assignment marketing - dbfa 2009-37 latest

LINK NATURAL PRODUCTS (PVT) LTDINTERNATIONAL MARKETING PROPOSAL FOR

YEAR 2010 - 2015

M.S.N.I.CHANDRADASA.DBFA 2009/37

MARKETINGINDIVIDUAL ASSIGNMENT 01

NO OF WORDS 2977

Link Natural Products (Pvt) Ltd.

TO : CHAIRMAN /BOARD OF DIRECTORS OF LINK NATURAL PRODUCTS (PVT) LTDFROM : MANGER – INTERNATIONAL MARKETINGSUBJECT: PROPOSAL FOR INTERNATIONAL MARKETING ENTRY STRATEGIESDATE : 31 DECEMBER 2009

PURPOSE OF THE REPORTFor the response to the request made by the Board of Directors of Link Natural Products (Pvt) Ltd,

I have outlined following proposal based on the understanding about the Company, Industry &

trends in the international market which I have gathered through analyzing the case.

INTRODUCTIONLink Natural (Pvt) Ltd, which is a strong brand in the Sri Lanka, holds great potential to expand its

market to Global Market due to these positive global industry trends. To determine the

appropriate marketing approach in introducing the Company’s’ products to the Global Market

requires the consideration of the nature and extent of the international market factors to support

the decision to expand into the global market as well as techniques in successfully promoting

products of the Company.

Company has modern Research and Development facility and the uncompromised standards and total quality management maintained across all disciplines at its modern ISO 9001, ISO 14001 and HACCP certified factory. Also Company’s manufacturing facility is a totally environmental friendly “green” complex, where “zero waste” is maintained with one of the most modern “waste water” recycling plants and “energy regeneration” from solid waste, is maintained. These quality products brought the National Science and Technology Award for the Development of Standardized Quality Ayurvedic / Herbal Products. These things will brings company lots of strength, opportunity & good reputation to play as key player in the international market.However, there is need to generate specific market data on the size and demographics of the

market for Link Natural (Pvt) Ltd, the competitive environment that the company will likely face,

and the internal and external issues that the company expects to face when it enters the Global

Market to support the identification and development of a strategic marketing plan to drive the

viability of the Endeavors.

Source: www.linkherbals.com

of 20M.S.N.I Chandradasa- DBFA 2009/37

http://www.linkherbals.com/


SIGNIFICANCE OF GLOBAL MARKETINGGlobal marketing has become vital for the growth of the organizations as a result of –

Saturation of domestic markets. Liberalization of trading. Rapid technological developments that have enabled manufacturers to produce good

quality products at low prices. This in turn, enabled these companies to enter new markets, where they could leverage the advantage of their superior quality products.

Current trend of people believe natural product rather than artificial products

Global marketing will help the companies leverage the following advantages – Marketers can source good quality materials from places where they are available at

economical rates. Companies can reduce their development time and recover the investments in research

and development rapidly by marketing their products in the global market. By entering new markets, the companies can meet the expectations of the shareholders

and capital market regarding earnings, growth objectives, and future prospects of the company.

Source: http://www.idc.com


http://www.idc.com/


ATTRACTIVENESS OF THE COMPANY IN THE INTERNATIONAL MARKET Consumers spending in excess of $25 billion on natural and organic food alone, the natural

products industry is rapidly maturing. Once the mainstay of purists, hippies and back-to-nature

people, educated consumers in multiple demographic groups now understand the health and

lifestyle benefits that can be reaped by pursuing a diet of whole and organic foods, and they have

increasingly demonstrated a desire to consume them.

Natural and organic products have become much more mainstream over the past few years and

their popularity will rise further due to an average age increase and greater awareness in the

general population. Supermarket chains will continue to fine-tune their natural/organic branded

product assortments and push more deeply into these profitable categories

All of these developments make it incumbent on natural products manufacturers to understand

the crucial nature of their branding and packaging initiatives. This, too, is part of developing a

comprehensive business strategy for long-term growth and success.

Source: http://www.naturalproductsinsider.com


http://www.naturalproductsinsider.com/


POTENTIAL MARKETS There is good market for Natural and organic products in any part of the world. However, peoples of developed counties such as United States, Australia, and European Union are more concerned about natural and organic products. Further, they are willing to pay premium price for such products.Therefore, I suggest that company should enter into international market by exporting its products to European Union’s (EU ) counties because with that region there are lot of markets and which would help to achieve ultimate objectives of entering into international market.However, company should select one country which as more demand for natural and organic products that will enable company to establish in that region. So United Kingdom (UK) is the most attractive country when considered about the political, legal, social factors & consumer behavior.Accordingly Company should first enter into the UK Market & then to the markets on other European Union Countries. Company should make more attention to capture sufficient market share since the market for company’s products still at growing phase in its life cycle within the EU countries.It is very important to create strong brand personality & make customers loyal to the brand using smart marketing techniques.



EVALUATING POTENTIAL MARKET

1. Evaluation based on PEST factors.

The Macro Environmental factors affecting to Link Natural (Pvt) Ltd is analyzed below.

Political Factors

The EU supports the fair trading commitment for both the local consumers and foreign producers.

This is observed by a requirement on labelling that a stamp of "Fair-trade" must be included in the

products for consumer reference. This shows that the EU do not have strict policies on fair trade.



Economic Factors

There are numerous characteristics of EU that makes it an attractive destination for exporter

goods. EU is consisting with the globalized advanced economies the world (UK Statistics). Free

market is also the main framework of EU countries which limits the influence of countries in

trades. EU also has low inflation, unemployment and interest rates and ranked one of the most

superior economies in the region. With this in mind, exporters can easily attached bulk of positive

issues to the production, start-up and marketing environment in the countries. In the contrary, EU

still has problems in reducing income inequality. Although not a good sign in aggregate, exporters

can use niche marketing to exploit this bottleneck. Competition, thus, is reduced when direct

rivalry is spread over the income boundaries of the people.

There is an advantage of exporters who can offer innovative products. In this way, the market will

not rely on price factors to affect their decisions rather to the qualities of products which are also

the source of loyalty. With Asian touch to the products, the market may also feel that exports

have higher nutritional value than local counterparts. However, there is a very high risk of failure

in the industry especially if the location is EU due to low Profit margins.

Social Factors

The health consciousnesses of consumers have revived several years ago. Convenience in eating as

well as provision for healthy diet is two of the primary motivation of the consumer of their

increased support. The typical intake of healthy products is changing with the aid of governmental

information efforts; more EU people are developing the habit of evaluating the nutritional content

of each product label before actual purchase. This improvement is an extension of 2000 shifts on

health beliefs of the population.



Technological Factors

In European standards, EUROPEAN UNION agricultural production and its level of technology is

efficient and highly-atomized. For an instance, only 2% of its labor is in required to support sixty

percent of its agricultural sector. Nutri-Ingredients medicinal value is believed to be redeemed for

products that do not undergo intensive technological application. To this part, exporters would be

encouraged to enter and compete in the EUROPEAN UNION market because what they are

offering are unique products. Historically, unique products have the ability to run against market

trends (e.g. avoidance of lower prices).

EU is consisting with those developed economies that maintained the role of agriculture in the

economy despite radical shift of sectors towards service and manufacturing industries (IATC

Website). The quality of EUROPEAN UNION's products is reflected in its consumer protection

against low quality and sometimes foreign foods. This can be a source of weakness against

products from developing countries.

Source: http://ivythesis.typepad.com


http://ivythesis.typepad.com/


2. Evaluation SWOT Analysis for the Company

Sub-sectors Strength Weakness Opportunity Threats

Raw Materials National initiative on promoting herbal plantation.

Availability of a wide and diverse base of herbal plants;

Increasing R&D interests and supports for herbal products; and

Latest government policy to utilise idle land.

Insufficient supply of local raw materials;

Unknown exact location of species; and

Information on soil suitability for herbal plants is currently not available.

Diversification of herbal-based products (body care and beauty products, cosmetics, health foods, etc.);

Domesticating wild plants in nurseries through mass propagation, in vitro culture, etc.;

Establishing herbal plantations at a large scale; and

Destruction of herbal resources due to unsustainable logging activities and agriculture development, etc.;

Risk of losing potential herbal species through forest fire and illegal logging;

Commercialisation may lead to over-exploitation; and

Intellectual Property Rights (IPR) issue.

Processing Vast traditional knowledge by local inhabitants on herbal preparation ;

Production efforts concentrated on a small scale industry;

Lack of capital investments on production facilities;

Lack of technological base for production; and

Poor adherence to

Development of new and improved products based on herbal plants;

Development of new and improved processing and packaging to produce higher quality products;

High overhead and production costs may limit involvement; and

Absence of private-led.



set quality control.

Marketing Acceptance and increasing demand of herbal-based products.

Absence of clear investment and marketing strategies;

Inadequate penetration to the overseas market; and

Inadequate effort to explore e-herbal.

Affordable medicines and food supply;

Investment potentials; and

Ready market for herbal products.

Export barriers; Competing herbal

products from other countries; and

Lack of diagnostic treatment by the suppliers.

Transportation Concessions given by the government to exports.

High transportation costs.

Improvement of existing facilities; and

Development of new infrastructures

Inadequate knowledge on exports..

Technology Existing technical and laboratory support.

Inadequate skilled manpower;

Lacking efforts in incorporating technological knowledge with cultural and anecdotal knowledge; and

Inaccessibility of entrepreneurs to technology know-how.

Developing supporting industries such as information technology, management and other support and service industries.

Great control of medical advances, technology and products by Western medicines.



Source: IDS (Sabah), 2000

Consider above Political, Economic, Social & Technological factors affecting to the region when deciding strategy, products to be introduced first to the market & selecting promoting method etc.



FOREIGN MARKET ENTRY MODESThe decision of how to enter a foreign market can have a significant on the results. Expansion into foreign markets can be achieved via the following four mechanisms.

Exporting Licensing Joint venture Direct investment



Source: James F. The Global Entrepreneur



INTERNATIONAL MARKET ENTRY MODE COMPANY SHOULD USE.

Company should first start with the export to the UK market & then rest of the European

countries.

Company’s primary objective should be enter the United Kingdom market with the Herbal Health Care Products such as Samahan , Paspanguwa , Five Herbs , Swastha

Thripala & Tea after 18 to 48 months they can distribute these product to the rest of the EU countries

In the short term company can introduce other products such as Personal Care Products ,

Cosmetics , Generic Ayurveda Products , Spa/Aroma Products , Essential Oils &

Oleoresins to the first into the UK market then to the other EU countries with the achieved high brand awareness and brand knowledge through introduced Products which represent a health-conscious and passionate point of view that hope to bring to the UK market & rest of the EU countries.

Then the Company should select suitable party to make joint venture agreement. When selecting such party company should evaluate such party with the following criteria.

Is this win/win and does every party benefits, or is someone being taken advantage of?

Are my partners ethical, honest and professional? How can the Company add a back end, further leverage this situation, increase profits

and/or distribution, or sell the deal? How can the Company meet better Joint Venture partners and find better deals?

If the marketing through joint venture became successful company can evaluate are there any opportunity to made direct investment in the countries which have great potential for growth.

N.B. before going in to above mention entry modes Company should carefully analyze the situation that will affect in the market when the strategy is going to be implement. Also need to keep in mind the above discussed advantages & disadvantages of each mode of entry.



FIVE YEAR MARKETING STRATEGY PLAN FOR THE COMPANY.

I propose a five year marketing strategy plan for the company based on my understanding as follows.

0-18 MONTHS – MARKET PENETRATION

Penetration occurs when a company enters a market with current products. The best way to achieve this is by gaining competitors' customers

Marketing Decision Decision Features

Product Within first six months – promote brand names

Samahan

Paspanguwa

Five Herbs

Swastha Thripala

Gotukola TeaWithin next six month – promote above products & introduce brands.

Kesha

Sudantha into the market. Basically give more attention on promote Kesha & Sudantha.

Within next six months give same prominence to products introduced in first & next six months. Give more concentration towards products quality, functionality & safety.

Price Use pricing strategies such as volume discount, cash & early payment discount, bundling, seasonal pricing However price should be minimum to capture the market. (i.e. with a minimum margin or no profit margin)

Place Specify marketing channel members & establish distribution centers.Ensure order processing is with minimum lead time & delivered to the particular location



without any delay.

Promotion Use push strategy as marketing techniquePrepare marketing communication budget and Use extensive marketing techniques through TV commercials, business magazines & emails.

Source: http://www.netmba.com

18-48 MONTHS - PRODUCT DEVELOPMENT

Existing markets, New products


Product The first step in developing product is innovations. Company can introduce new products like Herbal Skin Cosmetics for Acne problems.Then the Company can improve existing products like Kesha, sudantha,peyava & etc by adding new herbs which will give more value to the product.

Price Should charge premium price for enhance product features.

Place Further enhance existing channel members & distribution centers.

Promotion promote developed product features to ensure that customers ready to pays more for added value


http://www.netmba.com/


48-60 MONTHS- MARKET DEVELOPMENT

New markets, Existing products


Product Introduce all products to the other EU Countries.

Price Should be charge for cost & brand personality.

Place Further enhance existing & establish new channel members & Distribution centers.

Promotion Specifying the advertising platform and media

Organizing the sales force to cover new products and markets



FORECASTED SALES, COST & PROFIT FOR YEAR 2010-2015

Following table shows the expected profit from the global market & it’s not considered domestic sales, cost of sales & profits.

Product Months Expected salesRs. (Mn)

Expected cost Rs. (Mn)

Expected profitRs. (Mn)

Generic Ayuradic Products

0-1818-4848-60

100105110

907462

103148

Personal Care Products 0-1818-4848-60

656871

575451

81420

Herbal Health Care Products

0-1818-4848-60

818589

797577

21012

Others 0-1818-4848-60

454750

403838

59

12

N.B. Above illustrations are subject to best estimate assumption made based on the knowledge about the business, industry & global scenario.



CONCLUSION & RECOMMENDATION TO THE COMPANY

Companies’ product has higher demand in the global market since most of the customers moved from artificial to natural. They are very much keen on keeping fit due to various deceases became treat to human life more than ever. Also it has proven usage of artificial foods, western medicines having side effects & herbal products are free from side effects or their impact is very low when compared with the artificial products & medicines.

Therefore European market seems to be more lucrative for company since the market for company products are still growing & this will help to earn more profits. On the other hand there are so many herbal producers in the local market & competition in the local market is intense. Also company is currently underutilizing their operating capacity. This excess capacity will help company produce for global market in the short run & Company can enhance the production plant in the long run using the profits earn in the short run.

However though company has highest potential for success in the global market, global market strategy need to be carefully designed, implemented & controlled to achieve expected result as discussed above. Also need to focus on enhance existing products while introduce new products to capture the substantial part of the market.

Please feel free to contact me in any further clarification

Thank you

Yours sincerely,

Manager – International Marketing.



Appendix 01

References

Marketing Management 12th Edition by Philip Kotler & Kevin Lane Keller www.amazon.com www.linkherbals.com

www.oup.com

http://en.wikipedia.or www.lankabusinessonline.com www. oxfordreference .com www.ariadne.ac.uk www.bookmarketing.co.uk www. bookmarketing society.co. uk

Note: For the purpose of assignment it is assumed that the Company is not currently engaged in international marketing though it is operating in the current market more than 30 years.


http://www.bookmarketingsociety.co.uk/

http://www.bookmarketing.co.uk/

http://www.ariadne.ac.uk/

http://www.oxfordreference.com/

http://www.lankabusinessonline.com/

http://en.wikipedia.or/

http://www.oup.com/

http://www.linkherbals.com/

http://www.amazon.com/

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