The Promotional Plan for Market Entry of Areca Nut Plates and Bowls - Report Example

Executive Summary As a result of research conducted by Strikers in February of a responsive marketing strategy was recommended for Areca nut leaf plates and bowls to the UK market. This report details an 18 month promotional plan for Areca nut leaf plates and bowls in line with those recommendations. Areca nut is a cash crop found in Southern India, its leaves are tough and broad, and these qualities of crop are exploited by disposable plate manufacturers, to produce biodegradable utensils like plates and bowls. The use of areca nut plates is common in India and its neighboring countries. However, it’s a new item for UK’s market. To devise a market plan several business associated analytical tools were used to outline the pros and cons of introducing Areca nut leaf plates. The research carried out by the group Strikers included SWOT analyses, PESTEL analysis and Porter’s 5 forces. SWOT comprises of strength, weakness, opportunity and threat. According to this analysis, Areca nut leaf plates have two main strong points, first its raw material is cheap, and the product itself is biodegradable. Unavailability of raw material in UK is its weakness. Opportunities lie to the uniqueness of the product in regards to UK’s market, while threats include socio-political upheaval in India, or competition from other companies. To study the macro environment for the product and market, PESTEL analysis was used. There were several factors related to United Kingdom’s market that gave positive predictions, regarding the future of Areca nut market in UK. Porter’s 5 forces were also used for evaluation, and the results obtained were promising for the company. The SMART objectives of the promotional campaign are to specifically target the fast food industry’s packaging sector; to make sales or sign contracts for at least five hundred thousand plates in the first year; and to earn income equal to the initial investment cost. The main factors discussed in this report are related with finance, resources, promotion mix and channels of distribution. Finance is most important; therefore the company needs to ensure availability of capital. Finance includes selling and operational charges. Resource management is a key to success in newer market. Company needs to manage human as well as financial resources, along with the raw material. People only buy what they have seen or heard of. Advertisement campaign must be designed to voice the product’s uniqueness and usability. How product will be brought into the market, was discussed channel of distribution. Overall the results and analysis of the business plan reflect advantages and disadvantages of opening market in UK. The market is advantageous because it will open new channels for marketing of the product, it will ensue the expansion of the product into other EU countries. Further it will earn foreign exchange for Areca nut producing countries. Since, the market location is new, it will be challenging to establish the setup at the star. Due to the distance involved and absence of raw material in UK, there will be extensive spending regarding operational and logistic costs. Still the attempt to establish market for Areca nut in United Kingdom is welcomed, because its advantages outweigh its drawbacks. Introduction The report addresses the promotional plan for market entry of Areca nut plates and bowls into United Kingdom. Arecanut is a cash crop found in Southern India, its leaves are tough and broad, and these qualities of crop are exploited by disposable plate manufacturers, to produce biodegradable utensils like plates and bowls. The use of these cutlery items is common in India and its neighboring countries. However, it’s a new item for UK’s market. To devise a market plan several business associated analytical tools were used to outline the pros and cons of introducing Aerca nut leaf plates. The research carried out by the group Strikers included SWOT analyses, PESTEL analysis and Porter’s 5 forces (Bivolaru, et al., 2009; Grundy, 2006 ; Hill & Westbrook, 1997; Kurttila, et al., 2000; Yüksel, 2012). The focus will on analyzing the various factors that can influence the entry of a product into United Kingdom’s market. The SMART objectives of the promotional campaign are to specifically target the fast food industry’s packaging sector; to make sales or sign contracts for at least five hundred thousand plates in the first year; and to earn income equal to the initial investment cost. Marketing Objectives Disposable plates are common use products, anyone who carries his meal to work, on travel or purchase fast food use them. There is no specific segment of economic class that is to be targeted; however, people who prefer environmental friendly lifestyle may be used as initial target for market entry campaign. Fast food chains may be contacted to use packaging made of Areca nut leaves. The availability of raw material is not a concern because Areca nut is widely planted in India and there are number of farmers who ready to sell the by- product of their seasonal produce. The expected profit for the first few months will be on the lower side, however, once the product gains general acceptance, and is able to establish public demand, the expected profit will definitely increase several folds (Kotabe, 2006). (133 words) Product Adaption While supplying plates and bowls to restaurants or fast food chains, signature monograms or trademarks of the company may be engraved into the plates, this will earn specific automatic publicity for both the sides. Promotional Mix Advertisement will play a crucial role in the establishing the launching pad for the company’s product (Christian, 1994). People only buy things which they have seen or have heard about. The main aim theme behind the advertisement campaign will be environment protection and use of biodegradable products. Biodegradable paper-bags that already available in the market are made through several extensive chemical processes, and they do not have the capacity to hold water or drinks. Areca nut leaves are water repellent and are not processed chemically; therefore their manufacturing does not involve any potentially hazardous activity. Various platforms can be used to voice the aim of the campaign. Social media is the cheapest and easiest way to advertise one’s products; however, people attached to conventions are still reluctant in purchasing products that are not advertised in the main stream media like radio, television and newspapers. E-mail and short message services can also be used to spread the word (Armstrong & Cunningham, 2002). Target food chains may be offered a trial sample to package or serve their products in Areca nut leaf plates and bowls. This initiative can be used to advertise the products, for instance if Mc Donald’s start selling it meal in Areca nut leaf boxes, and inform the consumers that they are using biodegradable material for packaging, it will add spur to the business, as pro- environment segments of the society will be eager to purchase such materials, and the competing food chains will also try to get their hands on biodegradable Areca nut leaf products. Introductory exhibitions may be arranged by the company before launching its products in the market. People from all fields of life must be invited, and they should be given the chance to get to know the plates made from by-products of an exotic plant species. Channels of Distribution and Distribution Methods The company will have to establish a whole sale outlet within the business centers of UK. It will need a warehouse to store the stock for immediate delivery. The import of the stock will depend on the demand by the market. However, the warehouse must have the capacity to hold a minimum of 1 million pieces at one time. A network of salesmen may be spread all around the country to take the orders, and convey them to main office. The selling expenses for the product in the first year are estimated to be around £ 20,500, out of which £ 8,000 has been allocated for the distribution. Retail sector in UK is well developed in which Tesco, Sainsbury, Iceland, Waitrose etc. plays a leading role in it. These retailers have always maintained a good relationship with the customers such that whatever new products available in those retail shops will definitely get the attraction of customers. Better than manufacturers, retailers have earned consumer loyalty and they know how to control the market through effective merchandising and targeted pricing. Retail sector in UK gives much value to imported goods as when particularly London is considered, it is an international hub which holds people from different countries. People are always attracted to the new products and even more when it is from a different country. As a starting stage, we would sell our product through the retail outlets like Tesco and Sainsbury as they are expertise and good in retail market. Being into UK`s market since more than four decades, availability of consumers behavior and needs could know easily and customer satisfaction could be provided (Crane, 2010; Doole & Lowe, 2008). As Arecanut tree leaves are not available in the UK, we would export the manufactured product from India by the shipway. Even though it takes more time, but considered to other means it is cheap and economic. This product fits into the economic product list, as the motive behind this product is to be eco-friendly in nature and focus to cut down price where ever possible. The company can plan to import the product once in a month and the frequency could be later increased depending on the orders and sales. The imported products are stored in a warehouse and later distributed to the retailers (Quelch & Klein, 1996; Vargo & Lusch, 2004). The warehouses that would be built would be planned in a way that suits the physical distance and which would allow us to have a fluent distribution to the retailers. For this, multiple warehouses will be built Price The type of product, different variable of competitive situation and other strategic factors affects the pricing activity (Ghauri & Cateora 2010).The pricing strategy will be based in accordance with operational logistic expenses. Areca nut leaf has a low cost in comparison to the amount spent in operations and logistics. To ensure that price tagged is fair, it is imperative to evaluate the pricing used by the competitors are currently, as well as, their promotion and places they sell to. Moreover, looking at market share and target customer are a significant factors that cannot be ignored. Responsive strategy will be an optimal approach to enter the market with reliable resources. After carrying out the survey, the company has decided to set its product price for normal paper plates in UK, the proposed prices have been summarized in the following table. Size Cost of 100 pieces Cost of 1000 pieces 5.75” £ 1.32 £ 12.97 6.75” £ 1.61 £ 14.61 8.75” £ 2.76 £ 24.20 The company will distribute the product by shipway from India to UK. Consolidating the product in a container with other company will help minimizing logistic cost which is around 5005£ for 200,000 plate. The price will be set to just cover up the logistic cost and meet our break-even point. For our profit, are strategy is to earn less but sell in large volume instead. Excluding the VAT and custom charges for import, the profit per unit will be around 1-2 pound. Financials The initial selling cost will include production, shipping, advertisement and arranging place for sale (Bradley, 2004). Therefore, the selling cost will be higher at first. Production of Areca nut leaf will be low, however, the drying and processing of the raw material may demand extra budget, due to wet season. The shipment charges will be fixed and depend on the cost of fuel. Advertisement charges can be curtailed by using social platform; however, the use of mainstream media must not be overlooked. Free trial sample may be delivered to the fast food chains to gain exposure to general public. This will not only help the company to advertise itself, but will help it in winning new customers (Terpstra, 1972; Terpstra, 2000). Salary of the sales staff in UK and storekeepers is an important financial burden, because will have to recruit staff prior to sale. Further, the labor in India must be provided with handsome salary, so that there is no hurdle in production and operations at home. First Year Income Statement Production Cost Cost of raw material £ 10,000 Cost of labor £ 25,000 Cost of industrial process £ 15,000 Other charges £ 5,000 Total £ 55,000 Selling Expenses Advertisement cost £ 7,500 Distribution cost £ 8,000 Miscellaneous £ 5,000 Total £ 20,500 Sales in the first year Sales to fast food chains £ 70,000 Sales to domestic users £ 10,000 Total sales £ 80,000 Resource Requirements The initial capital will be arranged by the company through borrowing money from bank in form of a loan. The cost for raw material is low, and it can be minimized by making contracts with local farmers, and removing the element of middleman. This will allow the company to save more, and it will also benefit the Areca nut farmers. Moreover, the company will take half of the order payment before the products are delivered, so that it could meet the operational cost beforehand. Recruitment of labor will be the first task, people who can operate the production units and who know the tricks of the trade. Sales staff in UK will be selected from native, and those who have the experienced the market. This will help the company to establish its place in the new market. Further, selection of managing staff will be crucial as well. All these selections will eventually determine the performance of the company in the next 18 to 24 months. Conclusion As a result of research conducted by Strikers in February of 2014 a responsive marketing strategy was recommended for Areca nut leaf plates and bowls to the UK market. This report details an 18 month promotional plan for Areca nut leaf plates and bowls in line with those recommendations. Areca nut is a cash crop found in Southern India, its leaves are tough and broad, and these qualities of crop are exploited by disposable plate manufacturers, to produce biodegradable utensils like plates and bowls. The use of areca nut plates is common in India and its neighboring countries. However, it’s a new item for UK’s market. To devise a market plan several business associated analytical tools were used to outline the pros and cons of introducing Areca nut leaf plates. The research carried out by the group Strikers included SWOT analyses, PESTEL analysis and Porter’s 5 forces. SWOT comprises of strength, weakness, opportunity and threat. According to this analysis, Areca nut leaf plates have two main strong points, first its raw material is cheap, and the product itself is biodegradable. Unavailability of raw material in UK is its weakness. Opportunities lie to the uniqueness of the product in regards to UK’s market, while threats include socio-political upheaval in India, or competition from other companies. To study the macro environment for the product and market, PESTEL analysis was used. There were several factors related to United Kingdom’s market that gave positive predictions, regarding the future of Areca nut market in UK. Porter’s 5 forces were also used for evaluation, and the results obtained were promising for the company. The SMART objectives of the promotional campaign are to specifically target the fast food industry’s packaging sector; to make sales or sign contracts for at least five hundred thousand plates in the first year; and to earn income equal to the initial investment cost. The main factors discussed in this report are related with finance, resources, promotion mix and channels of distribution. Finance is most important; therefore the company needs to ensure availability of capital. Finance includes selling and operational charges. Resource management is a key to success in newer market. Company needs to manage human as well as financial resources, along with the raw material. People only buy what they have seen or heard of. Advertisement campaign must be designed to voice the product’s uniqueness and usability. How product will be brought into the market, was discussed channel of distribution. Overall the results and analysis of the business plan reflect advantages and disadvantages of opening market in UK. The market is advantageous because it will open new channels for marketing of the product, it will ensue the expansion of the product into other EU countries. Further it will earn foreign exchange for Areca nut producing countries. Since, the market location is new, it will be challenging to establish the setup at the star. Due to the distance involved and absence of raw material in UK, there will be extensive spending regarding operational and logistic costs. Still the attempt to establish market for Areca nut in United Kingdom is welcomed, because its advantages outweigh its drawbacks. References Armstrong, G. & Cunningham, M. H., 2002. Principles of marketing. Scarborough: Prentice Hall. Bivolaru, E., Andrei, R. & Purcaroiu, G. V., 2009. BRANDING ROMANIA: A PESTEL FRAMEWORK BASED ON A COMPARATIVE ANALYSIS OF TWO COUNTRY BRAND INDEXES. Management & Marketing, 4(4).. Marketing Management, 4(4). Bradley, F., 2004. International Marketing Strategy. s.l.:Financial times/ Prentice Hall. Christian, Gronroos, 1994. From Marketing Mix to Relationship Marketing: Towards a Paradigm Shift in Marketing. Asia-Australia Marketing Journal. 2 (1), pp. 9-29. Crane, A., 2010 Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globilization. 3rd ed. s.l.:Oxford University Press. Doole, I. & Lowe, R., 2008. International Marketing Strategy. 5th ed. s.l.:Thomson Learning. Ghauri, P. N. & Cateora, P. R., 2010. International Marketing. 5th ed. s.l.:McGraw Hill Higher Education. Grundy, T., 2006. Grundy, T. (2006). Rethinking and reinventing Michael Porters five forces model.. Strategic Change, 15(5), pp. 213-219. Hill, T. & Westbrook, R., 1997. SWOT analysis: its time for a product recall. Long Range Planning, 30(1), pp. 46-52. Kotabe, M., 2010. Global Marketing Management: International Student Version. 5th ed. s.l.:John Wiley & Sons. Kurttila, M., Pesonen, M., Kangas, J. & Kajanus, M., 2000. Utilizing the analytic hierarchy process (AHP) in SWOT analysis—a hybrid method and its application to a forest-certification case.. Forest Policy and Economics, 1(1), pp. 41-52. Quelch, J. A. & Klein, L. R., 1996. The Internet and international marketing. Sloan Management Review, 37(3). Terpstra, V., 1972. International marketing. The International Executive, 14(4), pp. 1-2. Terpstra, V., 2000. The millennium and international marketing. International Marketing Review, 17(1), pp. 15-18. Vargo, S. L. & Lusch, R. F., 2004. Evolving to a new dominant logic for marketing.. Journal of marketing, 68(1), pp. 1-17. Yüksel, I., 2012. Developing a Multi-Criteria Decision Making Model for PESTEL Analysis.. International Journal of Business & Management, 7(24). Appendix PEST Analysis Political - Increase of tax and tariff will affect our operational cost. Legislation for importing and exporting product can be vary and will cause customer expectation to go down due to the shipment may not arrive as agreed. Their might me political conflict between the government and civilian which can affect the enterprise eg. Protester may obstruct in critical route of your distribution plan. Economic the inflation can be fluctuate and cause importing and exporting can both Beneficial and non-beneficial. The variation of exchange rate can also jeopardize the business when you are importing or exporting at the wrong time. Social awareness of being health consciousness and reducing environmental footprint of consumer behavior can accelerate the demand of the company product diversification of consumer demand may vary into other sector that the company has overlook. Culture issue may impact the company image rating due to different opinions and perspective. Technological New technology can be introduce to your company which will affect your operation cost therefore, the finish product costing will be higher. The efficiency of production could or could not be comply to due limited technology Researcher and development department may adapt new and advance product which may give the company a competitive advantage. SWOT Strength Availability of raw material Biodegradable Availability of labour Low manufacturing cost Weakness Exotic plant species Product needs to be transported from India to UK Still at market entry level Opportunities Large number of Fast food chains in UK New market, new customers, Established retail sector in UK Threats Increasing fuel prices and transport Taxes on sale and import Competition from other producers Read More