Launching Brazilian Carnival Coffee in the USA - Term Paper Example

? Launching Brazilian Carnival Coffee in the USA   Table of Contents Table of Contents 2 Country Choice 3 2.Product Launch Strategy 5 Channel Development 5 Marketing Campaign 6 3.Organizational Structure of the Company 7 4.Financial Management of the Launch 8 Assumptions 8 Costs 9 Revenue and profit 9 References 11 1. Country Choice The world today, is moving at an extremely fast pace. The era of the 21st century, more specifically the first decade of the 21st century, has brought with itself a significant number of benefits as well as extreme challenges which has become a regular affair as of today’s date. Talking in more broader terms, it can be said that from the benefits point of view, right from the early days of this decade, there has been a tremendous boom in technology with the evolution and widespread diffusion of internet connectivity which has significantly helped in the process of eliminating the difference arising from geographical barriers as well as regional time differences. This has automatically led to the rise in competition in various market places around the world, since the countries have become easily available to operate and work with, because of the high level of secured connectivity provided through the usage of various technological devices connected through the internet. On the challenge perspective, it can be said that due to the ease of access to various countries around the globe, business organizations of various countries around the world are focusing on the process of expanding their business processes around the world and thereby achieve significant growth in the business process. Talking in that particular aspect, it can be said that the increasing interest of various multinational organizations around the world to enter in newer markets which provides significant growth potential in future is resulting to the opening of various markets by the process of lowering of interest rates, which is helping in attracting foreign investments in the emerging and newer markets. This factor along with various other economical, social and physical factors which are focused in the process of attracting investments is playing a direct role in the rise of challenges for operating in new environments and markets. While talking about entering new markets, it can be said that there is a culture factor that plays a major role in the process of determining the probability of success for a product in a particular market. Talking from the culture point of view, it can be said that as a result of the prolonged economic crisis of the West, which continues to hamper the economic prospects of US by the process of slowing of demand of products and services, the population of the US is focusing on working overtime as well as balancing multiple jobs in an attempt to manage their cost expenses as well as maintain their lifestyle in these challenging times (*). As a natural fact, the population of US is highly dependent on a stimulating drink, which will help them in giving more output, and thereby will be ability to increase individual productivity. From the statistical aspect, it can be said that the US has a population of over 313,000,000 (Cia.gov, 2012). Talking in terms of defining coffee consumption trends in the US, it can be said that over 50% of the entire population of US are dependent on some variants of coffee, which makes up an essential part of their daily life (Harvard School of Public Health, 2009). The coffee consumption in the US has increased over 7% on a year on year basis in the year 2012 (ncausa.org b, 2012). Apart from the realization of the various health related benefits that coffee consumers gets, the increase in coffee consumption in the US market can be further attached to the process of increased coffee intake of coffee consumers belonging to the Hispanic communities of the US (ncausa a.org, 2012). Analyzing the country in terms of customs laws that will be applicable for the purpose of importing and international sourcing of coffee in the US, it can be said that there are no significant restrictions applicable for importing of coffee in the US. However, the coffee products have to be approved by the United States based Food and Drug Association (FDA) for the purpose of making them eligible for importing in the United States (US Customs and Border Protection, 2012). So, talking in terms of Brazilian Coffee, it can be said that selecting the US region for the company’s strategy of entering new market will significantly help in the process of attaining success for the company, because of the social and culture based advantage. 2. Product Launch Strategy The process of launching the Brazil based Carnival coffee brand in the high potential US markets has to be done by the process of designing a highly efficient product launch strategy that will help in the process of creation of effective demand and supply of the product in the new market right from the very initial days of the product launch. The product launch strategy of the company should comprise of the process of both channel development as well as a highly effective marketing campaign in order to achieve significant amount of success in the processes of both value communication as well as value distribution. Channel Development Talking from the point of developing a significant lineup of delivery channels for the purpose of efficient delivery of the product to the consumers as well as significant demand creation for the products, the company can focus on the process of implementing a few strategies. The first point that the company can focus is the process of forming a network of wholesalers and distributors, who will be responsible for the delivery of the Brazilian Carnival Coffee in various retail outlets selling specialty coffee in various locations all over the US. The next strategy that the company can focus on for the process of securing a strong demand for the Brazil based coffee product is the process of forming collaboration with Walmart for the purpose of gaining shelf space. Having gained shelf space in the biggest retail chain of US will automatically cater to the process of creating a demand of the product in the market through the process of high product display. Another strategy that the company can follow for the purpose of creating demand in the market is by the process of going into collaboration with various popular wholesale chains of the US like the Costco, Sam’s Club, etc. which provides bulk purchase of products to the customers. Selling of the Brazilian coffee product through these wholesale formats will automatically trigger the process of reverse demand creation in the markets. Another strategy that the company can focus on for the process of value distribution directly to the contributors while generating a steady demand for its products is the process of entering into an agreement with Starbucks to cater to their sourcing needs by the purchase of its high quality coffee. Marketing Campaign For the purpose of value communication to the target audience, which increasingly comprises of the entire coffee drinking population of the US, conduction of a marketing campaign is very important as it will help in the process of creating awareness about the product among the minds of the consumers. To make the marketing campaign for the company a very effective one, the company should focus on the process of developing a marketing campaign strategy which will be inclusive of the traditional methods as well as virtual methods of marketing. The first step that the Brazil based coffee company can take is to create a high quality advertisement featuring the product as a high quality and highly demanded specialty coffee and promote it by advertising it in various US based television channels with high viewership. In an attempt to promote the product as a specialty coffee, the brazil based coffee company should also focus on promoting a very enhanced, high priced variants of the Brazilian Carnival Coffee in various highly lifestyle based television channels in the United States. The next step of the marketing campaign will also be a traditional move. In an attempt to gain identity, and have high retention power for the coffee product in the minds of the US based coffee consuming population, the company should focus on the process of the advertising by placing posters in various bill boards in various locations over the United States. While implementing this strategy, the company should focus on the process of choosing locations in a very strategic way in an attempt to make sure that the locations selected have a high flow of traffic. So, naturally, this will help in high exposure of the brand in the minds of the US consumers. Another marketing move that the coffee company can focus for the process of communicating its presence to the target market is by the process of sponsoring of community activities in various parts of the United States. Another marketing move that falls under the traditional marketing efforts but can lead to generation of high results in regards to the generating and raising awareness of the brazil based coffee product among the consumers of America is through the process of providing print ads in various lifestyle and health magazines of USA, which has a high readership base among the US population. However, apart from focusing on the traditional marketing strategies, in an attempt to increase the connectivity of the brazil based coffee brand with today’s highly tech savvy consumers, the company should focus on the process conduction of online marketing campaign to increase their consumer connections and thereby generating consumer attachment with the brand. Talking in these lines, it can be said that the company should focus on maintaining a highly sophisticated and attractive online website, so that the consumers can find significant amount of motivation to try the product for the first time. Also, the company should focus on providing roll over advertisements in various leading local websites which are highly popular in the United States in terms of attracting consumer traffic. 3. Organizational Structure of the Company Organizational structure is a very important factor for smooth running of operations in a business organization as it helps in the process of designing, implementing and efficient monitoring of various business strategies that plays a significant role in the upward growth of the organization (Naoum, 2001, p. 77). In this context, it has to be considered that the company which is focusing on entering the market of US is based in Brazil. The important distinguishing factor in this case is that Brazil is an emerging economy while US is a developed and established economy. Hence, it can be concluded that the expertise of handling business operations is much more for the executives who have worked in various companies in the US and are compatible with the US business environment as compared to business executives, who have gained expertise working in the Brazilian market. Also, another factor is that there will be significant differences in the culture of working methodology of the executives working in the US division of the company as compared of the headquarters division located in the US. Talking in these lines, it can be said that for the purpose of designing an effective organization structure, the American division of the Brazil based company should be functioning as a strategic business unit (SBU) of the company with decentralized decision making process. The organization structure of the America based strategic business unit of the company will have multiple key departments like marketing, finance, technology, human resource and administration. The heads of all these divisions will be responsible for overlooking the growth of their respective divisions in the US market and will be responsible for acting as the single point of contact for maintaining communications with the Brazilian headquarters for their divisions. 4. Financial Management of the Launch Assumptions Financial analysis of this launch has been done based on some assumptions. Sales and different operating costs have been forecasted for next 10 years. Growth rate of sales and cost of sales depends on many environmental factors which cannot be predicted for next 10 years and therefore growth rate of these two major factors have estimated as past growth rate of sales and cost of sales of existing companies in this market. Unit price of coffee represents price of 1 coffee bag of 1 pound which is assumed as $5. Current market price of African coffee in US retail market is $5.1.Unit price of coffee is expected to raise every year as it has been increasing due to increase of operating cost like transportation, wage rate etc. Growth rate of price per unit is assumed to be 7.5% each year. Considering the environmental factors and past scenario, the growth rate of sales of coffee in US market is assumed to be 10% every year as consumption of coffee has been increasing every year in this market. This growth rate of sales leads to growth in market share by 2% in this market. As, Africa is the largest coffee producer in the world, therefore, price of coffee beans will be comparatively lower than any other region. Considering this factor, price of 1 pound coffee beans is assumed as $2 which is expected to be rise as growth rate of 6%. Costs As the company is launching its product into US retail as well wholesale market, therefore, fixed cost of the company is neglected. All cost regarding this market diversification is assumed to be variable costs. Major variable cost are export changes, cost of coffee beans, marketing expenses, distribution costs, and other operating costs including wage rates and others. Export charge is assumed to be 15% of the cost of coffee beans which is expected to be increase at a rate 5% every year. Marketing expense at the initial two years of operation in this new market will be high due need of more market penetration to increase brand awareness. It is assumed as $50000 in first year and it will increase 15% in second year and then increase at fixed rate of 5% remaining years with the increase of sales. Distribution cost is assumed to be $25000 in first year and it will also increase 15% next year and then expected to be decrease at a fixed rate of 5% as the company will start achieving economy of scale. Other operating costs is assumed to be $75000 with respect to total sales and it will also increase next two years due business expansion and again start5 decrease because of increasing growth rate of sales. Revenue and profit In first years the company generates will generate loss of $15000 as cost of sales will be high as a new market diversification. In second through sales will increase 10% but increase in marketing and distribution costs will lead to net loss of $13,465. In third year the company will breakeven as its will start earning. Net earnings of the company will increase next two years due to more market penetration and increase of demand. But growth rate of net earnings is expected to be decrease from firth year of operation due to market saturation. References Naoum, S.G. (2001). People & Organizational Management in Construction. Great Britain: Thomas Telford Books US Customs and Border Protection (2012). Importing coffee, tea or spices for personal use. Retrieved From: https://help.cbp.gov/app/answers/detail/a_id/335/~/importing-coffee,-tea-or-spices-for-personal-use ncausa.org a, (2012). PRESS RELEASE: HISPANIC-AMERICANS DRINK MORE COFFEE, PER NEW MARKET RESEARCH. Retrieved from: http://www.ncausa.org/custom/headlines/headlinedetails.cfm?id=848&returnto=778 Cia.gov, (2012). The World Factbook. Retrieved from: https://www.cia.gov/library/publications/the-world-factbook/geos/us.html ncausa.org b, (2012). NATIONAL COFFEE DRINKING TRENDS 2012. Retrieved from: http://www.ncausa.org/i4a/pages/index.cfm?pageid=731 Harvard School of Public Health. (2009) Coffee By The Numbers. Retrieved from: http://www.hsph.harvard.edu/multimedia/flash/2010/coffee/facts.html Read More