Marketing Tactics Issue of Allstar Brands in Brazil - Country Manager - Case Study Example

Marketing Tactics Issue of Allstar Brands in Brazil – Country Manager

Allstar Brands is a consumer products company that is based in the United States that majorly deals in the production and distribution of ethical pharmaceuticals for prescription, over the counter drugs and consumer products. The company was formed in 1924 and competes with other firms, smaller and larger depending on the product market and the country within which the product is introduced. The consumer products that the company deals in include packaged goods such as laundry detergent, shaving cream, hand and beauty soaps, toothpastes and shampoo. Over the years, the company has been involved in expansions through international marketing and acquisition of brands and their companies. Recently the company introduced its toothpaste brand in Brazil. Brazil was considered a better choice due to a number of reasons with the main one being the fact that the Brazilian market professed a large potential of market needs and a large population that could maximize the volume of sales. Secondly, Brazil has a growing popularity of hyper markets and with a population of approximately 202 million, the brand was sure to have a good reception in the country. There are various key international marketing issues that manifested themselves during my participation in the Country Manager simulation. This plan explains one such issue, the marketing tactics, and how it manifested itself during the period. It further critically evaluates how our team handled the issue based on my analysis of the relevant academic material. Lastly, it identifies shortcomings professed by academic material in guiding the international marketing practice.

Marketing tactics as an international marketing issue manifested itself in a number of ways during the period. Firstly, since the product was in its initial entry stages in Brazil, it was determined that operating a new business in Brazil resembled navigating through the sea in stormy conditions. A regional plan was formed after careful consideration of the elements that comprised of the regional market environment (Henseler, Ringle and Sinkovics, 2009). The elements included plant selection, market selection and company positioning. Among the countries that were listed, Brazil professed the highest population and the largest toothpaste sales alongside increasing volume sales of toothpaste in the last three years. Regarding the selection of the ideal target market segmentation, family segmentation was selected as the primary target since the demographic structure of the country showed that 43.7% of total population was determined to be in the 25-54 age bracket. As such, these people were established to be the sole economic sources for their families and they professed decisive purchasing power.

The Brazilian health products market was determined to be the ideal market for an entry product since white and health products could be received best in that it was assumed that they could bring added value because the population will be willing to pay more for benefits promised by products for their teeth. However, it would be difficult to compete with the local companies in terms of the economy of the product since foreign products would have additional costs added on the products due to tariff barriers and shipping costs. Lastly the Brazilian market had only one local firm producing a similar product which was seen as an entry opportunity for the company.

The marketing of the product adopted the 4Ps marketing strategy which was designed to measure the applicability of the product and the company in Brazil as a bid to expand its international coverage. The company decided to adopt the existing formulations of stock keeping units (SKUs) in order to enter the market. With the viability of the product, the company targeted two major groups that largely fell on the family segmentation. The groups were that of the young and families. The young were attracted to the product by the benefit of whiteness promised by the product while families were attracted by the economy of the toothpaste and its ability to prevent disease associated with dental hygiene. The economic aspect of the toothpaste was based on its price which was kept low as a competitive driver to reduce the market share professed by the competitors. The company was also keen to promote the product to its target market by establishing brand awareness among the public and shaping the perception of customers regarding the product. Since the offering of the product in Brazil a higher allowance of 10%-13% was set to ward of the product’s strong rivals.

Handling of the marketing tactic issue

The issue of marketing tactics was handled by the team over a number of fronts. The main objectives of the team were to increase overall sales of the toothpaste, diversify from niche markets and launch competition in hypermarkets and increase competition since the market was dominated by regional and local brands. The team utilized a number of strategies including channel strategy, product strategy, advertising strategy and pricing strategy. In the channel strategy, the company aimed to enter the hyper markets and achieve at least 768 million Brazilian Reals in sales in the fourth period of entry. Further, the product was supposed to enter local market directly without any real competition in regard to economy variety. In the product strategy, the product entered the market using the economy brand where the product was significantly cheaper than competitor products. In the price strategy, the team adopted a strategy that had the product compete in the local market in terms of prices by offering lower prices than those of regional 1, a popular brand in the country and by offering higher allowances to the customers than those offered by regional 1.

Lastly, in the advertising strategy, alongside the usage of the target market approach where the younger population was targeted by advertisements that campaigned for higher teeth and the family segment was targeted by the economy of the product and the its ability to prevent diseases associated with dental hygiene, the product was introduced further with focused advertising which addressed the identified target markets (Douglas, Craig, and Nijssen, 2001). In addition, Allstar allocated 20 million Brazilian Reals to the advertising budget. Other issues such as shipping costs, tariff avoidance and creating a stronger national identity in the country, the company budgeted for setting up a manufacturing plant in the country. This would significantly help the company reduce the shipping costs by great margins and would help it to further save costs related to tariffs while at the same time building a stronger identity of the company in the national scene.

The manner in which the team handled the company’s marketing tactics was impressive but lacked significantly in a number of fronts. Since it was an expansion move for the company to expand its international market, the allocation of a sales force in the international scene would provide the company and its product the best coverage for the product in the selected target markets of families and the younger population and their shopping habits. A salesperson could be allocated to a channel within the country such as a wholesale sales force. It is normal for in any industry for manufacturers to set the suggested prices and provide discounts for volume sales to a channel (MSRP). However, the retailers have the discretion of the final prices for products they stock in their stores although many of them follow the prices set by the manufacturer. As such, when setting the prices of the product in Brazil, the manufacture should consider the production costs and the conditions of the market.

According to academic materials, the process of penetrating new markets and developing an international market may be hectic as introducing a new product or a start-up situation with no marketing infrastructure, no sales, and no knowledge of the market. However, companies treat the situation of developing an international market as that of expanding a business where it is viewed as a source of increased revenues for already existing services or products (Quelch and Hoff, 1993). There are various recommended steps for articulating international marketing plans and new market penetration. First, it is recommended that before venturing into it is important that one carries our research in the foreign country that they intend to introduce their product for the purpose of gathering knowledge that would enable them to make an informed decision on the global strategy they are to use (Solberg, 2000). Second, most business do not have resource fronts for which they can use to undertake global marketing strategies. If it is assumed that there are enough opportunities abroad, businesses should be able to determine the ways in which to develop appropriate resources such as logistics, in-country sales, fulfilment and support (Reynolds, Simintiras and Diamantopoulos, 2003). To minimize the risks involved in new markets, some companies choose to partner with other companies in the host country that have already established base and have extensive experience in the market that the company targets (Quelch and Hoff, 1993). However, these kind of partnerships profess a number of drawbacks such as lack of direct experience oversight and direct management oversight. Third, as one continues to formulate partnership and hiring strategies, it is important to assess the current products and services produced by the company and determine their viability in the new international markets. In the assessment, the offerings need to be scalable and intuitive (Quelch and Hoff, 1993). In that light, if a product or service is not intuitive and applicable in the target market with ease, the entry in the market is bound to fail. In addition, if the product is not scalable and cannot be released to the target market to make profits, the entry in the market is bound to fail as well.

Further, once the product is fine-tuned and apparently ready for release into the market, the sales collateral must be modified. This is important in new international markets for the purposes of ensuring that any cultural or regional nuances are handled appropriately (Tse, Lee, Vertinsky and Wehrung, 1988). Blending in the market gives the target market the perception that the new product is able to provide them with a relevant solution. Further, it is important that the company in the new international market creates a network through alternative strategies for business development such as sponsoring, attending and participating in networking events in the in industry such as conferences and trade fairs (Terpstra, Foley and Sarathy, 2012). Lastly, once the business is up and running, it is important that, on a quarterly basis, the involved individuals take a closer look at the progress of the company in the new market (Wind, Douglas and Perlmutter, 1973). This would involve carrying out assessments of the effectiveness of the process used, tactics and strategies for the purposes of determining that the company is on the right track. If it is established that the company is not on the right track, the management should look for additional ways to fine-tune by breaking down the previous process. On the other hand, if success has been realized since the inception of the project the management should establish and determine the factors that work well for the company and it is up to the management to determine whether they would want to scale further or not. If the company decides to scale further, the research phase should be revived and the next market opportunity identified (Wind, Douglas and Perlmutter, 1973).

Shortcomings of Academic material

Although most of the information provided by academic sources regarding international marketing and practices involved in developing international markets are highly researched, reliable and correct, there are various aspects of them that can be viewed as shortcomings in the marketing scene. For instance, academic sources recommend partnerships in new markets for the purposes of minimizing financial risk which involve companies that are already established in the market. However, these sources do not consider the fact that a company may venturing into a new market for the sake of expanding the reputation of the company to international heights by introducing subsidiaries (Papadopoulos and Heslop, 2014). In addition, most academic material only provide guidelines for international marketing practice for big companies. They, in this case, do not consider the fact that there are medium-sized businesses that could use such advice and due to their differences in size and resources, medium-sized businesses cannot use most of the guidelines recommended for bigger companies (Jain, 1989).

Reference List

Douglas, S.P., Craig, C.S. and Nijssen, E.J., 2001. Integrating branding strategy across markets: Building international brand architecture. Journal of International Marketing, 9(2), pp.97-114.

Henseler, J., Ringle, C.M. and Sinkovics, R.R., 2009. The use of partial least squares path modeling in international marketing. Advances in international marketing, 20(1), pp.277-319.

Jain, S.C., 1989. Standardization of international marketing strategy: some research hypotheses. The Journal of Marketing, pp.70-79.

Papadopoulos, N. and Heslop, L.A., 2014. Product-country images: Impact and role in international marketing. Routledge.

Quelch, J.A. and Hoff, E.J., 1993. 10 Customizing Global Marketing. Readings in International Business: A Decision Approach, p.267.

Reynolds, N.L., Simintiras, A.C. and Diamantopoulos, A., 2003. Theoretical justification of sampling choices in international marketing research: key issues and guidelines for researchers. Journal of International Business Studies, 34(1), pp.80-89.

Solberg, C.A., 2000. Standardization or adaptation of the international marketing mix: the role of the local subsidiary/representative. Journal of International Marketing, 8(1), pp.78-98.

Terpstra, V., Foley, J. and Sarathy, R., 2012. International marketing. Naper Press.

Tse, D.K., Lee, K.H., Vertinsky, I. and Wehrung, D.A., 1988. Does culture matter? A cross-cultural study of executives' choice, decisiveness, and risk adjustment in international marketing. The Journal of Marketing, pp.81-95.

Wind, Y., Douglas, S.P. and Perlmutter, H.V., 1973. Guidelines for developing international marketing strategies. The Journal of Marketing, pp.14-23.

Appendices

Appendix 1

Market Comparison on Economic Considerations

Appendix 2

Manufacturer Toothpaste Sales by Country Market.

Appendix 3

Market Comparison on Social Characteristics

Appendix 4

Unit costs in different countries.

Appendix 5

Appendix 6

MSRP