7BSP1271 Marketing in Mexico: XYZ Company's Expansion Report

This report provides a comprehensive analysis of the XYZ Company's potential expansion into the Mexican market. It begins with an introduction to international marketing and the importance of cultural variables, followed by an overview of the XYZ Company and the Mexican market. The report then delves into an environmental analysis of Mexico, examining political, economic, social, technological, legal, and environmental factors. The core of the report focuses on market entry strategies, specifically franchising, with a discussion of its advantages and disadvantages. Marketing strategies are then explored, including STP analysis (segmentation, targeting, and positioning) and ethical considerations, particularly concerning religious dietary restrictions. The report concludes with recommendations and a summary of key findings, offering valuable insights for the XYZ Company's successful entry into the Mexican market.

Marketing across Cultures
6/13/2019

MARKETING ACROSS CULTURES 1
Table of Contents
Introduction................................................................................................................................2
Overview of the XYZ Company............................................................................................2
Overview of Mexico..............................................................................................................3
Environmental Analysis of Mexico.......................................................................................3
Political Factors..................................................................................................................3
Economic Factors...............................................................................................................3
Social Factors.....................................................................................................................4
Technological Factors........................................................................................................4
Legal Factors......................................................................................................................4
Environmental Factors.......................................................................................................5
Market Entry..........................................................................................................................5
Franchising.........................................................................................................................6
Advantages of Franchising.................................................................................................6
Disadvantages of Franchising............................................................................................6
Marketing Strategies for XYZ Company in the Mexican Market.........................................7
STP Analysis (Segmentation, Targeting, and Positioning)................................................7
Ethical Issues for Company and Recommendation for overcoming issues...........................8
Recommendations..................................................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................10

MARKETING ACROSS CULTURES 2
Introduction
International marketing automatically provides a key position to the cultural variable, but
everything is not based on the culture. It is dangerous to link the individuals’ behavior
completely with the cultural grouping from which they belong. In addition to this, the view
that everyone has regarding other cultures mostly inclines to be rather stereotypes or shallow,
which gives only the imperfect image of the cultural group’s operations. The cultural variable
is very tough to isolate and operationalize. The key motive of international marketing is to
recognize, classify, assess and then select the market segments (Usunier and Lee, 2005). The
intent of this report is to discuss the market entry strategy for XYZ Company which is
established in the United Kingdom market and planning to expand operations in Mexico. The
report is providing a detailed market analysis of the Mexico market for the company such that
it can properly take entry in the market. The report is also based on identifying some of the
ethical issues that business could face in the Mexican market, but the report is also providing
recommendations through which company will be able to overcome the issues and
challenges.
Overview of the XYZ Company
XYZ Company is one of the known companies which is established in the United Kingdom
and offers vegetarian and non-vegetarian fast food product options such as Burger, Pizza, Hot
dog, etc. The company has restricted its operations to some locations only; however, due to
increasing discussion regarding the Brexit, the businesses that are operating in the United
Kingdom will be majorly influenced in terms of sales, profit, and revenue. Hence, in order to
overcome this, the XYZ Company has planned to expand operations in the Mexican Market.
The company is involved in offering non-vegetarian food such as meat, fish, etc., but the
Seventh-day Adventist tradition Christians of Mexico have forbidden eating meat.

MARKETING ACROSS CULTURES 3
Overview of Mexico
Mexico is the third largest nation in Latin America, after Brazil. The society of Mexico is
majorly characterized by the extremes of poverty and wealth (National Geography Kids,
2018). Mexico is considered as the chief political and economic factors in Latin America.
The country is ranked in the list of easiest nations for doing business in Latin America as per
the report of World Bank in 2012. But, high rate of crimes creates problematic situations for
the businesses (Euro monitor, 2012).
Environmental Analysis of Mexico
Political Factors
The poverty in Mexico is influenced by the national and local government. The local
government influence the success of different businesses especially small local businesses. If
the business provides any benefit to the government then they provide incentive facilities to
the small businesses. Mexico is presently drowning in political corruption (Business Anti-
Corruption Portal, 2019). Leaders and politicians' with power are majorly involved in taking
bribes for their personal benefits. It is very tough for the citizens to have faith in democracy
because the elected leader can openly do anything for his/her benefit and not for the people.
Economic Factors
Mexico is considered as the 15th largest economy in the world and predictors are forecasting
that by 2050 the economy will the 5th largest. Mexico is ranked second in terms of the largest
economy after Brazil. Depending on the forecasters the economy is continuously growing at
an annual moderate rate of the development that is 2.4% (Nation Online, 2019). Overall,
however, Latin American and Caribbean region are experiencing a decline in the growth in
comparison to 2003-2012 time periods. The main cause of the decline is the lower prices of
the raw material, slowing down of the Chinese economy and low investment. However,
enhancing the economic position of Mexico allow foreign businesses to expand operations in

MARKETING ACROSS CULTURES 4
the country. Considering the economic situation of the country, XYZ Company can expand
its business in the Mexican market.
Social Factors
Mexico is majorly a nation with Spanish speaking with a maximum of the residents live in
the urban region. Rural region people yet struggle to find employment. In spite of the issue of
poverty, the nation is enhancing its rate of literacy as well as education. However, in spite of
ranked low in comparison to other nations, there is an increasing rate of literacy for Mexico
(Statista, 2015). The Mexican's give priority to their family and many of the households have
three generations. Women in families are responsible for taking care of home and children
(DiGirolamo and Salgado, 2008). As people in Mexico give major priority to their families, it
highlights that they also like to spend time with family and visit different public places such
as a restaurant for quality time. XYZ Company can essentially target the families in the
market by providing them a happy and enjoyable environment.
Technological Factors
Mexico and the U.S share a border, which means it is very easy for them to transport goods to
their American neighbors. Technology also supported people to get new opportunities for a
job. Though, computer systems are mostly utilized by businesses and personal computers by
small enterprises. The biggest reform that took place in the Mexico market is the
enhancement of the telecommunication system. This reform has contributed to the social as
well as economic development of the country and allowed a number of businesses to operate
smoothly their operations (Madrazo, 2013).
Legal Factors
As per Ahonen, the importing of the products particularly the manufacturing products has
been made easy by the government of Mexico for the businesses to operate their activities

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successfully in this sector. However, in the service sector, there is an increasing number of
cost as well as limitations. This is because in different cases there is a requirement of
registrations and licenses (Export. Gov, 2018). On the other hand, the customs in the country
are very complex. The customs are not transparent and even follow their own regulations. For
instance, under national technical requirements, the country has asked for new testing in
Mexico, even after when it has been already tested, this result in time wastage (Kesseli,
2017).
Environmental Factors
This section provides knowledge regarding the performance of the country on environmental
policies and indicators. Mexico owns a huge history of natural resources and environmental
issues, specifically in the wider teams, where the major environmental problems have
resulted due to increasing population, industrialization, and urbanization (UN Environment,
2019).
Market Entry
The strategy of market entry is said to be the deliberate distribution as well as the delivery
technique of the services or products to the new market. In the export and import of the
services, it refers to the establishment and organization of the agreement in the foreign nation.
Developing the strategy of market entry is comprised of a detailed analysis of the potential
customer and competitors (Glowik, 2016). Factors that should be considered by the business
while deciding the feasibility of the entry strategy in a specific market is comprised of price
localization, export subsidies, trade barriers, competition, and localized knowledge
(Tielmann, 2010). The market entry strategy that will be adopted by XYZ Company to take
entry in the Mexican market for offering its vegetarian and non-vegetarian food options is
franchising.

MARKETING ACROSS CULTURES 6
Franchising
Franchising is generally a marketing concept that could be accepted by the business as a
strategy for the expansion of the business in a foreign market. When it is implemented, the
franchisor provides the license its knowledge, process, utilization of the business model,
intellectual property, rights and brand name for selling the branded services and products to a
franchise (Webber, 2012). In its exchange, the franchise is responsible for paying the agreed
fees and complies with some of the responsibilities, classically set a Franchise Agreement.
XYZ Company will adopt the franchising as the market entry strategy under which it will
provide the license to one of the local franchisers in the Mexican market for providing its
products in the market. By adopting this market entry strategy the business will be able to
properly understand the demand of the people because there is huge different in the culture,
values, and language of U.K and Mexico.
Advantages of Franchising
 The risk of failure of the business is decreased by adopting franchising.
 The services and products are already established in the market and have a market
share (Mathews, 2011).
 The recognized name of the brand and trade market can be utilized.
 The franchisor provides complete support in terms of training and setting up the
business.
 Through franchising arranging funds for the business becomes easy.
Disadvantages of Franchising
 The cost of a business can be higher.
 The agreement of the franchising generally comes with restrictions related to how to
operate the business.
 It is tough to sell the franchise (Invest Northern Ireland, 2019)

MARKETING ACROSS CULTURES 7
 The profit of the business is shared with the franchisor.
Marketing Strategies for XYZ Company in the Mexican Market
STP Analysis (Segmentation, Targeting, and Positioning)
Segmentation and Targeting
Segmentation is the process of dividing the market into different portions that are definable,
profitable as well as accessible and possesses the high potential of growth. It is very tough for
businesses to target the complete market due to the effort, cost, and time constraint (Dolnicar,
Grün and Leisch, 2018). Hence, if the business will divide the market it will be able to
identify and target the market.
XYZ Company is planning to offer its vegetarian and non-vegetarian food options of the
customers in the Mexican market and for that, it will segment the market on the basis of
demographic and psychographic segmentation.
Demographic segmentation – Under this segment, the company will target majorly middle-
class customers, men, and women, from the age group of 15-50 years.
Psychographic segmentation – Under this, the company will not target Seventh-day Adventist
tradition Christians who have forbidden meat. The company will target customer on the basis
of their lifestyle, and decision-making patterns.
For targeting these above segment the company with make use of aggressive promotional
strategies by providing the details of the tasty and types of food options business offers. As
discussed above people of Mexico give priority to family and love to spend quality time with
each other. Hence, the company will majorly target families and will provide them a fun and
enjoyable environment.

MARKETING ACROSS CULTURES 8
Positioning
Positioning is the place that is gained by the product or service in the market in relation to
another similar type of products offered by the competitor. In addition to this, this highlights
the image of the business in the eyes of the customer (Riezebos and Grinten, 2012). XYZ
Company has planned to gain a leading position in the Mexico market by offering a variety of
veg and non-veg food items at a reasonable price.
Advantages of STP Analysis
 The key advantage of STP analysis is it increasing the focus of the company on a
specific target market.
 This analysis helps business in retaining the customer (Sauro, 2015)
 Improve communication between the organization and customers.
Ethical Issues for Company and Recommendation for overcoming issues
As discussed above the Seventh-day Adventist tradition Christians of Mexico have forbidden
eating meat. The major issue that a company can face is from this religious group as they are
against eating meat and non-vegetarian food products. They can boycott the company in the
Mexican market due to which business has to deal with issues like negative brand image
(Carroll, Brown and Buchholtz, 2017). In order to overcome this issue, the company will
advertise that the manufacturing procedure of the company is comprised of healthy
ingredients which will not impact anyone's health. In addition to this, the company while
marketing the products will consider the values and belief of the religious group.
Further, it has been acknowledged that Mexican political structure is corrupted, as they the
powerful leaders and politicians are involved in demanding bribes for their benefits (Rubio,
2017). This can result in increasing issues related to the establishment of the business and the
cost of the business. Hence, in order to overcome these issues, the company has planned to

MARKETING ACROSS CULTURES 9
adopt franchising market entry through which the company will contract with a franchise that
has knowledge of the market and can manage the political issues.
Recommendations
In order to smoothly operate the business in the Mexican market, XYZ Company must have
strong marketing strategies and must hire marketing agencies which can support in executing
aggressive promotions for the business to attract a maximum number of customers in the
market. For this, the company must advertise the services through television, radio,
billboards, and hoardings.
Furthermore, in order to avoid the controversies due to Seventh-day Adventist tradition
Christian’s, the company must make use of organic and natural ingredients in the
manufacturing procedure.
Conclusion
The above report has provided a detailed analysis of the Mexican market in order to
understand the available opportunities for the business to expand operations in the country.
The report has also discussed the market entry strategy and marketing strategies that will be
adopted by XYZ Company for establishing successful operations in the country. From the
analysis, it has been identified that the company needs to adopt franchising business structure
to avoid the risk of the market and have increased investment. Furthermore, marketing
strategies such as segmentation, targeting, and positioning will support the company in
having a definable segment and will be able to focus on a particular segment.

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Carroll, A.B., Brown, J., and Buchholtz, A.K. (2017) Business & Society: Ethics,
Sustainability & Stakeholder Management 10th ed. U.S: Cengage Learning.
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