Introduction
Background
The food and drink industry in the European region is one of the most attractive markets. However, the high rate of globalization has provided a major challenge to industry players due to intense competition (Dagnino & Rocco, 2009).
The industry has become internationalized over the past decade. Three major wholesale and import groups dominate approximately 80% of the market (Azar, 2011). In a bid to remain competitive, firms in the industry are focusing on improving their operational efficiency.
Some of the strategies that firms are adopting include forming international alliances, centralizing their purchases, and undertaking international market expansion (Belch & Belch, 2009).
Problem statement
The Swedish food and drink industry has become very competitive due to increased market entry by local and international investors. The attractiveness of the industry emanates from the high rate of economic growth despite the adverse effects of the 2008 global financial crisis.
Surviving in the industry requires businesses to adopt effective operational, market entry, and marketing strategies.
According to Simsek et al. (2007), understanding the success factors that influence businesses in the international market is paramount in the process of developing new products.
Gaining knowledge on the international market will aid in minimizing the likelihood of failure as such knowledge will aid a firm in avoiding the common mistakes that emanate from lack of the right information (Ernst, 2002).
It is projected that introducing Ayran (a new yoghurt product in Sweden) will address the consumers’ health and wellness needs. However, this goal will only be achieved if effective marketing, entry, and operational strategies are adopted.
Rationale
Consumers are becoming more conscious of health in their consumption patterns (Notaker, 2009). Consumers have become more aware of the importance of consuming healthy products.
Change in consumer preferences coupled with new regulations has encouraged innovation in the food and drink industry (Borg, 2009).
Numerous health and wellness food products have been introduced in the Swedish market. Thus, introducing Ayran Yoghurt will not only help in addressing the consumers’ needs, but also contribute towards profit maximization.
Research objectives
- To evaluate the success factors that influence market entry into the Swedish food and drink industry.
- To investigate the most effective internationalization strategy that should be used in entering the Swedish market.
- To analyze the marketing strategies that food exporters should adopt in marketing their products in countries with different food culture.
Research questions
The following research questions will be analyzed in accordance with the above research objectives.
- What are the key success factors that influence market entry into the Swedish food and drink industry?
- Which are the most effective internationalization strategy that should be adopted in the process of venturing into the Swedish food and drink industry?
- What marketing strategies can food exporters adopt in marketing their products in countries with different food culture?
Literature review
Success factors
Swedish consumers are increasingly inclining towards the consumption of more nutritious, more convenient, and fresh products. Demand for high quality milk products in Sweden has increased significantly. Moreover, consumers are shifting towards the consumption of organic food products.
Major retailers in Sweden are investing in the development of organic food products (Jones & Parry, 2011). Consequently, local brands have gained substantial market recognition, which highlights the high market potential in the Swedish food and drink industry (Roberts, 2005).
Understanding the national culture of the target market plays a critical role in determining the success of investors in the international market (Kogut & Singh, 2012).
One of the cultural issues that investors should evaluate relate to cultural distance. Drogendijk and Slangen (2006) define cultural difference to include the “extent to which the shared norms and values in one country differ from those in another country” (p. 362).
Hofstede developed four main dimensions in an effort to understand the national culture. These dimensions include individualism, uncertainty avoidance, masculinity, and power distance.
Integrating due diligence can enable investors understand the national culture, viz. the society’s values, norms, and beliefs, of the target market (Abu-Jarad et al., 2010).
National culture influences the consumers’ purchasing behavior. For example, in an individualistic society, the consumers’ decision-making is not subject to group values as in the case of a collectivist society.
By analyzing a country’s uncertainty avoidance index, foreign investors can understand the degree of risk in the international market.
The success of Ayran Yoghurt in the Swedish market will also depend on how effective the product is developed. Effective quality planning should be undertaken in the new product development.
Extensive commercial evaluation and market-directed feasibility studies with reference to the new product should be conducted prior to entering the market.
The entrepreneur should also undertake continuous commercial appraisal of the new product development project to determine how well it is aligned with the market needs.
Moreover, the entrepreneur should understand the difference between customer integration and market orientation in the NPD process. Effective organization is fundamental in the process of introducing new product to the market.
Thus, an effective cross-functional product development team should be constituted. Moreover, effective communication amongst the team members should be integrated (Ernst, 2002).
Internationalization process
Currently, internationalization is one of the major strategies that organizations are adopting in pursuit for profit maximization. Internationalization enables organizations achieve economies of scale, hence attaining their profit maximization objective (Forsman, 2008).
The internationalization process comprises two main aspects, which include the state and the change aspects. The state aspects entail market knowledge and market commitment.
These aspects relate to the efforts that foreign investors undertake in order to understand the international market. The change aspects relate to current activities and commitment decisions.
On the other hand, the change aspects relate to the decisions made by investors to commit the necessary resources in the current business activities (Johanson & Vahlne, 2009).
Modes of entry
Globalization has provided entrepreneurs with an opportunity to expand into the international market (Hakanson & Dow, 2011). The choice of entry mode varies from one country to another.
Some of modes of entry that organizations can adopt include foreign direct investment, joint venture, and licensing, exporting, and sole venture (Gelder, 2005).
Modes of entry into the international market are influenced by the cultural distance between the entrepreneurs’ domestic country and the foreign investment destination.
Some of the dimensions that entrepreneurs can consider in order to understand cultural distance include power distance, uncertainty avoidance, masculinity-femininity and individuality.
Kogut and Singh (2012) further opine that cultural distances between countries have significant impact on the prevailing investment risk.
The prevailing cultural distance between the two countries determines the easiness with which an organization can transfer best operational practices into the international market.
Moreover, understanding cultural distance gives entrepreneurs insight on how to avoid cultural gaffes, and to adapt its products to the prevailing culture.
Therefore, it is imperative for entrepreneurs to determine the extent of cultural distance in order to determine the most effective mode of entry. For example, joint venture is the most effective mode of entry in countries characterized by high cultural distance.
Marketing strategies
Cavusgil and Zou (1994) are of the opinion that globalization and competition have increased the need for internationalization. Growth-oriented firms are considering investing in the international market in an effort to achieve their financial and non-financial goals.
The European food industry has become very competitive over the past few years because of increased internationalization. Numerous food companies are venturing into the market (Azar, 2011).
Firms venturing into the European food market should therefore adopt effective export market strategies. However, this can only be achieved if the entrepreneurs understand the conditions prevailing in the international market.
The prevailing food culture is one of the aspects that foreign investors into the Swedish food and drink industry should consider. Azar (2011) is of the opinion that there is a positive correlation between food culture distance and the export marketing strategy.
In the process of introducing Ayran Yoghurt, the entrepreneur will evaluate the difference between the local and the foreign market targeted to determine whether the product is aligned with the market needs. This will be achieved by conducting an intensive market research.
Consequently, the entrepreneur will gain insight on how to adjust its marketing strategies to fit the Swedish market.
Research methodology
In conducting this research, both qualitative and quantitative research designs will be used. The rationale to integrate the two research studies arises from the need to gather a wide range of data from the field.
Qualitative research design provides the researcher with an opportunity to ask additional questions, thus improving the outcome of the study. On the other hand, quantitative research design will aid in simplifying the data collected.
Population and sample
The study population for this research comprises a multi-collection of individuals who include consumers, industry players, specialists and consultants, and entrepreneurs.
The decision to select this population hinges on the need to have adequate knowledge on pertinent issues in the Swedish food and drink industry.
However, only a sample of the population will be selected for study. Thus, random sampling will be used in selecting the study sample. Sampling makes the research process easier and manageable.
Data analysis and presentation
The researcher will conduct adequate data analysis and presentation by undertaking a comprehensive analysis on the research questions.
Qualitative research design will enable the researcher to gather a wide range of information. The data collected will be analyzed using graphs and charts to aid in simplifying the voluminous data collected.
Data collection method
Primary and secondary methods of data collection will be used by using questionnaires and interviews. A comprehensive set of questionnaires and interview will be formulated. The researcher will ensure that the questionnaires are effectively designed in order to eliminate ambiguity.
Secondary sources of data will also be used by using published reports, journals, and relevant websites on dairy products. However, the researcher will ensure that the secondary sources used are credible.
Conclusion
By following this proposal, the researcher will develop a comprehensive understanding of the Swedish food market.
The proposal shows that the likelihood of Ayran Yoghurt succeeding in the international market is high as evidenced by the high rate at which consumers are changing their taste and preferences with regard to food products. Consumers are becoming more conscious of their health and wellness.
Consequently, consumers are shifting towards the consumption of organic and high quality products. However, the success of the new product in Sweden will depend on how well the new product is introduced and marketed.
Thus, it is fundamental for the entrepreneur to undertake a comprehensive analysis of the factors that might influence the success of the new product.
Reference List
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Dagnino, G., & Rocco, E. (2009). Competition strategy: theory, experiments and cases. New York, NY: Routledge.
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