International Market Entry - Pomlife Company - Case Study Example

INTERNATIONAL MARKETING MANAGEMENT By Student’s Name Institution Prof Date Introduction Business leaders and managers around the world are increasingly become cognizant of benefits that come with the global market. According to a survey conducted in 2014, a large number of the business organizations are expanding to the international markets to leap the benefits associated with the global marketing. Analysts argue that the recent wave of globalization has hugely impacted on the international marketing as domestic markets have become more open to global companies. The trend has seen a large number of organizations expand in the international market to increase the sales and profit margin. This paper is an international market entry report for Pomlife ® Company. The report will examine the entry of the company into the Asia marketing to provide fresh Pomegranate arils in this market. Company and product background Pomlife ® Company is the major company in Australia that deals with the pomegranate products and will be expanding to provide the products in Asia International market. The company was founded in the year 2008 in the Goulburn Valley in Victoria, Australia. The company started with orchard to 100 hectares accommodating more than seventy thousand trees. Over the next seven years, the company has growth exponentially delivering pomegranate fruits to a large number of Australians in the country. The company continues to show a lot of commitment towards the growth of the products by encouraging more farmers to start farming the crop. The aim of the company is to become the major pomegranate producer in the country delivering these products to meet the increasing demand of the pomegranate in the Australian market and the international market. In 2012, the company started to export the products to international market to expand its operation and increase the sales and profit margin. The company has both financial and human resources that are sufficient to meet the international market demand (Balassa 2012). Pomlife ® Company has a number of strengths as well as weakness which can enhance or deter the smooth exportation of the pomegranate products into Asia and other international market. The company has excellent staff that has a strong knowledge of the products requirement. The employees in the company understand all the aspects of the pomegranate products ranging from production to the marketing of the products. The demand of Pomlife® Fresh Pomegranate Arils in Australia and other parts of the world is significantly high while the supply for the product is limited. The last strength of the company is the good reputation and relationship which the company has established with their customers (Krugman 2014). The major weakness faced by the company is the seasonality of the fruits. Pomegranate is a seasonal crop that produces between March and August. Pomlife® Fresh Pomegranate Arils are available in most supermarkets during this period. However, getting the product during the peak season is always a problem. The second weakness affecting the company is the environmental factors such as wealth and pests which affects the crops. Lastly, due to the large demand of the Pomlife® Fresh Pomegranate Arils, the company fails to meet the demand especially during the low season period (Viner 2012). There are many opportunities which the company can capitalize to enhance its growth. First, there is a large market of Pomlife® Fresh Pomegranate Arils that remain unexploited. The demand of the product both in the domestic and international market is considerably high giving the company an opportunity to increase their sales. Second, the lack of competition is an opportunity which the company can capitalize to set the market price and increase their profit. However, the company needs to manage a number of threats such as increasing global warming and climate change, the small but growing competitors and the increasing costs of the storage and operation. The table below gives the SWOT analysis of Pomlife ® Company. Strengths Weaknesses Excellent staff with wide knowledge of the product. High demand Good reputation and relationship with customers Seasonality of the pomegranates Pests and environmental factors such as low amount of rainfall Failure to meet the high demand Opportunities Threats There is a large market that remains unexploited. Lack of competition Global warming and climatic changes are affecting the conditions favorable for pomegranate growth There is an increasing costs of storage and operation There are small but fast growing small firms which may become competitors in future Pomlife® fresh pomegranate arils Pomlife® fresh pomegranate arils are made from pomegranate fruits and are popular due to their quality fresh juicy taste and the health benefits associated with them. The fruit has a tangy explosion of flavor and sweet taste, which attract most of its consumers. The products from the fruit have a similar taste hence attracting most of the people who like the taste. Pomegranate fruits are also known for their health benefits that accrue to its consumers. The fruits provide nutrients that help to boost their health immunity and hence remain health for a long time. Pomlife® fresh pomegranate arils are consumed by all people as a snack, in salads, ice creams and are cooking. The target market for the product is people of all walks of life. The fruit is not expensive and hence can be afforded by people from all status in the society. It does not have any alcoholic content or effects and hence can be consumed by religious, non-religious, old and young people. Therefore, the target market is all the people in the Asian market especially the major urban areas where the population is concentrated. The demand for the product has been high in the Australian and the same trend is expected in other countries. A study conducted in 2013 indicates that sixty percent of the people in the Australia consume the products on the weekly bases (Wagner 2013). People who understand the benefits and the taste of the products are always willing to buy more. The trend has been the reason behind the rapid growth of the Pomlife ® Company since it was established in 2008. Pomlife ® fresh pomegranate aril is a product of its own kind that is high differentiated from other substitute products. Market Selection The most suitable market in Asia for Pomlife ® fresh pomegranate aril is the Chinese and the India markets. There are two Asian markets that have large number of the customers due to the large population living in these two countries. Therefore, the market for the Pomlife® fresh pomegranate arils will always be high throughout. Additionally, the average income in the two countries is considerably high hence can afford to buy the products without straining. These markets are large and their growth rate is also significantly high. The major market segment is the urban populations where the large population presents a large market for the product. Therefore, considering the three factors, the two markets present the most profitable market target in the region (Pujari 2012). Pomlife ® Company does not have a direct competitor in these markets. However, there are other products that can substitute the Pomlife ® fresh pomegranate arils. There are different types of fruits which can be consumed to achieve the same effect as the one for Pomlife® fresh pomegranate arils. These competitors do not pose a major threat to Pomlife ® Company although it takes a considerable percentage of the market share in the region. The market target is the urban population which is characterized by high income; high buying power and high consumption rate (Krugman 2014). In addition to the market segment, most of the countries in the Asia encourage free trade between them and other countries creating a favorable market condition. Market conditions such as social-cultural, political-legal, technological environmental and economic factors are all favoring the marketing of the product in Asian markets. The two countries have enjoyed a stable political environment which has enhanced economic growth. The social-cultural environment in the region does not deter the selling of the pomegranate products. As some of the fast growing countries in Asia, China and India economic growth will favor the introduction of the new product. Entry Strategy Operating in the international marketing can be challenging for most organizations due to the dynamic nature associated with the markets. International markets are hugely influenced by factors such as legal-political factors, economic factors, social-cultural factors and environmental factors. An organization entering in the international market should be aware of these factors so that it can choose the most suitable strategy to use to enter into the market. There are a number of international marketing entry strategies namely franchising, joint venture, exporting, licensing and wholly subsidiaries. The most suitable method for entry in the Asia market is the exporting strategy. Direct export entry strategy is a popular strategy that is used by organizations entering in the international market for the first time. In the case of the Pomlife ® Company, the choice of the strategy is based on a number of factors. First, the legal and regulatory policies in Asian countries such as India and China encourage importation of different products from other countries. According to the survey conducted in 2013, most of the Asian countries have removed international trade barriers in order to foster international trade and leap the benefits that come with the trade (Staub 2013). Therefore, there is no restriction on the amount of the good that enters in the region making exporting products to the market cheap and fast. Second, Australia and Asian is well connected through sea transport, which lowers the cost of the transporting the products between the two regions. The cost of the exporting is invariably a major factor in the international entry strategy. High cost of transportation adds cost of the product hence making exporting an unsuitable strategy. However, in the situation where the cost of the transportation is significantly low, exporting becomes the best choice. The third reason behind the choice of the exporting strategy is that the strategy provides an opportunity to the Pomlife ® Company to gain experience in the Asian market. Exporting allows a company to come in contact with the real market conditions in the international market (Theberg 2012). The exporting entry strategy has two advantages. First, the Pomlife ® Company does not need to establish a subsidiary in the Asian to produce Pomlife® fresh pomegranate arils. The company will export the finished product from Australia to the market in India and China. This reduces the cost of the expanding to the international market. The second advantage with the strategy is that it allows economic of scale as the product are made at one place. However, the company has to manage the transport cost to ensure that it is maintained within the minimal level. In addition, the company risks losing control of the market since it’s located a distance from the headquarters (Grimwade, 2000,). Conclusions This paper is an international market entry report for the Pomlife ® Company. The report has examined the entry of the company into the Asia marketing to provide fresh Pomlife ® arils in this market. Pomlife ® Company is an Australian Company that was established in 2008 to produce and market pomegranate products in Australian and beyond. In the next five years, the company grew rapidly and expanded to global market. In order to effectively penetrate in the Asian market, the company should adopt the exporting entry strategy. This is suitable because there are limited trade barriers between the regions allowing free flow of goods. In addition, Australia and Asia is well connected by the sea transport. However, the company must manage the cost of transportation in order to maintain it at the lowest level possible. The most promising market in Asian is China and India markets particular the urban population. This population has high income and consequently high buying power. References Balassa, B., 2012, Policy responses to exogenous shocks in developing countries. American Economic Review, (5), 75-78. Baltagi, H. & J.M. Griffin, 2009, A general index of technical change, The Journal of Political Economy, 96(1), 20-41. Grimwade, N., 2000, International trade: New patterns of trade, production & investment. London: Routledge Ohlin, B., 2009, Interregional and international trade. Cambridge, Mass: Harvard University Press. Krugman, P., 2014,Rethinking international trade. Cambridge, Mass: MIT Press. Pujari, A., 2012, Economics of pomegranate and ber fruits. Rohtak India: Spellbound Publications. Staub, J. 2013, 75 remarkable fruits for your garden. Layton, Utah: Gibbs Smith. Theberg, J. 2012, Economics of Trade and Development.London and New York: John Wiley and Sons. Wagner J.,2013, Exports and productivity: A survey of the evidence from firm level data. The World Economy, 30(1), 60-82. Viner, J. 2012, Studies in International Trade Theory. London: Allen and Unwin. Read More