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PEST Analysis of Canada

Question:

You have been hired as the Marketing Manager of Ugg Australia in Sydney (https://www.australianuggboots.com.au/en-au ). Your CEO has decided to market Ugg Australiaâ„Finland, Canada, and Russia. you to write a report after conducting a strategic analysis of the environmental variables such as economic, political, social, cultural, technological and any other variables in any ONE of the above countries of your choice which may influence the marketing of Ugg Australia in that country.

The Australian UGG boots are a part of the Australian culture. These boots got their name decades ago, though the logic behind the naming is not exactly clear.  These specific boots are made of Australian sheepskins. These are long boots made of sheepskin with flat soles. These boots were high in demand in Australia during winter due to the warm comfort it provided to the person. These boots are now famous worldwide and the demand from the foreign nation is significantly raising every year. Australian UGG Boots Pvt Ltd is one of the leading UGG boot makers in Australia who has extended their supply outside the borders reaching out some of the international markets in Europe and Asia (Australianuggboots.com.au, 2017). However, the UGG boot makers had recently came into light due to the trademark obtained by the Decker, an US company who does not even produce their UGG boots in Australia. This has significantly shaken the international market for Australian UGG Boots Pvt Ltd along with other similar companies in Australia. The company is planning to expand their business to Canada to explore the benefits keeping in mind about the natural condition of the country. Winter in Canada demands for something like UGG boots for comforting the feet.

PEST analysis can help in understanding the market situation and facilitate in the selection of the marketing strategy required penetrating the Canadian market.

Political

The country offers a full treatment for foreign investors. This falls under the context of open market economy operating with democratic principles and industries. This makes Canada as a favourable pool for investing and starting business. The global Affairs Canada alongside with ISED promotes Canadian market as an open, rules-based global investment regime for attracting foreign investors. The foreign companies can easily extract the required country information from their government operated Canadian Trade Commissioner Service’s website named “Invest in Canada”. This website also communicates the easy steps to follow for registering foreign businesses in the Canadian market (Export.gov, 2017). United States has been the fifth largest foreign investor in Canada for a very long time. This led them to dominate the Canadian market with the products and services offered. Moreover, the Canadian market is also popular for its cost effectiveness for the foreign investors that increase due to te low tax regime. Additionally, the country is becoming the largest free trade zone in the world for the firms importing manufacturing goods.

Economical

The real GPD of the nation as per 2016 calculation was approximately CAD 1795.56 billion; where as the nominal GDP was CAD 2026.83 billion. Estimated per capita GDP for the nation is about USD 42210.13. Purchasing power parity depending on the per capita GDP was about USD 46437.16 (Tradingeconomics.com, 2017). This not reflects a stable economic condition of the overall population of the country, but also a dominating power in the international market. Expansion in this nation will be fruitful for any business considering the economic condition as they can easily sell the high-end high priced products in the Canadian market (Howard Silverman & Howard Silverman, 2017). However, it is obvious to maintain the product value to satisfy the customer perceived value.

Economic Factors

Social

Canadian society reflects a significant gap between the higher income group and the lower income group. $ 66,160 is the average family income of the total Canadian population. However, 43.6% of the average income is earned by the top 20% of the families, whereas, the bottom 20% of the families earn around 5.2% of the average income. This leaves a large section of the society to in the middle income group. Hence, it will be wise for the company to address the upper and middle income group in the country to generate maximum revenue. Moreover, the western democratic cultures of the Canadian society leaves ample amount of opportunity for Australian UGG Boots Pvt Ltd. to expand in attract a significant portion of the target market towards their products (Ho, 2014).

Technological

The technological advancement in Canada has drastically changed after globalisation. The nation has attained technological advancement in every aspect ranging form energy production, industrial advancement, transportation, and aerospace and even in communication. Companies like IBM, BlackBerry have originated in Canada. Even the inventor of Java belongs form Canada. The modern technologies connects every corner of the nation that will be useful for Australian UGG Boot Pvt Ltd. in promoting their product in the market and utilise the full potential of social media marketing (Richardson & Hull, 2017). However, technology incorporated in the boot industry might pose some challenge for the company as they use traditional manufacturing procedure that costs higher.

From the above market study, it can be suggested that the company can target every age group ranging from teenagers to the old aged as the company offers products covering the mentioned. Moreover, the company should identify the middle to upper economic group for generating maximum profit in the market. It is because of in overseas operation of the company. The overseas export will increase the production and service cost being incurred by the company.


Market entry strategy on the other hand suggested for the company is indirect exporting. This will reduce the chances of loss that might occur in the process. The investment in the international market will be null in this case providing more opportunity for the Australian UGG boot manufacturing communities to grow (Laufs & Schwens, 2014). Additionally, the cost associated with exporting will be considered as marketing expenses.

Differentiation strategy for competing the customers in the overseas market will prove to be useful for Australian UGG Boot Pvt Ltd. This will enable the company to keep their price high in the market through differentiation. It is possible due to the uniqueness of the products provided by the company. The company will be selling authentic Australia made UGG boots in the Canadian market. The product itself will be unique and rare in the target market that will help the company keeping the price in the high-end. The authenticity of the products will also ensure the quality of the products, which in turn increasing the value proposition (Acquaah, Amoako-Gyampah & Jayaram, 2011). Currently UGG, a brand of Decker Corporation is supplying similar products in the target market. However, the UGG boots offered by the company is China made which looses the authenticity and in turn considerably reduces the product value in the market.

Social Factors

Market Penetration strategy of pricing can be utilised by the Australian UGG Boot Pvt Ltd for entering the Canadian market. It is often useful in attracting customers while launching new products in the market. The companies in this strategy keeps the pricing of the products in the high end for attracting their customers. Though the company has to incur significant amount of loss in its initial stage, it is considered as useful in long run. This is because the company using this strategy can place themselves in the higher segment of the market in comparison to their competitors (Yan & Pei, 2011). This will reflect the quality of the products offered by the company. Moreover, as identified from the market analysis, positioning UGG boots as high-end products will be beneficial for the company. The purchasing power of the Canadian population can support the high price of the products by the company due to the increasing demand.

The best way to promote products in Canada is social media promotion. This can be attributed to the technological advancement and its adaptation. Australian UGG Boots Pvt Ltd can utilise both social media and networking channels fro promoting their products in the market. Moreover, as the potential target market for the products offered address the complete age group of the population ranging from kids to olds, they have to identify every possible means to attract the whole population. The company can use pay per click, as it is useful in online promotion. Moreover, despite of advanced technology, Canadian culture supports the traditional newspapers. Hence, it will be wise to promote the products through newspaper advertisements to address the complete target market in the country (Hultman, Katsikeas & Robson, 2011).


On to it, the company can use sales promotion strategy in its initial days, as it is always useful in attracting customers. Moreover, the company also needs to communicate correct information regarding their products to build public relation in the target market. Hence, transparency is an important factor that needs to be followed. 

The market entry mode suggested for the company in Canadian market is indirect exporting, Australian UGG Boot Pvt Ltd. can utilise selective distribution as their distribution strategy. Company in this strategy will be reaching out their customers through a selected number of channels in the market (Terpstra, Foley & Sarathy, 2012). It provides greater control over products as the products will be available only in certain retail stores of supermarkets in the target market. This will further help the company maintaining the demand in the target market by making it available only a selected number of stores in the area.

Conclusion

The above discussion can conclude the fact that Canadian market is a wonderful opportunity for Australian UGG Boot Pvt Ltd. The company can enjoy the supply of their products in the market almost without any competition as there are limited number of companies offering similar products. Moreover, the uniqueness and authenticity of their product will provide competitive advantage in the market. The market entry mode suggested above approves other strategies, as it will help maintaining product value by offering the authenticity, uniqueness and quality of their product. Moreover, the economic and social condition of the country will also support the promotion of the products in the market. Hence, it is unlikely for the company to face any hindrance following the above mentioned recommendations

References

Acquaah, M., Amoako-Gyampah, K., & Jayaram, J. (2011). Resilience in family and nonfamily firms: an examination of the relationships between manufacturing strategy, competitive strategy and firm performance. International journal of production research, 49(18), 5527-5544.

Australianuggboots.com.au. (2017). About Us | Australian Ugg Boots Pty Ltd. Retrieved 17 December 2017, from https://www.australianuggboots.com.au/en-au/company/about-us

Export.gov, (2017). Canada - 1-Openness to, and Restriction on Foreign Investment | export.gov. Retrieved 18 December 2017, from https://www.export.gov/article?id=Canada-Openness-to-Foreign-Investment

Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), 6478-6492.

Howard Silverman, T., & Howard Silverman, g. (2017).  The Canadian FDI Climate: Taxes and Incentives Advantages - Area Development. areadevelopment.com. Retrieved 18 December 2017, from https://www.areadevelopment.com/Canada-Investment-Guide/Location-Canada-2012/Candian-FDI-climate-taxes-incentives-363537323.shtml

Hultman, M., Katsikeas, C. S., & Robson, M. J. (2011). Export promotion strategy and performance: the role of international experience. Journal of International Marketing, 19(4), 17-39.

Laufs, K., & Schwens, C. (2014). Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda. International Business Review, 23(6), 1109-1126.

Richardson, W., & Hull, J. (2017). Technology in Canada. thecanadianencyclopedia.ca. Retrieved 17 December 2017, from https://www.thecanadianencyclopedia.ca/en/article/technology/

Terpstra, V., Foley, J., & Sarathy, R. (2012). International marketing. Naper Press.

 Tradingeconomics.com. (2017). Canada GDP per capita. Retrieved 17 December 2017, from https://tradingeconomics.com/canada/gdp-per-capita

Yan, R., & Pei, Z. (2011). Information asymmetry, pricing strategy and firm's performance in the retailer-multi-channel manufacturer supply chain. Journal of Business Research, 64(4), 377-384

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[Accessed 12 June 2024].

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My Assignment Help. Marketing Analysis For UGG Australia In Canada [Internet]. My Assignment Help. 2019 [cited 12 June 2024]. Available from: https://myassignmenthelp.com/free-samples/market-analysis-and-entry-strategy.

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