Abstract
In the dynamic market, it is important to carry out comprehensive logistics planning to guarantee the success of a product in the market. The aim of the paper is to establish the challenges in logistics management in selling refurbished phones from the US in five countries within the South American continent. Besides, the paper aims to identify remedies to these challenges. Through secondary research, the findings revealed that the main challenges of penetrating these markets are different government regulations, culture, unique customer behavior, and limited logistic support. The remedies identified are integrated logistics execution, remodeling the refurbished phones to fit the unique customer behavior, and systematic entry over a period of five years.
Introduction
Many companies intend to sell refurbished phones in the international market. The rationale for these businesses is to take advantage of the readily available market for refurbished phones, which are cheaper by almost half the new phone. The international logistics strategy for refurbished phone products is to enter countries in Latin America with the first year in Chile. The second-year strategy will be to enter the Mexico and Brazil markets after the successful establishment of a production plant in Chile.
The third-year strategy will be market expansion within the three countries by increasing product visibility by 70%. In the fourth year, the strategy will be to enter the Argentina market. Although there were several competitors, the entry strategy and market penetration in the five targeted countries are expected to be successful.
Despite the successful logistics management strategy, the implementation was characterized by a challenge in the allocation and customization of management resources, especially in the tracking of product preference in the five targeted regions. This treatise attempts to explicitly review these challenges with the intention of proposing appropriate strategies for turning the impediments into positive international logistics tools to guarantee penetration of the refurbished phones in the targeted markets.
Background
In the management of logistics in the four targeted markets, regional managers face the challenge of allocation and customization of logistical resources due to variances in culture, demand, demographics, and penetration strategies. The cultural, demographic, and economic factors make it difficult for a smooth flow in product entry in each country and subsequent market penetration since balancing the aspects of supply chain and resource utilization is very difficult.
For instance, the demographic factor makes it very challenging to penetrate the market in Argentina due to imbalances in designing logistics for managing the family and young customer segments. Besides, the market in Chile is highly stratified due to the unique culture among the targeted client. There is an urgent need to design an appropriate logistics management strategy that guarantees penetration into these markets to ensure that refurbished phones are sold at a profit.
Literature Review
Allocation and customization of logistics in internal businesses involve the proper distribution of the financial, labor, and technology resources to ensure that the targeted market is served in the most optimal means possible. Customization of the labor and other factors of production are vital in international business since it should be in line with different factors that directly determine the outcome of each management strategy (Jones, 2010).
In order to successfully allocate and customize resources in international logistics management, it is important to carry out in-depth research about the geographical location of the market, resources needed, the role of the strategy in line with the needs, concerns, and interests of the targeted market. In addition, it is necessary to study the business needs (Yan, Myers, & Wang, 2012). This means that a company interested in international logistics management must review its needs to ensure that the short-term and long-term plans are implemented without interfering with the primary goal of business sustenance and feasibility. Allocation and customization of logistical support should consider the element of people since any operation plan is based on the need to convince customers to accept a product or service (Hammond, 2006).
In allocation and customization of logistical support, Hackle, Swenson, and Vince (2012) note that any management agent should “endeavor to monitor the response rate and the duration or period of advertisement to ensure that the point of contact is sustainable” (p. 446). Therefore, realistic assessment and creation of a unique market niche are the main prerequisites for successful resource allocation and customization. In the case of established refurbished mobile product companies, the regional managers often find it difficult to balance the aspects of people, culture, and supply chain in integrating operational module that is relevant to the targeted countries of entry.
According to Hackle et al. (2012), “activities, interests, and opinion marketing directly dictate purchasing behavior and preference among customers” (p. 449). The population in the five targeted regions consists of relatively conservative middle-income families as the majority. This group is very consciously of culture and tends to be influenced by their cultural perception of a product before making a decision to purchase (Jones, 2010).
Since managing the process of selling of the refurbished phone is done through indirect distribution, it is difficult for the regional managers to balance the power of the supplier since the aspect of outsourcing the supply chain comes with a myriad of challenges such as market fluctuations (Yan et al., 2012). In the international logistics operations, sustainability is vital in the placement of an effective operations management plan to ensure that the targeted market is well served through a proactive balance of different business constraints (Hammond, 2006).
According to Yan et al. (2012), “it is critical to adopt brand amalgamation and consolidation through a long term communication strategy that directly appeals to the target market” (p. 469). Though the international operations management has been effective in promoting the visibility of the refurbished products across different markets, the operations model needs to be more inflexible to the cultural and social dynamics in each of the four states (Yan et al., 2012). Besides, the negotiating media contract stage is always very difficult to implement since the entry in each market is done at a different time with different resources.
Media has emerged as an important tool to organizations and individuals in logistics management due to its ability to bridge the gap between producers and consumers in the business matrix. This is especially true for the written media, which has widely been used by companies to draw the factors of production to guarantee sustainability in the short term and long term. The effects of written media on logistics management have led to the suitability of marketing approaches at times, while at others, the approaches have been praised for their authoritativeness towards informing the public due to the inability to integrate different operations management tools. Behaviors and attitudes can be changed through conditioning. Repetition of an act, for instance, through constant quality assurance leads to behavioral changes that may be beneficial or detrimental to a company (Jones, 2010).
This indicates how the media can and has been used to reinforce consumer behaviors. Efficiency activities, therefore, are taken to represent the official position of the organization on a product or service by the consumers. Communication activities in companies have led to doubled sales in the last decade since the products are branded and presented in persuasive ways that easily skew the minds of potential buyers (Hammond, 2006). For instance, the different contents of logistics management dealing with similar issues have had an accumulated impact on an individual’s perception following the integration of social media as an important medium for relaying advertisements messages.
Despite the fact that the challenge of allocation and customization of operations management is common in most of the international business management, the current literature on the topic has not focused on the South American continent. This means that there are no past research studies that are directed towards the dynamic region in Latin America. Therefore, the research paper will attempt to fill this gap by investigating how the challenge of allocation and customization of logistics resources affect international operations management strategies.
Findings
Despite the fact that the targeted countries are located in one region, the level of market attractiveness differed, with Chile being the most attractive and Brazil being the least attractive market. Since the entry plan for each country was systematic, the resources available should be spread across the five years. Customization of resources also became challenging in applying a standardized operations management plan since some of the targeted countries used different languages (Hammond, 2006).
Therefore, it was very difficult to use a single product matrix to create a refurbished phone brand across Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela. Since the production point for the targeted markets was located in Chile, the challenge of logistical support in order to keep a constant supply in other countries such as Brazil, Colombia, and Argentina was apparent. Besides, transporting the refurbished products manufactured in the US to Mexico was a challenge since the long-distance translated into more resources being channeled in the distribution costs.
The entire international operations management strategy had different primary channels for each targeted market. For instance, in Chile, the channels comprised of hypermarket, and self-service, while the channels in Mexico comprised of traditional and wholesale. The differences in primary channels translated to the need for more logistical support in the customization of the logistic resources for each geographical location (Jones, 2010). Since the geographical regions that were targeted have different cultural, social orientation within their demographic dynamics, it was very difficult to create a standardized international quality management strategy as part of the complete operation of the production and transition to improve product acceptance and visibility.
In trying to ensure that the operations management strategy for the refurbished product is effective, there was the challenge of sustainability, especially in the dynamic Argentina market since the research findings revealed that the majority of the targeted customers in this country could easily change their preference. It was not easy to create a sustainable communication plan for the refurbished phone brand since the advertisement message was similar in all five countries.
Among the key preconditions that emerged in implementing the simulation was the possibility of creating a long-term commitment to operations efficiency beyond the five year period dedicated to entry in the four markets. Specifically, the operations management plan was not created in a way that it can remain responsive to societal changes since the research conducted did not accommodate the possibility of brand amalgamation in the long run (Yan et al., 2012).
In developing the international logistics communication implementation stage, the regional manager was successful in the creation of a high-level strategy to ensure that the entry plan and penetration in each target country was done within the time frame allocated. Actually, the regional manager was able to create benchmarks for increasing product awareness and sustaining publicity in the four countries.
However, the advertisement tactics were mismatched since each targeted market did not operate in the same conditions. For instance, the regional manager did not have a comprehensive “understanding of the dynamics of the local market, technological competition, quality assurance, cultural compliance, and effective marketing skills when reaching its target market through the advertisement plan” (Jones, 2010, p. 48). This situation occurred due to the initial assumption that the targeted clients in the four countries will find it very easy to associate with the refurbished phone product.
Recommendations to handle the challenges
It is important to note that different countries exhibit different cultural and social practices and beliefs, which may have a significant influence on business. One important aspect to consider is the fact that the targeted region has cultural practices, consumption patterns, and beliefs that are different from those in the US (Hackle et al., 2012). Although it may be a daunting task to convince some clients in the targeted region to accept products affiliated to the US, the team can depend on the good diplomatic relations between the US and these regions to create positive change in a social environment and eventual product acceptance (Jones, 2010). Indeed, the team’s strategy of production in Chile may be successful in convincing the clients that the refurbished phone product is local.
In terms of language, the team may use English as the language of the primary operation since the majority of the targeted population speaks English as a second language. This will make it easy for the team to create a standardized international operations management strategy. Since the targeted region is largely dominated by Christians, the team many successfully create procedures on how to satisfy the needs of the communities without interfering with the Christian culture in Chile, Brazil, Peru, Argentina, and Mexico. This will allow the refurbished phone product to maintain its leadership position in the used phone market (Hackle et al., 2012).
During expansion, it is normal for any business to face different challenges. For the expansion to succeed, it is very important for one to take note of all the challenges that might appear, and strategies on how to tackle them. The team managing the refurbished product should adopt strategies to ensure that they are culturally sensitive through a thorough stakeholder analysis when launching the campaign, in order to eliminate any chances of alienating company stakeholders, especially on social perspective (Yan et al., 2012).
The team should conduct a survey of the South American region, including the socio-cultural norms of each targeted country, in order to understand their consumption patterns and needs. Besides, the production plant in Chile should be established to produce refurbished phones that are more inclined to the interests and preferences of this community, such as long battery life and multiple film cards.
Reflectively, a stratified operations communication plan should integrate the elements in the AIDA Model to easily convince the customer to purchase the refurbished product since they form the tenet of consumer behavior modification, especially when there are several alternatives to choose from. This may be achieved by creating a flexible efficiency module, critical public relations exercise, and continuous sales promotion. Besides, it is important to integrate personal selling through referrals and direct marketing. Since the world has become a village, the operations plan may adopt an appropriate media that appeals to the target audience.
In the ideal, there should be a mixture of the traditional operations management channels and modern channels such as six-sigma and integrated financial management system. It is important to plan for the integrated operations plan and create success measurement parameters. The parameter is meant to check goal achievement. Moreover, it is important to integrate the aspects of price, place, product, and promotion to ensure that the targeted customers notice the competitiveness of a service or good, among other alternatives (Jones, 2010). In addition, the whole plan should be managed within a predetermined budget range, which is derived through the rule-of-thumb and objective-and-task.
Conclusion
In order to address the challenge of demographic imbalances in the targeted region, the team managing the refurbished product should carry out clear customer segmentation and identified the needs of each segment in each country. From the demographic segmentation strategy, the team will be able to identify the young and family segments as representing the majority of targeted clients while the aged segment was the least in the targeted region. Through this strategy, more resources and marketing customization will be directed to the young and family segments to maximize the brand intake.
References
Hackle, U., Swenson, J., & Vince, Z. (2012). Consumer-based brand equity and top-of-mind awareness: a cross-country analysis. Journal of Product & Brand Management, 21(6), 439-451. Web.
Hammond, K. (2006). Market segmentation for competitive brands. European Journal of Marketing, 30(12), 39-49. Web.
Jones, P. (2010). Advertising: strong force or weak force? Two views an ocean apart. International Journal of Advertising, 9(3), 45-61. Web.
Yan, R., Myers, A., & Wang, J. (2012). Price strategy, information sharing, and firm performance in a market channel with a dominant retailer. Journal of Product & Brand Management, 21(6), 475-485. Web.