Assignment
Case Study: Havering Promotional Products (HPP)
Established in the late 1960s, HPP specialises in the manufacture and supply of business and advertising gifts. Based in the London Borough of Havering, the company employs a total of 100 people. Products include pens, desk accessories, mugs and key rings, which are printed with the client's name and are designed as give-aways to customers. The business and promotional gifts market has become increasingly competitive recently. This is due to low barriers of entry, an increase in the number of competitors and the domestic market reaching a maturity stage.
Having experienced 15 years of sales and profit growth, HPP's management was concerned to find that the sales performance in 1999 was static, and that in 2000 it declined. This was disappointing, as part of the firm's long-term corporate strategy is to increase yearon-year profits by several percent, thus achieving economies of scale. As 100% of HPP's business was within the UK, the firm finally took the decision to look at international markets. With no previous experience of operating in an international environment, the responsibility for handling this was given to David Sanchez, Assistant Marketing Manager, who was one of the few within the company with any language ability. A market research agency was appointed to find out why the firm's brand image and performance were so disappointing in the UK and to analyse possible international markets the firm could enter. The research findings suggested the following:
1 Although the firm is well known in the industry, it is seen as old fashioned, and has been quoted as the ‘Marks & Spencer' of the promotional gifts market.
2 The firm does not come across as having a particular strong brand identity.
3 The promotional gifts market in the UK is almost stagnant.
4 Prices of HPP are perceived to be higher than the industry norms. Many people quoted the biggest firms in the market - ‘Gifts for All' and ‘STW Promotional Gifts' - as being considerably cheaper for similar products.
5 HPP is seen as having a strong London base with only a limited ability to service clients outside this area.
6 There appear to be international market opportunities in Eastern Europe and China within the promotional gifts industry. This is largely due to the increasing amount of foreign direct investment from overseas into these countries. When respondents were asked how likely it was that they would do business with HPP over the next 12 months, the mean (average) pattern of responses suggested that this would be ‘fairly unlikely'.
The conclusion also highlighted that a small number of respondents even believed the company to have gone out of business within the preceding six months! The board of directors all agreed that the report should be taken seriously and recommended that a marketing consultant be employed to make recommendations on future strategy.
Questions
1 Explain why HPP should internationalize. Use case examples of other companies wherever possible.
2 Discuss the range of international market entry methods that are available to HPP.
3 Think of an example of a successful joint venture in an international market. Investigate the background to the joint venture, and then analyse the benefits both parties to the venture have derived, as well as any possible areas of conflict.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.