International Marketing of Rokeby Farm Dairy Products in Thailand & Singapore - Case Study Example

Tables of contents Executive Summary…………………………………………… Pg2 Introduction……………………………………………………. Pg3 Company & product analysis…………………………………. Pg3 Company & product attractiveness…………………………… Pg5 Market comparison Singapore & Australia…………………… Pg9 Product Market analysis……………………………………… Pg11 Competitor analysis…………………………………………… Pg12 Comparison of Rokeby farm & competitors………………… Pg14 Market selection and justification…………………………….. Pg15 Entry strategy…………………………………………………. Pg16 Conclusion…………………………………………………… Pg17 Work cited……………………………………………………. Pg18 Student’s Name: Lecturer’s Name: Course Name: Date: International marketing of Rokeby farm dairy products in Thailand & Singapore Executive summary The report is about market selection and the entry strategies that a company should use to penetrate into foreign markets. In the report, Singapore and Thailand are compared to determine which a better market is. Close scrutiny using PEST analysis shows that Singapore has better environment for a business to thrive. The report then gives a comparison between Singapore and Australia and its depicted that Singapore is growing at a fast rate and has a demand for dairy products. Rokeby farm products can do well in the Asian continent where demand for milk is rising. MADE Company is to use local retailers such as Sheng Siong as their distributors. Marketing through channels such as social media will also be incorporated to create awareness about the product in Singapore. Then direct exporting will be used as a market entry strategy. All these factors put into consideration give Rokeby farms a very good chance for expansion and gaining loyalty from the consumers in Singapore hence it’s a very lucrative venture. Introduction Internationalization refers to the expansion of a company beyond the boundaries of the home country. Most companies are trying to venture into foreign markets because new markets have risen up over time and thus there is the urge by companies to compete on a global level (Aulakh 2005). Different companies go global for different reasons which include: acquisition of several market shares, to increase sales and to make use of the available resources. MADE Company has great potential for growth because they got the required facilities for production and also because Australia has plenty of dairy farms hence milk is readily available for them. This is crucial because a company cannot expand to other countries if they do not have the capacity to meet the demand. Before deciding to export a company must take into consideration and do thorough research on the potential market, analyze the competitors and buyers as well as come up with the best entry strategy to venture into the new markets. The markets Rokeby farm is considering to venture are Singapore and Thailand which are both upcoming economies. Singapore for instance is growing at a very fast rate and has lower tariffs, higher purchasing power parity and political stability. Company and product analysis Made company was started back in 2005 producing nutrient water, cold pressed juices and cocobella coconut water. In 2014 the company started the Rokeby farms which are a range of dairy products totally owned and produced locally. The farms are based at Victoria and then processed at Melbourne where the plant is situated. The product comes in different flavors which are: banana, iced coffee, salted caramel, Dutch chocolate and banana with honey and cinnamon. The products are rich in protein twice the amount of milk. This gives it a comparative advantage because most consumers crave more protein. The company aims at competing with other global companies in producing a whole range of nutritious products while maintaining the standards and food safety for human consumption. The company also aims at raising the standards of the farmers in the country because they source their dairy products from local farms. For the past three years, the company has experienced tremendous growth in sales. The company has seen a 200 % growth each year in sales (MADE 2015). It has more than 2,000 major retailers such as Woolworths, Caltex, BP and Seven-Eleven stores as well as other independent retailers who have been part of the success for MADE Company. The four brands of the company generate retail sales of about 120 million. Rokeby farms are products made of whole protein breakfast smoothies made with fresh; cold filtered and contains twice the amount of proteins which is highly demanded in Australia. The retail sales of the product are expected to exceed $ 10 million in 2016. Most Australians prefer fresh milk to UHT milk. The milk has to satisfy the cleanliness standards as well as the fresh taste of milk even with increase in shelf life. The operation of the facility should operate under a HCCP certified system of management as well food safety programs such as Level 3 Safe Quality Food. The target market for the company is all people from the toddlers to the elderly in the society. This is because proteins are required for proper functioning of the body by all individuals. Body builders may require the product more because proteins help in body building and muscles. Therefore, the product is targeted for children, youth as well as the older generation. The Rokeby farms dairy products have been performing very well in the domestic market. This is because people are adopting the liquid breakfast trend. The product has had 200 % growth in sales each year since it was launched in 2014 (MADE 2015). There is a projection that the sales will exceed 10 million by the end of 2016. Rokeby farms distribute its products locally through the petrol stations and convenience stores. The company has seen an increase in the number of distributors who are now more than 2000 retailers. The company promotes its products through social media such as twitter handle, instagram, facebook and advertisements on newspapers and television networks. They also have brand ambassadors who help in endorsing the dairy products thus creating awareness about the existence of it. The retail price for the milk at the grocery stores is $ 3.99 while at the petrol station and convenience stores it is $ 4.99 for a 425 ml bottle of milk. The price is inclusive the total cost of production and it is affordable for the people. The MADE Company has sufficient resources to expand overseas. This is because the founders invested in a production facility worth about 20 million that enables them to produce more in a very clean environment and to also increase the shelf life of the milk from 30 days like most competitors to 100 days. This facility will enable them produce more for export as well as ship their products since they last longer instead of using flights which are more expensive thus this will be a competitive advantage for them as exporting will not increase the cost of the products. Comparison and product attractiveness The comparison is between Singapore and Thailand so as to determine the best market to export the products. Singapore The country is business oriented and strong economically. It is also termed as the stronghold of the Asian countries as most multinational corporations operate from there. The country is growing at a rapid rate. Political factors Singapore has a very stable political environment as compared to other countries in Asia. They have a democratic system where they elect their leaders thus the country is peaceful and people have better standards of living. Economic factors The country is doing very well economically having the highest per capita income in the ASEAN countries. They have a free market economy which is free of corruption and encourages competition among business people. The country has high literacy levels thus the employees are skilled and willing to work. There is also availability of cheap labor from the neighboring countries which makes Singapore very attractive to carry out business. Social factors Most Singaporeans are educated and they tend to dislike the blue collar jobs. They are also adopting the Western culture and therefore there is an urge to live good life and this motivates them to work hard thus they have good purchasing power which is an advantage for businesses. Technological factors The government has set up good infrastructure for technology such as internet. They have also set an Electronic transactions Act that helps govern how online business is to be conducted. The government of Singapore has very strict protection laws for intellectual property rights and this is an incentive to attract foreign investors to the country. To attract investors, they also have tax reliefs as well as import and export procedures. Thailand Thailand has a population of 66.79 million people. It is in the continent of Asia and below is an evaluation of the macro environmental factors that would affect business in the country. Political factors Thailand is quite unstable and experiences random protests against the government therefore this would largely affect the thriving of business in the country. However, the current government is trying to enhance the attractiveness of Thailand as a business destination by enhancing access of the market, ensuring corruption is eliminated and raising the standards of living for the citizens by raising their salaries and giving them tax reliefs. Economic factors The country has been struggling to recover from the financial crisis of 1997-1998. This has been achieved partially because the banking system which is very strong in the continent has contributed to the growth of the economy. However, the country has continually had an increase in its fiscal deficit which not a good sign for future growth and this is a discouragement for foreign investors who may fear to invest then incur losses. Social factors Most people in Thailand are paid poorly and there is inequality of income. People from different regions doing same kind of work are paid poorly. The employees in Bangkok are paid better than those in the North regions. This makes people have very low purchasing power as they cannot afford luxuries therefore investors are discouraged. Disparity in development is also prevalent in different regions as such some areas are highly developed while others are marginalized. However, amidst all these, Thailand have a literacy level of about 95% therefore the workforce is highly educated and skilled. Technological factors The government of Thailand is working towards enhancing the research, development and innovation sector so as to ensure business thrives well. However, the country has very poor intellectual and property rights protection policies which makes piracy of property rights very prevalent in the country and therefore this discourages multinational companies from investing in Thailand. Comparison between Thailand and Singapore After the PEST analysis of the two markets its evident that Singapore is a better market to expand to for MADE Company. This is because Singapore has a better environment for business to thrive as well as government incentives such as low taxes to make the market more attractive. The Singaporeans also have better purchasing power because they have better standards of living. Therefore the dairy products have ready market in Singapore where the natives crave fresh milk as compared to the UHT products. Singapore is very promising for investment because it has minimal cases of corruption as compared to Thailand and also because the country is politically stable therefore the Rokeby farms will do very well there. Comparison between Singapore and Australia Political factors Both Australia and Singapore have stable political environment which is democratic. This ensures peace and hence good environment for business to thrive. However, Singapore has disrupted freedom of speech whereby the opposition leaders have to watch what they say to avoid punishment or imprisonment. Economic factors Singapore is a free market ranked among the best in the world for its open economy. It has a GDP of $314.96 billion with a very high purchasing power parity which is very attracting for investors. Australia on the other hand has a very strong economy which is doing better than that of UK and France. Australia has a GDP of $ 1.62 trillion therefore a very good environment to carry out business. Social factors Singapore has a population that is highly educated and skilled therefore providing a workforce. The people are also willing to live a more improved life therefore they work hard to afford their needs and wants. Australia also has one of the best education systems in the world therefore its population is well educated to provide labor. Technological factors Singapore has good infrastructure for technology such as internet and this makes it easier for investors to penetrate the market. The government has also put in place an electronic transactions Act to guide online marketing, protection of property rights is taken seriously and piracy is not condoned. The government also gives tax reliefs to investors as an incentive. Singapore also has a procedure put in place on how to go about importing and exporting. Just like Singapore, Australia has highly developed infrastructure for technology. The government of Australia funds and supports about 55 % of all research and development in the country. The government also gives reliefs on tax and has very strong protection laws for property rights. From the PEST analysis of the two countries, they share a lot in common despite the fact that Singapore is still growing, it has a lot of potential for business and therefore Australian companies like MADE should venture into the Singaporean market because business can do well. Also because the Singaporean government has incentives put in place to encourage foreign investors. With these facts, it is clear that Rokeby farms can penetrate into the Singaporean market and do well just as it has in Australia. Since Singapore is well developed in terms of technology and infrastructure, it will be easy for Rokeby farms to venture and advertise their products on social platforms so as to create awareness of the products to the Singaporeans. Product market analysis Singapore has a population of about 5 million people with a growth rate of 0.8 % each year. This means that there is a market for products. Singapore also has the highest food consumption rate in Asia. Dairy products make up 11 % of total food consumption which is 40%. The major exporters to Singapore are Australia 42 % and Thailand 31 %. This means that Australia dominates the market therefore MADE company will have an advantage. It is therefore clear that the market for dairy products is rapidly growing and is estimated to grow at a rate of 3.4 % per year from 2013 to 2020 (Euromonitor 2013). The market is segmented according to income. There are two different categories for segmentation in Singapore: 1) Geographic segmentation In this category, consumers are segmented based on their nationality or country of origin. Most Singaporeans are Chinese who account about 70 % of the total population, Malaysians, Indians and expatriates from different parts of the world. All these people have different tastes for products. 2) Demographic segmentation This segmentation categorizes people according to age, income and occupation. In Singapore, more than half of the population is aged between 15-64 years. The youth tend to adopt the western culture thus they are likely to buy imported dairy products. The older people have more disposable income that they are willing to spend on different products and brands. Based on income, Singapore has three segments: low income earners, middle income and high income earners. The middle class and the upper class are likely to purchase the Rokeby farm products because they have more money to spend and this group comprises the majority of Singaporeans. Consumption of dairy products in Singapore or rather the market is mature and therefore for a company like MADE to penetrate and gain a market share they ought to have very differentiated products so as to attract customers. The Singaporeans are also very price sensitive for basic needs and as such the strategy of Rokeby farms to ship their products will see to it that prices are low thus attracting more customers ( MADE 2015 ). Most of the dairy products in Singapore are imported from Australia and Thailand because they do not produce their own due to less arable land in the country. Other suppliers are: Indonesia 11 %, New Zealand 5 %, India 2 %, and USA 0.3 %. Distribution of dairy products and food in Singapore is done via retailers, convenience stores, petrol stations and traditional stores. There are about 3000 supermarkets and 1300 food and drinks outlets. The supermarkets and hypermarkets take up the largest distribution channel categorized under retailers. Some of these key retailers are; Fair price group which attracts the high income earners, Dairy Farm Group and Sheng Siong which is a favorite for low income earners. Competitor analysis There are many competitors for dairy products in the Singaporean market both local and foreign. The most dominating brands are Magnolia, Farm house and Daisy by the Fraser and Neave Company (F&N). The other brands are HL and Marigold by the Malaysian Dairy Land. Fraser and Neave ltd The company was started in 1883 therefore people have known their brands and come to trust them. It is among the leading companies in Asia for dairy products and is listed on the Singapore Stock Exchange. It has branches in 11 countries including USA and Europe. They have a variety of products ranging from dairies and beverages as well as printing and publishing services. For the beverages they have: soft drinks like sparkling water, bottled water, Asian drinks and fruit trees. For the dairies their product range is pasteurized milk, condensed milk, UHT milk, yoghurt, ice cream and tea under their brands Magnolia, Farm house and Daisy. Malaysian Dairy Industries The company was started in 1963 as a partnership between a Singaporean and the Australian Dairy Produce Board but later in 1969 the Singaporean gained full equity for the company. It is among the leading companies in dairy products supply in Singapore and Malaysia with total sales revenue of about $ 260 million per year in Singapore. They produce sweetened condensed milk as well as pasteurized milk with the brand names being HL and Marigold. Greenfields Company The company was started by a group of Australian and Indonesian entrepreneurs. The company specializes in the production of fresh milk, UHT milk, cheese and whipping cream. The company has high quality products that have a market share in Singapore. Meiji Company The company was started in Japan back in 2006 and later expanded to Thailand. It is among the major suppliers of dairy products to Singapore. Their range of products include: sweets, biscuits, snacks and dairy products. Comparison of Rokeby farms with the competitors Rokeby farms have a competitive advantage over their competitors in Singapore because their products will be relatively cheaper as compared to others. This is because they will use sea as their mode of transport as compared to their rivals who use air freights which add to the cost of the products. Secondly, the MADE Company has invested in high class facility plant worth about $ 20 million (MADE 2015) to facilitate more production as well as increase the shelf life of the milk to 100 days thus their milk is more durable and fresh. Therefore, Rokeby farms products will manage to penetrate the market and gain share among the middle class as well as the low income earners because their products are affordable. The fact that their milk is fresh will also give MADE Company a competitive advantage. The company will manage to supply enough quantity because Australia is well endowed with arable land and dairy farming is prominent in the country therefore fresh milk is readily available. Buyer analysis The buyer is very critical and his needs have to be identified through conducting research so as to ensure consumer satisfaction (Burmola & Srivastava 2010). Buyer behavior is a part of the behavior of human beings (Kita et al 2002). Consumer behavior is affected by factors like: social, psychological, economic factors as well as personal factors. Social factors are social classes, income and gender. Psychological factors refer to factors that trigger motivation for purchase. Other factors that may influence buyer behavior include: quality of products, availability, variety, pricing, brand name and advertising. The most important factor is quality entailing freshness and taste. The youth are attracted to foreign products because they want to adopt the western culture therefore they will purchase the Rokeby farms products. The middle class society is rapidly increasing and they will often opt to purchase fresh milk so as to maintain their social status. The older people are mostly in the high income category therefore have more money to spend and thus will purchase Rokeby farm products. Singapore has so many expatriates employed in the multinational corporations earning higher income and is therefore willing to spend money on fresh milk which is rare in Asia. The Rokeby Farms products are differentiated in such a way that different groups can purchase depending on their preferences. The products have different flavors for example: banana, iced coffee, salted caramel, Dutch chocolate and banana with honey and cinnamon. The products are also packed in recyclable PET bottles not the normal Tetrapak. These differentiations will attract different buyers. Market selection and justification The Singapore market has very lucrative opportunities for Rokeby farms this is because most of the competitors do not have available raw materials in their country thus have to import then process for supply in Singapore. However, MADE Company has adequate supply of fresh milk from farms in the Victoria region. Secondly, the competitors deliver their products by air which is very expensive thus adding to the cost of milk but Rokeby farm products will be transported by sea which is way cheaper compared to air mode. This will see to it that their products are cheaper than their competitors. Thirdly, MADE Company has come up with a technology to increase the shelf life of their products from 30 days like their competitors to 100 days without changing the taste or freshness of milk. This therefore gives them an upper hand. Lastly, most people in Asia crave fresh milk aside from the pasteurized or UHT and Rokeby farm is making this a reality because they will be supplying fresh milk. This is a latent need that will get to be satisfied. Entry strategy The choice of an entry strategy is a decision that a company should take seriously as each choice has its consequences and they contribute towards a companies’ competitive advantage against the competitors (Gencturk 2005). Change from one strategy can be expensive and time consuming (Baena 2013) and thus the decision should be taken after thorough research There are several strategies that a company can use to penetrate a foreign market. They include: licensing, franchising, partnering, joint ventures, Greenfield investment and direct exporting. The strategy of entry is determined by several factors such as marketing costs, cost of transportation, tax rates and the adaptability of the product to the market. These factors cause increased costs of production but they are then offset by increased sales. The best strategy for MADE Company to market the Rokeby farms products in Singapore is via direct exporting. This strategy entails the company selling directly to the chosen market using their own resources. However, later after establishing a loyal clientele, Rokeby farms can work with local distributors and suppliers to represent them in the country. These distributors could be supermarkets such as the Sheng Siong. This strategy is viable for made company because less costs are involved and it will also give them time to learn the market trends and establish loyalty among the consumers. Conclusion In conclusion, it is evident from the report that the Rokeby farm products can gain market share in Singapore through research of the potential market. The report indicates that the market for dairy products in Singapore is growing at a faster rate as compared to Thailand. A comparison between the two markets shows that Singapore is a better venture. By coming up with strategies to keep up to the competition like the longer shelf life for their products and using sea as their mode of transport MADE company will do well in Singapore. Mainly because the latest trend depicts Singaporeans wanting to take more proteins and milk that is fresh. Work Cited Baena, Verónica. “Insights on International Franchising: Entry Mode Decision.” Latin American Business Review 14.1 (2013): 1–27. Web. Farms, Rokeby. Protein-rich breakfast Smoothies, made in Australia. Rokeby Farms, 2016. Web. 6 Oct. 2016. Gençturk, F.E. (2005) “Foreign market entry modes; a sequentially embedded decision approach”. In Handbook of Research in International Marketing, Jain, S.C. (ed.), Edward Elgar Publishing, Inc., Massachusetts, USA Aulakh, P. S. (2005) “International product strategies: and integrative framework”. In Handbook of Research in International Marketing, Jain, S. C. (Ed.), Edward Elgar Publishing, Inc., Massachusetts, USA. “Connect to: Passport (Euromonitor) - la Trobe university library.” n.d. Web. 5 Oct. 2016. “http://www.sge.com/sites/default/files/private_files/BBK_Foodstudie_Singapore_June%202013_0.pdf.” n.d. Web. 6 Oct. 2016. “http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Retail%20Foods_Singapore_Singapore_10-23-2014.pdf.” n.d. Web. 6 Oct. 2016. Read More