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Country Analysis and Foreign Market Entry Choice Report


Abstract

The purpose of this report is to analyze the foreign market and entry choices in relation marketing of pet care products in India. Various sources of theoretical framework have been used to gather secondary information. In addition, issues such as competition, culture and market have been researched.

This business report has analyzed foreign markets referred to as 5Cs by use of theoretical framework. These 5Cs are based on competition, culture, customers, constitution and company. This framework which is very broad has been used to analyze the real Indian market situation and pet care industry, though it can be used to analyze a variety of foreign markets.

The findings show the evidence of potential pets care firms to enter the Indian market, based on preferences of the consumers and the general market situation. In addition, it has been found that the future success of pets care firms in India will be determined by their strategic commitment.

The categories of pets food in India is increasingly becoming specialized along size, breed, and age of dogs, cats and other pets. Rising disposable income and humanization of pets are believed to be the key causes of rise in demand for these products. Royal Canin premium brand is one of the dog foods, which is highly specialized and cater for varied life stages, sizes and breeds.

In many urban centers, exclusively-packaged dog food is commonly fed on puppies less than six months. Flavors and life stages are the main categories of product specialization, though it is less profound in cats’ foods. This is attributable to the fact that cat owners are less interested in learning about a variety of breeds compared to dog owners.

The study recommends India as a potential international market for pets’ care products since the analysis of the facts shows that this environment has less risk factor and many opportunities as a result of increased benefits of pets’ foods, higher awareness of the dietary needs of pets and rising disposable income.

Introduction

In future, pets care in India is expected to continue registering more popularity and growth. Several factors such as benefits of pets’ foods, higher awareness of the dietary needs of pets and rising disposable income are attributable to such growth and popularity. More consumers in India are increasingly finding the need to have pets for companionship and are spending more on their welfare.

The realization of the benefits of prepared foods is drawing a sharp shift from non-prepared foods. As the owners of the pets become more interested in improving their pets’ health and giving them comfort, strong popularity and growth within the pets’ products such as dietary and supplements and grooming products is expected take place (Ramesh, 2008).

Provision of pets’ care products in India is dominated by multinational companies. In year 2010, Mars International India Pvt Ltd was the leading player, followed by Royal Canin India Pvt Ltd and Provimi Animal Nutrition India Pvt. Strengthening of multinationals and Consolidation of pets’ care products resulted from a number of acquisitions that took place in 2009. Specifically, multinational Companies gained from loyalty and brand awareness.

In addition, availability of resources for education and marketing as well as provision of quality products also gave these companies a competitive edge. In 2010 and 2011, international brands like Hill’s Pet Nutrition Inc continued joining the pet food industry. The manufactures have seen a growing demand for pets’ products in urban areas and hence continues offering different wellness and health products for pets in India (Louis, Boone & Kurtz, 2011).

Product country and relevant market

Nowadays, many companies opt to operate globally rather than locally (Majaro, 1982). International marketing has been enhanced by a quick pace of globalization. Any firm which considers going global has international marketing strategies at the top of its agenda (Majaro, 1982). Johnston and Beaton (1998) argue that a lack of proper market research is the key reason why firms that venture into international markets fail.

They add that foreign market selection is one of the most critical considerations that organizations should make, and that the specific market, the products as well as the management should be well balanced. Wood and Robertson (2000) advocate the analysis of factors such as market potential, political, economical, infrastructure, and legal and culture when designing foreign market entry strategies (Johnston and Beaton, 1998).

This report analyses different categories of pets care products in India. These products are increasingly becoming popular in the Indian, and they are becoming specialized along size, breed, and age of dogs, cats and other pets. Rising disposable income and humanization of pets are believed to be the key causes of rise in demand for these products in India.

For example, Royal Canin premium brand is one of the dog foods, which is highly specialized and cater for varied life stages, sizes and breeds. In many urban centers, exclusively-packaged dog food is commonly fed on puppies less than six months. Flavors and life stages are the main categories of product specialization, though it is less weighty in cats’ foods.

PEST Analysis

Political and legal environment

The political environment is mainly shaped by the constitution which has a strong impact on macroeconomic environmental factors for firms which contemplate going international. Any factor that can influence the firm’s decision making or operations regarding international or national political factors is analyzed under the political and legal environment dimension (Doole & Low, 2004).

The firm’s foreign business operations can be negatively affected by the political environment in that particular country. The profitability and security of the firm’s investments can be greatly impacted by the political events of the host country. For instance, the government polices that touch on restriction of expatriates’ employment, tax laws and the expropriation of a firm’s investments have far reaching effects on the firm’s operations.

Factors such as taxation policy, social welfare policies, and government stability should be considered (Johnson, Scholes & Whittington, 2005). In addition, it is very important to assess the legal environment of the host country, by considering factors such as employment law, competition law, product safety law and health, and safety law (Johnson, Scholes & Whittington, 2005).

The political and legal environment can be divided into host country environment and the home country environment. The home country environment entails the legal and political matters that affect the international relations.

The country that hosts the trading activities is involved in the export market which encompasses political and legal issues such as market control, import control, labor restrictions and local laws among many others. Factors such as international trade laws and the role of trade unions within two or more countries are the issues to consider in regard to the international market.

The current Indian government is headed by a prime minister. However, the prime minister is free to select advisers and special commiteee to evaluate foreign policy options and other areas of interest to the Indian government.

For instance, Manmohan Singh appointed K.Subrahmanyam to spear special task force charged with the responsibility of examining global strategic developments over a period of ten years. More so, the Government is chanelling huge amounts of funds for carrying out research on how pets’ products can be improved (Louis, Boone & Kurtz, 2011).

India has an advantage of its growing economy, friendly foreign policy, strategic location coupled with large vibrant diaspora. It aslo enjoys close ties with a number of developing countries amongst them being South Afica, Brazil and Mexico.Other major countries consindered close trading partners are the US, France, Russia and Israel.

Economic & financial environment

The operations of organizations are highly affected by the country’s economic conditions. For example, people tend to spend more if their disposable income is higher and cut their expenditure when income level decreases.

In addition, uncertain economic conditions such as the interest rate make prediction of profits uncertain especially when considering that the foreign currency needs to be converted in to the home currency’s currency. As such, due attention should be paid prior to investing in a foreign country. Such factors include disposable income patterns, GDP patterns, inflation, unemployment rates, interest rates, and the stability of the currency (Hollensen, 2004; Johnson, Scholes & Whittington, 2005).

India’s economy is the twelfth world largest economy. The major backbone of the economy is agriculture and manufacturing with fewer mineral resources (Das, 2001). The Indian economy did not escape the effects of global recession and financial crisis which led to the decline of annual GDP from 7.4% to 6.7% between 2009 and 2010 (Employment and Unemployment Situation in India, 2011).

Socio-cultural environment

India is the second most populous nation after China with a population of 1.21 billion people. The life expectancy in India is 65.77 years for male and 67.90 for female. The country of India has the largest population of Hindus, Zoroastrians, Jains, and Sikhs. This nation is the home of the largest Muslim population though the distribution of religion varies from one territory to another (Pasricha, 2006).

In India, factors contributing to growth in pets’ products includes; demographic shift, increase in income levels and increased awareness of the benefits of pets products. Currently, there is an increased awareness in media coverage of scientific research on benefits of specialized products for pets, and also the government has stepped up healthy pets’ foods campaign.

Technological environment

Technological environment includes the knowledge based on scientific discoveries, innovations and inventions. However, major discoveries can have significant marketing implications since they can drastically change the industry (Lander, 1991).

Besides, technological innovations, companies also try to ensure that the development process of such innovation is achieved within the shortest time possible in order to trickle down the resulting benefits to the clients and for them to keep pace with their competitors. Companies in this industry are spending millions of dollars to develop their products in a bid to ensure that they maintain appeal to their clients.

The international marketers need the technological environment particularly for gathering crucial information. The internet and the information technology have significantly revolutionized the way the business is done. A firm that intends to trade internationally should be conversant with the technological environment of the country it intends to trade with, considering that certain countries are technologically advanced than others (Doole & Lowe, 2004).

The technological development of pets’ care products manufacturing sector in India is dependent on factors such as the investment climate. There have been major structural changes since 1990s which has seen considerable progress in pets’ care products manufacturing and distribution.

Although there have been major challenges recently, the reforms progress in India are significant and much development are expected. Nonetheless, the long-term competitiveness of India pets’ care firms is mainly dependent on production efficiency and the ability to import, develop and adapt new technology (Hofstede, 1991, p.23).

Competitive Environment

The pets’ care products industry in India is projected to grow at between 5% and 15% annually (Louis, Boone & Kurtz, 2011).The industry experts also add that the industry is highly competitive and fragmented with underutilized market opportunities and lack of clear brand leadership.

The opportunities for triumphant entrance are evident and can hence be capitalized on. The competitors in this industry are numerous. Manufactures and designers are the direct competitors of complementary products and elevated pet feeder such as pet fountains. The major competitors in this industry include A Charmed Life (Elevated feeders), Veterinary Ventures, Inc. (Drinkwell fountains), Doskocil Manufacturing Company (LesBistro feeders and waterers), and OurPet’s Company.

The elevated pet feeders’ consumer buying habits is basically influenced by the elevating pets’ food, products functionality and the health benefits of the products. The consumers who are not satisfied by what the market offers are known to manufacture their own elevated feeders or turn to their friends for help.

To gain consumers royalty, firms are struggling to meet the specific and unique needs of the consumers by venturing in different niche marketing. To ensure a competitive edge, many firms turn to patented designs and technology to introduce their elevated feeders in the market. In addition, many firms ensure that their products provide off-the-shelf solution for owners of pets.

The sale of pets’ care products is hardly affected by the slow growth of the economy in India, despite the fact that the economic status has made it quite difficult for the Indian consumers. In 2009, it was projected that of the key pets’ care products in the market, specialized products would perform better and continues to grow in terms of sales revenue. Other types of products which were expected to continue to enjoy good sales growth rate were the smaller products for cats and dogs (Lander, 1991).

Study of the Indian market also shows that most products are sold directly to the customers. Also, majority of the customers are farmers and hence most of the products are directed at them. The direct selling market appears to be dominated by small retailers owned by larger multinational companies. In addition, there are numerous national companies which operate direct sales outlets across the country. The foreign owned firms imposes intense competition on the local companies leading to closure of a good number of them.

Most of the direct selling companies are devising new strategies as a way of facing the competitive market. It is apparent that many companies will adopt Internet marketing in the future in a bid to capture wider market. Though a common business practice in India, direct selling is more developed in other Asian countries. This can be attributed to the fact that direct sales have got some negative image.

Analysis of facts gathered

Advantages & disadvantages of your product

Dealing with pets care products is advantageous because of convenience and choice. Considering that a company has enough resources to purchase the supplies in bulks, it can be capable of selling products at lower prices and can also offer the customers a wide variety of brands to choose from.

In addition, pet stores dealers can be able to offer personalized services such as membership numbers to their customers hence monitoring their purchase behavior and eventually turning them into royal customers. On the other hand, pets care business is very responsive to external forces such as change of laws, which can lead to hefty losses or loss of customers. Furthermore, if the staff of a pets’ care company is not trained in a relevant profession, they may not be well versed to deal with the pets’ care products.

Marketing Mix

Product

The product is the most important aspect to consider while planning for global market mix (Hollensen, 2004). Product entails not only the tangible goods but also the ideas, places, personnel and services. A product is defined by three levels, including the core product, the actual product and the improved product.

The core product is what the buyer really buys or rather the primary level. What the customer desires or what satisfies their problem-solving process is the core product. The actual product includes the quality level, the design level, packaging, features and the brand name. The improved product has some additional customer service and benefits such as credit and delivery, warranty and after sales services.

Kotler (1997) provides that the core product can easily be standardized while going international, while the improved product is the most complicated. Branding plays a very crucial role in regard to international marketing. Branding is the element that enables the customers to identify the products. When launching a product abroad, the home country is considered to be an important factor (Javalgi & White, 2002). Dichter

(1962) added that the home country has significant impact on the manner in which consumers respond to the products. Home country is associated with cultural stereotypes in regard to varied countries. Generally, consumers believe that superior products are produced by highly skillful and trained workforce. That is why goods produced in developed countries are rated highly by the consumers (Verlegh & Steenkamp, 1999).

Price

Price can be defined as the amount of money which is paid in return for a service or a product. Kotler (2005) defines it in broader terms to mean a combination of all the values that consumers are ready to part with in return for the products or the services. Adjustment of the price can be done relatively easy and hence a very flexible marketing strategy.

The strategies for international pricing can be influenced by factors such as philosophy and tradition of the firm, a need for a higher rate of return, innovative and unique features of the product, the cost of the product, and the availability of substitute goods. In addition, external factors such as government controls on import or exports can as well influence the pricing decisions.

The best price that a firm decides to set for a particular foreign market depends on the development, competitive environment and infrastructure of the retail system, economic conditions, and laws and regulations (Kotler, 2005). The value of the product or service is the other very important factor that will be considered when fixing the prices. Those products that are valued highly by the consumers are also expected to be priced highly.

Place

The concept of distribution channels is basically the one that deals with place as a marketing mix. A distribution channel is the one responsible for the transfer of products from the producer to the final consumer. Market intermediaries are commonly used by producers to transfer the products to the consumers. Market intermediaries increase the value of the products through their experience, contacts, scale of operations and specialization (Kotler, 2005).

The marketing channels become very challenging when it comes to international marketing. To get access to the market, the company may decide to sell directly to the consumers and also use the intermediaries to plug the gap. The most popular channel of distribution for pet products is pet shops as they offers advice to customers and avails a variety of brands as well.

The second most popular channel of distribution for these products is the veterinary clinics, especially as a result of the trust that these professionals exhibits due to their skills. However, supermarkets channel is increasingly become popular because most of these stores stock most of the products from the leading brands such as Mars International India Pvt Ltd.

Promotion

Promotion encompasses making of decisions on how to increase the sales of the pets’ care products. There are a variety of techniques that can be used for this purpose. Promotion is conducted with two basic aims, including persuasion of the customer to purchase the products and making known the existence of the products to the potential and existing customers.

The existing and the potential customers for pets care product may not be aware of the existence of such products or the benefits of using them if the necessary information is not communicated to them. The tools for communicating the information to the customer are varied and it is upon the company to decide which one to use. To achieve an optimum marketing objective, the company should mix all the four components of promotion mix which includes personal selling, public relations, sales promotion and advertisements.

Promotion of pets’ care products should capitalize on making awareness of the importance of the products to the pet owners. For example, a good promotional strategy should portlay the company’s image as one that attaches importance in the relationship between the pets and their masters.

The target audience should be told repeatedly of the importance of the love they holds for their pets and the need of caring for them. The promotional marketing strategy should build a business relationship which is filled with friendship, approval and trust. The strategy should drive the point that pets should be loved and cherished just like any other family member, hence making the customers to offer them the special treatment that they deserves.

Segmentation

The use of segmentation is very useful when selecting a population to include in a focus group. It involves the creation of groups on the basis of particular categories such as income, sex, ethnic among many others. Segmentation is very useful as it makes comparative dimension possible.

In addition, it facilitates discussion by making the groups more homogenous. This study can use four market segments including pet care professionals, design professionals, individual consumers and government agencies. Pet care professionals may include focus groups such as landscape architects and interior designers.

Pet care professionals are breeders, veterinarians, pets’ day care centers and kennels that need specialized products for their clients. Government agencies may be taken to include fire departments and police dog departments that benefit from various pet solutions. Individual consumers that could be the largest segment of the potential buyers are the household who own pets.

Targeting

Targeting involves selection of the specific segments that the company wishes to market the products. The marketer should assess different market segments that are available and enter what seems to be the best (Shostack, 1977).

When assessing the best market to enter, the company should consider factors such as the attractiveness of the market segment, its growth potential, its size, and the objectives of the company as well as the available resources. Evaluation of the market segment starts with collection of information relating to growth rates, current segment sales and profitability of different market segments among others.

The segment that possesses the right growth characteristic and size is perhaps the best choice. A pet’s care marketer should select the size and growth of the segment based on the resources of the company. The company should however focus on the segments that are potentially more profitable.

Since each buyer, considered as separate segments, exhibits unique needs and wants; the marketer may wish to devise a distinct market plan for each. Alternatively, if there is less number of smaller buyers, the company may wish to design broader segments of buyers.

Positioning strategy

Product positioning enables the customer to identify with the unique nature of the products. The customer uses particular attributes to define the product relative to the competitors’ products. For example, a particular brand of pets care brand can be positioned as healthy, all-purpose cats feed.

The customers should be provided with a lot of information regarding the product so they can identify with its unique characteristics (Berry, Parasuraman, & Zeithaml, 1985). Although the consumers can position the products in their minds without the help of the marketers, the marketers may not wish to leave the position of their products to chance. Instead, they find it important to plan the positions of their products in a manner that will yield the best possible outcome (Abraham, 1954).

Validity of information and/or its sources

The internal validity of a study depends on the quality of the information that has been used. This means that the researcher should have a good understanding of the content of his study (Jacobsen, 2002). Interview on some focus groups has been used o create a good understanding including its strategies, competencies and resources. Nonetheless, research on the background of pet care products, especially the reason why it is very popular in India is scanty.

Assessment & selection of entry strategies

Various entry modes

Pet care firms may opt not to invest heavily in the foreign market, and as such, give franchise licenses. A firm may establish a head-office with a few employees and then recruit locals as regional managers back in their home towns. Nonetheless, countries that deal with pets’ care products can apply for franchising agreements in return for a license fee.

This strategy had been undertaken successfully in the countries such as Arab, India, Central America and the UK. Kotabe and Helsen (2004) describe the kind of entry strategy adopted by most pets’ care firms as a mix between franchises and wholly owned subsidiary.

When a pet’s care producer prefers opening up their own office abroad and employ their own employees, then a wholly owned subsidiary method of entry is applied. Regional managers are however offered franchise rights so as to expose the company to more expansion opportunities.

Recommendation about market entry mode

This study has analyzed the foreign markets based on PEST. This is a very important framework that has helped to analyze the real world of pets care products and India as a market. The findings of the study show that it is potential for the companies to enter Indian market, either as a wholly owned subsidiary or as a franchise.

Most importantly, it has been found that pets care producers’ strategic commitment to enter a mature market like India is very critical. Notably, the Indian business environment does not appear to hold many risks and as such, establishing a wholly owned subsidiary can be a prudent decision.

Conclusion

This report intends to analyze the international market and entry choices in relation marketing of pets’ care products in India. To get a better understanding of the factors to consider, different frameworks have been used to analyze the Indian market. Existing literature has been gathered and used as the basis for analysis of the 4 Ps of international marketing. In the coming years, pet care is likely to register robust performance in Indian market.

As pet owners continue seeking for expediency means for their pets, they will continue shifting towards prepared foods. Since the urban pet owners in India understand the benefits of different products and the needs of their pets, they are expected to continue demanding socialized and premium food. Furthermore, demand for pet care is likely to heighten as the status of pets becomes more pronounced, as the pet owners turn to pet products that will guarantee healthcare, grooming and leisure for their pets.

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IvyPanda. (2019, April 25). Country Analysis and Foreign Market Entry Choice. Retrieved from https://ivypanda.com/essays/country-analysis-and-foreign-market-entry-choice-report/

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IvyPanda. 2019. "Country Analysis and Foreign Market Entry Choice." April 25, 2019. https://ivypanda.com/essays/country-analysis-and-foreign-market-entry-choice-report/.

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