Marketing Strategy of Water Soluble Tissue - Research Paper Example

Marketing Strategy of Water Soluble Tissue Paper of Table of Contents Introduction 3 Porter’s Five Forces 3 Ansoff Matrix 5 Distribution Mix 6 Marketing in Qatar 6 Conclusion 6 References 8 Introduction Tissue paper is a paper based hygiene product mostly used for wiping and cleaning purposes. The global tissue paper production has been estimated to be over 20 million tons (ETS, 2014). Based on the per capita consumption of 2011, the global per capita consumption has been estimated about 4.4 kg. USA holds the 1st rank with an average consumption of around 24 kg, followed by Western Europe with a consumption level of about 15 kg. African and Far East Asian countries fall under the lowest consuming regions (ETS, 2014a). This paper is based on the analysis of the water soluble tissue paper industry, based on theoretical models like Porter’s five forces, Ansoff matrix and distribution mix. It also includes the marketing strategy of water soluble tissue paper for Qatar. Porter’s Five Forces Figure 1: Porter’s Five Forces Source: (Kotler and Keller, 2011) Power of Buyers: The power of buyers can be described by the switching cost involved in shifting from one brand to the other. The tissue paper industry is saturated with several well established manufacturers like George Pacific, Kimberly Clark, SCA, P&G, etc which offers water soluble tissue papers (SCA, 2014). Thus it gives the customers a lot of options to choose from. Moreover due to high availability and competitive pricing it is even easier for the buyers to switch between brands. As a result the rival company goes into a price war by offering lower or discounted price in bulk to attract more customers. Thus the influencing effect of the buyers on the pricing suggests that the power of buyers is high. Power of Suppliers: The tissue paper manufacturing companies procure the raw materials like recycled paper pulp, chemicals adhesives, etc from global suppliers (Carlsson et al, 2006). Although the availability of suppliers are high in the industry, but the supply often fails to meet the market demand. The low supply of raw materials is due to low availability of recycled paper and high regulation over deforestation. Thus the overall supplier’s power is moderate. Threat of new entrant: Entering into the soluble tissue paper industry, a firm does not require high capital investment, as the cost of raw materials and other production costs are relatively low. Moreover, in the tissue paper market, the concept of water soluble tissue paper is a relatively new. Thus any new entrant will have an early mover advantage. This as a result leads to low barrier to entry in the market, which increases the threat of entry of new brands. Thus the overall threat of new entrant is high. Threat of Substitutes: A substitute product is defined as any product which serves the purpose of another product (Kotler and Keller, 2011). The immediate substitute for tissue paper products can be handkerchief or cotton towels. Although the normal paper made tissues can act as a substitute for water soluble tissue papers, but the water soluble feature is not present in any of the substitutes. The water soluble feature allows the end users to easily dispose the used tissues. Thus the threat of substitute is moderate. Rivalry Among existing firms: The tissue paper manufacturing companies run their business in a highly competitive environment. Established manufactures like P&G, SCA, Marcal, etc offers similar product in a competitive price (SCA, 2014). Due to the standardized nature of the product, the manufacturers often wage a price war in order to gain a larger customer base. Thus the rivalry among firms is high. Ansoff Matrix Figure 2: Ansoff Matrix Source: (Ansoffmatrix, 2014) The Ansoff Matrix shows four quadrants based on new or existing products launched in a new or existing market. Market Penetration: Market penetration is introducing an existing product in an existing market. This market strategy is used to gain a deeper access to the existing market by adopting new promotional activities and aggressive product pushing through distributors. As the product is already familiar among the customers, the risk of product rejection is extremely low (Ansoff, 1957). Thus launching water soluble tissue in Qatar will not fall in this category. Market development: Market development is launching an existing product in a new market. This allows the company to gain access to a new market in a different geographical location (Ansoff, 1957). Launching the water soluble tissue paper in Qatar, can be categorized under Market development because water soluble tissue paper is an existing product being launched in a new geographic location, Qatar. Product Development: Product development is launching a new product in an existing market. This strategy usually allows the company to improve its brand image and gain customer preference. New product is also developed in order to break the clutter among the consumers in an already saturated market place (Ansoff, 1957). A new product also helps to extend the brand life cycle of a firm. This category does not relate to launching water soluble tissues in Qatar. Product or market diversification: This category is characterized by entering a new market with a new developed product (Ansoff, 1957). This allows the company to cater a particular market with a new product which has been designed for their consumption only. This strategy is mostly adopted to cater to a niche market, so launching water soluble tissues in Qatar does not fall into this category. Distribution Mix The distribution mix can be described by the following elements: warehousing, inventory management, proper communication within the supply chain, and logistics. Warehousing involves efficient storage of products. Storing sufficient amount of tissue papers is necessary to meet the market demand (Geunes, 2009). The warehouses should be strategically placed so that the distance between the retailers and the warehouses can be reduced, as a result this will reduce the time of transportation. A good inventory management is also required for efficient delivery of products to the retailers. As the shelf life of tissue papers is extremely high, it can be stored for a longer period of time. Thus over production will not affect the quality of the product. A good communication among the supply chain partners is essential for maintaining a proper distribution channel. This results in faster delivery and it also avoids any shortage of product supply (Stern and El-Ansary, 1996). Logistics plays a vital role in goods transportation. The logistics route should be designed in such a way that the transportation time can be reduced as much as possible. The good road condition of Qatar will complement a better logistics system. Marketing in Qatar According to the reports of ETS (2014a), the per capita consumption of tissue paper is quite low in Qatar and other Middle East regions. Thus Qatar can prove to be a potential market for launching water soluble tissue papers. The low consumption pattern of tissue papers in Qatar also shows that their cultural trend does not require the use of tissue papers. In order to make a successful penetration in this market, extensive promotional activities are required to virtually create the need for water soluble tissue paper usage among the consumers. The pricing should be kept low by following the economic pricing strategy, which will help to attract new customers to tryout the product. Depending on the product’s success in Qatar, the company should penetrate into other neighboring regions in order to access more untapped markets. Conclusion The tissue paper industry has already become highly competitive in regions like the USA or UK. Thus for a new entrant it may be difficult to penetrate in those markets, despite of low manufacturing costs. Qatar has huge potential in future due to low consumption of tissue papers. However, although Qatar can have future business prospects in the waters soluble tissue paper industry, but in order to increase the sale of the product the company needs to invest in extensive promotional activities to attract the consumers. The promotional activities should highlight the benefits of water soluble tissue paper usage and how it can improve the health and hygiene of the consumer. Thus, with proper marketing strategies, Qatar can be a lucrative business location for water soluble tissue papers. References Ansoff, I. (1957) Strategies for Diversification. Harvard Business Review. 35 (5), 113-124. Ansoffmatrix. (2014) What is the Ansoff Matrix? Retrieved from http://www.ansoffmatrix.com/ ETS. (2014) The European tissue paper industry Association. Retrieved from http://www.europeantissue.com/about/profile-of-ets/ ETS (2014a) Tissue Consumption per capita. Retrieved from http://www.europeantissue.com/facts-studies/fact-and-figures/tissue-consumption-per-capita/ Kotler, P., & Keller, K.L. (2011) Marketing Management. (14th ed). New Jersey: Prentice Hall. Stern, L. W., & El-Ansary, A. I. (1996) Marketing Channels. (5th Ed). New Jersey: Prentice-Hall. Geunes, J. (2009) Applications of supply chain management and E-commerce research. (5th ed). London: McGraw-Hill Education. SCA. (2014) All consumer tissue brands. Retrieved from http://www.sca.com/en/Products/Consumer_tissue/Brands/ Carlsson, D., D’Amours, S, Martel, A and Ronnqvist, M. (2006) Supply Chain Management in Pulp and Paper industry. Interuniversity Research Center on Enterprise Networks, Logistics and Transportation. October Issue. Read More