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MKT 571 Channel and Pricing Strategies

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Communication Paper
MKT 571 Channel and Pricing Strategies
Channel and Pricing Strategies
Team C’s objective is to state the channel and pricing strategies of
Thermo Express. Our team has decided to have our home country as
Chile and our international market country as the United States. We
considered the population as well as the potential that our product
“Thermal Express,” in order for the launching of the product to take
place. We have also realized that the challenges and opportunity will
accompany it.
In order for the company to develop and launch, we had to develop
pricing strategies in both the domestic and international markets. We will
also provide justifications for our choice for acquiring the United States
as our international market. The two advantages in this product are that
it is green, meaning it is good for the environment and will eliminates the
excessive use of cups and perishable items. Second because of the
economic state, people can save money by using this and not constantly
buying coffee or tea bags.
Justification for Thermo Express
Our organization has selected the United States has our international
market to sell our product Thermo Express. Although the opportunities
for companies to enter and compete in foreign markets are significant,
the risks also can be high. Companies selling in global industries
however, in fact have no choice but to internationalize their operations
(Philip Kotler and Kevin Lane Keller, 2007, p.322). The company must
also decide on the types of countries to consider. The product,
geography, income and population, political climate, and other factors
influence attractiveness. The developed nations and the prosperous
parts of developing nations account for less than 15% of the world’s
population (Philip Kotler and Kevin Lane Keller, 2007, p.322). The
important reason for us to choose USA as our country of choice is that
the United States is one of the world's largest consumer of coffee,
importing 16 to 20 million bags annually (2.5 million pounds),
representing one-third of all coffee exports. More than half of the United
States population consumes coffee. The typical coffee drinker has 3.4

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cups of coffee per day. That translates into more than 450,000,000 cups
of coffee daily. USA is the largest economy in the world and we think our
profit opportunities will be high in USA. Because we have larger
customer base in USA, who drinks coffee, we should able to achieve
higher profits and will be able to sell more of our product. Obviously
there are some risks in growing into international market.
We have to consider the following: We must understand foreign
customer preference and may need to alter our product to attract the
customer base, We must understand the business culture and know how
to deal effectively with foreign nationals. We also should not
underestimate the USA regulations and incur unexpected costs. We
need to hire managers with international experience, and we must
understand USA commercial laws, its currency value, and political
condition. The following strategies considered for entering the foreign
market: Indirect and direct exporting, Licensing, Joint ventures, direct
investment.
Indirect exporting involves less investment and less risk because the
intermediaries bring know-how and service to the relationship (Philip
Kotler and Kevin Lane Keller, 2007, p. 322). On the other hand, direct
exporting involves higher investment and more risk but offers higher
potential return. Licensing strategy whereby our company will issue
license to a foreign firm to use a manufacturing process, trademark,
patent, trade secret, or other item of value for a fee or royalty. The risk
here is licensee gains production expertise or well-known product or
brand name. Joint Venture Our Company may join with local company
to create joint venture in which both can share ownership and control.
The risk here is partners view business re-investment may be different
from us. Direct Investment- where we buy all or part of a foreign-based
assembly or manufacturing facility or build our own facilities. This
strategy leads to cost economies, like cheaper labor or raw materials,
government investment incentives, and freight savings ((Philip Kotler
and Kevin Lane Keller, 2007, p. 325)
Channel Strategies
Thermo Express is facing the daunting challenge of introducing a new
product and technology to the world. The organization has no brand
recognition or customer base to build on. A pull strategy will be
necessary to attain widest dissemination of the product; “A pull strategy

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