Preliminary Project Charter Worksheet

international marketing

•    Identification of specific challenges to company

30%
Constructive analysis and application of international marketing strategies    •    Evaluation of current situation linked to proposed strategic options for international growth, including justification of market selection for growth
•    Identified and justified selected strategy with particular focus on relevance to target audience
•    Outline of key aspects of marketing mix as applicable to the identified strategy

60%
Format and referencing,     Harvard referencing where relevant and appropriate.  Appropriate report format     10%
Total        100

Candidates must clearly label their ID Number on additional separate reference, formula or answer sheets.

Summative Assignment Task:
This summative assessment represents 50% of grade.
All learning outcomes will be assessed.

Scenario
As a marketing consultant for new Moxy budget hotel chain, you have been asked to complete a strategic marketing audit to analyse both internal and external factors that are impacting on the organisations ability to develop internationally.
You have been given a particular remit to consider the changing nature of the global tourist industry to consider the future international market development for Moxy.  Based on your critical analysis of the international hotel industry, assess the strategic options available to Moxy to develop its international presence. Recommend with justification Moxy’s strategy for international market development.
International Marketing Strategy Report
This should include:
•    summary situation analysis
•    evaluate strategic options for Moxy’s international strategic growth
•    recommend with justification 1 of these strategic marketing options and associated market selection and entry strategy
•    outline recommended marketing mix to support the recommended strategy
Notes on report:
•    Please note analysis of case study research data and any additional data should be included in appendices in the form of a marketing audit.  Please ensure you cross reference the marketing audit within the main body of the plan to ensure you receive relevant marks e.g. summary situation analysis to summarise key findings from detailed marketing audit in the appendices.
•    You should use the data provided in the case study material but you can include additional research data.
•    The focus of your additional research should be in relation to the academic nature of international marketing strategy development, as opposed to a lot of additional market data relating to the case.
•    Please present in business report format

Supporting Case Study Material: Moxy
What we’ve seen
•    Ikea has bought up a lot of development land in the UK and Europe and yet has not been getting permission to open superstores in every site it owns.
•    Ikea has strong property acquisition and development skills.
•    The company is already building homes. In Gateshead the first ‘flat-pack’ village, Boklok, has been built with Scandinavian-style timber-framed homes. It was developed in conjunction with  building company Live Smart At Home – a provider of affordable and supported housing.
•    Ikea’s development plans include a Europe-wide chain of hotels under the Moxy brand, pitched at the budget hotel customer. These will be developed and run in conjunction with Marriott.
Ikea in the UK
Ikea opened its first UK store in 1987 and currently operates 19 stores, 18 of which are located in the UK and one in Ireland. Future openings coming on stream include new stores at Reading and Sheffield.
Flat market conditions have depressed sales of furniture in the UK for several years. Also, the company has not been able to open any new stores since 2008. This has meant almost static levels of sales for Ikea.
Budget hotels in the UK
Mintel’s report Hotels – UK – October 2013 reports that the market for hotels is growing in the UK. In 2013 there were 160.2 million guesthouse nights in the UK, +14.4% on 2008. By 2018 this will grow by 11.7% to reach 178.9 million.
Budget hotels account for around 14% of the market by number of hotels and 23% of the market by number of rooms.  The leading groups in the market are the budget chains Premier Inn and Travelodge. These companies have a combined market share of 10% of UK hotels and 15% of UK hotel rooms.
During 2012 UK hotel supply increased by around 18,000 rooms, the highest increase over the past decade. Around 90% of new rooms in 2012 were branded. And the explosion in hotel development is continuing – around 3,300 new rooms opened in the UK by the end of 2013 and a further 15,000 will come on stream in 2014. Over half of all new rooms being built are expected to be in budget hotels.
Will Ikea’s new hotels contain Ikea furniture?
Marriott International launched its new economy tier, three-star hotel brand Moxy into Europe in March 2013, expected to arrive in the UK during 2014/15. Moxy, designed in conjunction with furniture company IKEA, is targeted specifically at what Marriott sees as a key emerging demographic, the ‘Millennial traveller’ (those born between the early 1980s and the early 2000s).

The first Moxy hotel will open near Milan’s Malpensa airport in 2015, with rooms priced at €60 (£52) to €80 a night. And Ikea is targeting further locations in cities across the UK and Europe. In the UK the first four sites will begin opening in 2015 at Westfield’s Stratford City Olympics site, Heathrow’s Bath Road (a 422 bed hotel), the Royal Docks in east London, and Liverpool’s Cropper Street.
The furnishings in guests’ rooms will not come from Ikea, though they will reflect the no-frills price of a night’s stay. But the hotels will be built with an ‘Ikea’ approach including pre-manufactured rooms complete with flat-pack fittings, manufactured in Italy and delivered across Europe. The bathroom amenities are reported to be ‘upscale’ and the colour tones planned for the hotel rooms will not feature the bright colours which are associated with some Ikea furnishings, but will be calming, neutral and have a natural theme such as leather-look and stone.
So Ikea’s motivation is not so much to create a showroom for the company’s home furnishing lines, but to capitalise on its skills in delivering excellent value for money. The company brings its property development skills to the party, along with a desire to make money outside of its core markets.
Opportunities for cross-marketing?
Ikea is not the first furniture retailer to open hotels in the UK. Laura Ashley opened its first hotel in August 2013. The Manor Hotel at Elstree is showcasing Laura Ashley furnishings. Guests sleep on the company’s beds, read by Laura Ashley lamps and enjoy the comforts of Laura Ashley furniture throughout the hotel. The interior also uses archive designs, some dating back to the 1950s. And Laura Ashley’s design team have a track record of working on interior design for other hotels before this.
So it would seem surprising if Ikea misses an opportunity to expose customers at Moxy hotels to its design ideas, its textiles and its housewares. Where else will people get the chance to actually sleep on an Ikea bed for the night, or experience an Ikea bathroom? And there could also be other cross marketing opportunities such as developing a loyalty scheme for customers of the hotels to benefit from the stores, and customers of the stores to use the hotels.
Extending brands
The Mintel Inspire Trend, Extend My Brand, looks at the ways established brands have begun to leverage their trust by extending into new categories. Brands in declining or heavily regulated markets are also extending into new territories and new sectors to survive, whilst others are using extension as a form of self-promotion in its own right. And for Moxy, any visitor from outside the UK there is scope for the brand to capitalise on people’s familiarity with the Ikea brand, setting the expectation of hotel standards.  There could be scope for the brand to become involved in facilitating trips, including shopping trips that take in a UK Ikea store!

What it means
•    In a slow-growing and highly competitive retail market place Ikea is spreading its wings and looking for new channels of revenue.
•    The budget hotel idea fits very well with Ikea’s value-for-money philosophy. And also gives the company development opportunities on land which are less suitable for retail outlets.
•    Ikea’s design flair and cost control experience should help it create a chain that will stand out in the crowded budget hotel market place.
•    For the future Ikea has a significant opportunity to use the Moxy hotel chain to build awareness of and loyalty to the Ikea brand.

The competition in the UK: low=frills, high teach
As the budget sector continues to grow apace, leading hotel chains are rolling out new pod brands, designed around a combination of small space (ideally suited to congested city centre locations), few frills, low prices but high technology.

In July 2013 the UK budget market leader Premier Inn announced its new ‘hub by Premier Inn’ brand. Rooms will feature an en-suite bathroom, wardrobe, desk, bed and a 40” smart screen television, contained within a space of 11.4 square metres.

Guests will be able to control lighting and room temperature using a mobile phone app. They will also be able to pre-order breakfast and change the television channel so their favourite programme is on when they arrive. According to owners Whitbread, room rates will be up to 30% cheaper than existing Premier Inn hotels.

citizenM has launched its first London venue with two more properties to follow in the capital in 2014. The boutique capsule concept is designed around ‘affordable luxury’ with rooms offering a king-size bed, wall-to-wall window and a screen MoodPad that enables guests to control the television, window blinds, temperature, coloured lighting and wake-up alarm themes. Wi-Fi and iMac computers are offered free of charge along with the services of a 24-hour snack/drinks bar canteenM. The brand describes its target market as ‘frequent traveller, value conscious, multi-cultural, free-spirited, tech savvy, informed, social, international, contemporary and urban’.

Source: Mintel Report 226.3.14

Additional Moxy Case Study Data:
Hotel Trends – February 2014
Overview
Total spending on travel and tourism is projected to have risen by over 40% in real terms (all amounts stated in 2011 US Dollars) between 2012 and 2020. Growth in leisure travel spending is forecasted to slightly outpace that of business travel spending, which supports the move of some major hotel chains to create all-inclusive resorts, as detailed below in this report.

FIGURE 1: Projected spending on leisure & business travel, 2012-20

(in 2011 US$m)
World     2012     2013     2014     2015     2016     2017     2018     2019     2020     % change 2012-20

Leisure travel spending    3,222.1    3,324.1    3,479.7    3,652.7    3,823.2    3,999.8    4,184.6    4,375.2    4,570.5    +41.8
Business travel spending    1,017.4    1,048.9    1,103.5    1,161.1    1,214.2    1,266.2    1,318.0    1,369.7    1,418.8    +39.4
Total     4,177.8     4,309.9     4,518.0     4,746.3     4,967.8     5,193.9     5,427.8     5,667.4     5,909.1     +41.3

Source: WTTC

Otherwise, spending on domestic travel is expected to grow faster than incoming receipts. This is mainly due to the rapid growth of travel (both leisure and business) spending in the large developing countries – notably the BRICS (Brazil, Russia, India, China and South Africa), where tourism is overwhelmingly domestic.

FIGURE 2: Projected incoming receipts & domestic travel spending, 2012-20

(in 2011 US$m)
World     2012     2013     2014     2015     2016     2017     2018     2019     2020     % change 2012-20

Incoming receipts    1,243.0    1,282.0    1,343.7    1,409.8    1,466.6    1,525.1    1,587.2    1,650.1    1,714.7    +38.0
Domestic travel spending    2,934.8    3,027.9    3,174.2    3,336.5    3,501.2    3,668.8    3,840.6    4,017.3    4,194.4    +42.9

Source: WTTC

According to Mintel estimates, the total number of hotels in 20 major country markets worldwide should have advanced by about 20% between 2011 and 2016. Unsurprisingly, the greatest growth is projected for developing countries – the BRICs in particular – led by India, China and South Africa. Two South East Asian nations – Indonesia and Vietnam – are also slated for rapid growth, with the number of hotels projected to have risen by over 40% by 2016. Meanwhile, the drop in the total number of hotels forecasted for Australia and Japan does not necessarily imply a reduction in total accommodation capacity, but rather an increase in the average size of property. In Japan, for instance, small traditional inns – called ryokans – are being progressively replaced by larger standard hotels.

FIGURE 3: Trend in the number of hotels in 20 leading country markets worldwide, 2011-16

Region     2011     2012 (est)     2013 (fore)     2014 (fore)     2015 (fore)     2016 (fore)     % growth 2011-16
Australia    5,990    5,957    5,902    5,840    5,772    5,700    -4.8
Brazil    27,250    27,686    28,164    29,019    30,153    31,207    +14.5
Canada    8,486    8,569    8,575    8,631    8,650    8,693    +2.4
China    80,776    87,276    97,339    107,933    120,100    128,505    +59.1
Colombia    7,572    7,970    8,346    8,725    9,106    9,494    +25.4
France    58,500    59,100    60,400    61,600    62,900    64,200    +9.7
Germany    45,600    46,203    46,698    47,434    48,160    48,881    +7.2
India    52,640    58,860    64,940    72,650    80,620    89,630    +70.3
Indonesia    15,283    16,551    17,636    18,954    20,398    21,881    +43.2
Italy    77,350    77,650    78,340    80,110    82,510    85,430    +10.4
Japan    79,066    77,727    76,196    74,566    72,932    71,302    -9.8
Mexico    17,294    17,975    18,470    19,072    19,646    20,278    +17.3
Russia    5,655    5,956    6,254    6,540    6,787    7,045    +24.6
South Africa    5,320    5,668    6,054    6,427    6,863    7,355    +38.3
South Korea    711    726    749    773    795    818    +15.0
Spain    35,114    36,031    36,907    37,401    38,143    39,231    +11.7
Turkey    12,721    12,635    12,655    12,943    13,281    13,629    +7.1
UK    46,388    46,348    46,625    46,932    47,762    48,285    +4.1
US    51,210    51,700    52,100    52,500    52,800    53,200    +3.9
Vietnam    13,000    13,706    14,677    15,718    16,986    18,296    +40.7
Total     645,926     664,294     687,027     713,768     744,364     773,060     +19.7

Note: est = estimate; fore = forecast
Source: Mintel Travel Accommodation – 2013

Trend Information
•    Brands continue to proliferate with new offerings, which emphasise ‘lean luxury’, health and fitness, social networking and technology, and target the millennial cohort in particular.
•    Hilton is attempting a comeback in the lifestyle segment following the failed launch of Denizen in 2009.
•    Marriott is entering the economy segment with its Europe-centred ‘cheap chic’ Moxy concept that targets ‘Millennials’.
•    Non-affiliated hotels are especially dependent on online travel agencies (OTAs), which typically generate 70-80% of their online bookings.
•    Priceline’s Booking.com and Expedia are consolidating the OTA sector, but Booking has the advantage due to its destination-oriented structure.
•    Metasearch is becoming a dominant force in hotel distribution. Kayak, owned by Priceline, and Trivago, a unit of Expedia, are leading examples. The guest commentary site, TripAdvisor, is increasingly being used as a metasearch tool and Google has launched Google Hotel Finder, which enables travellers to search hotels by location, price, star grade and guest appreciation score.
•    The future of mobile devices as hotel booking tools is being enhanced by Hotel Tonight, who have developed an easy-to-use app for last-minute hotel bookings in some 200 cities worldwide.
•    New York-based Loews Hotels & Resorts has become the first chain to offer booking possibilities on Twitter.
•    Some traditional hotel services, such as reception desks, room service and minibars are falling by the wayside, due to social and technological evolution.
•    Hotels are using technology both to save costs and enhance the guest experience.
Source: Mintel Hotel Trends– 2014

Ikea Store Location
As of August 2014, IKEA owns and operates more than 350 stores, in some markets it operates franchise arrangements.

Country    Debut    No. of stores
Australia
1975    7
Austria
1977    7
Belgium
1984    6
Bulgaria
2011    1
Canada
1975    12
China
1998    15
Croatia
2014    1
Cyprus
2007    1
Czechoslovakia (to 1992)
Czech Republic (1993 on)
1991    5
Denmark
1969    5
Dominican Republic
2010    3
Egypt
2013    1
Estonia
TBA    0
Finland
1996    5
France
1981    30
Germany
1974    46
Greece
2001    5
Hong Kong (to 1997)
Hong Kong (1997 on)    1975    3
Hungary
1990    2
Iceland
1981    1
India
TBA    0
Indonesia
2014    0
Israel
2001    3
Italy
1989    21
Japan
1974 – 1986 (initial),
2006 (reentry)    5
Jordan
2014    1
Kuwait
1984    1
Latvia
TBA    0
Lithuania
2013    1
Malaysia
1996    1
Morocco
TBA    0
Netherlands
1978    12
Norway
1963    6
Poland
1991    8
Portugal
2004    3
Puerto Rico
2013    3
Qatar
2013    1
Ireland
2009     1
Romania
2007    1
Russia
2000    14
Saudi Arabia
1983    3
Singapore
1978    2
Slovakia
1992    1
South Korea
2014    0
Spain
1980    20
Sweden
1958    19
Switzerland
1973    7
Taiwan
1994    5
Thailand
2011    1
Turkey
2005    5
Ukraine
TBA    0
United Arab Emirates
1991    2
United Kingdom
1987    18
United States
1985    38

Source: Ikea.com

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