Baleno Holdings: Business and Market analysis - Iloka Benneth Chiemelie
https://ilokabenneth.blogspot.com/2013/11/baleno-holdings-business-and-market.html
INTRODUCTION
In 1996, Texwinca acquired the trademark "BALENO" and established the Baleno Holdings Limited as the holding company. Being a famous casual wear brand name in various Asian countries, Baleno was launched in the Mainland China and Hong Kong in 1996. The Baleno chain has achieved significant expansion in regions like mainland China, Hong Kong, Taiwan, Singapore and the Middle East in a mere 13 years' time. To give a rough idea, there are over 3700 chain-shops throughout the world.
Natural and simple is the motto of Baleno. The brand also provides a full range of casual wear with the emphasis of "value for money" in this mass market. Offering a competitive price and outstanding quality on its products ensures Baleno's significant market share.
Baleno Holdings Limited is striving to become the largest fashion-retail enterprise in Asian in the future. To boost its fame further, various top celebrities are invited as Baleno's spokespersons. Well-defined progress targets have also been brought into play. It is the successful and frequent innovation evolutions which ensure Baleno to achieve its great feat and sound expansion today. Excellent services and the high product quality are beyond everybody's expectations. It is thus not difficult to understand why Baleno can hold the key of success.
They currently have 10 manufacturing and distributing industries across Malaysia. Their products are mainly fashion and beauty products. Ranging from clothes for both genders and of any age to facial and beauty lotions made from natural sources like Bamboo, Sea mood, Citrus and Green tea.
COMPANY PROFILE
Companyname Baleno Holdings Limited
Type public
Founded 1996
Headquarter Hong Kong
Industry fashion and beauty
Revenue 9,997,737
Number of employee 21,817
Profit for the year 2009 HK$ 860 million
Total equity 4,274,788
Total assets 6,792 million
PEST ANALYSIS – THE WHAT AND HOW OF BALENO HOLDINGS
POLITICAL ENVIRONMENT
These are laws, government agencies and pressure groups that influences and limits various organization and individuals in a given society. (Kotler & Armstrong)
Baleno holdings work under the delegation and direction of the Malaysian laws. These include company taxes, ensuring customers security under the customer protection act, and operating business free of illegal products. These political factors like taxes influences the way the company operates. And since power changes hands every five years in Malaysia, a new government can be a new challenge to the company. The government taxes are currently high.
Government taxes are the major politically influence on companies in Malaysia. This taxes ranges from import and export tax, sales tax and annual income tax. These measures are merely enacted by the government to boost sales of local products more than imported products.
Research shows that, taxes for imported cars like BMW or Toyota are higher than taxes on local Malaysian cars like Proton. This is also applicable not to just the products and users, but also to the companies. And in this case, Baleno holdings limited is affected because the company is originally from Hong Kong.
ECONOMIC ENVIRONMENT
These are factors that affect consumer buying and spending powers. (Kotler & Armstrong)
Malaysians are industrial economics. The government provides most of their basic needs like, car and housing loan, student loan, medical insurance, accident insurance, tight security and defense system, as well as festivity promotion. This gives the Malaysian market a more buying and spending power. With more customers willing to buy, the industry is making more profits.
The biggest upset to the Malaysian market was the recent 2008/2009 recession which doomed most parts of the world. The national was drastically affected because most of their importation and business units are from nations that where in recession as well.
But, in terms of general sale, research showed that they were not many losses in fashion and beauty industries when compared with commodity products and asset industries. This recession inflicted the fear or purchase in customers and the effect was low sale and low profits, sometimes loses.
This is one of the economic factor faced by Baleno recently, and as the nation is recovering from the disaster, customers are back into the buying position and sales are starting to boom but the idea is that companies must find a way to cover the incurred losses during the period of recession.
SOCIO-CULTURAL ENVIRONMENT
There are institutions and other forces that affect the society’s basic values, perceptions, preferences and behaviors. (Kotler & Armstrong)
Malaysian is a country filled with vast majority of Malays (Muslims) Chinese (Christians and Buddhists) and Indian (Hindus and Christians) respectively. These three different but unique ethnic groups have a strong believe in fashion and beauty. Since Baleno offers fashion wears for both genders of any age and beauty products, it has been a boost to the company’s sales not withstanding many competitive forces.
This socio-cultural environment makes sales seasonal since customers go for fashions that best suit their festivity during festival periods. And this seasonality in purchase can affect companies like Baleno that deals mainly or only on western fashion and beauty products.
Another socio-cultural effect is the idea that many Malaysians still believe and make use of traditional medicine or means for ways to maintain and treat their body. This believe leaves them with little believe in industrialized beauty products, and it in turn affect sales of beauty products across the Malaysian market.
TECHNOLOGICAL ENVIRONMENT
These are factors that create new technologies, creating new products and market opportunities. (Kotler & Armstrong)
Since the era of customer satisfaction is far more fading off, Baleno holdings have implemented new technologies to make their customers delighted. This includes double filtering their clothes to make them more durable, comfortable and strong. Other ways they have turned it around is new active care body pack that includes moisturizing creams from Bamboo Tree, Green Tea, Citrus and Sea Mood. All these product offer double purpose use, that means they can be used both for the body and for the hairs. These have gone a long way to boost sales since customers no longer need to spend twice to get these products differently.
The growth in technology is a more complex factor since many companies are into the fashion and beauty industry, the need to remain firm as the best is so demanding that you need to upgrade and improve on the assets and technologies you have. This mounts lots of pressure on the company, because of the cost of maintenance and building new products.
4PS – HOW TO DEAL WITH ISSUES IN BALENO HOLDINGS
Marketing mix is the set of controllable tactical marketing tools – product, price, place and promotion- that the firms blends to produce the response it wants in the target market. (Kotler & Armstrong)
PRODUCT
Baleno holdings major in western products like jeans, and t-shirts.Even though, the market is considered good. The company can boost their sales by introducing new verities of products that suits the Malaysian traditions that the locals are more likely to buy. This product expansion would lead to marketing expansion as well and more profits to the company.
PRICE
Currently the prices for Baleno products are classified as affordable. But, Malaysia has four different types of market – rich, not so rich, not so poor and poor- and Baleno have to take into consideration these different groups of individuals and their behaviors. Understanding their needs and want and the amount of funds under their possession is a good way to reverse of look into their product pricing. Offering discounts and credit sales could be a better way to tackle this issue. This would boost more sales and bring in profits as well as market shares to the company.
PLACE
With just 10 distribution channels in a Malaysian market of 24 million people and 15 states, Baleno has a major setback in marking their products available to the market. Sales can only be achieved by customer’s decision to purchase, and for customers to make this decision; they need to see the products. To increase sales, Baleno would have to expand their market, increase their distribution channels to make their products available to more customers. This would result in mass sales and profit to the company.
PROMOTION
Baleno promotion currently includes sales promotion. To attract more customers and gain more market shares, the company would have to introduce a new promotion strategy that involves public relation to make customers more loyal, personal selling to reach more customers with their different tastes, advertising to create awareness of new products and customer relationship to keep customers delighted. This would make their goods not just available to the customers but also making the customers more royal and increasing sales as well as market shares.
CONCLUSION
By conducting the environmental analysis, we have been able to see and understand the challenges Baleno is facing as a company, and proper implementation of the marketing mix would be a boost to the company’s sales and gain in market shares.
Researches have helped me to critically analyze the Political, Economic, Socio-cultural and Technological Environment in Malaysian market. The biggest of all this is the Political factor, because this is a changing force that occurs every five years in Malaysia. A change in government could mean a change in many policies which would in turn affect Baleno holdings limited either directly to the company or indirectly through their customers.
In marketing, as well as in general sales can only occur upon customers demand for the goods or services. This demand is a concern for everybody and that is why customers demand could be the definition of where a company is now and where it would be tomorrow.
Haven understood the PEST analysis that affects Baleno holdings limited, I have developed s strategic measures which if implemented would bring back the company to their normally position, improve their sale and gain them more profits.
These strategic measures are based on full understanding of the marketing mix, proper understanding of strategic marketing and implementation.
REFERENCES
Website
Malaysian Government official website 2009, online, accessed on 24-09-2009 www.govt.com.my
Books
Joe, T, John, B & Keith, P, 2005, managing innovation: integrating technological, market and organizational change, 3rd Ed, john Wiley, England.
Philip, K & Armstrong, G 2001, principles of marketing, 9th edit, Prentice Hall, New Jersey.
William, D & Jerome, M 1999, Basic marketing: a global-management approach, McGraw-hill, London.
William, M & Ferrell, O 2005, marketing: concept and strategies,10th Ed, Houghton Mifflin, New York.
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