7MK003 Global Marketing – Strategy and Practice PDF

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it is an assignment for the global market strategy...

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7MK003 GLOBAL MARKETING – STRATEGY AND PRACTICE

Contents Introduction................................................................................................................................2 Company overview................................................................................................................2 Point no 1. • Market entry- what is the market entry strategy that would be most appropriate for the organisation in the international market. Justify this selection...................3 1. Joint ventures.....................................................................................................................4 2. Franchising.........................................................................................................................4 3. Piggybacking......................................................................................................................5 Justification of selection.............................................................................................................5 Point no 2. • Marketing mix-adaptation or standardisation of each element and what would the specific changes, if any, be. This needs to be presented as a comparison to the home market of the organisation and needs to be backed up with data and information....................5 Standardization or adaptation of product by Alara wholefoods.............................................6 Standardization vs. Adaptation of pricing by Alara wholefoods............................................7 Standardization vs. Adaptation of promotion.........................................................................7 Standardization vs. Adaptation of distribution (Place)..........................................................8 Comparison to the home market of the organization.............................................................8 Point no. 3 Suggested organisation structure for managing the international operations and justify why this is the most appropriate...............................................................................8 International Division Structure.............................................................................................9 Point no. 4 Evaluate the issues that may affect the supply chain for supply to the final market and identify where these have an impact on the cost and sales price of the product or service in the final choice of market........................................................................................10 Increase in cost in supply chain management..................................................................10 Complex multiple channels to supply and market products.................................................11 Consumer demand needs to be catered................................................................................11 Pandemic and lockdown situation........................................................................................11 LO3 Strategic factors impacting on the decision to go global with marketing........................12 Cultural factor......................................................................................................................12 Economic factors..................................................................................................................12 Political and legal factor.......................................................................................................13 Impact on logistics and buying decisions.............................................................................13 LO4 Totality of global marketing decisions and their effect on the success of the business...13 Conclusion................................................................................................................................13 References................................................................................................................................14

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Introduction In this report, Alara wholefoods by Alex smith is the company which will be analyzed in terms of expanding the business by launching it to the new market. The marketing strategies and model will be used to cover all the learning outcomes for the report. In this section, the company overall operations will be explained.

Company overview Alara wholefoods by Alex smith is the UK based company which sells cereals and muesli mainly gluten free cereals to make the life healthy and organic. The company primary focus is to produce cereal and muesli gluten free and sugar free purely extracted from fruits and vegetables that grows organically in farms. Alara was owned and started back in 1970s when Alex Smith found £2 picked up from the street. He then decided to utilize that money into turning out some sustainable business. He started his venture by purchasing a van, through the van he used to gather the fruits and vegetables that were going to waste. He picked that fruits and vegetables from New Covent Garden Market and sold them in a squatting shop. With the aid of that squatting shop, Alara came into real world whose focus was to produce cereals and muesli from scratch. With the aid of shop, Alara was able to produce its first ever muesli with no added sugar in it back in 1977. The company now sells its cereals and muesli all over UK and international market as well. Their main suppliers are the grocery stores which sells grocery items. Soil Association in 1988 provide license to Alara in order to manufacture certified cereal for the very first time in the UK (Alara.co.uk, 2020).

The

company claim to be most green and sustainable organisation which claims to save environment by producing solely organic cereals. Since the start, the company primarily 2

focus was to manufacture a health breakfast for those who are in hurry and have no time to make breakfast. There was no cereal back then which comes without sugar, salt, and any extra fats. Alara was the first one to introduce muesli without sugar and any extra fastening ingredients. The company invested in muesli machine maker fitted in Bloomsbury. Presently, the company has its own farms and orchard and their own factory in Camley Street, King's Cross. They grow through sustainable means to elimiante the carbon footprint from earth. Their main priority is to produce foods without hurting natural things and damaging environment. Alara uses special ingredients like goji berries and linseeds. The company had built up an unpredictable database that they used to create mixes with explicit necessities, for example, high selenium, or vitamin C that will at present taste incredible. The company also covers big market share due to its popular muesli and cereals which also sells through online orders as well. The company do nationwide deliveries of their products. In this report, the strategic marketing plan will be explained in terms of conducting the business in selected market which is China. The business is going to expand in China where people like to have something organic yet cook in time for their daily routine life.

Point no 1. •

Market entry- what is the market entry strategy that

would be most appropriate for the organisation in the international market. Justify this selection A market entry strategy is the approach which helps many organizations to achieve their aim and goals while entering into new market. Various factors like tariff rates, the degree of adaptation of your product required, marketing and transportation costs can influence the decision of entering the market. Hence as to cover each factor the following market entry strategies will help Alara Wholefood to enter into the selected market.

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Figure 1 breakfast statostics shift

1. Joint ventures One of the most common market entry strategy is to make partnership with a company in order to make third company. The formula for joint venture works like 1+1=3. One company collaborated with another company to make third company. In the past, Alara wholesale also partnership with Tradecraft a fair-trade organisation to introduce a new range of muesli. The company introduce new flavors to introduce in international market like Germany, south Africa, Pakistan, and Chile. Similarly, Alara foods can also enter into the selected market by joint venture with the cereal brand in order to introduce new range with a partnership. This will help the company to work together in same market while sharing equal profit with each other. Alara can combine with any cereal making company to make another brand which will take its position in new market. Alara will partnership with Chinese organic farms in order to start the business in China.

2. Franchising Another common North American practice for expansion of business which involves transferring the same business into new market. Franchising in UK market is pretty common especially in wholefoods and organic stores. As for Alara, franchising will work very well because they deal with wholefoods which is repeatable business and can introduce to selected 4

market easily. The same recipe and ingredients can help to bring same taste and quality into new market. In franchising model, two caveats are mandatory. One is that business must be unique in terms of products and services and brand recognition. Secondly, it is important to grow competition inside the franchisee in future. Alara lie in the category where it is pretty famous among all living in UK. People are familiar with taste and service of cereals and muesli. It will also bring out competition among franchises in order to perform better in future. Franchising will help Alara to enter into the market easily and they have strong brand image in UK which can build up the bridge to enter into Chinees wholefood market and create relationship with their customers as well.

3. Piggybacking Piggybacking is the most appropriate way of expanding the business by taking steps towards international arena (Kenneth Shaw, 2015). In piggybacking two companies gather to form an alliance in order to market their products which are complementary for both companies. As for Alara, the company can build alliance with organic farms which will help to bring out best foods and vegetable important to make cereal and muesli. Through this way, organic farms cannot alone make cereals out of their fruits and vegetable. They will need support from Alara to make products. This market entry strategy for Alara will help the company to partnership with some organic farm company in order to make the venture successful in the new market.

Justification of selection In the above section I selected the international marketing strategies which impact the business in global chain. As to justify my answer I will choose franchising method in order to start the business in China by collaborating with grocery store who sells organic products and will partnership with them in order to start business.

Point no 2. •

Marketing mix-adaptation or standardisation of each

element and what would the specific changes, if any, be. This needs to be presented as a comparison to the home market of the organisation and needs to be backed up with data and information Standardization and adaptation are the most common factor which were in debate since 1988.

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In order to expand the business or enter the international market, organisation needs to standardize or adapt their marketing mix which are 4 p’s of marketing. The core extract of global marketing is to maintain the equilibrium with standardized (extension) approach and the adaptation localize approach in order to stay in the market (Fobbe, 2020). Hence, the real task is to find the best approach which can help in standardizing and adapting the marketing mix suitable for the company. as per the four major elements of marketing mix product, price, place and promotion. Products is said to be one of the most difficult elements to adapt. The continuum of adaptation and standardization helps the companies to consider the best marketing mix element which they will adapt or standardized.

Figure 2 adaptation or standardized continuum

Standardization or adaptation of product by Alara wholefoods A product can say to be a thing designed for attention, acquisition, use or consumption. As for Alara, their main focus was to bring out cereal without additives or glutens to make the starts of say with healthier choices of food. They grasp the attention of customer through introducing sustainable and yet healthier breakfast cereals and Muesli. Alara gain competitive edge by making first gluten free muesli ever. After its successful introduction, the company now owns their own factory and orchard where they grow vegetables and fruits and make cereal out of it. For the product standardization, Alara can export their product to the new market with keeping the taste and other things familiar in international market (Trojanowski, 2014). Moreover, Alara can also adapt the taste of that culture and people prefer to have in

order to be more customer-oriented and adaptable in nature. This will help the company to build the brand image in China where Kellogg and PepsiCo are ought to be biggest 6

competitors of Alara.

Standardization vs. Adaptation of pricing by Alara wholefoods Price is the amount of money a customer pays in order to own the product. In order to enter new market, Alara needs to select an option among standardization or adaptation in order to be successful in new market. There are many factors like environmental, legal factors, customer choices, and competition in the relative industry which influence the choices of customers in regard to the prices. The price standardization is usually common in B2B companies which ought to set prices standard which remains same in international as well without considering the above mentions factors. This may create chaos because the new market might not be as stable as the home country. In UK, Alara tend to sell cereal based on different prices as shown in fig 2. They can set these standard prices for the new market as well. But before that, it is important to do research of the present condition of market in which factors like disposable income of people can be observed to see if people can afford to buy organic cereals or they can spend less or any normal cereals or muesli.

Figure 3 Price range of Alara Wholefoods

As for the fact, to stay on safer side, adaptation is the best approach to set the prices according to the local condition of economy in that new market. Through this, Alara can perform research of market to see the condition of economy and people preferences in order to set the prices which can be suitable to the customers in order to gain competitive edge over the rivals (HUANGFU, JIANG and ZHANG, 2013).

Standardization vs. Adaptation of promotion The way of promotion of any company includes the blend of advertising, sales promotion, 7

public relations, personal selling, and direct marketing tools that helps to raise the bars of company in front of customer eye. This is most important element of marketing mix which also needs to be standardized or adapted. As the promotion of the rand is affected by language, religions, laws, economic differences, and media availability. So, if Alara choses to be standardized they must approach the best way to market the brand which can be applicable in any region of world. Standardization of promotion can be little challenging for Alara because new market might not offer language translation which will then require to make the promotion change completely. So, adaptation is the best approach for Alara which can be done with minor changes in order to make it specific for new market (Omar and Porter, 2011).

Standardization vs. Adaptation of distribution (Place) The distribution channels are the systemized network which works in remote way to continue the circle of needs and demands and fulfill the products shelfs as per their demands in the market (Tan, 2010). Place of marketing mix cannot be standardized because each region has its own way of distributing product. In UK, there is specific way of making the product available in the shelf of grocery stores but in new market, there will be different set of policies which cannot make the process same as it was in UK. As for Alara, the company needs to look out ways through which they can adapt the distribution strategy of new market in order to introduce the product into the market. In the home market of Alara, the product can be distributed to organic grocery stores all over in UK which sells the cereals muesli of Alara. The company also offers online delivery of your favorite cereal at your doorstep which is very convenient for the UK people.

Comparison to the home market of the organization While comparing the home market of Alara, the company has developed their brand image in market of UK. People in UK love to consume cereals are their breakfast. But in China people are more into noodles and Chinese food to start their day. But with the immigration of people into China there is a chance of positivity in entering the market.

Point no. 3 Suggested

organisation

structure

for

managing

the

international operations and justify why this is the most appropriate A structure of organization is utmost important element in entering into new market. It is very important to set a hierarchy which can build up a composition of positions and 8

allocation of people in order to run the company in new market. As for Alara in order to enter new market, the best suitable organizational structure is International Division structure.

International Division Structure An international division structure is the most common used structure in order to expand the business internationally. In international division structure, each activity is grouped with separate division that works internationally for the organization. As for Alara wholefoods, the company needs to have a separate international structure which works for the new market solely. As shown in fig 3, the international division structure works for the company by working in grouping for each activity.

Figure 4 International division structure

With the help of this hierarchy in fig 3, the organization structure of Alara wholefood can be set to work in new market. Through this structure, there will separate departments for each activity (Andrade, 2016). For example, in order to cover the framework of budgeting and resourcing of the raw materials and other money related issues, finance department will be responsible of catering all these problems. Similarly, a marketing department will look out 9

ways to promote Alara products in new market in according to the taste and choices of customer out there. Through this segregation, Alara will be able to be more stable in the new market because there will be whole new structure which will cater every activity in the company. above all of them Chief Executive officer CEO will be appointed to control all the main departments and control the major operations of Alara in new market. With the help of international division structure Alara will be able to gain critical mass of expertise globally. International division structure is pretty adaptable in nature, this is capable of adapting environmental changes in order to deal international markets (Van de Walle, 2016). It also eliminates the duplication of activities which will be beneficial for Alara. International division structure is best for multidomestic strategies which involves little modification. This is also suitable for Alara because the company can modify the organizations structure to fit into new market (GmbH, 2017). Their primary focus is always on health and gluten free products which will make them prominent in the new market beca...