Strategic International Marketing Plan

Executive summary

Marketing is a key factor in the success of any organization. That is because marketing acts as the main channel that links an organization to its customers. Among the consequences of globalization and internationalization has been foreign market entry, which is characterized by organizations searching for and exploring new markets abroad with a sales potential for their products or services to expand their operations/business (Kotler and Armstrong, 2012). Besides the increased growth potential that new or foreign market entry presents organizations, it also involves huge risks. Therefore, an organization must develop a strategic international marketing plan/mix to contribute to its successful entry into the new market. Hashim and Hamzah (2014) describe marketing mix as the set of controllable marketing tools available to an organization. It uses to elicit the desired response from its various target markets. A compelling marketing mix enables an organization to improve its short-term and long-term performance and achieve its objectives (Palmer, 2011). For those seeking further insight, marketing dissertation help can provide valuable resources and guidance. Marketing mix strategy enables an organization to use its strengths to enhance its customers’ satisfaction regarding its products and services, thereby differentiating itself, becoming strong, and achieving a competitive advantage in the highly competitive market environment (Daniel et al., 2015).

Therefore, this international marketing plan aims to establish and recommend a marketing mix strategy that will enable the organization to successfully enter and achieve its goals in the new market.

Situation Analysis

Dairy food products are made in a wide range of forms (including ice cream, butter, cheese, ghee, cream, yoghurt, and so on), flavors, shapes, and sizes worldwide. Dairy farming, and consequently dairy food, has gained traction as a significant driver of economic growth in India, with the Indian dairy market estimated to be growing at a rate of 9% annually. It is also estimated that the urban Indian market consumes over 50% of the total milk fluid that the country produces. This increase in consumption can be attributed to the high-income elasticity of the demand for milk- the wealthiest households spend ten times more on dairy products, especially the value-added dairy products, than the poorest households. With the domestic demand for value-added dairy products increasing at a rate of 8-10% annually, the Indian dairy industry can be seen to have high growth potential, both domestically and internationally. These statistics present Bulla Dairy Foods (henceforth Bulla) with a unique opportunity to enter and profitably operate in the Indian dairy market. Before executing its market entry into India, the company must conduct a PESTEL (Political, Economic, Social, Technological, Environmental, and Legal) analysis.

PESTEL Analysis

Political

The Indian Government, through Department of Animal Husbandry Dairying and Fisheries (DADF) which is under the Ministry of Agriculture, controls the dairy industry and stipulates the rules and conditions under which dairy food companies must operate. The increased attention that the government is paying to it, along with political stability, has significantly benefited the dairy industry. The government’s allowance of 100% Foreign Direct Investment (FDI) as well as its provision of various incentives has significantly contributed to the growth and development of the industry. This will make it easier for Bulla to enter the Indian market. The implementation of legislation governing the dairy industry in India is undertaken at three different levels- state schemes, central government schemes, and both state and central shared schemes. The government has put in place various measures, including monetary and technical assistance and free insurance, to support cattle owners to promote the health of their cattle.

Additionally, the government’s initiatives to strengthen and expand infrastructure in the rural areas enable milk producers to easily access markets and dairy companies with the opportunity to procure milk efficiently. The country also has an adequate and sufficiently qualified human resource due to its introduction of food processing and technology courses in its higher learning institutions. In the recent past, the government has also paid particular attention to the development and modernization of the food processing industry, which will enhance the operation of dairy food companies in the country.

Economic

With an annual GDP growth rate of about 6.8%, India has an opportunity for continuous economic growth in the future. At the same time, 20.5% of the GDP is contributed to by both agriculture and food processing, while dairy farming results in 31% of agriculture’s contribution to the GDP. However, despite the production of milk rising by 4.6% annually, the demand is still higher, resulting in the country’s inability to meet its demand needs adequately. That has resulted in the price of milk constantly rising, for example, from 12.6% to 13.6% in the last year. The potential impact of this is that the input cost used to produce dairy products might increase, which could increase product prices (that may impact sales due to loss of customers) or lower profit margins.

Social

Changes in consumer lifestyle and preferences have seen them substitute various dairy products for ‘healthy’ ones, and the government outlining various standards that dairy products must meet. The dairy industry also contributes to improvement in the lives and well-being of locals and the economy of rural areas. The large amounts of waste arising from dairy farming and livestock product processing plants, if not well managed, could lead to air, water, and land pollution that poses a significant health risk to society.

Technological

India needs newer, more advanced technologies that the industry could use to improve its measurement of concentration (purity), procurement, and processing of dairy products. Even though a late entrant, India is now steadily exploring livestock cloning and has made great strides in cloning technology. For example, it has successfully rolled out the ‘hand-guided cloning technique,’ which starkly varies from the conventional cloning technique. The country has also invested in and made requirements for the use of new-age packing systems. The low-cost packaging, which uses technology such as atmosphere control, oxygen scavenging, and biodegradability, protects dairy products from pathogens, thereby preserving it for longer. This packaging technology (due to its low cost and longer shelf life advantages) could significantly help Bulla increase its profit margins.

Environmental

Dairy farming exposes people working in dairy farms and taking care of cattle to health issues such as asthma and skin problems. Dairy animals also produce large amounts of methane, which is more powerful than carbon dioxide, therefore harmful to the environment. The massive waste produced by dairy cattle and livestock product processing plants increases air, land, and water pollution.

Legal

The increasing need to establish quality standards for probiotic foods, as proposed by the Indian Council of Medical Research, could make it mandatory for dairy food companies to conduct clinical tests on their products before sending them to the market. While this will help improve quality standards, it may also increase production time and cost.

Organizational Analysis

Bulla is an Australian dairy company that was established in the year 1910. The business, which has its headquarters in Derrimut, Melbourne, is a partnership among three inter-related families that own and operate it. Bulla manufactures and exports various ice creams, table cream, sour cream, yoghurt, cottage cheese, and imitation cream. The company has, in the course of its more than 100 years of operations, expanded internationally; besides supplying its products in Australia, it also exports them to over 20 countries, including Fiji, China, New Guinea, South Korea, Singapore, Malaysia, Japan, The Philippines, Thailand, Hong Kong, Indonesia, and so on. Bulla employs over 600 people across its three manufacturing sites in Dandenong, Colac, and Mulgrave and a distribution center and headquarters in Derrimut, Melbourne.

Bulla is currently seeking to expand its operations into India. To successfully execute its foreign market entry plan, the company will need to draw on an effective strategic marketing mix that will enable it to reach, serve, and be accepted in the new market. Before a foreign market entry, an organization should critically analyze itself concerning its current organizational situation. Part of this organizational situation analysis involves the conduction of a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis. A SWOT analysis enables an organization to cement and build on its strengths, correct or improve its weaknesses, mitigate threats and exploit potential opportunities.

Strengths

Bulla is one of the notable companies in Australia and one of the major organizations in its industry (consumer goods). It possesses strengths that have enabled Bulla to successfully operate, acquire, safeguard, and increase its market share in Australia and enter multiple new foreign markets. Among the company’s key strengths are:

i. A proven track record of strong financial performance- the company has consistently achieved improved returns on its expenditure over the years. The company achieves approximately $400 million in annual gross sales, making it the largest dairy food company in Australia.

ii. Creativity and product innovation- Through its Dollop Cream Portions, the company was awarded the best new foodservice product in 2012 for its relevance and innovation. In 2014, the Royal Agricultural Society named Bulla the best food producer. In 2016, the company received the DTS Food Laboratories Award for the use of dip, cream, and dessert in its 200ml sour cream and an award for the creativity of its Fairy Bread ice cream. These, among many other awards for innovation and creativity, have differentiated the company from its competitors and enabled it to attain a strong market position.

iii. Impressive brand portfolio- Bulla boasts of a wide variety of dairy products under multiple brands.

iv. Increased customer satisfaction levels- the company’s possession of a strong brand and product portfolio has contributed to ensuring that its customers are not limited in terms of their choice that effectively satisfies their needs.

v. Successful entry and performance in new and foreign markets- besides successfully operating and supplying its products in the whole of Australia, the company has also been able to successfully expand internationally and export its products to over 20 locations in the world.

vi. A strong supply chain network has over 100 suppliers from whom it receives more than 1,000,000 litres of milk, thus ensuring its operational continuity and sustainability.

Weaknesses

Bulla also has a few weaknesses that it should improve on to improve its performance and further strengthen its market position and competitive advantage, including:

i. Increased competition- despite its strong market positioning and unique selling proposition, Bulla is faced with increasing competition from rival companies in Australia. The three main competitors of the company are Lion Dairy and Drinks, Peters and Streets, and Tasmania Heritage St. Claire.

ii. The company’s heavy dependence on perishable products, including milk and milk products.

ii. A weak presence in Pacific Asia. Although the company enjoys a major presence in Australia and exports its products to multiple locations, including Southern Asia, it is still not a big player. It has a weak presence in Pacific Asia.

Opportunities

The following are the opportunities that the company could potentially exploit to improve its performance and market position:

i. Expansion of its ice cream product segment- the decline of the dominant ice cream brand Peter and Streets’ market share from 40% to 30% presents Bulla with the opportunity to expand and increase the penetration of its ice cream products in the market.

ii. The company’s weak presence in Pacific Asia also signifies the potential to expand into the region and increase its presence and market share.

iii. Sale and service of signature food recipe items- following its successful supply of supermarkets and various retail outlets in Australia and the recognition of its creative and innovative products, the company could open its retail outlets or chain restaurants to sell and serve signature food recipe items.

iv. The numerous new and existing free trade agreements (FTAs), which result in the opening up of new and foreign markets, present the company with the opportunity to expand into and enter new emerging markets in which it has no presence.

Threats

Among the threats facing Bulla are:

i. Potential decline in profit levels- the stability of the sector and its profitability that have attracted an increased number of sector players. This poses the risk of increased competition, which could threaten the company’s profits by putting pressure on its sales. A decline in the company’s profit levels could also be occasioned by an increase in operating costs associated with increased fuel costs, inflation, and the cost of doing business.

ii. The outbreak and spread of cattle disease and epidemics could greatly pose a danger to the source of raw material that the company and the entire industry heavily depend on.

iii. The threat of massive losses is likely to arise from the challenge of adequately maintaining timely processes and the required quality in the perishable foods sector and storage difficulties or disruption of the distribution (supply chain) network.

Market Entry Options

The mode of entry into a foreign market is a strategic decision underpinned by various economic (transaction cost, Denning’s eclectic and international life cycle) theoretical approaches (Daniels et al., 2015).

The economic approach to market entry is premised on the patterns of and ownership of assets used in production activities in various countries (Benito and Gripsrud, 2012). The eclectic theory by Dunning (1976, 1988) evaluated the significance of factors that influenced an organization’s entry into a foreign market. When entering a new market, Dunning (1977, 2004) asserts that organizations should draw on their firm-specific advantages, including ownership, location and internalization-specific (OLI) advantages. However, changes in the global economy have rendered the OLI advantages redundant due to its inadequacy in distinguishing internalization and ownership advantages (Cook, 2006) and the disruption of organizations’ capabilities and strategies (Cantwell and Narula, 2011). The approach is also perceived as static given that it fails to explain how internalization and OLI advantages correlate or the strategic decisions that guide firms’ new market entry choices (Argawal and Rasamwami, 1992).

According to the international product life cycle proposed by Vernon (1996, 2004), an organization’s mode of entry into a new market depends on the life stages of its product (Galan and Gonzalez-Benito, 2011). The introduction stage is described as local- activities are undertaken in the country where the product is produced (Almor et al., 2006) and exported to the new market until the company gathers sufficient information to enable it to set up production in the new market (Sikorski and Menkhoff, 2000). During the growth stage, exports to new markets increase, and, over time, companies establish production close to or in the new foreign markets (Lu, Zhao, and Du, 2005). With the maturity stage comes the saturation of markets and a degree of standardization that give rise to concerns over production costs, which in turn cause firms to shift production to lower-production cost countries from where they will export the product to other markets (Sikorski and Menkhoff, 2000).

The transaction cost approach, by Ronald Coase (1937), suggests that it may be more efficient- under certain conditions, such as foreign activity transaction costs- for companies to establish internal markets rather than enter new foreign markets. The implication of this is that high transaction costs could lead to companies choosing to internalize production and exporting to foreign markets, or producing in foreign markets if they perceive that the replacement of external foreign markets could surpass their internal organizing costs, and therefore result in reduced transaction costs (Madhok, 1997). As a result, companies will select the production location and organizational model that presents them with the lowest overall transaction costs (Coviello and Martin, 1999). Lower transaction costs arise from new foreign markets that are less different from domestic markets.

Bulla would be best suited to adopt the international product life cycle or the transaction cost approach following these market entry modes and approaches.

Potential Market Segments (Target Markets)

An examination of the Indian dairy market reveals that the traditional milk beverage and dairy products market share increased to over 90% between 2015 and 2018, resulting in large supply shortages that in turn led to acute dairy and dairy product deficit (“The Indian Dairy Landscape”, 2021). However, it was also observed that most millennia’s tended to shift to nondairy, plant-based proteins. Millennia’s, as of 2018, had more spending power than other generations, and their unique values and preferences have disrupted the dairy market. Millennia’s are 2.8 times more likely to trust new brands as being better or more innovative and 3.7 times less likely to buy from big brands than baby boomers (McKinsey, 2021). Therefore, it would be in Bulla’s best interest to target baby boomers, who are still more inclined to dairy products, while also targeting and seeking to attract millennia’s through the use of social media and digital platforms. This is because millennia’s are more given to search for and engage with customer feedback and reviews on the company’s feedback and social media. Millennia’s also influence other generations of consumers through their behaviors, which has resulted in customers demanding not just products but also experiences (McKinsey, 2021). This will result in the need for the company to continuously engage customers in dialogue that is aimed at establishing relationships with them and bolstering their loyalty.

Objectives for the First 12 Months of the Marketing Plan

The main objectives that Bulla seeks to achieve through this marketing plan are:

i. The improvement of the overall annual customer acquisition by at least 7% from 2022.

ii. To improve the company’s overall annual customer retention by at least 10% from 2022.

iii. The acquisition and maintenance of at least 20% market share by 2022.

iv. Improving the average order value of the company’s E-commerce sales to £35 per customer within the first year.

v. Achieving £10 million worth of sales by the end of the 12 months.

Strategic Recommendations

To achieve the objectives mentioned above, Bulla must adopt a strategic marketing mix. This will involve adopting and implementing the 4Ps of marketing mix- product, price, promotion, and place- (Kotler and Armstrong, 2012). The product, in this case, is Bulla’s wide range of dairy food products, all of which seek to give customers value and satisfy their needs. The company should package, label and brand its products in a way that will enhance its appearance and make them easily noticeable to customers, and therefore attract them to examine and buy them. Bulla should also incorporate the product attributes of features, design, quality, and style to enable customers to prefer the products (Muchiri, 2016). Concerning the price, Bulla should adopt pricing strategies to determine and set the prices customers will be willing to pay for its products (The Chartered Institute of Marketing (CIM), 2009). Thus, it should ensure its prices are affordable, competitive, offer value to customers, and achieve its desired profitability. Higher prices would result in customers’ expectations of higher product value and quality. Bulla should also determine whether its customers (existing and potential) are price-sensitive and their value to its products. Additionally, it should consider the various PESTEL factors that will influence its production and operational costs to set prices that will enable them to attain profits.

Place (also distribution) refers to the means and process through which the company gets the products to customers and involves a web of producers, suppliers, distributors, brokers, and customers interacting with one another at a specific place and time (Isoraite, 2016). Bulla should thus ensure the ready availability of its products in the market and in locations where customers can quickly and conveniently access them. The company needs to establish a strong distribution network of reputable wholesalers, retailers, and distributors to indirectly sell to customers or directly sell to them through its physical stores and e-commerce/online platforms (Thabit and Raewf, 2018). Bulla should ensure the availability of its products in the right places, quality and quantity, and at the right time.

Bulla should draw on promotional strategies- such as advertising, branding, public relations, CSR, offers, and promotional sales (CIM, 2009)- to communicate to its (target) customers and promote its products, and increase their visibility and awareness, among them (Gituma, 2017). The company should employ social media and digital platforms to gather information on their customers’ feedback, needs and preferences, market trends, competitors’ activities and strategies, and share information regarding its products with customers. The company should create and share eye-catching and appealing promotional messages that it will share through social media and digital platforms in a prompt, easy, convenient, and cost-effective manner (Parveen et al., 2013). It should also give offers, discounts, and promotions to retain existing customers and attract new ones, to increase sales and, thus, revenues (Caruso, 2016).

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