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:
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:
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:
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:
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:
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:
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:
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.