Market Evaluation and Strategic Planning Project for Dubai Refreshments Energy Drinks - Research Paper Example

?Introduction Prior to any degree of success being realized due to the introduction of a new product or product line, the firm in question must thoroughly research the market as well as the potential consumers of whatever good or service they are attempting to integrate with the consumer base. As a function of this level of research, it is possible for the firm or entity to gain key insights into the best ways in which a given product or product line is able to be integrated and prove to provide an overall increase in profitability. With such an understanding for the need of research and understanding with regards to the markets and the consumer tastes, the following brief summary will detail the market as it exists for DR energy drinks. By providing an overview of the geographical markets, overall sales/market share, expectation for future sales growth, profitability potential, and seeking to analyze and understand the firm’s geographic growth strategy, the reader/researcher is able to determine a great deal with regards to what may take place within the future without ever having to suffer the risk and danger of blindly testing a highly costly product line in a market or with a given demographic of the consumer base that would ultimately reject it. Background Begun in 1959, Dubai Refreshments originally was located on Maktoum Street in central Dubai. In such a way, it comes as no surprise that the full power of the most potent geographic market for the firm’s offerings exists within the continents of Africa and Asia. Although the firm has experienced a great deal of growth domestically, it has yet to fully leverage a degree of potential international growth. In such a fashion, for the nation of the United Arab Emirates, Dubai Refreshments exhibits nearly a 70% market share with regards to energy drinks. Similarly, due to the fact that population of Dubai and the surrounding region has grown exponentially within the past several decades, the firm is able to integrate its products with a broader and broader market segment than it would have before thought possible. As a direct result of this, profitability has increased alongside this population growth. Although Dubai Refreshments is considered a bonafide distributor of PepsiCo drinks, the firm in and of itself exhibits complete autonomy and is not a subsidiary of the global beverage giant. Such a level of autonomy means that Dubai Refreshments is able to integrate within the global market and seek to leverage a degree of success for itself without being under the constraints of any contractual obligations or limitations placed upon it by a third party or ultimate conglomerate of ownership. Market Analysis/Evaluation Although it is ultimately the intention of Dubai Refreshments to engage in a broad marketing plan that will see each and every one of its sectors grow in overall sales, the purpose of this specific strategy is with regards to seeking to leverage a degree of growth within the market of Vietnam; seeking to promote the drink company in an emerging market as a means of breaking out from the formerly “domestic only” lable that the firm has crafted for itself. As will be discussed below in the analysis, the reasons for choosing Vietnam are multiple; however, the nation itself has not been chosen merely on one or two determinants. Rather, it has been chosen due to the fact that it is the belief of these authors that this particular nation represents the greatest overall possibility with regards to future growth and international development of the brand. Social Issues Although long overlooked as something of a backwater communist relic, the nation of Vietnam has experienced a rapid amount of economic growth within the past several years. Due to the rapid level of economic growth, the human development Index and the gross domestic product of the nation of Vietnam has risen precipitously alongside this form of development. A further reason why the nation of Vietnam is been chosen with regards to the international expansion of Dubai Refreshments is with regards to the fact that both the nation of Vietnam and the nation of the United Arab Emirates are both extraordinarily hot climates. In such a way, even though there is a differential and culture between these two peoples, it is the belief of the promoters and stakeholders of Dubai Refreshments that the very same forces which have promoted Dubai Refreshments into a position of popularity and appreciation within the market of the United Arab Emirates will necessarily promote the farm within the nation of Vietnam as well. A key aspect that Dubai Refreshments must keep in mind is with regards to the fact that the nation of Vietnam has a very long and sordid colonial past. Within such an understanding, it will be necessary to approach marketing within this particular market in a differentiated and unique fashion. Whereas within the United Arab Emirates a single language can be used in a single level of understanding generated among all societal stakeholders, within the nation of Vietnam, the legacy of French colonialism, American influence, and traditional Vietnamese culture all are juxtaposed in a high pod of cultures and languages. Within such an understanding, even the choice of choosing which way to represent the Vietnamese language, whether in the traditional form, or in the Latinized alphabet, is a vital compounded of a marketing strategy that must be devised prior to any level of market entry taking place. With a population in excess of 80 million people, and growing rapidly, the nation of Vietnam represents a lucrative potential with regards to any expansion effort by Dubai Refreshments. Moreover, as has been discussed briefly within the preceding section, the fact of the matter is that the HDI and GDP figures for the nation of Vietnam have increased at a rapid rate within the past several years. As a direct and tangential result of this increased level of human development and economic success that the nation has experienced, individuals within Vietnam are now able to integrate with consumer products to a degree an increased means that they’ve had not formally been able to enjoy. This necessarily represents a potential for Dubai Refreshments as this populous nation is now able to integrate with more products and services that they had been able to within the past. By integrating with such a market that represents such a large potential, it is the understanding of the stakeholders of Dubai Refreshments that such a market entry could serve to be one of the better choices within the current world model. Economic Analysis Although there are many positive aspects of the economic situation that is presented within Vietnam, it must be understood by the analyst that there are some economic factors that should give any would – be an investor paths with regards to entering the market. The first of these is with regards to the inflation rate. Due to the fact that the economy has expanded to rapidly within the past several years, the inflation rate has been unstable to say the least. Secondly, the individual must realize that although the nation of Vietnam has experienced a degree of liberalization and trade integration over the past decade and a half, it nonetheless is still a Communist country that engenders a high degree of central control and limits the overall level of freedom that any would be an investor might engage in. Furthermore, the infrastructure and means of transportation within the nation are antiquated; how be at improving. Within such an understanding, the investor should be mindful of the fact that a different dynamic and paradigm must be utilized with regards to providing the end goods to the consumer. Political/Legal Concerns First and foremost, the investor should be keenly aware of the fact that although the nation of Vietnam’s experienced rapid level of economic growth, it remains a communist nation that is centrally planned and has a high level of restrictions control in place at a variety of junctures. Within such an understanding, it is necessary to realize that the same level of legal constraints and controls that might exist in more developed nation, such as the economy of Australia, the United States, or even many of the countries of Europe, do not exist to the same degree or are governed by the same level of legislative norms as they are within the nation of Vietnam. Although this in and of itself is not a game changer, it requires a much more careful approach and analysis of the Vietnamese market prior to any level of direct foreign investment being appropriated. Furthermore, with regards the local situation, as has already been stated the nation of Vietnam is communist. Although communism in and of itself is not indicative of what it was during the time of the Soviet Union, it nonetheless has at its core a supreme dislike and distrust of foreign economic powers meddling in the internal affairs of any nation. Although it is not the intention of Dubai Refreshments to perform any such level of internal intrigue within the nation of Vietnam, it will be impossible to perform any level of business without at least while being certain local, regional, or federal government officials with regards to difficulties that the firm might face within the business process. As such, this unique risk must be understood and appreciated with regards the local threats that exist within the nation of the it now. Industry Analysis and Strategic Planning The ultimate mission and vision that is sought to be derived from the strategic focus and marketing plan which is thus far been discussed is naturally creating a market share for Dubai Refreshments within the nation of Vietnam. Success within such a mission or overall vision will be determined based upon whether or not a degree of integration and consumer loyalty is able to be derived within the first several quarterly reports with regards to this market penetration effort. Competitive Environment/Market Entry and Strategy With regards to the competitive environment that necessarily exists for Dubai Refreshments within this particular market, it must be noted that nearly each and every provider of beverages within Vietnam is ultimately a direct subsidiary of a larger multinational. In such a way, it will be necessary for Dubai Refreshments to be in direct competition with some of the more powerful multinational drink providers in the world; however, at the same time, DR (Dubai Refreshments) has a unique advantage due to the fact that it is able to provide an alternative to an otherwise undifferentiated market for consumer beverages. However, there do exist and number of subsidiary firms that are owned by branches of PepsiCo and Coca-Cola that could necessarily bring to bear a large level of financial resources in seeking to keep Dubai Refreshments out of the market entirely (Dubai Refreshment Business Forecast, 2013). In such a way, the overall level of competition as compared to the drink market in which Dubai Refreshments already competes is an order of magnitude less than what exists within this sector; however, this should not be understood as a means of optimism with regards the overall level of market share that DR can hope to derive within the very first few quarters of entry into the market. Additionally, the level of competition that exists within this environment and the overall level of consumer choice that exists with regards to the number of products is yet another reason why a conservative strategy of market integration has been adopted within this analysis and marketing plan. Target Market and Positioning As such, the marketing integration that is sought to be engendered is not merely with regards to turning a quick profit. Rather, it is also of high interest to the firm to seek to develop and differentiate the current and existing product offerings that DR has available. Due to the fact that no company is able to continue to exist without differentiation and development of new and existing markets, is the goal of DR to affect such an end within the chosen market in question. In such a way, the following number listing should integrate with the reader/analyst an understanding of what the step-by-step process DR hopes to achieve will ultimately look like once initiated. 1) Development of product lines 2) Branding strategies discussed and agreed upon 3) Pilot studies within key demographics 4) Selection of geographic region to be engaged 5) Promotion in specially determined outlets 6) Final launch 7) Quarterly reviews 8) Growth and change strategies incumbent upon analysis and feedback from the market research Target Markets Due to the fact that DR offerings have traditionally been drunk by a younger demographic, one of the key demographics that the firm seeks to integrate with a larger demographic. In such a way, seeking to penetrate this but the current market is a perfect means by which this goal and further market share can hopefully be developed in one fell swoop. Although market research and pilot studies will be necessary in order to determine specifically what target markets will best be suited, the geographic region will remain unknown and undetermined until the analysis comes back with the determinant understanding of the situation and growth of the environment question. However, perspective the target demographic market, the entire premise of this marketing expansion and product integration is built upon the premise that the growth and development of the firm would best be served by integrating this particular demographic and age group. Product Strategy/ Market Entry Problems Similarly, with regards to the way in which such products are able to benefit the company in question, it is the understanding of this analyst that the growth and development within this but it would sector which is been referenced is a natural progression of the key strengths and resilient activities that the firm has displayed of the past several decades. Although it is the hope of this marketing plan, as well as the firm in general, that each and every one of the product lines which will be watched will be ultimately successful, the reality the fact is that it is the anticipation of the analysis that those product lines which will achieve the greatest level of success integrally tied to the overall level of success that prior DR products have been able to achieve. Internationalization and Price Strategy Due to the fact that DR will be engaging in a cautious and conservative entry in the market, it will be necessary to have a high costs/low turnover ratio with regards the old pricing strategy. Although this will not be able to deliver a high degree of profitability, the fact of the matter is that such an approach is the only one which will allow the marketing plan to move forward with the lowest overall exposure and the possibility of giving the consumer a welcomed benefit in the future if the line is ultimately successful and prices are able to be lowered accordingly. Conclusion Although the foregoing list of activities represents a daunting task that the firm will need to engage in as a means fo promoting DR within the nation of Vietnam, the possible benefits and increased levels of profitability that this decision could yield are more than adequate towards promoting such an integration. True, there are a great level of drawbacks and negative aspects of the market that provide a key level of risk; however, when DR compares these risks with the other potential market entries they might engage with, Vietnam not only comes at as the lowest cost alternative to a potentially highly successful market entry, it also reveals the fact that DR can leverage its greatest strengths within this particular market while all the time minimizing the weaknesses the Vietnam engenders. Reference Dubai Beverages Business Forecast. (2013). UAE Business Forecast Report, (2), 1-60. Read More