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Market Assessments of the Pet Care Products - Case Study Example

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The paper "Market Assessments of the Pet Care Products" is a perfect example of a case study on marketing. The main objectives are being discussed in this paper in relation to developing a comprehensive business report for Australian Pet Food & Treat Manufacturer. One of these objectives is ensuring that the company is not saturated in its domestic market with various of its pet care products…
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Extract of sample "Market Assessments of the Pet Care Products"

International marketing report Executive Summary The report gives a detailed report on the market assessments of the company’s products. The company deals with sales of dog care, cat care and other pet healthcare products. Due to its saturation in the domestic market the company that of recent been rapidly expanding, has decided to establish a market in China. In the report the entry modes has been given and the best entry mode for the company has been assessed and selected. In addition, the report includes the PESTLE analysis, Political, Economic, Social, Technological and Legal, which include competitor, company and industry analysis. SWOT analysis, Strength, Weakness, Opportunities, Threats analysis is also given of the company. From this the findings were; The company had more strength and opportunity in the market The company deals is likely to be affected by the government policies in China The economic factors also will affect the creation of new markets. The best entry mode for the company is export. Competition is likely to be faced from the existing companies. From this findings, recommendations have been given that will assist the company to establish its market in China. The company needs to come up with strategies that will improve and eliminate the threatening factors. . Table of Contents 1.0 Introduction 4 1.1 Objectives 4 1.2 Company/ Product/ Market selected 4 2.0 Situation Analysis 5 2.1 PESTLE Analysis 5 2.1.1 Political factors 5 2.1.2 Economic factors 6 2.1.3 Social factors 6 2.1.4 Technological factors 6 2.1.5 Environmental 7 2.1.6 Legal 7 2.2 Market analysis 7 2.3 Industrial analysis 8 2.4 Competitor Analysis 9 2.5 Company analysis 10 2.6 Implication of situation analysis 10 3.0 SWOT Analysis 11 3.1 Opportunities and Threats 11 3.2 Strength and Weakness 11 3.3 Implication of SWOT analysis 12 4.0 Objectives 13 4.1 Mission Statement 13 4.2 Generic Business Strategy 13 5.0 Marketing strategies 13 5.1 Market selected 13 5.2 Market entry mode 14 5.3 Customer behavior 15 5.4 Market positioning 16 5.5 The market mix 17 5.5.1 Price 17 5.5.2 Product 17 5.5.3 Promotion 18 5.5.4 Distribution 18 6.0 Conclusion 18 References 20 1.0 Introduction 1.1 Objectives The following are the main objectives that are being discussed in this paper in relation to developing a comprehensive business report for Australian Pet Food & Treat Manufacturer. These objectives are; Ensuring that the company is not saturated in its domestic market with various of its pet care products Being a rapid growing company it is important that we develop a market plan that will enable it expand and compete with other organization across the globe Ensuring the Australian Pet Food & Treat Manufacturer get access to the best entry mode based on the market research that will be obtained from this business report 1.2 Company/ Product/ Market selected Australian Pet Food & Treat Manufacturer is a specialized supply from Australia and which deals in dog and cat collar, dog harness, pet bag, pet toy. In addition, Australian Pet Essentials Pty Ltd Innovator in global class pet nutrition we are principal the way in exceptional pet food & pet treats products and proud manufacturer and business export winner Geelong 2006. The company has hired a large number of professional workers who are involved in the production of quality products that at a competitive price to ensure that their customers are satisfied. The company is largely involved in providing original products for its clients whereby there are likely to have a good company appeal in China. Australian Pet Food & Treat Manufacturer (2011), maintain that the company is largely involved in following various stipulated policies highly specializing on quality, professionalism as well as the use of skillful activity in developing their products as well as innovation. Evidently, although the company export about 50% of its products to other countries within the globe such as Europe, USA, Korea, Taiwan, Moscow and Japan it is necessary for it to involve itself in international marketing so as to develop a niche within China which is a fast growing nation. 2.0 Situation Analysis To ensure that the company is able to market itself internationally it is necessary that a comprehensive situational analysis is carried out. These situation analyses should incorporate PESTLE, market, industry, competitor, company analysis not forgetting to find out the various implications that arises from this situation analysis. The Pet care market across china largely consists of retail sale of both cat and dog cares whereby this same market is valued according to an estimated retail selling price which widely includes any applicable taxes. 2.1 PESTLE Analysis There are many factors within china macro-environment that largely affects the decision of managers within this company. These decisions are emerge from new laws, tax changes, trade barriers, government policies and demographic change. 2.1.1 Political factors It is evident that Australian Pet Food & Treat Manufacturer is affected by various political factors that largely emerge from the government of china and its policies. The various notable political factors are; government policies especially those which are largely associated to the pet care industry, tax policies, trade restrictions and tariffs and finally laws and regulation that are usually made to ensure that the company processes and products are in accordance to stipulated standards. 2.1.2 Economic factors The following are economic factors that are affecting Australian Pet Food & Treat Manufacturer; Since the recent financial crises, banks and other financial institutions suffer higher interest rates thus affecting Australian Pet Food & Treat Manufacturer finances deterring the company investment because of the fact that borrowing cost are very high The inflation being experienced across the globe has led to creation of strong currency making exporting of goods more difficult due to the fact that foreign currencies price raises The fact that china is one of the most growing country across the globe it is receiving a higher national income growth which may boost demand for Australian Pet Food & Treat Manufacturer. 2.1.3 Social factors Changes in Australia social trends are greatly impacting on the demand for Australian Pet Food & Treat Manufacturer. Most people are keeping pets thus boosting the products being provided by the company. 2.1.4 Technological factors It is quite evident that the growth of new technology has led in the creation of new processes and products in Australian Pet Food & Treat Manufacturer. Increased in online shopping has force Australian Pet Food & Treat Manufacturer to develop a website which gives information about its products as well as allowing its customers to purchase good online. The company further engages in application of various new invention and ideas so as to be in line with the rapid rate in technological change. 2.1.5 Environmental Based on the environment in climate change requires the company to come up with goods that are eco friendly. The company realizes the need to produce goods that are environmental friendly processes and products creating a good pattern which in turn creates perfect business opportunities. 2.1.6 Legal Recently, there have been a lot of legal changes that have greatly affected firms’ behavior. These changes affect Australian Pet Food & Treat Manufacturer demand and cost. PESTLE analysis is a perfect tool which Australian Pet Food & Treat Manufacturer managers can use while ensuring that the company have a successful transition within the international market. The analysis will enable them analysis the various forces which are driving the industry and how this same factors influences their day to day operations. 2.2 Market analysis According to a recent news release by a Chinese research company, pet owners across china are projected to spend an estimate of about $2.2 billion for pet care. The same research company indicate that the spending on pet product have doubled since the year 1994. It is quite evident that inadequate marketing has greatly resulted in annual sales returns that are considered to be below the level that a given market should deliver. This therefore indicate that the growth of this market could be much stronger if various market efforts were created in a more sophisticated manner compared to what is being offered in today’s market (Onkvisit and John 2004). based on a comprehensive market research the following aspects are important in ensuring that Australian Pet Food & Treat Manufacturer is able to attract more customers especially based on international marketing should largely be directed to: Pet care professionals Design professionals Individual consumer Global pet care consumers Government agencies Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Potential Customers Growth CAGR Individual consumers (1000's) 10% 154,782 170,260 187,286 206,014 226,616 10.00% Government agencies 5% 24,841 26,083 27,387 28,756 30,194 5.00% Design professionals 5% 104,200 109,410 114,881 120,625 126,656 5.00% Pet care professionals 5% 28,320 29,736 31,223 32,784 34,423 5.00% Total 7.57% 312,143 335,489 360,777 388,179 417,889 7.57% 2.3 Industrial analysis A research that was carried out recently gives an indication that the pet care supplies industry is likely to grow between 5% and 15% annually throughout 2011. Further, industrial experts report that the pet care industry is competitive as well as highly fragmented with no kind of clear brand leadership not forgetting underutilized global marketing opportunities. Clearly, there are various opportunities for successful entry that Australian Pet Food & Treat Manufacturer can use for their own advantage. With many individual across the globe engages in keeping pets, more pet owners are predicted to spend most of their income in feeding, care, pampering and spoiling their pets. Research indicates that the actual spending on pet products in the year 2003 was 32.3 billion which turned to be $1.4 billion more than it was projected (Onkvisit and John 2004). 2.4 Competitor Analysis It is quite evident that Australian Pet Food & Treat Manufacturer has competitors not only in china but across the globe. Onkvisit and John (2004) assert that, these competitors are divided into two namely direct and indirect competitors. Based on the direct competitors they range from manufacturers and designers of pet care and other complimentary product such as pet feeder. From a comprehensive research the key international competitors in the pet care industries are; Veterinary Venture Inc (Drinkwell fountains) Doskocil manufacturing Company A Charmed Life Indirect international pet care suppliers for China Pet Supply Co Ltd include and are not limited to; PETCO PETsMART Nestle Purina PetCare Pet care consumers are largely driven by the company product functionality. For Australian Pet Food & Treat Manufacturer to establish a competitive advantage over its competitors it is necessary that the company understand that most consumers are dissatisfied by today market offering for various pet care products. It is necessary that the company engages in creating products that widely addresses consumer needs for functional product which also suits the owner needs for the various products that fit their desired lifestyles (Paliwoda and John 2008). 2.5 Company analysis Australian Pet Food & Treat Manufacturer is a renowned company (Paliwoda and John 2008). The company ability to hire many professional who work in various departments has assured its success which is incorporated by the production of more than 300, 000 pieces per month. Within Australia, the company has created a good customer background which is an added advantage while practicing international marketing. 2.6 Implication of situation analysis After a comprehensive situation analysis it is important to understand various implication involved in it. Based on the PESTLE analysis it is important that Australian Pet Food & Treat Manufacturer understand political, economic, social, technological, legal and environmental factors and how they affect their market entry within international boundaries (Joshi 2005). It is important that the company understand how these factors will affect its operations and how to utilize them to their own advantage. Understanding both market and industrial analysis on the desired market entry will enable the company have a clear view on the market products and processes. According to Joshi (2005), company analysis will enable the company understand its ability to function proper within international markets whereas competitors analysis gives an overview on how the company will present itself to its customers as well as ensuring that it adapts an effective competitive advantage compared to its competitors. Competitor analysis will also enable the company have an understanding of the entry market of a particular country of interest. 3.0 SWOT Analysis SWOT analysis examines the company’s internal strength, weakness, environment opportunities and threats. It is a basic tool to be used during decision making and a significant precursor in strategic planning. The company has used the analysis to develop a plan that will take into consideration the internal and external factors, maximizes on the potential opportunities and strengths as it minimize the impact of the threats and opportunities (Bohm 2009). The analysis will be used in the strategic planning as it is establishing the market in China. 3.1 Opportunities and Threats Opportunities The competitors in China have products that are poor. The market can surprise competitors. New products may be developed. The profits may have a good margin. Excellent suppliers’ deals could be sought. Threats The company is vulnerable to attack from the already established competitors. There is possibility of negative publicity of the healthcare products. The market demand for the products may be low. Fluctuation of the economy in the country may create uplifts. Possibility of losing key staff to the already established company. 3.2 Strength and Weakness Strength The management is confident and committed. The healthcare products have the required accreditations. Most employees have ever worked in the China market in the same industry. The products are superior as compared to the competitors. The company has obtained a list of potential customers. The company can serve the clients from existing sites. Right products, reliability and quality. Some staff has been trained the Chinese language. Direct marketing experience among the staff. The customers’ list has already been tested. Weakness More sales people are needed. Lack of a detailed plan available. The budget is limited. Training of direct-staff needed. 3.3 Implication of SWOT analysis The SWOT analysis is simple and will help in strategic planning, planning, marketing, research reports, product development and competitor evaluation. It assists a company to measure to market potential of the business and analyze the social, political, economical and technological factors (Fine 2008). In addition, in making decision within the management, the SWOT analysis will be effective. It will be efficient in assessing ways of distributing sales, the excellent brand in the new market, strategic option, in this case getting into a new market, potential partner. However, of great concern are the drawbacks that may be experienced in the SWOT analysis. For instance, a threat may be perceived as an opportunity depending on the groups in the management. SWOTs may also allow the company to handle a lazy course and look for those strengths that match the opportunities and ignore those opportunities that the management feels that the company cannot take advantage of. Basically, the management will have a system that will present a practical way of taking in external and internal factors in establishing a new market for the company’s product in China. 4.0 Objectives 4.1 Mission Statement To combine quality products with aggressive strategic marketing and competitive prices to give excellent pet healthcare products and satisfy the customers. 4.2 Generic Business Strategy This strategy will assist the company to improve the competitive performance. This includes differentiation-based and cost-based competitive strategies. The competitive advantages will involve outperforming competitors and avoiding competitors. Differentiation and low cost leadership will play a role. The company will provide better products that will exceed that cost of differentiation. The sources of cost advantage will be experience, location and product design. The key to excellent differentiation will be the understanding of customers’ preferences and needs, knowledge of the company’s abilities and innovation (Kearns 2010). 5.0 Marketing strategies 5.1 Market selected Choice of a market is a fundamental consideration to make when expanding a business internationally. Although there are many countries in the world, they all differ in terms of market potential thus; choice should be based on the ability of the new venture to expand the company at the lowest resources possible. Literature on international business recommends that market selection should be based on traditional models and environmental analysis. Following these approaches, market that are politically stable, possess large economies, favorable legal conditions and labor policies are preferred by many international organizations. China demonstrates many of these features as revealed by a comprehensive market research. This entailed identifying potential customers and actually talking to them so as to assess demand as well as trends in the industry. Competitors, distributors and retailers are located using the internet. Analysis of the factors outlined above show that China is indeed a potential foreign market. 5.2 Market entry mode Literature suggests three major categories of market entry strategies: exports, investment-based and contractual-based. Other sub-classifications emerge from these broad classes and they include franchising, licensing, direct and indirect exporting joint ventures and contracts. Market entry modes are characterized by five aspects; resource commitment, control, dissemination risk, ownership and flexibility. Dissemination of risk by definition refers to level in which the company’s know-how will be exploited by the partnering firm. Control on the other hand refers to the extent in which the company will govern processes, activities, logistics and marketing. Resource commitment is the input of physical, financial and human resources into the host market. Ownership is defined as the equity participation of the firm into the new country. Flexibility refers to the ability of the company to change into another mode of entry if circumstances change (Wu and Zhao 2007). There are various factors that influence choice of market entry mode and they basically classified into two broad categories: situational influences and moderating influences. Under situational influences firm factors emerge such as strategic considerations, firm experience in foreign markets and specific firm advantages. Environmental factors are also included in this category and they consist of competitive, demand, political and economic conditions. Moderating variables on the other hand include factors such as government regulations and policies, firm size and corporate policies. Considering all the factors highlighted above, exporting is the most viable and promising market entry mode that can be employed in this specific venture. To begin with, exporting has increased profits as compared to other modes as it eliminates all intermediaries. The company will also have control of a greater degree for most of its transactions and will have direct contact with its customers. As a result of this, it will be easy to improve quality of products based on direct feedbacks from customers. In addition, the company will have a clearer understanding of the market place which will in turn enhance flexibility of the market efforts (Delaney 2011). 5.3 Customer behavior Understanding consumer behavior in the new market is key to making of essential decision within the company and in the policy making process. It involves conducting customer research studies in order to understand motivations, perceptions, preferences, tastes, likes and dislikes of customers. The study will try to find out perception of customers concerning pet products produced by the company, suggestions on ways of improving them and how they are used by customers. Although the process is based upon assumptions and appears to be dynamic and complex, it forms a central part in any marketing strategy hence should be greatly handled by marketers. Customer behavior can be easily influenced by using both public policy methods and commercial methods. Over the years, the commercial sector has continuously recognized the importance of positively influencing the behavior of customers and as a result has developed many techniques of changing customer behavior. Commercial marketing enables customers to come into close contact with the company and this entails advertising, packaging and promotions. The manner in which these processes are conducted can attract customers to buy products from the company. A final point worth noting about customer is use of the internet. The internet has become an integral part of the society hence should be given precedence during marketing planning. Besides the ordinary methods of advertising such as television and newspapers blogs and web pages can be developed to advertise products of the company. Social networks are also good avenues to capturing more customers (Foxall et al 2007). 5.4 Market positioning Market positioning refer to marketing strategies whereby a firm manipulates its brand or rebrands them in order create a whole new public perception concerning the product. Products that are well positioned have the potential of higher sales and also boost reputation of the company. For a company to engage in market positioning, it is essential that it determines perception of customers towards the product and how rebranding would alter the perception. Positioning takes various forms depending on the nature of activities within the company. It can be against the broader market, a specific price market segment, geographical segment, usage segment psychgraphic segment or during a given season during the year, for instance, the company could produce specific pet feeds for specific geographical regions in China or to suit specific seasons in the course of the year. The concept of market segment is also closely related to market positioning. It is the process whereby the company divides its market segment into different customer groups with similar product and/or services needs. The main purpose of market segmentation is to ensure that customer needs are maximally met. Marketing mix elements, that is, price, product, promotion and distribution are designed in such a way that meets the needs of different groups of customers. The company could produce certain pet feeds with special additives and offer then at higher prices for the rich populations and leave them out for customers who cannot afford the expensive ones. Another example would be to sell canned pet drugs at higher prices while sell the same drugs packed in plastic bags at reduced prices (Sandhusen 2008). 5.5 The market mix 5.5.1 Price Of all the elements of the market mix, price is the only element that is linked to generation of revenue as all the others are costs. Price is essentially a determinant of the sales that will be made out of a product. Theoretically, price is determined by the value attached to the products and especially from customers. Researching on what customers think about the value of the product is paramount in determining exact prices of the products. However, other factors such as time, economic conditions and company goals are considered as determinants of price. 5.5.2 Product The product is the central point in which almost all the marketing efforts should focus. Knowing which product to sell, installing the production process and providing financial resources for the same is not a function of the marketing personnel. His function rather is to determine the function and appearance of the product. Appearance is concerned with how well the product fulfills the requirements of the market while function determines how the product is able to address the needs of customers. 5.5.3 Promotion Promotion is basically communication with customers. It provides customers with necessary information regarding the products as they make decisions on whether to purchase the products or not. The promotional method used should contain the right message and should target the right audience. Promotion is sometimes known as advertisement and some of the channels of advertisement include radio, web sites, television and emails. 5.5.4 Distribution Distribution refers to the channels used to reach the products to customers. Distribution can either be direct sales or sales via intermediaries. Whichever means is employed, distribution coverage is an important consideration during distribution. Coverage could be intensive, exclusive and selective (Haberer 2010). 6.0 Conclusion Due to its saturated market, the company has come up with a plan to expand its market to China. Company deals with pet care products and health products. The Market information of the potential market was given in order to come up with the right strategies. This includes the SWOT analysis of the company, entry mode to the market, PEST analysis which included the company and competitor analysis and the implication of the analysis. The mission statement and generic business strategy are also given. As a result of this analysis is possible for the company to establish a new market in China. The objective of this assignment was to come up with a report on the potential of the Pet Care product company to establish a market in China as a result of the saturated market in the domestic market. The report has been able to give the needed analysis that is significant in the expansion of the company. References Australian Pet Food & Treat Manufacturer (2011). Australian pet essentials. Retrieved from http://www.auspetess.com/# Bohm, A, 2009, The SWOT Analysis, Norderstedt: Grin Verlag Delaney, L. 2011. Direct Exporting: Advantages and Disadvantages to Direct Exporting Developing a Foreign Market Entry Strategy. Retrieved on 6th January 2012 from http://importexport.about.com/od/DevelopingSalesAndDistribution/a/Direct-Exporting-Advantages-And-Disadvantages-To-Direct-Exporting.htm. Fine L, 2008, The SWOT Analysis: Using the Strength to Overcome Weakness, New York: Wiley & Sons, Inc. Foxall, G., Oliverira-Castro, J., James, V. Yani-de-Soriano, M. and Sigurdsson. 2007. Consumer behavior analysis and social marketing: The case of environment conservation. Behavior and social issues, volume 15, p. 101-124. Haberer, J. 2010. Disney international marketing mix international marketing of Disney Hong Kong. Munchen GRIN Verlag GmbH. Joshi, R, 2005. International Marketing. New Delhi and New York: Oxford University Press Kearns, P, 2010, HR Strategy: Creating business strategy with human capital, Burlington: Routeldge. Onkvisit, S and John,J. 2004. "Process of international marketing". International marketing: analysis and strategy (4th ed.). p. 3. Retrieved 2009-10-11. Paliwoda, S and John, K.2008. "International business vs. international marketing". International Marketing: Modern and Classic Papers. Peter Buckley, Kotabe (2001, p. 461-2). p. 4. Retrieved 2009-10-22. Sandhusen, R. 2008. Marketing. New York: Barron’s Education series. Wu, D. and Zhao, F. 2007. Entry Modes For International Markets: Case Study Of Huawei, A Chinese Technology Enterprise. International review of business research paper, volume 3, issue I, p. 183-196. Read More
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