Brompton is one of the leading bicycle manufacturers located in the UK. The company was founded in the year 1975 by Andrew Ritchie, who was the first person to design a peculiar folding bike in his apartment (Brompton 2013). Since its inception, the company has grown remarkably in terms of the number of bikes produced, its market share and the profits made. Currently, Brompton manufactures more than 45,000 bikes every year (Brompton 2013).
MOST APPROPRIATE MARKET ENTRY AND MARKETING COMMUNICATION STRATEGIES
In fact, its sales increased significantly from 6000 bikes in 2002 to 40000 in the year 2014 (Brompton 2013). Besides, out of the number of bikes produced annually, 80% are sold in external markets (Brompton 2013). The ultimate aim of the company was to transform the people’s cycling life by manufacturing convenient bicycles that are portable and easy to use. Many users hold the opinion that Brompton’s product elevates the customer’s sense of liberation and freedom. The business concept is what forms the basis of the company’s activities and projects. Brompton’s success can be attributed to various factors including its outstanding and unique design.
Exporting bikes to other countries had always been one of the top agendas of Brompton Company since the late 80s when full-time manufacturing commenced (Brompton 2013). In an interview with the director of marketing at Brompton Emerson Robert, he affirmed that the organisation’s success in exportation is founded on the same aspects that promote its victory in the local market (London Loves Business 2012). The success factors include correctly designed, engineered, and appropriately manufactured products that satisfy the customer’s requirements. Given that China is a country with 1.3 billion individuals who are willing to spend (Weinert, Ma & Cherry 2007), Brompton should consider penetrating China as one of its target markets. Therefore, the current paper will endeavour to provide a critical analysis of the Chinese market. The discussion will also advice Brompton Company on the most suitable market entry and marketing communications strategies that will ensure its success in the Chinese market.
An Analysis of the Chinese Market
China’s economy is amongst the leading economies in the world. As earlier mentioned, it comprises of a population of 1.3 billion people who are eager to spend money on designer brands. China’s number one goal is to become a prosperous nation as well as a superpower. Besides the large population, China is the world’s biggest manufacturing centre. The country also has the largest auto market in the globe. However, high-end bicycle transactions are likely to expand by 10% annually as they become a representation of the status for the wealthy (Fairley 2005). Today, the rich people of Chinese origin are spending on bicycles more money than a middle-class nationality can make within a span of three years (Peace 2011). For them, the bicycle is not only a mean of transport, but also fashion. The change in perception proves that there is an eruption of a new bike culture in China (Peace 2011). Therefore, people, who are well-off and healthy, advance their ways of living; and in some instances, they desert ostentatious cars for bikes that cost more than a vehicle (Weinert, Ma & Cherry 2007). Because of the country’s strong economy and consumption capabilities, numerous international companies are striving to enter the China’s market.
More specifically, the production of bicycles and e-bikes in China is commendable. In fact, it is a leading bicycle manufacturer in the world. The country’s bicycle production amounted to a total of 82.78 million in 2012 (Fairley 2005). However, the figure marked a decrease by approximately 1% from a number of bikes manufactured in 2011 (Peace 2011). Out of the entire cluster of bicycles produced, 59.125 million were manufactured by large 396 companies. The statistical fact reveals that the existing competition in the Chinese bicycle industry is very stiff.
According to market analysts, the China’s bicycle market is expected to grow by approximately 10% during the subsequent few years. Moreover, the sector that deals with high-end market is estimated to expand by 15% annually. China’s role in the global arena will hence be vital in the future of bicycle industry.
In terms of exportation, the country’s bicycle exports amounted to 57.151 million in the year 2012 (The Guardian 2012). During the period, China recorded a 2.6% increase in the export figure from the preceding year. On average, the price of every unit of a Chinese manufactured bicycle is $55.60. The average export cost for each piece was $ 426 in 2012 in instances where the bicycle is manufactured in Taiwan (The Guardian 2012).
The number of bikes exported, and their values increased insignificantly since the previous year. Nevertheless, the yuan exchange rate contributed to the elevated value of export. The expensive price of labour in China has also led to a rise in the costs of operation in China. Similarly, there has been an increase in the loan interest rate that imposes a greater burden on the industry players. The China Bicycle Association revealed that exports throughout the most significant sales period that runs between October and December decreased drastically for the last three years.
On the contrary, the exportation of parts expanded by an overall percentage of 5.2 which is equivalent to $ 2.21 billion (The Guardian 2012). However, the opposite case was experienced for nine months during the entire year. Also, although the export value and quantity reduced, the price of items such as rims, spokes, chain wheels, pedals as well as cranks increased by 12.7% the during the earlier period (The Guardian 2012).
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Notably, Taiwan is one of the places where the cycling trends have been encouraging the vigorous campaigns for cycling in China. It earned the nickname “The Bicycle Kingdom” following the radical export increase as a result of its contracts with successful companies. Surprisingly, most Chinese consumers, who comprise 30% of the world’s demand for bicycles, are the Taiwan’s leading clients. The sale of high-end bikes expanded from one million pieces in 2008 to 3 million units in 2013. The increase occurred as a result of the growth in the number of wealthy people who needed good quality bikes for transportation and recreation purposes. As per Credit Suisse’s prediction, the yearly growth is approximated to amount to 11% between 2014 and 2018. Further, Taiwan provides the two most purchased bicycle brands. CBA also supports long-distance activities that involve cycling. Their mottos are “Green Journeys” and “Cultural Cycling” as well (Peace 2011). Moreover, numerous bicycle clubs, organizations and the UCI are holding many entertaining and competitive cycling occasions. For most people, cycling is a sport, leisure activity and also a means of ensuring physical fitness (Peace 2011). Consequently, the local Chinese market for bicycles is thriving; and hence a variety of international brands are making their way into China’s market.
Firms based in China do not rely on cheap prices as a strategy for competition. Instead, their prime tools for building competitive advantage include quality, brands, creativity, talent pools, amalgamation capabilities and effective business strategy. At the heart of every Chinese bicycle manufacturing company lie the values of teamwork as well as self-discipline. The rationale behind the virtues is that problems should not be tolerated since they might affect the image and progress of the entire industry.
Another strategy used by Chinese organizations is the formation of partnerships with international producers of different brands. The plan is meant to condense the time required to develop new markets and expand corporate strength. Additionally, the bicycle companies also endeavour to seek out further competitive production centres in areas like Cambodia. The step will ultimately increase the market for bicycles.
One of the factors that are likely to affect the Chinese bicycle market is the outbreak of the H7N9 flu as well as natural disasters such as earthquakes. The uncontrolled factors influence the attendance of cycling festivals that aim to create awareness among people. Other key factors that can affect the consumption patterns of customers include political aspects and the weather. Therefore, Brompton can use the abovementioned information to establish the best strategies to succeed in the Chinese market.
Market Entry and Marketing Communication Strategies
Brompton’s desire is to acquire a large market share by exporting its products to different countries outside Europe. Today, the organization sells its folding bikes to 42 markets located outside the UK. The expansion has boosted the company’s profits tremendously. Out of the exports sold 2012, the organization managed to record a profit of 1.6 million pounds (The Guardian 2012). The previous successes show that Brompton has a potential to enter the Chinese market with the appropriate marketing strategies.
Firstly, the company should take advantage of its strong brand image to attract the customers in China’s market. The approach can increase the chances of success because Chinese people are mainly fascinated by brand names, as earlier mentioned. Most people express a desire to own unique products that are not only beautiful but also fashionable (The Guardian 2012). The brand name of Brompton is a distinctive label representing a place located in Britain and a surname. The logo used for the product denotes the design of an ancient road sign. The purpose of the brand name is to uphold and depict the image of Brompton Company as being of a British origin. Thus, the exclusivity of the organization is in the fact that only a few bicycle manufacturing companies exist in Britain. Also, all products sold by the corporation are made in the factory in West London, England. The company is also known for its high-quality products that the organization can utilize as a Unique Selling Point (USP) when trying to gain entry into the international arena (The Guardian 2012).
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Another strategy that is closely related to the above point is that the organisation should strive to improve its design and engineering to appeal to Chinese customers. In China, the main type of bikes sold on the market is the electric bicycle (Weinert, Ma & Cherry 2007). However, with the introduction of the new portable and convenient folding bike, most customers will be tempted to try out the product. The folding bicycle can be categorized under the group of specialty merchandise. It attracts the high-end market and meets the client’s requirements of excellent features, stout and proper bike for living in the urban areas.
Similarly, the use of the folding bike is advantageous to the customers since it captures the contemporary demographic changes effectively. For instance, the number of individuals living in the city centres is rising gradually. Research shows that the proportion of residents in the cities is likely to increase by two-thirds by 2030 (The Guardian 2012). Therefore, the figure will be higher by 16% when compared to the current population of people in urban areas. The consequence of urban migration is that there will be less space to store items, and the level of congestion on the roads will apparently rise as well. Thus, the probability that the Brompton product will thrive in China is high. Besides the provision of transport, the folding bike will help tackle the issue of congestion, since its design allows the owners to fold the bike and hence store them without using space. The Brompton Bike should capitalize on the aforementioned benefits of a product for the Chinese market.
A good suggestion of how Brompton can improve the quality of its product is by introducing the Kevlar belt to the design as opposed to the ordinary chain to transfer the power to the wheels of the bicycle. The belt is durable and makes less noise when compared to the old string. By ensuring that the quality of the product is maintained, the company will be able to keep the current price per unit as a strategy to attract customers. Moreover, Chinese customers are not price sensitive. They are willing to spend as much as they can if they are guaranteed of the product quality and uniqueness. The selling price for the folding bicycle is between 100 pounds and 1000 pounds. Some are even sold at 1500 pounds each. The same pricing strategy will be applicable to China.
The formation of partnerships with diverse and renowned companies and organizations in China is another tactic that Brompton can use. For example, by partnering with the China Bicycle Association, Brompton will increase its chances of marketing to the target market. The aim of association is to encourage the use of bicycles in China to reduce the level of pollution. Moreover, Brompton can establish business relations with the Taiwan-based establishments. Through the collaborations, the organization will reduce the amount of capital it will require setting up new companies in China. The mergers will also help increase their market share by a high percentage. Above all, the variety of products availed to the customers will increase; hence giving them a wide selection. Brompton should take advantage of groups that organize social gatherings such as cycling sports for Chinese people. The strategy will give the company a chance to promote its products to a large population of the clients.
The use of a distributor model can assist in the marketing of the bicycles in China (London Loves Business 2012). The strategy is to sell the produce directly to shops located in China that retail in bicycles. The tactic is important because the company lacks knowledge of the surrounding, language and culture of the people of China (London Loves Business 2012). With the assistance of distributors, advertising and marketing to the citizens of China will be easier. Therefore, the partners-intermediaries will ensure that proper customer care relations are established (London Loves Business 2012).
The advantageous entry strategy is to use retailers as opposed to a wholesale dealer because they ensure that the product is availed to the customer at a high rate (London Loves Business 2012). The process is also cost-effective because the absence of middlemen decreases the final cost at which the product is sold. In fact, the expenses will not be shared among many people. It also draws the benefit of better control, as signs portrayed by the market, and an alteration of fashion can be reported to the organization faster (London Loves Business 2012). The current market news will assist Brompton to react within the shortest time possible to the emergencies. Although the plan will attract certain costs, there are also crucial benefits such as business connections. In addition, the risks associated with this strategy are small.
Brompton can utilize reminder advertising to campaign for their line of product. The development of the publicising platform has enabled the organisation to ensure brand loyalty. The culture has also made the Brompton bike look more attractive to the clients that associate with the company. The advertising has been successful following the annual ‘Brompton World Championship’ competition that is organized by the enterprise. In the championship race, the contestants are required to finish a 26-mile path and they must put on a suit jacket, a shirt with collars and a neck tie. The purpose of the dressing code is to create a sense of togetherness between the members. Nevertheless, the strategy reaches out to only a few customers who are regular users of the goods. Instead, the organisation should make it a broader culture and invite more people by advertising the events on the Internet and distributing the same through their intermediaries, who are located in diverse places.
Besides, Brompton manufactures bikes only. Thus, the company should strive to produce other items used for biking and which have the company’s brand name. Some of the supplies that the organization should seek to avail to customers include helmets, cycling suits, and water bottles among others. For purposes of promotion of the Brompton bicycle, the organization should try to sell the bike together with its accessories in a package. Many customers are fascinated by the packages because they feel that it is a means of reducing costs.
Online advertising and marketing can be employed as a strategy for reaching out to thousands of people in China. Today the popularity of the Internet has made it easy to sell products to people in virtually every location around the globe. Most customers look for information about products online. A majority of the users also make reviews of particular products which they have used before. The word-of-mouth knowledge usually influences a customers’ decision to buy a particular product or not. Consequently, Brompton could draw numerous benefits by utilizing the Internet to reach as many customers in China as possible through advertisements and reviews.
Despite the fact that all the strategies mentioned above provide possible solutions, exporting goods is not an easy task, and companies may not be successful if planning stage fails. The difficulty arises due to the challenges that a business is likely to face when trying to enter a new jurisdiction. Some of the traits require diligence, flexibility, and an objective methodology.
From the previously stated analysis, it can be concluded that the Chinese market is a lucrative arena that has a high investment portfolio. The support for the claim is that China has a population of around 1.3 billion, which is ready and willing to spend money on quality products. Secondly, the primary target of China is to become a superpower and an economically empowered nation. Currently, it has one of the leading economies in the world. In China, people are acquiring an entirely new and positive perception about cycling. A large percentage of the population consider cycling as a convenient means of transportation, sport, recreational activity and some even think it is fashionable to own a bike. In fact, some people spend more than an average individual could earn for three years to buy a bicycle in China. Cycling is also encouraged by organizations such as CBA with slogans such as green and cultural cycling. For the above reasons, the market in China will be an attractive place for selling goods in the future. Nonetheless, the market is flooded with a number of competitive firms that produce quality bicycles. Statistics also reveal that China is among the topmost producers of bicycles. Additionally, most of the bikes manufactured in the country are exported to other countries. Therefore, Brompton needs to use appropriate marketing strategies to enter the Chinese market successfully. Some of the suggestions include taking advantage of its brand name and the quality products it makes to attract customers. The use of retailers located in China and formation of mergers with famous companies could help the business acquire a larger market share. Finally, advertising on the Internet and organizing sporting activities could also provide opportunities to reach out to many people.