Mistine’s Entry Mode Strategy in AEC
Expanding into a foreign country is one of the most critical business strategies made by a firm relative to the international market. The decision of how to enter a foreign market can have significant impact on the company’s future. Therefore, it is extremely important for the company to think deliberately of where, when, and how to enter into the new market. For cosmetic industry it seems to be vital for the business to be the first mover in the market. It seems to be more difficult for latecomers because people are more brand loyal when it comes to cosmetics. For Mistine, it is not their first time to expand the business in the foreign country, about 14 years ago they had experienced the market entry in Myanmar and they were very successful in terms of the radically increase in sales figure and brand awareness. The entry mode that Mistine had chosen to break into Myanmar market is the Direct Export. Basically, Mistine exports all kinds of product from Thailand to Myanmar, then the products are distributed to the 6 showrooms which are located in big major cities of Myanmar like Yangon, Mandalay, and Handawaddy. The number of population residing in these cities are relatively high which also leads to a high purchasing power of customers. With this approach, Mistine tends to obtain the high coverage of their target customers in the countries and customers find it easier to access to the showroom and buy the products. The overview of Thailand’s exporting cosmetics product to Myanmar: It is noticeable that the Myanmar market is likely to welcome the product of Thailand in their country. Regarding the total population of 54.6 million people, the majority of them prefer to consume Thai product over other countries. Currently, the production capabilities is still couldn’t satisfy all of the local demand, therefore they still need to import the products to fulfil those needs. These can create a big opportunities for Thailand to export our products and expanding the market. Moreover, there are gradually increased in demand of certain product category such as ‘Home Use product’ e.g. soap, shampoo, and skin care products etc. The target group are the working women which resulted in 34% of total population, their income are also likely to be increase over time which result in high purchasing power.
Figure showing the Total Exporting Revenue of Cosmetics to Myanmar
Recommendation for Mistine:
By expanding the brand to other AEC countries, we would suggest Mistine to stick with their mode of entry strategy which is exporting as it is a very fast and easy way to sell the products with very low risks and require lower level of investment. However, on the negative side, the company can also facing many obstacles such as trade barriers (tariffs), transportation cost and complexities. For that reason, we would like to suggest further so that the company can achieve the uppermost benefits when entering the new market of AEC countries. As Mistine is targeting the mass market and B-class customers, regarding this, we believe that Indonesia and the Philippines have great potential. These two countries both have huge number of population. Especially Indonesia, even though there are great number of potential customers available, still, there are only two local cosmetics brands, neither of which are managed for direct selling. Therefore, Indonesia could be the next destination for Mistine after Myanmar.
We are going to divide the market entry modes into three stages: 1) Early Stage
2) Growth Stage
3) Consolidation Stage
1st Stage: Early Entry
At this initial stage will be focusing on the first 3 years of the new market entry. For Mistine we recommend them to study in depth in terms of market characteristics and consumer behaviours. The study should comprise of both primary and secondary data such as population record provided from the government, conducting the market...
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