Analysis of the Market Situation in Australia - Term Paper Example

Marketing research for the nutraceuticals, cosmeceuticals and Nitrocosmetics in Australia Name: Student number: Date: Contents Introduction 4 Background 4 Market size 4 Market growth rate 5 Market profitability 5 Market trend 6 Key success factors 6 Distribution channels 6 Industry cost structure 7 Swot analysis 7 Objectives 7 Review of the survey 8 Results and analysis 10 Microsoft power Pivot 10 SAP Lumira 15 Recommendations 18 Conclusions 20 References 21 Introduction In the past two decades, the pharmaceutical, personal care, and nutritional industries have converged to addressing growing demands in the beauty, health & wellness market. The convergence has led to formation of new industry segments Nutraceutical, Nutricosmetics and Cosmeceuticals. Cosmeceuticals: topical cosmetic products that have medicinal or drug-like benefits (creams and fortified syrups). Nutricosmetics: supplementation of nutrients that are formulated for beauty care (both oral and topical). Nutraceuticals: products derived from food sources that provide extra health benefits, in addition to the basic nutritional value found in food (dietary supplements and functional food). These three new segments are mainly driven by an increasing awareness and need for preventive healthcare, natural therapies and anti-aging products. The annual global growth rate of all three segments is approximately 4%–8%. A noticeable geographical dominance is observed in different segments, China and Japan are key Nutricosmetic markets accounting for 90% of global sales, while the USA dominates the Nutraceutical category at approx. 45% . Following this observation of segment distribution, it’s important to understand the market situation of both the three segments before entering into a market. This is called the marketing research which helps one understand the market situation. This paper presents a marketing research for the three segments in Australia. Before the survey research, it’s important to understand the background of marketing research. Background Market size The overall use of the products in the world is high. However, Australia is comparatively a smaller consumer comer by global scales but it remains a high consumer evaluation of the market size for the pharmaceuticals. Cosmetic products remain highest in market size in Australia compared to the others. A book by Berger, Rosen and Udell (2001) explains how market size structure effects competition. A larger market size implies high number of competitors in the industry and this informs a potential industry player of the stiff competition. However, it implies general acceptability of the product. Too small markets would allow one to get away with higher pricing as opposed to larger market sizes. However, too low prices in a larger market would lead to dismissal of products as low quality. The Australian market size therefore provides opportunities for marketing but greatly influences the pricing trends. The larger market also possess stronger competitor threat to a new entrant. The largest spenders on the products under study are middle-aged. In most cases, () shows, higher income earners are the largest spenders (nuticeuticals.com, 2007). Market growth rate There is generally an increasing market growth in Australia for the 3 segments (Cosmetology-trichology.conferenceseries.com, 2017). This faster growth rate in the market serves to promise opportunities for more products Berger et al. Market profitability This refers to the buying capacity of the consumers. In some way, it impacts the volume output and thus provides the opportunities for higher potential. In Australia, the market profitability is particularly high for the 3 segments. However, the market profitability for nutricosmetics is slightly higher than the other two (Nutraceuticals World, 2017). Market trend The markets in Australia greatly favour the nutritional products and people are increasingly willing to spend on them. The nutraceuticals, nutricosmetics and the cosmeceuticals are getting improving trends in usage over Australia (Nutraceuticals World, 2017). This possesses as an opportunity for an entrant into the industry in Australia. Key success factors There are several success factors. One the major success factors of relevance is technological favours the industry receives. Online marketing is a major contributing factor when it comes to business success. A new entrant would therefore enjoy this success factor in reaching a larger number of consumers. Distribution channels As indicated above, online marketing is one of the success factors. It is one of the most enjoyed distribution channels in Australia. Additionally, there are many distribution channels associated cosmetics. However, not all cosmetics are nutricosmetics. This would in fact pose as a challenge if most of the cosmetics are not nutricosmetics. In most cases, most of the cosmetics shops readily accept the nutricosmetics and thus providing the opportunity to a new entrant in the industry (Dholakia, 2002). Industry cost structure Industry cost structure refers to the industry cost of production to the point of sale. Whereas the industry cost structure can be a weakness/threat to the products, the alternate production regions still give the products an opportunity in Australia. This therefore means an entrant has to thoroughly evaluate; other factors and government policies notwithstanding (Paul, 1999). Swot analysis As a summary of the above information, the swot analysis implies that the products under study have more opportunities and strengths in Australia as opposed to the few challenges as threats and weaknesses explained in the above section, background. Objectives This purposes to present the survey research for the marketing research for a new entrant in Australia. It seeks to present a survey for three product segments namely the nutricosmetics, nutraceuticals and cosmeceuticals in Australia. This kind of research mainly focuses on 4 objectives to measure market situation as shown below. a. Understand the market size for the three segments b. Understand the market trends for the three segments c. Establish market growth rate for the three segments d. Determine the market profitability for the three segments Review of the survey The survey design questions are as shown in the appendix A of this paper. A good survey, as Researchconnections.org, (2017) describes, is one that mainly addresses the target population. In this case, the users of the target product. However, with this kind of survey design in which only product users are targeted for questions, it remains apparent that it’s very difficult to determine the overall market size. This means that the survey objective would not be fully addressed since only consumers are allowed to participate in the questionnaire. Although the research design would easily capture percentage usage per city, it’s a bit challenging to use the information in computing the global percentage use of the segments. This survey therefore may not therefore provide reliable information as to whether one should proceed with entry into Australia or explore elsewhere. All the questions asked in the survey are closed-ended questions where the customer just chooses from the options given. Lavrakas, (p.66 2008) describes this type of research as a structured research design and as one that limits the participants to the survey and thus only relevant is extracted. Structured questions make data collection and analysis much simpler and they take less time to answer. However, it reduces the chances to find out new information about a given question. In this case, some questions, especially those regarding key success factors and distribution channels would require open ended questions. If not, they would require very long questionnaires to cover the target information. This has not addressed by the survey, and thus can be described as not fully exhaustive of the survey objectives (Lavrakas, 2008). A good questionnaire is one that uses simple language. Whereas this survey is supposed to use such words as cosmeceuticals, nutraceuticals and nutricosmetics, the design uses such simple words as beauty, health or wellness products. This is a simple and familiar language that the respondents could easily understand. As Brace (p 105, 2008) explains it ensures informed response as well as simplified questionnaire that is effective. However, looking at the terms used, there can be misplaced understanding. The terms used can of ambiguous inclusion of the target products. Eg, not all beauty products have the cosmeceutical value as described by the meaning of cosmeceuticals. Neither are all wellness products nutraceuticals or nutricosmetics. The survey should have been designed in a way that briefly describes each of the products. In the current state, a respondent would respond for the products which may not necessarily fall in the target products (Brace, 2008). The survey, in its basic question development, can be described as very exhaustive of the market behaviour that is relevant to a new entrant. It, for example, helps to easily identify the particular growth trends of a given segment and in fact, by city. This survey design can therefore easily give the market situation for both the segments and for each of them. This makes it very reliable. As Daniel and Sam, (2015) describes, it leads to informed decision making as far as the marketing research of this kind is concerned. As a general review, this survey addresses the main objectives that can be attainable in this kind of marketing research. As Lavrakas (2008) describes a good survey in terms of objectives, this survey can be said to be generally very reliable with redress of a few aforementioned problems. However, it is very difficult to use the survey in determining such market trends as distribution channels. One such important question that is missing is how easy it is to get the desired product. This makes the new entrant not very informed of the competitive distribution channels for the products. Understanding distribution channels is a very important aspect in marketing research (Paul, 1999). To address such an issue, as noted earlier, one such a question that would inform the research of such information is one that seeks to understand how easy it is to access the products. Results and analysis The survey was analysed using two analytical tools and results for each of them displayed as shown below. Microsoft power Pivot Figure 1pa: Overall market distribution for the products Figure 1pb: market distribution for each of Product segments and state. Figure 2p: Overall confidence rating for each of the products Figure 3p: forms in which the products are taken Figure 4p: Income brackets for respective product consumption Figure 5p: Monthly expenditure on respective products by the participant consumers Figure 6p: Overall age band and average consumption of all the products Figure 7p: The recommendation levels for each of the products Figure 8p: General market size for each segment SAP Lumira Figure 1La: Overall product consumption by state Figure 1lb: Product consumption by state Figure 2l: Product consumption by age band Figure 3l: Product confidence level by the users Figure 4l: Preferred forms of product segment consumption Figure 5l: Recommendation levels for particular product segments Figure 6L: General product market size Recommendations As far as marketing opportunities and target markets are concerned, the following five recommendations are highly valued for a client who wants to enter Australian market for the three products; This number of recommendations is determined by the objectives as well as some of the market information that may be deemed important, but not necessarily as basic marketing research design objectives. 1. As general recommendation, a new entrant with all the segments should consider to throughout Australia because there is no biased market in the overall distribution of the product market as shown in figure 1La and figure 1pa. However, looking at figures 1pb and 1Lb, it’s highly recommended that an entrant should consider distributing the products according to market size of each of the segments. The figures show bias distribution of the products based on state and the distribution is as illustrated by the said figures for each of the segments. Distribution considerations should follow marketing principles based on market size. Other factors notwithstanding, then according to explanation by Berger, Rosen and Udell (2001), it’s recommended that an entrant with a particular segment should consider the largest market distributions for the particular segment. On the basis of the same fact about market size, a consideration of the figures 6P and figure 6L shows that there is a larger market size for Nutricosmetics. An entrant is therefore recommended to have larger stocks of the nutricosmetics than the other two segments. 2. Nutricosmetics show that it has the highest growth expectations based on the recommendation levels as shown in figure 7p and figure 5L. Apart from the growth rate, nutricosmetics show a market stability through the confidence levels shown in figures 2p and 3L .Berger et al (2001) recommends that a high market growth rate favours new entrants compared to slower ones. He further explains that stronger market stability for a given product favours a new entrant as would be opposed to when it’s less strong. Based on the market stability and expected growth, then as Berger et al (2001) explains further, it’s therefore highly recommended that an entrant should have some bias in segments with favours to nutricosmetics. A consequent consideration, as made in the first recoomendation should also consider the biasness in market distribution for the product as per the states. 3. Figure 2L and figure 6p show that the segments are people aged in the lower age bands. Most consumers are in the age band below 30 years and 30-40 years. From the same figures, it can be shown a biased distribution of consumption that favours nutricosmetics. Figure 6p shows that consumption reduces with increasing age; thus marketing strategies should have a bias for younger on the overall. It’s therefore highly recommended that a new entrant should consider marketing strategies that favour the said age bands and have biased marketing for the nutricosmetics since they have the largest market within the age bands. 4. The survey shows other factors that would influence the market. The average expenditure of the consumers is one such a factor in this case. First of the survey shows that most spenders are those within the income brackets of 70,000-90,000 as can be seen in figure 4p. From the same figure, it can be evaluated how the income brackets influence the segments taken eg, in the 100,000, more cosmeceuticals are used. For market profitability considerations therefore, it’s highly recommended that the entrant should consider the 70,000-90,000 income earners thus employing marketing strategies that would suffice capturing of this income bracket. Still on profitability considerations, figure 5p shows the monthly amounts spend on the products. From the figures an entrant should expect highest average expenditure on the products to lie in the expenditure band 50-100 dollars per month. The figure also shows that more is spend on the nutricosmetics thus highly recommended that on profitability grounds, and entrant should consider having more nutricosmetics into the market. 5. The survey also illustrates the preferred forms in which the products are taken. Figure 3p shows that products are consumed in both the three forms with very slight biasness in a form depending on the segment. It’s therefore highly recommended that there should not be one form with high dominion over the others. However, there should be very slight variations in form depending on the segment as shown in the figure. Conclusions From the survey results, it can be concluded that there is unbiased geographical market distribution for the segments in Australia. However, there’s demographic biasness in the market. AS a general observation, it’s recommended that an entrant should consider all the segments with a bias for nutricosmetics. It can be safely concluded that the market situation provides more opportunities for the segments with a bias in geographic and certainly demographic distribution for a particular segment. Finally, it can be concluded that Australia offers a good market opportunity for the products. References Berger, A., Rosen, R. and Udell, G. (2001). The effect of market size structure on competition. 1st ed. Washington, DC: Division of Research & Statistics and Monetary Affairs, Federal Reserve Board. Brace, I. (2008). Questionnaire design. 1st ed. London: Kogan Page. Cosmetology-trichology.conferenceseries.com. (2017). | | Conferenceseries Ltd. [online] Available at: http://cosmetology-trichology.conferenceseries.com/abstract/2015/importance-growing-demand-of-edible-cosmetics-nutricosmetics-in-cosmetology-treatment [Accessed 6 Jan. 2017]. Daniel, P. and Sam, A. (2015). Research methodology. 1st ed. Delhi: Kalpaz Publications. Dholakia, N. (2002). Global e-commerce and online marketing. 1st ed. Westport, Conn.: Quorum Books. Lavrakas, P. (2008). Encyclopedia of survey research methods. 1st ed. Thousand Oaks, Calif.: SAGE Publications. Nutraceuticals World. (2017). The Global Nutricosmetics Market. [online] Available at: http://www.nutraceuticalsworld.com/issues/2010-09/view_features/the-global-nutricosmetics-market [Accessed 6 Jan. 2017]. Paul, C. (1999). Cost Structure and the Measurement of Economic Performance. 1st ed. Boston, MA: Springer US, p.7. Researchconnections.org. (2017). Survey Research and Questionnaires. [online] Available at: https://www.researchconnections.org/childcare/datamethods/survey.jsp [Accessed 6 Jan. 2017]. Read More