In 1989 Carrefour first made the decision to move into the Asian markets by moving into Taiwan, the reasons for moving into the Asian markets can be called unique to say the least, the first and the foremost reason for moving into the Asian markets was that even though they had low GDPs they had made the transition to mass consumption and they were more mature markets now. The way that Carrefour went about it was even more unique, since they did not have much knowledge about the Asian markets they built partnerships by collaborating with local firms and manufacturers.
Another important factor over here that was taken into consideration by Carrefour was the element of timing, timing was very crucial because to have any substantial and long lasting impact Carrefour had to be the first one to move into the Asian markets, at a time when most firms were delaying there entry because of the Asian crisis Carrefour was able to move into these markets because of their low prices and this actually worked in favor of Carrefour because people were able to buy products at extremely low prices and that was critical at the time of crisis. Another reason for entering into the Asian markets was that it was culturally a different phenomenon, people were moving towards more impulse buying rather than just necessity shopping, culturally it was a different phenomenon, it was a totally different shopping experience for people, a trip to Carrefour became a family outing in a lot of ways.
Carrefour is a company that has not totally relied on research all the time it has been a combination of instinct and market research for example when the company was conducting a market research on whether it should enter Romania or not they had very negative results and the decision that would have been taken according to those results was not to enter Romania but carrefour did not back out due to the results of the research because they had a gut feeling or an instinct that it would not be a bad decision at all and at the end of the day that is exactly what it turned out to be , a very good decision. So another reason for entering Asia could be that it had an instinctive feeling that they would do well in a place that has matured to a certain extent and would be able to accommodate carrefour. Another reason that carrefour decided to enter this market was that they had seen that the pattern for shopping and nature of goods had been changing, the nature of goods were becoming more and more westernized and that is why carrefour decided to enter the market with its global more westernized brands all available to the customers just under one roof.
Ansoff Matrix
The ansoff matrix is a tool that is basically used by companies to exactly pin point what they want to do and what are the strategies that they would require to pull of their objective. For example if a company is not introducing anything new into a market then it needs to go for market penetration strategy which means that they would have to advertise very aggressively, they would have to price their product so that they are able to effectively penetrate the market and may also have to come with bundle offers such as buy one and get one free so that more and more customers try their products.
The same is the case when a company wants to introduce new products into an existing market, it would have to engage in product line extension both vertically as well as horizontally and it might also have to bring in new products altogether into the market.
The third scenario is the new products and new market segment where there is a need for the business to develop associations with the local businesses and attack new market segments which previously had not been targeted, the move might also prompt take over of smaller business competitors in the new market.
The fourth strategy is basically the one that Carrefour engaged in. The market development phenomenon, according to the Ansoff matrix because it introduced its existing products into new markets, this strategy consists of expanding your market geographically, which Carrefour did very effectively by moving into the
Asian markets in a number of countries. It targeted a new consumer segment, which was totally unaware of the hypermarkets phenomenon, and since it had the first mover advantage in most of these markets it emerged as the clear winner in most of the markets and today these markets account for 13 of all the sales of Carrefour globally. Another element of entering into the new markets is that you need to build global and local alliances because the company might not be very aware of the markets and this was also an element of Carrefour expanding into the Asian markets very effectively. The strength of carrefour remains in the size of its business, it stocks very large number of units for each and every brand and hence has the power to negotiate because of the economy of scale, but good companies drive the advantage home rather than just using it, same was the case with carrefour. What carrefour did was to implement a GNX system in 200 where by the store and the suppliers could interact in a more efficient and effective manner.
Another important element when entering into new markets, human resources is an element that has to be kept in mind because if there is a scarcity of high quality labor or the number of people available to work for you then it might be a cause of concern for the company because people make the company, it is interesting to note down carrefours strategy over here. When opening up a new market in a country what carrefour does is to basically employee experienced expatriates as the head of the departments where as the local human resources is hired and sent off to a country in the region where carrefour is already successfully operating so that they can gain know how of the business and then they are called back to the country of origin, what this does is that it integrates the experience of running the store and knowing the internal policies and culture with the local knowledge and culture, which is a very effective collaboration.
These were the tools and strategies that were used by carrefour in a very effective and efficient way and they had not missed out on anything in fact they have taken this strategy to the next level by also highlighting the effect of training local human resources when entering a new market and have provided a framework to do so as well, existing productsNew markets lead to market development in the ansoff matrix and that has been achieved by carrefour in Asia and they have kept on growing where ever they have seen an opportunity to grow and where ever they feel the market is mature enough to accommodate them.
Competitive Advantages
Carrefours competitive advantages include
One stop shopping solution for the whole family, this means that consumers would find each and everything under one roof only and they would not have to go anywhere for their shopping needs. This concept was very important in the Asian markets because it was different from the traditional methods of shopping.
Low prices have always been competitive advantage in the case of Carrefour because of their stocking model, Carrefour stocks almost 50,000 stocks of each and every product and hence is able negotiate very low prices that are transferred on to the consumers by keeping very low margins at times as low as 2.5 net margin. Carrefour promotes new products daily, pricing them at really low prices and challenging their that they can refund their products if they can find them anywhere else at lower prices.
Retailers in these markets were traditionally over the counter oriented and Carrefour introduced self-service which gave the customers the option to look at the products more closely and gauge them accordingly, another important element was that Carrefour introduced more variety under one roof which was very crucial to Carrefours success.
Quality products have been a strong forte of Carrefour, it stocks only quality products and at that too high quality products so that customers can have the highest shopping experience possible. Carrefour had an edge over the competitors because of its global alliances with product manufacturers, which meant that it not only provided highest quality products but also that too at the lowest prices possible and this means that there is more traffic for carrefour because it not only provides the highest quality of fresh goods but it also has the widest variety of the goods.
Freshness of the products is also a very important factor because Carrefour deals with perishable items and it had to ensure that their customers got the goods that were fresh in nature.
Free parking and a lot of parking space ensured that the customers had a good shopping experience because they did not have to go through the hassle of finding parking places in highly congested markets, to add to this experience Carrefour also added play places so that women coming in with children could let their children play as they shop to get the highest degree of satisfaction.
Technology is another factor of carrefour competitive advantage, as mentioned before it introduced the GNX system of procuring supplies from the suppliers in a more efficient and effective manner and this lead to lowering it costs considerably. All the other major super markets and hyper stores were just followers in this program, this shows that carrefour is pretty proactive in establishing what needs to be done to secure the future of the company and how to bring the costs down to the bare minimum.
Another important factor over here that was taken into consideration by Carrefour was the element of timing, timing was very crucial because to have any substantial and long lasting impact Carrefour had to be the first one to move into the Asian markets, at a time when most firms were delaying there entry because of the Asian crisis Carrefour was able to move into these markets because of their low prices and this actually worked in favor of Carrefour because people were able to buy products at extremely low prices and that was critical at the time of crisis. Another reason for entering into the Asian markets was that it was culturally a different phenomenon, people were moving towards more impulse buying rather than just necessity shopping, culturally it was a different phenomenon, it was a totally different shopping experience for people, a trip to Carrefour became a family outing in a lot of ways.
Carrefour is a company that has not totally relied on research all the time it has been a combination of instinct and market research for example when the company was conducting a market research on whether it should enter Romania or not they had very negative results and the decision that would have been taken according to those results was not to enter Romania but carrefour did not back out due to the results of the research because they had a gut feeling or an instinct that it would not be a bad decision at all and at the end of the day that is exactly what it turned out to be , a very good decision. So another reason for entering Asia could be that it had an instinctive feeling that they would do well in a place that has matured to a certain extent and would be able to accommodate carrefour. Another reason that carrefour decided to enter this market was that they had seen that the pattern for shopping and nature of goods had been changing, the nature of goods were becoming more and more westernized and that is why carrefour decided to enter the market with its global more westernized brands all available to the customers just under one roof.
Ansoff Matrix
The ansoff matrix is a tool that is basically used by companies to exactly pin point what they want to do and what are the strategies that they would require to pull of their objective. For example if a company is not introducing anything new into a market then it needs to go for market penetration strategy which means that they would have to advertise very aggressively, they would have to price their product so that they are able to effectively penetrate the market and may also have to come with bundle offers such as buy one and get one free so that more and more customers try their products.
The same is the case when a company wants to introduce new products into an existing market, it would have to engage in product line extension both vertically as well as horizontally and it might also have to bring in new products altogether into the market.
The third scenario is the new products and new market segment where there is a need for the business to develop associations with the local businesses and attack new market segments which previously had not been targeted, the move might also prompt take over of smaller business competitors in the new market.
The fourth strategy is basically the one that Carrefour engaged in. The market development phenomenon, according to the Ansoff matrix because it introduced its existing products into new markets, this strategy consists of expanding your market geographically, which Carrefour did very effectively by moving into the
Asian markets in a number of countries. It targeted a new consumer segment, which was totally unaware of the hypermarkets phenomenon, and since it had the first mover advantage in most of these markets it emerged as the clear winner in most of the markets and today these markets account for 13 of all the sales of Carrefour globally. Another element of entering into the new markets is that you need to build global and local alliances because the company might not be very aware of the markets and this was also an element of Carrefour expanding into the Asian markets very effectively. The strength of carrefour remains in the size of its business, it stocks very large number of units for each and every brand and hence has the power to negotiate because of the economy of scale, but good companies drive the advantage home rather than just using it, same was the case with carrefour. What carrefour did was to implement a GNX system in 200 where by the store and the suppliers could interact in a more efficient and effective manner.
Another important element when entering into new markets, human resources is an element that has to be kept in mind because if there is a scarcity of high quality labor or the number of people available to work for you then it might be a cause of concern for the company because people make the company, it is interesting to note down carrefours strategy over here. When opening up a new market in a country what carrefour does is to basically employee experienced expatriates as the head of the departments where as the local human resources is hired and sent off to a country in the region where carrefour is already successfully operating so that they can gain know how of the business and then they are called back to the country of origin, what this does is that it integrates the experience of running the store and knowing the internal policies and culture with the local knowledge and culture, which is a very effective collaboration.
These were the tools and strategies that were used by carrefour in a very effective and efficient way and they had not missed out on anything in fact they have taken this strategy to the next level by also highlighting the effect of training local human resources when entering a new market and have provided a framework to do so as well, existing productsNew markets lead to market development in the ansoff matrix and that has been achieved by carrefour in Asia and they have kept on growing where ever they have seen an opportunity to grow and where ever they feel the market is mature enough to accommodate them.
Competitive Advantages
Carrefours competitive advantages include
One stop shopping solution for the whole family, this means that consumers would find each and everything under one roof only and they would not have to go anywhere for their shopping needs. This concept was very important in the Asian markets because it was different from the traditional methods of shopping.
Low prices have always been competitive advantage in the case of Carrefour because of their stocking model, Carrefour stocks almost 50,000 stocks of each and every product and hence is able negotiate very low prices that are transferred on to the consumers by keeping very low margins at times as low as 2.5 net margin. Carrefour promotes new products daily, pricing them at really low prices and challenging their that they can refund their products if they can find them anywhere else at lower prices.
Retailers in these markets were traditionally over the counter oriented and Carrefour introduced self-service which gave the customers the option to look at the products more closely and gauge them accordingly, another important element was that Carrefour introduced more variety under one roof which was very crucial to Carrefours success.
Quality products have been a strong forte of Carrefour, it stocks only quality products and at that too high quality products so that customers can have the highest shopping experience possible. Carrefour had an edge over the competitors because of its global alliances with product manufacturers, which meant that it not only provided highest quality products but also that too at the lowest prices possible and this means that there is more traffic for carrefour because it not only provides the highest quality of fresh goods but it also has the widest variety of the goods.
Freshness of the products is also a very important factor because Carrefour deals with perishable items and it had to ensure that their customers got the goods that were fresh in nature.
Free parking and a lot of parking space ensured that the customers had a good shopping experience because they did not have to go through the hassle of finding parking places in highly congested markets, to add to this experience Carrefour also added play places so that women coming in with children could let their children play as they shop to get the highest degree of satisfaction.
Technology is another factor of carrefour competitive advantage, as mentioned before it introduced the GNX system of procuring supplies from the suppliers in a more efficient and effective manner and this lead to lowering it costs considerably. All the other major super markets and hyper stores were just followers in this program, this shows that carrefour is pretty proactive in establishing what needs to be done to secure the future of the company and how to bring the costs down to the bare minimum.
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