Lucozade Export Marketing Opportunity - Case Study Example

Select a company or a product and evaluate an export marketing (US market) opportunity for them Table of Contents Table of Contents 2 Introduction 3 Justifying the choice of country 4 Market Entry Strategy 6 Pestel Analysis 6 SWOT analysis 7 Distribution Strategy 8 Pricing Strategy 9 Conclusion 10 Reference 11 Introduction The 21st century world has an environment that promotes fast change and rapid development. The high level of technological developments along with a high rate of internet powered connectivity penetration in various corners of the globe has transformed the markets and economies of the world into a well connected and integrated global entity. The evolution of a global world has resulted in the faster evolution and rapid implementation and acceptance of various globalized trends in various developed as well as new economies. This has resulted in the evolution of a new pattern of consumer behaviour from consumers of various new and emerging economies. It needs to be mentioned that in order to meet the growing amount of diverse needs of the customers, the setting up of global trade processes is very essential. It is of utmost importance that global trade is highly necessary as it helps in satisfying the needs of the customer while generating strategic benefits for the firms (Seyoum, 2000, p. 7) Discussing in details about the requirements of this project, it has to be brought into notice that the current focus is to develop an intensive evaluation for the opportunity related to exporting for a particular product. For this assignment, the product that is being selected is the UK based product Lucozade. While introducing the product Lucozade, it has to be mentioned that it is an energy drink, which promises to meet the varying calorie requirements of athletes, sports professional as well as fitness conscious individuals. The project focuses on identifying the opportunity related to attaining business growth by entering a new overseas market like the United States. So, the main motive of the project is to identify the export opportunity of Lucozade from the UK to the US. Justifying the choice of country It is important to mention that while selecting a market for exporting of products, the focus is on identifying the various prospects associated with it (Zou & et.al, 2009, p. 32). In the times of increased economic uncertainty as well as various other macroeconomic challenges in various corners of the world, it is highly interesting to mention that the market demand for energy drink products is growing various developed as well as developing markets. As of the recent times, the energy drinks is considered as a growing sub category of soft drinks in various global markets because of the increased focus of masses around the world to lead a healthy and fit life. It has been estimated that the global health drinks market is estimated to attain a growth rate of around 35% by the year 2016 (Russell, 2012). As per market based region specific forecasts, it has also been found that the markets of Asia, North America and West Europe are expected to grow the most (Business Wire, 2013). As per an OECD sponsored report dated in the year 2012, it has been found that the United States leads the world in regards to mass obesity (Obesity Update 2012, 2012, p. 2). Source: Obesity Update 2012, 2012, p. 2 It also has to be said that in the United States, the obesity has grown in the range of 4 to 5% on an annual basis (Huffington Post, 2012). Source: Chou & Kane, 2012 Data backed statistics also indicate that around 68% of the US population are possibly overweight or obese (Chou & Kane, 2012). However, it is of increased importance to highlight the fact that due to an increase in obesity numbers, there has been a growing consciousness amongst the masses around the world to stay fit and in shape (Johnson, 2012). Talking on this note, the fact of increased consciousness in regards to obesity in the US market also has to be taken into consideration. Records of previous sales reveal that the sales of the energy drinks are increasing in the US at a steady rate (Haffner, 2012). This reveals that the US market has attained an increase in market attractiveness in regards to energy drinks. There are a number of competitors currently present in the market of the United States. The market of the United States is dominated by brands of Pepsi, Coca Cola, Monster, Red Bull (Haffner, 2012). Market Entry Strategy Pestel Analysis The PESTEL analysis takes in to account the political, economic, social, technological, environmental and legal aspects of a particular business environment. It is of significant importance to state that firms looking forward to indulge in international trade should take in to consideration the laws and regulations that currently exist in the new country (Albaum & et.al, 2006, p. 118). The political scenario in the US in regards to the soft drinks sector is a little challenging in the recent times. The Food and Drug Administration of the US region is seriously evaluating the caffeine content that is present in the energy and health drinks of the various brands. The agency is evaluating the amount of threat the various energy drinks poses to the health of the consumers (Edney, 2012). Talking in the economic point of view, focus has to be given on the fact of slowdown and economic challenges, as well as shrinkage in industrial productivity in the US, which has resulted in decline in sales for the overall soft drinks sector. While discussing the issues of social factors, it needs to discussed and highlighted that there has been an increase in awareness among the consumers of US in regards to obesity (Dube & et.al, 2010, p. 737). Talking on the lines of technological impacts on the US sector of energy drinks, the factor of the existence of an indirect relationship needs to be brought forward. Because of the high amount of time spent by the consumers on the online media, the value communication exercise for the energy drinks becomes more effective through the online media. However, the environment factors does not present a significant influence on the sector related to energy drinks. Finally talking on the legal point of view, it can be discussed that the US based Food and Drug Administration controls the supervising and governing power in regards to the health benefits and related claims made by the energy drinks sector in the US. SWOT analysis It is of utmost importance to state that while thinking in the lines of engaging in export oriented business, firms and organizations has to conduct a detailed analysis of the firms in regards to the inward and outwards advantages and disadvantages. This makes a swot analysis as a very important criterion. For exporting the UK based energy drink to the US, the firm needs to focus on its strength. It is of significant importance to mention the fact said that Lucozade being an energy drink will have product standardization in its new markets and does not need any major market or consumer based change (Linton & Donnelly, 2012, p. 12). The fact the company has developed a significant expertise in regards to manufacturing of energy drinks for the UK market can be counted as its strength. Also, the well acceptance of the brand in the UK market provides the company with a strong domestic strength, which is very critical when opting for international trade. While talking about the weakness, the company’s presence only in the UK regions which results in the lack of expertise of handling international markets and its new dynamics needs to be mentioned. While talking about the opportunity aspect, consideration has to be given to the fact that the energy drinks market in the US is expected to grow in the upcoming years in terms of volume provides a significant amount of growth opportunity. From the potential threats, the rising awareness about the harm from consumption of energy drinks has to be taken into consideration. Also, the stringent actions and policies developed by the Food and Drug Administration of the US can be counted as a potential threat for developing the opportunity of Lucozade in the US market. Distribution Strategy While talking about the strategy of distribution, it is of considerable importance to mention that the energy drink is a fast moving consumer good. Also, it has to be said that like markets of other developed economies, the retail market of United States is highly organized in nature. Talking about the distribution strategy, it has to mentioned that the product will be initially distributed to various wholesalers. The next chain of distribution will comprise of delivering the product from the wholesalers to the distributors located in various regions of the United States. The final move will be to deliver the products to the various retailers located in and around the United States. Pricing Strategy It is of considerable importance to state that since a high amount of competition exists in the energy drink market in the US, because of the presence of various other global brands, it can be said that the pricing for the product needs to be very competitive. Talking on this note, it can be considered that for the purpose of picking up fast market share and gaining a foot hold in the market of the United States, the company can focus on inculcating a series of pricing strategy. On the very first move, the company can focus on implementing a loss leader pricing strategy for an introductory period. By implementing the loss leader pricing strategy, the UK based company may be highly successful in attaining a volume based growth in the market of US. Also, it will help the customers of US to get acquainted with the product which is basically of UK origin. Once the customers get acquainted with the UK based product, the company can focus on implementing penetration pricing. Talking in an elaborate manner, it can be mentioned that penetration pricing is the strategy of keeping a low price for the sole aim of gaining price based competitive advantage (Jain & Khanna, 2010). It is important to say that during the course of conduction of the international business, the company will bear the cost of importing the goods to the UK market. Talking about the variable costs related to distribution of the products to various distributors, stockists who are located in the United States, it has to be said that the transportation costs has to be incurred by the retailers and wholesalers in the initial phase. However, with the significant increase of market share for the energy drink in the UK market, the company will look forward to providing various discounts and other related privileges which will help in equating the cost aspects, which is associated with the incurring of transportation costs by the retailers and distributors. Conclusion While designing the entry strategy for the UK based energy drink, various aspects of political, economic, social etc has been taken into account. Also the strategic analysis identified the internal and external threats associated with the company. On a concluding note, it can be assumed that by applying the strategies related to product pricing and distribution, the UK based beverage product Lucozade will be successful in gaining a significant foothold in the market of the United States. Reference Seyoum, B., 2000. Export-Import Theory, Practices, and Procedures, Part 1.New York: International Business Press. Linton, C. & Donnelly, R., 2012. CIM Coursebook: Delivering Customer Value through Marketing. UK: Elsevier Ltd. Dube, L. & et.al, 2010. Obesity Prevention: The Role of Brain and Society on Individual Behavior. USA: Academic Press. Albaum & et.al, 2006. International Marketing And Export Management, 5/E. India: Dorling Kindersley (India) Pvt. Ltd Zou, S. & et.al, 2009. Export Marketing Strategy: Tactics and Skills That Work. New York: Business Expert Press. OECD, 2012. Obesity Update 2012. [Pdf] Available at: http://www.oecd.org/health/health-systems/49716427.pdf [Accessed 27 Feb. 2012] Russell, M., 2012. Global: Energy drinks consumption grows in 2011. [Online] Available at: http://www.just-drinks.com/news/energy-drinks-consumption-grows-in-2011_id106327.aspx [Accessed 27 Feb. 2012] Business Wire, 2013. Research and Markets: Global Energy Drinks Report 2012-2015 - 82 Country Analysis. [Online] Available at: http://finance.yahoo.com/news/research-markets-global-energy-drinks-110900370.html [Accessed 27 Feb. 2012] Edney, A., 2012. Energy Drinks’ Health Danger Being Probed by U.S. [Online] Available at: http://www.bloomberg.com/news/2012-11-27/energy-drinks-health-dangers-being-probed-by-u-s-regulators.html [Accessed 27 Feb. 2012] Huffington Post, 2012. Obesity Rates Rising: 10 Fattest Countries In The Developed World. [Online] Available at: http://www.huffingtonpost.com/2012/02/22/obesity-rates-rising-developed-fattest-world_n_1294212.html [Accessed 27 Feb. 2012] Haffner, R., 2012. Focus: A World of Energy: The Landscape for energy drinks. [Online] Available at: http://www.just-drinks.com/analysis/the-landscape-for-energy-drinks_id108225.aspx [Accessed 27 Feb. 2012] Chou, J. & Kane, J., 2012. Obesity in America: By the Numbers. [Online] Available at: http://www.pbs.org/newshour/rundown/2012/05/obesity-in-america-by-the-numbers-1.html [Accessed 27 Feb. 2012] Johnson, S., 2012. The Energy Drink Market World Outlook for 2013. [Online] Available at: http://www.liefinternational.com/blog/market-research/consumer-trends/world/energy-drink-market-world-outlook-for-2013/ [Accessed 27 Feb. 2012] Jain, T.R., & Khanna, O.P., 2010. Managerial Economics. New Delhi: VK Publications. Read More