International Marketing- Essay Solution

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International Marketing

(9071 words)

 

Introduction

            This paper embodies the thirst of Edinburgh-Preserves to be a global player in the industry of specialty preserved/ condiments industry.  But before it can get to this status, it should prove success in the European market.  Diverting focus to the United States (US) may imply weaknesses on quality (as EU especially selected countries like France has higher standards) which run counter with EP’s admonition of “premium products for the high-end markets”.  More importantly, the firm could dissolve its potential market base in the future since it does not produce products to destinations that the latter perceive as markets demanding only merchandise of the highest quality.  High-end market can be said to possess meticulous taste, powerful bargaining power and conservative product/ service outlook.

 

In view of this, this paper is tailored for EP to wake-up and divert its corporate strategies.  The firm needs not a huge market base but a portion that can be loyal customers who needs value from quality above all.  By analyzing SWOT, PESTEL, five forces and consumer behavior of one European country, we can create marketing plan for EP and suggest polished strategy for implementation.  The chosen country will be a surprise.  To succeed in these discussions, we will initially discuss some background about EP, its UK and US market and the importance of international marketing.  The market analysis proper is intended to rationalize the “perceived” SWOT of EP with regards to the chosen country into a concrete and objective SWOT conclusion.

Background of Edinburgh Preserves

            Actually, Edinburgh is considered as one of the biggest financial centers within Europe ().  But the city wanted to exploit its tourism sector, wherein it only trailed behind London as the most visited city in Europe, that it maximizes its agricultural topography.  Perhaps, this is one of the reasons why Edinburgh Preserves (EP) existed.  Built in 1994, EP wisely utilized Scotland’s reputation and tradition of producing preserved products (EP website).  In effect, it ended with a strategic location wherein there exists an arable land where preserve inputs can be easily sourced and local recipes/ techniques can be employed.  Its products includes chutney, pickles, jelly/ sauces, mustard/ dressing, preserves/ curds, marmalade, honey, pudding sauces, nibbles/ snacks and jar (for packaging).  EP popular brands were admitted to gain popularity due to its quality and diversity.

 

The United Kingdom (UK) Market

            According to one of the leading food producers in UK, today’s busy customers are willing to pay a premium for any product that provides speed and convenience ( 2006).  Food is no exception.  This is why EP had penetrated the UK market not only because its product line is naturally prepared for instant use of the customer but also it can be easily stored in a refrigerator for future consumption.  With EP products, the two requirements above are satisfied without undermining taste and reliability which can exclusively be given by wives or other members of the household who can cook.  However, the need for ready-to-eat or easy-to-prepare foods intensifies by the fact that working women and people living alone are increasing (2006).

 

            In the contrary, EP products is unlikely to be brought and consumed within office premises (except perhaps, nuts) aside in the home.  Generally, there is a need to prepare the main dish before EP products can be added as condiments and taste enhancer.  End-users become questionable when it comes to product demand, at best, in a sustained and continuous trend.  According to their website, EP targets the top end of food retailing market and food outlets.  There is no direct selling to customers which serve as the hedging mechanism of EP to remain profitable.  Its marketing focus need not be mass produced as it only shares a fragment from the whole market.  In this view, quality stands to maintain customer relations ( B2B) while diversity acts to attract new business markets or expand current relations.

 

EP relies on the rationality of its business customers.  But since its products are intended to a pool of “middlemen” who are also interested in the high-end market, the relationship is maintained due to convergence of profit and strategic goals.  Through this relationship, EP is able to resolve convenience and speed issues and transfer the marketing responsibility to business customers because the latter is the final accountable person face-to-face with the end-consumer.  If any, EP attaches its reputation and future consideration as a supplier in the freshness, taste quality and differentiation of its products.  Also, over the past ten years, growth in health awareness grew ( 2006) which implies that EP should be able to prioritize and communicate that its traditional and reputation-based production are considerably healthy.

 

International Marketing, US Experience and Initial Market Criteria

            When going outside the national borders, EP is confronted with numerous barriers as well as motivations.  Why go out, one may ask?  This question can be answered by simply mentioning maximizing returns from local specialization and broadening market base.  According to  (2004), it is better for a country to specialize on a limited number of trades to cut costs from large scale production (pp. 4-5).  Research and development will be optimal to that country while other countries develop their own flag specialization.  However, products that are produced internally are unlikely to achieve its profit and growth goals within the same borders especially in the long-term.  As a general rule, the less scarce an object is the less value it carries.  With this respect, globalization is a necessary trend, if not, a way of life.

 

According to 1996 figures, world trade in manufactured food products accounted for 67% share of the aggregate (cited in 1998 p. 12) while 80% of the shipments were concentrated within the operations of twenty four countries (p. 13).  As UK is one of the top global players (p. 13), its trade reputation is already matured as of today.  This gives EP national support as incentive for outside trade especially when it has the organizational capability proved by its Scotland operations.  Outside market, however, should also be an active global player.  This will be imposed as a prerequisite in the initial country selection to grant partial success criteria generally.  Also called as the “more active the better” rule, the international presence of a country to be selected is a ready basis regarding the significance of market factors to EP objectives.

 

            To illustrate, the United States (US) was the first cross border distribution channel of EP products because the country passes the rule.  It is one of the largest world exporter as well as importer of variety of products.  As observed, a developed economy like US (to some extent) is limited in internal production capability to satisfy the needs of its booming population.  On the other hand, many countries in the European Union (EU) including Japan have problems with an ageing population coupled by low fertility rates ().  EP is operating within these factors and ended exploiting the relatively high income margin, high population and specialization constraints in US as well as mitigating potential saturation of market base in the UK.

 

Up to this point, we have already found some significant hints for cross border success.  First, market determination and analysis is relatively simple with regards to EP situation as it only targets the high-end market.  Second, the behavior of end-consumers is reflective to the decisions of food retailers and food outlets.  Third, the target country should be a global player because it usually has population and income relevance.  Using these initial findings, we will be able to select a country within EU.  With respect to the third finding, France is a suitable country for market evaluation.  In 1994, the country had the largest share of food exports (p. 14).  However, as its world ranking in growth competitiveness in the global trade declined from 27th in 2004 to 30th in 2005 ( 2006), this 1994 record would also be adversely affected.

 

In the contrary, the motivation should stand still because France ranked 10th in the world in areas of business competitiveness, company operations/ strategy and quality of national business environment that is written in the same report.  This can provide a suitable market environment for EP as the intensive competitiveness in the country drives people towards the willingness to pay the premium to get best quality.  In addition, UK and France are adjacent countries wherein there is a significant role played by Channel Tunnel in connecting their commerce ().  Further, both are members of EU which opens their commercial doors towards regionalization.  However, these country specific and two-way commerce incentives, although proved to be a good benchmark, needs to be rationalized through focus analysis of the French market.

           

The French Market: A Constructive Evaluation

SWOT Analysis

These statements are partial forecasts regarding the potential and disincentive of EP in the French market.  With minimal knowledge to the nature of EP operations, Scotland agricultural endowments, UK market and French market, such statements can also be misleading.  In addition, SWOT inability to perfectly classify strengths to weaknesses and opportunities to threats ( 2006) make this section a mere “eye-opener” to the vital characteristics of the firm and its target market.  The statements will be discussed more profoundly in the following sections until we come-up with rationalized conclusions.

 

Strengths

  • Raw materials and production is done in the same location (in Edinburgh) saving transportation, inventory and delay costs on top of the absence of cost of foreign direct investment (FDI) and production technique leakage.
  • Operational efficiency and capacity are embedded within the 22-year old learning curve of EP and the skill/ experience/ pride of local workers.
  • Preserved products can be shipped across the globe in an extended time frame which can provide the platform to complete EP warehouse-to middlemen-to end user cycle without loosing taste quality.
  • Financial sources and support are bountiful as Edinburgh is a financial hub prominent in Europe
  • Exclusive contacts, thus undermining competition from the at least 39 Scottish exporters of related EP products ( 2006), are likely since EP produces only the highest quality.

 

 

Weaknesses

  • Quality and diversity strategies would be a costly engagement if failed.
  • There are limited agro-products in Scotland that may not satisfy French market.
  • Scottish company image, culture, structure and staffs would serve as detachment to French consumer behavior.
  • Limited exposure of the experience curve in international trade particularly with EU nations.
  • Pressure on transportation costs demands pressure on pricing.
  • Absence of market presence and brand awareness.
  • Inability to protect from product imitation as EP will negotiate merely to middlemen without strong footing in the French market.

 

Opportunities

  • Using analogy, EP has derived the reputation of Scotland in preserved products and can use this to increase its value to foreign customers.
  • Advance infrastructure of both countries can address transportation issues and solidify exportation without FDI.
  • High rate of foreigners in France can bring numerous market expansion prospects.
  • Trade partnership between two countries is assured due to EU contracts

 

 

Threats

  • French locals can generate public disaffection due to foreignness
  • High volume of foreigners can provide abundant impressions to EP products that can lead to problematic brand development
  • France is surrounded by a balanced combination of bodies of land and water which suggests that competition from different countries is likely.
  • Business attractiveness and market opportunities magnets only competitive products and drive-out the otherwise.

 

PESTEL Analysis

Looking on PESTEL, it is to note that each factor is not substantially relevant to the marketing transfer initiated by EP.  However, by explaining perceived critical elements of the factors on EP outcome/ success, we can derive vital issues to be used in the latter sections.  On the fore, our basic analysis pattern is an inverted pyramid which starts from the general view of French market down to specific and more important attributes/ findings.  In doing so, we can gain in-depth understanding of the French market that can simplify implications on EP marketing feats.  EP should be assumed as conservative risk-taking company.

 

Political Factors

France aims for a strong president ( 2004) that makes the country under uniform and centralized administration.  The potential of Communism and its “shocks” on the incumbent republic-socialist governance can be undermined with regards to foreign products since there are several public servants in France who guards the quality of public service.  It is within the idea that foreign products can be entertained if the local produced failed to address public expectations.  In addition, as a large number of civil servants graduated in the same school, the Ecole Nationale d’Admistration ( 2006).  In effect, there is a considerable meeting of ideals regarding French governance.  The government is stable and no risk of military invasion.  As a result, priorities on social projects will be in continuum (at least for 7-year presidential term) giving foreign products time to embed operations before leadership turnover.

 

Strikes are French tradition but they are mostly intended to state-owned companies in the area of transportation, utilities and health ( 2006).  In the contrary, there is no real threat regarding strikes to foreign companies or products.  Exporters indirectly benefit from minimal strength of labor unions as their members are defined as uncooperative while the union itself is weak and inefficient (2006).  This tends to be Indirect because the strength of an imported product that could result to downsizing of local producers is with lesser counter-effects to impede exports.  Further, as UK is a main customer of France ( 2004) not to mention their EU ties and geographical distance, open trading between the two countries is very feasible.

 

 

Economic Factors

According to  (2004), state ownership had decline over the past twenty years.  If any, government remains in control of public utilities rather food products.  This avoids EP under state oversight that makes its entrance entirely within commercial competition with other companies.  Today, France is the world’s second largest of services and farm products and fourth as largest exporter of durable goods.  Even though this confirms the “more active the better” rule, the large role of agriculture in French economy ( 2004) connotes that it has comparative advantage in the food industry.  Since EP products are mostly preserved, the abundance of French agriculture would undermine its convenience, speed, quality and diversity in favor of natural (rather than preserved) foods.

 

France is a country that adopts Euro ().  As EP would base its French profits on euro currency, it is shielded from exchange rate fluctuations due to French specific economic modifications rather regional condition with other euro-countries.  This makes French exchange rate relatively stable.  EP will also avoid transaction costs from risk hedging and market research to forecasts currency trends.  Although UK does not adopt euro and seemingly unlikely in the future (), there is big advantage derivable when EP has peace in mind that isolated French happenings would not have drastic effect on euro.  It can focus its strategy on day-to-day operations with less priority on “developments” aside from regional issues.  Financial markets are said to be deeper, more liquid and more flexible under euro currency wherein their efficiency can result from competition of actors to provide/ get available financial products ().

 

France collects one of the highest taxes in Europe which is at 50% of its GDP (2006) from its working citizens.  Although intended for income equality and intensify social services, this results to high unemployment at 10% and above Euro-zone budget deficit.  With these, EP faces a likely de-motivated high-end market that currently facing levies on their worldwide assets like properties, vehicles, debt receivables, furniture, jewelries, shares, bonds, redemption value of life insurance, even horses ( 2006).  In the contrary, the country has high cost of labor that can offset excessive tax burden but this is partially defeated by a 35-hour work week ( 2006).  In effect, EP can exploit the busy hours of the market with its on-the-go products.

 

Goods move freely within the EU and imported goods are not taxed until such goods are bound for final consumption (, 2005).  EP products will not only retain its price competitiveness to French middlemen but can also obtain efficient distribution links within EU.  This can be the situation when EP plans to expand operations wherein excess supply in one EU country can be diverted to another (like France) without accumulating mark-up due to levies and duties.  At present, being an EU member, UK makes EP products exempted from rigid French Custom inspection and deterrence of plants and vegetables detrimental to the country.

Social Factors

In France people differ from one another depending on a regional classification which is a proof that the country is culturally diverse.  However, Parisians represented several typical French features like being rude, aggressive, scornful and arrogant ( 2006).  There is also the presence of 6 million public servants who adheres to the quality of life and quality of government services.  French are largely known as arrogant race inflamed by their world accomplishments in numerous fields.  This can imply that foreign products should be value-oriented as French would likely consider this than cheap products.  Considerably, differentiation strategy would be more suitable to fit under these conditions than cost-based strategy.  Arrogance can intensify in the high-income bracket making the product of EP more relevant to French behavior and national image.

 

There are three social classes in France (): namely, highest (high-level politicians, wealthy families and powerful business owners), middle (senior executives that have high to stable incomes) and lower class (blue collar jobs in food service or retail).  EP products target the initial two, although there is to some extent, relevance of the lower class to the nature of business of EP.  Today, several numbers in the lower class transfers to civil service sector () which can imply two things: that they are finding ways to compare their way of life with the higher classes or a method to preserve worth in the society.  In the end, arrogant behavior holds and subsequently converges to EP’s nature of market, that is, willing and able to express social status or social ideals despite monetary and status quo constraints.

 

Developed in France, conventions theory concedes deficiencies of commodities under incomplete contracts that should be guided by rules, norms and conventions to production and exchange to mitigate adverse effects (cited in  2000).  Coupled with EU policies for quality and safe food products, the country is to be considered as a very health conscious people.  Its world ranking demand for agricultural machineries and supply in food exports show how globalization is impeded on the basis of “local touch” of consumable/ perishable goods.  In this view, EP products are undermined by the natural characteristics and abundance of farm produce in the target country.  The greatest challenge for EP, if not Scotland or UK, is to adhere to French conventions as well as that of EU and prove that its products are not only high in quality, but more importantly, sufficiently complies with local and regional food export requirements.  US may not have the same standards as France due to uneven quality categories across space (cited in  2000).

 

Technological Factors

France is a primary exporter of machinery, equipment and chemicals ( 2006) which is an advantage of its agricultural sector.  As the labor force is less than 5% working in agriculture, it is likely to use technology-intensive ways to increase output.  With conventions in place for local producers to follow, these technological improvements in agriculture are proven to pass safety and quality requirements.  This resulted to its subsequent key role in exporting farm products not only in global scale but within the strict rules imposed by itself and EU.  On the other hand, EP operations rely on traditional way of preserving fruits and vegetables.  This can undermine the dominance of France agriculture as it is applied with technological breakthroughs.  However, recipe is unadjusted to France whereas the method of cultivation of inputs is unknown to the French market/ authorities which can have adverse features on local conventions.

 

Further, EP products are marketed internationally through e-commerce particularly in .  France has online shoppers who research purchases online and half of internet users made purchases online ( 2006).  Together with Germany and UK, the country has one of the largest e-commerce markets in EU ( 2006).  As the probability of the high-end market having internet connection and use online purchases for convenience exceeds compared to average French, internet could be considered crucial to EP.  However, taking into account that their products are preserved food/ condiments, French conventions would hardly relate technological convenience with online purchases.  According to  (2005), the French e-market is centered to the demand of clothing, accessories, shoes and video games. As observed, there is more in food industry that even the benefits of fast, safe and informative technology cannot suffice which is largely a sign of French (and others) conservatism on food purchases.

Environmental Factors

The French government is encouraging environmentally sustainable growth ( 2001).  But since EP will not use FDI in mainland France, the engagement diminishes the importance of ecological issues.  However, EP particularly and Scotland generally should maintain their image of sustainable development.  Such entails refusal to indulge trade-off between export earnings and land poisoning as this can be a departure to the French food conventions.  At present, Scotland with the help of several key sectors is working towards the promotion of organic farming reflected by the creation of plans, reports and schemes to achieve the demand of organic products from Scottish land (, 2006).  By integrating this fact to the traditional processes employed by EP in production, it is likely that it can comply with French conventions.  However, limited technological application to farm processes can result to inefficiency in land and resource use, size and quality as well as operating within human limitations.  EP, in the contrary, is not focused on mass production and economies of scale rather value strategy as it concentrates to minimal but value-motivated buyers.

 

Legal Factors

Tougher legal constraints face non-EU countries as in the case of Indian exporters’ consignment difficulties with rigid and laborious French requirements on maritime products (, 2006).  However, as stated earlier, EP is within EU which gives it some preferential (implicit) rights against other countries.  With this thinking, producers from countries using euro overtakes EP advantage on legal relaxation.  Due to this, there is a need for a more objective basis.  In 2001, France was a major advocate in refusing to lift export ban on cattle and its associated products coming from the UK ( 2001).  This is historical evidence that France really protects its food conventions despite trade relations and EU ties with the UK.  In this press release, it even demanded that the ban should include both EU and non-EU countries for global protection.  The inability of UK exporters to present a complete set of community rules on traceability and labeling was the major basis of French decision.

 

In view of this, the earlier identified derived benefits of EP from EU, neighboring location and organic farming should continuously adopt to French standards.  Local conventions in the target country are very rigid and evolving.  Due to this, first mover advantage is directed to local producers including political support to achieve the conventions.  As EP environment lags behind the agro-prominence of France as well as its technological developments, catching up with local standards would be costly and risky engagement.  Food trade policies serve as shield of local producers against foreign products.  As a result, 93% of French food producing companies is small- to medium-scale producers (, 2006).  Aside from disproving that large global companies are more successful, this implies the dynamism of legal constraints in which formal and inflexible players could not resist unlike cultural orientation and structural strategy of local firms.

Analysis of the Five Forces of Competition

Although PESTEL provide us with a clearer picture of the French market and “frame” our cross-border concerns in simpler terms, we have yet to consider factors that have direct effect to EP’s strategic competitiveness and capability to earn above average returns ( 2003 p. 55).  In this section, we will tackle the attributes and implications of potential and current competitors, their suppliers, their distributors, their customers and other value chain partners.  We will derive our discussion from the industry of French specialty-preserved foods/ condiments.  The mind-set is that EP has already entered and operating in the French market.  The question then is “how long can it enjoy business and financial benefits from the engagement?”

 

Threat of New Entrants

The industry creates moderate to high barriers to entry.  Economies of scale are not a significant barrier for both aspiring local and foreign players where mass production on food could even trigger perception in loss of quality.  If any, an aspirant is required to provide a diverse line of products with unique qualities.  In doing so, capital requirements could be high especially on foreign players since they can be restricted entry due to conventions in which local alliance is necessary.  Transaction costs and relationship maintenance added on the cost burden.  Switching costs to middlemen is seasonal depending on the agricultural situation in France and EU trade.  If the country and EU do not have enough supply of the required agro-input, switching cost is less costly otherwise middlemen may put their supplier relationship and benefits of such at stake leading to high switching cost.

 

Aspirants’ access to middlemen is restricted by the latter relationship to current suppliers (for gourmet outlets) and quality controls (for retail stores).  In effect, the former should prove that its products as well as contracts are better-off than the current suppliers.  Cost advantages independent of scale are high for current players especially in the industry where distinct operational and branding attributes contribute to middlemen success.  In addition, France has comparative advantage in the industry that intensifies such advantages with political and financial support to local producers (like French conventions and subsidy).  At present, however, government is moving towards free-market structure that minimizes the shield of local producers to foreign competition.  In the contrary, expected retaliation from the latter is high. The country is a world player in agro-products and this would not be attained if people are not “ingrained” into the industry.  But aspirants could prevent this adverse reaction when they use niche marketing (like EP targeting the high-end market).

 

Bargaining Power of Suppliers

The industry has also moderate to high bargaining power of suppliers.  As cited, the French agriculture is dominated by small businessmen making it easy for middlemen to replace overly distorted contracts from suppliers.  Supplier’s power increase when the relationship lasts for a considerable time that the operations of middlemen are adjusted to supplier’s contracts.  The industry, aside from local agro-abundance, receives almost the same level of imports making numerous available product substitutes.  However, the power is redeemed when local producers is able to capitalize the importance of natural/ localized foods in terms of freshness, safety and palatability to middlemen and end-users.  To highlight this importance, (2006) reported that French activists tore hectares of genetically modified corn in southwestern France.  This connotes the continuing drive of active groups (thus, supporting the power of local suppliers) to retain traditional way of plant growing.

 

The fact that the country is known for conducting frequent strikes not only result to supplier importance but also result to high switching costs for middlemen.  The psychic costs as well as loss of customers are likely in a country that has several public servants and high product conservatism.  Middlemen would likely sustain local producer relationships although subject to seasonal specific agro-abundance, changing UE and national policies, and quality of foreign products.  Finally, the threat of forward integration is likely due to increasing demand of natural foods in the country.  Further processing of inputs by local producers will not be conducted instead raw products will be readily sold.  The threat would then be countered by numerous industry players that cannot simply drop the contracts with business customers (the middlemen).

 

 

Bargaining Power of Buyers

Middlemen are significant to the industry players especially the latter is supplying products that have its intended use (customized) although this can be taken the other way around depending on the sector of where the former belong.  For gourmet and specialty outlets, the bargaining power of current buyers is high as their demand for the supplier’s products tends to be continuous especially when the outlet is a familiar destination for high-end markets and tourists.  On the other hand, the second biggest world retailer Carrefour derives almost 50% of its sales in the country (, 2006).  The firm competes for price and quality which forms a hybrid of cost-leadership and product differentiation strategy ( 2003, p. 135).  However, such attainment is difficult to sustain (p. 136).  In the long-run, such retailer would eventually defeat the purpose and appeal of specialty products due to the need of high differentiation (making the product more prone to shelf substitution) and price war (making the product lost its perceived value) in the retailer’s shelves.  In the contrary, middlemen in specialty groceries may resemble high bargaining of specialty restaurants.

 

Threat of Substitute Products

With soaring agricultural figures of the country, the industry is deeply threatened especially the market for preserved foods.  Middlemen can continuously outsource to local suppliers with raw (rather preserved) materials while end users increasingly demand for healthy products derived from French conventions would prefer naturally harvested foods.  In both cases, the threat for substitute products is high.  The threat eases during seasonal fluctuations and partly foreign visitor infiltration where differences in cultures and conventions make imported products within the specialty industry buyable.  These scenarios relieve root conventions and allow French market indulge to imports especially those that are branded.  Since the country does not report population by ethnicity ( 2005), it is suffice to acknowledge that it is highly multi-cultured with one fourth of population increase in 2005 came from immigration ().  This makes the product substitutes less of threat, however, national laws on imports must initially be bypassed otherwise conventions will hold footing and middlemen/ end-users will be barred on access and selection.

 

Intensity of Rivalry among Competitors

According  (2005), French trade on processed food and food complements including imports from non-EU countries continue to increase.  Numerous competitors make rivalry and the probability of retaliation higher.  Industry products both local and foreign (but so much with the latter) require proportionate increase in differentiation.  This induces each player to re-evaluate visible dimensions such as pricing, quality and innovation.  In general, the French specialty-preserved foods/ condiments belong to fast industry growth.  This is because food is a basic and daily need.  With diminishing share of agricultural sector as a country reaches its industrial and post-industrial development, the preceding statement becomes substantial.  There is also minimal pressure for competitors to sell their products on bargain prices in view of the pressure of in high fixed costs and storage costs.  Aside from value-orientation on selling and focus on high-end market, their competitiveness arise from organic aspects of their products that makes investments in machinery and warehouses unnecessary.  If any, research and development including preserving of national heritage on traditional ways of food preparation is the primary key.

 

Industry players have differentiated products because they tend to specialize and address specific needs.  They are not commodities preventing rivalry from raw producers.  They are branded and have premium quality.  However, using raw materials and converting them to highly differentiated processed foods should infuse organic requirements in the cultivation and harvest of raw materials themselves.  This is another evidence of French conventions.  In the same  2005, many French consumers favor organic farming because it has health and environmental merits.  As illustration, 2004 demand rose to 44% from the previous year level of 37%.  More importantly, the best selling organic products include harvests in fruits and vegetables.  However, there exists high strategic stakes among players because shelf spaces in retail stores are limited and the same as the number of restaurants (both catering high-end markets).  In relation to this, the players also have high exit barriers since their (farm-based/ traditional) assets are located in a single location away from the end-users, strategic relationships being maintained with their laborers as well as middlemen and emotional barriers from lost of pride due to business failure that runs counter with typical French arrogance.

Consumer Behavior

            In this section, the focus is on the French consumers themselves.  This is within the assumption that PESTEL and five forces are addressed to obtain operational rights and competitiveness.  The problem is beyond four C’s of consumers rather to resolve passing the French food quality conventions.  The high-end market is known to relate their status and tastes with the nature and pattern of their consumption and purchase decisions ( 2003).  In this regard, we can have simpler discussion and optimal understanding of their behavior if we frame this section on how they view quality conventions and put emphasis on each.

 

In France, Dell launched expensive but hi-tech PCs that ran counter with its cost-effectiveness scheme due to direct marketing (cited in  2005).  This is an evidence that the country has strong market base who value industrial conventions over commercial ones.  Such notion is likely to gain merit as Dell turns to the meticulous high-end market.  When it comes to food, the convenience of food products is more preferable than its price due to constraints in increasing work hours especially for senior executives.  The additional costs would then be derived from work earnings.  On the other hand, high-ranking politicians are too busy with their public responsibilities that suggest efficient and reliable products seen in industrial conventions.  In contrasts, as incidence of single household rises ( 2005), these two high-end market niches would have some emphasis on packaged foods.

Euro Monitor also pointed that there are only minimal consumers who give primary importance on the following food criteria: namely, health, environment and people who provided inputs.  In this respect, such portion (consistent with quality assumptions on this particular market) likely centered in the high-end market proving their emphasis on domestic, public and civic conventions.  In illustration, as organic farming unleashed its success in the French market, the past decade experienced a 300% increase in organic farmland and 500% increase in crops under organic cultivation in the country ( 2005).  In effect, local harvests and local processed foods are perfectly embedded with French conventions.  Undoubtedly that conventions theory derived its roots from France.  They have the ability and willingness to be an industrial nation endowed with rich and quality agricultural products.

 

Even though the country is said to be underdeveloped in organic farming (of course, it is one of the pioneer) which is cited in the same report, the mere information about its nature and social implications has automatically “shock” the high-end market.  Approximately, they have intrinsic characteristic to have “higher and backed arrogance”.  As a result, the tendency of their behavior to be affected by economic adversaries and decline in aggregate purchasing power is far to be likely, except, perhaps when the government continues or much intensifies to “milk” on their wealth from above world standard taxes.  In this respect, the slow down of 2005 supply in dairy and meal replacement as well as sweet and savory snacks ( 2005) makes importation acceptable to them.  Of course, this industrial convention should be coupled by other necessary conventions to increase their perceived value.

 

The busy lifestyle of French people increases their tendency to snack ( 2005).  This is coupled with decreasing time to prepare food estimated at a mere 20-minute routine every Sunday.  Industrial conventions again hold its emphasis that the market wanted quick and meal solutions found in convenience-based foods.  Thus, the form of packaging also is of great importance as contributory factor on convenience.  Further, French consumers move to balanced and healthy diet ( 2005).  In this respect, domestic conventions is the key since the market is looking for natural flavors, less sugar rather sweetening agents, reduced-fat, no preservatives and less colorings.  Natural and traditional way of processing foods becomes the source of health benefit claims.  Taste and functionality of packaged foods should be met if any product is to succeed against stricter criteria of the high-end market.

 

As explicit admission, French market considers premium products of being healthier (2005).  There are food scares in the country which undermines commercial for domestic and civic conventions.  The high-end market is exempted from the statement that “French consumers are more price sensitive than brand conscious” ( 2005).  Due to this, discounters that make French retailers obtain marketing success aside from product differentiation and strategic location can even receive adverse reactions from the rich segment.  This is where the rule of “(changes in) price defines (changes in) quality” applies.  In this respect, the segment is expecting that quality products be located in specialty shops.  Innovation common to known manufacturers is useful for the market in terms of improving industrial and public conventions of their products.  In contrast, too much innovation (especially product modification and phase-outing) can lead to high-end market disloyalty due to possible loss of perceived domestic, public and civic conventions (as innovation may involve inorganic processes, de-marketing and labor-downsizing regimes).

 

Marketing Plan for Edinburgh-Preserves French Operations                  

Purpose

This plan is produced to explain strategic ways to enter/ survive/ profit the French specialty-preserved foods/ condiments industry and to build market share from the French middlemen and end-users.  The information is prepared primarily as a guide for EP management to come-up with objective impressions, and subsequently, rational decisions regarding French market penetration.  However, for subsidy and support needs, UK government can also have access to this information.

 

Mission Statement

EP is in the UK and US specialty-preserved foods/ condiments industry because it is a known brand in Scotland deriving local resources and traditional methods and uses these as competitive advantage.  The market is the high-end bracket of middlemen and end-users that are offered with premium products which are highly differentiated, processed and delivered with value orientation and aspires to address diverse conventions.  It is to be known as a global product particularly proving this by penetrating the EU market.  In doing so, it will prove that it can achieve a global status based on its competency by abiding the various national food quality conventions (initially in France).  This is supported by a philosophy to continuously utilize Scottish endowments to improve business as well as adhere for sustainable development and world image of the locality.  Highlighted products include several ranges of preserves and chutneys.

 

Product Analysis

According to several online-based middlemen (like Amazon), EP products have no artificial preservatives.  They are also covered indigenously and bottled in export-quality jars.  The content comes from the 75% share of agricultural land in Scotland ( 2006) that can readily imply expertise and traditions in preparation.  Pricing is not the focus of EP.  This gives middlemen the role of tagging price that result to a positive net but the “invisible hand” requires them to couple their pricing independence with value-added services like delivery or return and exchange policies.  As stated, middlemen are present in both virtual and real setting.  The former type is compatible with convenience needs of the high-end users while the latter address the need of some meticulous end-buyers who prefer actual observation/ handling which is experienced in retail stores.  In specialty food outlets, they can even readily taste the product as long as the EP brand is indicated and known as cuisine input, therefore, being recognized.  The firm is not directly involve in promotions and services (as it is value-oriented) rather the middlemen.

 

Target Markets

Target market selection is applied with segmentation technique.  The French market is segmented primarily by income, occupation, lifestyle and attitudes all of which converge to high-end consumers and specialty-oriented middlemen.  This market is learned to have needs largely based on (according to rank) domestic, public, industrial, civic and commercial conventions.  They will use EP products due to these needs because EP has value-orientation and less concern with pricing.  Approximate period in which middlemen will try/ use the product commences after certification from French food authorities while end-users can access/ taste them after the initial positive impression/ evaluation of middlemen which means EP products are suitable with their image and even provide additional business differentiation.  Its positioning revolves around its Scottish origin and value strategy apart from local competitors, raw substitutes and mass-produced ones.  EP products will receive considerable amount of research and fact-finding from the target market.  Failure to satisfy expected level of convention resolution will result to abrupt exclusion from food alternatives, if not, faces complete demise of the product’s brand name.

 

End-users will select from a pool of comparative products the same EP on the basis on each capability to address a set of French conventions discussed under consumer behavior section.  The more conventions being adhered, the larger the chance of being bought, however, such could be applied only on new products like EP.  This is because old products tend to create customer loyalty.  New products need to be aggressive in informing the market regarding its intrinsic attributes including certifications from French authorities.  The information should be relevant in addressing local conventions.  Applicable to retail buyers, the timeline for actual purchase is extended due to food scares and partly requires peer or professional motivation.  Since end-users are too busy, however, house helpers are likely to shop for them.  On the contrary, they directly purchase the product (unconsciously except when condiments/ sauces are explicit) in specialty food outlets.

 

Approximating number of the target market can be done by summing probable buyers of the product based on wealth and income.  According to  (2004), 50 year-old individuals in the country (which is 1/3 of the population) earn 45% of net domestic income and 50% of population’s net assets while spending billions of billions of euros in products/ services.  In a research of  (2001), 25% of total household consumption in France accounted for the richest 10% spending.  However, share of food in household expenditure continued to shrink in a half-century perspective rather on housing and transportation ( 2002).  With this, the local market comprises a potential 19 million buyers (population of 50-year old seniors multiplied by 60 million French populations).  Tourists are excluded from this estimate because of their diversity (in culture, income, wealth and religion) and their likely focused on French products rather Scottish.

 

Distributor Network

The channel to be employed is indirect via distributor through exportation.  In this way, EP can save management and other fixed costs in FDI, maximize product potential and minimize research costs since these tasks are transferred to middlemen.  For specialty retail stores, EP products will be displayed in their shelves to increase product diversification and international image.  For specialty food outlets, they will be used as ingredient to enhance main cuisine taste, presentation and image.  The importance of the product to the latter is more crucial to strategy than the former since EP products has the threat to obliterate the outlet image if customer taste/ perception is not met by its introduction while retail stores can simply cut the relationship when adversities arise (strikes, customer indifference) as they have higher bargaining power.  In terms of competitiveness, the reliance of the outlet to EP is crucial to its success while retailers are not.  Due to this, outlet (French) owners are more hesitant to deal with EP especially when the firm cannot support its strategy and competitiveness during pre-taste and pre-trial to dining customers.  Their decision to purchase the product can be motivated when UK/ Scottish tourists are their key/ major customers.  Specialty retail stores can be a European/ global player or specialty shops for UK-based products serving middle- to high-end market while specialty food outlets would tend to be a local business but with the same markets (due to nearness of UK and France).

 

Competitors

Exporting players (especially those within EU) also have the same market as EP although with slight variations especially on the nationality (Irish, German, and Third World Counties).  Near competitors (carrying raw substitutes) are commodities targets even low-end of the market.  The former products is ”localized” and processed in their own country endowments which can mean that its advantages as well as disadvantages is the same as EP (although EP has the upper hand with Third World Countries).  The promotion of local processors is more intensive because they are with direct communication with their distributors and they can even create forward operations.  Due to this, the power of buyers especially distributors is  undermined while they can conduct relationship marketing to increase product features targeting the current needs of the market.  Local competitors tend to have financial support higher than exporters as the government and their managers can easily observe and evaluate their success.  Their R&D is also optimal as it can readily infuse observations from the market unlike EP in which distributors’ communication is crucial that is subject to personal and contract conflicts.  Lastly, local competitors are “ingrained” and more trusted by the market.

 

Financial Matters

According to  (2005), sales of canned/ preserved food will grow 2% annually emphasizing the key role of premium brands.  In 2005, it was estimated that it will reach at least EUR 3.6 billion in France alone.  This value will be the benchmark of EP sales (converted to British pounds).  Most of the products of EP (on Amazon) are priced at approximately EUR 5 per item.  Since there is limited data regarding EP previous sales performance, estimation should be derived.  Undermining 11.6 million UK visitors in France in 2004 ( 2005) and other French age a groups, the 19 million senior 50-year olds (purchasing at least once a year for the initial year) as target market should result to initial gross sales of EUR 95 million (distributor’s figures).  There is a need to deduct transportation, distributor discounts and other costs for EP to determine its own gross sales.  This value represents 2.6% of the total canned/ preserved foods in the French industry.  If successful, EP should reach this overall distributor’s market share.

 

Marketing Strategy

Using the market growth and market stability strategies (see slide presentation), financial and marketing objectives can be attained.  Distributor’s sales should be EUR 95 million for the entry year capturing 2.6% of the industry market.  This will be the universal barometer to derive the strength of the EP products according to demand of middlemen and end-users in order for the firm to react for succeeding steps.  The firm will have no direct relationship with end-users making marketing task practically on middlemen’s shoulders.  EP is only after the creation of marketing programs aimed at these middlemen.  As stated in the earlier parts of the paper, performance and actions of middlemen are best evidence of end-user satisfaction.

 

Tactical Marketing Programs

Pre-middlemen transactions will necessitate EP to coordinate to French authorities regarding the requirements in food quality particularly the organic farming requirements.  During this period, the focus of EP is on addressing the basic French legal provisions and other conventions regarding imports.  This could lead to several submissions of product samples, business data, Scottish/ British certifications and even personal visits of French authorities in EP farms and production sites.  After resolving this including business/ product adjustments, contacting possible middlemen open for import relationships (basically large and specialty retailers and specialty food outlets).  With the initial number of interested middlemen, EP can formulate its B2B marketing strategies.

 

EP will build partnership with the evaluated and chosen middlemen.  The approach, however, is different depending on the sector.  If it is a retailer, there is no need of rigorous communication regarding the long-term strategy of the retailer as this would be impractical.  EP will maintain the relationship through on time deliveries, defective product replacement, fair payment schemes and monitoring of possible “dumping” of products that can disarray retailer’s strategies.  On the part of specialty food outlets, the relationship is very close.  This is because taste is crucial to the business of restaurants and other gourmet/ fine outlets.  EP will adjust to the preference of the outlet base on the reaction of the end-users.  Close coordination and frequent visits of EP management to French branches would be possible.

 

In this view, EP will create two types of networks in France: namely, vertical market and opportunity networks.  The former will reflect the preceding relationships (except perhaps suppliers since the raw materials will be derived in Scotland) while the latter suggests for the probable high-tech French firms who can improve the agricultural process of EP (since France is known for agro-technology).  Horizontal networks is unlikely due to localized production of EP products, however, the door is not close for prospected Scottish food importers.

 

With regards to product, no product expansion/ contraction will be made, at best, in the initial year because continuous product differentiation will follow this French market penetration.  Packaging will be the same jars and traditional way of covering.  This can suggest environmental responsibility and can add civic conventions.  On the other hand, labeling and branding should be adopted in French language to address public, commercial and few aspects of domestic conventions.  This automatically customized the products to French citizens and French-speaking tourists.  Certification from French authorities including organic logos and “free from preservations” captions will be all highlighted in the packaging.  Nutritional content will be adjusted to dietary needs of the French market.  In aggregate, the content of the product is made with all Scottish touch and ingredients.  This may sound unprofitable but it is to note that French cuisine the most famous cooking style in Europe that each country of the continent had adapted to French taste ().  In addition, EP products are merely food enhancers.

 

EP will adhere to highest standard of Scottish food to be able to address French food conventions.  The range of spicy, sweet, sour, bitter and other tastes of the EP products will surely target specific middlemen.  The priority of middlemen search is on British/ Scottish specialty food outlets and retail stores to maximize end-user base approximated earlier.  Information about them will be derived from local authorities in whom EP intends to conduct middlemen research.  When successful middlemen are considered, they will undergo paid visit to EP farm and even have UK tour (all expense paid).  Necessary information regarding the product will also be handed to them for guidance.  A contract will be signed regarding the do’s and dont’s of middlemen in a bargain setting in which the latter can give their opinions.  After signing the contract, pre-export requirements should be prepared.

 

The trains from Channel Tunnel will be used as transportation means.  Afterwards, the freight service firm will deliver the products into the warehouse of middlemen.  Payment will be made by EP with regards to shipping as middlemen incentive although on a quarterly basis (depending on the turnover).  As the common shelf life of naturally preserved foods is 12 months ( 2006), middlemen should be compensated for inventory costs.  The relationship revolves around trust above financial gains. In doing so, EP will aspire to obtain long-lasting relationship than emphasize on short-term revenues.  An information technology platform will be connected to each middlemen’s database to form an EP network that can show the total sales of EP in real-time manner.  Communication will be done through the use of internet.  Market coverage is within restricted availability approach.  Locations can be classified as UK populated area and French High-end market.

 

Conclusion       

The paper ends to be research-oriented while the marketing plan is general in approach.  This is because our presentation highly revolves on the initial market entry of EP to the French market.  If we become too detailed, we may waste our time from a too risk-averse forecast and plan.  In addition, marketing actions of EP are simpler since they do not intend to deal with end-users rather selected middlemen (those who can adhere to the partnership).  After the initial year, we may perform other marketing strategies to rationalize our findings in this paper.

 

On top, our constructive analysis of the French market had given use a more “taught” SWOT which is enumerated earlier.  That transportation issues are not that vital to initial market entry rather middlemen impression/ relationship building.  In addition, although EU membership proves to be useful, French conventions on quality are the primary key to pass the political as well as social barriers in the country.  Local producers are “embedded” in the industry where EP products are poised providing high barriers to enter in the market (a negative feature for EP during pre-operation but advantage after entrance).  Foreigners are also doubted to be a significant portion of EP sales due to their “French excitements” when they arrived in the country.  Lastly, the foremost “passport” of EP to enter the French market is to resolve as many conventions as possible.  In effect, its core strength is the agricultural abundance of Scotland and traditional way of production and process expertise.

 

The determination of this rationalized SWOT is made possible by rigorous discussion on PESTEL, five forces, consumer behavior and marketing plan.  The inverted pyramid adapted earlier proved to be useful, however, blemished.  This is because we failed to obtain the lowest part of the pyramid as we lack numerical figures and further analysis of the high-end market.  In the contrary, stopping in the specific portion of the pyramid is said to be useful to avoid unrealistic risk from occurring which can defeat the rationale behind growth strategies.  Suffice to know that we establish the powerful role being played to the planned growth strategies of EP by French arrogance identity and agricultural superiority (social and economic factors, PESTEL), the unattractiveness of French specialty preserved/ condiments industry and position of middlemen as reliable hedgers (discussed in Five Forces), and the importance of addressing French conventions as a measure of high-end market purchase decisions particularly on (imported) food products (discussed under Consumer Behavior).

 

Ultimately, using these constructive findings, we have arrived to one final conclusion that EP should resort to market development strategy.  Although the marketing plan does not show the step-by-step process, it is a practical move since EP is only responsible to middlemen which are far too simple than end-users.  There is also focus on the initial entry year which does not mean that there is yet to create a real “strategy” (long-range planning) rather a strategy which only assures the survival of EP products when it is deployed in the French market.  Too much scenario planning is unhelpful for EP.  We come-up with lengthy market research and this would be enough to say that our products will appeal to French high-end market.