International Marketing Analysis and Strategy of a Given Product - Essay Example

International Marketing analysis and strategy of a given product al Affiliation Table of content Background of the company Screening and evaluation of the market Marketing intelligence Market potential Marketing criteria Competitive criteria Risk criteria SWOT analysis Product policy Entering the market Pricing strategy Financial estimates Background of the company Trudea Services is a newly established business with a presence in Kikuyu, Kenya. The company is engaged in the supply of solar energy and appliances and targets the low and middle income households in the rural areas of Kikuyu. Solar energy is a relatively new concept in Kikuyu given the fact that most of the residents in the area do not have access to electricity but have been using paraffin as their main source of energy. While the market is flooded with a large number of companies providing solar energy appliances, there is no company that has focused on serving the low income market segment. The business will involve itself in heavy marketing in order to create a long-term market presence among the low income and middle income customers. Trudea Services was planned in 2005 to be a part-time business venture. It has been asmall business designed to meet the needs of its clients and their pet family members. The company is located in Kikuyu and plans to expand to other towns in response to increasing demand for solar energy appliances. The company understands the value of ourclients money and provides highly effective and efficient solar energy appliances. At Trudea Services, we accept nothing but the best from our suppliers and ourselves. Management Future Trudea Services was founded by Joseph Kamau and Anthony Kimunya. The two co-own the company and will oversee the day to day management of company operations. However, the company will hire additional members of staff when it expands its operations. Mission Trudea Services is committed to ensuring customers’ success in their energy saving ventures by providing them with the most innovative and cost effective energy saving appliances. Plans The company plans to invest more than 350,000 shillings in the purchase and supply of low cost solar energy appliances to middle income and low income households in Kikuyu. This is a long term project that is expected to last for more than five years depending on the market performance. Date Started Trudea was established in 2001 in Kikuyu and has been operating in the same market since its inception. Financial Plans The company seeks to make expansions into other markets by establishing branches in those areas including Wangige and Westlands. This requires adequate financing because the project is to be operated in the long run. Therefore, the company aims at maximizing on profits and using the proceeds to expand its operations. The business also plans to source for short term loans from a financial institution. Ownership This is a partnership business owned and operated by four individuals. Each of the partners has equal rights in terms of ownership and decisions making. The partners are involved in the company’s daily decision making and decisions are reached subjected to the majority support of the partners. Markets The company is concentrated in a single geographical market and will ensure that it serves the market with its innovative products before making expansions. However, there are two market segments that the business is targeting. They include middle income households and low income households. The business also serves the high end market but products will only be made available on order from customers. Products Trudea Services deals with the supply of solar kits packaged in different sizes. This is to address the diverse needs of customers in the market. The company also offers light solar kits for easy installation and transportation. This reduces the burden on customers during purchase. Most of the solar kits have a trademark on their surfaces for easy identification. Manuals assist consumers are not skilled in usage and maintenance. Products are wrapped in packages bearing the name of Trudea Services for the sake of enhancing the ability of the consumers purchasing genuine products in the market. Screening and evaluation of markets Strategies for Market Services The market for solar energy and appliances has been expanding rapidly and entrepreneurs are seeking to seize the existing opportunity. However, most of the existing businesses have emphasized too much on the high end market at the expense of the middle income and low income market segments. Trudea Services seeks to fill the existing marketing gap by offering low cost solar energy and appliances to its customers. This will make the products more affordable hence attract a significant number of customers. Growth Potential The market for solar energy and appliances is large enough to accommodate our company and its products. Kikuyu has a relatively high population density which translates to a large number of households. The number of household has been on the increasing and we predict that this will translate to a growth in the market for solar energy and appliances. Our company will expand relative to increasing customer demands. Marketing intelligence The market for efficient sources has been growing in the last one decade. Kenya has been experiencing shortages in its supply of electricity due to inadequate sources of power. This has led to the growth and development of the market for solar energy especially in rural areas such as Kikuyu. Kikuyu is relatively densely populated area and most of the people living in the area are engaged in small business and agriculture. The two activities heavily on the supply of power and the use of solar energy has enabled the residents of Kikuyu to have access to power at a relatively low cost. The market for solar energy and appliances is dominated by small businesses that offer their products at low prices. This has invited a large number of entrants into the market hence stiffening competition. Additionally, most of the businesses are located in Kikuyu town with a few having retail stores in the outskirts of the town. Products Description Value Proposition Trudea Services will offer affordable energy solutions for the people of Kikuyu who are limited by their low purchasing power. In Kikuyu, the price of a solar panel is about 3,600 and this has made it difficult for the community to afford electricity in their premises. The company will offer financial arrangements that will enable customers to pay for the solar panels in monthly installments in a similar fashion that people in developed areas do when purchasing most of their products. Trudea Services allows customers with low income and medium income to afford low cost solar energy appliances. Our customers can choose products for their own convenience and have access to innovative products that offer a unique product experience. Market research Customer Characteristics The rural population in Kikuyu lives in houses made of brick and of large sizes. The sizes of the rooms are between two to three bedrooms with each of the houses having a kitchen. The target market is composed of majorly low income earners with a few of the population earning more than Kenya’s average income. Electricity supply is only available to the rich and affluent members of the rural population. Most of the electricity available in the area is hydroelectric power. This is a potential market for Trudea Services to introduce solar electricity systems that are cheaper than hydroelectricity for the low and average income families Market potential The target market for the business is the low income earners occupying the rural areas of Kikuyu in Central Province. Kikuyu is densely populated area with most of its population living in rural areas. The town has a population of approximately 100,000 people with 60,000 living in rural areas. A small percentage of the population in Kikuyu has access to electricity with the remaining majority having no access to any form of electricity. Research studies indicate that the rural areas of Kikuyu are the most affected with results showing that only 5% of the population has access to electricity with the remaining 95% having no hopes of accessing any form of electricity. Majority of the population is not modernized and market research conducted by the company last year indicates that 99% of the population under study is willing to have access to a solar electric system. They believe that the supply of solar panels will enhance the process of modernization in the area. We will offer services and products that will be of affordable prices to ensure that most of the population is able to afford solar energy appliances. Most of the population is lacks technical knowledge on the use of solar energy appliances since it is a relatively new concept in the area. The business will address the need of the customers to understand the operations of the solar energy appliances by offering training programs. Services and products will be located near the rural areas with a relative high concentration of people to ensure that most of the people have access to solar energy. The product will rely on solar energy making it simple to install solar electricity equipment for the resident. This will make it easy for the customers lacking technical knowledge to operate the solar systems. In recent years, consumers in the market for solar energy appliances have shifted their preferences to demand more of products with low costs and easy ways to operate. The consumers have also increased their demand for products with high levels of efficiency and effectiveness as they aim to maximize value for their money. This is a wonderful opportunity for Trudea Services to thrive because its products are highly efficient and effective. Our products are also easy to operate and this will make our customers enjoy a unique experience. There has also been the entrance of new solar energy appliances which have increased competition in the market. In the last five years, there has been increase in the demand for low cost solar energy appliances among low income and middle income households. This can be attributed to the fact that most of them have not been able to access the supply of electricity in their homes. Competitive criteria Trudea Services will concentrate its products and services on the provision of reliable energy. The company is aiming at marketing its services in the emerging market. The emerging market has the characteristic of fast economic growth and emergence of new technology. There has been an economic revolution in emerging markets accompanied by astonishing growth that has eventually resulted in the creation of new market for businesses. The market for renewable energy in an emerging market is commonly known as Renewable for Sustainable Village Power (RSVP). It is a subset market of the global energy market that is very common in developing countries in Africa and Asia. Experts in the energy sector have made a prediction that there will be an increase in demand for energy in the next ten years. This has been attributed to the high levels of industrialization in developing countries. Most of the target users of electricity in Kikuyu live in rural areas resulting in an increase in demand for renewable energy. This makes renewable energy the most preferred source of energy in the area. The RSVP market has experienced an increasing trend of privatization of public companies and, deregulation of energy activities. Majority of the Governments in developing countries have implemented aggressive policies in efforts aimed at attracting foreign investors into their economies. Kenya has been on the forefront in privatizing its industries especially energy after a series of losses under the management of the government. This has resulted in the entry of many businesses in the energy sector targeting to satisfy demand for rural energy at a profit. SWOT Analysis Strength Trudea Services’ staff members are innovative and posses unique expertise that would be very difficult to match. Trudea Services’ products were the first into the market and can be quickly adapted to changes in the industry and evolving customer and entrepreneur behavior. Our products have unique features that serve customers well and are not matched by any rival business. The products of rival companies are cumbersome to operate and are not specialized for use. Trudea Services has a strong positive reputation among customers. The business is located in a strategic place hence making it easy for customers to access our premises. We offer products at relatively low prices hence making them cheaper and affordable. Weakness As a new and young company, Trudea Services does not have strong brand recognition in the marketplace. Trudea Services lacks extensive channels of distribution and reputable retail store to market its solar energy appliances. Opportunity Growth of middle income households as indicated by the government survey conducted in 2009. Awareness and interest in the use of solar energy among middle income and low income households. Inadequate supply of electricity which has led to an increase in the demand for solar energy and appliances. Increasing government support for small and medium enterprises through vision 2030. Threat Increasing cost of living which reduces the purchasing power of middle income and low income households. Influx of cheap counterfeit solar energy appliances in the market. This could hurt our business because such products are easily available and cheaply priced. Estimated Market Share Our estimated market share is 40 percent given the fact that we offer the cheapest prices in the market and also have the most innovative products. Related businesses have been relying on the supply of solar energy appliances from our company and this shows how much we have dominated the market. Product policy Manufacturing and Operation Plan Trudea Services is located inside the town limits of Kikuyu. It is a commercial business with its premises located near Equity Bank Kikuyu branch. The business is strategically located and will ensure that customers have access to our products and services with ease. We are also located near a financial institution hence it is easier for our customers to arrange for payments in a convenient way. However, the strategic position of our business attracts high costs of operations in form of high cost of rent. The business will expand its business premises by renting additional space so as to accommodate the increasing demand for our products. Design and Development Plans We will provide solar energy appliances together with an operating manual so as to guide customers on how to operate the respective devices that they will purchase from our premises. The business will hire a technical team that will be responsible for the testing and repair of appliances. Customers are offered a one year warranty on our products and are allowed to return any faulty appliances. Marketing Plan Pricing Strategy Trudea Services will charge the cost of supplying solar energy and solar panels at the lowest possible price while still recording an attractive profit. Our marketing research studies indicated that a rural family is willing to surrender half of its annual income in exchange of an essential service such as the supply of solar electricity. The low pricing strategy adopted by the business will enable the customers to pay less for the provision of solar electricity and purchase of a solar kit by more than half the price that they would have paid if retailers would have provided the products and services. Generally, the business aims at offering the most affordable prices for the supply of solar energy Entering the market We conducted a market research and identified the need for the rural consumers to have access to affordable energy. Most of the rival companies supply energy at high costs yet most of the population has a low purchasing power. The supply has been synonymous to luxury living and most of the consumers assume that only the rich can afford to use electricity. Most of the rural population lacks the supply of electricity despite their wish to get the supply of electricity. The business will target its marketing activities to the rural areas of Kikuyu since they have a perception that the existing businesses are charging high rates. This is an opportunity to introduce our products since we will be marketing them as affordable. Management Team Trudea Services management team consists of electrical engineers who have proven to be innovative in the development of low cost energy appliances. They are highly specialized and talented individuals who have managed to reshape the industry and continue to help shape its present and future course. The company is managed as a partnership owned by four partners who have managed to be successful entrepreneurs in their previous careers. The core is qualified to continue the company’s operations and expand upon its current success. Anthony Kimunya, Chief Executive Officer Mr. Kimunya received his BS in Electrical engineering at the University of Nairobi (UoN)inMay, 1995 and co-founded his first business, Kaimo Ventures, while a student at UoN. Theventure was acquired by BIG Ideas co. in 2002 for Ksh. 800,000. Kimunya worked as aSenior Product developer at BIG Ideas from 1996 to 2000 and helped to develop thecompany’s leading BIG-Pub solar energy appliance. He co-founded Trudea Services with Joseph Kamau in 2001. Joseph Kamau, Chief Operating Officer Mr. Kamau received his BS in electrical engineering at the University of Nairobi inMay, 1995 and co-founded Kaimo Ventures Anthony Kimunya while a student at UoN. Mr. Kamau has vast experience in the development of solar energy appliances and has worked with reputable companies such as Botto-Solar Ltd. He then joined Mr. Kimunya toco-found Trudea Services in 2001. Financial Analysis This is the financial overview of Whey Protein Optimum relative to the marketing activities of the product. The financial overview will include a break even analysis, sales forecast, expense forecast, the link between sales and expense strategy, and contribution margin of the product (Blythe 66). However, the financials, budgets, and forecasts of Whey Protein Optimum are based on a number of assumptions which include: a. There will be a steady generation of profits from the product after two years of market presence. b. The financial projections for the product will remain viable for a period of two to three years. c. The percentage interest is 10 percent. d. Demand for Trudea Services’ solar energy appliances will increase steadily over the period of business operation. e. The marketing strategy is effective in increasing demand for solar energy appliances. f. Total expenses will increase with an increase in sales revenues. 4.1 Break-even Analysis
 The break-even for solar energy is determined at a point whereby there will be zero profits from the sale of the product. In this case, the break-even point is 150,000 where total expenses equal total revenues. In order for the product to break-even, the required levels of sales will be 150,000. Revenues 20,000 15,000 10,000 5,000 0 -5,000 5,000 10,000 15,000 20,000 Expenses Monthly Break-even Point -10,000 4.5 Contribution Margin Year 1 Year 2 Year 3 Year 4 Year 5 Sales 100,000 108,000 123,000 141,000 166,000 Cost of sales 20,000 21,000 24,000 26,000 30,000 Gross Margin 80,000 87,000 99,000 115,000 136,000 % Gross Margin 80% 80.5% 80.4% 81.5% 81.9% Expenses Budget Marketing 20,500 20,400 19,800 19,600 19,200 Personnel 44,000 54,000 55,200 66,000 71,400 Operating 7,000 8,000 9,000 10,500 10,500 Total 72,500 82,400 84,000 95,500 101,100 % of Sales 72.5% 76.3% 68.3% 67.7% 60.9% Contribution Margin7,500 4,600 15,000 9,500 34,900 CM/Sales 7.5% 4.3% 12.1% 13.8% 21% Financial Plans Proforma Cash Flow Sep Oct Nov Dec Jan Feb Operating Profit 30.0 29.5 27.0 25.0 21.0 20.0 Cash Income Taxes 0 0 0 0 0 0 Funds from Opers. After Tax 30.0 29.5 27.0 25.0 21.0 20.0 Increm. Working Capital Invest. 19.0 5.0 7.0 11.0 13.0 11.0 CashFlow From Operations 49 34.5 34 36 34 31 Non Op Inc. (after tax) -1) 0 (2.1) (2.1) (2.3) (2.1) (2.0) Investor(s) 400 0 0 0 0 0 Net Cash Flow 449 32.4 31.9 33.9 31.9 29.0 (1- After-tax interest income Mar Apr May Jun Jul Aug Operating Profit 25.0 23.0 26.0 27.0 28.0 30.0 Cash Income Taxes 0 0 0 0 0 0 Funds from Opers. After Tax 25.0 23.0 26.0 27.0 28.0 30.0 Increm. Working Capital Invest. 13.5 14.0 16.0 17.0 19.0 15.0 Cash Flow From Operations 38.5 37.0 42.0 44.0 47.0 45.0 Non Op Inc. (after tax) -1) (2.0) (1.9) (1.5) (1.3) (1.0) (1.1) Investor(s) 0 0 0 0 0 0 Net Cash Flow 36.5 35.1 40.5 42.7 46.0 43.9 (1- After-tax interest income Projected Income Statement Year 1 Sales 345,000 Cost of Goods Sold 15,000 Gross Profit 330,000 Salaries 200,000 Selling Expense 75,000 Office Expense 30,000 Other 0 Total Expenses 305,000 Operating Profit 25,000 Interest Income 20,000 Earnings Before Taxes 45,000 Income Taxes (15,000) Net Income 30,000 Projected Balance Sheet Time 0 Year 1 Assets Current Assets Cash 160,000 200,000 Accounts Receivable 74,000 50,000 Inventory 120,000 168,000 Other Current Assets 23,000 50,000 Total Current Assets 377,000 468,000 Long-term Assets Long-term Assets 0 23,000 Total Long-term Assets 0 23,000 Total Assets 377,000 491,000 Liabilities and Capital Current Liabilities 10,000 10,000 Accounts Payable 7,000 0 Current Borrowing 50,000 60,000 Other Current Liabilities 10,000 30,000 Subtotal Current Liabilities Long-term Liabilities 100,000 141,000 Total Liabilities Capital 200,000 250,000 Total Capital 200,000 250,000 Total Liabilities and Capital 377,000 491,000 Proposed Company Financing Trudea Services intends to raise Ksh. 200,000 in its third round of financing. This round will address a number of business needs including the expansion of business operations and introduction of new products to the market. Most of the financing will be sourced from company profits and loans from financial institutions. The company targets to source finances at the lowest cost in order to minimize on costs while maximizing on profits. Risk criteria Despite preparing a strategic business plan, the business expects that there will be a misunderstood perception about the provision of solar energy and appliances. Most of the rural areas are used to lending hence they will have the perception that our business will be offering products and services on credit. The business will handle the situation by enlightening the community on the need to buy and install solar electricity appliances through a convenient financial plan with financial institutions. Changing economic conditions my affect consumer purchasing power hence affecting the buying patterns in the market. Inflation may result in an overall increase in prices of commodities. Consumers will have a priority of satisfying basic wants such as need for food, shelter and clothing. This will eventually result in a fall in the demand for solar energy. Trudea Services will address the challenge by offering flexible financial arrangements to offer payments in installments. It is expected that new businesses will enter the market for energy to supply solar energy. This will increase competition in the market and pose a potential threat to the company. The business will respond to the threat for increased competition by supplying branded products and securing copyrights for the exclusive supply of the branded products. This will ensure customer loyalty for the business and the business will be able to retain the market share. Appendices Expense Breakdown 1
 Personnel Expense Budget Year 1 Year 2 Year 3 Year 4 Year 5 Salaries 132,000 139,000 140,000 150,000 155,000 Commissions 17,000 18,500 18,600 19,000 19,200 Allowances 15,000 16,500 16,600 17,000 17,200 Totals 144,000 154,000 155,200 166,000 171,400 Expense Breakdown 2 Operating Expenses Year 1 Year 2 Year 3 Year 4 Year 5 Rent 23,000 24,000 24,000 25,000 25,000 Insurance 12,000 12,500 13,000 13,300 13,500 Office Equipment 22,000 22,000 22,000 22,000 22,000 Totals 57,000 58,000 59,000 60,500 60,500 Read More