is clear that the relationship-based entry will be better
suitable for the firm because it provides them huge success in the coming days and also helps the
supermarket to establish their market permanently in this country.
The theories that should be used for market entry in the Hong Kong market are Dunning's
eclectic paradigm and Williamson's transaction cost approach. Dunning’s eclectic paradigm
theory is based on three elements one is ownership attributes, internalization and location
attributes (Grimmer, 2018). The three factors of this theory described competitive advantage,
control of resources, FDI in the foreign market and also the governmental regulations that need
to be followed by the firm after starting the business. Another theory of Williamson's describes
that the chosen mode of entry provides control in transaction specific assets, internal and external
uncertainty and also on the free-riding potential (Sultan, Wong, & Sigala, 2018). Hence both
these theories have to be followed by a company before entering a foreign market.
The company target market is mainly the housewives that are fond of buying cooking products
and enable to cook for their loved ones. The positioning strategy of the firm is to enhance their
performance by making high-quality products for their customers by maintaining their price so
that they can quickly grab the market which can improve their business growth (Escaron et al.,
2016). In other words, by target markets, they can easily enhance secure positioning and
profitability and thereby generic strategic options should improve.
Target market
The target customers for this Coles supermarket are the mainly the people that possess different
cooking habits and are fond of making various cooking dishes for their loved ones. It is noted
that the company's main products are dairy, fresh fruits, and other food-related products. Thus
this company main strategy is to target are children in the age between 10 to 15 years, youth in
between 16 to 25 years and mainly the housewives of age between 23 to 50 years (Zarkada-
Fraser, & Fraser, 2015). For maintaining their target market, they are going to offer various
discounts on their products.
Positioning
The firm mainly focuses on the segmented population those who wanted products under one
roof. By using this strategy of manufacturing food products under one roof, they will enable to
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maintain their position in the market of Hong Kong (Pulker, Trapp, Scott, & Pollar, 2018). In
other words, low pricing of high-quality products will also enhance their place in this country.
Thus it can be seen for making a good position in the new market the firm uses these strategies
so that they become one of the leading brands in Hong Kong.
Market selection process
The selection of market is mainly based on segmentation and targeting procedure. As Coles
supermarket provided business to customer or B2C services so their central segmentation, as
well as targeting, will be done by demographic, behavioral, physiographic and environmental
factors (James, 2016). The company is going to expand their business in the international market,
so according to the export-based entry they have to segment customers by demographic criteria
so that they enable to manufacture products as per the customer needs (Wertheim-Heck,
Vellema, & Spaargaren, 2015). In other words, according to the manufacturing based entry, they
have to manufacture products according to the customer’s lifestyle and occupation. Besides this,
in relationship-mode of entry, the company has to focus on all aspects of segmentation so that
they can quickly enhance their business in this Hong Kong market. Apart from this depending on
the market needs they segmented the customer section of their firm.
Target market selection process
Many companies make various strategies for selecting their target market, but few firms can
afford to enter into all markets. The company Coles supermarket also uses the innovative
approach to target market by different modes of entry. In concerning export-based entry, they
mainly selected the children of age between 10 to 15 years as their main target market. In this
entry modes mainly the company has to take franchisee or they have to license for their firm for
certain years. Thus for increasing their business growth, they will select this age group people as
their primary target customers. In manufacturing-based entry modes, they will focus mainly on
the housewives and manufacture products according to their needs (Lewis, & Phillipov, 2016). In
this modes of entry, the firm has to acquire with another firm so they targeted this group of
people. In other words, in case of relationship-based entry, they will focus on the people of
different age group and manufacture products according to the market trend so that they can
quickly increase their business growth in Hong Kong.
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Positioning for each target market
To enhance the positioning of the Coles supermarket in Hong Kong, the firm mainly focuses on
the characteristics of the products that give benefits to their customers and attracts the vast
number of customers towards their firm. In concerning to manufacture-based entry mode, the
positioning strategy for children is that they make different flavors diary and chocolate items that
can attract them towards their brand (Booth, & Coveney, 2015). In another word for the
housewives and also for the youths they will manufacture fresh and high-quality products and
sell them at a low cost. Though it has given them a minimum profit, it helps them to make a good
positioning for their brand in this country.
Alternative generic strategies
The generic strategies mainly focus on the positioning and profitability of the firm. By Porter's
model to maintain a competitive approach about cost the firm has to access new technology and
raw materials and also manufacture the product as per the target market and market needs
(Rummo, Guilkey, Popkin, Evenson, & Gordon-Larsen, 2017). In other words by differentiation,
they will reduce the cost of the product than other similar firm in the market so that they can
quickly grab the customer attention towards their firm. Besides this, to enhance their competitive
strategies, they have to focus on the differences in cost behavior so that they will manufacture
products concerning to the target market. Hence all these Porter’s competitive strategies help the
firm to enhance their positioning and profitability.
Recommendations for the preferred strategy for a country
Some suggestions are provided that help the firm to enhance their business growth in the Hong
Kong market are as follows:
For entraining into the international market, the firm has to choose relationship modes of entry
because in this entry modes they have to make strategic alliances with other established firm in
the area. In other words, this modes of entry also help the firm to readily know about the
customers' needs and demands concerning food types.
It is to be recommended that the firm has to take care of their range and quality of products and
also focus on their healthy products so that they can easily attract their targeted customers.
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Besides this, if they make the differentiation in the market with quality food at less cost which
thus increases their customers base.
To increase their positioning, they have to focus on refining, enhancing and improving their
investments in the field of promotion and advertising so that their vision can easily reach to the
consumers.
One of the generic strategies used by the firm is to make joint ventures with the Charltons
Company in Hong Kong which is a leading boutique law firm. The company gives legal advice
to PRC and international clients and also provides the joint venture with the global firm.
Evaluation of alternative strategies
Table 1: Alternative market entry strategies
Market entry
strategy
Examples Advantage Disadvantage Justification
Partnering Parenting with
the country like
Asia
Partnering is a
co-marketing
strategy that
helps the firm to
know about the
local market
which enhances
the firm to
manufacture
products
according to the
market needs.
If the
patterning
company is
not chosen
wisely, then it
causes loses
for the
company
business.
Parenting is a
useful strategy in
those markets
where the
business, culture,
and society is
substantively
different from one
another (Pineda,
Florencio, &
Roldán, 2018).
Buying a
company
Xiaomi’s Epic
mobile company
Buying a
company
provides the firm
to be well
established in
that area
If the firm
buys a wrong
company,
then it may
put them to
loses
Purchasing a new
company helps the
firm to receive the
same benefits of
the local market
which thereby
help them to
establish a strong
customer base
(Kita, Furková,
Reiff, Konštiak, &
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Sitášová, 2017).
Alternative target market, positioning, and marketing mix strategies
Identify potential market segments in the chosen market
Table 2: Alternative target market strategy
Option Target market Positioning Strategy Marketing mix
1 Children of 10-
15 years
Manufacture diary
and chocolate
product of different
flavors
Product Cadbury and chocolates
Price
10 to 50 dollars
Place
Hong Kong
Promotion
Through advertisement
2 Youth and
housewives of
23 to 50 years
Fresh vegetables and
grocery items of
high quality and low
cost
Product
Vegetables and grocery
Price
20 to 100 dollars
Place
Hong Kong
Promotion
Through advertising and campaign
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Conclusion
The paper concludes that among the three modes of entry if the firm chooses the relationship
based entry, then it will help in bringing huge benefits for them in future. In other words, the
firm mainly targeted the age group of children, youth and housewives concerning to their entry
modes and also make positioning strategies about that. Besides this, the recommendation
provides also concludes that by using this strategy the firm can quickly enhance their business
growth in the future.
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References
Ang, S. H., Benischke, M. H., & Doh, J. P. (2015). The interactions of institutions on foreign
market entry mode. Strategic Management Journal, 36(10), 1536-1553.
Booth, S., & Coveney, J. (2015). ‘Big Food’—The Industrial Food System. In Food
Democracy (pp. 3-11). Springer, Singapore.
De Villa, M. A., Rajwani, T., & Lawton, T. (2015). Market entry modes in a multipolar world:
Untangling the moderating effect of the political environment. International Business
Review, 24(3), 419-429.
Escaron, A. L., Martinez-Donate, A. P., Riggall, A. J., Meinen, A., Hall, B., Nieto, F. J., &
Nitzke, S. (2016). Developing and Implementing “Waupaca Eating Smart” A Restaurant
and Supermarket Intervention to Promote Healthy Eating Through Changes in the Food
Environment. Health promotion practice, 17(2), 265-277.
Grimmer, L. (2018). The diminished stakeholder: Examining the relationship between suppliers
and supermarkets in the Australian grocery industry. Journal of Consumer
Behaviour, 17(1), e13-e20.
James, S. W. (2016). Beyond ‘local'food: how supermarkets and consumer choice affect the
economic viability of small‐scale family farms in Sydney, A Australia. Area, 48(1), 103-
110.
Kita, P., Furková, A., Reiff, M., Konštiak, P., & Sitášová, J. (2017). Impact of Consumer
Preferences on Food Chain Choice: An empirical study of consumers in Bratislava. Acta
Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 65(1), 293-298.
Laufs, K., & Schwens, C. (2014). Foreign market entry mode choice of small and medium-sized
enterprises: A systematic review and future research agenda. International Business
Review, 23(6), 1109-1126.
Lewis, T., & Phillipov, M. (2016). A pinch of ethics and a soupçon of home cooking: Soft-
selling supermarkets on food television. In Food, Media and Contemporary Culture (pp.
105-124). Palgrave Macmillan, London.
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