International Marketing and Business Operations of TABlites Products - Case Study Example

Topic: TABlites is well known for its wide range of supply comprising of high quality of E-liquids and E-cigarettesamong other accessories. Thus, the organization is slowly gaining popularity in the international market all over Europe. Majority of the smokers based on a study conducted in Europe have now switched to electronic cigarettes, paving way for the growth of TABlites and other subsidiary organizations that focus on the same range of products. There have been numerous of advantages that favour the use of E-cigarettes rather than the real cigarettes. The most significant aspect is that the use of E-cigarettes and E-liquids, which prevents the presence of carbon monoxide and harmful tar that is usually produced when tobacco is burned, simply because they use nicotine instead. The sales of E-cigarettes have sky rocketed ever since its first introduction, which was in the UK in 2007 (E Cigarette Research Advocates Group, 2013). TABlites now want to expand their international market all over Europe and the world in general. This paper will focus on the business operations and market recommendations for TABlites’ products: E-liquids and E-cigarettes in the Spanish market. All aspects of the international market with regards to the chosen organization and the products will be looked at in detail so as to favour the targeted Spanish Market. Introduction Spain is well known for having smoke filled restaurants, corner cafes as well as bars. Research conducted in Spain have indicated that the level of smoking has reduced over the years owing to the fact that the Spanish Government have implemented strict laws prohibiting smoking in specific public places. However, even with such strict laws imposed by the Spanish government, researches that have been conducted in some cities in Spain have indicated that a majority of the smokers’ value smoking and thus it has become a necessity. Based on these findings, it is easier for any Cigarette Company to get a valid opportunity to expand its business operation in the Spanish market (Elpais, 2013). TABlites’ products have an added advantage because they are more socially acceptable thus making their use legal in most public places. Other advantages are E-cigarettes are healthier than cigarettes, they have strong customer loyalty and they come in a variety of flavours. In order to effectively analyse the international business context of TABlites the use of both international marketing and operation management theory is going to steer up the strategic decision to be made by the client with regards to the organization and product. International marketing simply revolves around two main areas of business that is: exports and imports. Therefore, international trade is a good start for TABlites to venture more into the international market. On the other hand, operation management deals with the analysis of TABlites’ internal processes so as to favour its performance in the Spanish Market. Performance simply refers to three major aspects of concern which are cost, quality and time. Based on the fact that TABlites wants to venture into the Spanish market all the regulations and aspects of Spain that are a norm to the citizens should be put into consideration before any further analysis. Identification of target consumer segment and Issues Target consumer segment Statistics carried out in Madrid indicates that majority of the smokers range within the age group of 25-44 years. This age group consists of both manual and non-manual smoking classes. Even with the decrease in the number of smokers, there is still a group that values smoking as a lifestyle, thus they provide opportunity for Cigarettes Company to venture into the market. Another age group that is also recognized for valuing smoking in Madrid ranges between the ages of 44-64 years. This group provides a rich market for cigarettes’ company with a low decrease level in the number of smokers. However, based on these set of age groups, the highest consumer ratio is that of men. Men in Spain as per statistics conducted form the highest ratio compared to women accounting for an estimated 22.3% while women account for 13.7% of the total number of smokers (Angoinfo, 2011). Based on these findings, TABlites will focus more on targeting the two age groups in the Spanish market. It is well known that most cigarettes company target the youth as their main consumer segment, thus many cigarette companies enter new markets with sole goal of establishing loyal consumers among the youth. However, from research studies conducted in Spain, TABlites can find a loyal consumer base within the age groups of 25-44 years and 44-64 years of course with men being the largest number of consumers. The targeted consumer segment is according to the ethics of marketing as TABlites main target will be slightly above the youth bracket. As a result it will be much easier for the company to get support and funding in the country based on the reasonable target. E-cigarettes are segmented based on three factors: demographical bases, psychographic bases and behavior bases. Demographical bases include generation, age and social classes (E Cigarette Research Advocates Group, 2013). Therefore based on the statistics conducted in Spain TABlites will target the consumers within the age groups of majority of the smokers. Second factor is psychographic factors. Majority of the smokers in Spain value smoking as part of their lifestyle, thus it will be easier for TABlites to get an opportunity to successfully establish itself in the market. Finally, the final factor is behavior bases. This factor involves establishing the buyers’ needs of all smokers and potential smokers in the Spanish market. Based on these factors TABlites will be able to conduct proper market segmentation into the Spanish Market. In order for any company to venture to a new market, there is need for a thorough industry analysis. In the case of TABlites must proceed to establish their target market based on factors such as attractiveness, trends, profitability and also the potential competitors. Therefore, TABlites will focus more on the age groups that are known to have a stronger market base in Spain with more emphasis on the age group between 25-44 years. Issues The major concern of TABlites while trying to venture in the Spanish market is the fact that it is a small rising firm. It will be a difficult task for the company to get resources and funding from banks due to the fact that is not well known worldwide. Based on the economic situation of Spain it may be quite difficult for TABlites to receive some funding assistance from banks and financial institutions. Other issues that may affect TABlites Company while trying to establish their consumer base in the market may be imposed by the Spanish government and health care institutions. There are a few legal concerns that are attributed to the market operations and the market segmentation of Cigarettes’ companies thus there is some drawbacks that may slow the venture of TABlites into the Spanish Market. Market/Country attractiveness E-cigarettes and E-liquids have been aggressively marketed in the European market through various interactive modalities and different channels in order to increase the demand for the products as well as adopt a more favourable environment. E-cigarettes are marketed in a manner that they appeal more to the special target consumer segment with regards to both the existing smokers and the potential smokers (E Cigarette Research Advocates Group, 2013). As a norm that is adopted by many Cigarette companies it is essential that the production process and the distribution process comply with the regulation of their products. Spain is known to have a strong base for smokers based on research conducted in Madrid and other cities from within (Angloinfo, 2011). With a majority of smokers and potential smokers valuing smoking, this is an advantage for TABlites to establish its base in the Spanish market. E-cigarettes are known to be much healthier compared to real cigarettes thus this fact will make TABlites products to be much more appealing to majority of the smoker providing an easier switch opportunity. The use of E-cigarettes is a growing trend in the Spanish Market whereby one enterprising business man, Marlboro Man aims to become king of electronic cigarettes. There are numerous shops that are now selling E-cigarettes along the streets of Spain thus there is a strong market base that can boost the success of TABlites products (Elpais, 2013). Even with the presence of competitors in the market having their own brand of E-cigarettes, TABlites are known to have an added advantage based on their increased number of flavours. TABlites have around 30-40 flavours, E-lites another E-cigarette brand has around 20 flavours while Vapea has around 25 flavours. Based on this, TABlites has an added advantage and is more appealing to the consumers’ needs. Spain is definitely a good market base for TABlites as it favours its products distribution. Assessment of potential distribution strategy Looking at future predictions with regards to the adoption of E-cigarettes in most countries, TABlites is looking forward to increasing its growth rate based on its potential distribution strategy. At the moment the major competitors that the company faces is E-lites and Vapea who also deal with their own E-cigarettes brands. For TABlites to introduce their products into the Spanish market there is need to device distribution strategy that will enable its inception in the new market to be access. The distribution process of TABlites products will first begin from the production process up to the delivery process into the relevant distribution points in Spain. TABlites mainly use different companies to distribute their products depending on the suppliers that deliver their products. To venture into the Spanish market, UPS will be best suited in transporting the TABlites products into the market. UPS Company is quite reliable as they have a variety of ways and solution in which business goods can be transported. This includes ways such as freight forwarding services via ocean, air, rail or road. UPS will thus provide the needed services for importing TABlites products to and from Spain. UPS service is cost effective and efficient and most important it provides import control. TABlites aims to focus on the major districts that may boost the sale of their products. Favourable distribution points in Spain include Salamanca District, Plaza Norte, Principe pio shopping center, Chueca District, The Golden Mile and El Corte Ingles. Salamanca District is regarded as a major shopping area in Madrid, Spain. It has the best and largest stores in the city. Principe pio shopping center dates back to the ancient railway station that was converted to the present shopping mall. The shopping center comprises of various restaurants, stores and movie theatres. The Chueca district is regarded as a cosmopolitan area in the region. El Cortes Ingles dominates the shopping area surrounding making it quite famous in the region. Using these major shopping localities in Spain, TABlites aims to distribute and make their products known in the Spanish market via the best shopping areas in the country (Angloinfo, 2011). With a plan to distribute its products to highly active shopping centers so as to attract more consumers, TABlites also focusses on using appealing marketing strategies that will increase its demand thus making the warehousing services offered by UPS to be of great significance in marketing their products. Identification of critical operational issues arising There are a lot of critical issues that emerge when a Company is trying to gain entry into a new market. These issues revolve around specific operation management activities such as product creation and development, production as well as distribution. With regards to TABlites, other operational activities that will influence the presence of critical operational issues include inventory control, managing purchases, quality controls, evaluation and logistics. It is well noted that the operational services offered by any firm will differ based on the social and cultural context of the targeted market (Mahadevan, 2009, p.33). Critical operational issues that TABlites may experience while venturing into the Spanish Market will thus revolve around quality management, purchasing practices, product and service management and logistics as well as transport management. The first critical issue is purchasing practices. TABlites will be required to select a supplier that will best aid in delivering the best supply. To effectively venture into the Spanish market effectively, TABlites will need to verify that the resources and products delivered to their consumers are of the finest quality. Challenges that may arise from this issue may be imposed by government regulations as well as business ethics. Government regulations in all countries ensure that the products entering into the market are of high quality if not the Company in charge may be dismissed from offering its products to consumers. Another key issue that may interfere with the operational management of TABlites is quality management. If TABlites products fail to reach the quality standard set in the Spanish Market then it will be difficult for the firm to establish as a strong customer base. Quality of products is a critical issue that must be addressed when a firm wants to enter a new market if TABlites product fail to meet the quality standards set by the Spanish government, then it will be difficult for the firm to operate efficiently. Product and service management are key factors that may also interfere with the operational process of the firm. They involve creation, development and distribution of the firm’s products (Mahadevan, 2009, p.42). TABlites needs to thoroughly ensure that the products are created to the highest quality and that the distribution channels used will be able to increase the attractiveness, trend and profitability of their products. The final factor that may bring critical operational issues is logistics and transport management. Logistics simply revolves around the transportation method of the products as well as the storage services that may be required (Mahadevan, 2009, p 44). Any wrong choice made in selecting a supplier to deliver the products may result in the firm’s product failure in entering the new market. TABlites will hire UPS services in transporting their products to and from Spain. In case of any storage services required UPS will also cater for that. It is important that all critical operational issues are identified before a firm introduces its products into a new market setting. This is because it is important to adhere to the key actives needed in the firm’s operation management. Identification of critical international marketing issues arising With the rise of development in the global market, a lot of cigarettes companies have emerged, thus the need for companies trying to gain new entry into the international market has sparked a number of concerns. Development of E-cigarette companies with regards to the global perspective has brought about a lot of innovation as well as competition in the market. Based on this realization companies are now focussed on establishing products and services that are able to bring an added advantage in comparison with the competitors. TABlites Company will thus need to adopt marketing activities that will create awareness of the products. They will also need to establish ways in which they can be able to maintain a competitive advantage among their competitors. There are some critical international marketing issues which must be careful addressed by a company when it is planning to enter a new international market. Leading factors that have contributed to the critical issues experienced in international marketing are globalization, marketing, marketing orientation and financial relationship (Czinkota & Ronkainen, 2010, p. 420). Specific analysis in the cigarettes companies indicate that critical issues are sparked by technological changes, innovation and most of all competition. However, based on researches that have been conducted in Spain, no technological issues have been noted because there are other similar brands that are already established in the Spanish market. A major critical issue with regards to international marketing is the development of a strategic marketing plan. This is essential as it will help TABlites in making very critical decisions about the performance of the firm. A strategic plan is important for any business organization as it helps them in achieving their goals and also maintaining a good performance (Czinkota & Ronkainen, 2010, p.401). In this context performance will be based on cost, quality and time. It is necessary that all these factors are looked at in detail in order for TABlites to successfully achieve its goal in entering the Spanish Market. Other issues that are quite prevalent in the global market are that of culture and business ethics. Every business firm should ensure that the products they are being into a new market conform to the business culture of the region. TABlites is a small business firm that is not well known worldwide thus it should aim at creating cultural awareness among the targeted consume segment in Spain. TABlites needs to study the culture of the locals in Spain before it can introduce its products to them. An aspect that arises from culture focuses on the marketing strategy that will best help the firm in communicating about its products to the targeted consumers. Business ethics will focus on whether TABlites will be able to conform to the rules and regulations that are in a social business context (Doole & Lowe, 2012, p.70). Operational and marketing recommendations for international marketing entry Any organization that has decided to enter a new market that is overseas can embrace numerous options that are tabled for it. These options tend to vary with risk, cost as well as the degree of control that can are located to them (Czinkota & Ronkainen, 2013, p.210). The simplest entry strategy is that of exporting using various direct or indirect methods like hiring an agent (Hollensen, 2012, p 25). TABlites will acquire the services of UPS which will transport its products to and from Spain. Export strategy will consist of features such as duty rates, VAT rates, and minimum thresholds as well as custom fees and other taxes that will be imposed on the products. Based on the selection of the export strategy decision will be made regarding the distribution channels that will best suit the firm (Hollensen, 2012, p.28). Many cigarette companies use supplier agents that are able to deliver and distribute their products to the targeted consumers. In the case of TABlites UPS will favour the needed operations requited to suit the export strategy. There are numerous operational and marketing recommendations that can be made when an organization wants to establish international operations in a new market. However, the choice depends with the targeted market and the organizational goals. TABlites targets the Spanish market, thus the operational and marketing recommendations should be based on selecting a market entry strategy that best suits the market. An important factor that should be looked at by TABlites is that of product marketing. This concept will involve features such as pricing, distribution, service as well as retail. It is recommended that a firm should place reasonable prices that will suit the needs of their target consumers as well as provide profits for the firm (Hollensen, 2012, p.35). The distribution channels used should also be effective in bringing the products to consumers. Conclusion Based on the studies that have been conducted on the emergence of firms that deal with E-cigarettes brands there is need for operational and marketing recommendations to be followed in order for new firms to have an added advantage. TABlites is a small company that is slowly gaining popularity based on its various products that have a wide range of flavours. With a focus of gaining a successful entry into to the Spanish market, TABlites will definitely find base in the country because their similar brands that are already established. However, TABlites will need to use the best marketing strategy that will guarantee a successful entry into the international market. References Angloinfo. (2011). Smokers and smoking in Spain Doole, I., & Lowe, R. (2012). Social and cultural considerations in international marketing, International marketing strategy: analysis, development and implementation. Andover: Cengage learning, pp.66-85 Czinkota, M.R., & Ronkainen, I.A. (2010). Distribution management. Principles of international marketing. Australia: South-Western/Cengage Learning, pp. 399-432. Czinkota, M.R., & Ronkainen, I.A. (2013). Strategic planning. International marketing. Mason, Ohio: South-Western Cengage Learning, pp.206-234 E Cigarette Research Advocates Group. (2013).Evaluation of the cytotoxic potential of e- cigarette vapour on cultured cardiac cells. Elpais. (2013). Spain approves sale of e-cigarettes in tobacco stores. Hollensen, S. (2012). Global marketing in the firm. Harlow: FT Prentice Hall, pp.5-48. Mahadevan, B. (2009). Operation management theory and practice. New Delhi, Licensees of Pearson Education. Rodriguez, R. (2012). Cigarette market. Barcelona: Print Press. Read More