The Marketing Strategies of Yorkshire Smoothies - Essay Example

Yorkshire Smoothies In this era of international and global marketing, cross border flow of goods and services has become so simplified that most of the flourishing companies are trying to capitalize such opportunities. Along with that, advancement of logistics and supply chain management as well as application of e commerce have drastically reduced establishment and transportation cost. This induces more and more firm to penetrate into the global marketing to grab business opportunities especially from the emerging market. Hence, cut throat competition in international standard forces the firms to produce a better quality product and to keep the prices at a competitive level (Finch, 2013). However, due to the presence of domestic as well as international competitors, companies willing to penetrate in the global market, should take sound marketing strategies to survive in long run. Here, the marketing strategies of Yorkshire Smoothies will be discussed in terms of Industry analysis and Marketing Mix to ensure sustainability and profitability for the company in global market. Introduction Yorkshire Smoothies is a UK based contemporary fruit beverage brand, flourishing in the premium segment of fruit based health drinks. The products are specially designed for the health conscious consumers made by locally grown organic fruits. However, the company has taken a pricing strategy for keeping their price above any other retail brands available in the supermarket in order to attract the premium segment of the retail customers. Using glass bottle instead of plastics, using locally grown raw materials, sponsoring and arranging promotional events in annual folk music festival are some of the examples of sound ethical practises maintained by the company. Success of Yorkshire Smoothies in UK market has influenced the company to expand their business in developing nations such that in India (Bennet, 2008). After receiving inquiry from a significant distributor, the company is seriously thinking of capturing the market opportunities. Hence, the company needs to analyze whether they should standardize their marketing strategy and production process in India or they should adapt the strategies prevailing in the country in order to ensure sound business operation and long run profitability in Indian market (Solberg, 2002). Discussion For the purpose of expansion of business of Yorkshire Smoothies in India, the company is required to analyze the factors contributing to their product acceptability and growth in the UK market and compare those contributory factors in terms of availability of opportunities in Indian market to determine whether they should adapt Indian marketing strategy or standardize their existing UK marketing strategy in Indian market (Daft, 2008). Standardization versus adaptation Standardization is the process of reinforcing the existing production process and pricing, positioning, promotional and advertising strategies of the product into a separate business environment. In contrast, adaptation means analysing the economic opportunities relying in the potential market and accordingly modifying the marketing strategy in order to enjoy comparative advantage (Brady, 2010). Standardization of existing marketing strategies in a different market structure may prove to be beneficial for a company (Solberg, 2002). As standardization provides market information available to the firms, it reduces firm’s dependency on a single supplier. This enhances bargaining power of the individual firms. Product quality also increases with the increasing level of competition among suppliers as a result of standardization. It creates synergy between the companies by harmonizing technologies and making strategic alliances among them. Standardization also reduces potential economic risk through extensive research and development (Czinkota, Ronkainen, and Micheal, 2005). However, standardization ignores the necessity of modifying the requirements in case of varying market structure. Following the established business decision in the ever changing market may lead the firm to continue with a faulty marketing approach. Apart from that, it becomes a costlier and time consuming affair for a firm to establish changes made in standardization process. Transfer of technology and establishing the advancement in production process and distribution approach in all markets largely increases cost and therefore reduces the company’s profitability (Theodosiou and Leonidou, 2003). In contrast, adaptation is a more advantageous for firms engaged in international marketing as strategies adopted are tailored so that they can grab the opportunities of competitive advantage. In case of adaptation, product information in all the markets is complete to the company (Solberg, 2002). Adaptation encourages selection of the mode of marketing communication based on the consumer knowledge prevails in the market which in turn enhances product acceptability. Involving in business with local distributor and others local entities engaged in marketing channels speeds up market entry. Localization also ensures meeting requirements in terms of culture, consumer behaviour, consumption pattern as well as legal, political and business restrictions. Hence, if the assets and competency level of the market in which the firm is thinking of establishing adaptation is of sound quality (Theodosiou and Leonidou, 2003). Industry Analysis According to the reports from India’s Ministry of Food Processing, size of the beverage industry in India is approximately $50 billion. According to Drink Technology India Fair, 2013 Indian beverage industry contributes only 10% of the total global beverage market (Markides, 2013). The contribution of packaged fruit juice is even small (3.4 million litres over 1% of market share) (Markides, 2013). However, as a result of expansion of market, more and more market players are coming to this segment for tapping lucrative business opportunities. Improvement in standard of living resulted in increasing level of health consciousness and changing lifestyle among the consumers which in turn have decreased the demand for carbonated soft drinks with an increasing demand for packaged fruit juice (Robert, 2002). Further, hygiene factors and use of non sugar variants has enhanced the acceptability of packaged food drinks among Indians (Robert, 2002). Hence, fruit juice market in India is expecting a growth at a rate of 30% in the next decade Markides, 2013). Though a large market players like PepsiCo, Parle Agro, Dabur and Godrej are successfully operating in the market, constituting of worth Rs. 500 crore market volume (Brunel and Pichon, 2004), opportunities are still there for the new entrants to come and establish business. Cultural differences between UK and Indian market Each culture consists of its own exclusive characteristics. So, the firms intend to engage into international marketing should consider strategic choices on where to standardize its marketing mix or to reformulate their marketing strategies according to the cultural dimensions of the market (Glowik and Smyczek, 2011). For instance, Indian market is characterised by more traditional values as compared to contemporary UK market. As a result, consumer behaviour and consumption pattern changes. Effect of cultural aspect on marketing strategy can be best described through Hofstedes cultural dimensions theory and Hall’s theory on culture. Hofstedes cultural dimensions theory Hofsted has given five cultural aspects which may influence marketing strategy of an organization. In terms of Power distance, UK is one of the most powerful countries in the world in terms of their socio economic condition as compared to India. Hence, companies based on UK such that Yorkshire Smoothies incorporates superior technologies and marketing strategies in their production and distribution process in order to maintain quality standards of their products. However, establishing similar process in Indian market will not be beneficial as obtaining parallel infrastructure will include huge cost and incompatibility. Keeping product quality so high is also not a key requirement for Indian market (Kanso and Kitchen, 2004). Figure 1. Comparison of Cultural Dimension in UK and India (Source- Hofstede, 2014). As UK companies follow individualism in contrast to collectivism, while operating in Indian market, Yorkshire Smoothies should restructure their internal strategic unit in a way that requires dividing responsibility into small groups and assigning each group a particular responsibility in order to smooth running of operations in India (Zou and Fu, 2011). The degree of uncertainty avoidance and long term orientation is also at a higher side for Indian market. The market being more emotional as compared to UK market, it is easier to endure long run relationship with the customers, once the product is accepted. Hence, in order to increase product acceptability, adapting Indian standards of marketing is of utmost importance for Yorkshire Smoothies. Hall’s cultural theory Hall’s cultural theory gives emphasis on the cultural aspects like context of the culture, time period and space (Hitt, 2009). According to Hall’s theory, UK market is characterised as high context market where information and knowledge of customer is unambiguous to the customer whereas in Indian market, the level awareness is much lower. In terms of time, UK market is more time and process oriented than Indian market. Indian emerging market is dominated by other superior markets like UK. So, it will be very difficult and cost and time consuming for Yorkshire Smoothies to standardize their product in Indian market. Rather they should go for adaptation (Cullen, 2011). Marketing Mix - Four P’s of Marketing After analysing the viability of social and economic environment of India, Yorkshire Smoothies’s decision to enter Indian market should be strengthen further. Now, in order to establish their strategy from standardization of adaptation point of view, potential marketing mix for the company should be discussed. (Cullen, 2011) Marketing Mix is a tool used by the companies to determine their sustainability in the existing market in terms of Product, Price, Place and Promotion (Hill, 2002). As discussed earlier, the main product of Yorkshire Smoothies i.e. their bottled fruit juice which is on the high demand side in Indian market. However, the market is characterised by a large no. of existing players such that PepsiCo, Parle and many more. Domestic companies like Mother Dairy, Ladakh Foods are also entering to the emerging market (Markides, 2013). So, according to Porter’s Five Force Model, the product should consider the possibilities of cut throat competition with those domestic and foreign competitors and brands like Tropicana and Real. When it comes to raw materials, the company uses locally grown organic fruits. These are perishable in nature; hence the company will have to make arrangements for uninterrupted supply of fruits either from local market or from leased fields (Cole, 2003). Using local raw material rather than exporting it from UK will be a cost effective decision for Yorkshire Smoothies, as the company will be in the initial phase of product life cycle. Therefore, adaptation will be the best policy. In this way, they will get an access of local fruits like oranges and lychee and contribute towards local demand through diversification (Theodosiou and Leonidou, 2003). In case of pricing, where Yorkshire Smoothies imposes a premium pricing strategy in the UK to capture attention of the premium buyer, they should adopt a competitive pricing strategy for Indian market. Placing the product price artificially high is beneficial for the UK market as it constitutes of a large no. of consumers with high income (Glowik and Smyczek, 2011). In contrast, Indian market is characterised by consumers of middle income group. Hence, charging a price lower than the competitor’s price level will enhance acceptability of the new brand. They will help the company to capture a large section of consumers as compared to the premium customer segment in India (Blackwell, 2011). Hence, the company should adapt competitive pricing strategy which is best suitable for Indian market (Hitt, 2009). Another important consideration of marketing mix is place, in regard to location of production, distribution, inventory, logistics and market coverage. The factor includes each and every establishment associated with the company starting from production to placement of product on the shelf (Onkvisit and Shaw, 2004). In case of Yorkshire Smoothies, the company has already received a proposal from one of the biggest distributors of India. Yorkshire Smoothies can en-cash this opportunity and rely on the distributor to support them in establishing the entire chain Kitchen and Pelsmacker, 2004). Promotional activities used by Yorkshire Smoothies in the UK such that giving away free samples will not be a suitable idea for the Indian market. Failure of such marketing strategy taken by Tropicana highly discourages it. Rather, in order to capture attention of large consumer base in India, the company should adopt advertising strategy (Thrassou, and Vrontis, 2006). Sample distribution is profitable in the UK market because of the uniform consumer behaviour (Kotler and Armstrong, 2008). Conclusion After discussing all the factors contributing towards the potential marketing strategies of Yorkshire Smoothies it can be concluded that the packaged fruit Beverage Company of UK should adapt the strategies suitable in the context of Indian market (Simerson, 2011). In terms of market structure and consumer pattern, UK foods and beverage market largely differs from that of the Indian market. Cultural dimensions also differ in terms of availability and level of awareness among the customers. Where, there targeted customer segment in UK is the premium consumers, in India, they should target the upper middle class, positioning and pricing will also vary according to that. So, standardization of the existing marketing strategy will be very costly and time consuming for Yorkshire Smoothies. As the consumer pattern of India completely different from UK, risk of non acceptability of the product is also there and to survive in Indian market, there is no alternative to successful product penetration and acceptability. Hence, in order to ensure sustainability and long term profitability, adaptation of Indian marketing strategy will be the best option for Yorkshire Smoothies. Reference List Bennet, R., 2008. International Business. New Delhi: Pearson education Ltd. Blackwell, E., 2011. How to Prepare a Business Plan: Create Your Strategy; Forecast Your Finances; Produce That Persuasive Plan. London: Kogan Page Publishers. Brady, D. L., 2010. Essentials of International Marketing. New York: M.E. Sharpe Inc. Brunel, O. and Pichon, P. E., 2004. Food Related Risk Reduction Strategies: Purchasing and Consumption Processes. Journal of Consumer Behaviour, 3(4), pp. 360– 374. Cole, G.A., 2003. Strategic Management. Singapore: Cengage Learning EMEA. Cullen, P., 2011. 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