IBM 204 – Assignment 1
Market Entry Strategy
Our company Natural Baby Foods, deals with Organic Baby Cereal products. Introduced in 1990, we are doing very well in Canada with a market share of around 70%. After gaining success in Canada, we are planning to expand our brand exposure to other continents namely France.
To enter the market of France, we have chosen the option of choosing an Agent.
To evaluate an agent, we would go through the following selection processes to evaluate an agent –
Agent History and Background
While selecting an agent, it is important to have a background check on the agent profile, especially to gauge the competence of the agent in the market the company is planning to enter.
No. of years in the Organic Baby Cereal market
Experience of the agent is a very important factor to consider while choosing an agent. Our company prefers an agent with intensive knowledge of the market, which can help us get sales instantly. This will help us earn returns on our investment early on.
Reliability of the agent is a point of consideration, since entering a market is our long term objective, we would expect our agent selection to be a long term relationship as well.
Agent Contact Network and Product Expertise
Our company places high importance on our ideal agent understanding our company and our products offered to the market. We believe, once the agent understands our product and which customers are targeted, it becomes easier for the customers to understand and be aware of our products.
Once an agent is selected, the contract negotiations would take place with the following points in discussion.
Appointing the chosen agent, we would sign the contract based on the location at which the agent would be active, scope of area and effective date of his duty.
Scope of Contract
The scope of contract mainly outlines the activities that the agent will handle, the support from our company. It also discusses what activities will be out of the agents control.
Our company believes in fair sales policies. Our agent needs to follow the same policy and ensure sales are conducted in a legal manner. Sales are important to our business hence we will work closely with the agent to ensure our sales are as per our goals.
Our basic agreement with the agent would be that the agent would receive a percentage of the sales agreements that’s influenced by him. We are looking about 5% commission per sales deal, which can be re-negotiated at a later stage.
Acceptance of Orders
The company will hold the rights on the final decision in order to agree on a sales deal. Related factors such as pricing, credit limit, etc. shall be solely decided by the company. The company also holds the right to reject a sales deal on its complete discretion.
The company and agent will decide on the volumes the company expects to sell in a specific period. This can be altered based on various situation but only on mutual consent. This point will help the company be prepared for peak sales season and ensure that the demand of the product in the market is met always.
Quality is an important part of our values, and our company does not compromise on quality of our products. Hence, the agent should maintain the quality and standard of the product while marketing or negotiating sales deals with potential customers.
Limitation of Powers
The agent enjoys the freedom of negotiating the deal. However, the final agreement with the customer will be solely made by the company.
Termination of Contract
The contract between the agent and the company can be terminated based on mutual consent. A meeting shall be conducted to discuss the same.Advantages of Using an Agent.
Our company will benefit from specialised marketing services without incurring costs of hiring a marketing team. This is essential for our company since France is a new market and experimenting different marketing techniques would just expand our initial budget. Hence, having an agent with established experience in this field and country will help us reduce unwanted costs.
We also have an advantage in terms of avoiding the need of having a sales team allocated to the new country. Having an agent facilitates having sales deal negotiated without being physically present in the country.
Having an ideal agent for our company also means he will be highly motivated to ensure our company does well in the new country. This is crucial for our company as we want to establish our brand in France then move to different neighboring countries.
Disadvantages of Using an Agent.
An agent, if not the ideal choice for the company in the specific industry can have a negative reaction on the company’s fortune in France. Hence, it is important to choose an agent with the right experience and knowledge of the market the company wishes to do business in.
Another issue of choosing an agent as a market entry strategy is to keep the agent motivated and competent to help our company achieve the goal.
The biggest challenge we would face by not having our company set up in the new country is to handle customer complaints and concerns. An agent would not be responsible for this aspect of the company’s business. Hence, a customer would prefer a company having at least a point of contact within the country in order to boost the confidence of the customer on the company.
Choosing an Agent over other options.