Develop A New Product And Pricing Strategy For Market Entry

Develop a New Product and Price Strategy for Market Entry

As a team, develop a product which is not existing in the country. Determine the market and discuss why this market is chosen. Define the ethnocentric, polycentric, and global pricing strategies. The assignment should include the following:

- Identify the target market and justify why it is selected, including market research and potential demand. (20%)

- Develop a short-term and long-term pricing strategy for the product.

- Describe suitable distribution channels for the product.

- Define ethnocentric, polycentric, and global pricing strategies with explanations.

This writing assignment should be completed in the standard APA format, and the final document should be two pages long.

Paper For Above instruction

The process of introducing an innovative product into a foreign market requires thorough research and strategic planning, especially when the product is entirely new to the country. For the purpose of this assignment, the chosen product is a “Smart Home Energy Management System” (SHEMS). This product is designed to optimize energy usage within households, promote energy conservation, and reduce electricity costs through intelligent automation and real-time monitoring. The introduction of SHEMS into a new market entails analyzing various factors, including market selection, pricing strategies, and distribution channels, to ensure effective market entry and sustained growth.

Market Selection and Justification

The target country selected for the introduction of the Smart Home Energy Management System is Brazil. Several factors contribute to this choice. Firstly, Brazil has a rapidly growing middle class with increasing disposable income, making consumers more receptive to innovative home technologies (Brazilian Institute of Geography and Statistics, 2022). Furthermore, Brazil faces energy management challenges primarily due to frequent energy shortages and the significant reliance on hydroelectric power, which is susceptible to climate variations (Energy Research Company, 2021). This creates a demand for energy efficiency solutions to mitigate costs and promote sustainable energy use. Additionally, government incentives and incentives for green technologies are encouraging households and businesses to adopt energy-saving innovations (Ministry of Mines and Energy, 2023). The expanding smart home market, combined with the country's energy issues and environmental commitments, positions Brazil as an attractive market for SHEMS.

Pricing Strategies

When entering a new market with a novel product, selecting appropriate pricing strategies is crucial. The three primary approaches are ethnocentric, polycentric, and geocentric (global) pricing strategies, each with specific applications and implications.

Ethnocentric Pricing Strategy involves setting prices based on the home country’s standards without considering local market conditions. This approach might be suitable initially for a company testing the waters or using a uniform global pricing model. However, this often neglects local purchasing power differences, leading to potential market entry issues.

Polycentric Pricing Strategy tailors prices to each local market, considering local economic conditions, competition, and consumer willingness to pay. For SHEMS in Brazil, a polycentric approach would involve analyzing local energy costs, customer income levels, and competitors’ prices to set reasonable, attractive prices that encourage adoption.

Global (or Geocentric) Pricing Strategy strives for a standardized global price that balances local adaptation with economies of scale. It requires careful assessment of local market factors while maintaining a cohesive brand image. For SHEMS, this might mean a base global price adjusted for local taxes, tariffs, and currency fluctuations to ensure profitability across markets.

Pricing – Short-term and Long-term

In the short term, competitive introductory pricing may be implemented to attract early adopters, possibly including discounts or promotional offers. This can help establish a customer base and gather initial user feedback. Over time, the price can be increased gradually to match perceived value, especially once the product gains credibility and a reputation in the market.

In the long term, a value-based pricing approach can be adopted, reflecting the energy savings and sustainability benefits provided by SHEMS. As the product becomes more established, premium pricing can be justified through added features or enhanced services, maintaining profitability and supporting ongoing innovation.

Distribution Channels

Effective distribution channels for SHEMS include partnerships with home improvement retailers, direct online sales through a dedicated website, and collaborations with local energy companies or utility providers. Retail partnerships can enhance visibility, while online platforms offer convenience and broader reach. Collaborating with utility companies could also facilitate bundled offerings or incentives with energy savings claims, accelerating adoption.

Furthermore, installer networks and certified technicians are vital to ensure proper installation and after-sales support, which are critical for customer satisfaction and product reliability. A multi-channel approach blending physical retail, online platforms, and strategic partnerships is optimal for maximizing market penetration.

Conclusion

Introducing a Smart Home Energy Management System into Brazil requires meticulous market analysis, strategic pricing, and effective distribution planning. The chosen market offers significant potential due to energy efficiency needs and increasing consumer interest in smart home technologies. Employing a combination of polycentric and geocentric pricing strategies will help balance affordability and brand positioning. Coupled with multi-channel distribution, these strategies create a strong foundation for successful market entry and sustainable growth of the product.

References

  • Brazilian Institute of Geography and Statistics. (2022). Household survey report. IBGE.
  • Energy Research Company. (2021). Brazil's energy market analysis. ERConsult.
  • Ministry of Mines and Energy. (2023). Energy efficiency programs in Brazil. MME.
  • Levitt, T. (1983). The globalization of markets. Harvard Business Review, 61(3), 92-102.
  • Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.
  • Cavusgil, S. T., Ghauri, P. N., & Akcal, A. A. (2014). Doing business in emerging markets. Sage Publications.
  • Ahmed, P. K., & Rafiq, M. (2003). Internal marketing issues and challenges. European Journal of Marketing, 37(9), 1177-1186.
  • Customs and Tariffs in Brazil. (2022). World Trade Organization Report.
  • Global Energy Monitor. (2021). Renewable energy trends in Latin America. GEM Reports.
  • OECD. (2020). Digital transformation in energy sectors. OECD Publishing.

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