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Strategic approach to entering a new international market

4414 words (18 pages) Essay in Marketing

02/05/17 Marketing Reference this

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It is an international marketing planning assignment where I am supposed to launch a product in the foreign market and I have selected UK as my market and Dabur Real juice is my product which I will be introducing in UK.

INTERNATIONAL MARKETING PLANNING

According to the American Marketing Association (AMA) “international marketing is the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives”

THE ANALYSIS:

Dabur is the fourth Fast Moving Consumer Goods company in India. Dabur was established in 1884. This Company is giving an excellent performance since 125 years. Dabur has more than 300 products.( www.dabur.com) but the main product of this company is Dabur- Ayurvedic health care products, Vatika-premium hair care, Hajmola-tastey digestives, Real – fruit juices and beverages, Fam-fairness bleaches & skin care products. It has expended their products in various countries that includes Middle East, North & West Africa, EU and the US with its brands Dabur & Vatika. had a turnover of approximately US$ 750 Million & Market Capitalisation of over US$ 3.5 Billion with brands like Dabur Amla, Dabur Chyawanparas, Vatika, Hajmola and . The company has kept an eye on new generations of consumers with arrange of products that cater to a modern life style while managing no to alienate earlier generation of loyal costumers the companies growth rate rose from 10% to 40%. The expected growth rate for two years was to fold. Dabur foods a subsidiary of Dabur India is expecting to grow at 25%. Its brands of juices namely and active together make it a market leader in fruit juice category. (The Economic Times, www. Dabur.com)

According to the above data the market of fruit juice and juice drinks in UK is still has vast market after recession , the sales of fruit juice was 1189 m litres in 2005 but after gradually declining, sales was 1159 m litres in 2009, which is also a good quantity. There is a good chance for Dabur real juice for success in this market.

The fruit juice and juice drink market is valued at Pound 3.1 billion in 2009 and while both volumes and value have grown in recent years. (oxygen .mintel.com)

Britain now consumes 2.2 billion litres of juice drinks a year – around 36 litres for every man, woman and child.(news.bbc.co.uk). This figure shows the future growth of product one it make the goodwill after establishment. UK food market is one of the highly regulated food markets in the world and it is hard for any company to launch a new food product in the UK market. On top of that the existing intense competition by leading corporations selling juice products such as Pepsi Co and Coca Cola made it hard for other brands to enter into UK juice-consumer market. Tropicana is the no.1juice in UK. Tropicana makes the juices and smoothies from the highest quality of fruit, expertly blended. It contain 100% juice no added water.(www.pepsico.co.uk) On the other hand, it represents a unique opportunity for a multinational company to enter such market with a differentiated product attracting a specific customer-base which is spread all over United Kingdom. Dabur, the multi-national company, based in India is one of the oldest Fast Moving Consumer Good company selling range of products to its customers since 1885. It operates in 8 countries worldwide including United Kingdom but selling only limited number of products outside India. Due to its ‘multinational’ nature and have number of years experience in international trading, it puts the company in the unique place to launch its juice products in the United Kingdom.

There are many competitors in the market for new products which has mentioned in above data, in which PepsiCo, princes, Del monte has strong hold over the market.The organisation already sells some of its health products in Britain so already possess ‘UK consumer’ experience. The UK ‘juice’ market is competitive in its nature with leading brands established such as Tropicana and Copella. But there is a huge market potential to attract those customers who have some kind of connection with Indian sub-continent and are loyal to the products originated from that continent.

TARGET MARKET

The target market of my product would be south of London because the majority of Indian people are living there and they already know about the brand, there is a possibility to sale product among the Indian origin people, afterward we will launch the product in all over London. The number of residents in UK according to office of national statistics exceeds 3 million which are spread all over the country hence making an ideal position for a leading company like Dabur to launch its juice brand ”. According to Dabur.com, ” It has been the preferred choice of consumers when it comes to packaged fruit juices, which is what makes India’s No. 1 Fruit juice brand”. It further clarifies the status of ” that, “has been awarded ‘India’s Most Trusted Brand’ status for four years in a row”. This reflects the unique quality of this juice product which after number of years of hard work has not only get to the top place in the massive retail market of India but also retained the top position for four years. To expand internationally, British market offers best opportunity for this Indian brand targeting initially those customers who has some kind of connection with Indian sub-continent. Its unique entry point into the UK market typically based on the Core quality aspects of the ranges of the juices under ” brand available together with its augmented services such as the theme of Indian-culture with the core product.

UK juice market currently worth at $6602.5 million which includes a 10.9% increase in 2009 according to the datamonitor report on UK juice industry profile. With that it is set to increase by 53% to the total value of $10,118.5 million by year 2014 since 2009.(www.lowpriceshopper.co.uk)

The leading competitors include Pepsi INC., Del Monte Foods Company and GSK but do not include any of the Asian brands. UK market represents the 26.2% of EU juice market value (www.fdf.org.uk) hence representing an ideal place for Dabur to launch its juice products in this new market and to have access to EU market. Although the existing competitors face intense competition among selling juices but such rivalry tend to reduce due to the international comparisons and differential market shares in other markets. The juice market typically consists of the following juice types:

100% fruit juice – from concentrate

100% fruit juice – not from concentrate

Nectar – 30%-99% juice

Fruit drink

Vegetable juice

The best selling type from the above is the 100% fruit juice – not from concentrate.

Dabur focuses on producing 100% juice – not from concentrate and its juice ranges up to 12 covering almost all types of fruits.

There is no single competitor in UK who is covering that many types of ‘100% juice – not from concentrate’ thus making it ideal for this global FMCG to enter and survive the intense UK juice market and establish its juice brand ”. Its suitability for growth opportunity depends on the penetration of the ” brand into the market where there is a high concentration of residents of Indian-subcontinent. Its unique selling point is the existing quality which is on top of range of already established juice brands in UK market plus the comprehensive range of juices and the fact that it has been originated in India from a company which is in existence for more than 125 years. UK market is also considered an ideal market for Dabur due to high disposable incomes, and high health consciousness of UK residents’ couple with the desire of convenience of having quality products at the doorstep. The ” brand initially fits the criteria of becoming a successful juice brand in UK market but on top of that it can also launch similar juice products such as smoothies to compete with other major competitors such as ‘Innocent’. High product awareness means that Dabur can emphasize on the core qualities of its juices which circle around the ‘healthy lifestyles’. The biggest obstacle of a foreign market is the language barrier which can end up in high promotional cost. But Dabur already promotes its products in English in India and have large number of employees who are already skilled in English language. Thus entering the UK market will not going to increase its product-development or employee-training cost in anyway. There is also high rates of tourism every year which currently takes place in both countries thus there is already a huge sense of collaboration and exchange of cultural values in place. A big Asian community in UK means that Dabur only need to use different pricing strategies for ” products rather than starting from the scratch point of heavy promotion of its juices. (Economicstimes.indiatimes.com,www.dabur.com)

MODE OF ENTRY BY DABUR REAL JUICE

Export (Direct or Indirect)

Joint Venture

Direct Development

Figure: International Market Entry Options

Looking at the options above, company on the first instance can use the option of exporting its juice products because of low risk it carries but it will prove unsustainable for the company due to its traditional selling techniques which do not include exporting the products or having a joint venture. Company can make best use of Direct Development option by using its current product and customer base at a little extra cost. It gives company the maximum benefits of ultimate control but comes with the maximum cost without sharing it with any partners. This strategy fits best with Dabur international expansion motives which come with long term commitment in the international market. Direct Development also gives Dabur full control of marketing mix.

There are number of marketing options available for Dabur to expand its product base in UK to include its popular ” brand and it does have number of options. Looking at generic strategies it can enter the UK market through ‘Niche plays’ by having its ” brand on display in small corner and town shops present in multi-cultural areas of England such as London, Birmingham and Manchester. Due to the limited number of products offered by Dabur at this stage, it suggests that it has high excess capacity available by looking at the range of products it offers in Indian market. On top of that, the work it has done before on the development of brand in UK, it can be proved very successful for the launch of ” brand. This international expansion also suggests a good strategy to spread the corporate risk.

Assignment 2.

You are planning to enter this market as a market challenger.

Examine your strategic attack options.

To challenge existing competitors, further market analysis is being carried out as given below with discussion on strategic attack options:

MARKET SEGMENTATION:

First steps towards developing a strategic attach option on the competitors is the market segmentation. As a result of market segmentation company will be in a clear position on how to enter the market and reach the customers.

“Market Segmentation is the process of identifying different group of users within the market.” (Croft, 1994). Dabur will need to use following product distribution networks to reach wider customer audience which is also covered by the competitors thus creating a challenging environment for them.

WHOLESALERS:

When the market for juice are distributed in UK then these one that is wholesalers falls under a category which deals the juice directly or indirectly with customers.

DISTRIBUTERS:

They are specialized in the task and well known about the local preferences so it’s easy to get localized feedback, and they again major consumer of juice.

AGENTS:

Agent has the all information about the local contractors, distributors and retailers etc. So they can enhance the dealing among the retailers. Agents will help to increase the network.

RETAILERS:

Retailer is the ultimate person who is directly dealing with customers or direct sales the product, he directly interact the buyers and delivered the information to customer about product due to which buyer buy the product there are a lot of dabur retailers are available in London which are already selling different product of Dabur.

TARGETING

Targeting is the second stage of the Segmentation Targeting and Positioning (STP) process. After the market has been separated into its segments, the marketer will select a segment or series of segments and ‘target’ it/them.

The task of marketing manager is to plan and execute programs that will assure an elite competitive advantage for any organization. According to Czinkota and Ronkainen (1990), this task has two integral part. They are (1) the determining of of specific target markets and (2) marketing management that consists of certain marketing mix elements.

Option 1 – “THINK GLOBAL – ACT LOCAL”

To target its customer base, company initially needs to take into account the habits of its potential customers such as there cultural and attitude needs and which types of products such customers values. Dabur will have competitive advantage here against any other international FMCG who wish to target similar customer base as it is already aware of the cultural needs of the target customer base. However it needs to act very sensitively to attract and retain customers of Indian origin due to intense rivalry and availability of alternative products. Such customer base can be act as a source of promotion within UK market and outside UK market due to large movement of people globally which is turning world in a single market.

Option 2 – Decentralisation

Theodore Levitt has already commented on international movement in 1983 which was published in Harvard Business Review, “Ancient differences in national tastes or modes of doing business disappear, the commodity of preferences leads inescapably to the standardisation of products, manufacturing, and the institutions of trade and commerce…success in world competition turns on efficiencies of production, distribution, marketing and management”.

To integrate above, company need to ensure some de-centralisation within its organisation. Although it does have its subsidiaries in 7 other countries including UK, but specifically for the launch of product in UK decentralisation of marketing strategy from its Indian based business will be proved very beneficial. The decentralisation of marketing strategy will bring the benefits to Dabur UK such as addressing local needs more effectively but there will be issues in overall brand protection and strategic continuity of the overall business.

Option 3 – Using web

Looking at high internet access, Dabur should also use the web as the major marketing strategy to attract the customer to its ” product but it will need to ensure that it tries to use same strategic principles in marketing its ” Product in UK as it does in India to keep the similarities in communication channels. Communication strategy forms the part of promotional aspects of the Dabur Company which alongside other P’s of the market strategy are discussed in the implementation section of this report in further detail.

Assessing the options: How the product differs from others?

The Dabur Real juice would be different from other juice products of UK. It contain more nutrient and Ayurvedic substances which will make this product differ from others, ayurvedic substances will give much more energy as compared to others. it will target the customers age group between 10 to 35 but it’s also attract the customers above 35 due to its nutrition and more energetic factors.

To further develop strategic attach options, marketing mix analysis is carried out. The marketing mix is the term which is use to explain the compounding maneuver used by businessman for accomplishment of goal through its products and services. Usually its work on particular target group. It refers all 4 Ps which are few of the vital factors which implies the implementation of the product.

Product

Price

Promotion

Place

Product :

We are going to launch fruit juice it comes in different flavour. fruit juice is the core product. The company will launch its 14 variants in two divisions the first division will include the launch of seven variants and critically analysing the success. The company will launch its next seven variants after a period of 6 months. the juice will appeal to the people of all age group as health is no consider as wealth and juice is capable of nourishing people health of different age group. juice contains some added fleavors which will attract the age group of six to ten. Every product has a life cycle. Which start from Introduction than Growth afterward Maturity than after Declining and ultimately withdrawal last time of product. With the help of this product we can forecast the life of our product Real fruit juice.

PRODUCT LIFE CYCLE

Price :

fruit juice is the natural flavoured juice which consists of various nutrients and vitamins. Based on the investment and quality, we fix a good price for selling. The company has launch its products by CREAMING price technique. Price will also help to show the brand and quality which attract the customers. We are using the direct development of the product strategy to launch this product, so we need to recover the cost of production and also good profit margin. Profit is directly related to price of product in any organization. Price is important as it generates revenue. juice price margin will be excellent due to its brand name. Sometimes customer make general perception that low price means low quality. So we can’t ignore the customers like or dislike. Customer think negative about the very low price. They think that is inferior good and in case of too high price customer think product is very expensive. Until and unless company calculate the exact cost of goods and services, then company afford more loss on more sale.

Place :

Initially we target the Indian dominated place in UK. UK is the highly multi cultural country, where we can find the people from every part of the world. Inside the UK London is the highly multi cultural location, south and west London would be most preferable place for launching the product fruit juice. Apart from London, we will also provide the easy accessibility of fruit juice in Birmingham, Manchester etc. We will try to cover all those places where the transport is very economic. Product would be available in many physical stores as well as on virtual stores over the internet.

Promotion :

Promotion of any product is a vital process of an organization. We should be very careful about the promotion of fruit juice. Now a days we are living in the modern era, it is easy to provide the information about our product inside and outside of the door. Promotion has 4 vital elements: advertising, personal selling, public relation and sales promotion.

Advertising is a channel of communication which influences the listeners, viewers and readers directly or indirectly. With the help of advertisement we will make our product fruit juice among the customers. At this time we advertise fruit juice in various ways through television, radios, electronics, print media, banners and template also. We will distribute the free samples among the people. At the time of launching product in the market, we ned to spend a certain amount of money on advertisement. we can show the quality of product through advertising in electronic as well as print media. News papers and magazines contain the advertisement for a long period. It is one of the effective modes of promotion of goods. Free sample distribution and cash discount enhance the awareness of product in the market with the help of this process people will know about the taste and quality of a product, if they like product, they will start buying regularly. Cash discount always attracts the consumers attention to buy product.

We will also promote our fruit juice by good public relation. Daubur already have good image in the eye of Indian customers, so we will try to maintain this brand level in UK. We will also use the technique of individual sale to promote our fruit juice.

Middleman in Distribution:

We may reach out consumers either directly that is without help of distribution channel, or may be by using more than two distribution channel.

Manufacturer to customer: with the help of direct marketing we can sell juice to buyers by personal selling, direct mail, telephone selling and internet etc.

To distribute our fruit Juice we make available our product in to the multiplex, malls and give franchise and open new shop in local market. We will deal with agent, wholesaler and retailer to easy accessibility of our fruit juice to customers. Effective channel of distribution boost the sales of product.

Critical Reflection

Dabur juice is all set to launch itself in highly competitive juice market and ready to compete with well establish firms of juice market that include Pepsi co, Tesco, Tropicana.with Tropicana sharing the largest market share , Dabur juice can face some tough challenges. As discussed earlier the company using the creaming price technique it could go against the success of the juice in UK as some well established juice companies are charging much more nominal price and offering the similar quality. The company is the new entrant in UK juice market and Direct Development can go against the company which has just now moved their step forward by launching itself in UK market. Direct Development has advantage of getting maximum profits but on the other hand there are certain disadvantages as it is too costly for investment and it bears a lot of risk with it. The company will take much time for recovering its cost as the amount for investment is very high.The company will have to invest a huge amount in promotional activities as it has been mention earlier that in order to promote the juice the company will adopt a policy of distribution of free samples among the prospective consumers that could increase the cost and effect the profit of the company in long run. With the presence of well establish firms there is a perfect competition amongst the rivals, which could effect the success of the business in longer period of a time. Lack of Monopoly Market and presence of perfect competation the company will have to develop some unique strategy to tackle the problem of fierce rivalry in juice market. Although the company Dabur already launched in UK, the product of dabur that is juice is first amongst its categories it is a general perception of people that hesitate on shifting to a new product and juice been a new product could face this kind of difficulties. The company has a strategy of targeting the people of Indian origin it may happen that people of Indian origin may be use to local products so the company is in a great risk of failure in UK market. The company has adopted a direct development technique which involves a huge investment that includes setting ups the industries marketing which include a huge cost and in turn increases the profit earning capacity but at the same time the company has to go through high risk of not recovering it costs due to large investment and using direct development technique.

BIBLOGRAPHY

The Economics Times, 5 Dec, 2010, http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/Dabur-rebrands-Real-juice-eyes-Rs-700-cr-from-food-div/articleshow/7046665.cms

The complete directory of BBC, http://www.bbc.co.uk/a-z/

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http://www.fdf.org.uk/publicgeneral/Food_and_drink_exports_firsthalf_2010.pdf

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http://www.lowpriceshopper.co.uk/vitamins_nutritionalsupplements/products__keyword–uk+juice.html

Times of India, access from, http://timesofindia.indiatimes.com/search.cms

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http://economictimes.indiatimes.com/articleshow/7046665.cms?prtpage=1

http://www.pepsico.co.uk/brands/tropicana

Diet Blog, http://www.diet-blog.com/07/the_10_top_selling_brands_in_the_uk.php

IBIS World, http://www.ibisworld.co.uk/industry/default.aspx?indid=495

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