A Potential International Market For Holland & Barrett

Executive summary:

Health and wellness products are becoming increasingly popular as people grow more health conscious. People are now turning to companies like Holland and Barret International to acquire natural and organic products. As a result of the increased health awareness, companies have resorted to expanding their operations to serve more customers and get more revenue. Equally, Holland and Barret international has not been left behind in this quest. From operating only in the United Kingdom to neighboring countries like Ireland and Netherlands, the wellness retailer is growing wings. In the same vein, countries like Oman and Iceland present unique opportunities for expansion. Both countries exhibit varying advantages and disadvantages especially to the investor company. Therefore, an international market analysis is undertaken below to determine critically the comparative opportunities available in both countries then subsequently weigh the same for a better option.

Introduction:

Holland and Barret International is a health and wellness retailer with international presence. The company has already expanded its offerings beyond the United Kingdom. There are more opportunities in countries like Iceland and Oman. It is thus important that a market analysis is conducted to find out the suitability for the company’s operations. This paper first provides the external analysis of Holland and Barret, followed by an analysis of the potential consumers. Thereafter, there will be the provision of the international market mix, which will then be followed by a definitive conclusion.

External Factors

Table 1: Current competitors

Political and Legal factors

A parliamentary Constitutional Republic characterizes the nature of the government. It is ranked number seven in world political stability index (Vrontis et al., 2009). For any business seeking to expand into a country like Iceland, this is an opportunity to establish a business without political risks associated with instability. Additionally, the country has no armed forces but is protected by United States under the NATO agreement. The corruption index list Iceland as number 14 in the world (World Bank, 2017). Economic crimes like corruption are bad for businesses hence a graft-free country provides a good environment for business.

Oman has an absolute monarchy type of government where the Sultan is the head of both government and state. It ranks number 54 in world political stability index and number 65 on corruption index (World Bank, 2017). The monarchy exercises sweeping powers in decisions, for instance, the visa ban for foreign expatriates with an aim of increasing employment opportunities for locals.

Socio-cultural factors

Christianity is the main religion in Iceland with majority being of the Lutheran denomination. Official languages include Icelandic, English, and Danish (Karanikolos et al, 2013). Therefore, when expanding into such a country, products offered for sale should be aligned to people’s faith and religious beliefs or practices to avoid any negative response. Similarly, the packaging, branding and labelling should be done in consideration of the three languages. Awareness of religious beliefs and the attendant celebrations is vital to the manner in which sales will be customized (Terpstra et al., 2012).

Islamic religion is the predominant religion in Oman and official language being Arabic. Since Holland and Barret deals with consumer products, it is important that a deep understanding of the Arabic culture is undertaken to find out the nature of products acceptable (Kotler & Armstrong, 2010). Sensitivity to culture and language will also be applied in labelling and naming of products in manner that does not offend norms and customs. In both countries, it will be important to be familiar with the level of education of the prospective consumers for ease of communication. It is also important to take into consideration the contextual norms as to whether a sale can be done directly to children (Terpstra et al., 2012).

Economic factors

In 2017, Iceland posted a Gross Domestic Product growth of 3.64% and the total amount of GDP was 24 billion dollars (World Bank, 2017). Even though this was drop from the previous year, the economy still shows signs of growth in the coming years. Notably, the country has an average population of 380,000 hence the amount of resources required for expansion will be less in comparison to another state like Oman.

On the other hand Oman had a GDP growth of -0.27 and total amount of GDP being 72.64 billion dollars. This means that economic growth of the country is slowing down. Economists have attributed the slowdown to low oil production and weaker consumption and investment (World Bank, 2017). However, the government is currently implementing policies to diversify its growth indicators. Forecasts also show that growth rate will rise as a result of higher oil productions in future and diversification of the economy. Hence, it is still a good destination for Holland and Barret.

Environmental factors

In light of climate change, energy transformation, and sustainability, Iceland has taken bigger strides towards a cleaner ecosystem. Renewable energy sources like hydropower and geothermal power are the major sources of power (OECD, 2013). Therefore, a company expanding its operations into its borders will have to comply with the environmental requirements. The market in this country is one that already appreciates and are aware of climate change repercussions thus receptive to health and wellness products. Significantly, Oman aspires to have a carbon-free country and as such, it has put up an array of measures to ensure that emission of greenhouse gasses is substantially reduced (Ragnar Grímsson, 2013). The business of providing wellness products is, fortunately, less carbon-laden hence there is no material clash with the environmental policies.

Technological factors

Technological advancement in Iceland is evident in the manner in which the existing wellness retailers conduct their businesses. These competitors have a robust online presence, which is aimed at reaching a vast majority of the population that has embraced the digital way of life (Czinkota and Ronkainen, 2013). Iceland being number four in the world ICT development index, provides a suitable frontier to venture. Additionally, the population is small and is technologically aware. It offers one of the best markets in the world for favourable business environment for companies that are into the use of innovative technology in their operations

In Oman, the Information Technology Authority is charged with implementing government policies on technological issues. It has created a digital strategy which is aimed at among other digitizing government services. Hence, there is already a foundation for a company venturing into Oman to build on to sell products to customers. Although, the country has taken strides in technological advancement, the nature of infrastructure in Iceland is still superior and preferable (Rowlinson et al., 2007).

Potential Consumers

Age

People’s choice of brands re-transformed as they become older and the things that they once loved lose meaning. As such, appropriate market research should be undertaken focusing on the millennial generation and persons above 50 years. The younger generation as opposed to the older ones, is easily reached through social media platforms (Kotler and Armstrong, 2010). Hence, this distinction is important for Holland and Barret even as it seeks to expand into new markets in Oman and Iceland. More importantly, there is a difference in behavior of a young generation in Oman and another in Iceland. Observation method would work better to research this kind of market since it is relatively cheaper and focuses on real reactions (Kotler & Armstrong, 2010).

Gender

For a successful offering of products to take place, a thorough market research should be conducted along the lines of gender. A combination of survey and observation of customer behaviour would work better in giving accurate needs of both sides. Products will therefore be sold in such a way that they target women and women separately (Solomon et al, 2009). In this regard, Holland and Barret is well placed because they already have this distinction with their current products.

Lifestyle

Today, more people are becoming increasingly conscious about their health by regulating what they consume. The same will be reflected in a market research to determine which segment to sell to such related products (Tepstra et al, 2012). Field trials can be used to gauge the response of an identified segment to the particular product. Lifestyle may also be influenced by religious beliefs hence in a country like Oman, it will be suitable to be wary of products considered unclean.

Income level

Disparity of income levels is an important aspect that determines pricing and the kind of products to be offered. Consumers falling within the middle-class category will buy an item based on utility while an upper-class consumer will consider the design, style, and special features. This kind of information is important for product categorization. Both countries present an opportunity for mostly, luxurious goods. In person surveys is an appropriate method for determining the above (Shroder, 2011).

International Marketing Mix

Product

The product element is a means through which the company offers a combination of goods and services to its customers (Kotler and Armstrong, 2010). International marketing takes into accounting several factors when it produces, packages, labels and placement into the market. A company has two options when it is expanding into a new market. It can either maintain the standard product and change only some subtle elements or adapt it to the special setting. Again, product information is now available to consumers and companies must be careful in the product specifications provided.

In this case, Holland and Barret International can offer the same standard products to the Icelandic market without any alteration except labelling. Health and wellness products similar to those of the company are in existence in the country. In this regard, there is no need to effect material changes to the products already in existence (Solberg, 2017). However, the company may decide to produce new products specifically for the Icelandic market to take advantage of an unexploited opportunity.

Taking into account the conservative lifestyle influenced by the Islamic religion, the nature of products offered may be differentiated to perfectly fit into that setting. Products should be capable of meeting the needs, tastes and preferences within the Oman culture (Karanikolos et al, 2013). Nevertheless, Holland and Barret is a big company and is capable of direct selling as long as there is return for investment for the same.

Place

In order to make sales, the products should first reach the customers through different channels. There are existing large scale retailers in both countries and one would consider selling to them or consider selling small retailers. Alternatively, a company may decide to undertake direct selling to the consumers. Direct selling involves large capital as opposed to sale to retailers. Muscat is the capital of Oman hence should be the entry point for the company. This is where retail stores should be established to counter the existing competition, majorly from pharmacies. Thereafter, it should maintain an online infrastructure that will allow consumers to buy products online for delivery to their homes (Gordon, 2012). Oman is already awash with online shops selling to various customers, which means it will not take time for consumers to familiarize themselves with the platform.

Reykjavik is the capital city of Iceland and houses more than two-thirds of its population. That being the case, retail stores should be limited within the city since that is where a majority of the population is found. The other parts can be served with online shops. The use of websites for selling to consumers is n not a new thing for Iceland considering that Nammi has been using the same to reach its customers. It is important in either countries the opening of retail stores is not expanded to the whole country (Churchill, 2017). This new market first, must be approached with caution by testing the waters. Again, health and wellness products may not be well received by consumers in rural settings.

Price

Every product produced has a value attached to it. That value is the sum the customer must exchange to obtain the offering (Solomon et al, 2009). A mix of factors drives pricing both internal and external to the company. Where there is stiff competition, a company may be forced to reduce its prices to match the competitor or woe more customers and that affects the price of a product. Moreover, the cost of production, segment of market, channels of distribution and consumer preferences will influence the price of a product.

While there exists wellness products in Omani, the market is not fully exploited and the competition is not stiff. In that scenario, the prices of products will be affected by the fact that there is no serious competition, target consumer segment and among others. For Iceland, there are existing Icelandic organic materials preferred by consumers that can be harnessed by the company to reduce cost of production (Solberg, 2017). Additionally, Iceland has a low rate of unemployment hence the cost of labour may be high leading to high prices.

Promotion

The manner in which a company communicates its offerings can directly impact on the success of the sales. Effective communication of a company’s offerings means that the consumer receives enough knowledge to make a decision whether or not to purchase an item depending impression. Promotion of products through advertisement should be approached with caution in consideration of different cultures and advertisement laws in a given jurisdiction (Solberg, 2017).

For instance, an advertisement on television for a wellness product depicting a lady jogging in shorts would be acceptable in Iceland but not in Omani because of the cultural differences. In view of technological advancements, online advertisement is the most preferable way to reach consumers. This can be down via social media platforms by having mobile optimization, using social media influencers, website branding among others (Tuten and Solomon, 2017). These modes of advertisement as cost effective and have a wide reach in view of the proliferation of smartphones in both Omani and Iceland.

Conclusion

In view of the above, Iceland offers a unique opportunity for the company to expand as a result of the technological advancements. This lays a good foundation for exploitation of technological innovations in the field of wellness and health products. Additionally, Iceland has exhibited high rate of growth since its independence from the Danish rule (Ragnar 2013). A growth that was only hampered by the 2008 financial crisis. Hence, it has potential to return to its former state of economic growth. The country also has liberal visa policies, which is an indicator that during expansion, foreign expatriates are allowed to work in the country. However, it has a relatively smaller population compared to Oman, which means just a few stores can serve it.

There is an array of opportunities in Oman since the market is not saturated with health and wellness products from major companies. Therefore, here, is an opportunity to go into the Oman market and take a share. It also provides a large market in terms of population which if a product is successfully pitched translates to high revenue (Al-Shanfri, 2012). Although, the market presents a challenge in customization of products to fit the consumers’ culture and preferences unlike Iceland that can take standardized products. Another challenge is the government’s policy on immigration of foreign expatriates, which curtails the number of employees who can move into and work in Oman suppose they are not locals.

Recommendations

Oman presents the best opportunity for investment by Holland and Barret International. Despite the challenges listed above, the country is like a young market for health products. It is advisable that in spite of the culture and regulations challenges, the case study company invest into this market before other competitors of its caliber gain interest. In short, the return on investment in Omani outweighs the present problems.

The company simply needs to conduct a research and analysis of the grey areas with the assistance of a local expert with knowledge of the culture and regulations. This way, adopting of some and not all the products to fit customer preferences will create a smooth entry into the market. With a population of 4.6 million, there is huge potential for large sales hence increased revenue (World Bank, 2017). Omani being an oil-rich country, there is a segment of the market that can be targeted with luxury goods at a relatively higher price.

In addition to this, there exist few health and awareness product retailers. In fact most of products are sold by pharmacies dealing in drugs (Al-Shanfri, 2012). It shows that companies in Oman have not taken advantage of the opportunity to specialize like Holland and Barret have done in some European countries. In fact, this poses as an opportunity for the company to expand by introducing new product lines specially designed for the Omani market, wherever necessary. A product line towards natural and organic incense would do well since it is something cherished in the country.

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