XYZ Company on the Camel Milk’s Market Report

Exclusively available on Available only on IvyPanda® • No AI

Executive Summary

The XYZ Company will start and operate a business in the Netherlands in order to create a market for selling camel milk. The company hopes to set up the production facilities close to the retail outlets in the country so that the distribution channels work efficiently. Owing to the fact that camel milk is not quite popular in the Netherlands, the company wants to spend a considerable amount from the budget in integrated marketing communications and other promotional activities in order to create public awareness about the highly nutritious features of the drink. Total cost of the start-up is estimated to be $452,000, and the bank and the owners are going to invest 60% and 40% respectively.

In addition, according to sales projections, the company will be able to reach the break-even point within one year because of accurate marketing strategies and high-level of expertise of the owners.

Product

Initially, the main product of the XYZ Company would be camel milk because it is a highly nutritious drink with amazing health benefits. Moreover, in a European country like the Netherlands, the availability of packaged camel milk is a relatively new concept, which means that using this, the company would be able to capture high market share.

Background

Camel milk is so nourishing that in ancient times, Bedouins and other tribes depended merely on it during lengthy and strenuous journeys in desert because they had very limited access to water or other food sources; in fact, this traditional scenario is still present today in rural areas of countries like Kenya, Mali, Saudi Arabia, Somalia, Sudan, and the UAE.

General Description

It is important to note that according to a report of the Organic Information Services (2016), camel milk contains good amount of insulin, which keeps diabetes under control, while its protein, organic elements, and antibacterial ingredients enhance metabolism, boost growth, prevent calcium and iron deficiencies, cure neurological illnesses like autism, and remove harmful cholesterol.

Target Country

The entrepreneurs of this company have decided to start the business in the Netherlands because according to the reports of The World Bank (2016), it possesses an amazing business environment, vibrant workforce, stable economy, good weather conditions, and flexible tax regulations, which makes it one of the best markets in Europe. On the other hand, the political scenario of the country is also quite peaceful, and throughout the last few decades, there has been no incidence of any violent clashes. In addition, it is notable that the country has secured one of the best positions in the global ranking in terms of business friendliness, and this has been demonstrated in the figure below:

*Figure 1: The Netherlands in the global ranking.*

Situational Analysis

Macro-Environment in the Netherlands

In order to operate successfully in the Netherlands, it is quite essential for the company to conduct a thorough analysis of the macro-environment of the country because it has no earlier experience of running a business in this market. In addition, as a new market player, the business is expected to face many adverse external issues that can cause potential damage to its revenues.

Cultural

It is essential for the owners of the XYZ Company to appreciate the fact that the cultural perspectives of the European countries differ greatly from the social and cultural situations in Africa and Middle East. As a result, products that are popular in Saudi Arabia may not receive the same level of recognition and love in the Netherlands automatically. Keeping this in mind, the branding and packaging must be designed in a way that attracts the people in the target market.

Economic

Central Intelligence Agency (2016) noted that this country has the sixth major monetary system in the EU and its financial market is extremely saturated; as a result, during the economic downturn, its economy observed a huge decline; however, to recover from the crisis the government executed considerable austerity measures in the housing and energy market. In spite of this, the country has been able to boost its economy greatly in the recent years, lowering the impact of the global financial crisis significantly (Central Intelligence Agency, 2016). However, the following table shows a synopsis of the overall economic conditions in the country in order to understand its market better:

Gross domestic product (in billions of US Dollars)	Per capita income (in US Dollars)		Average national saving as a percentage of GDP
831 in 2015	49,300 in 2015		27% in 2015
816 in 2014	48,400 in 2014		28% in 2014
808 in 2013	47,900 in 2013		29% in 2013
National budget (in billions of US Dollars)
Revenues		336
Total spending		351
Total exports (in billions of US Dollars)
488 in 2015
571 in 2014
National reserves (in billions of US Dollars)
42 in 2015
46 in 2014

Table 1: Economic overview of the Netherlands.

Consumer

Trading Economics (2016) noted that last year, the consumer confidence of the country had increased by one percent; however, the graph below suggests that since 2016, people are more positive about the retail buying habits, which is a positive indicator for the XYZ Company:

In order to assess the consumer buying habits in the retail industry profoundly, it is quite essential to look at the retail sales figure and spending patterns of the recent years:

Consumer buying behavior	Recent figures	Last year
Consumer confidence amongst Dutch citizens	1	-4
Retail Sales per month	1 percent	-1 percent
Retail Sales per year	2 percent (approximately)	-2 percent (approximately)
Consumer expenditure	70,058 million Euros	70,116 million Euros
Disposable consumer earnings	306124 million Euros	296517 million Euros
Consumer Savings	8 percent (approximately)	Above 24 percent

Table 2: Retail sales figure and spending patterns.

Micro-Environment

The decision makers of the XYZ Company would construct the initial corporate strategies by comprehensively evaluating the micro-environment of the market because this would help it to assess the areas that have direct influence over its operations.

Competitors

The retail industry in the Netherlands is highly saturated with many companies, which offer different types of packaged foods and beverages; however, the closest rivals of the XYZ Company would be the businesses that offer bottled cow milk or other dairy-based drinks. Nevertheless, it is important to state that there is no competition in the camel milk market, as the amount of direct substitutes is very low.

Under this situation, the company should put forward some groundbreaking strategic footsteps that can increase the sales of its product by creating a competitive advantage over the rivals. This should include certain programs through which people could comprehend the fact that the health benefits of camel milk is much better than cow milk, and that it is completely safe for consumption.

Customers

It is notable that the target customers of the XYZ Company would be almost everyone because milk is a highly essential health drink required by people of all ages, races, and gender. As a result, there is no requirement to fragment the consumer groups in order to formulate different strategic approaches for each group. However, the consumers of certain age groups may demonstrate more eagerness to buy the product from the retail shops, and so the company must give special attention to them. This implies to the fact that the company is required to treat each consumer group separately through different advertising and promotional campaigns.

Characteristics

Euromonitor (2016) reported that the main characteristics of the customers in the Netherlands become apparent from their buying behavior; for example, they ask for the best quality products at the cheapest possible rates and cannot tolerate bad service quality; in addition, their buying patterns are greatly affected by cultural aggression, technological advancement, online shopping, and promotional campaigns.

Cultural

It is notable that the Dutch culture is quite liberal and adaptable to change; as a result, it is easier for the businesses from different backgrounds to operate here successfully without having to worry about the adverse cultural repulsion.

Social

Euromonitor (2016) noted that the key social problem in the Netherlands is the increasing rate of aging population because they mostly depend on pensions and are accustomed with the conventional way of life; moreover, this part of the society is also reluctant to try new things.

Personal

It is essential to note that even though the company has carried out the market research by considering the consumer trends of the entire country, the personal tastes and preferences of the individuals can vary a lot and cause the projected sales figure to fluctuate significantly.

Psychological

Psychological factors would have a huge influence on the sales of the product because since ancient times, most people in the Netherlands are familiar with the taste of cow milk, and offering camel milk all of a sudden can seem bizarre in the first instance.

SWOT Analysis

In order to better comprehend the external environmental issues and assess those in light of the internal resource and capabilities, it is necessary to conduct SWOT Analysis for the XYZ Company:

Strengths	The owners and decision makers of the company are highly educated and very much competent to deal with adverse situations
	The company is going to offer an excellent product that possesses a great potential for market development
	The highly nutritious and delicious features of the product is likely to create a huge consumer base in the Netherlands
	The business would possess a vibrant and skilled workforce with the ability to increase the production levels at any time during the year
	The manufacturing plants would be fully equipped with energy efficient and technologically advanced machines and software, which can lower the costs of operations, time, and labor
	The business would use cloud computing techniques to control the entire operative segment swiftly and communicate with the employees directly; in fact, it would integrate ‘hybrid cloud’ so that the regular activities become easier to manage
	The location of the production facility would be excellent because it would be near the retail chain stores; this means that the transportation costs are going to be lower
	The business would have a very efficient supply chain so that the delivery time and product wastage rates remain lower
Weaknesses	The company has no prior experience of operating in this market
	The customers may be reluctant to taste the new product initially
	The financial strength and capabilities of the firm would be quite weak during the first few years
	Training the new workers can be costly
	It would be nearly impossible for the company to lower the advertising expenditures for at least five years
Opportunities	The market conditions of the Netherlands are very much attractive, as it has one of the best business friendly environments in the entire European Union
	The economy of the country is booming since the last few years
	The purchasing power and consumer confidence are increasing greatly and the figures of the retail sales are also quite promising
	The level of competitive rivalry is extremely low in the camel milk market
	The political situation of the country is really stable and there are no chances of any violent clashes that can hamper the business environment significantly
	The European Union law regarding the free movement of goods allow tax and duty free trade of items between the member states; this implies to the fact that as camel milk would be produced in the Netherlands, it could be exported in other EU nation without having to pay the customs duty and tariffs
Threats	The unstable condition of the Eurozone and the ongoing crisis in certain European economies may cause damage to the economy of the Netherlands in the future
	Some other new entrants may be encouraged by the XYZ Company to offer camel milk, and this can be dangerous for its market share
	The strict nature of the consumer and labor protection regulations, as well as the environmental, corporate, and trade laws can harm the smooth running of the business

Table 3: SWOT Analysis for the XYZ Company.

Key Issues

Before starting the operations, the company must consider a number of issues in order to perform efficiently in this new market, and these are discussed in the table below:

Identifying the priorities	Constantly attracting and preserving the consumers and understanding their needs in order to ensure loyalty
	Ensuring effective communications with people and examining cash flows regularly in order to avoid potential mistakes
	Regulating and analyzing cash flow estimations to identify potential crises or funding requirements of the company
	Motivating the workforce using appropriate methods, appointing qualified people, and ensuring that they are working efficiently to resolve problem areas
	Maintaining corporate transparency, scrutinizing worker performances, and discovering new ways of improving their productivity through training
Lowering the risk factors	Implementing apposite strategic steps to diminish risks drastically, setting up contingency plans, and keeping risk areas under insurance coverage
	Trying to create consumer loyalty to decrease the risk of falling market shares, expanding the customer base, and requesting recommendations from experts where necessary
	Increasing the safety features of the factory, making it an enjoyable, calm, and dynamic workplace, and resolving a trivial dispute quickly before it becomes a grave concern
Increasing the skills and outputs	Spending more on scientific procedures to take advantage of corporate skills
Increasing the skills and outputs	Integrating lean production techniques to gain a competitive advantage by lowering costs, saving time, and boosting output
Designing the strategic framework	Constantly developing the short-term strategic targets, while taking assistance from the experts to formulate long-term aims to allow the company to expand
	Using the key success factors to amend the corporate policies and constructing methodical indicators while evaluating and updating the business plan frequently
	Persistently supervising the political, economic, social, technological, environmental, and legal factors that can influence the overall performance
	Observing the rival companies and updating the goals accordingly
Conforming to all the laws and regulations	Corporate lawyers must be appointed in the company to help the manager to deal with the legal issues
	Ignoring the laws and regulations while designing the corporate strategies can be dangerous because failing to conform to a single rule can result in complex lawsuits, which can be extremely costly for the company
	The company should have some level of knowledge about the employment, consumer, and labor protection laws, as well as the laws on trade, IT, and taxation
Addressing the weaknesses	Identifying the potential weaknesses and seeking suggestions from the corporate analysts to remove those
Addressing the weaknesses	Preparing back-up plans to run the business during adverse situations

Table 4: The key issues XYZ Company should consider.

Goals and Objectives

It is notable that the company wants to reach the break-even point by December 2017; in addition, it aims to augment the annual revenue figures of the first year by 40 percent in the second year. On the other hand, by 2018, the company has smart objective to reduce the manufacturing costs by 25 percent through the incorporation of advanced IT infrastructure; moreover, by 2020, it has targets to lower the emission levels of the greenhouse and other poisonous gases by 50 percent. From 2021, the company wants involvement of renowned celebrities in its outdoor marketing campaigns, online promotional videos, and TV advertisements.

Marketing Strategy

Segmentation

According to Euromonitor (2016), the demands of children, teenagers, young adults, youths, and middle-aged individuals vary significantly in the Netherlands; as a result, it is possible to divide the market for camel milk in separate segments; for instance, the company expects that people aging from 15 to 50 would demonstrate the major demand for this beverage. However, the company would use different marketing tactics for people aging from 15 to 30 and 31 to 50 because the impact of online marketing, for example, is not the same on the middle-aged people as it is on the teenagers.

Demographic

Indexmundi (2015) noted that the total population of the country is 16,877,351 and its total education spending is almost six percent of the GDP; however, it is essential to analyze the other demographic factors as well in order to get an idea about the potential consumer groups of the company:

Age configuration
0 to 14 years	16.9 percent		Men 1,460,234 and women 1,393,766
15 to 24 years	12.2 percent		men 1,046,323 and women 1,006,114
25 to 54 years	40.4 percent		men 3,423,777 and women 3,399,378
55 to 64 years	12.9 percent		men 1,088,860 and women 1,094,574
65 and above	17.6 percent		men 1,331,258 and women 1,633,067
Percentage of dependent groups
Percentage of dependents			52.8 percent
Young dependents			25.9 percent
Old dependents			26.8 percent
Support-ratio			3.7
Average age of the population
Average age of total population			42 years
Average age of men			41 years
Average age of women			42.9 years
Birth and death rate
Number of births per thousand population				10.83
Number of deaths per thousand population				8.57
The rate of urbanization
Total urban inhabitants			83.2 percent
The rate			0.74 percent per year
Ethnic inhabitants
Dutch population			80.7 percent
Inhabitants from Indonesia			2.4 percent
EU citizens			5 percent
Inhabitants from Suriname			2 percent
Inhabitants from Morocco			2 percent
Inhabitants from Turkey			2.2 percent
Inhabitants from Caribbean area			0.8 percent
Other inhabitants			4.8 percent
Religious groups
Total Roman Catholics		28 percent
Total Protestants		19 percent
Other groups		11 percent (comprises around five percent Muslims and a very few numbers of Hindus and Buddhists)
No religious believe		42 percent
Literacy rates
Total literacy rate		99 percent
Men		99 percent
Women		99 percent

Table 5: Demographic overview of the Netherlands.

Geographic

The XYZ Company wants to serve the entire country for several years before it decides to expand its operations in the other nations; as a result, it is not necessary for the business to use its resource and capabilities in creating separate geographic segments of the market at this stage.

Psychographic

Psychographic segmentation is highly essential for the company because it has decided to conduct its marketing campaigns by focusing on the diverse characteristics and viewpoints of the different customer groups; in addition, this kind of approach would help the business to stay focused from the very beginning by successfully locating its products in the correct market segments.

Behavioral

Behavioral segmentation method is used by businesses that split an industry by focusing on the consumer awareness, attitudes, and reactions; however, it is important to state that the XYZ Company is going to start a new business and offer an unusual product to the customers; therefore, it would not be feasible for it to adopt this approach at this stage. Nevertheless, after two to three years, the company would be able to comprehend the actual reactions of the customers about the product and at that time, it would be able to assess and adopt this strategy.

Targeting

The company is not prepared to restrict the number of potential customer bases by targeting some specific group of people; moreover, camel milk is an amazing health drink, which has crucial benefits for everyone. Therefore, owing to the fact that huge proportions of the Dutch population are milk consumers, the business would prefer the entire country as the target market.

Differentiation

It is necessary for the XYZ Company to differentiate its beverage from the competitors’ products through a number of strategies because the uniqueness of an item is able to persuade the consumers to pay higher prices; consequently, the business would construct a wonderful packaging design and a succinct slogan to boost the exclusivity of the camel milk.

Branding

Kabiraj & Shanmugan (2011) noted that good branding is the key success factor for a business; as a result, it is necessary for the XYZ Company to carry out the branding of the camel milk in a way that whenever a person recalls the name of the brand, he remembers the quality, reliability, the satisfaction associated with it. On the other hand, the company should keep in mind that the brand name of the camel milk should be short and simple, and the packaging should include an admirable logo, a motto, and some uniform colors, helping the customers to identify the product instantly amongst many other things on the shelf of a retail store.

Positioning

The main target of the company is to create a huge consumer base in the Netherlands; as a result, it would position its product in a way that helps to attain this goal. From the very beginning, the company would ensure that the quality of the product is maintained by using strict quality control measures in the factory; however, in order to attract the customers, it would offer the packaged milks at cheaper prices.

Marketing Tactics and Action Plan

Product

The company would start its operations in order to create a market for camel milk; therefore, it has no plans to diversify its product line at this stage. However, in the upcoming years, it may come up with some innovative ideas and increase its product offerings in order to expand its business rapidly throughout the country.

Price

It is necessary for the company to undertake customer oriented pricing strategy because it would not be feasible for it to charge the customers highly during the first few years. Even though the competition level is very low, setting high prices may result in falling sales because the demand for camel milk is perfectly elastic. In addition, the XYZ Company would be offering different discount packages in order to attract a huge customer base. However, after securing a large group of loyal consumers, it would be practicable for the company to raise the prices to some extent, and adjust the prices at regular intervals depending on the economic circumstances.

Distribution (Place)

The XYZ Company would locate the production plants on outskirts of Amsterdam; however, it would make sure that the factory is close to the retail shops. This is because ensuring proximity to the retailers would make the distribution channels less complicated, more efficient, and more cost effective; in addition, use of appropriate transportation systems would ensure that the packaged milks remain fresh throughout the journey.

Integrated Marketing Communications and Promotion

The XYZ Company must implement integrated marketing communications campaign and other promotional activities in order to endorse the product in the market because most of the people in the European nations do not even know that camel milk is perfectly safe and edible. As a result, the company has plans to invest a major percentage of the budget in the advertising activities, and it hopes that by means of an effective campaign, it would be able to persuade the customers to purchase camel milk; however, a detailed analysis of this has been included in the table below:

IMC Plan for Promoting the Product
Advertisement campaigns	According to Schultz & Gambetti (2015), advertisements through television, newspaper, radio, and hoardings are the most quick and effective way to reach a large number of customers instantly; as a result, the company is going to advertise its product in all these media; in addition, the business would also formulate a wonderful slogan to influence the audience considerably
Online and digital marketing	According to Burgmann & Kitchen (2015), in the modern times, online and digital campaigns through corporate websites, e-commerce platforms, and social networks are extremely popular amongst a major part of the population; therefore, the company would build customized e-commerce stores, create Facebook, Twitter, Skype, and YouTube accounts, and undertake other email marketing strategies to boost its sales
Public relations	Rakić & Rakić (2014) noted that maintaining public relations is an exceptionally effective way of creating awareness about a brand and many multinational corporations use this technique to gain competitive advantage; consequently, the XYZ Company is undertaking diverse strategies to sponsor a number of social events, offer free products at concerts and cinemas, and conduct live presentations at amusement centers
Promotional activities	The company would have to offer various discount coupons and gifts to attract the customers; in addition, it must make sure that the packaged milks are displayed in an eye catchy way in the retail stores

Table 6: Integrated marketing campaign and other promotional activities.

Summary

In spite of being a new entrant, the XYZ Company has numerous resources and capabilities to operate in any highly competitive environment in order to create a market for camel milk. On the other hand, the Dutch market possesses a strong economy, where the consumers are quickly gaining confidence to spend heavily in the retail industry; in addition, the country has a remarkably business friendly atmosphere, which is suitable for all start-up companies. However, it is notable that although the level of competition in the Dutch beverage market is quite high, only a few companies offer camel milk there, and this makes the Netherlands a wonderful place to start this business.

Reference List

Central Intelligence Agency. (2016). Europe: Netherlands. Web.

Burgmann, I., & Kitchen, P. (2015). Integrated marketing communications: Making it work at a strategic level. Journal of Business Strategy, 36(1), 34-39.

Euromonitor. (2016). Consumer Lifestyles in the Netherlands. Web.

Indexmundi. (2015). Netherlands Demographics Profile 2014. Web.

Kabiraj, S., & Shanmugan, J. (2011). Development of a Conceptual Framework for Brand Loyalty. Journal of Brand Management, 18(4), 285-299.

Organic Information Services. (2016). Health Benefits of Camel Milk. Web.

Rakić, B., & Rakić, M. (2014). Integrated marketing communications paradigm in digital environment: The five pillars of integration. Megatrend Review, 11(1), 187-203.

Schultz, D., & Gambetti, R. (2015). Reshaping the boundaries of marketing communication to bond with consumers. Journal of Marketing Communications, 21(1), 1-4.

The World Bank. (2016). Doing Business 2016. Web.

Trading Economics. (2016). Netherlands Consumer Confidence. Web.

More related papers Related Essay Examples