Boundary Bend - Recommendations for the 4Ps of the Marketing Mix in Sweden - Case Study Example

International marketing Customer’s Name: Customer’s Course: Tutor’s Name: Date: Executive summary Australia’s olive industry is presently experiencing abundant expansion; currently they have about 2000 producers providing olive oil for home market and overseas markets. Most olive orchards are due to attain maturity and attain full production latent over the next decade. The production of olive oil in Australia is expected to rise to about forty thousand tones by the year 2015 (Balmer, 2006). Locally, the escalating reputation of olive oil is underpinned by the mounting trend of consumer’s prevalence of ‘healthy foods’. Currently most of the Australian consumers principally base their purchases of olive oil on price; this trend is changing with time since the consumers are becoming more enlightened of the benefits associated with the consumption of olive oils. According to a survey undertaken in at Fine Foods trade exhibition in Melbourne in 2004, it was found that about eighty percent of the consumers believed that olive oil was the healthiest oil available in the market place. Contents Executive summary 1 Contents 2 Introduction 3 Company background 3 Product background 4 Comparative Country 5 Macro analysis 5 Sweden 6 Venezuela 7 Competitive Analysis 10 Buyer Analysis 11 Entry Strategy 11 Marketing Objectives 13 Recommendations for the 4Ps of the Marketing Mix in the chosen Country 13 Conclusion 14 References 14 Introduction The purpose of this project is to deal with the marketing of olive oil products been produced by Boundary Bend limited. The company aims to sell its products in Sweden and Venezuela but it have to make a choice of the most suitable country to take their products and this is done through a clear and concise pest analysis, product market analysis, competitive analysis and buyer analysis of the two countries .The report also sets out to portray the most suitable method for entering into the new market and recommendations for the 4Ps of the Marketing Mix in Sweden. Company background The olive oil industry has been in existence since early 1990’s, with the growing recognition of Mediterranean foodstuff and acts as a catalysts for growth. Olives and olive oil are termed as a staple component of European diets, the trend is slowly gaining momentum in other countries such as Australia and some parts of Asia and with time the trend will be basically accepted by almost every one in the globe. This growth in one way reflects the muscular multicultural make-up of the Australian people and also the mounting perception of eating ‘healthy’ foods. Boundary Bend Limited is a private company and is classified under Fruits and Tree Nuts (Unclassified). The company is located in Lara, VIC, Australia. Boundary Bend limited was established in the late ninety’s and currently it is the leading participant in the modern day olive oil industry. Despite it been a company, it is also ranked among the major Australian olive firms and manufacturer of extra virgin olive oil (McEvoy, 1998). The company manufactures world class olive orchards, located at Boundary Bend and Boort in north-west Victoria and they act as flagship groves in the Australian industry. The company has received various awards such as 'Olive Grove of the Year’ from the Australian Olive Association in 2005 and 2008 respectively. Boundary Bend is the leading marketer of premium Australian extra virgin olive oil and owns Australia’s #1 home-grown olive oil brand, Cobram Estate. the company also manufactures olive harvesters, and they own the largest Australia’s olive tree nursery and olive oil bottling, storage and laboratory facility, and innovators in all aspects of the “new world” olive industry (McEvoy, 1998). The company has been attributed in having un-wavering focus on quality, innovation and customer satisfaction through all facets of their business, Boundary Bend is speedily developing into a global reputation as one of the major players in the modern day olive industry not only in Australia domestic market but also in the international arena. Product background Olive oil can fit best in edible fats and oil food group. It is mono- unsaturated oil, considered to be the healthiest type of fat (Collins, 2006). The beneficial health effects of the oil are mostly due to both its high content of mono-saturated fatty acids and its high content of antioxidants. Mono saturated fats are believed to lower cholesterol and may assist in reducing heart disease. The high consumption of olive oil in Mediterranean countries is considered to be one of the reasons why these countries have lower levels of heart diseases than countries including UK, USA and Australia. Olive oils contain natural anti-oxidants, which have been shown to have a host of beneficial effects from healing sunburn to lowering cholesterol, blood pressure and risk of coronary disease. There are as many as 5 mg antioxidant polyphones in every 10 grams of olive oil (The olive oil source, 2006). While olive oil has a shelf life of up to two years, air, heat, light, and age all affect quality. As olive oil deteriorates through the process know as oxidations (rancidity) so do its health properties. In general, oil is considered to be ‘fresh’ and at its best within 6 months of processing. It is for this reason that Australia is seen to have a counter-seasonal opportunity to market olive oils to the Northern Hemisphere in their “off” season (The olive oil source, 2006). Comparative Country Most companies aim at marketing their products in the local markets and to international markets for them to have a greater number of consumers (Cunningham, 1986). Marketing is also a major concern for Boundary Bend Limited. They aim at selling their olive oil range of products to various customers around the world. This will ensure that they gain more income and attract a larger customer base. In this scenario we will consider two target market/ countries: Sweden and Venezuela. Macro analysis The environment under which a business operates in is crucial to its success. Macro environmental analysis refers to the factors that affect the way an organization’s products will perform in light of the factors that the organization has little or no control over that is: political, cultural, economic, social and technological environments (Philip, 2001). Businesses have to devise ways of combating the challenges and also grabbing the windows of opportunities which are posed by the external environment for the macro environment can pose either as a challenge or as a window of opportunity to organizations (Kotter, & Schlesinger, 1991). Sweden Sweden as one of the market eyed by Boundary Bend Limited is considered among the best countries in the world in which to conduct business. The legal political environment in Sweden is favorable with the country’s government playing a key role in establishing policies that encourage foreign investments. For instance, Sweden’s government responsiveness to business is seen through the way the Swedish government has adopted lower rates of taxes for corporations, has zero tolerance to corruption attitude and also a political environment that is very stable. Technological environment, refers to the competence of incorporating modern technologies in business processes and having the ability and know how of use of modern tools and equipment. In light of world economies, Sweden is considered as one of the countries in the world which is very receptive to adopting modern technologies. Sweden also boasts of a labor force that is educated and thus suitable for adopting emerging technologies (U.S. Department of State, Diplomacy in Action, 2011). Economic environment refers to the factors that affect buyers’ purchasing power and thus the demand for goods and services in the economy. Sweden’s economy is favorable to business which is indicated by the flow of trade in the country and the numerous foreign investments which the country hold and which serves to further justify our premise that the economic conditions in the country are favorable for business. Cultural environment is another important element when it comes to doing business in foreign countries. Culture is said to influence the types of products that consumers buy in the market. For instance in Sweden, many people use oil when cooking due to its associated health benefits for instance low cholesterol levels. However, the Swedish culture is very strict on the dressing code of business men and women with the culture favoring conservativeness. In Sweden, the social environment is more promising than ever with more and more people adopting the notion of healthy living and this means that the society is more receptive to olive oils (Fernau, 2006). To Boundary Bend, it is a window of opportunity with the increased consumer awareness of healthy living. Venezuela Venezuela political stability is questionable and the country has been experiencing political instability. The country for not long ago had an economy that was dominated by the ruling government but the recent arrangements by President Hugo Chavez to privatize industries in a bid to make the Venezuela economy favorable to investors encouraged investors to invest in the country bringing us to the conclusion that as far as economic environment of Venezuela, the country is on an upward trend with the GDP reported in 2009 at -3.3% (U.S. Department of State, Diplomacy in Action, 2011). The social environment in Venezuela cannot be explicitly defined for the country is mixed in terms of its ethnic composition but one thing remains for sure is that the overall society is adapting to taking healthier foods and this means that there is more consumption of olive oil. The cultural environment for businesses in Venezuela is then a question that looms in the mind with the fact that there is a mixture of different cultures and all the cultural values of the people who are in Venezuela have to be up held. For instance, when it comes to dealing with somebody with an Arab background, dress code when conducting business dealing has to be conservative. In regard to technological advancements, the country is slowly making its way to adopting modern technology. Looking at the pest analysis between Sweden and Venezuela and aligning them to the objectives of Boundary Bend Limited, the organization is at a better position investing in the Sweden market. Similarities and Differences between Australia and Sweden Australia and Sweden shares some similarities in regard to the Pest analysis. The two countries are politically stable and offering good environment for business. In regard to the market share in terms of population, Australia has a larger market for its olive oil than Sweden with the consumption of olive oil in Australia increasingly gaining momentum due to the consumer awareness of the benefits associated with healthy living. Australia and Sweden enjoy strong economies which are dominated by exports and also ever increasing domestic demand for products. Social environment in both countries will favor the market and growth of market for Olive Oil by Boundary Bend because consumers are aware of the importance of using olive oil. Technological advancements in both countries are per with the global technological advancement with Australia making a mark in the global production of quality oil due to the adoption of modern technology. The labor force in both countries is equally ready and trained to adopting modern technologies. These similarities in the export county (Australia) and the receiving country, (Sweden), might make Boundary Bend to adopt marketing strategies that it has used in Australia without the consideration that Sweden market is one of its kind. One of the similarities between Sweden and Australia in the market arena in that both countries offer promising opportunities for growth due to increasing population with most investors and business people preferring either Australia or Sweden as their preferred destination for business. Australia on the other hand is different in culture from Sweden and each country has its own distinct culture with Australia having a mixture of cultures from the immigrants into the country and this reshapes the way business is conducted in such a country. The similarities and the differences influence the way an organization markets its products taking into considerations the cultural, technological advancements, political and social environment because in the end businesses do not operate in isolation and their success depends on how they can overcome the challenges posed by the external and the internal environments. Sweden population as reported by July, 2011 was 9,088,728 with the growth rate calculated at 0.163% per every year and this can be attributed to the number of immigrants in Sweden and also the low mortality rates in the county, therefore, the market in Sweden is bound to keep on expanding (U.S. Department of State, Diplomacy in Action, 2011). The size of the market in Sweden is growing at a favorable rate with the GDP rate of growth reported in 2010 to be at 5.5% annually. In relation to the product life cycle, the market in Sweden for Olive Oil products by Boundary Bend Limited is in the introductory stage with my justification being that the Australian Company will be new to Sweden market and therefore the consumers of Olive Oil may not be so willing to try out new products when they have been having a similar product produced in their native country. Therefore, it will take time before the consumers in the foreign country gets used to the idea of a rival product. The E.U. dominates 95% olive oil supply to the neighboring countries Sweden included and the dominant importers of Olive Oil in Sweden are the Sweden Importers. The oil is distributed after it has been packed to its required destinations. Market segmentation in the region is geographically based with most people in Sweden consuming Olive oil for its health benefits with no relativity to size and growth of the market for Olive Oil for the product has been native to the people and therefore the size and growth of the market will grow at the same rate that the demand for the product is increasing. Therefore, there is no demographic segmentation for the product. Competitive Analysis Like in any other business or industry Boundary Bend has its own competitors in the olive oil industry. The competitors are sparsely distributed within the globe. Some of the competitors are from USA, South Africa, Syria, Italy, Argentina and Jordan. Some of the competitors are located locally and some internationally. The number of competitors is extremely high ranging to about three hundred of them around the world. The competitors include: Australian olive limited, Bella vista ranch, Al-Rahid and Apollo olive oil just to mention a few. The competitors can be categorised as company based competitors. Alfa Laval is also a company which has many international operations including operations in the UK and China. Alfa Laval, operates both in the local setting i.e. Sweden and also in the international market (Australian Olive Association, 2003). For centuries olives have been produced using traditional methods. Traditional production methods usually include: limited irrigation, wide tree spacing, limited automation, and limited horticultural inputs. During the last 15 years countries without a long tradition in olive production have begun establishing olive groves using a more modern approach. The BBL Group’s approach to olive growing utilizes irrigation, mechanical harvesting and pruning, higher density plantings and the use of varieties from many different countries. Yields produced using these production methods can be many times higher than average traditional yields, with a greater degree of control over quality leading to the production of better products in the long run. Thus the company has a competitive advantage over the companies using the traditional method of farming. Buyer Analysis Market segment tries to identify the characteristics that are distinct to buyers for them to demand a certain product (Thompson, 2002). Consumers in Sweden are not segmented on the basis of age rather than on the interest of using healthy products. The market segments in Sweden are based on the interests of the consumer in Olive oil bringing us to marketing strategy that Boundary Bend can comfortably use as an Australian company that produces the highest quality Olive oil in the world. Entry Strategy Many corporations effectively function in a niche market without ever venturing into new markets. Some industries attain augmented sales, business stability and customers become more aware of their products by entering a new market. The financial resources of most companies, the product lifecycle and the product itself play a major role in deciding which country to venture into and the right time to enter into the new business (Fleisher, & Bensoussan, Craig S. Fleisher (Author)› Visit Amazon's Craig S. Fleisher PageFind all the books, read about the author, and BBBBBBSee search results for this author2002). When choosing the strategy to use one has to consider the potential competitors and possible buyers of your products (Cunningham, 1986). One should consider various factors such trade barriers, price localization, competition when deciding on the viability of that market as a target market for the companies’ products. Organisations at time are tasked with the work of deciding whether to enter into new market overseas or not. In this respect there are a number ways in which companies can start selling their products to the overseas companies. The options are differentiated mostly by the price, hazards and the level of control been implemented on them and the advantages and disadvantages associated with each option. Although their are various ways of entering into foreign markets most companies prefer using strategy of selling abroad using either a direct or indirect method such as an agent or counter trade since it is the simplest form. Another common way of venturing into foreign market and which seems to be complex to companies is using the truly global operations which may involve combined ventures, or export dispensation zones. The entry strategy selected by the company must make sure that the essential value chain activities are carried out and incorporated (Keegan, 1989). Boundary Bend limited can use agents and counter trades because of the many advantages associate with it. They advantages include: the reduced level of possible risk coupled with working overseas, it gives the company the chance to learn overseas markets before investing and since manufacturing is home based it is less risky than overseas based. Marketing Objectives Companies use marketing objectives as a means to achieve the preferred and set sales objectives. The company can use the target market data and market segment data to come up with their objectives so as to address each target group in the market. The company should have clear and concise data on the market dimension, possible market and the current customer’s base. Information such as prospects, consumer buying rates and other behavioral issues should be added so as to help in appending specific numbers to the marketing objectives. The marketing objectives of the company are: to increase the current customers buying rate and to sell the commodities to a certain number of customers in the new markets. Thus seems to be having a high potential the company should aim at selling their products in that country and with time they will have their own market share in the country. Recommendations for the 4Ps of the Marketing Mix in the chosen Country When a company is marketing its products there is need to integrate the marketing mix components well. They company should have the right product, sold at the right price, in the right place and using the most suitable promotion strategy. The manager at Boundary Bend can control the marketing mix components in order to fulfill the consumer’s needs in the target market. In ensuring that the target market is satisfied they should ensure that the product has a good packaging, appearance and some may also have a warranty (Blattberg, Getz, Thomas, 2009). The price placed on an item should be considerable, promotion should be carried put to ensure that the brand is well known in the market and lastly the product should be distributed using the proper channels. Boundary Bend should ensure that all the marketing mix elements are considered in Sweden for them to gain a competitive advantage over the other competitors in the market. Conclusion From the report it is evident that the future of the olive oil industry is very promising. The company can rely sturdily on its capability to exploit on its competitive advantage over the other companies. Health benefits are the key competitive advantage for the business but much need to be done to sensitize and prove to consumers about the promotion of olive oil as a secure and hale and hearty food in the country and overseas. After the promotion of olive oil consumers should be educated and particularly in the home market, about why fresh Australian extra virgin olive oils can provide superior value for money, despite higher costs than some imported products. References Australian Olive Association (2003) Australian Olive Association Strategic Plan 2003-2008. (www.australianolives.com.au) Balmer, C. (2005). Food and Fiber Export Performance 2004-05. Victorian Government Department of Primary Industries. Melbourne, www.dpi.vic.gov.au/trade Blattberg, R., Getz, G., Thomas, J. (2009). The marketing mix. Harvard. Harvard Business School Press. Collins, A. (2006). Dieting and Weight Loss Questions – What is Mono-unsaturated fat? http://www.annecollins.com/dieting/monounsaturated-fat.htm Cunningham, M.T. (1986). "Strategies for International Industrial Marketing". In D.W. Turnbull and J.P. Valla (eds.) Croom Helm. 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Chemical and Nutritional Properties of Olive Oil http://www.oliveoilsource.com/olivechemistry.htm Thompson, J. (2002). Strategic Management. 4th Edition, London: Thomson. U.S. Department of State, Diplomacy in Action. (2011, August). Back Ground Note: Sweden. Retrieved on 28th September, 2011. http://www.state.gov/r/pa/ei/bgn/2880.htm U.S. Department of State, Diplomacy in Action. (2011, August). Back Ground Note: Venezuela. Retrieved on 28th September, 2011. http://www.state.gov/r/pa/ei/bgn/35766.htm U.S. Department of State, Diplomacy in Action. (2011, August). Back Ground Note: Australia. Retrieved on 28th September, 2011 http://www.state.gov/r/pa/ei/bgn/2698.htm Read More