Marketing Mix for a Fruit Drink Vidco Manufactured in Uganda - Business Plan Example

History of South Africa

The history of South Africa can be traced back to over a decade ago. The country started as a Dutch republic but was later overtaken by the British colonialists. There was a fight between the British and the Boers who were Dutch settlers. There were peace and agreement for some time when the Boers settled in two towns and took control of them. The British recognised the Boer’s rule in these towns, but this was not so long before the diamonds and the Gold were discovered. The discovery brought disruptions in South Africa and there were wars between the British and the Boers and the locals. In 1910, South Africa got their first constitution; however, the resentment between the blacks, the whites, and the Boers continued for almost a decade long before the country finally held its first democratic elections in 1994 whereby nelson Mandela was elected president. After the death of Apartheid, South Africa got a new constitution and turned its focus to structuring the civil service so as to put enough emphasis on the results of the Apartheid. More resources were allocated to the black people to try to correct the damage that was done during the apartheid. Therefore, the political climate in South Africa is trying to bring a level playing ground. The effect of this is that there are various initiatives that have been started that help in bringing a level playing ground for both the blacks and the whites and this means that the purchasing power of all people in South Africa is much better (Whitfield, 2006).

Geography and Climate

South Africa is a large country and it has vast geographical features. The country has a very large coastline as it is located at the southern tip of Africa. However, the coastline is narrower as compared to other African countries at the coastline, as this is soon taken over by mountains. The climate is South Africa is considered as semi-arid although this may vary throughout the year with the changing seasons. The semi-arid nature of the land means that it experiences warmer climatic conditions that are suitable for the business venture considered here.

Economy

The economy of South Africa is among the highest economies in Africa. Despite all the challenges that were faced in the country during the Apartheid, a considerable progress has been noted as the country is now ranked as the second largest economy in Africa after Nigeria. The country has also being ranked as the upper middle-class economy by the World Bank, and this means that it is slowly moving from being considered a developing country to being considered a developed country. The recent recession slightly affected the country but this was able to be brought under control through the self-induced inflation and the strong partnership between the public and private enterprises. This saw a fast stabilisation of the country’s economy and the public finance function (Mills, 2015).

The main economic activities in South Africa are farming, mining, and manufacturing of products. Mining took a centre stage when gold and diamonds were discovered almost two centuries ago, and this is what fuelled the major part of the colonial activities, and it is still aiding in the economy of the country. Agriculture was done majorly by the whites during colonization and the major part of the Apartheid. However, with the democratic government in place, the black people have also moved from dong sustainable agriculture to commercial farming. From these, it can be noted that the economy of South Africa is favourable for investment.

As much as international trade is concerned, South Africa has been the number one destination for the abroad companies seeking to go global. It should be noted that with the advent of globalization, many companies are seeking for markets and labour abroad. This is so because due to unemployment rates, companies can get cheap casual labour in South Africa. Most of the products produced in South Africa are sold abroad as final products or to be processed further. Therefore, it can be said that the global market is viable in South Africa if someone takes the right products to the market. However, it should be noted that as an African country, South Africa still has inherent African challenges such as overpopulation and budget deficits that may affect the trading economy.

However, it should be noted that despite all these progress, the country is still suffering from unemployment, inequality in the access to public facilities such as education and health, as well as the increasing crime rates. This is especially so among the black population, and the government is doing its level best to ensure that the standards of these people are elevated.

Legal-Political environment

There are a number of laws that affect trading in South Africa. The first is that for a foreign entity to trade in the country, it has to be a legal entity. This means that it should be in the form of a company and its presence should be registered with the registrar of companies. This is to ensure that the country has control of the entity rather than the individuals who control the entity. The entity must also have at least 40% of the workers employed in the entity as South Africans, and this is to ensure that the local workforce benefits from the trading the company. This is taken as symbiotic relationship whereby the company benefits from the environment of the locals, while the locals, in exchange, benefit from the work that the company gives them. The other laws that have to be complied with are employment laws for the employees and the tax laws. Every entity trading in South Africa has to pay tax on the revenue that is gotten from South Africa.

The business environment in South Africa is friendly depending on where one trades at. For the urban population and most people of colour, what matters to them is the quality that is purchased, and this is mostly attributed to the foreign companies. However, the blacks and those people that were detrimentally affected by the blacks are sceptical of foreign companies because it reminds them of the oppression they went through in the hands of the foreigners. Therefore, the entry strategy will influence the level of acceptance of the products that are traded.

The government is a purchaser of goods depending on the kind of goods that are sold. However, this only applies to basic needs and other basic goods that the government is tasked with producing. This does not affect goods that are considered luxury such as the goods that are the subject of this report. However, the government spending has an indirect effect on the purchasing power of the individuals. When the government purchases goods and services for the people, the people can spare a little more money in which they can spend on other goods. This is why business is good in any country when the economy of the country is good and vice versa.

South African Culture

The South Africans were originally hunters and gatherers before the advent of colonization. They did not have any permanent structures and they lived in the savannah where animals are plenty. They lived together as families, and they would marry within the family. However, now there is diverse ethnic communities and culture within South Africa. The main staple food in South Africa is meat that is roasted. However, it is to be noted that there are still poor populations that cannot afford meat on a daily basis. The main language spoken in South Africa is English. South Africa is the first African country to liberalize its laws on gender orientation because it allows gay relationship and marriages (Rubidge, 2005). However, in most settings, especially rural areas, the place of the woman in the society is still clear as lower than that of males. However, this is slowly changing among the urban population and those who are learned. The main religion in Christianity, although there are various other religions such as catholic, Islam and Hinduism. Education has been highly embraced in the urban areas while it is still slow in the rural areas. Education is structured depending on the level. The lowest level that is considered the entry is the R level, followed by the lower level that is divided into 7 years lower and 5 years higher making it a total of twelve years. Education into tertiary institutions is purely on merit and is depended on the 12 years lower level.

Technology

A number of technological inventions are in South Africa. The first yellow fever vaccine was developed in South Africa, and this can be attributed to extensive research and technology. There are also various mining patents that are in South Africa as it gets 10% of its GDP in mining. The first heart to heart transplant in Africa was done in South Africa in 1967. South Africa also has some of the largest coal power stations in Africa and this is attributed to its extensive coal deposits.

Although this may not impact directly on the market entry into South Africa, it will have an overall effect because it shows that there is a lot of research and developments going on in South Africa. People are focused on improving lives and this also improves business. The business entity also has to check with the IP body before it can register any inventions whether there are similar inventions in existence.

Infrastructure

South Africa has one of the best infrastructural developments in Africa. It has beautiful wide roads, fast electric trains, and underground tunnels. This affects the doing business in South Africa because it dictates the movement of goods and products. There is also a good communication network as well as extensive internet coverage.

In conclusion to the country analysis, it is noted that South Africa is a destination of choice if the right product for the market is chosen.

Marketing Plan

This is a marketing plan for a fruit drink called Vidco that is manufactured in Uganda and has gained entry into most African countries apart from South Africa. Vidco is a beverage drink that is in the same market as Pepsi and Coca-Cola products.

Mission statement

The mission statement for Vidco is to achieve the greatest penetration in all the countries in Africa and also the international market. The vision of the drink manufacturing company is to be considered the drink of choice in all the occasions. In that spirit, the company has manufactured various types of drinks under the same brand name to suit different preferences and occasions.

The major markets that the product is being sold is the eastern African markets. The country of manufacture is Uganda, and it has given most of the drinks in that market a lot of competition. The company has managed to penetrate both the rural and urban settings through the same of various quantities which allow flexibility in price.

The major benefits that are being delivered to these markets are that the people are able to enjoy affordable home-made drinks. When the markets of these products increase, the people are able to get employed in the industries, thereby increasing the benefits of the product (Turcotte, 2003).

SWOT analysis

SWOT is an acronym that stands for strengths weaknesses, opportunities and threats that a company faces currently in its home market. This analysis is important because it enables the company stakeholders to make various decisions touching on the firm such as expansion into new markets.

Strengths: The major strength of Vidco is that it has a high market position in its home country. With the invention of Vidco, most drinks in the Ugandan market were threatened and most even went out of the market. This high market position indicates that the company is highly accepted and regarded by the locals, and this means that this can also be translated to other countries that the product enters. This also means that the company can risk with other markets without collapsing since it has a strong base.

The other strength of Vidco is the high product mix that the company boasts. The company has various brands and flavours of drinks that a customer can choose from. This product mix is suitable when entering into new markets because they will bring in variety. The company also has extensive production and distribution networks in east Africa. This is also good because it shows that the company is stable.

Weakness: The major weakness of the company is that it has minimal penetration outside east Africa. The product has not gone outside East Africa or even to the rest of the world. Therefore, its acceptance within East Africa could be limited to the inherent nature of the Eastern Africa. The company also has a poor employee management strategy and it experiences a high turnover of low and middle-level employees. Employees are coerced to bring in results, otherwise, they face termination and most employees cannot stand this pressure. Therefore, most of the company revenue is spent in the replacement of the employees that have resigned.

Opportunities: The best opportunity of the company is the advent of globalization and the way most companies are going out of their geographical boundaries to trade abroad. Globalization is good because it has broken down trading barriers enabling overseas companies to enjoy the same privileges that are enjoyed by companies at home (Sergio, 2010). There are also various companies that are willing to form alliances with overseas companies in the domestic market and share the benefits. This is good because the crucial part of any company when intending to trade in overseas companies is normally the entry point. Therefore, entry using an already developed company overseas is an advantage to the company.

Threats: The major threat is the threat of competition from existing and upcoming products. Existing products such as Coca-Cola and Pepsi have an upper hand in the market since it has gained adequate brand image. There is a lot of competition because every company in the market is striving to gain an edge over the other companies.

There is also a threat of changing lifestyle as people are walking away from carbonated drinks and other artificially manufactured drinks into fruit drinks. This change in lifestyle is fuelled by the incidence of lifestyle diseases and other diseases that have no clear causes.

Market analysis

There is room for entry in the destination market noting from the stability of the industry. There are minimal barriers to entry in the market, especially if a company enters the market with collaboration with an existing company. The population is huge, and the drinks are affordable hence the need for the drinks (Fill, 2005).

The market is also volatile judging from the nature of the movement of consumers within the last few years. When Coca-Cola was introduced, it gained a substantial number of customers immediately. When Pepsi was introduced, it also gained a substantial number of customers immediately. This means that the people are flexible and are willing to try new products as they are introduced into the market.

Competitor analysis

There are various competitors for Vidco in the South African Market. The major competitors are the existing competitors composed of Coca-Cola and Pepsi. There are also other local competitors and various upcoming companies.

However, amidst all these competitors, the company is hoping to implement a cost-cutting strategy on entry, to ensure that it can easily manipulate the prices of the drinks to suit the market without any losses. The company has also put in a differentiation strategy that ensures that the consumers get differentiated products affordably

Objectives

The objective of the company is to have a stable market base in the next five years. Turbulence is expected in the first few years but this should be eliminated by the time the company turns five in South Africa. The company expects to break even starting from the first year of operations with no target in the amount of profits to be made. This is because the company is using a cost leadership strategy and can lower the prices as low as possible and still achieve a break-even position.

Entry strategy

The entry strategy that will be adopted by the company is the hire of sales agents. The company will advertise and hire sales agents who will be charged with the distribution of the company products for the time being. The sales agents will have the sole responsibility of distribution, and their main source of pay is a commission for the sales they make (Donelly, 2010). The sales agents that are adopted will be South African nationals who have developed good marketing network of other products. The companies will be vetted to ensure that they have good will and that their association with the Vidco products will not tarnish the company name. Vidco Company will be in charge of various other aspects of running the company such as advertising, and procuring goods from the source to the agents. Vidco Company will still produce its drinks in Uganda and only transport to South Africa for marketing. This is a good strategy because it will ensure that the company does a pilot entry so that if the market does not become stable within 5 years then the company can withdraw from South Africa.

Target market

The target market of the product is in the middle age persons. This is people above 16 years to around 50 years of age. These can be in both urban and rural areas.

Marketing mix

The product is a carbonated drink that has been designed to have various flavours and sugar content. The carbonated drink is specifically manufactured to be drunk at all times whether the weather is cold or hot. The drink has the ability to eliminate thirst among its users. The product is produced in Uganda and is marketed in various countries in the eastern Africa. The product has no presence outside eastern Africa, although its reception in the countries it is trading in has been very good.

The promotion that will be used will be through advertising in the various markets that the product will retail in. The marketing strategies that will be adopted will be advertising through the print as well as the digital media. The print media is through newspapers and brochures while digital advertising will be through the television and internet platforms such as the social media.

The place of manufacture of the drinks will be Uganda, and they will be transported either by road or rail or sea through Kenya to South Africa. The manufacturing will go on as usual in its Uganda production site only that the quantities will be increased. They will be packaged and then transported to the retained sales agents in South Africa.

The type of pricing that will be used is the differential pricing strategy whereby products will be priced according to their costs. This differential pricing is good because it centralizes on the product and it enables the company to come up with a pricing that suits its costs and hence the chances of the company break even are high.

Implementation

The entry will be implemented in bits allowing the company to get used to the new environment while still being in control. After a market survey and analysis, the sales agents will be identified, and then adverts for the South African market will be structured. The products will be sent to South Africa according to the need of the drinks in South Africa.

The Organization Structure

The chart below illustrates the proposed movement of the product from its main office in Uganda to the South African Market.

Timetable

June 2016- market visit and survey, to come up with a report

August 2016- A detailed entry strategy report should be out for approval by management

October 2016- Availing of funds and setting the strategy in place. Employing agents and running the adverts

January 2017- Entry