Global Marketing Case Study

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INDIVIDUAL ASSIGNMENT

LB5301

                                    Subject   :         Global Marketing

                        Lecturer :        Mr. Dennis Ng

                        Course    :         Master of Business Administration

                        Student name : Gokulnath Ceelam Venkata Prasad

                        Student ID : 13100400

1.Will China be successful for GLAM?

According to the case and considering the current scenario China is a very good market for luxury bags not only for GLAM but for any luxury brand for that matter. Luxury brands are impressed to the enormous size and sprinting growth of the consumer market in China and have overlooked regional disparities in economic improvement and also the purchasing power of the consumer. It is important to consider the regional disparities for luxury business to devise marketing strategies to enter successfully in Chinese consumer market. Chongqing and Chengdu municipalities with population around 42 million are fastest growing consumption bases for luxury brands in the world. They represent high attractive opportunities for the luxury goods, specifically at a time of decreasing demand in Shanghai and Beijing (Fflur Roberts).

Sales of luxury goods in china continued to grow in 2014. The reason for this growth is, firstly the rising number of high economic status of  people and affluent households. Secondly,  the middle classes with solid spending force and also the affinity for affordable  extravagant products. Thirdly, consistently expanding disposable salaries and increase in urbanisation also triggered consumption of luxury products. Here, GLAM has taken the advantage of manufacturing in low labour cost countries to keep the selling cost low compared to other premium brands. However to keep up the quality the materials are sourced from high-end mills. Thus, maintaining a stable product quality which attracts premium customers.

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China luxury index 2013

GLAM has done a clear research analysis to predict the existing women population in China to be one-third of the total population among  middle-upper class. Since, GLAM is also clearly focusing on female customers who they claim to be loyal, it is a good decision to enter into the Chinese market. Considering GLAM has been successful in Hong Kong and Japan by costing the accessories at an affordable price, it can do the same in China as well.

2.Tom Buckley, President of GLAM! International is adamant of a direct foreign investment approach to market entry for China through direct management of its own stores like it did in Japan. Do you agree with his approach?

Foreign direct investment(FDI) means having control over a business enterprise in one nation by an entity based in another nation. Using this as a strategy for market entry into the Chinese market, I believe GLAM could benefit largely from the advantages that follow with it. GLAM can use this as a strategy to enter the Chinese market so that several benefits can be enjoyed. FDI has increased every subsequent year since China joined the World Trade Organization in 2001,with manufacturing a main destination. But in recent past, i.e during the first seven month of 2014  FDI in manufacturing fell while it rose in services. henceforth, if GLAM is planning only on service and retail it will be a good option that can bring great profit.

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On the other hand setting up a factory will not be favourable that this point because China is losing its attractiveness due to reasons like rising costs of labor, steadily increasing prices  for energy and expensive industrial property. After all, FDI will turn to be the most expensive method as the company has to put efforts to control its operations, out of its home country.  Training employees and adapting to the practices of a foreign country will be a greater hurdle.