Abstract
Companies should have a simplified approach of fusing their marketing efforts with the global sales to gain a competitive edge in the marketplace. The importance of a foreign market development plan is that it helps new or existing companies to create, expand, as well as promote successful business strategies in the foreign markets. As argued by Peter, Gabrielsson and Seppala (26), entering an international market depends on planning and research to achieve its business objectives.
This paper develops the most appropriate foreign market development plan for Dairy Queen, an American fast food restaurant. This international market development plan will discuss DQ’s market analysis, product-offering menu, as well as the company’s competitive analysis and market positioning. Besides, this paper will also discuss the general market description and the major obstacles the company needs to overcome. This paper will discuss the most appropriate distribution channel for Dairy Queen. In conclusion, this paper will highlight key issues discussed in DQ’s foreign market development plan.
Introduction
The general assumption in businesses around the globe is that companies that do not have an active marketing may fail to gain a competitive edge in the marketplace. Teething problems in foreign markets may cost a new company a great deal of loss. A marketing plan helps to keep a business to its initial business objective (Peter, Gabrielsson and Seppala 25). The Foreign market development plan should be able to conduct a comprehensive market analysis.
Key issues discussed in the market analysis include the relevance of the UAE markets and budgets that show capital costs and pro-forma income statements. Secondly, there is need to come up with the most appropriate product-offering menu. Product offering menu should include the most effective approaches of customizing the product for the UAE markets. Creating a competitive analysis and market positioning is also important.
The competitive analysis and market positioning should include incomes, market size, position, target market, and the number and location of these stores. Coming up with a general market description is essential when creating the appropriate foreign market development plan. Therefore, understanding major obstacle for the new company is essential. These barriers may include space/location opportunities, and the availability of suppliers including labor. Lastly, there is need to create an effective distribution channel of the new foreign business venture. By highlighting these key areas of a foreign market development, this paper acts as a clear guideline for the Dairy Queen when entering into the United Arab Emirate (UAE) market.
Company Overview
Commonly referred, as DQ, Dairy Queen Corporation is a well-established subsidiary of Berkshire Hathaway, Inc. Formed in the early 1940s, Dairy Queen has continued to provide its customers with “crave-satisfying nutrients and treats. For over 70 years, DQ has maintained a simple recipe. Despite the changing world, the company has continued to celebrate sports for kids. The company has continued to grow due to its involvement in a broad range of business practices and cooperate social responsibilities (Constanza and Mathews 33).
These business practices include Children’s Miracle Network Hospitals, local community partnerships, as well as the Dairy Queen Cares Product Grant Program (Turnbull and Paliwoda 111). Recently, the company has shown interest in expanding its business practices to the UAE markets.
In its UAE market, the company aims to venture into a new kind of business practice. Dairy Queen has planned to import foreign art, establish galleries in the Middle East region of the world, and create a website with a global reach. Unlike the US and Canadian, the United Arab Emirates market presents new challenges to the company’s plan to start a new business venture. With respect to new challenges in the UAE market, it is important to come up with a comprehensive foreign market development plan.
Dairy Queen’s market analysis
In the year 2007, Dairy Queen had generated global sales worth 3 billion USD. This increase was a representation of a 4.8 percent growth from the previous years. In 2007, Dairy Queen produced 36 percent of its sales through foods, 4 percent through beverages, and the remaining percentage of sales through its treats (Constanza and Mathews 24). While US companies increased their sales by 3.9 percent, sales in the Canadian stores increased by 5.5 between the year 2006 and 2007.
Dairy Queen’s product offering menu
It is important for the business to come up with a proper definition of their product to achieve its desired goals. The description of these products should help a business to attain a competitive edge and make an economic sense (Constanza and Mathews 34). Whether Dairy Queen offers a service or a product, it should be able to provide a clear definition of the different approaches it would use to reach the target audience at the right time in the foreign markets. An appropriate product offering approach will assist in attracting ideal purchasers.
In theory, it is critical to provide a definition of a given product at the time the new business is established (Turnbull and Paliwoda 111). Through conducting a careful market research as well as cost assessments, Dairy Queen will be able to price its products in the most appropriate manner for its target market. The company could also consider selling its new product is a definite schedule. By selling its products in an appropriate timetable, DQ would get good return on its investment in the UAE (Richard and Sanderson 422).
Taking enough time to define what the company offers, its target market, the related benefits will help Dairy Queen in creating a structured marketing plan. Coming up with reasonable sales targets will help in consolidating a marketing plan that will expand and develop the new venture. As DQ focuses on importing foreign art and establish galleries in the UAE, there is need to define its products carefully.
DQ’s art gallery will be located in the ten states of the UAE. In each of its stores, the floor space will provide a broad range of art and craft supplies. Due to the company’s small stores, DQ will have a purchasing power to buy artworks directly from manufacturers across the world. Buying the pieces of art from the different suppliers across the globe will reduce intermediary’s costs. Customers will get customized artworks upon making an order. Free delivery services will be given to customers who purchase goods worth 500 USD and above.
Dairy Queen’s Competitive analysis and market positioning
As a significant part of a business plan, competitive analysis helps a company to not only differentiate its offering but also to create value for the target market. A competitive analysis involves modeling a competitive landscape to attain a competitive advantage in the marketplace. As argued by Turnbull and Paliwoda (112) creating communications and marketing strategies must start with having a clear understanding of forces that surround a business (Constanza and Mathews 45).
Therefore, in each engagement, Dairy Queen’s marketing strategy should start with a company’s stakeholders. Applying a competitive analysis will help in creating unique an individual product and service (Richard and Sanderson 424).
Balance Sheet
Proposed Budget for DQ Art Gallery.
The General market description
Following a successful contribution at the ‘Art Antiques Design Dubai’ in 2008, the UAE has had an increased numbers of art galleries flights. As highlighted by De Marieke (243), world class have recognized the increased international interests of the United Arab Emirate’s art market. Art dealers London and New York Fairgrounds argue that UAE’s ‘Art Antiques Design Dubai’ have provided stable foundation through which artists can be able to connect with UAE’s art clientele.
The Gulf Cooperation Council governs the art market in the UAE. Commonly referred to as GCC, Gulf Cooperation Council is the political as well as economic association of the Arabian Gulf countries. As argued by Turnbull and Paliwoda (107), the recent past has seen an extreme enthusiasm in the GCC art markets. Qatar and the UAE are the largest purchasers of the contemporary western art.
DQ Art Gallery will compete with UAE’s well-known art galleries. Its competitors will include the Gallery Isabelle van den Eynde, Grey Noise, The Third Line, and Lawrie Shabibi. According to Stanley (107), most art galleries in the UAE are equipped with “state of the art” products. The high-end income and middle-income earners are the most appropriate target market in the region (Peter, Gabrielsson and Seppala 24). As far as UAE’s market positioning is concerned, artworks are the most sold products in the area.
Considering the increased demand for art products, DQ will establish ten distribution stores in all the UAE states. These countries include Abu Dhabi, Sharjah, Ras al-Khaimah, Ajman, Fujairah, Umm al-Quwain and Sharjan.
Major obstacles that Dairy Queen need to overcome
Expanding business practices to the foreign markets presents many challenges. For DQ to attain a competitive advantage, it should understand challenges present in the foreign markets (Constanza and Mathews 55). Understanding these challenges will enable DQ to create the most effective strategies for selling its products.
Business Culture
Business culture is among major problems Dairy Queen will face as it expands its business practices into the UAE. Initially, DQ operated in two countries (Canada and the US). The reason for creating a new business model is that the conventional business model may not work in the new markets. DQ will have to be flexible enough to adjust to UAE practices with respect to UAE’s characteristics. Due to the differences in business cultures, most business activities in the UAE do not conform to accepted standards (Richard and Sanderson 422). Dairy Queen should be humble and be ready to learn from UAE’s culture. The importance of learning UAE’s business model is to understand the complexities in their markets.
Market Needs Identification
For a company to succeed in any market, it should be able to understand the actual needs of its target market. Customer’s needs are different in every country. Since customers have needs that need a solution, creating products that will offer, solutions to their problems are necessary. Gaining the actual consumer requirements in a foreign country is challenging. American marketing executives are bound to do mistake when entering into the UAE markets. Dairy Queen may experience the problem of identifying consumer needs when entering the UAE art market.
Brand-Name Power Dilation
Although DQ is a well-known brand in Canada and the US, expanding its business practices to the UAE may lead to brand-name power dilation. In the digital era, American brands have gained an increasing recognition in the world markets. Despite their recognition status in the world markets, American product may become less popular when introduced in the foreign markets (Constanza and Mathews 35). DQ may face a long and expensive process to win the trust of consumers in the foreign markets. Besides, most American companies cause resentment when they attempt to take over local companies in the foreign nations.
The Style of Communication
Companies venturing into the foreign markets consider styles of communication as the greatest barriers to achieving a competitive edge. For instance, the American pace of business in one country may different from another country. While Americans are quick to business negotiations, the UAE business people prefer to create relationships.
Distance and Time
Despite technological advancements, business managers in some countries may consider establishing individual relationships. For small companies in the US, time and distance may translate into a significant venture in traveling expenditures. Forcing top managers out of duty for an extended duration may a lot of time (Michael, Rivoli and Ronkainen 34). Variance in time makes it a challenge for managers to organize projects where teamwork is needed. For instance, business managers from the West Coast may be forced to work different times of the day. The time factor may become a challenge when it comes to management issues.
Access to Reliable Partners
Companies expanding business practices to foreign countries face challenges such the inability to find reliable partners. American companies establish relations with distributors in the foreign nations through hiring sales representatives. DQ may be forced to engage in public relation and marketing practices in the foreign countries to find reliable partners. However, without an initial experience, DQ may face a challenge of getting competent and trustworthy personnel.
Distribution channel for Dairy Queen
An effective marketing strategy should use the most reliable distribution channel when delivering its products to the consumers. Therefore, selecting an effective distribution channel will help new businesses to attain a competitive edge in the marketplace.
Various distribution channels include the use of direct sales, using retailer, using distributors, as well as the internet. An effective channel of distribution should ensure that consumers across the country could by the company’s product (Richard and Sanderson 422). There are many of factors to consider before choosing the most appropriate channel of distribution. The factors include the cost of control, the required resources, as well as skills, and management cost. The internet and distributors serve as the most appropriate channels of distribution channels for DQ.
Internet Distribution Channel
With recent technological advancements people are increasingly connected. Business people, students, and the entire population are relying on the social networks to convey the message to each other. Companies are using the internet medium to not only advertise their products, but also sell their products through shopping websites such as EBay and other company websites (Constanza and Mathews 65).
The greatest attribute associated with the internet as a channel of distribution is that it can reach the most significant population in the shortest time. Utilizing the internet as marketing and selling tool will greatly increase the company’s sales. Due to its cost effective nature, the Internet presents great opportunities in terms increased sales and brand recognition.
Distributor
Distributors ensure products reach the consumer in the most convenient way. In marketing, distributors act as a link between the manufacturer and consumers. Having the different distributor in various parts of the UAE region will bring DQ’s products close to the consumers. In this case, most consumers will not rely on arts from other countries (Michael, Rivoli and Ronkainen 24). Distributors are of great significance since they expedite the response.
By promoting consumer response, distributors help companies to not only enhance but also create value-added products. As argued by Michael, Rivoli and Ronkainen (34) distribution is the most viable substitute that can supplement and balance direct sales. It is important for DQ to treat the distributor channel of distribution as an important part of its marketing strategy. The company should consider using distributors as an important channel of distribution since they help to build customer-manufacture relationships.
Since distributors play a significant role in bridging the gap between the consumer and producer, DQ should train its distributor on the products. As argued by Michael, Rivoli and Ronkainen (55), manufacturers who support and view their distributors positively by supplying them with the appropriate marketing strategies and tools will attain a competitive edge in the marketplace. DQ should realize that using a distributor, as a marketing channel will give rise to increased profitability for the new venture in the UAE.
Conclusion
As established in this paper, companies need to create simplified approach of fusing their marketing efforts with the global sales. The relevance foreign market development plan is that it helps new or existing companies to create, expand, as well as promote successful business strategies in the foreign markets. With respect to the importance of strategic planning, this paper has developed the most appropriate foreign market development plan for Dairy Queen.
Among the key issues addressed as DQ expands, its business practices in the foreign market include the company’s market analysis, product-offering menu, as well as the company’s competitive analysis and market positioning. Besides, this paper has discussed the general market description and the major obstacles the company needs to overcome. This paper has also recommended the most appropriate distribution channel for Dairy Queen.
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