INTERNATIONAL MARKETING

AZIMUTH(International marketing plan to expand overseas)

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CONTENT PAGE

1. Introduction

1.1 The Company1.2 The Product

2. Market Selection

3. External Environmental Analysis

3.1 Political and Legal Factors3.2 Economic Factors3.3 Social and Cultural Factors3.4 Technological Factors

4. Marketing Strategy

4.1 Profile of Targeted Segments4.2 Product Positioning

5. The International Marketing Mix

5.1 Product5.2 Pricing5.3 Place5.4 Promotion

5.4.1 Advertising5.4.2 Sponsoring5.4.3 Product Placement & Endorsements

6. Conclusion

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1. INTRODUCTION

1.1 The company

Azimuth Watch Company opened in 2004 by Christopher Long and Alvin Lye, is a niche branded

Watch Company that assimilates modern innovations with excellent watch-making tradition to create

high quality haute timepieces. In their first year Azimuth manufactured about 200 timepieces which is

a far cry from their current production of 1,500 watches in 2009 (Azimuth, 2004)

Azimuth produces all their watches in Biel/Bienne Switzerland, a region reputed for top-of-the-range

watch engineering and manufacturing. By doing so Azimuth is able to remove any stigma of being a

“local” company and focuses the consumer’s attention to the fact that their timepieces are being

made in the same region with the likes of Rolex, Omega and Tissot. Therefore Azimuth is able to

charge a premium for their watches with a price range between $2,500 and $7,000. (Asiaone, SME

Central, 2009)

1.2 The product

Azimuth watches has designs that span the watchmaking spectrum from their Militare - 1 collection which are inspired by the pilot watches from World War II, to their angular and quirky Gauge Mecha-1 BMF designs. (Azimuth, 2004)

Azimuth currently has three collections.

The SP-1 Mecanique This features watches inspired from mechanical-Contraptions such as cars, spaceships, robots And even gaming machines like a roulette table.

Xtreme-1Watches designed for use in extreme sea conditions,Most watches in this collect are nautically inspired.

Round-1This collection features a “back in time” concept Whereby the watch actually runs anti-clockwise. This collection also comes with another gaming Inspired Design, the “baccarat watch”

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2. MARKET SELECTION

Hong Kong: A country that is demographically & socially similar to Singapore’s domestic market. HK

is also identified like Singapore for its being a shopping destination and is replete with branded and

luxury retail outlets. Being so similar to Singapore will enable Azimuth a better understanding of the

local cultures and traditions when entering the market and will minimize the probability of Azimuth

creating social faux pas which would alienate them from the locals.

Hong Kong is also an ideal location for expansion as according to the Federation of the Swiss Watch

Industry, the luxury watch market rose by 22 per cent in 2010, to £11.2 billion and the biggest growth

markets are in Hong Kong and China. (The Telegraph, 2011)

3. EXTERNAL ENVIRONMENT ANALYSIS

All organizations are subjected to environmental factors which manipulate their activities and

establish the impact of the general environment on the firm’s performance. According to Anthony

Henry these factors can be classified by using a PESTEL analysis. Identifying these factors will allow

Azimuth to observe the similarities present between Singapore and Hong Kong in terms of their

strategic environmental factors. (Henry, 2008)

3.1 Political and Legal Factors

The political factor is important because it can have a direct impact on the way business operates.

Decisions made by government affect our everyday lives and can come in the form of policy or

legislation.  (Kate Gillespie et. al, 2011)

Hong Kong which is a special administrative region of the people’s republic of china since July 1997

is potically stable and has a high degree of autonomy in economic trade, financial and monetary

matters. This is important as Hong Kong will continue to have capitalist economic and trade

systems , free movement of goods and captial and status as a free port and separate customs

territory.

Hong Kong has no Goods and Services Tax which would allow Azimuth to displace their expenses

gained from export costs. (Hong Kong Trade and Industry Department, 2011)

Hong Kong also has strong copyright laws (The Copyright Ordinance (Cap 528), which became

effective on 27 June 1997) in place to protect the intellectual property of individuals and consumers

which makes it an ideal place for Azimuth Watches as many of their watch designs are one of a kind

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and are very vulnerable to counterfeit. This makes the political and legal system an opportunity.

(legislation.gov.hk, 1997)

3.2 Economic Factors

Hong Kong has been considered as one of the commercial destinations in Asia. There has been a

considerable flow of traffic particularly involving tourists and other travellers in Hong Kong. Hong

Kong and Singapore has a good trading relationship, Singapore being one of Hong Kong’s 5th largest

trading partners.

Hong Kong’s economy is very stable, with growth of 1.2% in Q3 of 2012, and low unemployment rate

of 3.3%. The retail sector also grew in terms of sales by 10.6% year-on-year for the first 9 months of

2012. Tourism in HK is also stable and growing with an increase in international arrivals by 16.3%

year-on-year and 24.4% from the mainland. This gives Azimuth an oppourtunity to enter a robust

market with high potential for continued growth. (Economic and Trade Information on Hong

Kong, 2012).

3.3 Social and Cultural Factors

“Social and cultural factors influence all aspects of consumer behavior and is a central consideration

in developing and implementing international marketing strategies” (Isobel Doole, 2008)

Historically Singapore and Hong Kong share many similarities, this being so it will be easier for

Azimuth expand to HK as they would already have an idea of what the culture in HK is like.

Like Singapore, HK is a very fast paced country where its people are very competitive. Being

predominately chinese, there will be a culture of “showing face and losing face” where you are

judged by what you wear or own.

In chinese culture, having more luxury items can be equated to how successful you are.

Therefore this is beneficial for Azimuth as they produce a limited number of watches per collection or

can create a customized watch (1 piece only) which would entice the rich and affluent people in HK

as it allows them to have a “exclusive status”.

Sharing a “chinese culture” with HK also allows Azimuth for a smoother transition of all

communication aspects, special training for managers to be sent to HK will be minimized and similar

advertising strategies can be utilized in both countries, a low level of adaptation will be necessary.

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3.4 Technological Factors

Hong Kong is a very developed country with good infrastructure networks. It has good

telecommunication services and financial institutes. According to the CIA (central intellegance

agency) HK has a literacy rate of 93.5%.

It also has a extremely high amount of internet users approximately 75% of their current population.

(google public data, 2012) With a such development amenities and infrastructures Azimuth need

not worry about power shortages, shipment delays or telecommunication failure. The wide usage of

technology in the country would also allow Azimuth an opportunity use multiple digital platforms to

generate brand awareness and communicate with consumers.

4. MARKETING STRATEGY

An effective marketing strategy takes into consideration its competitive strategy, will use

differentiation or cost leadership. Then the market is chosen and is segmented and a target profile

can be created. (Czinkota, 2010)

4.1 Profile of Targeted Segments :

Azimuth Watches targets both male and female, from ages 21 and above with a general

income of $3000 and above. Due to the nature of the product, the targeted market will

also be of higher education (degree and higher) with managerial type jobs. This group of

consumers is usually looking for premium or unique for themselves. (McColl-Kennedy & iel, 2000)

Azimuth can also utilize geographic segmentation as like china’s “gated communities” Hong Kong

also has communities with only the rich reside in. This would include estates in HK like “beacon hill,

repulse bay, Stanley, tai tam, the peak, happy valley, deep water bay” (Business Insider, 2012)

4.2 Product Positioning :

Positioning: “the way the product is defined by consumers on important attributes” Azimuth has

positioned their products as “collectors” items and this is further reinforced by the fact that they

produce a limited amount of watchers ranging from 2000 to 3000 pieces to be sold worldwide which

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gives the product percent of exclusivity which sets them apart from or other local watch brands.

(McColl-Kennedy & iel, 2000)

5. THE INTERNATIONAL MARKETING MIX

5.1 Product Adaptation

This part of the international marketing mix is where Azimuth must determine what strategy to

adopt, standardization or adaption. Product adaptation is done by taking a product and customizing

it to suit the needs of the local market, while standardization is selling the product as it is in the

international market. (Czinkota, 2010)

Factors to consider while selecting a strategy includes the product characteristics, company

characteristics and the market itself. Due to the nature of Azimuth’s products and its target

customers, Azimuth should adopt a standardized approach. Customizing the product will cause

Azimuth to lose justification of their prices and may cause a loss in market share due to having

inferior products. (Czinkota, 2010)

5.2 Pricing

Price plays a large role in a marketing strategy as according to Czinkota “price serves as means

of communication with the buyer by providing a basis for judging the attractiveness of the offer”

Because Azimuth’s products mainly target “collectors” or customer who wants a unique watch

they are willing to pay a premium price for the quality of the product.

Azimuth should then use a standard worldwide price, which is using the same price globally.

This method should be adopted as with an increase in technology consumers can easily find out

what the global prices are, and also because there is no differentiation between the products

globally. (IIka A. Ronkainen, 2007)

Azimuth may have to take into consideration export related costs, which are the costs related to

export and includes things like “operational cost of the export operation” and “cost incurred in

entering foreign markets; like tariffs and taxes”. (Michael H. Moffett, 2009)

Having a Standard worldwide pricing will benefit Azimuth by helping stave of grey marketers.

According to (Robin Lowe) grey marketing or parallel importation ‘occurs when trademarked

goods are sold through channels of distribution that have not been given authority to sell the

goods by the trademark holder” (Robin Lowe, 2008)

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5.3 Place

Azimuth has to utilize a multiple channel distribution strategy as Hong Kong is a very large

country and a single flagship store will not be able to cater to the entire country. And it will not be

cost effective to open up multiple retail outlets; instead Azimuth should consider using

distributors to become “authorized retailers”. (Julian Dent, 2011)

Benefits of using distributors would include having access to their customer base, distribution

networks and also their advertising promotions. Using authorized retailers will further prevent

parallel importers to target their products.

Retailers that Azimuth should use, must be large established retailers like “Perfect Watch Co.,

Ltd, Valuable Watch And Jeweler Co., Ltd, Top Class” (Azimuth; Distribution, 2004)

5.4 Promotion

Azimuth has to adopt a communications strategy that would suit the needs of the local market

and to generate awareness among their target customers. To do so, Azimuth should use

Advertising, Public Relation Campaigns, Sponsorships and endorsements and lastly product

placement.

5.4.1 Advertising

“Advertising is the use of nonpersonal presentation of ideas, goods or services by an

identified sponsor”. (Kotler & Armstrong, 2012). Azimuth should then use print ads

placed in magazines which cater to “watch collectors” or rich and affluent readers.

Magazines like this includes “The Watch Magazine” and “Hong Kong Tatler”

Azimuth can also use a more targeted approach by sending print or electronic media

directly to their target customers. This is known as direct marketing. Because of the

geographical distribution of the wealthy in Hong Kong, where many of them live in certain

districts or communities as mentioned earlier, Azimuth can send direct mailers which are

pinpointed to their target customers.

5.4.2 Sponsorships

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Azimuth can sponsor sports clubs doing aviation or nautical sports with their watches

which are specially designed to suit those conditions. By doing so Azimuth would

associate their brand with a specific event which will allow greater recognition of their

brand.

5.4.3 Product Placement and Endorsements

In Hong Kong there is a large domestic entertainment culture, where local entertainment

celebrities in TV, music or movies have “idol” statuses. These celebrities hold a large

influence among the locals.

Azimuth can endorse a well known celebrity such as “Andy Lau or Leon lai or Jacky

Chueng” who is part of the “4 heavenly kings of Hong Kong entertainment”

AsianFanatics, 2011)

Because people like to emulate movie stars or celebrities as they are considered a

reference group, it would create brand awareness for Azimuth by associating their brand

with a celebrity especially if it is a new entrant. Azimuth can also place their products into

Movies or TV shows to be used by the main characters or design a show based on their

products. (Leon G. Schiffman, 2010)

6. CONCLUSION

After extensive consideration of Azimuth’s product and the culture of their domestic market, Hong

Kong would be an ideal market for Azimuth to expand into. Hong Kong has a close proximity with

Singapore and shares similar cultural beliefs, traits and language which would allow Azimuth an

easier transition into their local market. Integrating and translating the marketing strategy would not

be a problem, because of language similarities (mandarin), so the risk of miscommunication is

minimized.

Staffing issues would be easily resolved as the two countries are so alike it would be easy to

relocate managerial staff to work in Hong Kong and thus additional training to understand the local

culture would be unnecessary. Because of all this extenuating factors Hong Kong is an ideal choice

for Azimuth’s international expansion.

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2232 words

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