The Global Weight management market is growing and is estimated to grow more from US$363 billion in 2009 to US$586 billion in 2014. Detox regime is a company based in Brazil that produces Acai berry biscuits and has successfully established a market for the product. The company now wants to expand its horizon and internationally market Acai berry biscuits. With the growing concerns of obesity and health related issues, tackling this with Acai berry biscuits that increases metabolism rate and help with weight loss, will instantly gain market shares in all the countries it expands to.
- Filter 1 - Women Population - This is the initial criterion that is selected to for the screening process. Women's are the target market for Acai berry as they will be likely to purchase the product. Therefore a minimum threshold of 50, 00,000 is desired level as there is a higher chance of purchases for countries with high population.
- Filter 2 - GDP per capita - All countries that pass the 1st filter are screened through again using GDP per capita as this gives information on the purchasing power parity and consumer spending levels. Hence, as GDP increases above minimum threshold level $ 6000, the chance for consumers to spend on the product is higher.
- Filter 3 - Consumer spending on confectionary products - this will give an indication on possibility of sales of the product in these countries. The higher the expenditure above minimum threshold $ 3000 on confectionary products, the better it is for Acai berry as, it helps to estimate the demand for the market.
- Filter 4 - Age structure (14- 64) - This criteria helps understand the demand pattern with respect to segmentation by age of a country. The maximum threshold is 70 %. All countries that fall within the threshold are countries which are most likely to be considered as, age influences purchase.
- Filter 5 - Health issues - Obesity and other health problems are on the increase, and Acai berry is clinically know to threat many such health issues. The final stage in the screening process is therefore obesity rates above maximum threshold of 22% are considered and this concludes in the final 5 countries into which Acai berry will enter via contract manufacturing and exporting.
The countries into consideration after screening are Australia, Mexico, Turkey, United States and United Kingdom. The market of these countries is entered using the contract manufacturing and exporting modes of entry. This is followed by formulating effective marketing mix's which will help the product to adapt, gain market share in volume and value and create brand awareness in its targeted country with respect to culture, language and other barriers for marketing the biscuits successfully.
OVERVIEW OF THE PRODUCT
Detox regime is a successful firm constantly looking at expanding its horizon and is based in Brazil. The company uses effective marketing research and product development to meet the needs of its expanding cliental base by introducing a balance diet as the focus of producing biscuits. The Growing demand in South America for nutritious food products with variety of flavors has formed an opportunity for the company to supply tropical fruits like Acai berry in the South American market. The Global Weight management market is growing and is estimated to grow more from US$363 billion in 2009 to US$586 billion in 2014. (marketsandmarkets.com, July 2009) Detox regime produces Acai berry biscuits which is a product that caters to the changing consumer trend towards healthy eating habits. The confectionery sector has experienced drastic change over the year which has led to changing consumer consumption patterns. Confectionery manufacturers are aiming to appeal to customers in the health-conscious sector with nutritional innovations, whilst trying to remain indulgent. "You are what you eat" is what describes today's diet conscious customers. The intake of vital nutrients in the food acts like fuel to the human body, which helps to increase efficiency and provide nutrition for the challenging fast paced life of the 21st century. Considering the rapid demand for organic products and the need for new products that can naturally heal disease that are becoming more prevalent in today's society, the company has introduced Acai berry biscuits which contains both these properties. The biscuits basic component is the berry which is a rich source of antioxidants containing high levels of anthocyanin. The berry is found in the tropical amazon region of Brazil and is an important component of the traditional caboclo population diet. It contains 10 to 30 times more anthocyanin then a normal grape. Most biscuits are considered fattening. A single plain biscuit may contain about 70 calories (...) thus, is not a viable option for diet conscious customers. What makes the Acai berry biscuit different is that the biscuit is a high fiber whole grain biscuit which contains freeze dried berries that helps keep the heart healthy, increase metabolism, boost energy as well as assisting digestive function. The product has reduced saturated fat and does not contain artificial preservatives, sugar and preserves the essential nutrients of the berry.
The berry contains 19 different amino acids which help with the growth, repair, and maintenance of body tissues. It also contains vitamins B1, B2, B3, C and E. With every 100 grams of Acai, the berry provides more than 1000 IU of Vitamin A. Other minerals present are potassium, calcium, copper, magnesium, zinc and is rich source of Omega-3, Omega-6, and Omega-9. (http://www.pure-acai.co.uk/)
Detox regime is primarily targeting women ages 14-64 that are health conscious, yet indulge in consuming sweet biscuits. The target audience resides in the urban sector of the city as, there is higher rate of literacy and awareness of healthy lifestyle. Men are not included in the target market because men are not as health conscious as women. The income range that is targeted is the socioeconomic groups A, B, C1. The biscuit caters to customers with health related problems as well as those who intake organic products for healthy living. The psychographics of the target market is the desire to be healthy and diet conscious, though they have a difficult time eliminating sweet indulgences and have a pattern for low self-control with regards to what food they consume thus, a product which is sweet but has no sugar and uses Acai berry. The secondary target audience is children due to the increasing problem of obesity amongst them. The product has a low involvement decision making as it is not a large purchase. The usage of the product is a quick healthy snack between meal times.
The Acai industry has expanded into a $2 million in the recent market (...). Due to this companies try to produce in larger scale without taking into consideration the nutritional integrity of the product. The biscuit does not face any direct competition as it is a new product in the market. It faces competition from indirect competitors like McVitie's, Jacob's, Carr's, McCoy's, Hula Hoops, McVitie's Jaffa Cakes, KP, Mini Cheddars, Verkade, Sultana, BN, Delacre and kraft, etc. http://www.unitedbiscuits.com/aboutus.php?rnd=FgAn%2BWYnjZOgf%2FkaR1GybFUtCz6p66waDTqQ4YqRLK8%3D) Detox regime has a competitive advantage in the market as it understands the need for quick healthy snacking. The biscuits are prepared using a freeze dried method which keeps the nutrients intact with no additives and provides organic health benefits. This method also keeps the taste of the product intact and is described as a robust combination of chocolates and berries. The product does not use artificial sweetener or flavoring to enhance the taste of the biscuit. Unlike other nutritional biscuits, the Acai berry biscuit contains many vitamins, minerals, dietary fibers and other nutrients necessary for healing, boost energy, fighting disease, cell regeneration and promoting positive general health, fast nutrition and a low calorie balanced diet. It also has reduced saturated fat levels in comparison to other biscuits. According to researchers in university of Florida, "Acai berries are already considered one of the richest fruit sources of antioxidants," (http://news.ufl.edu/2006/01/12/berries/). The nutrients help to control obesity, Arteriosclerosis, Atherosclerosis, Heart Disease, Cerebrovascular disease, Stroke, Aging and other non- communicable diseases(http://www.bsherman.org/freeradicals.htm). The biscuit has natural antioxidants unlike other remedies. The free radicals and disease causing germs are destroyed by the antioxidants (burst 86% leukemia cells) (http://news.ufl.edu/2006/01/12/berries/), increase metabolism, purify the blood and making it easier to burn more calories. The antioxidants bring stability in the body and achieve an element of homeostasis, reducing cholesterol and improving your skin tone and texture. The biscuit along with ingredient wheat and oatmeal forms a balanced diet for customers opting for a healthy regime.
CRITERIA FOR SELECTION
Detox regime has been immensely successful in the home country and has given rise for the company to expand globally by Building brand value, adding revenue sources and growth markets, reducing dependence on the home market and expanding supply chains, know-how and intellectual property. (http://www.allbusiness.com/retail-trade/4017371-1.html). The confectionary industry has seen a changing market as; manufacturers are now focusing on the health aspect of producing the product.
- STEP 1: Population size and structure (women): If population is high, the demand for the product will increase. Women are relatively more health conscious than men. Women also influence household purchases thus, the more the women population in the country, higher is the demand for organic healthy products. The other aspect of population is the rural and urban sector of the population in the country. If the population of women is higher in the rural sector the product may not be successful due to low standard of living, lack of awareness and education. Urban sector women are more aware of health products and it forms a part of their nutritious lifestyle. The minimum threshold set for this criteria is 50, 00,000.
- STEP 2 -Income GDP per capita: The purchasing power parity of a country helps determine the affordability of a product by customers in the market. Income has a direct effect on personnel preferences and consumption pattern of a country. Since Acai berry is a rare ingredient, the product is priced slightly higher than competitive products but has higher quality and beneficial factors. Countries with low income are driven by basic calorie need requirement which is rich in carbohydrates. In middle income countries where countries can meet their basic caloric need ,actors such as culture, taste and other economic conditions are more dominant factors for consumption. Countries with high income levels food consumption pattern is influenced by leisure and social preferences. Consumers with high income level consume expensive products with high nutrient need. Expenditure will also increase on labor saving ready-to-eat products with higher product quality that upgrade their diets (http://journals.cambridge.org/action/displayFulltext?type=6&fid=630732&jid=&volumeId=&issueId=&aid=574312) Another aspect is the inverse relationship between income and waistline i.e. as income increases, the lower is the level of obesity as consumption quality shifts towards nutritious products. (http://www.medicinenet.com/script/main/art.asp?articlekey=52444) The minimum threshold for this criterion is $ 6000.
- STEP 3 - Consumer expenditure on sugar and confectionary: The higher the demand for confectionary products, the higher is the expenditure on biscuits. This criterion will help distinguish between countries as, they differ with respect to cultural tastes and preferences of a certain food type. High expenditure on confectionary is directly influenced by income as well as, lifestyle. As income increases customers shift demand from basic needs to healthy products thus, determining consumption pattern from regular calorie biscuits to dietary Acai berry biscuits. The data will allow Detox regime to track spending trends and importance of different types of consumer units. The minimum threshold for the criteria is $ 3000.
- STEP 4 - Age structure (14-64): Age structure will have an effect on aggregate consumption of biscuits. The marginal propensity to consume (MPC) varies over the life cycle alongside changes an individual's preferences and need. (http://www.springerlink.com/content/q11863502274695m/_ ) As the age of an individual increases the demand from high calorie chocolate and sugar biscuits shifts to low calorie, high nutrition biscuits. Countries with older age group require high expenditure on the health food sector thus, creating a market demand for diet biscuits. The maximum threshold level for the criteria is 70%.
- STEP 5 - Health issues (obesity): The most important criteria for elimination is obesity as, the maximum number of non-communicable diseases arise due to overweight issues. Obesity usually occurs due to inactive lifestyle and unhealthy food consumption. Detox regime will target countries that have high level of obesity by promoting the healthy aspect (anti- obesity medicinal qualities) of the biscuit and its positive effects on lifestyle.(http://www.goherbalremedies.com/blog/health-benefits-of-acai-berry/) Obese consumers usually tend to find quick and easy methods on reducing weight resorting to dietary supplements, products containing ingredients which boost metabolism and have lower amount calories. These factors will help create demand for Acai berry biscuits thus, making obesity an important criteria for country selection. The minimum threshold for screening is 22%.
In order to form a suitable screening process for country selection, Detox regime will funnel the selected criteria with respect to level of importance i.e. narrowing from a large data to a selected few. The first criteria used is population because of it being a broader aspect and also because it helps determine the potential demand with respect to market size for the product at the top of the funnel. Population is taken with respect to the target audience, mainly women. The initial 59 countries taken into consideration refer to Women Population of countries after elimination
The countries that are eliminated are Sri Lanka, India, Indonesia, Pakistan, Bangladesh, Nigeria, Vietnam, Philippines, Ethiopia, Egypt, Congo democratic republic of Congo, Ghana, Mozambique, Yemen, Myanmar, Tanzania, Kenya, morocco, Uzbekistan, Nepal, Iraq, Uganda, North Korea, Afghanistan and Syria as they are below the minimum threshold level of $ 6000. This is the desired threshold level as, Acai berry biscuit is a diet product and is not affordable by all customers. The other aspect is people having high income are more health conscious, not taking into consideration the basic carbohydrate intake but the overall nutritional value of the biscuit as they can afford it.
The third criterion taken into consideration is consumer expenditure on sugar and confectionaries of 21 countries refer to . The reason for taking data of the specific 21 countries is due to their population and income level is above the stated threshold levels.
The countries that are eliminated under this criterion are Thailand, Romania, Ukraine, Colombia, Peru, Algeria, Saudi Arabia and South Africa. Iran is eliminated as data is not available. These countries are eliminated as they do not have the minimum threshold level of $ 3000. The reason for setting this threshold is that countries that spend a certain amount of income on confectionary can help determine the markets demand pattern, lowering the risk of entry into the market of these countries.
The next filtering criterion is the age structure of the population in a country. In this aspect 12 countries are taken into consideration refer to . The age structure helps determine which country has the required target audience.
After the final elimination the countries due to low obesity i.e. below minimum threshold 22% which are rejected are Spain, Italy, France, Canada and japan. This final process gives detox regime the feasible markets to target. The reason for taking this value is because countries with high obesity will create a demand for healthier biscuits as they can consume natural sweet biscuits and balance the overall calorie intake thus, opting for nutrition with taste.
MODE OF ENTRY
In order to exploit opportunity in its targeted country detox regime will take into consideration the geographical distance as the product is a perishable good. The next aspect considered is the tariff barriers, exit costs and competition in order to enter the market. The product has a first mover advantage as it is a new and innovative product in the market. Though it has substitute products, Acai berry biscuits does not face any threats in the markets it is targeting. As the company is based in Brazil, the most feasible option is to first use contract manufacturing to enter Mexico, UK, Australia and Turkey. This mode of entry is an intermediate mode where a specialist manufacturer based in the host country will manufacture and distribute the product to retail stores and supermarkets. The advantage of this entry mode is the shared control, risk, ownership and profit. The financial investments in setting up a manufacturing plant from scratch is not involved in this mode of entry as, it uses existing plant, machinery and know-how thus, reducing cost of production. This entry mode will allow detox regime to concentrate on the branding and marketing activities of the product in the different countries and will not have to worry about the production. Even though contract manufacturing may result in loss of quality of product since, a third party manufacturer is producing the product, routine quality assurance checks will be made by managers who will be employed by detox regime to make sure that no compromises are done in the manufacturing of acai berry biscuits. The reason for using contract manufacturing in UK is because of the EU health and nutrition claims regulation which came into force in all EU member states on July 1, 2007. The regulation could act as a barrier to NPD in sectors that are increasingly having to focus on healthier alternatives, particularly confectionery.(http://www.researchandmarkets.com/reports/575126/growth_opportunities_in_confectionery.htm) Thus, exporting will have a high level of restrictions and other entry modes will require large capital investment as the cost of manufacturing in UK is high. After entering Mexico, UK, Australia and turkey the company will then export its product from Mexico to the united states as they fall under the same trade area NAFTA thus, making it easy to distribute the product without tariff barriers. The other reason of using this entry strategy is due to the geographical distance being small between the two countries, making it easier for the perishable goods to move. The advantages of exporting are gain economies of scale as, the capital invested is low in comparison to other entry modes and exit costs are low as well due to low investment and risk. The quality of the product can be controlled and there is authenticity of the product. Even though the company will face logistic cost while exporting, the overall cost of production will be lower than other entry modes as investment is lower whereas, the targeted geographical area is large.
Detox regime intends to adapt its product using the four elements to its target countries.
Pricing: The price of the product is set with respect to the indirect competitors, ingredient and quality of the biscuit. Acai berry is a high quality product and since it uses berries which are not easily available in the market the pricing strategy used is price skimming as the product has substantial competitive advantage thus, priced higher than competitors United Biscuit and Kraft. The prices are also set according to pack size i.e. 400g/14 oz. is $ 6.52, 200g/ 7.5 oz. is $ 3.52 and 2494.8g/88 oz. is $ 40.66. The prices will differ with respect to currency and exchange rate of the targeted country i.e. Turkey (lira), Mexico (pesos), Australia (AUD) and UK ().
Place: The distribution channel used for Mexico, turkey, Australia and UK is the same due to common entry mode. The channel used is manufacturer, wholesaler, retailer and end consumers as, the volume of the product is large, it requires an intermediary (wholesaler) to make distribution to retail chains and supermarkets easier. They also provide storage facility as the product is perishable and requires a control environment to be stored. The other reason for keeping the distribution channel short is to cut down additional expenditure that might increase the cost of the product. The distribution channel in USA is manufacturer, agent, wholesaler, retailer and end consumer. The reason for this channel is that as production is contracted to Mexico and further exported into US, agents with strong knowledge of the market are required in order to distribute to the right wholesaler who then in turn will distribute to the retail chains and supermarkets outlets.
Product: The core ingredient of the tangible biscuit is standard for all the target countries due to the beneficial advantage of its nutrients. The packaging color used is red and purple. This is because the color promotes fresher and healthier image and purple is the color of the berry. Detox regime also plans to include a zip lock seal on the package to lock in the freshness for a longer period of time. The brand logo and name will remain the same to create band identity. Minor packaging changes will differ with respect to culture i.e. for US, Mexico and Australia, the pack sizes will be bigger as the consumption in these countries is large and family pack sizes are preferred thus, pack sizes that are sold is 400g and 2494.8g. On the other hand, UK and turkey consume smaller pack sizes due to storage constraint at home and make purchases frequently. The pack sizes sold it these countries are 200g and 400g. The other aspect that will differ is the language on the packaging due to cultural and lingual differences. The common language used is English apart from which product description will also be written in Turkish and Spanish.
Promotion: To reach the target audience, which consists of health conscious women ages 14- 64, Detox regime will focus on a standard marketing campaign to enhance target reach, capturing market share and creating brand awareness.The company will run advertisements in magazines, TV, online, press releases, consumer promotion like coupons, public relations such as sponsoring breast cancer campaigns, billboards and will mainly focus on outdoor advertising effectively reaching the target audience.The communication message the company wishes to convey to the target audience is thatconsumers that are health conscious can control their diets without depriving themselves of the sweet craving for biscuits.Promotion will differ depending on culture and language but the communication message will be the same. Promotion in US, UK and Australia will be in English. whereas, turkey will use Turkish language and Mexico in Spanish. Promotion will also be according to festive seasons like in US thanks giving is celebrated whereas, Turkey celebrates a lot of Muslim festivals thus, changing product themes accordingly.
The high demand and changes made in consumer lifestyle towards healthy organic products has brought about a shift in trend towards the diverse market of biscuits and other confectionary products. The screening process has helped identify countries that detox regime can enter due to the feasible market demand patterns with respect to the criteria set i.e. women population, per capita GDP, consumer expenditure on confectionary, age structure and level of obesity. By elimination of countries which do not meet the required threshold Detox has chosen its target countries Turkey, US, UK, Australia and Mexico. The countries which are taken into consideration will then be entered by Detox regime through international expansion via contract manufacturing and exporting as the modes of entry. Acai berry biscuits can be adapted using the suitable marketing mix which is tailored according to culture, lingual factors and preferences of the countries. This will help Detox regime to expand its sales and market share in terms of volume and value. In the future, Acai berry biscuits can be marketed in other international markets to bring about brand awareness globally using this screening pattern.
- (marketsandmarkets.com, July 2009)
- (http://journals.cambridge.org/action/displayFulltext?type=6&fid=630732&jid=&volumeId=&issueId=&aid=574312) Another
- http://www.springerlink.com/content/q11863502274695m/_ )
- Source: CIA WORLD FACTBOOK (https://www.cia.gov/library/publications/the-world-factbook/fields/2004.html?countryName=&countryCode=®ionCode=A)
- Consumer expenditure on sugar and confectionery: National statistical offices/OECD/Eurostat/Euromonitor International (https://www.portal.euromonitor.com/Portal/ResultsList.aspx)
- Source: CIA World Fact Book, https://www.cia.gov/library/publications/the-world-factbook/fields/2010.html?countryName=&countryCode=®ionCode=&