Feasibility of Launching an American Product in a Foreign Market - Research Paper Example

Taking Fiber One Abroad – Marketing Internationally Inserts His/her Taking Fiber One Abroad – Marketing Internationally Introduction The paper aims to examine the feasibility of launching an American product in a foreign market. Based on a thorough market and business analysis, the paper will examine the viability of success or failure of the product through various dimensions. The paper will follow a structured approach towards analyzing the product’s acceptability in the foreign market. The structured approach will include not only the “business related decisions” but also a thorough analysis of the environment and the market that the product will be operating in. A product or a business can only be successful globally if the management takes into account other factors that are related to the change in the geographical location of the product. Factors such as culture, economy and politics can have a huge impact on the launch of product in a foreign market (Balmer, 2001). Hence the paper reinforces the concept that marketing research is not only limited to research related to the product but it is also related to research relating to all the factors that are going to have an effect on the product launch feasibility in the new geographical area (Kotler & Keller, 2011). Marketing Research Since the paper deals with formation of the basis of the new business idea, we will discuss the marketing research for the idea in detail i.e. discussion regarding launch of an existing product in a completely new geographical area. Hence the components of marketing research have been discussed below in detail. Product & the Chosen Country The chosen product is Fiber One bar from the American company Fiber One working under the General Mills. The selected location for the launch is Pakistan. Fiber One bar has been introduced in the industry as a product for health conscious people as it offers taste of chocolate and less calories at the same time. It is a very famous product in USA in the female population. The reason for selection of Pakistan for the product launch is the current changing trends in the country, within a few geographical areas of the country, a certain demographic segment is showing interest in purchasing healthy products due to which local stores are offering exported products that have been brought through unprofessional procedures (General Mills (USA), 2011). Based on all these evidences, a strong need for this product has been identified and the observable factors give very high probability of the product’s success in the market. However, there is a very high chance of failure of the product if proper analysis of the country isn’t carried out. We have identified the need for the product, but as of yet we do not have any strategy to launch the product. How can the strategy be devised? It can be devised by understanding the country, its people, economy and systems inside out. Only then we will be able to devise an effective strategy for the launch of the product in Pakistan. Cultural Analysis of Pakistan Pakistan is a country of different culture heritages combined together thus the country has a mixed culture. Since we are dealing with a product for a niche segment we are only going to identify the culture of the areas where our targeted segment is present. In order to do that it is necessary for us to identify our target segment. Our target segment is a niche segment of health conscious women (teenagers and young adults) belonging to the middle or upper middle class that are either trying to lose or maintain weight or are trying to keep a watch on their calorie intake. This segment is most likely to be present in three main cities of Pakistan that are Islamabad, Lahore and Karachi. The segment targeted has a culture somewhat similar to that of the culture in USA however a few basics for the product to get through the Pakistani markets would require it to abide by the basic culture which has the national language Urdu embedded in it and a strong inclination towards the religious Islam. The advertisements and any visible business operations should stress upon the “halal” factor of the product in order to gain the product acceptability in the market. The country’s overall culture is based upon being family oriented hence the promotion and placement of the product should be done accordingly. Since the social culture of Pakistan is very similar to that of an eastern culture with religious values embedded, it is very necessary to keep the element of social and moral values in mind while planning the launch of the product. Political System Analysis Pakistan, as a country, is solely based on the theory of collectivism. Society of Pakistan doesn’t follow the rules of individualism. One earning member is responsible and supportable for the rest of the family. This brings us back to the culture of Pakistan; the culture of Pakistan has shaped the political system of Pakistan. Since the culture of Pakistan has shaped the society to be family oriented, it has shaped the structure of the country to be based on collectivism. Although the country doesn’t have a positive impression for its political system but it is said to be based on democracy. A democratic system means the ultimate power lies with the natives of the country. Hence although, the feudal system might exist in some of the rural areas of the country but our targeted areas have a perfect democratic system. Launching your product in any other country requires a certain cost to be borne. Hence, we consider the trade tariffs and treaties that are going to have an impact on our marketing plan. Since Pakistan is a developing country, there is a constant threat to the domestic industry because of the foreign products. The Govt. therefore takes “safeguard measures” to safeguard the interest of the domestic industry. Hence if a local competitor is producing this product in any form, chances are that the govt. will provide legal protection to the domestic industry by forcing a high cost barrier on our business or by restricting the entrance into the country (NTC, 2009). In order to avoid, certain treaties can be formed between the government and our business which will be in favor of the country’s domestic industry, economy and also for our business. Economic System Analysis The economic system of Pakistan contains a market economy i.e. any question relating to investment, production or distribution is determined by the demand and supply of that specific product or the business. This means that the price of the product will also be formed on the basis of these two forces. Since supply of anything similar to are product is extremely low and demand is on the constant scale of growth, the product will be a high priced product. The high price of the product is not only because of the economic system of the country but also because of the target segment that we are catering to. Legal System Analysis The property rights of Pakistan require any business to have ownership of legal title of an asset and then the process for the conversion of assets into capital. Thus if a business is planning to enter the vicinity of the country it should work upon acquiring the legal title of the asset i.e. the company through which it would be producing the product and then adopt the process for conversion of the asset i.e. the company to the capital i.e. the factory or any place where the product is actually going to be produced. The basis of Pakistani legal system has been constructed on the pillars of English common law changed according to the Islamic requirements as the country is the Islamic republic of Pakistan. The highest form of judiciary within the country is Supreme Court followed by the high-courts based in various cities of the country. Foreign Exchange Market Analysis It is highly important to see the change in the financial market of the country as compared to USA. As USA is a developed country and has a stronger economy than that of Pakistan, its currency is more valuable than that of Pakistan. Thus in order to take decision regarding the investment and pricing of the product it is important to not the difference between the US currency and Pakistani Currency or in other words to know the conversion rate of both the currency. US 1$ is on the average equal to 85 Pakistani Rupees. Thus if a Fiber One bar is sold for 3 $ in US it is most likely to be sold for around 350 Pakistani Rs. The next important thing to evaluate is the feasibility of Foreign Direct Investment in Pakistan. The Pakistani Government lays minimum barriers for FDI and encourages FDI heavily in order to improve the economic conditions of the country. Thus the current FDI availability is medium but the country is focusing on increasing the FDI by attracting more Foreign Direct Investors (Shah, 2012). Gold is an essential element of the Pakistani culture. Gold standard of Pakistan these days is around 58000 PKR for one standard unit (tola) of gold. Thus the Gold standard in Pakistan is extremely high. Production Transportation and Labor Analysis Since Pakistan is a developing country it is facing energy crisis due to which the production and transportation industries are suffering. Thus the scarce fuel and electricity can lead to problems in the production and transportation capabilities of the firm. Currently the country is facing shortage of CNG i.e. Compressed Natural Gas and Electricity. This can be major problem as both of these are energy resources required for production and transportation. Thus the firm has to take prior decisions regarding how to cater if a major problem arises in any of these categories. The firm should have executable contingency plans to face these challenges. The Labor is extensively available in Pakistan since the rate of unemployment is very high, it will be easy to find people to hire for work in various fields of work. As compared to the labor market of USA, Pakistan has a cheap labor market. Thus the labor analysis provides us with the fact that the labor is the area where the company can be cost effective. Summary of Challenges Since Pakistan is a developing country, main challenges that Fiber One will have to face will be relating to the challenges relating to acquisition of the resources (excluding human resource). Scarcity and unavailability of resources will not only falter the stability of the country but also have a strong negative impact on the feasibility of the success of the product. Other challenges that have not been mentioned but do exist are the challenges related to the security threats within Pakistan. Since the security condition of the country is highly unpredictable it is going to be a huge risk to launch in the market specifically within the country. As discussed in the economic analysis the 85 Pakistani Rupees make 1 dollar, and rupee is constantly being de valued which means that the conversion rate is going to rise. If the conversion rate rises the price of the product will have to be increased. The devaluation of rupee means complete recession of the economy within the country which ultimately leads us to the fact that it will have a negative impact on the buying power of the people within the country. Coming to the other end of the story, if the rupee is de valued, the price of the product will rise but the income of the people will not. This will make the product unaffordable for the people thus affecting the profitability of the company. Conclusion Although there are various challenges, it doesn’t mean that we should not plan to launch the product within the country. There are various factors in favor of the launch as well. When we plan to produce a product here it would mean that our costs of production will decreases as certain resources can be acquired at a cheaper cost here. Thus the American image of the brand will associate quality with it which would increase the demand in the target segment. Also, extremely health conscious people will have the demand for a foreign healthy product as compared to the local one. Thus the opportunity that exists is greater than the risks and challenges that prevail hence, the product should be marketed internationally in Pakistan according to the cultural, legal and political requirement of Pakistan. References Balmer, J.M.T. (2001). Corporate identity, corporate branding and corporate marketing: seeing through The fog. European Journal of Marketing, 35, 3- 4. General Mills (USA). (2011, Jan 1). Fiber One. Retrieved from Fiber One: http://www.fiberone.com/ Kotler, P., & Keller, K. (2011). Marketing Management. Prentice Hall. NTC. (2009, Dec 31). NTC: Safeguards Gateway. Retrieved from National Tariff Commission: http://www.ntc.gov.pk/SFevent.asp Shah, A. A. (2012, Jan). Attracting FDI for Pakistan. Pakistan: US Pakistan Industrial Development Corporation. Read More