International Marketing of Confectionery Manufacturers - Essay Example

? International Marketing Company: Confectionary Manufacturers Introduction: It is an well acknowledged fact that the confectionary business is really thriving in Middle east. In any shopping mall, in any airport lounge duty free shop and in the nearest grocery outlet in the neighborhoods one can see the product on merchandising with ubiquitous Arabic or Hebrew script. The industry is growing in the Middle East at the rate of 15 %, thus providing enough room for further proliferation. The growing consumer base amongst the youths who has traditionally developed a sweet tooth , the ever increasing demand of the product in foreign countries, surging oil economy to name a few which have made the catalysis completed.(1). With so many companies with plethora of products, the market is merely clattering and when to enter into this market, one must see the background, the existing pleaers and the detailed product preference. In spite of the big names like Perfetti or Nestle, the domestic compatriots are ready to give a run for the money and to optimize the market potentials one must look for an wise approach. Albeit being considered as of inferior quality, the companies like Lebanon’s Gandour, Israel’s Strauss-Elite, and Iran’s Dadash Baradar are on the helm of the affair because of their price competitiveness and the attractive get up strategy. To enter into this market and make the presence felt in a formidable manner needs a shroud market strategy orientation and proper positioning. When each and every player are hell bent in entering a thriving market, when the potential is enormous, it needs to be understand that the milieu can not be free for all type. The thriving market, the proper positioning and a forceful promotion which includes a proper background study in cross cultural environment is the need of the hour. The theories are there to contemplate the situation but in hard reality, one has to be the winner to survive. That is the order of the day and the yardstick of the rule. Back Ground The situation that leads to this hype in the market of confectioners are not created overnight. The social milieu, the other factors are also responsible for the same. Predominantly Muslim population of the said terrain carries a deep rooted of socio cultural condition that is also responsible for this northward posting of the sales graph. The month long festivity during Eid and several other festivals, coupled with the gifting habit had definitely fueled the surge. (2) Apart from that, the diversified choice of customers with different type of liking has opened new vistas to the manufacturers. Not to mention, the deep pockets of the population has given the manufacturers the fullest chance to experiment different conceivable combination in full throttle, resulting a good and holistic growth of the said market. Objectives The objectives of choosing the Middle East Region are to grab the opportunities in both hand. A swelling market with an average GDP growth of around 20 %, the youths and old alike who had developed their affinity towards confectionaries, unlike western countries, where the market is thriving though the anti campaign masquerading as health consciousness etc still persists. The Middle East Positioning The modus operandi of this dissertation is the positioning of a new product into the confectionary market in Middle East. The situation to be dealt in a delicate manner. As per the survey, the No 1 position is being taken in the same field by Nestle followed by Modern Food. The local players, as discussed, have the formidable presence. At this backdrop, these policies are to be implemented- 1. The authority must think of Providing Manufacturing License to the local players. The existing players are indeed interested in this short of arrangement. It will also buffer the tough competitions from the major players abroad like Nestle, Cadbury or Master food for that matter. The lowered tariff rate also plays a major part in amalgamating the market, as the foreign as well as local players are keen to enjoy the facility. 2. The targeting of Confectionary shops in the region proves to be extremely beneficent in expending the market. The merchandising in big malls, supermarkets and the confectionary chains will give the worth of the investment to the organization. The distributors network to be stirred up for this type of activity. 3. Product positioning happens to be extremely important in this segment. The market of chocolate holds sway as per the survey where the total usage is considered $ 4.7 Billion. The market share is a robust 80 %. On the other hand almost 82 % of the Egypt confectionary market are being gobbled up by the candies (3).Moreover, the western choice of dark chocolate does not cut any ice as the preference of this region is the chocolate with more milk and sugar. So the same formula meant for a particular positioning will not work in this multicultural territory where the test varies from place to place. The expansion of the company The expansion is the crux of the organization. The market should expand either in terms of products or in terms of new market. The growth, like a living organism, is the essence of a living organization. Here the company needs to expand not only for growth but for the sake of survival. The market needs to be explored for every organization and it can not afford to sit on it’s past laurel. The transnational companies are exploring their fate everywhere and in this context, the entry-level market, Middle East appears to be the gold mine. The Market Entry Strategy There are several market entry policies available, amongst that, the choice of BOCR Strategy appears obvious as it gives full optimization of the money invested. Be it confectionary segment in Middle East or the FMCG segment in India, the entry-level strategy assessment with BOCR happens to be really helpful in analyzing the market scenario in proper manner. The BOCR Theory Benefit-Opportunity-Cost-Risk- all these stands for the BOAR theory. BOCR theory is the augmentation theory of AHP or ANP process. The Analytic Hierarchy Process (AHP) for decision-making uses high-end mathematics to process the entwined problem and personal choice of an individual in making a decision. On the other hand the Analytic Network Process (ANP), is a mathematical extension of the AHP theory. Here feedback from different source plays the pivotal role. BOCR theory is being constructed on the back of these two pillars of Operational Research. Basically, BOCR theorem is clubbing with the SWOT analysis, the ubiquitous measurement tool for different management protocol. The measurement tool along with the AHP and ANP tools was formulated (Saaty,1980) to potentiate further the augmentation of the strategy (4). As is being mentioned, BOCR stands for four words— Benefit: In any investment in the industry, in lay mans language value for money stands tall. That means the cost optimization. This can be divided into two sub groups-Economical & Technical. The organization must look into the benefits through this two-pronged approach. The Economical benefits can be divided into two sub groups , namely, financial and operational or technical benefits. 1.Functional Benefits : Assets, it can be divided into different portions including manpower, intangible assets like property etc, Intellectual Property assts including copy right and other forms of legal assets or goodwill etc. 2. Technical Benefits: as an organization, each and every company holds the key technological secret which is the main propelling force of their growth. The organization must have some specific technical edge over others. At the same time, the knowledge management and the transfer of technology in the manufacturing unit or the licensing plant to optimize the knowledge and know how plays the pivotal role. Opportunity The opportunity in this entry-level mechanics can be divided further into different aegis. They are basically into two sub section —A. Economic Opportunity, B. Customer Opportunity A. Economic Opportunity—This can be further differenced into three sub group-- 1. Business Development: A crucial point so far the new establishments are concerned. In case of making new ventures like this case study, this module will be beneficial. 2. Financial Opportunities: This includes the reduction of cost burden, the best optimization of available offshore funding so that the nascent organization should not get any hiccup. The licensing to the local players to reduce the cost can be included into this head. 3. Employees: The quality stuffing is equally important in order to get the desired result. The employment opportunities should be utilized in such a manner so that the organization may get the best possible result. B. Customer Opportunity 1. Customer Base : Customer base needs to be expended beyond known territory That is the reason the opportunities of confectionary market to be taken care of in Middle East . By creating a new customer base and by retaining the same a company can grow. 2. Marketing: it is often told that sales are the part of marketing which slips into oblivion in no time. The opportunities in marketing of new product are to be exploited. Specially in the niche market group where so many players are already present in a clattering and yielding marketplace, this opportunity should be recon with. Costs It is the third point to be noted and the major break up in cost factor includes Economic and Social Cost. The Economic Cost also further divided into three clusters- Financial, Operational and Resources. A. Financial Cost – Includes personal legal costs which needs to be controlled B. Operational Cost- Includes the production line costing, Project completion and sundry other costs. This is another factor which needs to be harnessed with farm controlling in order tom provide a longer life to this set up in cradle. C. Resource Cost- Technical Know How, and other knowledge to be incorporated which includes a cost. The Social Costing includes these pertinent factors as follow. A. Share Holders Cost : Though not directly in terms of cash, it is some short of intangible factor that plays its role. The notion of shareholders, the media criticism, adjustment cost in socio political milieu –these are to name a few. One has to bribe the corrupt professionals in the government to get the result. B. Labor Cost : The morale of a new co where every thing is greeted with a latent mode of uncertainty, the local labor unrest these points matter. Risk The risk factors are the most crucial part in this entry-level theory discussion. The risk factors can be divided in four major part, -Financial, Communication, security and Business process related risk. A. Financial: legal Part is being taken care off here. B. Security Risk: These are external factors like local law & order, geographical condition, climatic conditions as well as the rule of the law. In this case, the market demands the amalgamation with local players and that is to be followed. C. Communication Risk : The factors to be reconed in this head is the road condition for communication, the position of the site where the company to be situated, local customs, cultures, local languages, visa related problems etc. Any of these subtle factors can produce enough risk to the organization. D. Business Process Risk : The quality assurance are to be taken care of. The packaging etc are to be considered in highest priority. (5) Conclusion: Any company who wish to expend the network, get more revenue and earn more profit should follow some basic thumb rule. With the advent of technology, with the evolution of different management module the things got easier. What needed is the will to succeed under any circumstances. Every person in confectionary business knows it very well that at this point of time, dealing with candies and cake is no cakewalk. In this entry level business in Middle East, it will be extremely helpful if one follows the BOCR models. There are other modules available, but this particular model is discussed with a specific goal in mind. It is not only profit oriented but holistic in approach, which is mandatory in sustaining a business in long run. References:-- 1. The Middle- East Confectionary market: Opportunities for US confectionary Exports, Report by Bryant Christie Inc. page1 (http://69.17.111.188/site/c4/w116/downloads/middleeast.pdf) Accessed on 26th April,2011 2.The Middle- East Confectionary market: Opportunities for US confectionary Exports, Report by Bryant Christie Inc, Page 5; Accessed on 26th April,2011 3.The Middle- East Confectionary market: Opportunities for US confectionary Exports, Report by Bryant Christie Inc, Page 2, Accessed on 26th April,2011 4.www.superdecisions.com/.../AHP_WijnmalenD%20Improved%20BOCR%20analysis%20with%20the%... Analysis of Benefit, Cost, opportunity and Risk. By Diederik J.D. Wijnmalen, Accessed on 27th April,2011 5.Outsoursing a firms application and development Group. www.creativedecisions.net/.../ANP%20Individual%20Sample%20Projects/ Page 1-11; Acessed on 27th April,2011 Read More