Situation Analysis of International Marketing Environment - Research Paper Example

Situation Analysis of International Marketing Environment Introduction International marketing is the practice adopted by the companies for the purpose of carrying their business across the national boundaries. It is termed as a multinational process in which planning and execution of the concept is done with adequate pricing, promotion and execution of the ideas and thoughts. This facilitates exchanging of goods and services in order to achieve individual and organisational goals (Onkvisit and Shaw 2008). Therefore, international marketing is referred to the application of marketing principles, which is done by the companies across the regional and national boundaries. When the companies take the decision for expanding and diversifying their businesses across the national boundaries, it is important for them to take into consideration various factors that are important for the successful operation of the company on the international scale (Keegan and Green 2008). The focus is to formulate a strategy regarding the international operations of Algerian wine in the UK market. Algerian Wine Algerian Wine is a wine that is made from a country of North Africa in Algeria and is among the renowned name in the history of wine. Algeria is known to be one of the oldest producers of wine in the world. For the Romans, Algeria is considered to be the breadbasket and vineyard throughout the history of viticulture starting from the Roman Empire. Algerian wines have been seen to prosper the world with constant prosperity because of the fact that they have their own unique characteristics. Algerian wines are produced in five major regions that include The MEDEA region, The ZACCCAR region, The DAHRA region, The MASCARA region, and The TLEMCEN region. The aim of the company is to export the Algerian Wine called Coteaux De Mascara from Algeria into the market of UK. Coteaux De Mascara is termed to be the red wine from the Atlas Mountains. This wine belongs to The MASCARA region. This region has been well renowned in terms of producing wines with distinguished features. The wines produced in this region are considered to be robust and well structured. They are of good colour, and consist of high level of alcohol up-to 14 percent. All the wines of Algeria are distinguished with taste of deep berry flavours and the fragrance of roses and raspberries. Methodology For the purpose of data collection, various scholarly journals and articles will be selected, which will help in retrieving adequate information in relation to the international marketing. Secondary data will be helpful in collection of adequate and authentic information. The use of scholarly articles and secondary sources will help in deriving authentic and reliable information which will prove to be very helpful for the company to gain a strong base in the foreign market. Along with this, some authentic information sites on the internet will also be used for getting most accurate conclusions. The selected sources ought to provide the most authentic information and help in proper completion of the research. The major problems which have been faced because of these methods are adequate and exact information is not available in the context of research question, the sources are not updated and outdated sources tend to give old information, intellectual property rights which prohibit the use of information and data posted by somebody else. These were some of the problems which have been faced at the time of using these methods. By careful use these methods can be very helpful in timely completion of the project. Pest Analysis In order to get a detailed understanding about the industry PEST analysis will prove to be very helpful for the company to gain the insights about the industry and their functional patterns. (Source: http://creately.com/blog/diagrams/swot-analysis-vs-pest-analysis/ ) Political: The wine industry of the country has to face many political challenges. There are many laws which have been established by the laws which the companies have to consider before operating in the industry. The privatisation concept is also a hot topic which was has been able to generate many political constraints for these companies. There have been certain legal policies and procedures established by the legal authorities of the UK regarding the consumption and distribution of wine in the country. It is important for the company to undertake its business in adequate coordination and compliance with the rules and regulations provided by the government authorities (Babin 2007). In the country like UK, there have been various issues that came up with a view to ensure health protection and safety of the population. Government adopted several policies and regulations, which defined the adequate standard and limits for providing licence to the companies for conducting their operations in the country. Therefore, the company will have to comply with the limits set by the authorities in selling the wines in the UK and has to adapt to the rules and regulations of the business in an effective manner. Economic: The economic situations of a country also make a profound impact on the working of the wine industry. The consumers are more likely to switch towards those options which are affordable and value-priced. The luxury spending patterns are likely to bring in boom in the demand of wine and related products. There is significant level of competition in the market of the UK for wines so the company will have to establish itself in an effective manner, for undertaking its business in the UK market (Mitry 2008). On the other hand, the demand for the wine of this brand of Algerian wine is high so the company has a favourable demand and sale of its product in the UK. Social: The social factors are positive since the products is complied with position in the society and preferred by high class people. It is used as status symbol which makes a positive impact on the demand patterns. There has been an increasing demand for wine among the population of the UK. People who are young and the older people are the ones who have high preferences of wines (Oxford Business Group 2008). So the potential target customers of the company specially are the young population of men and women and the adults who belong to the group of middle age. Technological: The company needs to wok upon devising a new technological framework which will be useful for creating a distinguished image in the market. The technological advancement can play a vital role in building competitive advantage for the company. With the improvements and updating in the information technology tools the company can easily establish its market presence by creating awareness among people and reaching the needs of the large customer base (Pickton 2010). The company has to modify itself to handle the changing structures of the food systems in the market of UK. Porter’s 5 Forces Analysis Under porter five force analyses, the main factors which will be evaluated are threat of new entrants, threat of substitutes, bargaining power of suppliers, bargaining power of customers, and intensity of rivalry. (Source: http://www.web-books.com/eLibrary/ON/B0/B58/034MB58.html ) Threat of new entrants: The threat of the new entrants in UK wine market are moderate because of capital investment which are very high, switching cost of the customer which is minimal and the chances of retaliation from the existing players in the wine industry of UK. Threat of substitutes: The industry faces high level of threat of substitutes because of availability of beer and spirits. Buyers have a tendency to substitute wine with non-alcoholic drinks as the price of substitutes is very cheap (Zou and Fu 2011). The customers do not have to face any substitution costs, which raises the likelihood of switching to substitutes. Bargaining power of suppliers: The suppliers’ bargaining power is low as they outweigh the customers. This is also because the buyers integrate backwards into the supply chain. There have been various suppliers of wines in the UK. This would result in enormous competition for the company to enter into the market of UK. The company has to differentiate itself in order to mark its presence among the customers in the market. There have been increasing trend of marketing intermediaries for distributing wine in the markets of the UK. Wholesale markets and retail markets are the common places through which the wines are distributed to the customers (McDonald 2004). So the company should analyse the strategy of these marketing intermediaries on order to adopt an adequate strategy for distributing Algerian wines to the mass customers. Bargaining power of customers: The bargaining power of customers is high as the industry has oversupply and the products are highly standardised in nature. Consumption is lesser that production which increase their power. It has been analysed that in the market of UK, customers are not engaged effectively with the product. So it is beneficial for the company to adopt an attractive and differentiation strategy in order to train the minds of the customers and make them feel related to the product. This would help the company in expanding its customer base for purchasing Algerian Wines in the markets of the UK (Kotabe et al. 2012). The future prospects and challenges determines that the company has to modify itself in accordance with the existing market and demand of Algerian Wines in the UK market and adopt such strategies, which lead to an increase in the demand of the consumers and the market of the company is enhanced thereby generating growth in the long run (Paul 2008). Intensity of rivalry: The level of intensity is moderate. As there are few dominant players and there is no differentiation amongst products. The above factors will play an important role in helping the company in doing company, competitor and customer analysis in relation to wine industry of UK (Zou and Fu 2011). Competitor Analysis It is important for the important for the company to identify and analyse the existing as well as potential competitors of wine industry in the UK. For this purpose it is important for the company to know the strengths and weaknesses of its competitors and adopt such a strategy that would help the company in standing out of the competition and gain its position in the market of the UK (Anderson, 2004). The company should identify the distribution patterns of the competitors and analyse the strategies of innovation used by them in selling wines in the UK market. In this manner, the company can compare its performance with that of its competitors and differentiate its strategies for producing Algerian wine in the UK market in a successful manner.  Segment Analysis In the segment analysis, it is important for the firm to analyse the situation and the conditions of the market in which it is going to conduct its business. In this context the company should analyse the environment and the market conditions of the UK. This is beneficial for the company to gain information about the customer base in the UK, having an adequate taste of wine (Lowe 2008). The company would be able to get an insight into the demand patterns of the customers, their needs to purchase wine and their purchasing behaviour towards the product. After identifying the opportunities and analysing the environment of UK, the company has to identify its own capabilities of operating in such an environment and meeting the demand potentials of the clients and customers. For this purpose the company is required to have a thorough analysis of the macro environment and micro environment factors. SWOT analysis of the company With the help of SWOT analysis the main intention is to highlight some major strengths, weaknesses, opportunities and threats that are being faced by the Algerian Wine (Kleindl 2006). Strengths: The major strengths of the brand include a hot name of the band in the industry. The high quality of the product along with large and diversified varieties adds to make the brand more recognisable in comparison to other brand products, which are available in the industry (Czinkota and Ronkainen 2007). The styles and price of the points are in compliance with the quality which becomes an added feature. Weaknesses: The dependence on raw material and excessive dominance of the low priced wines are some of the major drawbacks which are faced by the company (Czinkota and Ronkainen 2007). It needs a well developed quality market of wine to sustain its demand. Opportunities: Expansion to the internal market is the major opportunity which the brand has as its quality will be well recognised there (Mühlbacher, Leihs and Dahringer 2006). The company can also go for expansion of its product line under the same brand name. Threats: Rising production and transport costs are the major reasons which have resulted in squeezing of the revenues and profits of the company (Mühlbacher, Leihs and Dahringer 2006). The company needs to focus on efficiency which will be helpful in clinching back the market without sacrifice quality. Conclusion and Recommendations Conclusion The above discussion has been very helpful in getting detailed understanding about the international marketing. Under this type of marketing, the companies aim at carrying out their business operations outside the national boundaries with an intention of expansion. The process of international marketing is multinational in nature and includes planning and execution of the concept is done with adequate pricing, promotion and execution of the ideas and thoughts. In relation to this paper, the main focus is on the entrance of the Algerian wine in the UK market. The paper has been very helpful in getting a detailed understanding about the Algerian wine, its origin, etc. The purpose of the paper is to conduct a situational analysis which will prove to very useful to highlight the factor towards which the company needs to attentive before entering the global market. In relation to this the paper has included both macro and micro analysis along with marketing tools like PEST, porter’s five force model, Swot analysis which have been helpful in doing a detailed situational analysis. The formation that has been revealed proves to be very helpful for the company to gain the understanding about the actions it is required to undertake and response patterns it needs to adopt in relation to the international market. On the basis of the overall discussion about the factors and opportunities that are available in UK market for Algerian wine it is clear that company should take an initiative of entering the market. It offers a bright scope of opportunities which will help the company in exp0anding in the international market in a successful manner. Along with this, the company should be highly focussed and sensitive towards the identified issues in order to minimise the level on uncertainty attached with international expansion. Recommendations: Followings stated are few of recommendations which will prove to be very helpful for the company in order to easily establish itself in the international market. The company needs to get a better understanding of the customs and business etiquettes about the international market in which it is entering. This will be helpful as the company will be able to get better understanding about the working patterns of the country. It can make use of a test for gaining information about the customers. This can be done with the help of focus group which will be helpful in evaluating the waters and their working patterns (Glowik and Smyczek 2011). Competition information and their working patterns will also prove to be highly educative of the company in the international market. Along with this, the company can also take into use the concept of customized market which ill be helpful in creating niche for it in the global environment. References Anderson, K. (2004). The Worlds Wine Markets: Globalization at Work. Edward Elgar Publishing. Babin, B.J. 2007. Exploring Marketing Research. Cengage Learning. Czinkota, M.R. and Ronkainen, I.A. 2007. International Marketing. CA: Cengage Learning. Glowik, M. and Smyczek, S. 2011. International Marketing Management: Strategies, Concepts and Cases in Europe. Europe: Oldenbourg Verlag. Keegan, W.J. and Green, M.C. 2008. Global Marketing. US: Prentice Hall. Kleindl, B. 2006. International Marketing. CA: Cengage Learning. Kotabe, M. et al. 2012. International Marketing. SA: John Wiley & Sons. Lowe, R. 2008. International Marketing Strategy: Analysis, Development and Implementation. Cengage Learning EMEA. McDonald, F. 2004. European Business and Marketing. SAGE. Mitry, D.J. 2008. The Business of Wine: A Global Perspective. Copenhagen Business School Press DK. Mühlbacher, H., Leihs, H. and Dahringer, L. 2006. International Marketing: A Global Perspective. CA: Cengage Learning. Onkvisit, S. and Shaw, J. 2008. International Marketing: Strategy and Theory. US: Routledge. Oxford Business Group. 2008. The Report: Algeria 2008. Oxford Business Group. Paul, J. 2008. International Marketing : Text And Cases. US: Tata McGraw-Hill Education. Pickton, D. 2010. Marketing: An Introduction. SAGE. Zou, S. and Fu, H. 2011. International Marketing: Emerging Markets. Germany: Emerald Group Publishing. Read More