BIRMINGHAM CITY UNIVERSITYBirmingham City Business School

BA (Hons) Business Administration

Module Title: International Marketing

Module Code: Mar6015

Lecturer: Dr Brian Wong

Issue Date: December 2015

Hand in Date: 16 January 2016

Student Name:

Student Number:

Assignment:

A. Learning outcomes and assessment criteria specific to this assignment:

1. Evaluate international marketing situations from the perspective of an international marketing manager.

2. Construct an international marketing plan for a given marketing situation.3. Drawing on your understanding of international marketing topics, you are required

to produce a report of no more than 3000 words to fulfil the following brief.4. Prepare an outline marketing plan for a foreign food or drink brand for entry to

Hong Kong market.

B. Please Note:

1. The foreign food or drink brand must not be currently available in Hong Kong.2. The selected brand must be suitable for distribution via s supermarket, department

store or similar outlet and NOT via direct outlets.

Table of ContentsTable of Contents.......................................................................................................................1List of Figures............................................................................................................................2List of Tables..............................................................................................................................31. Introduction.........................................................................................................................4

1.1. About Horizon Organic Milk....................................................................................41.2. What is the reasons to Entry to Hong Kong Market?...............................................51.3. Aim and Objectives...................................................................................................6

2. Marketing Strategy Recommendations...............................................................................73. Evaluate Selected Target Markets.......................................................................................9

3.1. Segmentation.............................................................................................................93.1.1. Requirements of Market Segments................................................................93.1.2. Bases for Segmentation in Consumer Markets..............................................9

3.2. Targeting.................................................................................................................123.2.1. Target Marketing Strategies.........................................................................123.2.2. Target Marketing Strategies to be Adapted.................................................13

3.3. Positioning..............................................................................................................143.3.1. Product Position...........................................................................................143.3.2. Product Positioning and Differentiation Strategy........................................143.3.3. Make a Value Propositions..........................................................................14

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4. Market Entry Recommendations......................................................................................164.1. Factors Affecting the Selection of International Market Entry Mode....................164.2. The Alternative Market Entry Methods..................................................................174.3. Risk and Control in Market Entry...........................................................................184.4. Market Entry Decision for Horizon........................................................................18

5. Marketing Mix Recommendations....................................................................................195.1. Definition of Product Life Cycle............................................................................195.2. Marketing Mix Strategies in Different Stages of Product Life Cycle.....................21

5.2.1. Development Stage......................................................................................215.2.2. Introduction Stage........................................................................................215.2.3. Growth Stage...............................................................................................215.2.4. Maturity Stage..............................................................................................215.2.5. Decline Stage...............................................................................................21

6. Conclusion........................................................................................................................227. Appendix I.........................................................................................................................238. References.........................................................................................................................24

List of Figures

Figure 1: Horizon Organic Milk Home Webpage................................................................4Figure 2: The components of marketing strategy.................................................................7Figure 3: Marketing Strategy and the marketing Mix of Horizon........................................8Figure 4: Micromarketing...................................................................................................13Figure 6: Factors influencing on selecting entry mode......................................................16Figure 7: International Marketing Entry Methods..............................................................17Figure 8: Risk and Control in Market Entry.......................................................................18Figure 9: Definition of Product Life Cycle........................................................................19

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List of Tables

Table 3.1: The selecting marketing segment’s criteria......................................................10Table 3.2: The segmenting consumer markets’ criteria.....................................................11Table 3.3: Target Marketing Strategies.............................................................................12Table 3.4: Definitions of Value Propositions....................................................................15

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1. Introduction

1.1. About Horizon Organic Milk

Horizon pioneered organic milk production practices and standards twenty odd years ago. Their mission and vision is to identify and adopt the latest and best organic methods in milk production. They have a fundamental belief that organic farming is the only truly sustainable agricultural production system to produce safe and pure dairy products while improving the health of human being, the health of animals, and the health of planet’s precious resources such as soil and water (WhiteWave Services, INC, 2015). Figure 1 shows Horizon Organic Milk’s Home Webpage. Horizon Organic Milk (“Horizon”) has always led by example with standards and their Organic Pledge in the milk industry.

Figure 1.1: Horizon Organic Milk Home WebpageSource: WhiteWave Services, INC (2015)

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1.2. What is the reasons to Entry to Hong Kong Market?

Horizon trusts there are lots of reasons that they will be success in the Hong Kong market. For example:

i. High nutritional value of the product which includes high protein, high calcium and DHA Omega 3;

ii. Sizes bigger than HK styles, no need to buy it every day;

iii. Packaging wise, they use an illustrated cow as their icon, it draws people’s attention;

iv. Food safety, it passed USDA Organic;

v. Special long preservation period; and

vi. A lot of selection, such as fat-free milk, low fat milk, reduced fat milk and whole milk.

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1.3. Aim and Objectives

The aim of this assignment is to outline key elements in an international marketing plan for “Horizon” milk to enter into Hong Kong market. Specifically, the objectives of this assignment are to:

i. recommend suitable marketing strategies (see Section 2)

ii. evaluate selected target market(s) (see Section 3)

iii. suggest market entry recommendations (see Section 4)

iv. recommend suitable marketing mix strategies (see Section 5)

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2. Marketing Strategy Recommendations

Markets are made up of people from all walks of life with wants and needs. Marketing strategy means measures taken by a business to fulfil the requirements of its market. In order to survive or win the market an organisation must be able to provide products and services that are better than their rivals. The organisation with the most effective marketing strategy should usually become the market leader.

In order to satisfy the market, marketing strategy should cover all elements of the procedure, such as research, promotion and advertising. Figure 2 shows the components of marketing strategy for Horizon to enter the Hong Kong market.

The components of marketing strategy

Market research

Product Pricing Advertising Promotion Consumer Tracking

Understand the market and potential customers

What product

How much By what means and

what channel

What incentive

Create data base for review

Figure 2.2: The components of marketing strategySource: www.thetimes100.co.uk

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Figure 3 summarises the major marketing activities involved in managing a customer-driven marketing strategy and the marketing mix (see Section 5).

Figure 2.3: Marketing Strategy and the marketing Mix of HorizonSource: Kotler & Armstrong (2012, P.48)

Kolter & Armstrong (2010) shows that marketing strategy involved two main questions:

i. Which customers will be served (segmentation and targeting)?

ii. How to create value for them (positioning and differentiation)?

The above questions will be analysed in Section 3.

Now, Horizon should create a marketing program – the 4P’s marketing mix – that brings the intended value to the main customers. As main intended value that Horizon wants to offer to main customers is its premium quality drinks in supporting healthy brain development and heart health in adults. The analysis of marketing entry will be talked about in Section 4.

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3. Evaluate Selected Target Markets

Hong Kong consumers are interested in organically milk in recent years. People concern also environmental lower grade, pesticide and hormone residues in milk and animal welfare issues. Horizon understands that it cannot profitably serve all customers in Hong Kong. Target marketing is to recognize the diversity of customers and then please them with different offerings. Thus to identify different market segments and their needs is the first step in target marketing. Market segmentation, marketing targeting, positioning and differentiation are the four elements of the success of a product in the marketplace.

3.1. Segmentation

Market segmentation is to identify portions of the market that are different from one another. Segmentation allows the organisation to better satisfy the needs of its potential customers (www.net.mba.com).

3.1.1. Requirements of Market Segments

In addition to having different needs, for segment to be practical an organisation should evaluate also the following criteria (see Table 1).

3.1.2. Bases for Segmentation in Consumer Markets

It is also important to decide the criteria for selecting market segments. Table 2 shows the criteria to be employed to segment Horizon’s target market.

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Table 3.1: The selecting marketing segment’s criteria

Criteria Issues How can Horizon fulfil the criteria?

Identifiable Measurable segments of differentiation must be obtained in order to identify

Survey by means of questionnaire (see Appendix I) for Baby Kingdom’s member had been conducted. So we can analysis from those figures in 4P.

Accessible Through communication and distribution channels the segments must be reachable

Horizon trusts that they can access through the sole distributors to the main supermarket and convenient stores.

Durable To minimize the costs of frequent changes, the segments should be relatively stable

It is expected that the requirement of main customers will not change frequently.

Substantial To justify the resources required to target segments, they should be sufficiently large

Horizon believes that the size of the market is large enough to be valuable.

Unique The segments must respond differently to the different marketing mixes to justify separate offerings

Horizon trusts that the premium quality drinks in supporting healthy brain development and heart health in adults can offer most customers a feeling of uniqueness

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Table 3.2: The segmenting consumer markets’ criteriaSource: Adapted from www.netmba.com

Criteria Issues What should Horizon use?

Geographic segmentation Markets are divided on the basis of geography.

Hong Kong is a small city, Horizon can be sold to all Hong Kong supermarkets and convenient stores.

Demographic segmentation

Demographic segmentation is one of the ways to target a specific group of consumers

The questionnaire results show that Horizon’s main customers’ should be middle and high income individuals and families, especially for the families who have child/children.

Psychographic segmentation

customers are grouped according to their lifestyle

The questionnaire results show that Horizon’s main customers’ should be interested in and value premium quality drinks

Behavioral segmentation The actual behaviour of customer toward products

Horizon should highlight its drinks’ health and special favour (e.g. Organic and without hormones or antibiotics) and urge customers to drink them often, for example: breakfast and etc.

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3.2. Targeting

After segmenting the market based on the different groups and classes, the next will be targets choosing. No one strategy will suit all consumer groups, so being able to develop specific strategies for target markets is very important.

3.2.1. Target Marketing Strategies

There are four general strategies for selecting target markets.

Table 3.3: Target Marketing Strategies

Target Marketing Strategies Definitions

Undifferentiated marketing Undifferentiated marketing is a marketing that does not target a particular segment of the market.

Differentiated marketing Differentiated marketing is a firm decides to target several segments of the marketing, it is engaging in a differentiated marketing strategy.

Concentrated marketing Concentrated marketing occurs when a business concentrates its marketing effort on one segment of the market

Micromarketing Micromarketing is used if you need to focus on two or more well defined market segments and want to develop different strategies for them.

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3.2.2. Target Marketing Strategies to be Adapted

Result of questionnaire shows that Horizon should take approach “Micromarketing (see Figure 4)”.

The targeted customer segment should have the following characteristics:

Middle and high income individuals and families that value premium quality drinks in supporting healthy brain development and heart health in adults at premium prices

Figure 3.4: MicromarketingSource: www.homebusinessproductreports.com

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3.3. Positioning

Positioning is to develop the product and brand image in the minds of consumers. It can also include improving a customer’s perception about the experience they will have if they choose to purchase the product or service.

3.3.1. Product Position

Ries and Trout (1986) explain that while positioning begins with a product, the concept really is about positioning that product in the mind of the customer. It is quite difficult to change a consumer’s impression once it is formed. Consumers cope with information overload by oversimplifying and are likely to shut out anything inconsistent with their knowledge and experience.

3.3.2. Product Positioning and Differentiation Strategy

In the competitive business world, companies should constantly examine their products and services to better serve customers. Product differentiation and positioning are key parts of a company’s marketing strategy and are necessary to keep ahead of competition.

Product Differentiation: Product differentiation is the incorporation of attributes, such as quality or price, into a product to encourage the intended customers to perceive it as different and desirable.

Product Positioning: Positioning is how you provide your product or service brand identification as you go to market.

In the case of organic products, current positioning is mainly based on some attributes to the products, either positive (healthy, better tasting) or negative (produced without chemicals, GMO free, etc.). Further, current positioning is usually pursued with a general symbolic reference to the need/goal of maintaining health, which appears one of the most relevant values in our long-living, healthy food. Besides, the organic attribute appears as a further element of differentiation in category management (you have whole, reduced fat milk, low fat milk and fat free milk), although all organic products have a common positioning in the mind of consumers.

3.3.3. Make a Value Propositions

The full positioning of a brand is called the brand’s value proposition – full mix of benefits upon which the brand is differentiated and positioned. Table 4 shows the definitions of five different wining value propositions (with blank color) whereas Figure 4 shows possible value propositions upon which Horizon should position its drinks.

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Table 3.4: Definitions of Value PropositionsSource: Kotler & Armstrong (2010, 238-240)

Value Propositions Definitions1. More for More “More for more” positioning involves providing

the most upscale product or service and charging a higher price to cover the high costs

2. More for the Same Companies can attack a competitor’s more for more positioning by introducing a brand offering comparable quality but at a lower price.

3. The same for Less Offering “the same for less” can be a powerful value proposition – everyone likes a good deal.

4. Less for Much Less A market almost always exists for products that offer less and therefore costs less.

5. More for Less Of course, the winning value proposition would be to offer “more for less”.

PriceMore The same Less

More More for More

More for the same

(Horizon should adapt)

More for less

Benefits The same The same for

less

Less

Less for much less

Figure 3.5: Value Proposition Adapted by Horizon’ DrinksSource: Kotler & Armstrong (2010, p.239)

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The losers The winners

4. Market Entry Recommendations

4.1. Factors Affecting the Selection of International Market Entry Mode

There are internal and external factors influencing enterprises to enter international markets. Internal factors are factors influencing on decisions of organization in relation to mode of entering to external markets. External factors are factors out of direct control of organization that are able to influence selecting entry mode to market. Root in year 1994 referred that finding out how external factors influence selecting entry mode to market depends on internal factors (See Figure 6).

Figure 4.6: Factors influencing on selecting entry modeSource: Pulijeva & Widen 2007: 12

Hong Kong is a group-up and enlightened market with a growing demand for milk. At the same time, most Hong Kong customers are price aware consumers looking for “value” products. Especially we always talk about the health of the food. This product is selling organic, DHA Omega-3, high calcium, protein and etc.

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4.2. The Alternative Market Entry Methods

There are numbers of ways business can sell their products in international markets. The most appropriate method will depend on tis products, the outcome of its Marketing Environment analysis and its Marketing Plan. There are varieties of ways in which organisations can enter foreign markets. For examples: Direct Expert, Franchising and etc. (see Figure 7).

Figure 4.7: International Marketing Entry MethodsSource: www.learnmarketing.net

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4.3. Risk and Control in Market Entry

One of the most important characteristics of the different market entry methods is the level of involvement of the firm in international operations. This has significant implications in terms of levels of risk and control and is shown diagrammatically in Figure 8. The four categories of market entry methods: (a) indirect exporting, (b) direct exporting, (c) cooperation strategies and (d) direct investment.

Control

Risk

Figure 4.8: Risk and Control in Market EntrySource: Adapted Doole and Lowe (2012, p.220)

4.4. Market Entry Decision for Horizon

Based on the market entry methods and the levels of involvement in international markets as shown in Table 4 and the risk and control in market entry in Figure 8, it is decided that “Direct Exporting” should be used to export the Horizon to Hong Kong. In particular, a local distributor in Hong Kong will be chosen as a sole distributor to distribute Horizon to target supermarkets and convenient stores in Hong Kong.

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Corporation Strategies

Joint venturesStrategic alliances

Direct InvestmentOwn subsidiaryAcquisition Assembly

Direct ExportingDistributorsAgentsDirect marketingFranchisingManagement Contracts

Indirect ExportingPiggybackingTrading companiesExport management companiesDomestic purchasing

5. Marketing Mix Recommendations

5.1. Definition of Product Life Cycle

The different stages that a product is likely to go through from its initial design and launch to its eventual decline and withdrawal from the market (See Figure 9).

There are generally four levels in a product’s life cycle:

i. Introduction;ii. Growth;iii. Maturity; andiv. Decline.

Figure 5.9: Definition of Product Life CycleSource: www.ibbusinessandmanagement.com

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The milk market is good fits in this definition. At the beginning, the product will grow and do well. However, as a new competitor goes into the market and as exhilaration about the product reduces, a new level in the life cycle level is reached, called maturity. If product revivification is not taken at this stage, we may see the saturation of the market and the profits starts to decline. Each level of a Product’s Life Cycle has a different marketing mix.

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5.2. Marketing Mix Strategies in Different Stages of Product Life Cycle

5.2.1. Development Stage

During the development stage, “Horizon” milk is still yet for sale in Hong Kong. In this stage, the marketing mix is in the planning phase, so rather than implementing marketing strategies, Horizon should concentrate on researching marketing methods and planning on which efforts are to be used to launch the “milk”. The ways to bring awareness of this “milk” to potential customers through marketing campaigns and special promotions are to be included.

5.2.2. Introduction Stage

The marketing mix during this stage of the product life cycle entails strategies to establish a market and create a demand for the “milk” as this is a new product that customers are not yet aware of.

5.2.3. Growth Stage

At this stage, customers become aware of Horizon Milk and sales increase. Marketing tactics during this stage requires branding that differentiates the “Milk” from other products in the market. Marketing mix during this stage should involve showing customers how this milk benefits them over the products and build a brand preference.

5.2.4. Maturity Stage

The marketing mix during this stage involves efforts to build customers loyalty, typically accomplished with special promotions and incentives to customers as the “Milk” has gained over its competition already.

5.2.5. Decline Stage

The marketing mix during this stage should focus on reinforcing the brand image of the milk to stay in a positive light in the eyes of customers.

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6. Conclusion

Specific characteristics of organic milk influence the combination of marketing-mix elements, whereby in particular combination of these elements specific quality and width of the market should be taken into consideration: i.e. more attention should be paid to the organisation of distribution and promotion activities. Organic milk products (Horizon) are considered to belong to a group of sensitive products. Packaging material and packing, as well as sub-elements of marketing-mix, play a very important role in the protection and preservation of organic milk from external influences (damaging, dissipating, spoiling, etc.).

For organic milk it is not enough only to have a demand for such products, but it is also necessary to supply these products to consumers by using appropriate distribution channels. A quality guarantee of organic food products directly influences consumption intensity, absorption power of the market, packaging material design, advertising messages, choice of the distribution channel, and distinguishing organic from conventional products according to their market characteristics makes the fundamental factor of the production differentiation and diversification with the aim of producing such organic milk that would certainly find its way to the consumer.

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7. Appendix ISample Questionnaire

1. What is your sex? A. Man B. Woman

2. How many people are in your household? A. 1-3 people B. 4-6 people C. 6 people above

3. How often do you go and buy milk? A. A couple times a week B. Once a week C. Every other week

4. What is your age group? A. below 15 B. 16-50 C. 50 above

5. What is your monthly income? A. $10,000 – HK$30,000 B. $30,000 – HK$60,000 C.$60,000 above

6. How much milk does your family drink in a week? A. None B. ½ to 3 gallons C. 3 gallons or above

7. Do you every buy organic milk? A. Yes B. No

8. Why do you buy organic milk? A. I like the taste B. I like it because of health

C. I buy it for my kids D. Other, please specify:

9. Are you willing to pay more for organic milk? A. Yes B. No

DONE, THANK YOU

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8. References

Anon., n.d. www.homebusinessproductreports.com; Diagram of Micromarketing. [Online] Available at: www.homebusinessproductreports.com

Anon., n.d. www.ibbusinessandmanagement.com; Definition of Product Life Cycle. [Online] Available at: www.ibbusinessandmanagement.com

Anon., n.d. www.learnmarketing.net; International Marketing Entry Methods. [Online] Available at: www.learnmarketing.net

Anon., n.d. www.net.mba.com; The selecting marketing Segment’s Criteria. [Online] Available at: www.net.mba.com

Anon., n.d. www.thetimes100.co.uk; The components of marketing strategy. [Online] Available at: www.thetimes100.co.uk

Doole, I. & Lowe, R., 2012. International marketing strategy: analysis, development and implementation. 6th ed. Hampshire: Cengage Learning.

Kolter, P. & Armstrong, G., 2010. Principles of marketing. 13th ed. New Jersey: Pearson.

Kolter, P. & Armstrong, G., 2012. Principles of marketing. [Online].

Puljeva, A. &. W. P., 2006. The Influence of Internal and External Factors on Entry Modes. Master thesis. Lulea University of Technology, Marketing Department of Business Administration and Social Sciences. [Online].

Ries and Trout, 1986. The Battle for Your Mind. [Online].

Root, F. R., 1994. Entry Strategies for International Markets. San Francisco: Jossey-Bass, Inc.. [Online].

WhiteWave Services, INC, 2015. Product. [Online] Available at: https://www.horizondairy.com/products/milk/whole-milk

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