International Marketing at A Paw for Life Company - Case Study Example

EXECUTIVE SUMMARY A paw for Life is a company starting up in Australia but whose main parent company is in Singapore. It will provide holistic services that will enable pet owners to enjoy life together with their companions. The pet service industry is very large in Australia with almost 38 million pets. Australians spend about $4.62 billion on pets. Since pets in Australia are taken as part of the family, the owners take care of them just like any member of the family. There is thus a need to spend time with them in a more comfortable place, a service that Paws for Life will provide amongst others. Owner’s technical expertise, holistic services, eco-friendly products and its membership with Pet Industry Association of Australia (PIAA) makes it strongly armed to survive in the industry. Singapore-Australia Free Trade Agreement makes it easier for Paws for Life to invest in Australia. However the limitations the company has is lack of enough start-up capital, no existing client base and limited business and experience for Australia industry management. Existing and emerging of new competitors is a great threat to Paws for Life. Australia has highly educated and competitive workforce at a low cost. Its technology and innovation is highly rated and is among the strongest economies in the world. Its political and regulatory environment is also stable. Paws for Life intends to increase its revenue by 20% yearly, maintain long term profitability and gain 80% market share 1. INTRODUCTION Paw for life is a company that will be situation at Sydney Area, Australia. It will provide holistic services that include; first-grade dietary and nutritional products SPA remedy for esthetic and health enhancement, TCM acupuncture, grooming accessories and styling services to customized spa treatments, expert consultation, playtime, daycare, hotel services and enrichment workshops. All these will help customers and their companions to a more fulfilling life together. 2. INTERNATIONAL MARKET ENVIRONMENT 2.1 SWOT ANALYSIS The SWOT analysis will provide Paws for Life with an opportunity to examine its internal strengths and weaknesses. It also allows the business to examine the opportunities presented to the business as well as its potential threats. Strength A paw for Life has available technical expertise from the owners who have been experienced in the field for more than seven years. Therefore, Paws for Life will save on costs used to hire external expertise as the owners will handle all the technical problems. A paw for Life also provides holistic services to its customers and therefore it will have an edge over other businesses in the area. The company conducts its business in an eco-friendly manner by using products that are natural, free from harsh chemical agents and environmentally friendly. Its facilities are fitted with recycled or renewable materials for sustainable living. It conserves energy through recycling and treating water to avoid contaminating the environment. Paws for Life’s efforts to conserve the environment will earn it respect from customers who would want to associate with a company that minds the environment. Paws for Life is also a member of Pet Industry Association of Australia (PIAA) which portrays the company as bound by strict Code of Practice and Code of Ethics to ensure professional behavior and high standards in the pet industry. This gives it a high leverage from other pet services industries in the area. Weaknesses A paw for life has several weaknesses it has in the industry. There is no enough start-up capital available at the moment which may become a barrier for the business to kick off on time, but the company is waiting for a loan application made to the bank to go through. There is also no existing client base for the business making it a risk for the company. Thorough awareness of the company services will need to be done to start building a client base. There is also limited business and industry management experience for Australia. The company will thus have to research widely about the pet industry in Australia and employ qualified and experienced Australians in the industry. Opportunities Australia welcomes foreign investment as it recognizes its role in boosting the economic growth of the country. Singapore-Australia Free Trade Agreement (SAFTA) strengthens the investment and trade links between Singapore and Australia. Pets for Life will not face any tariff barriers and thus its market access in Australia will greatly be enhanced. There are over 33.3 million pets of various species in Australia. Pets are more of companions to Australian families and are thus willing to care for them. As the number of pets increases, there is thus an opportunity of a wide market for Pets for Life services. Despite the economic downturn period, Australians don’t compromise on economizing at the expense of their pets’ wellbeing and health. Consumers regard pets as members of the family and thus are keen to ensure there is optimum health, nutrition and happy lifestyles for those pets. Threats Australia has many pet businesses that are a threat to Paws for Life. Due to the growth of pet industry, many pet businesses are coming up have a share in the growing market. 2.2 STEEP ANALYSIS Social Environment Highly educated and competitive workforce enables Australia to enjoy sustainable strong productivity growth. The country’s workforce provides cross-cultural and multilingual capabilities at a relative low cost with strong positive approach to change and work ethic. Australia’s workforce is one of the most competitive workforces in the region of Asia-Pacific. Australia has trained many financial advisors, engineers, architects, scientists and professionals. The attraction and retaining of talent at the Australian’s workplace is highly rated. The workforce is also technology savvy, rated third in having the highest internet users. Australia’s citizens originated from more than 200 countries making it a multilingual country. The linguistic diversity and the language proficiency with strong links with Asia and Europe provide an ideal environment for multinational businesses setting up or expanding their business in the country. Technological Environment Technology in Australia has been increasing at a high speed. Personal computers are increasingly used both at home and at work. Innovation is a culture embraced by Australians and always looks towards buying products of high quality and at a lower cost. Economical Environment The economy of Australia is among one the strongest economies in the world. It has had growth and falling of unemployment rate for two consecutive decades. Its economy is resilient, flexible and integrated with global markets due to three decades of policy and structural economic reforms. Australia’s economy has the ability to withstand both internal and external events like housing boom, drought and financial and economic crises. Its economy has grown by an average of 3.3% a year since 1991 while its gross domestic product (GDP) was approximately $1 trillion in 2007. Its sustained budget surplus has made be in as strong fiscal position which has be used to retire the debt of the government. Since 2000 Australia has had GDP growth average above 3% a year. Its standard of living has significantly increased enabling consumers to have high disposable income and have freedom to buy special products. Ecological Environment Australia is committed to doing sustainable business in order to conserve the environment. The Australian government supports business that look into going green by providing it with government grants. Consumers also support environment sustainability by buying products and services from businesses that choose to go green. Political Environment Doing business in Australia is of a high degree of certainty. Its political and regulatory environment is stable, progressive and open. The country has strong relationship with other countries. It is a safer destination for investments. Australian’s strength as destination of investment is portrayed in its highly effective political system in responding to policy direction and economic challenges. According to Australian Trade Commission (2011), Australian government policy adaptability to economic changes has been racked in the top two countries in the region. Its effectiveness and transparency of the government is also rated highly. 2.3 MARKET ANALYSIS Paw for Life is faced with the exciting opportunity of being the first-mover in its area by offering holistic pet services. Paw for Life’s market is all of the pet owners in the area and other surrounding areas of the city. According to the research taken by the researcher, the consistent care of pets by owners has been proven to be a winning concept and will produce the great results in the area. We have a goal of gaining a 80% market share and a target yearly profit increase by 20%. 2.4 INDUSTRY ANALYSIS According to Australian Pet Industry Statistics (2006), 63% of Australians own a pet with 53% owning a cat or a dog. In total, there are about 38 million pets in Australia. Consumer expenditure on pets is around $4.62 billion every year. 59% of the expenditure are spent on dogs, 26% spent on cats, and 15% spent on other pets. 3. SELECTED MARKET STRATEGY 3.1 OBJECTIVES i. The objectives of the selected market strategy are as follows: ii. Increase revenue by 20% yearly. iii. Gain 80% market share by end of second year iv. Maintain long-term profitability. 3.2 TARGET MARKET Our target market consists of all pet owners that have a capability to care for their pets financially and in the most elaborate way. Our target market consists of all gender and ages as long as they come from double income homes or have high profile jobs with more time to stay away from their homes. These target market live in suburbs areas that are upscale and surround the metropolitan area. The choice of our target market is because they own pets and can afford pet services provided by Paw for Life. Some of our services are not a necessity but an extra thing in life. Therefore, we strive to cater for those in the upper-class living within our area. 3.3 MARKET POSITIONING To position the product/services in the minds of customers, the business will rely on branding and constant advertisement to. There will also be use of Unique Selling Preposition, “Why Paws for Life” giving all the benefits of the company to the customers. 3.4 MARKET MIX 3.4.1 Promotion To promote the products/services, there will be use of personal selling to push sells, public relations, direct selling, sales promotion and advertising. 3.4.1.1 Advertising Fliers will be distributed to potential customers at the residential places, malls, streets and colleges. Paws for Life will also invite pet owners to its launch cum open day where the company will showcase its services and offer them at a discount rate. Social network sites like Facebook and Myspace will be used to spread the word around. During the start of the business, Paws for Life will do intensive advertising to inform the public about the services it offers. Electronic advertising will highly be used to reach a wide area of customers. 3.4.1.2 Promotional Budget Networking on social sites and friends and family doesn’t require any budget attached to it. However a substantial budget of $60000 will be needed for fliers and posters as well as electronic advertising. 3.4.2 Prices of products/services The business will reduce its overhead costs to prevent extending the cost to the customer in terms of prices. Managing overhead costs will lead to lower price of services. There will also be use of bundle pricing where if buys two types of services they get another service for free. Promotional pricing will be used at the initial stage of starting the business to attract customers. 3.4.3 Distribution of products/services The business will be located at main trading centre, being a central point to serve all the customers. The business will open as early as 8.00 o’clock in the morning and close as late as 9.00 o’clock in the evening in order to serve those customers who don’t have no access to the services during the day. To enable easy access, the business will be situated on ground floor. Services/Products will also be distributed to taken to residential areas at a far on order. 3.4.4 Customers To retain customers and their loyalty, the business will offer them discounts, free samples or free gifts upon use of certain amount of services. The business will also have a customer database that will be used for follow up and business updates and bulletins to the customers. Personnel will be trained on the importance of customer care and customer handling. Customers will also be offered benefits for membership. The business will be very keen on customer complaints and feedback in order to make corrective actions. 3.4.5 Process To effectively manage the business, there will be several processes or systems; customer handling process, follow up system, enquiry system, billing system and recruitment system. 4. PLANNING ASSUMPTIONS Project Profit and Loss for Paws for Life   Year 1 Year 2 Year 3 Sales $800,460 $1,600,920 $3,201,840 Direct Cost of Sales $250,500 $602,000 $1,156,000 Total Cost of Sales $250,500 $602,000 $1,156,000 Gross Margin $549,960 $998,920 $2,045,840         Expenses       Payroll $80,000 $165,000 $280,000 Sales and Marketing and Other Expenses $60,000 $130,000 $350,000 Depreciation $0 $117,000 $280,000 Rent $10,000 $10,000 $10,000 Utilities $2,000 $2,500 $3,000 Insurance - liability $5,000 $5,000 $5,000 Payroll Taxes $15,000 $20,000 $25,000 Other $0 $0 $0 Total Operating Expenses $172,000 $449,500 $953,000 Profit Before Interest and Taxes $377,960 $549,420 $1,092,840 Interest Expense $6,000 $4,500 $3,000 Taxes Incurred $120,000 $120,000 $120,000 Net Profit $251,960 $424,920 $969,840 Projected Cash Flow for Paws for Life   Year 1 Year 2 Year 3 Cash Received       Cash from Operations       Cash Sales $200,500 $6,015,000,000 $12,030,000,000 Cash from Receivables $315,000 $3,500,000 $2,600,000 Subtotal Cash from Operations $515,500 $6,018,500,000 $12,032,600,000 Additional Cash Received       Sales Tax, VAT, HST/GST Received $0 $0 $0 New Current Borrowing $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $0 $0 $0 Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0 New Investment Received $0 $0 $0 Subtotal Cash Received $515,500 $6,018,500,000 $12,032,600,000 Expenditures Year 1 Year 2 Year 3 Expenditures from Operations       Cash Spending $150,000 $300,000 $380,000 Bill Payments $3,152,000 $1,500,000 $2,350,000 Subtotal Spent on Operations $3,302,000 $1,800,000 $2,730,000 Additional Cash Spent       Sales Tax, VAT, HST/GST Paid Out $120,000 $120,000 $120,000 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $20,400 $30,000 $30,000 Purchase Other Current Assets $0 $0 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $10,000 $15,000 Subtotal Cash Spent $6,744,400 $3,760,000 $5,625,000 Net Cash Flow ($6,228,900) $6,014,740,000 $12,026,975,000 Projected Balance Sheet for Paws for Life   Year 1 Year 2 Year 3 Assets       Current Assets       Cash $90,500 $40,000 $350,400 Accounts Receivable $120,450 $361,350 $1,084,050 Inventory $40,000 $160,000 $800,000 Other Current Assets $50,000 $50,000 $50,000 Total Current Assets $300,950 $611,350 $2,284,450 Long-term Assets       Long-term Assets $120,000 $120,000 $120,000 Accumulated Depreciation $0 $108,000 $96,000 Total Long-term Assets $120,000 $12,000 $24,000 Total Assets $420,950 $623,350 $2,308,450 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities       Accounts Payable $110,000 $220,000 $440,000 Current Borrowing $0 $0 $0 Other Current Liabilities $0 $0 $0 Subtotal Current Liabilities $110,000 $120,182 $252,874 Long-term Liabilities $80,200 $50,000 $30,000 Total Liabilities $190,200 $170,182 $282,874 Paid-in Capital $150,500 $248,000 $645,576 Retained Earnings ($15,500) ($35,000) $200,500 Earnings $95,750 $240,168 $1,179,500 Total Capital $75,252 $255,551 $792,490 Total Liabilities and Capital $420,950 $623,350 $2,308,450 Net Worth $230,750 $453,168 $2,025,576 5. SENSITIVITY AND CONTINGENCY PLAN Problem Contingency Plan Company achieved sales and revenue target Increase customer relationship Undertake cold calling Move to a cheaper pension plan Target market share is not achieved as planned Undertake market research to establish the problem Change market strategy Increased Competition in the area Maintain open day shows with owners to limit access to market for competitors 6. IMPLEMENTATION AND QUALITY CONTROL Paws for Life will ensure that it formulates quality procedures and processes to ensure that it complies with Australian Bureau of Standards with an aim of attaining an international quality standard certification like ISO Certification in future as the business expands. Each section of the business will have key performance areas it will be rated to ensure that the whole business performance is up to the required standard. The procedures will be as follows: Customer handling procedures Customer Complains handling procedures Purchasing procedures Training Procedures Marketing activities procedures Technical support procedures and so on. 7. BUSINESS CONCLUSION A paw for Life does not intend to exit the industry but plans to franchise the business all over the world. Referencing List Australian Companion Animal Council. 2006. Contribution of the Petcare Industry to the Australian Economy. 7th Ed. http://www.acac.org.au/pdf/ACAC%20Report%200810_sm.pdf (Accessed May 29, 2011) Pets Australia. 2006. Australian Pet Industry Statistics & Trends Wood, L, B. Giles-Corti, and B. Max. 2005. The pet connection: pets as a conduit for social capital? Social Science and Medicine. School of Population Health, The University of Western Australia. Social Science and Medicine. Vol. 61, pp1159-1173. Australian Trade Commission. 2011. Democratic and Politically Stable. http://www.austrade.gov.au/Invest/Why-Australia/Democratic-and-Politically- Stable/Democratic-and-Politically-Stable/default.aspx (Accessed May 30, 2011) Australian Government Department of Foreign Affairs and Trade. 2011. Australia today. http://www.dfat.gov.au/facts/aust_today.html (Accessed May 30, 2011). Australian Companion Animal Council. 2006. Contribution of the Petcare Industry to the Australian Economy. 6th Edition. The Pet Industry Association of Australia (PIAA). http://www.piaa.net.au/ (Accessed May 30, 2011) Dwyer, B.2009. Pet Market Analysis Australia - Dogs, Cats. http://www.brucedwyer.com/market-analysis-articles/53-pet-market-australia.html (Accessed May 30, 2011) Australian Bureau of Statistics. 1995. Household pets special feature. Australian Social Trends 1995. Canberra: AGPS (Cat. no. 4102.0), pp. 168-71. Animals Australia. 2011. Companion Animals: A Cherished Part of Australian Life. http://www.animalsaustralia.org/issues/companion_animals.php (Accessed May 30, 2011) Clayton UTZ. Doing Business in Australia. http://www.claytonutz.com/docs/DBIA_English.pdf (Accessed May 30, 2011) Australian Government Department of Foreign Affairs and Trade. Singapore-Australia Free Trade Agreement (SAFTA). http://www.dfat.gov.au/trade/negotiations/australia_singapore_agreement.html (Accessed May 30, 2011) Australian Government Department of Foreign Affairs and Trade . Australia in brief A stable and competitive economy. http://www.dfat.gov.au/aib/competitive_economy.html (Accessed May 30, 2011) Australian Business Funding Centre. Government grants for business going green. http://australiangovernmentgrants.org/qa/qa.php?id=government-grants-for-business- going-green (Accessed May 30, 2011) Petnet. Pet Statistics. Petcare Information & Advisory Service. http://www.petnet.com.au/pet- statistics (Accessed May 30, 2011) Headey, B. 1999. Health benefits and health cost savings due to pets: preliminary estimates from an Australian national survey. Social Indicators Research. Vol 47, pp 233-243. . Read More