Analyzing the Global Marketing Environment - Assignment Example

? Analyzing the global marketing environment The globalization trend has triggered many firms to realize the importance of conducting business activities outside their home country. With the continual global economic growth, many firms around the world are looking at their business in a global marketing context. Through global marketing, some firms choose to standardize their products and marketing programs to attain global economies of scale while others take advantage of global specialization and cross-sourcing to achieve production and cost efficiencies. Firms that have successfully capitalized on the effects of global marketing are achieving great success in the global business environment (Global Marketing 2002). Background This report is based on the examination of the global marketing environment of the popular cookies brand of New Zealand, Cookie Times, in the global market, especially in United States. Cookie Time Ltd (CTL) is one of the most popular cookie brands in New Zealand. This is located in Christchurch and makes snack foods since 1983. The mascot of the brand is known as Cookie Muncher. It is a commercial, innovative snacking company. One of the fundamental business structures of the company comprises of franchised distribution, retail, as well as manufacturing operations with special focus on the opportunities of foreign licensing and franchise. Chocolate Chunk Cookie was the first launched product in the New Zealand market intended for individual sale. With unparalleled operational excellence and dynamic entrepreneurship, CTL is dominating the domestic cookie and cracker market for more than 28 years. Their passion lies in building strong customer satisfaction base and network by providing unmatched quality products with extravagant taste (Franchise opportunities, Cookie Time, n.d.). The company’s portfolio includes highly innovative and popular products like glutten-free cookies and smart cookies with authorized certification from the National Heart Foundation. The mainstream sweet cookie was launched in the market in 2006 with prior consultation with the Ministry of health, NZ Parent Teachers Association and the Heart Foundation. In 2010, the first full scale retail space of the company, the Cookie Time Bar was established in Queensland which serves great hot cookies and milk with a nostalgic ambience. The outlet shop of the company outside the Christchurch factory is a landmark site which is well known for its giant cookie frontage. The head quarters and the food science laboratory are also established here. For distribution of the products to more than 6000 domestic retail outlets 40 independent franchisees work rigorously across time (Corporate Profile, Cookie Time, n.d.). Reports show that about one-third the people of United States of America (US) have no time to take their meal. Only one-third of them take regular three meals in a day. The others depend on easily available food items and snacks and skip their meals. The unhealthy consumer behavior leading to rampant obesity has led majority of the American population to convert their dietary mechanism towards a more healthy process. As a result CTL finds a great opportunity to enter this market with its products which are rich in high proteins, high fibre, natural ingredients with low fat and sugar which guarantees healthy diet (Cookies in the US 2006, p. 6). That is why the study is done to find out whether there is proper global environment of the marketing Cookie Time in the country. 1. Environmental analysis 1.1 Economic Environment The economic setting can modify quite fast. Effects of rapid business decline in a country or region will adversely affect the business environment of any organization within that geographical boundary. However new strategies are to be formulated and implemented at the simultaneously for maintaining sustainability. The fall in consumer’s income changes their consumption pattern by cutting down expenses by barred consumption on some products. As a direct consequence many companies including the cookie and the cracker companies were adversely hit. The snacks market was substituted by cookies and in 2009 sales of private label brands sky rocketed  with brands like Nabisco’s Chips Ahoy!, Oreo, and Oreo Double Stuf occupied second, third, and fourth place in the cookie market respectively. As compared to the previous year the sales of the top ten brands increased by 1% with accumulated sales figure of $4.0 billion. The consumer’s loyalty towards brands like Sunshine Cheez-It, Wheat Thins, and Triscuits were overemphasized. The approximate expenditure of the Americans on the top 10 cookie brands in 2009 valued to $4.0 billion (Cookies and Crackers, n.d.). To enter the US market and to make its economic environment in favor of the company has to ensure that it is the first among the global competitors to enter the US market. According to the general manager of the company Lincoln Booth, “innovation can lift any business out of recession” (Licensing Success Story: How to sell Healthy quick meals, n.d., p.2). The distribution logistics for the company in the US market is a major problem. This is because the product of Cookie Time is freshly made from the natural ingredients and without any preservatives. The product has a little shell life. So it will not be feasible for the company to fly in stock weekly from New Zealand to US because it is expected that there will be initially low margins from selling the product which may be less than the costing in logistics. Commercial risks will also crop up if the company plans to develop a multimillion dollar US factory. The solution can be seen in licensing US manufacturing and distribution partners. Managing director Booth has always claimed that, “it is important to partner with the right people and get the basic right” (Licensing Success Story: How to sell Healthy quick meals, n.d., p.2). The company got expert advices from the organizations like NZ Trade & Enterprise, Main freight and James & Wells. The cookie time team also fully supports this strategy. The company has partnered with the Sanitarium products of Australia with the date of launching on February 12, 2009. The company also regards the creative branding and intellectual property licensing as prime indicators of the company’s success in the coming next decade (Licensing Success Story: How to sell Healthy quick meals, n.d., p.2). 1.2 Political, legal, and regulatory environments The political parties in power of a government representing the popular opinion of the citizens of the region often affect the political, legal, and regulatory environment. The rules and regulations created by the politicians entail deep influence on the cost of business operations and marketing of products and services. As for example in Canada there are stringent rules on tobacco and alcohol which hinders the marketing procedure of these companies. The curriculum of the government regulations include norms related to interaction of the domestic companies with the foreign companies, various restrictions to import, limitation to the operation of the foreign companies, the nature of influence on the domestic government by foreign fiscal policies, rules  reflecting and influencing the cultural scenario and demographics of the citizens and so on (The 6 Environments, n.d.). In the United States, it has been statistically calculated by international standards that 55 percent of adults are overweight. 23 percent of the adults are considered to be victims of obesity. In the current times one in five American students is classified as overweight. A part of this can be attributed to the influence of the political system on the US food industry. Food companies use political systems to convince congress, government agency officials, food and nutrition experts that the products of their company promotes health and they should not be subjected to regulations. In order to protect the marketing environment they contribute to the campaigns of the congress, lobby members of congress and they have formed trade associations creating an apparent notion among the people that the food products are healthy. In the regulatory environment, the cookies and the cracker industry must definitely satisfy the environment and food safety regulations. The EPA [Environmental Protection Agency], state and various local agencies are in charge of monitoring the protection of the environment including waste water treatment, air quality and storm water runoff. The federal rules and regulations are more stringent in the recent times. Many leading companies are sued for violating the norms and spreading Trans- fat products (Cookie and Cracker Manufacturing, 2008). The technology used in Cookie Time is very much favorable as its basic agenda is to produce fat free quality cookies. 1.3 Social and cultural environment analysis In USA Girl scouting is carried on in a rigorous scale in the cookie industry. The Girl Scout cookie program is a leadership and entrepreneurial opportunity where the girls learn and adopt the skills which make them self sustaining. The five processes through which the girls scouting take place is goal setting, decision making, money management, skill development, and business ethics. In the US a division of the Interbake Foods, ABC Bakers which is the oldest and the most experienced Girl Scout Cookie baker is quite famous for its expertise in the production, distribution, marketing and branding of the company. The girls scout cookie program is the largest girl led business in the US with a market value of $750 million. In order to promote the growth, the company produces eight delicious varieties of cookies in compliance with the all local, state and the federal food preparation regulation and third party audits to ensure Global Food Safety initiative guidelines. The company provides consulting services in order to identify, analyze and solve business problems, arrange workshops in order to help, educate the Girl Scout staff, rigorous research, extension of the marketing and public relations to engage the community and the reach of the council, empowerment of Girls scout council, cookie action plans, lead in the food safety and timely delivery (Appendix, Table 1). The Cookie Time has to keep the above factors in mind. Although the primary goal of Cookie Time is ensuring sustainable growth and success by harnessing smart entrepreneurship and delivering optimum customer satisfaction (Vision and Mission ,Cookie Time, n.d.), they have to monitor and keep up with the industry trends and keep themselves compatible with the niche wants of customers along with the existing trends of the US society. Size and weight of the cookie is also one factor which can be illustrated as a driver of cultural difference. Cookie Time has to focus on the engineering of the size of the cookies in comparison with its competitors in order to make a successful entry. In this respect we will compare the products of Cookie Time with that of the products of the ABC Bakers. The products of the ABC Bakers are sold by their weight. This is shown in a tabular analysis below: Products of ABC Bakers Size/weight Products of Cookie Time Size / weight Caramel Delites ( 2 cookies)/28g Original Chocolate Crunch (1 cookie)/95g Shot Outs ( 4 cookies)/26g Triple Chocolate (1 cookie)/95g Peanut Butter Patties (2 cookies)/25g White Chocolate (1 cookie)/95g Short Bread (4 cookies)/26g Apricot Chocolate (1 cookie)/110g Thin Mints (4 cookies)/34g Chocolate Crunch Afghan (1 cookie)/95g Thanks-A-Lot (2 cookies)/31g Chocolate Fix (1 cookie)/65g Lemonades (2 cookies)/31g Glutten Free Cookie (1 cookie)/65g Rookie Cookie (1 cookie)/30g Cookie Bites (3 cookies)/19g Chocolate Crunch 9-Pack (9cookies)/80g Triple Chocolate 9-Pack (9cookies)/80g Table2. ABC Bakers, (n.d.) & products, Cookie Time (n.d.) From the above product analysis table of the two companies it can be found that the cookies of the Cookie Time Company are much bigger than the popular Girls Scout cookies. This is really a significant domain in which the company needs to work out and formulate favorable strategies. However there are gourmet cookie companies in US like Carolina Cookie Company (Carolina Cookie Company, n.d.) which produces fairly large, individually packed and premium priced (Albaum, 2006, p.108). In this respect the company’s Bumper Bars like Apricot Chocolate, Wildberry Chocolate, Raspberry White Chocolate, Banana Chocolate, One Square meal can attract the market. Thus the company will have to attend trade shows, seminars, and workshops provided by the organizations like Retail Bakers of America. These affiliations will allow testing new product on select groups and sampling new baking methods and equipment. Also steps to search for ways to expand cookie company’s distribution channels at baking conventions are necessary (How to Manage a Cookie Company, n.d.). 1.4 Technological Environment In US the major cookie and cracker companies include Kraft's Nabisco subsidiary, Kellogg's Snacks Division, PepsiCo's Frito-Lay, Great American cookies and so on. Concentration is very high in this industry and the top 50 company’s accounts for around 90% of the industry revenue and much stress is given on the technology used in these companies. Categories of popular include chocolate chip, oatmeal, creme filled and sandwich cookies, toaster pastries, ice cream cones, and wafers for ice cream sandwiches. The common inputs used in the industry are wheat flour, soybean, cottonseed oil, sweeteners like cane, beet, high-fructose corn syrup (HFCS), molasses, cocoa powder, chocolate syrups etc. Due to unpredictable weather patterns the chocolate supply are sometimes scarce and are of inferior quality. The manufacturers rely heavily on HFCS in place of sugar which is expensive due to federal price supports. Recent technological developments include the ability to build and launch new products and automated quality control instrumentation which works in order to execute automated baking and integrated networks. Large companies in order to track sales in real time uses network of handheld wireless devices and centralized enterprise planning (ERP) systems (Cookie and Cracker Manufacturing, n.d.). Talking about the Cookie Time Company, in November 2008 it launched a gluten-free chocolate-chip cookie and it is the most successful snacks company in New Zealand and produces approximately 44 million cookies in 2008. The demand for gluten-free cookies has tremendously increased in recent times with the increase in Coeliac disease, commonly known as gluten intolerance. Although the previous launch of the gluten-free cookies yielded pessimistic results in terms of taste, but further modifications in it attracted a huge consumer and it is great demand. So it can be viewed as a positive side for the company to introduce this concept in the US market. As compared to centralized enterprise planning (ERP) systems, company Cookie Time uses Palm Treo 650 smart phones for its sales operation. After the implementation of this technology, Cookie Time has been successful in reducing administration and solving complex business problems. With this technology claims that they are on the top the game (Mobile invoicing solution delivers real-time data for franchised company, n.d.). Hence it can be said that the company has a competitive edge with respect to technological environment. 1.5 Contemporary environmental considerations Considering the contemporary situation the customers mainly include grocery wholesalers, warehouse clubs, restaurant chains, food services distributors, vending machine distributors, and convenience stores (c-stores). 10 to 20 percent of the sales of the cookie and cracker manufacturer go to the Wal-Mart account. Companies specialize in the production of the private-label brands for grocery and stores. A significant amount of marketing is carried on by TV and radio advertising, coupons, celebrity tie-ins, in-store discounts and end-cap promotions, sweepstakes and product specific websites. The Cookie and the cracker makers like Domino’s Oreo dessert pizza, Honey Maid graham cracker pie crust often collaborate with other food manufacturers to extend their brand value. Majority of the companies manage toll-free help lines, internet facilities in order to address various consumers’ queries about different products. Product prices vary from within the range $3 to $4 for a 16-ounce box. The cost of individually wrapped items costs between $0.50 and $1 along with those distributors adds about 10 to 20 percent (Cookie and Cracker Manufacturing, 2008). 1.6 Competitive environments The total cookies and the cracker industry values about $ 10 billion in 2010. The industry is booming with serious competition from large number of periphery industries such as potato chips, nuts, energy bars, fast food, and baking at home. The buying behavior of the consumers is highly fluctuating in this industry. Changing dietary concerns changes the consumer’s preferences rapidly. Consumers often embrace a brand and again abandon it within a few years. As for example, recently Nabisco Snack Wells Company which was once a $500 million brand have encountered 60 percent drop in their revenues (Cookie and Cracker Manufacturing, 2008). However the company is very competitive and we will have a look on the sales figure of some US cookies and crackers company as on February 20, 2011. Brand / Vendor Dollar sales (in millions) Unit sales (in millions) Private Label 644.9 280.8 Nabisco Chips Ahoy/Kraft Fodos, Inc 316.3 116.4 Nabisco Oreo/Kraft Foods Inc. 301.0 101.2 Nabisco Oreo Double Stuff/Kraft Foods 153.5 50.8 Lofthouse/Lofthouse Foods 134.8 38.0 Little Debbie/McKee Foods Corp. 111.0 70.3 Pepperidge Farm/Pepperidge Farm 95.3 32.6 Pepperidge Farm Milano/Pepperidge Farm 92.1 32.3 Nabisco Newtons/Kraft Foods, Inc. 86.3 27.1 Little Debbie Nutty Bar/McKee Foods Corp 76.6 47.0 Nabisco Nilla/Kraft Foods, Inc. 71.6 21.4 Nabisco Golden Oreo/Kraft Foods, Inc. 70.8 23.8 Voortman/Traditional Baking 62.4 24.8 Murray Sugar Free/Murray Biscuit Co. 52.7 18.7 Keebler Chips Deluxe/Keebler Co. 48.4 19.0 Nabisco Nutter Butter/Kraft Foods, Inc. 44.3 15.0 Keebler  Fudge Shoppe Fudge Stripes/ Keebler Co 37.4 15.3 Archway/Archway Cookie Co. 37.1 13.2 Nabisco Teddy Grahams/Kraft Foods, Inc. 31.5 12.0 Mother's/ Kellogg Co. 30.3 10.3 Table 3. Cookies (2011) Cookie Time encountered a sale $100 million in 2011. However the year 2011 was a tough year for the company as because of some structural damage of the firm’s Templeton factory due to massive earthquake. Still the company is enthusiastic in expanding globally. Trademark applications of the company are pending in countries like South Korea, Singapore, South Africa, and China. Company’s general manager Booth said that, "Licensing is the holy grail in terms of a business"(Adams, 2011). The company is also investing a lot of time and money in market research and innovation (Adams, 2011). 1.7 Internal Environment The internal environment of the company is very important for the proper functioning of the organization. The internal environment will be structured in an optimal manner with social responsibilities at its core. There are cookie companies in the US which take the social responsibilities at the core of their business process with optimal structuring within the internal environment. An example of such company in US is the Dancing Deer Baking Company in Boston, Massachusetts. The baking products of the company are made from natural ingredients. The practice of social responsibility is carried on both internally and with the community as a whole. The employees of the company have a direct stake in the company with ownership interests which was practiced since the company was only two years old. Among numerous employee benefits provided by the company Employee ownership is one of the benefits provided by the company. The company’s CEO Trish Karter is really committed to the social cause of ensuring that the people are educated and they play significant productive roles in the society. From one of its product lines it contributes around thirty five of the proceeds to the Sweet Home project that provides education and encouragement to the people. Although the company Dancing Deer is a small business, it has a huge production potential. The company produces 43000 cookies and 12000 brownies each day. The company has experienced huge growth each year with $10.5 million in sales from 2006. The management of the company targets for themselves a goal of $ 50 million sales within the next few years (Business Ethics and Social Responsibility, n.d., p.55). The Cookie Time Company adapts the Herrmann Brain Dominance Instrument (HBDI) as an assessment tool. By the adoption of this technique the employees can optimize their thinking style to suit any given situation in their personal and professional lives. The system of HBDI provides the employees of the company with development opportunities through which they can improve themselves as well as understand the values of others. The system of HBDI can be represented diagrammatically as follows: Fig. 1. (HBDI , Cookie Time, n.d.) The above diagram shows the technique which the company Cookie Time implements within the internal environment to enhance the development dynamics. Another policy adopted within the internal structure of the Cookie Time Company is the Balance by Design policy. The structure can be shown in a tabular representation below: Ensure a work-life balance Importance is given on the employees health needs and interests Issuing an Activa account which they can use on both their individual and their family’s health and wellbeing Yearly contribution by the company into employees Activa Accounts for the creation of balance in their life Table 4: (Balance by Design , Cookie Time, n.d.,). These above management systems of the company can be advantageous over the technique used by the US cookie and crackers firms. Conclusion The above discussion thus provides an elaboration of the environmental considerations of the US cookies market and their analyses which acts as the chief source for the New Zealand cookie company. The Cookie Time to make marketing decision for entering the US market. Considering the economic and competitive environmental analyses it can be inferred that there is fierce competition in the industry and volatile customer preferences. However with the track record of previous success the company views licensing policies as tool to make a successful entry into the market. Considering the social and cultural environment analyses the company has to restructure policies regarding the size of the cookies as the Americans especially like small cookies. Welfare and development programs for the girls will have to given special emphasis. The development of Gluten-free cookies and smart phone in the sales mechanism can be said to have advantageous edge from the technology purview. The pricing of the cookies need to be carefully handled. The internal environment of the company is also favorable with the application of efficient technology like HBDI and provides a competitive edge. The US market is a potential market for successful entry for Cookie Time if the strategies can be appropriately implemented. References 1. Cookie Time, (n.d.), available at: http://www.cookietime.co.nz/profile.html (accessed on May 12, 2012) 2. Cookies and Crackers, (n.d.), available at: http://business.highbeam.com/industry-reports/food/cookies-crackers (accessed on May 12, 2012) 3. Licensing Success Story: How to sell Healthy quick meals, (n.d.), available at: http://lesanz.org.au/upload/Licensing_Success_Story_Cookie_Time_110916.pdf (accessed on May 12, 2012) 4. The 6 Environments (n.d.), available at: http://www.witiger.com/internationalbusiness/6environments.htm (accessed on May 12, 2012) 5. Business Ethics and Social Responsibility, (n.d), available at: http://highered.mcgraw-hill.com/sites/dl/free/0073511722/620358/ferrell7e_chapter2.pdf (accessed on May 12, 2012) 6. ABC Bakers, (n.d.), available at: http://www.interbake.com/?page_id=35 (accessed on May 12, 2012) 7. Albaum (2006), International Marketing and Export Management, Pearson Education India 8. How to Manage a Cookie Company, (n.d.), available at: http://www.ehow.com/how_2315781_manage-cookie-company.html (accessed on May 12, 2012) 9. Carolina Cookie Company, (n.d.), available at: http://www.carolinacookie.com/ (accessed on May 12, 2012) 10. Carolina Cookie Company (n.d.), The only way, fresh every day, available at: http://www.cookietime.co.nz/assistant_brand_manager.pdf (accessed on May 12, 2012) 11. Mobile invoicing solution delivers real-time data for franchised company, (n.d.), available at: http://www.hpwebos.com/asia/pdf/cs_cookietime.pdf (accessed on May 12, 2012) 12. Cookie and Cracker Manufacturing, (2008), available at: http://www.edsuite.com/proposals/proposals_346/app_10_cookie-cracker_mfg-ind_profile_fi_25.pdf (accessed on May 12, 2012) 13. Cookies (2011), available at: https://www.aibonline.org/resources/statistics/2011cookies.htm (accessed on May 12, 2012) 14. Franchise opportunities, Cookie Time, (n.d.), available at: http://www.cookietime.co.nz/franchise.html (accessed on May 12, 2012) 15. Corporate Profile, Cookie Time, (n.d.), available at: http://www.cookietime.co.nz/profile.html (accessed on May 12, 2012) 16. Vision and Mission, Cookie Time, (n.d.,), available at: http://www.cookietime.co.nz/vision_values.html (accessed on May 12, 2012) 17. Products, Cookie Time (n.d.), available at: http://www.cookietime.co.nz/coc.html (accessed on May 12, 2012) 18. HBDI , Cookie Time, (n.d.), available at: http://www.cookietime.co.nz/vision_values.html (accessed on May 12, 2012) Appendix Table 1. Strategies of ABC bakers Consulting services for the assessment, analysis, problem solving and decision making Workshops to help educate, motivate and inform Girl Scout staff and volunteers Research to guide strategies and programs Marketing & Public relations to engage community and extend council reach Cookie action plans designed to ensure councils meet their revenue needs Empowerment of the Girl Scout council for a successful and sustainable Girls Scout cookie program Lead in the food safety Delivery of a streamlined cookie experience Read More