International Retail Marketing of Iceland Foods - Assignment Example

?Executive Summary: Iceland Foods knows that a bag of frozen peas is as good as the freezer where it is kept. The company has an impressive large chain of frozen food stores which counts to more than 700 in the United Kingdom. Most of its foods are private-label convenience foods with Iceland also offering home delivery facilities along with the facilities to buy products online and in order to provide the customers with convenience. This report is about Iceland Foods and how good they are in the country they are operating it i.e. the United Kingdom. It also focuses on marketing-mix that organizations need in order to establish themselves as one of the renowned organizations. The marketing-mix is also needed as part of international retailing when an organization decides to move on to a new country to further establish their business world-wide which is influenced by different factors of different countries. The country we have targeted for Iceland Food’s retail is Saudi Arabia. Saudi differs from United Kingdom in various aspects which include cultural, psychographic and demographic dimensions. The macro environment of the two nations is also different. The report focuses on what 7 P’s are needed by Iceland to establish themselves in Saudi Arabia and what should differ to what is already being done in the United Kingdom. When moving into a new country, the retail outlets also need to consider various ways of understanding the customer behavior and how they can improve the customer relationship to retain sales in the long term. Organization: Iceland, one of Britain’s most innovative and fastest-growing retailers is considered to be one of UK’s best companies. Its primary product line consists of frozen foods such as frozen prepared meals and also frozen vegetables. Iceland also launched what according to them was the first nationwide, free, online grocery shopping service. Critical Evaluation of the role that marketing mix plays in the devising of the marketing strategy of a retail organization: Marketing Management decisions can be based on one of the four categories: product, price, place and promotion. These variables are known to be the 4 P’s of marketing or the marketing mix. In order to satisfy customers in the target market, these variables are controlled by marketing managers. This is in an attempt to generate positive response in the target market as these four marketing mix variables can be blended in an optimal manner. Product: It is the physical product or service which is offered to the consumer. When the physical products are offered, it can also refer to the services or the conveniences that are part of the product being offered. The decisions on products can include different aspects such as function, appearance, service, warranty and packaging. Price: The decisions on pricing of the product are made by taking into account the profit margins and the probable pricing response of the competitors. This not only includes the listed price of the product but also the discounts, financing and other options such as leasing in order to satisfy the customers in the best possible way. Place: The decisions on place (or placement) are the ones that are associated with the channels of distribution that provide the platform or the channels for getting the product to the target customers of that market. The system of distribution performs transactional, logistical and the facilitating functions. The decisions on distribution include the market coverage, the channel member selection, the logistics and the levels of service for the product to reach to the final consumers. Promotion: The decisions on promotions are the ones related to communicating and selling the product to the potential consumers. The costs of promotion are large in proportion to the price of the product; therefore, an analysis of break-even should be performed when making decisions of promotions. It is essential to know the value of a customer in order to determine whether the cost of acquiring additional customers is worth it or not. The decisions on promotion involve advertising, public relations and the types of media. Marketing mix relevance in terms of Retail Organization: Products are also called Merchandise and the different products that a particular store offers is known as the merchandise-mix. The variety of the merchandise-mix is the number of different product lines that a retailer keeps as stocks in his stores. The breadth, or assortment, is the number of merchandise brands in the merchandise line. For example, if the merchandise line is menswear, the breadth of the formal wear shirts would be the number of brands of shirts that the store keeps for its customers. The depth refers to the average number of units of stock within each brand of merchandise line. Pricing It is an integral part of retail marketing mix. The organization decides to follows the price policy depending on the customer profile which is the targeted audience for the organization’s range of products. It also depends on the uniqueness of the product and the other substitutes that are available. Place The location of the retail store was considered to be the most important element of the retail marketing mix for a very long time. However, with technological advancements and the advent of television and internet shopping, many retailers have gone for a click and mortal approach for the distribution of the product. Promotion The budget for advertising, the publicity of sales promotion and the relations with public play a very important role for retailers to maintain competitive advantage. The retailers learn the need of the strategy of communication in line with the target market and with the products they keep in store. Presentation At store level, the manner or the placement in which the merchandise is presented is very important. Along with dealing with the store layout and ambience created, this aspect also deals with visual merchandising, which is, the orderly systematic and intelligent way of placing the stock on display in the retail store. Visual merchandisers are employed by many large retail organizations to aid the store in this function. Customer Service The customer services or the support services that a retailer provides have become very important these days. The product return policies and the credit policies need to clear not only to the end customer but also the sales staff. The new buzzwords in the industry today are relationship marketing, data warehousing and customer relations management. All these are directed in enhancing customer services to retain the customer in the long term and provide satisfaction. People Retails are used to operate in a unique environment. The industry of retail today is dominated by large number of inexperienced workers, who put in a lot of hours of work. These employees are most of the times in direct contact with the customer and have to face irate or unreasonable customers. The people working at the front end of the retail organization are very important as they represent the organization to the customers. The attitude, behavior manners and the product knowledge of these people play a vital role in building long term bond with the customers of the retail organization. International Marketing Strategy and Marketing Mix of Iceland: Iceland should be exploring various avenues in Saudi Arabia keeping in mind of creating a panel of Iceland customers that help inform parts of their marketing strategy. The variety of products and the marketing mix will also have to change according to the Saudi environment. The new frozen products should be the ones that are accepted in the Saudi’s market and are offered by the competitors. The list of products include frozen bakery, desserts, meat substitutes, noodles, pizzas, processed fish, processed potatoes, processed poultry, processed red meat, processed vegetables and ready meals. The key factors that cause the international marketing mix to differ from the local marketing mix are: Cultural Factors: Saudi Arabia is a Muslim country. The food that will be offered to the market of Saudi Arabia will be different compared to that of the United Kingdom. The people are very traditional and eat the same kind of food as it has been eaten in the country for centuries. The average meal of the Bedouin Nomads is a lot simpler than the urban Saudis who make up the majority of the population of Saudi Arabia today. It is not like in the United Kingdom where people taste preferences change with time. The concept of ‘halal’ food also needs to be kept in mind as Saudi’s will only eat food that is not prohibited in their religion. As they are strict Muslims, they do not eat pork. They serve lamb to honored guests as part of tradition. According to the Muslim law, animals should be butchered in a particular religious way and blessed before they are eaten. Differences of demographics and psychographics Saudi Arabia ranks as one of the biggest consumers of broiler chicken in the world and is world’s largest importer of live sheep. This is not like in United Kingdom where pork is treated as one of the tastiest foods compared to sheep. Pork is prohibited in Saudi Arabia and people are very strict about it. People in Saudi are very proud of their culture and their selection of meals is still dependant on their cultural background. In UK, there are people from all over the world and any variety of food might be eaten by some and not by others. This is not the case with Saudi Arabia where people from other people come up from different cultures but have to adapt to the culture of the locals living in the country. The people differ in demographics as in UK; children do stay away from parents and have more rights to live their lives independently. In Saudi children are influenced by their parents and also their cultural heritage. Different Macro-environment The changes in the macro-environment will have a direct affect on foreign organization working in another country. The political factors of UK such as the government policy are different compared to that of Saudi. The interest rates in Saudi Arabia are higher compared to United Kingdom. The changes in social trends have an impact since the population of UK has been ageing which has increased the costs for pension payments. The population distribution of Saudi Arab shows that there are more people in their early 20s. Technological factors are also needed and organizations have to make sure that there are plenty of facilities in the country where the business is being develop compared to the local country. The environmental changes can also alter with UK being a country with a low temperature compared to Saudi which is near the earth’s equator. The legal issues which make sure that the organization works within the laws developed by the government also differ from each other and the organization has to adapt to laws of the new country. Critical Evaluation and Recommendations: Product The products of Iceland in UK are according to the demand of the population. The same variety of products cannot be introduced in Saudi Arabia. Pork, one of Iceland’s most successful products, cannot be introduced in the Saudi market because it is prohibited due to religious reasons. Iceland should also focus on lamb meat when in Saudi as it is very attractive food for the people of Saudi Arabia. Price The price of the frozen food in Saudi Arabia can be kept at the same relative price as in the United Kingdom or equal to that of competitors because it is the only source of meat Saudi’s can purchase in their country unlike other undeveloped countries where meat is available from shops at cheaper cost. Saudi people live with prestige and can afford meat at higher cost if the quality is good enough to match their standards. Place Frozen food is available almost at all super markets in Saudi Arabia. Iceland supermarkets should make sure that their retail outlets are attractive enough to encourage the customers to visit Iceland to buy their frozen food just like they do in the United Kingdom. Promotion The promotional strategies in United Kingdom are according to the legal limits endorsed by the country. The advertisements have women to show that it is for every mom. However, in Saudi Arabia, women cannot be showed much in the advertisements because exposure of women is prohibited in Islam. People In the United Kingdom, each frozen food category has a particular target market. For instance, Muslims in UK will not buy pork. Chinese in UK are more attracted to continental food. In Saudi Arabia, the same kind of food can be used by everyone and the organization will not have to divide the population into many segments. Physical Infrastructure The infrastructure in both UK and Saudi Arabia is developed which helps the organizations to move their products from one place to another more conveniently. Since Saudi is rich in oil, transport costs in Saudi are much cheaper compared to that in the United Kingdom where fuel is relatively expensive. Processes The process of carrying out business in both the United Kingdom and Saudi Arabia are very convenient due to the development of both countries. Bibliography About Iceland, viewed 10 April, 2011. (http://www.iceland.co.uk/page/view/about_iceland) Iceland Supermarket, 4 April, 2011, viewed 10 April, 2011. (http://en.wikipedia.org/wiki/Iceland_%28supermarket%29) Quick MBA, The Marketing Mix, viewed 10 April, 2011. (http://www.quickmba.com/marketing/mix/) The Retail Marketing Mix, V S Rama Rao, 28 July, 2010, viewed 10 April, 2011. (http://www.citeman.com/9778-the-retail-marketing-mix/) PESTLE Analysis of Macro-environment, Gillespie, viewed 10 April, 2011. (http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm) Frozen Processed Food in Saudi Arabia, Nov, 2010, viewed 10 April, 2011. (http://www.euromonitor.com/frozen-processed-food-in-saudi-arabia/report) Read More