Weet-Bix Market Entry Essay
Weet-Bix Market Entry
This report is a market entry report that focuses on Sanitarum’s Weet-Bix entering the Indian cereal market. As Sanitarum is a leading brand, and Weet-Bix is a key product, and popular within Australia, Sanitarum thought it could expand the company internationally. Sanitarum has chosen India to market Weet-Bix, with the hope Weet-Bix are successful, they can introduce other Sanitarum products to the Indian market. This report outlines how Sanitarum will be able to introduce Weet-Bix to the Indian breakfast cereal market, and how the product will be marketed in India.
Company Background Sanitarium is an Australian food company that was founded in Melbourne in 1898 (Sanitarium , 2013). The company’s focus is the health and wellbeing of its consumers, and focuses on providing health conscious food to Australians. The company vision is ‘to lead, inspire and resource the genuine experience of happy, healthy living in our community. ” (Sanitarium, 2013), which is supported by the companies values, which include ‘care, courage, humility, intergrity and passion’ (Sanitarium, 2013).
Sanitarium offers a range of products from cereals, spreads, milks to vegetarian foods, as well as helping a various range of charities, in which makes them a market leader in various food markets around Australia Country + Market Attractiveness Political and Legal Environment There are a number of political factors that will affect the introduction of Weetbix to India. Trade safeguards put in place by the government to protect the local industry have continuously restricted the entry of new products into the local market.
In August 2013, the Indian government passed a food bill created as a food procurement & distribution system, which provides subsidised rice and wheat to the poor. This is done through the government purchasing local stock, thus, providing local farmers with financial incentives for production. While this will supply the poor with cheap food, the food bill has a potential to cause overproduction of rice & wheat and subsequent food inflation. A main concern regarding the distribution of Weetbix in India is that price of government-provided local foods will be substantially less than the price of imported Weetbix.
This might be enough to deter locals from purchasing Weetbix instead of a cheaper, local alternative. Economic Environment The Indian economy is one of the fastest growing economies in the world. Possessing the third largest purchasing power, India was ranked the 10th-largest importer of goods in 2013 (TimesofIndia, 2013). The agricultural development of recent years accounts for 60% of the nation’s total employment. As such, India is the 2nd largest producer of agricultural goods such as rice & wheat in the world.
The large scale of this sector is illustrated in an average yield of 2,938kg of Wheat per hectare; a main ingredient in the production of Weetbix. With this in mind, we can be certain that the introduction of Weetbix will have market stability and ensure a creation of jobs if the product is able to be locally produced instead of imported. In addition, India has experienced an increase in Gross Domestic Product (GDP) of 2. 3% in 1951 to 6. 5% in 2012 (TimesofIndia, 2013).
This explosion in economic power has provided the government with enough spending power to expand the food bill mentioned in the Political environment analysis from 200 million people to 800 million people. Environmental Environment Home to 1. 237 billion people (Tradingeconmics. com, 2013), India faces a number of environmental issues caused by the sheer overpopulation in its cities. Noise, water and air pollution are major problems plaguing the nation and are caused by lack of sanitation and inefficient garbage removal services.
Solid waste and rubbish are dumped on the streets and are often burnt, resulting in a layer of thick haze coating the larger cities. In 2000, the Indian Supreme Court ordered cities to create waste management programs but the directions were disregarded. However, in 2011, a group of Indian cities decided to employ the use of “waste-to-energy” projects designed to utilise waste for energy production (Nzte. govt. nz. 2013). Due to the lack of effective drainage, there are often flash floods which cause soil erosion and the contamination of clean drinking water through mixing untreated sewerage and clean water.
In September 2013, government statistics show that 22 out of 32 major Indian Cities are facing a severe water shortage (Nzte. govt. nz. 2013). Social + Cultural Environment India is rapidly going through significant demographic and socioeconomic shifts where the customer base is changing because of social trends. According to the Western Australian Trade office, 2012, 56% of the population is under 25 years of age and only 13% are above 50. The population continues to grow with the working population between 16 – 25 years of age.
The affluent urban population will be largely concentrated in Southern and Western India in the States of Tamil Nadu, Karnataka, Andhra Pradesh, Kerala, Goa, Gujarat and Mahrashtra. Satellite towns around Delhi city have also developed due to land saturation in the federal capital. These satellite towns include Noida, Gurgaon and Jaipur that are well connected with Delhi. These are the major states we will aim at distributing our product to. Relationships in India have a clear – cut hierarchy that they stick to in order for the social order to be maintained.
For example people typically define themselves by groups they belong to as part of their family beliefs and values. This stems from the strong relationship Indians have with there families. The operative social values in India could be broadly classified into (a) preference for hierarchy; (b) embeddedness; (c) personalized rather than contractual relationship; (d) harmony (agreeing) rather than confrontation; and (e) duty and obligation rather than self-indulgence.
A five-nation study suggested that unlike other nations, leaders in India give more preference to society values rather than economic values. This shows that rather than going for rules and regulations, Indian leaders prefer to give importance to relationships and needs of specific followers. Technological Today India is a big market in mobile section with 5-6 player operators and new services launching soon. India is equipped with 3g Technology including Tata DOCOMO “Tata Docomo has also become the first Indian private operator to launch 3G services in India” Docomo, 2013.
This is important for innovation and access to online social media forums, which will allow for digital marketing and advertising. Market Audit: The Market Audit Will Cover: Product Perception Market Size Buying Habits Distribution + Transportation Channels Common Promotional Mechanisms Customary Pricing Arrangements Product Perception The likely perception of Weet-Bix in India can be seen as positive, as shown by: Seen as a health conscious food, which can draw consumers to the product Quality Australian Product Value for money
Quick and easy to make for busy people Weet-Bix has been seen to advertise with Australian cricketers, which could be seen as a positive perception to the Indian people, as cricket is such a popular sport in India Market Size The market Sanitarium will be focusing on marketing Weet-Bix to, is the middle class consumer. The reason this class was chosen was because consumers are willing to try new products, as well being familiar with western brands and international products. The middle class is also and expanding market in which is currently made up of roughly 53.
3 million households, which translates into 267 million people (Bennett, 2013). (McVey, 2012) The above graph shows that the middle class (Yellow), is a class that is continually going to grow, and that was a main reason for marketing our product towards this class. Buying Habits As India is such a traditional country, it has been hard to change their perceptions of cereal, but with the help of major brands like Kellogg’s, they have been able to change the peoples perceptions, and assess the buying habits of the consumer.
From research it has shown that the buying behaviour of the middle class person in India, is simular to the everyday Australian. The buying habits of the middle class people of India include: Willing to try new products, as well as willing to spend a little more money on these new products When buying products they look for products that have health value and that are nutritional Shop are shopping complexes, but are also loyal to their local neighbourhood stores Are brand conscious Like products that are convenient and easy to prepare
That they shop on taste and flavours that suit their palettes. All these habits were concluded from surveys aimed at the target market completed by the Western Australia Government (WA Trade Office, 2012). Below are results taken from a survey of customers buying habits and what’s important to them: (Jain, S 2011) Distribution + Transportation Channels As Sanitarium Weetbix is an Australian made product and company, numerous channels will need to be used to introduce the product to India and its breakfast cereal market. The Channels Include: (WA Trade Office, 2012)
Each channel will play a vital role in ensuring Sanitarium Weetbix, is available to purchase within India. Each channel has to communicate with each other to ensure everything can run smoothly and successfully. The Timeframe of exporting to India (WA Trade Office, 2012) The timeframe of exporting to India may vary depending on transportation of goods across Indian states may take up to 10 days as of poor roads, traffic jams and toll ways (WA Trade Office, 2012). Common Promotional Mechanisms Promotional Mechanisms can be a way Sanitarium can drawn consumers into their products and pursue them to buy Weet-Bix.
Some promotional mechanisms that can help Sanitarium and be successful in India include: On Shelf Couponing- This method would help draw people to the product on the shelf in the retail outlet Point-of-sale Display within the outlet- Can help our product stand out in the store Push Money- Push money can benefit retailers, which can benefit retailers by offering rewards for selling the product, as well as Sanitarium as retailers would push the Weet-Bix onto customers Price Deal- Can be used when Weet-Bix are first introduced, this can entice customers to buy Weet-Bix, as it is ‘cheap’ Although this is only four examples, promotional mechanisms, they can all benefit Sanitarium, the retailers and the consumers by drawing people to the product, and hopefully increasing sales within India. Other Promotional Mechanisms that can be used includes: Product Sampling Trade Contest (For Retailers) Free Gift with product purchase Contest (For Consumers) Customary Pricing Arrangements There are numerous factors that need to be looked at when creating a customary pricing arrangement. Some of these factors include: Perceptions and expectations of customers Prices of competing companies and products Cost of transportation of Weet-Bix from Australia to India
Once these factors are looked at, Sanitarium can come up with a pricing arragment for Weet-Bix. Competing products such as Kellogg’s Cornflakes are sold for 21 rupee per 100g (Jain, S 2011), which translate to $0. 49, which in Australia would be considered very cheap, but in India is considered an upmarket, expensive product. Sanitarium would like to base their product prices on par with Kellogg’s cornflakes. Taking in account the factors mentioned previously Sanitarium can create a customary pricing arrangement to sell their products in India. Major Competing Products The Indian breakfast market varies from local savoury recipes, such as dosa’s to sweet cereals and oats.
Throughout the Indian cereal market Sanitarium has two major competitors, these competitors include American companies The Kellogg Company and their breakfast cereal ‘cornflakes’, and Quaker and their branch of oats. Kellogg Company + Cornflakes The Kellogg Company and cornflakes are considered a major competing product and company, as they are an international company who have managed to branch into and be successful in the Indian market, are popular choice of breakfast with the Indian people, as well as having a simular target market and simular pricing strategies. (Bhushan, R 2012). The Kellogg Company first started operating in India in 1994, in which they have secured a large portion of the market.
The Kellogg Company currently has a market share of roughly 70%, with cornflakes making up roughly 80% of the Kellogg companies sales in India (Chatterjee, P 2013). The reason The Kellogg Company has managed to be so successful, is because of smart marketing mix: Product: The product is Kellogg’s cornflakes, which aims to bring a good quality product to the Indian market. The product has been altered to suit the tastes of the Indian palette. Flavours Kellogg’s have introduced to cornflakes include real mango puree, real banana puree and real almond and honey (Kellogg’s 2013). Price: The price for cornflakes is set higher than other cereals at 21 rupi’s per 100g (Jain, S 2011). The price is higher, as consumers are paying for the product along with the products high quality. Place:
Kellogg’s noted distribution as a major area to help penetrate and show people the product. So it was important to distribute cornflakes to as many Indian cities as possible, but when it was first released in India it was only available in a few cities, but today cornflakes are now available across the whole country. Present day Mumbai has a 53% market share of Kellogg’s cornflakes (Chatterjee, P 2013). Promotion: The main aim for Kellogg’s was to promote ‘fun-and-taste’ (Jain, S 2011). To do this they had to aim their promotional tools at both school children and families, in which they launched the “The Kellogg Breakfast Week”, as well as given samples to school children.
This promotes not only cornflakes, but Kellogg’s as a company. Quaker + Oats Quaker and their oats are considered a major competing product and company, as like Kellogg’s, Quaker has been able to enter and succeed in the Indian breakfast cereal market. Quaker launched its oats in India in 2006, after copious amounts of research. The companies aim being ‘aim for a healthier you’, wanted to change and improve the eating habits of the Indian people. The Quaker marketing mix is quite simular to Kellogg’s focusing on both simular target markets, and the health of its consumer. Product: The product is Quakers oats, which aims to improve the eating habits and health of its consumers.
To appeal to its consumers Quaker created flavoured oats that suited the palette of the Indian people. Some of these flavours include strawberry flavour with real apple pieces, masala with real vegetables kesar flavour with raisins and a vegetable mix (Quaker 2013). Price: The price of the oats 25 rupi’s per 100g, which makes it simular pricing to Kellogg’s cornflakes (Western Australia Trade Office 2013). Place: Quaker’s oats are available across most cities of India, which makes it easily accessible by all consumers (Western Australia Trade Office 2013). Promotional: Quaker’s, aims to promote its products at all consumers, but focuses on mothers and students.
Majority things used to promote the company have related to the health and well being of the consumer, so different campaigns have been used to promote the oats, which include the 360 degree awareness campaign, as well as working with Apollo Hospitals for free heart checks for consumers (Quaker 2013). Other Competing Products Include: Mohan Meakins Murginns Shanti’s AIM’s Aristo Savour Market Entry Strategy Market level strategy is defined as, an organization exporting its goods and services to a new market in a different country. There are 4 types of market entry strategies; 1. Exporting which consists of direct exporting, indirect exporting, the Internet and direct sales. 2. Contractual agreements consist of licensing and franchise. 3. Strategic alliances which forms joint ventures and consortia and finally, 4. Ownership, which is the direct foreign investment. (Cateora et all. 2012, p. 329).
This section of the report will focus on Exporting as the main market entry strategy for Weet-Bix as this a ideal method because of the lower risk and commitment involved in comparison to joint ventures and other market entry strategies (Anura-Amarasena. 2013, p. 4). And also, if successful how direct foreign investment could also play an important role in succession with exporting into an emerging market such as India. Exporting Exporting can be either direct or in direct ((Cateora et all. 2012, p. 329-330). Direct exporting is defined as, the company that sells their goods or services to a customer in another country. In-direct exporting states, the company sells to a buyer in the home country, who in turn exports the product. The advantages of exporting Weet-Bix are;
Increased profitability Spreading risks Enhanced innovation. (Dnbsmallbusiness. com. au, 2013). Increased profitability, gives Weet-Bix an advantage over its consumers, as presently the consumers are unaware of the product and also, since there is no demand, this could help increase opportunities to market the product and maximise sales and profit. (Dnbsmallbusiness. com. au, 2013). Spreading of risks- with less financial risks involved in comparison to a developed economy. This gives companies such as Weet-Bix to target new markets, with popularising the demand of the product more profusely through different promotional methods. (Dnbsmallbusiness. com. au, 2013).
Enhanced innovation- with the latest technology currently present in Australia, Weet-Bix could promote their product more efficiently and faster which could save time and money for the organization. (Dnbsmallbusiness. com. au, 2013). Direct exporting The advantages of exporting Weet-Bix through direct exporting are; Control over the pricing will be solely left to the organisation itself. Monopolistic brand control. Better understanding of buyer’s needs as the product can be altered to different target market. Positive customer relationship. Potential future possibilities. (NEW ZEALAND TRADE AND ENTERPRISE, 2013). Indirect exporting The advantages of indirect exporting Weet-Bix are;
Relatively cheap and straight forward to enter the market. Adequate market experience, reputation and contacts, using those skills, the goods can be distributed more efficiently and quickly to the end user. Internet The Internet plays a valuable role in the export trade of Weet-Bix. Organisations without the use of technology, could fall behind their competitors and without the updated technology, organisations would find it hard to exist. With the use of the Internet, Weet-Bix could reach more customers, and gather better information about them, target them more effectively and serve them better. (Berryman-Harrington et. al. 1998, p. 1). Direct Sales
Direct sales may be required in terms of high technological products. Since Weet-Bix is a food product used for, targeting middle class consumers. Up to date technology is required rather than high technological innovative products. Direct Foreign Investment The next section of the report will be focussed on Direct foreign investment, this section will briefly explain how Weet-Bix could be manufactured and sold within India. Direct foreign investment is defined as, a country that is investing its financial resources into another country chosen, for its production to expand its market share and gain more customers. The advantage of Weet-Bix entering a market in India would be; Low-cost labour.
The cost of labour producing Weet-Bix would be less in comparison to producing the product in their home country and exporting it to India. Avoid high import taxes. The cost of import taxes could be avoided as the countries could have government FTA’s such as free trade agreements. Reduce the high cost of transportation to market. High transportation costs could be less as money could be saved on freight, and shipping expenses. And finally, Gain access to raw materials, since India is the highest producer of wheat that is, they have 92,000 manufacturing plants in India (IndexMundi, 2013), this could help them produce more of the Weet-Bix product in an efficient way. Pricing strategy
There are different types of pricing strategies, organisations use currently, these are; Market penetration- low cost to attract more buyers, and Roll out- the product is kept secret, till the day of release, less information about the product is known. Market penetration would be the ideal pricing strategy for Weet-Bix for the export in India. The advantage of using market penetration for Weet-Bix in India is; Raise awareness of the product and get people to buy the product. Low cost of the product will create more demand for Weet-Bix. Affordability. Marketing Plan Highlights The marketing plan highlights consists of the marketing mix; which is product, price, place and promotion.
The marketing mix for Weet-Bix will provide a framework, to help Sanitarium market the product effectively and efficiently. (Constantinides. 2006, p. 408). Product Target Market The target market this plan will aim at will be Indian’s in the middle-income class range. Because Weet-Bix is not gender specific, The advertising and marketing plan will be segmented to both male and females but will predominately focus on families who want to lead a healthy lifestyle for themselves and there children. Product The product will be packaged no differently to what it is in Australia. A blue box with white and red text will feature. Some text may be in a different language because of the differences in dialog.
The physical components of the box are different to its competitors, which means it requires no change to the shape or size. The product is targeted toward middle class consumers. Since Weet-Bix is a tangible product, the availability of the product would be easy to purchase at convenience locations. The product strategy that was used in the export of Weet-Bix is the product life cycle. The product life cycle consists of 4 stages, Introduction, Growth, Maturity and Decline. This section will focus on the introduction stage of the product life cycle in the exporting of Weet-Bix to India. There are 4 sections in the product life cycle as said above, they are: 1. Introduction-
Organizations moving their product to a new market for example product development where firms export the product to a new country with new distribution channels (tutor2u 2013). This stage of the cycle could be expensive for Sanitarian to launch the new product in India, as the sales are low, although this could be changed in the foreseen months. (productlifecyclestages 2013). 2. Growth The popularity of the product rises, which leads to an increase in sales and rise in demand. This stage is vital as this is the most competitive product and sanitarian has to invest in their promotion methods wisely. (productlifecyclestages 2013). 3. Maturity Once Weet-Bix is established, the aim for Sanitarian is to maintain their market share. (productlifecyclestages 2013).
This is done through mass advertising of Weet-Bix through celebrity advertising appeals, and other forms of appeal advertising for example. Personal, Social, Fear, and Humor. (InfoJug 2013). 4. Decline The final stage in the product life cycle, this is where there is no demand for Weet-Bix , and Sanitarian should come up with other product extensions or discontinue the product. (productlifecyclestages 2013). Place The product is targeted toward middle class consumers. Since Weet-Bix is a tangible product, the availability of the product would be easy to purchase at convenience locations. For example: at department stores, general merchandises stores, supermarkets, and also at some corner shops. Thus making the product readily available at any time and place. Price
India has the world’s second largest population. They have currently 180,000 millionaires, which are expected to grow by 66% by 2018. (TimesofIndia 2013). This in relation to the pricing of Weet-Bix would be ideal for targeting middle class consumers. This will provide Weet-Bix with an excellent opportunity to cater their price higher than the other brands but reinstating the brand recognition and value of the product. The pricing strategy consists of market penetration. Market penetration – the cost of the product is relatively cheap and affordable to middle class consumers. This would help Sanitarian to achieve a high demand in sales, as the product is affordable.
The packaging of Weet-Bix would be the same while altering different promotion methods to target different segments of the market. (SmallBusiness 2013). Promotion The promotion highlights will include the use of TV, Radio, Billboards and some Social media/Digital Marketing. Audiences will be measured with the use of reach and frequency analytics. Promotion will be quite frequent during and before the I. P. L sport season. “The first 16 games in the current season of the Indian Premier League (IPL) T20 cricket tournament are thought to have reached 129 million homes, according to the latest TV ratings from MEC India 2013. ” This will increase Opportunities To See for our target market. Though TV is one way to get across the marketing messages to the target market.
The use of radio and outdoor advertising will also be effective. The U. S. P Unique selling proposition that be used through the advertising campaign will be; explaining and educating the health benefits of the product to consumers. Conclusion Throughout extensive research of both the current market situation of breakfast cereals in India and the Indian market, it is possible to introduce Sanitarium as a brand and their product Weet-Bix to the Indian market. When marketing the product to the Indian community, Sanitarium need to be careful not to come into the cereal market to strong, and threaten local brands, and will need to be cautious how they market the product.
Sanitarium’s aim is to market a product that focuses on the middle class consumers, and is a health benefit for the Indian community. By Sanitarium introducing Weet-Bix to the Indian community, it allows a open door to introduce other products in the future. In conclusion we see this move into India, as a way Sanitarium can introduce their brand and products into an international country, as well as expanding their customer base, and increasing their overall revenue. Recommendations All these recommendations are to help Sanitarium improve within the Indian market, they include: Sanitarium offering other products to the Indian market, such as their milk and spreads range.
Expands the Sanitarium range within India, like companies such as Kellogg’s have done. Weet-Bix offering a range of flavours to suit the taste palette of the Indian people, this could include both savoury and sweet flavours, simular to Quaker’s Oats. Creating a marketing campaign that focuses on different classes other that the middle class people, as different classes have different views on things. Sanitarium opening factories across India, as wheat is so cheap in India, it can minimise on importing and exporting the product and the costs involved. Sanitarium teaming up with the Indian government, in their food scheme to help the poor people of India, in which weet-bix are used.
This can create a relationship between Sanitarium and the Indian government. References Amarasena, A. 2013. Small Firms Exporting to Asia: An Innovative Export Model.. Journal of Internet Business, (11), pp. p1-38. 38p Berryman, K. , Harrington, L. , Layton-Rodin, D. and Rerolle, V. 2013. Electronic commerce: Three emerging strategies.. (1), pp. p152-159. 8p. 3 Diagrams, 1 Chart. Bhushan, R 2012, Kellogg India to take second shot at localising its Indian portfolio, The Economic times, viewed 15th October 2013, http://articles. economictimes. indiatimes. com/2012-10-19/news/34584530_1_kellogg-india-localised-variants-nimbooz Businessinsider. com. au. 2013. Indian Food