International Marketing Management - Report Example

International Marketing Management Table of Contents Overview 3 2. Changing Global Market for the over 65’s Market 3 3. Standardisation and Adaptation of Brands in Relation to South America 5 4. Appropriateness of the Selection of the Brazil Market 7 4a. Optimum Entry Mode of Brazil 10 References 11 1. Overview Marketing is one of the significant aspects, which is considered by every organisation for global expansion. It is important for the business to manage its marketing structure to promote the products to the new market. Moreover, the concept of marketing is vital as it is based on the targeted market and the type of the product to be promoted. In this regard, it is stated that, one of the marketing agencies has been requested by a global chocolate manufacturer to work with them for the launch of a chocolate bar. The chocolate manufactured by the company is dark in nature and is of good quality with 150gm of weight. The objective of the company is to launch the chocolate in South America for a prosperous venture. The target market for the dark chocolate is the ageing population over the age of 65 years. The aim of the company is to launch the chocolate bar in South America targeting at the over 65’s market (Cant & et. al., 2009). The aim of the paper is to market the chocolate in the global market focusing on the ageing population of over 65 years. 2. Changing Global Market for the over 65’s Market The global market is showing changing trend in the market due to the demographic factors, specially the ageing population. It is observed that the trend of market is focusing more on the people above the age group of 65 years. This is a long term change and a lasting trend which is taking place in both the developed as well as developing countries. This change is observed in several countries which include the United Kingdom, the United States of America and others with increasing aging population. It is evidential that in the past few years the life expectancy rate has increased to a considerable extent as compared to the 1970’s by 5 hours a day. As per the observation of a researcher in the market of the US, it was reflected that the market for the older people is becoming more as compared to the young generation. This swing in the generation demonstrates the changing trend of the market and also reflects the economic aspect. It is evidential that the age group from 18-59 reflects a growing trend of 7% whereas the ageing group of people had been forecasted to show an 81% growing trend from 2005 to 2030. Moreover, the purchasing power of the ageing population is showing a growth as evidential from the fact that about 60% of the holding of the UK is by the age group above the age of 50. Besides, the ageing group demonstrates a spending of approximately £200 billion per year. From the fact, it can be reflected that the opportunity for the global manufacturing is more if the products are focused towards the need of the older population (Active Age, 2012; Csirmaz, 2008). This change in the trend of the age group over 65’s is because of the increasing life span of the individuals. The reason for the increase in the life expectancy is because the older age group is becoming more health conscious and has a considerable extent of savings for spending. Additionally, the intention of setting up a chocolate bar focusing on the ageing population as a target market is appropriate because the growing demand of the people and the people being health conscious will help the chocolate to be launched successfully. As the life expectancy is increasing and the consumers are more aware of their health, the dark chocolate will have high opportunity in the market of the South America namely Brazil. The dark chocolate provides several benefits for the people of the ageing group as it is good for the heart, brain and helps to control the level of blood sugar which is common among the ageing population globally. Moreover, the dark chocolates contain effective ingredients which are high in vitamins and minerals and are beneficial for over 65’s (Active Age, 2012; Her Majesty the Queen in Right of Canada, 2012). As the trend is shifting from young age group to the old, the marketing strategies used will also be different keeping in view the preferences of the target audience. For over 65’s market, the marketing is done by demonstrating commitment to deliver the best products with quality ingredients. Marketing is done by focusing much on the health benefits the chocolate would provide along with the enjoyable experience. Advertisement of the products will be done in a manner where the benefits of the chocolates will be demonstrated along with the ingredients so that it gets into the notice of the people. Furthermore, marketing will be done through the use of the internet and social networks to reach a wide range of people. Subsequently, the advertisement can collaborate with organisations, for example, US National Heart, Lung and Blood Institute to demonstrate the healthy aspects of the dark chocolate and create a strong positive impact regarding the dark chocolate in the minds of the people (Roberts, 2014). 3. Standardisation and Adaptation of Brands in Relation to South America The standardization and adaptation with regard to the international marketing strategy is of importance for the success of a business in any country. The standardization of marketing is a concept wherein the strategies are implemented to provide similar identical products with similar prices, distribution channels and also the similar promotional strategies in several countries. On the other hand, the adaptation of the marketing strategy refers to the alteration of at least one attribute i.e. the products, pricing, distribution channels as well as the promotional activities in accordance with the people of the country their culture, level of income, purchasing power and customer preferences and tastes (Antunes & et. al., 2013). Thus, in order to be successful in a market, it becomes important for the companies to evaluate the marketing strategy and to balance amid the marketing standardization and adaptation keeping in view the cultural dimension in order to create a marketing mix strategy decision. The standardization and adaptation depends largely on the cultural dimension of the nations (Aswathappa, 2010). In this respect, it is important to evaluate the cultural dimensions to gauge that the success of the chocolate product in Portugal. Moreover, the intension is to understand the marketing strategies used in case of Portugal for promoting the dark chocolate targeting the market of over 65’s which will be effective in the South American region especially Brazil. The reason for such evaluation is because the countries have a few similarities and differences in respect of the cultural dimensions. The Portuguese and the Brazilians have largely the same cultural aspects with few differences. In order to determine the international marketing strategy the Hofstede’s Five Dimension framework is implemented to evaluate the differences in the culture of Brazil and Portugal. This difference will be useful to analyse the marketing mix strategy decision for the manufacturer of the dark chocolate which is beneficial for the people of the old age as reflected by the health organisations. As per the Power Distance dimension, it is observed that the cultures of Brazil and Portugal are similar to a great extent as both the countries believe in the level of hierarchy in their society. Moreover, they respect their elders to a considerable extent and provide benefits to the society’s health. Furthermore, both the countries have a strong sense of collectivism which implies that families are important aspect and people are careful regarding the health of the people and support each other. On the Masculinity dimension, the countries have a moderate score which reflects the fact that the quality of life is valued and caring is a vital aspect. This implies that the products to be successful it should be healthy and provide quality to the people. On the basis of the Uncertainty Avoidance dimension, it is observed that the rules and legal regulations of the countries are strong. People are more concerned with the security and healthy life. Moreover, the people are full of life and love to enjoy life and spend money wisely (The Hofstede Centre, 2014; Santos, 2006). Figure 1: Hofstede Cultural Dimensions Source: (The Hofstede Centre, 2014) Therefore, from the analysis, it can be reflected that the marketing strategy that would be applied for the marketing is standardization to attract the customers of South America as the promotional activities were a success in Portugal. The brand name being the same will help to attract the customers in a rapid manner but the product will be altered a bit by changing the packaging and labelling. The advantage of such standardization is that it helps in building the brand and product image. The attainment of economies of scale in production will help to achieve an optimum cost. Also, the global marketing mix will be developed at optimum cost. Also, the product communication strategies will be the same because of the similarities and few differences (Paul, 2008). 4. Appropriateness of the Selection of the Brazil Market The analysis of a country is an important aspect in order to determine the business environment that prevails in the nation for the business to proper. It is vital to analyse the risk factors of the environment so that a proper marketing strategy can be implemented for success of dark chocolate of the global chocolate manufacturer. In order to determine the risk factor Businesses Environment Risk Intelligence (BERI) framework is applicable to analyse the risk of the country. This tool is of importance to help in taking the corporate decisions (Perry & Leipziger, 1999). The BERI index has four values which help in the analysis which include Profit Opportunity Recommendation (POR) index. The POR index progresses from the sum of Operation Risk Index (ORI), Political Risk index (PRI) along with the R-factor (Economy Point, 2011). All these indexes scored on several aspects such as the stability in the political environment, growth, conflicts and economies. With the assistance of the BERI index, the risk analysis of the country can be done with ease. As per the analysis, it has been reflected that Brazil is ranked 2nd in the country analysis within the South American region. This depicts the fact that the business entry can be done in Brazil as there is a scope for prosperity. The demographics, political situation and the social factors are supportive for the chocolate manufacturer to enter in Brazil. This can be reflected from the diagram below. Figure 2: BERI Index Source: (Leeman, 2010) In accordance with the BERI index, it can be reflected that as Brazil gained 2nd rank in South American region reflecting the fact that the risk in the environment is less for the business to enter. Brazil indicates 60th percentile in every aspect other than Political Stability indicator i.e. 50th percentile (World Bank, 2013). Furthermore, it is important for the global chocolate manufacturer of dark chocolate to analyse the market and industry scenario in Brazil with the implementation of Porter’s Five Forces. The bargaining power of the supplier in the chocolate industry is high due to the limited number of suppliers. The reason for such assessment is that the cocoa seeds are the main ingredients for the chocolates which are limited. The bargaining power of the customer is low and moderate due to a lack of differentiated products in the market. The health benefits the chocolates have on the people reduce its power of bargaining. The threats from new entrants are low because of the capital requirement for the chocolate industry. Moreover, a lack of distribution channel access is another reason for the low threat. The threat of substitution is high for the chocolate industry but for the dark chocolate the substitution can be low. The competitive rivalry is high in this industry as there are leading competitors (Slide Share, 2014). Furthermore, in order to analyse the importance of Brazil as a prospective market, GE matrix as an instrument to measure the market attractiveness and competitive strength of the business. In this regard, in order to evaluate the market attractiveness, it can be stated that buying power of the customers is high. The reason for such analysis is the growing economy of the country. The rules and regulations of the country are strong and support the products which are good for the people. Moreover, the chocolate products would have a strong market as these are not seasonal and can be used throughout the year, thereby this feature makes it an attractive proposition the new market. On the other hand, competitive strength of the business entity is high as the potential market share is quite upward for the dark chocolate products. The quality of the product is high as it offers various benefits to the people (Leeman, 2010). Thus, from these analyses it can be stated that decision of entering Brazil is appropriate on various grounds. 4a. Optimum Entry Mode of Brazil Entering strategy in a foreign market is of significance as the success of the business depends on this aspect. It is important to take a strategic decision regarding the selection of the entry mode. The entry mode for the chocolate industry in Brazil can be contract manufacturing, which is a form of outsourcing (Agarwal & Ramaswami, 1991). This form of entry mode is of benefit for the new entrant in the foreign country as it is cost effective as the cost for the equipment is reduced to a considerable extent. The costs for the labour and other cost are reduced. It is a low risk entry strategy and the company gets the advantage of the locally made image by leveraging benefits. Quite less extent of entry barriers are to be faced because of this strategy. Moreover, because of the local image the product will reach the target customer at ease with less cost. It also avoids pricing problems and helps in delivering quality product at a reasonable price (Mukundakumar, 2012). References Aswathappa, K., 2010. International Business 4E. Tata McGraw-Hill Education. Agarwal, S. & Ramaswami, S.N., 1991. Choice of Foreign Market Entry Mode. IOWA State University, pp. 1-27. Antunes, I. & et. al., 2013. The Impact of National Cultures on International Marketing Strategy and Subsidiary Performance of Portuguese SME’s. The International Journal of Management, Vol. 2, Issue 3, pp. 38-45. Active Age, 2012. The Ageing Marketplace. Downloads, pp. 1-17. Cant, M.C. & et. al., 2009. Marketing Management. Juta and Company Ltd. Csirmaz, E., 2008. New Premium Chocolate In The Hungarian Market. Business Administration Course, pp. 4-86. Economy Point, 2011. BERI Index. Methods. [Online] Available at: http://www.economypoint.org/b/beri-index.html [Accessed April 08, 2014]. Her Majesty the Queen in Right of Canada, 2012. Global Consumer Trends. Age Demographics, pp. 2-19. Leeman, J.J.A., 2010. Export Planning. Books on Demand. Mukundakumar, S., 2012. Entry Mode Strategies. International Entrepreneurship, pp. 2-52. Perry, G. & Leipziger, D.M., 1999. Chile: Recent Policy Lessons and Emerging Challenges. World Bank Publications. Paul, J., 2008. International Marketing: Text and Cases. Tata McGraw-Hill Education. Roberts, M., 2014. Gut Bacteria Turn Dark Chocolate Healthy. BBC. [Online] Available at: http://www.bbc.com/news/health-26626507 [Accessed April 8, 2014]. Slide Share, 2014. Industry Analysis. Industry. [Online] Available at: http://www.slideshare.net/angelteezhiqi/industry-analysis-15701119 [Accessed April 08, 2014]. Santos, P.M., 2006. Relations Between Portugal and Brazil. JPH, Vol.4, No.2, pp. 1-15. The Hofstede Centre, 2014. What about Brazil? Brazil. [Online] Available at: http://geert-hofstede.com/brazil.html [Accessed April 08, 2014]. World Bank, 2013. Business Environment Snapshot for Brazil. Downloads, pp. 1-7. Read More