Fathom T

Global Market Analysis
Fathom World Communicator: Phone and Language Translating System
MNS Technologies

International Business
Instructor: Dr. David Strong
Spring 2012 – FTB

Abstract

The purpose of this paper is to summarize the steps of the marketing process involved in the launching of a brand new product in a particular part of the globe. We are focusing in brining a brand new product: the Fathom World Communicator into the market in Mexico City. We will be able to satisfy the customer’s needs and wants by applying our marketing plan and background research that we gathered about the area. After meticulously researching the market we were able to identify a target area that we believe will be successful. The introduction of the Fathom World Communicator breaks price and language barriers between local and foreign competitors. Our company wisely took advantage of joint efforts with local and established endeavors to be able to utilize local workforce and resources, making the launching of the Fathom World Communicator a success.

Introduction the Fathom World Communicator: All-in-One Phone and Translator 2012
Mexico City, Mexico

With projected 3.5% economic growth for 2012 and three times the size of Texas, Mexico has a current population of 113 million, with 50% under the age of 27. Mexico City’s population of 19.5 million, Mexico has outstanding potential and attracts impressive levels of investment. In 2012, the country will hold presidential elections and chair the G-20, a group of finance ministers and central bank governors from 20 major economies: 19 countries plus the European Union, which is represented by the President of the European Council and by the European Central Bank, where development and financial resilience, food security, employment and green growth are at the top of the agenda. Mexico is a vast and diverse country that offers excellent business opportunities, especially for U.S. product concepts due to the commercial ties between both countries and the recognition and acceptance of U.S. brands by the Mexican population.

Spanish is the official language of Mexico, having the largest Spanish-speaking population in the world with almost a thirst of all Spanish native speakers. Mexico is also home to a large number of indigenous languages that are spoken by 5.4% of the population. The indigenous languages with most speakers are Nahuatl, spoken by 1.45 million people, Yukatek Maya, spoken by some 750,000 people, and the Mixtex and Zapotec languages, each spoken by more than 400,000 people. In addition to the indigenous languages, other minority languages are spoken by immigrant populations like German, spoken by 80,000 of the Mennonites in Mexico. English is widely used and understood by education people and in urban centers. Mexico’s large and dynamic economy offers business opportunities in virtually any business sector which presents a potential for success for our newly developed product.

Market Entry Strategy

In Mexico, business is done on the basis of relationships. As a U.S. company, we had an opportunity to travel to Mexico frequently to develop and strengthen our relationships in order to do business successfully. Mexican companies tend to be extremely price conscious and appreciate outstanding service, as most consumers do. Time is essential to cultivate trust to enhance a professional partnership between other businesses in Mexico. Due to the different culture, Mexicans appreciate close working relationships so we decided to work with a locally-based agent in order to have minimal business-culture differences, allowing us to be more effective in building trust and conducting business in Mexico.

Mexico lies on the equator of the Americas and enjoys the close-proximities of the two continental markets. It is therefore surrounded by both distinctly developed and emerging economies. Opportunity for foreign investor relations is indeed vast with Mexico having more free trade agreements than any other nation in the world. Mexico has had a growing commitment to trade integration through the formation of free trade agreements (FTAs) since the 90s and its trade policy is among the most open in the world. The United States is, by far, Mexico’s most significant trading partner. About 80% of Mexico’s exports go to the United States and 49% of Mexico’s imports come from the United States. Mexico has had a growing commitment to trade integration through the formation of free trade agreements (FTAs) since the 1990s and its trade policy is among the most open in the world. Mexico’s pursuit of FTAs with other countries not only provides economic benefits, but could also potentially reduce its economic dependence on the United States. The United States is, by far, Mexico’s most significant trading partner. About 80% of Mexico’s exports go to the United States and 49% of Mexico’s imports come from the United States. Mexico has a total of 11 trade agreements involving 41 countries including the United States and Canada, Chile, Costa Rica, Nicaragua, Guatemala, El Salvador, and Honduras. In addition, Mexico has negotiated FTAs outside of the Western Hemisphere and entered into agreements with Israel and the European Union in July 2000. Mexico also has an FTA with Japan. (http://www.fas.org/sgp/crs/row/R40784.pdf)

Mexico was the country of choice for our company due to its nearby location, giving us easy access to travel in-between to research, study, and discuss business strategies. Our marketing management consultants are bi lingual which is a crucial part of dealing with a foreign country, giving us the full advantage of understanding the language of the country thus allowing us to fully understand all terms and conditions we agree upon in our business plan. We are fully aware and respectful of the Mexican cultural differences, placing our company in a highly advantageous position with competitors.

The vision and mission of our company goals are accomplished by the development of our international relationship with Mexico. By fully researching the needs of the business traveler, businessmen/women, students and anyone else who would benefit from an effective speaking translation device, we were able to bring the newly developed Fathom World Communicator to Mexico to satisfy the business needs of the country. We are the only load and clear translation device currently offered in Mexico, which is also loaded with a full capacity of translation terms to satisfy and prosper in this new business venture.

Cell Phone Translator Industry in Mexico

Our company is introducing a brand new product to the Mexican Market, the Fathom World Communicator; an all-in-one language translator cellular phone system. After meticulous research on the cell phone and hand held translator industry throughout Mexico, we found that cell phone service in Mexico is generally very good but there have been some major setbacks in the establishment of an adequate cellular/translator phone system. This has caused for great frustration for U.S. travelers vacationing or doing business in Mexico. First and foremost, Mexico made the costly mistake of utilizing the same cellular system that dominated the USA and Canada a few years ago and planned on being able to capitalized on American travelers “roaming” or borrowing the Mexican cellular system while on vacation or otherwise in Mexico. The main problem with this is that the roaming agreements between U.S. and Mexican carriers are extremely expensive as well as unreliable. This expense was then passed onto the consumer who was not willing to pay for expensive, yet unreliable cellular service. Since then, many carriers in the U.S. have opted to switch over to Global System Mobile (GSM) communications, the cellular platform used in over 200 countries, making things easier and more affordable to communicate internationally for the business or vacationer in Mexico which is our selected target the our product, the Fathom World Communicator phone/translating system.

The second set back is there being only one dominant cellular company in Mexico, Telcel, that service the entire country. Telcel uses the GSM networks on the 850 and 1900 bands – which is the same frequencies that GSM carriers use in the United States and Canada (http://www.cellularabroad.com/mexicocellService.php). With no real competition to speak of, local users don’t have much choice between who to choose for their provider, which means that they will pay the rates the provider issues if they need a cell phone. Thankfully, Cellular service in Mexico has improved drastically within the past couple of years and is continuing to do so, providing our company the competitive advantage we need to be successful in doing business and introducing our product Mexico.

Telcel has been able to upgrade its network to the GSM system and is continuing to extend its coverage to even rural areas, making our partnership a win-win situation. They are a mature company that are familiar with the Mexican market and have been in the communications business for years. We will be saving significant resources by joining ventures with Telcel, human, raw material, and infrastructure to name a few. Still, since there is not much competition from other providers in Mexico, prices will remain fairly excessive. Regardless of the high expense, many Mexican’s still carry cell phones due to the fact that all cell phones are still cheaper than land lines. Another reason is that some areas still lack the infrastructure needed to support land lines. With this being said, carrying a cell phone has become a necessity and a status symbol.

In Mexico, the majority of cellular users have opted to use a prepaid or pay as you go system to stay in control of how much is spent and the appreciation of no minimum fees, bills or monthly charges. While cell phones have penetrated virtually the entire spectrum of the population regardless of the socio-economic level, economically disadvantaged users only use their cell phones sparingly, mostly for emergencies. Another way users have found to cut expenses is sending SMS messages instead of placing calls. SMS messages are brief text messages that can be sent from cell phone to cell phone via the internet which is used extensively in the U.S.

MSN Technologies will continue to offer free text messaging to attract customers to our business. The person on the receiving end does not pay to receive SMS messages meaning that a person in the U.S. can send messages for free to someone in Mexico who uses Telcel or MSN Technologies translator cell phones.

For travelers going to Mexico, the least expensive cell phone option is to do what locals do – use the local carrier, have a local number and pay for local prices. Rates for most vacationers or business travelers in Mexico are quite reasonable, and the best deal they will get by going this route is that they will get the Fathom World Communicator without additional fees through MSN Technologies. Also, coverage is strong in most tourist areas such as Puerto Vallarta, Los Cabos, Cancun, Mazatlan, Acapulco, Guadalajara, Mexico City and so forth. Coverage should be comparable, if not better, to what you may expect in Mexico using MSN Technologies.

Ideally, it makes sense to purchase the Fathom World Communicator, language translator cellular phone. MSN Technologies will be able to provide an unlocked GSM that can be used as a primary phone in the U.S. with your GSM carrier and for international use. All you have to do when traveling to Mexico or any other country, is slip in the SIM card for that country in order to take advantage of the local rates.

Distribution

The three common ways of distribution are: intensive, selective, and exclusive distribution: intensive distribution aims to provide saturation coverage of the market by using all available outlets. Intensive distribution is usually required where customers have a range of acceptable brands to choose. If one brand is not available a customer will simply choose another; selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort on them. This works best when consumers are prepared to shop around. Customers have a preference for a particular brand or price and will search out the outlets that supply. exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area.

For the integration of the Fathom World Communicator into the country of Mexico, we selected the exclusive distribution method. Our primary plant will be located in Mexico, which will handle the production and distribution of the devices. By producing locally, we can keep production high and labor costs low. By using personnel to work in Mexico, there will be no Mexican tax on income as long as our company MSN Technologies pays our U.S. taxes. “There is also no restriction on the remission of royalties, dividends, honorarium or other types of payment to foreign workers in Mexico.” (How to do Business in Mexico, 1997, p.61). We will also look to employ local workers once we are aware of the legal restrictions or laws surrounding employment in Mexico, with another option based on sales will be a master distributor. By using a master distributor, all goods will be shipped from one warehouse and that distributor is responsible for sales in the pre-selected region and will also maintain local inventory and sells to retail.

Promotion

For a country with more than 100 million inhabitants, Mexico has notoriously low reading indicators, with relatively few readers of books, newspapers and magazines. The most common source of information is the television with 91% of households having a television set according to the 2005 census. Despite having relatively few readers, Mexico has quite a lot of newspapers, both national dailies and regional papers. Free broadcast television is dominated by two companies – Televisa and TV Azteca – with small local broadcasters making little impression on the market. Advertising for the Fathom World Communicator will be done through an array of forums for promotion. Newspaper, magazines, television and radio are popular sources for reaching the target market group MSN Technologies aims to hit.

Popular magazines within the country of Mexico that are ideal for the target market group we are aiming for are: El Financiero Internacional (business weekly, independent, business oriented), Milenio (newsmagazine), Vision (conservative newsmagazine) and Notimex (news service).

Reportedly 9 million newspapers are sold daily in Mexico City alone. The three most influential magazines in Mexico are the Proceso (Politics), the Contenido, and the Siempre. The newspapers that we will focus on will be: El Universal, Reforma, El Universal in News (English), El Heralso, El Financiero (Business news, nationwide), and El Economista (Business news nationwide) which are business related. (How to do Business in Mexico, 1997, p.87). We will spend most of our budget publicizing in the most influential paper, El Universal from Mexico City.

There are over 31 million radios in households in Mexico. AM and FM radio stations combined bring about nine hundred broadcasting stations throughout Mexico. The biggest and most popular network is StereoRey. StereoRey’s listening audience generally consists of commuters who may drive long distances and listen as they drive. “Airtime in Mexico City is very expensive, however, Monterrey and Guadalajara offer the same programs on StereoRey at a fraction of the cost. Television reaches approximately 12 million households in Mexico.” The market is controlled by two entities, the government owned channels and Televisa.” Since Televisa is owned by Emilio Azwarrage, the wealthiest man in Mexico, we have opted to purchase commercial time with his network in attempt to reach a similar target market.” (How to do Business in Mexico, 1997, p.88) and provided programming to more than 100 affiliate radio stations across Mexico

Promotional events are an important source of advertisement MSN Technologies pursue and will be showcased at the following events: March 22–24: We will be at the Food & Wine Festival in Ixtapa-Zihuatanejo – Apart from wine and cheese tasting, visitors will be treated with a free concert.

April 5-8: Primavera 2012 in Playa del Carmen, Mexico – Electronic Music Festival

Dec 12: Day of the Virgin of Guadalupe (Nationwide) – One of he most important holidays in Mexico during which millions of traveler’s visit.

Dec 23: Festival of the Radishes – Local artisans and sculptors set up stalls around the main square.

Product, Price and Currency

The Fathom Communicator, phone and language translator (PLT), will come with a standard calling plan of 1000 anytime minutes and free nights an weekends beginning at 5:00 p.m. and offer free text messaging. The Fathom Communicator PLT will come with standard Blue-tooth, media player and wireless modem. The manufacturing suggested retail price will be $250.00 U.S. dollars or $2,500 pesos.

The country of Mexico’s current currency is the Mexican Peso. The Mexican Peso current exchange rate as of April 21, 2012 was approximately 13 Mexican pesos to 1 U.S. dollar. Wile the value of the Mexican Peso continues to flutter, it is recognized as one of the top most traded currencies in the world. Each peso is equivalent to 100 centavos (centers).

The features of the Fathom Communicator PLT include global speech to voice translator, a Spanish English dictionary, Metric Conversion, a built in magnifying reading les, GPS, camera and web browser.

Competitors

Research indicates that the Fathom Communicator PLT is unique and has no local competitors within the target market of Mexico. While there are several individual devises available to the public, there is not one complete piece of equipment that offers all the features and functions as the Fathom Communicator PLT.

Examples of the devices in the market today that would come close are as follows:

• The Franklin Electronic 12 Language Euro Translator whose selling price on ShoppersChoice.com is $56.58. • The Franklin Electronic Publisher, inc., TG-450 whose price is $31.99. • The Merriam-Webster Collegiate Dictionary prices at $7 - $34. • The Merriam-Webster Speaking Dictionary price ranging from $78 - $350. • Garmin Street Pilot in store cost • TomTom One XL suggested retail price of $100 - $350.

Market Research

The Fathom Communicator PLT was tested on a a panel of twenty-four individuals all with specific communication needs. The test panel consisted of seven power players from fortune 500 companies, two stay-at-home moms stationed abroad, and one stay-at-home dad, and one international buyer, two airline pilots, and one small business owner, three full-time college students, two legal professionals, two clergy members and the remaining three retirees. The test panel consisted of various ethnic backgrounds, genders, and income and educational levels. The testing panel consisted of various ethnic backgrounds, genders and income and educational levels. The testing was conducted for a period of six months, where after suggestions and modifications were made for improvements to the Fathom Communicator PLT.

Macroenvironment

Launching a unique communication tool in a country with a population of over 113 million inhabitants, of which 19.5 million are within the Mexico City metropolitan area. Almost all of Mexico City metropolitan households own a phone line while 60% of the city’s occupants own their own cell phone and have internet access. Mexico has a large youth population of which the majority is influenced by western culture and status. In 2011 close to 50% of the population was 25 and younger. (www.conapo.gob.mx/00cifras/5.htm).

According to the National Institute of Statistics, Geography and Informatics (INEGI), the National Population Council (CONAPO), and the National Commission for the Development of the Indigenous Peoples (CDI), over 53 million consist of female population.

Communication technology is seen even in remote areas which allow families to keep in touch with family living aboard. Mexico City’s economic importance is high because it is one of the most significant Latin American commercial and financial centers at the present time. According to a study conducted by PricewaterouseCoopers, Greater Mexico City has a gross domestic product (GDP) of $315 billion in 2005, ranking a the eigth-riches urban agglomeration in the world after the greater areas of Tokyo, New York, Los Angeles, Chicago, Paris, London and Osaka/Kobe, and the richest in Latin America in 2020 it is expected to rank seventh with a $608 billion GDP, displacing Osaka/Kobe (PriceWaterhouseCoopers, “UK Economic Outlook, March 2007, page 5.””Table 1.2 – Top 30 urban agglomeration GDP rankings in 2005 and illustrative projections to 2020 (using UN definitions and population estimates.””

The Federal District (Mexico City) is the country’s richest region. The extremely high spending power makes the city attractive for luxury goods companies. Mexico City has become the center financial hub of the country for the corporate headquarters of large, innovative, high technology companies, and businesses. The country hosts a large variety of manufactures and production facilities that are located along the border towns and large cities eliminating the need for import of electronic components. Talk about crime rate of border towns here. The government encourages foreign companies to establish their facilities in the country with tax incentives and new environmental regulations for manufacturing within the Federal District. (Environmental Issues In Policy Based Competition for Investment: A Literature Review (http://www.oecd.org/dataoecd/2/35/9259521.pdf)”. Organization for Economic Cooperation and Development, OECD, Environment Policy Committee (April 2012).

Foreign companies established in the country employ workers with diverse culture and political backgrounds to meet the country’s culture and political values and beliefs.

REFERENCES

Read more: Mexico Press, Media, TV, Radio, Newspapers - television, circulation, stations, papers, number, print, freedom, online http://www.pressreference.com/Ma-No/Mexico.html#b#ixzz1sFlAaF5W