Market Entry Strategy for Scotts Emulsion - Case Study Example

Market Entry Strategy for Scott’s Emulsion Table of Contents Table of Contents 1 Analysis of GlaxoSmithKline: SWOT 2 Analysis of the product 4 Analysis of new market: Bangladesh 6 Conclusion 8 Works Cited 9 Introduction In the competitive market scenario, business houses are trying to expand the scope of growth either by developing new products and service or by entering into new markets with the potential for sustaining their products and services. This study focuses on the entry of the UK firm GlaxoSmithKline (GSK) with their product Scott’s Emulsion in the Bangladesh market. GSK is one of the top players in the pharmaceutical industry; they have been operating since 1715 and have developed huge brand value for the firm. GSK’s strategy of business expansion is mainly based on their ability to increase their operational practices by identifying potential markets in the global market place (GSK, “About us”). They have already developed a set market in the neighboring countries of Bangladesh such as India, China and Sri-Lanka. This report will focus on indentifying the suitable process of market entry for Scott into the market of Bangladesh. Analysis of GlaxoSmithKline: SWOT Strengths: GlaxoSmithKline is one of the biggest names in the global pharmaceutical industry and is counted among the top five pharmaceutical companies (About us, GSK.com). They are also highly involved in the Research and Development investments which provide them the edge in innovation of products. They were also awarded the Chemical Industry Manufacturing and Resource Efficiency Award increasing their brand value and brand equity in the international market (Lowson 26-34). They have high international presence with operations being conducted over 100 countries around the world and have a direct employee base of almost 98000 employees (GSK, “About us”). Weaknesses: The primary weakness of GSK is regarding their brand image. Controversies relating to the composition and safety of drugs hamper the organizational brand equity in the overseas and domestic markets (Drummond, Ensor and Ashford 113-136). GSK products have also sued for patent expiry cases which reduced the value of their international holdings considerably. Opportunities: Globalization has created a better platform for the business firms to engage in overseas business. GSK already having a large network for markets can focus on creating mergers and acquisitions for enhancing their brand value in the market (Drogendijk and Hadjikhani 94). On the social sphere also, people are more concerned about their health care, needs and requirements that are increasing the scope of operations for GSK (Drummond, Ensor and Ashford 113-136). Most of the third world countries are also approving of FDI for strengthening the internal social care prospects of their country. GSK being one of the top players in the healthcare and pharmaceutical industry can contribute in improving the healthcare sector of these markets (Lowson 26-34). Threats: The key threat to the operations of GSK is due to the economic slowdown in the European markets because of the global financial meltdown of 2007-08 (Lymbersky 46-69). On the other hand, corporate scams and healthcare irregularities have also led to strengthening of the regulatory frameworks all over the world. GSK also has suffered some setbacks in the form of few unsuccessful products in the market. Analysis of the product For GSK, in order to enter the Bangladesh market with their health supplement product Scott’s, they need to compare the suitability of the product with the market conditions. The IDEO framework for human centered design will be used to analyze the suitability of Scott in the Bangladesh market. Figure 1: IDEO Human Centered Design Toolkit (Source: Lowson p-87) The IDEO toolkit was developed by Bill and Melinda Gates Foundation for enhancing the effectiveness of the product development process (Lowson 84-89). The framework measures the ability of a product to conquer the consumer base of the market based on the nature and characteristics of the consumers of the market (Sampath 64). The first factor in the framework is desirability that analyses the requirement of the product in the target market. Scott’s Emulsion has been developed by GSK mainly for customers suffering from mal-nutrition. The primary components of the product are Vitamin A and D and Omega 3. Scott’s Emulsion is actually cod liver oil that has been developed with different flavors based on the taste and preferences of the consumers (GSK, “Our Consumer Healthcare Products”). The diversity of taste makes Scott’s Emulsion a successful product as it can be consumed by consumers of different age. In short, it can be stated that the function of Scott’s Emulsion is to develop a healthy society by reducing mal-nutrition. The composition of Scott’s Emulsion is non-narcotics which makes it easily available in pharmaceutical stores as well as grocery stores or supermarkets. Scott’s Emulsion is used for increasing the appetite, immunity, reducing sleep disorders and maintains a healthy growth process. Cod liver oil is a common ingredient in the daily household and has been used for centuries as a treatment (GSK, “Our Consumer Healthcare Products”). Vitamin A ensures a steady and healthy growth, good eye sight and strong immunity while Vitamin D helps in enhancing the functions of intestine by engrossing essential minerals such as iron, magnesium, calcium, etc. diseases like rheumatism, rickets, etc are effectively treated with the help of cod liver oil products (GSK, “Our Consumer Healthcare Products”). These advantages reflect the feasibility of the product for the consumers of the target market. Scott’s Emulsion Strawberry and Banana flavor are priced as $8.94 in amazon.com (Emulsion De Escocia Strawberry/banana 6.5 Oz Vitamin A, D & E, Amazon.com). Scott’s Emulsion has been developed by GSK in various proportions so as to fit the affordability of the consumers. Also, different flavors have been added into the original composition to make it more attractive and tasty. The variations in the product packaging and product size have allowed the consumers from different income levels consume Scott’s Emulsion. The packaging of Scott’s is done with sterilized plastic container bottles of different colors based on their flavors. For instance, the orange flavored cod-liver Scott’s Emulsion is packaged in an orange bottle while the strawberry flavored cod-liver Scott’s Emulsion is packaged in magenta bottle. This enhances the attractiveness of the product to the consumers and also increases its visibility in the racks of the sellers. These factors complete the viability of the product for the target market consumers. The added benefits with Scott’s Emulsion are its flavors and the pricing. Generally, cod-liver oils available in the target market are highly priced which keeps the middle income consumer groups at bay. However, with lower price and smaller proportion available in the market, Scott’s Emulsion is more affordable for the consumers. Analysis of new market: Bangladesh Political: Bangladesh’s political environment is based on a representative democratic system. The political scenario of Bangladesh is instable and this is also hampering the economic growth of the nation. Corruption is one of the primary features in the inherent political operations of the country (Drogendijk and Hadjikhani 94). Overall, it can be stated that the political scenario of Bangladesh is not suitable for overseas firm to explore. However, GSK with their high brand equity and financial strength can persuade the political framework of Bangladesh based on the scope of growth available in the market. Economic: Bangladesh economy is characterized with mixed economy. Some of the sectors such as agriculture, railway and healthcare are owned by the government, while, other sectors have been made for private operations (Bangladesh Association of Pharmaceutical Industries 3-9). In order to increase their economic stability Bangladesh is trying to attract foreign investors in the country which is a positive sign for GSK. On the other hand, the growing trend of privatization also enhances the scope for GSK’s contribution in the economic growth of Bangladesh (Lymbersky 46-69). Social: The social sphere of Bangladesh is based upon strong social customs, moral values and religions. Majority of the population is Mohammedan and are very conservative in nature. However, with the changes in the social platform around the world and communication platforms such as social media, the population is transforming from conservative to liberal allowing foreign business houses to sustain in the market (Bangladesh Association of Pharmaceutical Industries 3-9). Technological: The technological development in Bangladesh is slow but gradual. The growing privatization of the industrial sector is pressing the need for improved and updated technological resources (Fernandes 1729). ICT developments are being adopted by Bangladesh but they are far behind in comparison to international requirements for technological stability (Lymbersky 46-69). Legal: The legal system of Bangladesh imposes many restrictions on the business activities conducted within the boundaries of the nation. They have strict law on the operations of the international firms and the judgments include the contributions of the private firms towards the economy of the country. However, internal corruption and political influence are also some major drawbacks of the legislation of Bangladesh (Fernandes 1734). Environmental: Bangladesh being an agricultural focused nation has strict rules and regulations regarding the maintenance of their environmental resources (Lymbersky 46-69). Known as the land of rivers, Bangladesh also shares the world’s largest delta Sunderban with India. GSK in this case, will have to ensure that the chemical wastage of product manufacturing is not hampering the environment of Bangladesh. Conclusion The above study analyzed the scope of market entry for GlaxoSmithKline with their product Scott’s emulsion in Bangladesh. GSK being one of the top most brands in the global pharmaceutical industry is expanding its operational zone. The decision for entering the Bangladesh market with Scott’s Emulsion was based on the contemporary health conditions of the Bangladesh population. The analysis of the country, company and product reflects scope for growth and mutual benefit. However, further analysis regarding the product price and promotions, business strategies needs to be conducted for assessing the entire market entry strategy. Works Cited “About us” GSK.com. GlaxoSmithKline Plc. 2014. Web. 23 September 2014. “Emulsion De Escocia Strawberry/banana 6.5 Oz Vitamin A, D & E” Amazon.com, Amazon.com, Inc. 2014. Web. 23 September 2014. “Our Consumer Healthcare Products” GSK.com. GlaxoSmithKline Plc. 2014. Web. 23 September 2014. Bangladesh Association of Pharmaceutical Industries (2005). "Study on the Pharmaceuticals Sector of Bangladesh". Jetro, Dhaka, Bangladesh. Print. Drogendijk, Rian. and Amjad Hadjikhani “Internationalisation of bank enterprises in new emerging markets: the case of penetration and expansion into Eastern European countries”, International Journal Business and Emerging Markets, 1.1, 2008. 80-104. Print. Drummond, Graeme, John Ensor, and Ruth Ashford “Strategic Marketing: Planning and Control” 4/e. London: Palgrave Macmillan. 2012. Print. Fernandes, Ana M. "Firm productivity in Bangladesh manufacturing industries." World Development 36.10 (2008): 1725-1744. Print Lowson, Robert. H. “Strategic operations management: the new competitive advantage.” 4/e. London: Palgrave Macmillan. 2011. Print Lymbersky, Christop. “Market Entry Strategies: Text, Cases and Readings in Market Entry Management” 5/e: Hamburg: Management Laboratory Press. 2009. Print Sampath, Padmashree Gehl. "Intellectual property and innovation in least developed countries: Pharmaceuticals, agro-processing and textiles and RMG in Bangladesh." United Nations University – MERIT. 2007. Print. Read More