Mahashay Chunni Lal Gulati launched MDH spices in 1919 by opening a small shop in Sialkot. It is also known as Mahashian Di Hatti. It holds a leading position in India due to its wide variety of products at low prices. It is a global supplier of spices. It has total 12% market share as per Euromonitor. Its products are exported to Canada, the United Kingdom, Japan, Saudi Arabia, Europe and the United State of America. Due to the 88 years of experience of MDH owner, people have trust over the brand. Its objective is to provide the best quality product that is affordable to every kind of consumer. It has received quality assurance award as well as received “Arch of Europe” Award for excellence in quality in Paris (MDH Spices, 2018). The aim of the paper to come up with a marketing plan for MDH spices when it is entering into Indonesia. Therefore, a good promotional as well as pricing strategy is required to adopt.
SWOT analysis of MDH
· Quality of its spices is the major strength of MDH spices. It strongly believes in assuring quality norms while making spices.
· Low pricing- all its spices are between ranges of RS 35 to 50. It is offering ingredients at cheaper price that is affordable to every customer (Your Story, 2018).
· It has poor presence in the non-vegetarian market that might decrease its demand while moving internationally.
· It also has poor presence in the ready to eat products.
· Its spices are limited to some recipes that might create problem when it will expand its business (Your story, 2018).
· Due to its great market presence, it can expand its business internationally.
· Due to its best quality product, it has various opportunities to take over the market of other countries (Your Story, 2018).
· It is seen that there are various people who prefer non- vegetarian spices, so it can grab the opportunities by adding these in its product line.
· Competition is the biggest threat that it will face while moving to Indonesia. The biggest competitor in Indonesia are Royal spices and
· Due to its non-presence in Non-vegetarian market segment, it might face decrease in demand of its product (Your Story, 2018).
Changes and adjustment made while entering into Indonesia for business
It is seen that there are various competitors of spices in Indonesia. Therefore, there are various changes required by the company to initiate in its product as well as packaging of those. The packaging of MDH spices is done according to the Indian people and in their language. While moving to Indonesia, people have a different cultural background and people speak different languages as compared to India. However, the packaging of spices will change according to the preference of Indonesia citizens. Besides this, the spices of MDH are made according to the taste of Indian people so as per the demand and preferences of Indonesia changes will be done (Marsden and Arce, 2017). It will start making spices for Non-vegetarian dishes too that are prevailing in Indonesia people. It will create the comparative advantage to its spices by adding special features to its product. Richard theory of International marketing also states that firms are required to add comparative advantage for its product in order to succeed in the market (Piercy, 2016).
Market segmentation is done based on several categories. In Indonesia, segmentation will be done on various bases that are described below:
- Gender - Spices is such product that is required for every kind of people. Therefore, it will target mostly the women and men who have great taste for such spices.
- Age group- In Indonesia, MDH spices will target the women and men between the age of twenty and fifty. Besides this, it will also deliver its products to the different hotels and restaurants that are located nearby.
- Income- All the spices of MDH is made by taking the all type of customers in mind. Due to its low prices of spices, it has segmented the low, middle, as well as poor people with its affordable prices (Advameg, 2018).
- Local people of Indonesia- The manufacturing of its spices will be done and supply to the local people of Indonesia in lower prices (Advameg, 2018).
- Export purpose- It will manufacture its product for the local people of Indonesia. Besides this, it will export its spices to other countries.
In this, it will target those people who love cooking by taking homemade ingredients in use. Young people will use some ingredients of Indian to get the taste of homemade cooking. Therefore, in this market will segment in the cooking lovers, food lovers as well as working women.
In this segmentation, it has added some special spices that will used for the special occasions. Therefore, people who like to feel special will use these ingredients. Mostly, there are various restaurants, so its product will be supply to those on daily basis. The people of Indonesia mostly use chilli pepper in order to make the food spicy. Besides this, the most used spices are ginger, cumin, and coriander. The most popular dish through the country is rice. Hence, the major focus will be given on the different rice spices that are prevailing (Facts of Indonesia, 2017).
This strategy is used to position the product in new market. It will use the price, quality and culture as its positioning strategy in Indonesia (Shenkar, Luo and Chi, 2014). By providing better quality product at affordable price, MDH spices will grab the market of Indonesia. Besides this, it will add various spices that will be made for specific occasions.
MDH spices have great presence in the Indian market. While moving to Indonesia, it is planning to strive with the same. In the starting, it will adopt the penetration pricing strategy. It means, it will keep the prices of its spices too low so that customer will at least use it and come to know the quality of its spices. It will help it in gaining the market share. Economy pricing strategy will also adopt by the MDH spices in Indonesia. Under economy pricing strategy, prices are set by keeping in mind all type of customers (Woodruff, 2018). Just like India, MDH will keep the affordable prices in Indonesia too. It will help the customers to enjoy the greater taste of spices in their food. At the starting of setting up of brand, it is essential to add some benefits with the product so that customers get attracted toward it. Therefore, promotional pricing strategy is best to use for the MDH spices while moving to Indonesia. In this strategy, it will offer the discounts with its spices and use the scheme of “Buy one get one free.”
It is providing the best quality products in lower prices that will be affordable by every customer. Besides this, due to the tourist destination, various kinds of people prefer homemade food. It will supply the spices to the restaurants in nearby cities of Indonesia (Babolian Hendijani, 2016). For those restaurants, the prices will be lit bit high so that it can earn a better amount. In addition to this, geographical pricing strategy states the differences in prices in different parts of the world. According to the tax rates and market conditions, prices of product differ. It will use this strategy when it will export its spices to the restaurants in island. As these restaurants charge high prices for its food, so it also charges high prices while supplying to those hotels and restaurants (Nagle and Müller, 2017)
Mode of entry and distribution strategy
It is not suitable for the company to start a new industry in the International market, as there are a lot of competitors in Indonesia. Therefore, MDH spices will take the entry by Joint venture with Royal spices. Royal spices are one of the most reliable and trustworthy spice merchants all over the world (Dikova and Brouthers, 2016). It manufactures its spices and sells it in Indonesia. Besides selling its spices in Indonesia, it also has its market presence in several other countries. In addition to selling off its spices, it exports its products from various countries.
Before complying with any license and law, it will state its joint venture with Royal spices. MDH spices will state its market presence and describe the benefits that can get by doing Joint Venture with MDH spices. It will state the variety of its spices and all the ingredients that are used in making those spices.
There are various laws through which companies of other countries can take Joint Venture in Indonesia after complying with those. Before coming to Indonesia, it will take the necessary license and fulfil the terms and condition of Joint Venture that is decided by Government of Indonesia. It will comply with all the laws as per 2015 regulation. Afterward, it will take the license by providing its financial audit so that it will be able to take the license for doing business in Indonesia (Johanson and Mattsson, 2015). With this new regulation, the government ensures that every new investor with complying with the requirements.
There are different channels of distribution to reach the product to the final consumer. Therefore, an appropriate channel of distribution is required in order to make the timely delivery of products. After making of the product, the next step comes is its right distribution at right time. It will use the various distribution channels. It will supply its spices through the wholesaler, retailer, and export its spices to other countries. Besides this, there will be separate outlets for its spices in which customers can utilize its services. In addition to this, the export of spices will be done by transport or in ships. In nearby place, the transportation facilities will be provided to the wholesalers. On the other hand, export will be done through shipping as Indonesia is mainly covered by islands (Tulung, 2017).
International promotion strategy
Whenever new product is about to be launch, it is required by the company to use various promotional strategies so that customers can recognise the product and its benefits that it will give. The best promotional strategy is social media. Therefore, when MDH spices will start its business in Indonesia, it will use the strategy of social media in which it will explain its prices and benefits of the product. Companies can promote its product by using social media through various ways. It will start promoting its product by showing ads on television that is used by almost all the families. Besides it, it will use Google that is used by mostly students for getting various kind of information (Baker, 2014). Social networks will promote the product that will attract the potential customers to use its product.
Joint venture with Royal spices will add certain benefits such as people will easily recognize the product due to the good market image of Royal spices.
In addition to this, it will promote the spices by taking the help of Royal spices. It will promote its product on the page of Royal spices (Tu, Lee and Creativani, 2017). By doing this, people will come to know about its various blend spices as well as non-blend spices that is offering. It will also follow a policy in which it will offer the free sample of its spices so that the people of Indonesia will know its quality (Hunt, 2018).
Problem identification & solutions, future management control and measurement systems
It is necessary for the companies to identify the problem that it is facing. It will set the target that it is wanted to achieve in the specific time. After the decided time, it will compare the result with the established target. If any problem will be identified, it will remove it by taking quick and correct measures. A quality assurance team will also be hired so that they can verify the quality of the product before moving to the final consumers. It will measure its performance by comparing its current sales with the past sales.
In future, it might happen that customers demand changes, competition arise and government policies changes (Solomon et al, 2014). In order to face the changing customer demand, it will conduct the market research in which it will analyse the changing demand of customers. Experts will do market research so that problem can be identified and solved quickly.
In the limelight of above discussion, it can be concluded that MDH is growing well in India as well in various parts of the country. In order to establish its business in Indonesia, it has to take certain measures such as taking entry by doing merger with Royal Spices as well keeping its prices low in starting so that customer get attracted toward the product. In future, it might happen that demand of customer changes or any government policy changes. It is required by the company to keep the market research continuously so that any problem that is coming on the way can be solved quickly. The results are expected to achieve in the near one year. It should add various other products in its product line so that more revenue and market share can be generated.
Advameg. (2018) Indonesia Food. [online] Available from: https://www.foodbycountry.com/Germany-to-Japan/Indonesia.html [accessed 1/10/2018].
Babolian Hendijani, R. (2016) Effect of food experience on tourist satisfaction: the case of Indonesia. International Journal of Culture, Tourism and Hospitality Research, 10(3), pp.272-282.
Baker, M.J. (2014) Marketing strategy and management. United Kingdom: Macmillan International Higher Education.
Dikova, D. and Brouthers, K. (2016) International establishment mode choice: Past, present and future. Management International Review, 56(4), pp.489-530.
Facts of Indonesia. (2017) 20 Eating Habits in Indonesia – Society Life. [online] Available from: https://factsofindonesia.com/eating-habits-in-indonesia [accessed 1/10/2018].
Hunt, J. (2018) Global Product and Promotion Strategies. [online] Available from: https://smallbusiness.chron.com/global-product-promotion-strategies-26101.html [accessed 1/10/2018].
Johanson, J. and Mattsson, L.G. (2015) Internationalisation in industrial systems—a network approach. In Knowledge, networks and power (pp. 111-132). Palgrave Macmillan, London.
Marsden, T.K. and Arce, A. (2017) The social construction of international food: a new research agenda. In The Rural (pp. 87-106). United Kingdom: Routledge.
MDH Spices. (2018) About Us. [online] Available from: https://mdhspices.com/aboutus/ [accessed 1/10/2018].
Nagle, T.T. and Müller, G. (2017) The strategy and tactics of pricing: A guide to growing more profitably. United Kingdom: Routledge.
Piercy, N.F. (2016) Market-led strategic change: Transforming the process of going to market. United Kingdom: Routledge.
Shenkar, O., Luo, Y. and Chi, T. (2014) International business. United Kingdom: Routledge.
Solomon, M.R., Dahl, D.W., White, K., Zaichkowsky, J.L. and Polegato, R. (2014) Consumer behavior: Buying, having, and being (Vol. 10). London: Pearson.
Tu, J.C., Lee, Y.L. and Creativani, K. (2017) Forming brand identity and promotion strategy of creative industry in Indonesia. In Applied System Innovation (ICASI), 2017 International Conference on (pp. 1558-1561). IEEE.
Tulung, J.E. (2017) Resource Availability and Firm’s International Strategy as Key Determinants of Entry Mode Choice. Jurnal Aplikasi Manajemen, 15(1), pp.160-168.
Woodruff, J. (2018) Different Types of Pricing Strategy. [online] Available from: https://smallbusiness.chron.com/different-types-pricing-strategy-4688.html [accessed 1/10/2018].
Your Story. (2018) A refugee who made the country’s meals tasty: the story behind MDH. [online] Available from: https://yourstory.com/2016/09/mdh-story/ [accessed 1/10/2018].