INTERNATIONAL MARKETING AZIMUTH

(International marketing plan to expand overseas)

CONTENT PAGE
1.
1.1 1.2

Introduction
The Company The Product

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2. 3.
3.1 3.2 3.3 3.4

Market Selection External Environmental Analysis

Political and Legal Factors Economic Factors Social and Cultural Factors Technological Factors

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4.
4.1 4.2

Marketing Strategy
Profile of Targeted Segments Product Positioning

5.
5.1 5.2

The International Marketing Mix

Product Pricing

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5.3 5.4 5.4.1 5.4.2 5.4.3

Place Promotion Advertising Sponsoring Product Placement & Endorsements

6.

Conclusion

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1.

INTRODUCTION

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1.1 The company

Azimuth Watch Company opened in 2004 by Christopher Long and Alvin Lye, is a niche branded Watch Company that assimilates modern innovations with excellent watch-making tradition to create high quality haute timepieces. In their first year Azimuth manufactured about 200 timepieces which is a far cry from their current production of 1,500 watches in 2009 (Azimuth, 2004) Azimuth produces all their watches in Biel/Bienne Switzerland, a region reputed for top-of-the-range watch engineering and manufacturing. By doing so Azimuth is able to remove any stigma of being a

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local company and focuses the consumers attention to the fact that their timepieces are being made in the same region with the likes of Rolex, Omega and Tissot. Therefore Azimuth is able to charge a premium for their watches with a price range between $2,500 and $7,000. (Asiaone, SME Central, 2009)

1.2 The product

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Azimuth watches has designs that span the watchmaking spectrum from their Militare - 1 collection which are inspired by the pilot watches from World War II, to their angular and quirky Gauge Mecha1 BMF designs. (Azimuth, 2004) Azimuth currently has three collections. The SP-1 Mecanique This features watches inspired from mechanicalContraptions such as cars, spaceships, robots And even gaming machines like a roulette table.

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Xtreme-1 Watches designed for use in extreme sea conditions, Most watches in this collect are nautically inspired.

Round-1 This collection features a back in time concept

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Whereby the watch actually runs anti-clockwise. This collection also comes with another gaming Inspired Design, the baccarat watch

2.

MARKET SELECTION

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Hong Kong: A country that is demographically & socially similar to Singapores domestic market. HK is also identified like Singapore for its being a shopping destination and is replete with branded and luxury retail outlets. Being so similar to Singapore will enable Azimuth a better understanding of the local cultures and traditions when entering the market and will minimize the probability of Azimuth creating social faux pas which would alienate them from the locals.

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Hong Kong is also an ideal location for expansion as according to the Federation of the Swiss Watch Industry, the luxury watch market rose by 22 per cent in 2010, to 11.2 billion and the biggest growth markets are in Hong Kong and China. (The Telegraph, 2011)

3.

EXTERNAL ENVIRONMENT ANALYSIS

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All organizations are subjected to environmental factors which manipulate their activities and establish the impact of the general environment on the firms performance. According to Anthony Henry these factors can be classified by using a PESTEL analysis. Identifying these factors will allow Azimuth to observe the similarities present between Singapore and Hong Kong in terms of their strategic environmental factors. (Henry, 2008) 3.1 Political and Legal Factors

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The political factor is important because it can have a direct impact on the way business operates. Decisions made by government affect our everyday lives and can come in the form of policy or legislation. (Kate Gillespie et. al, 2011) Hong Kong which is a special administrative region of the peoples republic of china since July 1997 is potically stable and has a high degree of autonomy in economic trade, financial and monetary matters. This is important as Hong Kong will continue to have capitalist economic and trade

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systems , free movement of goods and captial and status as a free port and separate customs territory. Hong Kong has no Goods and Services Tax which would allow Azimuth to displace their expenses gained from export costs. (Hong Kong Trade and Industry Department, 2011) Hong Kong also has strong copyright laws (The Copyright Ordinance (Cap 528), which became effective on 27 June 1997) in place to protect the intellectual property of individuals and consumers which makes it an ideal place for Azimuth Watches as many of their watch designs are one of a kind

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and are very vulnerable to counterfeit. This makes the political and legal system an opportunity. (legislation.gov.hk, 1997)

3.2 Economic Factors Hong Kong has been considered as one of the commercial destinations in Asia. There has been a considerable flow of traffic particularly involving tourists and other travellers in Hong Kong. Hong

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Kong and Singapore has a good trading relationship, Singapore being one of Hong Kongs 5th largest trading partners. Hong Kongs economy is very stable, with growth of 1.2% in Q3 of 2012, and low unemployment rate of 3.3%. The retail sector also grew in terms of sales by 10.6% year-on-year for the first 9 months of 2012. Tourism in HK is also stable and growing with an increase in international arrivals by 16.3% year-on-year and 24.4% from the mainland. This gives Azimuth an oppourtunity to enter a robust

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market with high potential for continued growth. (Economic and Trade Information on Hong Kong, 2012).

3.3 Social and Cultural Factors Social and cultural factors influence all aspects of consumer behavior and is a central consideration in developing and implementing international marketing strategies (Isobel Doole, 2008)

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Historically Singapore and Hong Kong share many similarities, this being so it will be easier for Azimuth expand to HK as they would already have an idea of what the culture in HK is like. Like Singapore, HK is a very fast paced country where its people are very competitive. Being predominately chinese, there will be a culture of showing face and losing face where you are judged by what you wear or own. In chinese culture, having more luxury items can be equated to how successful you are.

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Therefore this is beneficial for Azimuth as they produce a limited number of watches per collection or can create a customized watch (1 piece only) which would entice the rich and affluent people in HK as it allows them to have a exclusive status. Sharing a chinese culture with HK also allows Azimuth for a smoother transition of all communication aspects, special training for managers to be sent to HK will be minimized and similar advertising strategies can be utilized in both countries, a low level of adaptation will be necessary.

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3.4 Technological Factors

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Hong Kong is a very developed country with good infrastructure networks. It has good telecommunication services and financial institutes. According to the CIA (central intellegance agency) HK has a literacy rate of 93.5%. It also has a extremely high amount of internet users approximately 75% of their current population. (google public data, 2012) With a such development amenities and infrastructures Azimuth need not worry about power shortages, shipment delays or telecommunication failure. The wide usage of

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technology in the country would also allow Azimuth an opportunity use multiple digital platforms to generate brand awareness and communicate with consumers.

4.

MARKETING STRATEGY

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An effective marketing strategy takes into consideration its competitive strategy, will use differentiation or cost leadership. Then the market is chosen and is segmented and a target profile can be created. (Czinkota, 2010)
4.1

Profile of Targeted Segments:

Azimuth Watches targets both male and female, from ages 21 and above with a general income of $3000 and above. Due to the nature of the product, the targeted market will

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also be of higher education (degree and higher) with managerial type jobs. This group of consumers is usually looking for premium or unique for themselves. (McColl-Kennedy & iel, 2000) Azimuth can also utilize geographic segmentation as like chinas gated communities Hong Kong also has communities with only the rich reside in. This would include estates in HK like beacon hill, repulse bay, Stanley, tai tam, the peak, happy valley, deep water bay (Business Insider, 2012)

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4.2

Product Positioning:

Positioning: the way the product is defined by consumers on important attributes Azimuth has positioned their products as collectors items and this is further reinforced by the fact that they produce a limited amount of watchers ranging from 2000 to 3000 pieces to be sold worldwide which gives the product percent of exclusivity which sets them apart from or other local watch brands. (McColl-Kennedy & iel, 2000)

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5.

THE INTERNATIONAL MARKETING MIX

5.1 Product Adaptation This part of the international marketing mix is where Azimuth must determine what strategy to adopt, standardization or adaption. Product adaptation is done by taking a product and customizing

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it to suit the needs of the local market, while standardization is selling the product as it is in the international market. (Czinkota, 2010) Factors to consider while selecting a strategy includes the product characteristics, company characteristics and the market itself. Due to the nature of Azimuths products and its target customers, Azimuth should adopt a standardized approach. Customizing the product will cause Azimuth to lose justification of their prices and may cause a loss in market share due to having inferior products. (Czinkota, 2010)

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5.2 Pricing Price plays a large role in a marketing strategy as according to Czinkota price serves as means of communication with the buyer by providing a basis for judging the attractiveness of the offer Because Azimuths products mainly target collectors or customer who wants a unique watch they are willing to pay a premium price for the quality of the product.

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Azimuth should then use a standard worldwide price, which is using the same price globally. This method should be adopted as with an increase in technology consumers can easily find out what the global prices are, and also because there is no differentiation between the products globally. (IIka A. Ronkainen, 2007) Azimuth may have to take into consideration export related costs, which are the costs related to export and includes things like operational cost of the export operation and cost incurred in entering foreign markets; like tariffs and taxes. (Michael H. Moffett, 2009)

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Having a Standard worldwide pricing will benefit Azimuth by helping stave of grey marketers. According to (Robin Lowe) grey marketing or parallel importation occurs when trademarked goods are sold through channels of distribution that have not been given authority to sell the goods by the trademark holder (Robin Lowe, 2008)

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5.3 Place Azimuth has to utilize a multiple channel distribution strategy as Hong Kong is a very large country and a single flagship store will not be able to cater to the entire country. And it will not be

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cost effective to open up multiple retail outlets; instead Azimuth should consider using distributors to become authorized retailers. (Julian Dent, 2011) Benefits of using distributors would include having access to their customer base, distribution networks and also their advertising promotions. Using authorized retailers will further prevent parallel importers to target their products.

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Retailers that Azimuth should use, must be large established retailers like Perfect Watch Co., Ltd, Valuable Watch And Jeweler Co., Ltd, Top Class (Azimuth; Distribution, 2004) 5.4 Promotion Azimuth has to adopt a communications strategy that would suit the needs of the local market and to generate awareness among their target customers. To do so, Azimuth should use Advertising, Public Relation Campaigns, Sponsorships and endorsements and lastly product placement.

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5.4.1 Advertising Advertising is the use of nonpersonal presentation of ideas, goods or services by an identified sponsor. (Kotler & Armstrong, 2012). Azimuth should then use print ads placed in magazines which cater to watch collectors or rich and affluent readers. Magazines like this includes The Watch Magazine and Hong Kong Tatler

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Azimuth can also use a more targeted approach by sending print or electronic media directly to their target customers. This is known as direct marketing. Because of the geographical distribution of the wealthy in Hong Kong, where many of them live in certain districts or communities as mentioned earlier, Azimuth can send direct mailers which are pinpointed to their target customers. 5.4.2 Sponsorships

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Azimuth can sponsor sports clubs doing aviation or nautical sports with their watches which are specially designed to suit those conditions. By doing so Azimuth would associate their brand with a specific event which will allow greater recognition of their brand.

5.4.3 Product Placement and Endorsements

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In Hong Kong there is a large domestic entertainment culture, where local entertainment celebrities in TV, music or movies have idol statuses. These celebrities hold a large influence among the locals. Azimuth can endorse a well known celebrity such as Andy Lau or Leon lai or Jacky Chueng who is part of the 4 heavenly kings of Hong Kong entertainment AsianFanatics, 2011)

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Because people like to emulate movie stars or celebrities as they are considered a reference group, it would create brand awareness for Azimuth by associating their brand with a celebrity especially if it is a new entrant. Azimuth can also place their products into Movies or TV shows to be used by the main characters or design a show based on their products. (Leon G. Schiffman, 2010)

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6.

CONCLUSION

After extensive consideration of Azimuths product and the culture of their domestic market, Hong Kong would be an ideal market for Azimuth to expand into. Hong Kong has a close proximity with Singapore and shares similar cultural beliefs, traits and language which would allow Azimuth an easier transition into their local market. Integrating and translating the marketing strategy would not be a problem, because of language similarities (mandarin), so the risk of miscommunication is minimized.

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Staffing issues would be easily resolved as the two countries are so alike it would be easy to relocate managerial staff to work in Hong Kong and thus additional training to understand the local culture would be unnecessary. Because of all this extenuating factors Hong Kong is an ideal choice for Azimuths international expansion.

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2232 words

Bibliography

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AsianFanatics. (2011, january 31). Retrieved november 26, 2012, from AsianFanatics: http://asianfanatics.net/forum/topic/742287-the-four-heavenly-kings Azimuth. (2004). Retrieved november 23, 2012, from http://www.azimuthwatch.com/about.html Business Insider. (2012, Novemember 11). Retrieved November 23, 2012, from Business Insider: http://www.businessinsider.com/the-15-most-expensive-homes-for-sale-in-hong-kong-2012-11?op=1 Czinkota, R. (2010). Principles of International Marketing. South-Western: Cenage Learning. Economic and Trade Information on Hong Kong. (2012, Nov 19). Retrieved Nov 23, 2012, from HKTDC Research: http://hong-kong-economy-research.hktdc.com/business-news/article/Market-Environment/Economicand-Trade-Informationon-Hong-Kong/etihk/en/1/1X4618GW/1X09OVUL.htm

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Henry, A. (2008). Understanding Strategic Management. New York: Oxford University Press INC. IIKa A. Ronkainen, M. R. (2007). International MArketing. Ohio: Thompson Higher Education. Isobel Doole, R. L. (2008). International Marketing Strategy, analysis, development and implementation. London: Cenage Learning EMEA. julian Dent. (2011). Distribution Channel 2nd Edition; Understanding & managing channels to market. London, United Kingdom: Kogan Page Limited. Kate Gillespie, J.-P. J. (2011). Global Marketing. South-Western: Cenage Learning. Kotler, P., & Armstrong, G. (2012). Marketing: An Introduction. Pearson.

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Legislation of Hong Kong. (1997, june 30). Retrieved november 23, 2012, from Legislation of Hong Kong: http://www.legislation.gov.hk/blis_ind.nsf/CurAllEngDoc/FE42E77662C83171482564DC001849C6?OpenDocument (2010). Consumer Behavior, 10th edition. In L. L. Leon G. Schiffman, Consumer Behavior, 10th edition (pp. 281-282). New Jersey: Prentice Hall. McColl-Kennedy, J., & iel, G. C. (2000). Marketing A Strategic Approach. South Melbourne: Nelson Thomson Learning. Michael H. Moffett, I. A. (2009). Fundamentals of International Business 2nd edition. New York: Wessex Inc. Robin Lowe, I. D. (2008). International Marketing Strategy 5th Edition: Analysis, development and implementation. SouthWestern: Cenage Learning EMEA.

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SME Central. (2009, june 29). Retrieved november 21, 2012, from Asiaone: http://www.asiaone.com/Business/SME+Central/Prime+Movers/Story/A1Story20090629-151542.html The Telegraph. (2011, November 12). Retrieved November 23, 2012, from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8884315/Luxury-watches-the-markets-ticking-overnicely.html Trade and Industry Department. (2011, july). Retrieved november 23, 2012, from TID.gov.HK: http://www.tid.gov.hk/english/aboutus/publications/factsheet/singapore2011.html

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