Case Analysis Of Foster’s Company

Assume that you are the Entrepreneurship and Innovation Manager with responsibility for International marketing of a selected organisation. You have been asked to prepare a report to explain the role of international marketing to other managers in your organisation.

Explain why firms develop international marketing, and prepare a PESTEL analysis of a chosen foreign market for identified products/services.

Generate ideas for an innovative product or service. Focus on the following key steps: o Idea generation, opportunity evaluation with SWOT analysis

Market research for the new idea and new product/service planning

Devise an outline marketing plan for a foreign market. Your plan should include your objectives, the marketing mix, and consideration of relevant ethical and environmental issues.

Evaluate international marketing research techniques for a chosen market, and explain methods your choice of for entering that market. Your response should show consideration of:

The choice of distribution channels for export of identified products/services o Analysis of how foreign investment decisions are made.

Identify, then evaluate a target market for the new product (see task 1) and select an appropriate market segment.

Construct a sound business proposal for the new product/service.

Individually, or in groups, prepare and deliver a presentation for a business pitch for the new product/service.

Carry out an environmental audit of a selected organisation and evaluate its strategic position, using PESTEL and 5 Forces analyses.

Task 1: Introduction

To start with, with speedy progress of globalisation along with continually modifying market needs, there has been high level of competition within all sectors. Be it technology, consumer goods or financial, the corporations must regularly make investment towards appropriate and unique strategies to outshine and develop. In the same way, this particular paper attempts to throw light upon the alcohol sector by taking the case of Foster’s Lager in specific. The paper highlights the several strategies as well as factors considered by Foster’s for the purpose of securing good position within the global marketplace i.e. India. 

To start with, international marketing occurs at time when an organization directs its services and products toward buyers within a nation apart from the one wherein it is situated. While the entire marketing concept is the same around the world, the atmosphere in which the marketing plan is executed could considerably vary from area to area. Prevalent marketing issues like input costs, advertising, price and distribution—are expected to vary greatly within the nations in which an organization decides to market its services and goods.

Companies decide to discover overseas markets for several reasons. In few situations, companies initiate foreign marketplace examination in reaction to unwanted orders from customers within those marketplaces. Several others, attempt to set up a business for absorbing overhead expenses at home market, expand their corporate assets, attain benefit of international or domestic economic or political changes, or enter new or progressing marketplaces. Advancements in transportation and communications are making it much simpler to enter the overseas buyers. Product-market prospects are frequently no more restricted through national boundaries. Worldwide there are potential buyers having needs as well as money to spend. 

Political

India is the leading democracy worldwide. There are a number of political forces affecting the operations of alcohol sector. These include tariffs, trade restrictions and taxes. There are a number of taxes and tariffs imposed on the alcohol industry. The companies need to pay all these to ensure smooth functioning and trade. Also, the government interference in this segment is also quite high with several laws and regulations governing the industry and its operations. It is highly necessary for the company to follow all the rules to ensure long-term existence and sustainability.

Economic

The economic forces within India are continuously improving. The GDP is projected to reach 2.965 trillion. There is an incessant rise in per capita income and it reached around 1000 dollars in the year 2010. This would result in greater purchasing power of the Indian buyers. Moreover, increasing consumption has been associated with rise in the comparative affordability of the alcoholic drinks, and in specific perks up in disposable incomes of the consumers. Price changes could be dictated through worldwide commodity marketplaces that offer MNCs a benefit.

Importance of International Marketing

Socio-Cultural

There has been an incessant rise in the alcohol consumption within India. With a rise in the buying power the consumers in India, who had preference for local hard liquor that is quite cheaper, are now capable of getting a taste of the comparatively expensive beer marketplace. The social pattern towards consumption of beer is modifying continuously and India has observed a rise of 90 percent beer use from 2002- 2007. As a result, this signifies towards a constructive trend for lager within India. Other social factors affecting the Indian brewing industry include latest rise in café culture, rise in eating out, rise in underage alcohol consumption, health of customers, lifestyle changes, developing wine culture within chief marketplaces, rising health consciousness and lastly, preference for premium and speciality products

Technological

The alcohol Industry in India is progressing speedily with several foreign players stepping into the Indian marketplace. The technological expertise and knowhow would also step into the Indian marketplace with a rise in the level of competition. With latest technology stepping into the Indian lager marketplace augmented manufacturing and decreasing production cost could perform an important part in the Indian lager marketplace.

Legal

There are several legal Acts that have an impact on the operations of alcohol companies operating within India. These include Licensing Act 2003 and Private Security Industries Act 2003.

Environmental

The companies operating in alcohol industry in India need to lay high focus upon the sustainability agenda as well as corporate social responsibility. 

Strengths· 

Market segmentation and execution approaches

· Diversified marketplace segments

· Combination of abilities

· Formation and sustaining strong capital base

· A focused and aggressive marketing campaign with proper strategies and goals and strategies

· Sound market position

· Competent employees

Weaknesses

• Lack of market standing than the competitors.
• The launch of new organizational procedures
• Restricted financial base in comparison with the key players within the market.
• Absence of proper distribution channels

Opportunities

• Particular niche
• Present drive through specialized and government institutions
• Internet sales and marketing
• Rising number of overseas companies looking for market penetration

Threats

• Recognized mass-marketplace corporations’ formation of fresh lines and vertical integration
• New marketing approaches and strategies through established companies and products.
• Prevailing competition.
• Intolerable price rise through overseas suppliers might take place

Over the period of past several years, a noteworthy progress has been witnessed in alcoholic beverages consumption, particularly beers worldwide (Goldammer, 2008). The chief reason behind such a rise in lager consumption is rapid modernisation, modifying needs of the consumers, improving standards of living, change in consumers’ tastes and likings and easy obtainability of less expensive and cheap lager. Latest research studies highlight that lager volumes, across the globe are being chiefly directed through the rising dispensable income, improvement in lager quality, marketing and advertising procedures and gradually rising population using lager. There exists an on-going tendency, which is evident within emerging and growing marketplaces is replacement of traditional and local spirits with the lager consumption. Such development is directed through rising incomes and sensitivity for marketing as well as brands. Additionally, demographic shifts towards urbanization along with budding western preferences of the younger generation have resulted in the deviation for the consumption of lager (IBIS World, 2013).

PESTEL Analysis of Indian Alcohol Industry

Moving ahead, lager is chiefly prepared through fermentation as well as brewing of starches. Other constituents take in hops, yeast and water. Distinct producers might add several other constituents for producing fresh styles and flavors. Lager is the highly consumed alcoholic or distilled beverage and in terms of status it stands third next to coffee and tea. These days, lager is highly apparent product that is frequently observed in television commercials and widely sold within restaurants, bars and retails shops (Goldammer, 2008). Moreover, lager is produced as well as offered in several distinct styles and flavours that chiefly relies upon the constituents. Over the period of past 20 years, just as any other known product or service, the lager sector also turned out to be globalized. This implies towards the fact that the product, which is produced within a nation and after that is manufactured and offered globally. The pace with which lager globalization has quickened up during this period has led to new amenities and facilities and also the licensing of the beer brands outside the domestic boundaries. The demand for such products has increased with alterations in the living standards and rising incomes. 

The marketing objectives of Foster’s lager in India include:

• Increase the overall sales of the offered products
• Increase overall profits and revenue levels
• Attract higher number of customers

• Product

The corporation would make available superior quality lager in different as well as fresh flavors.  Of the two offered volumes i.e. 350ml and 550ml, the pint size (i.e. 350ml) would be more powerfully marketed for the reason that about 70% of Foster’s overall sales occur from this particular marketplace sector.

• Price

The company would focus upon premium pricing strategy for the offered products. In the beginning, the costs of the offered products wouldn’t be under firm’s control nevertheless directed through market conditions prevalent at the particular period of time.

• Place

Foster’s Group would ensure that right amount of products are offered to right customers at right place and right time. The distribution channels would involve wholesalers and retailers. The company would ensure that the breweries are positioned near to the chief distribution divisions not only for reducing costs but for also ensuring that the products are effortlessly obtainable, in good condition in the different markets around the nation.

• Promotion

The corporation would consider approaches such as sponsoring events. The promotion strategy of the corporation within India would chiefly revolve around updating potential buyers regarding the presence. Since the firm would target different market segments, the promotional strategies might vary to some extent to complement the intended market. However, within all cases the marketing will put across the sense of quality, refreshness and health in all pictures, promotions and publications. 

SWOT Analysis of Lager Industry

There are several legal Acts that have an impact on the operations of brewing companies operating within India. These include Licensing Act 2003 and Private Security Industries Act 2003. Moreover, the companies operating in alcohol industry in India need to lay high focus upon the sustainability agenda as well as corporate social responsibility. 

Political

India is the leading democracy worldwide. The alcohol industry is constantly faced with government interventions. There a number of government rules and regulations governing the operations of companies operating in brewing industry. Moreover, the excise tax and tariffs imposed upon the brewing companies keep on increasing from time to time. Thus, it is important for Foster’s to follow government rules and regulations at all times to ensure long-term sustainability and existence.  

Economic

The economic forces within alcohol industry are continuously improving. The GDP is projected to reach 2.965 trillion. There is an incessant rise in per capita income and it reached around 1000 dollars in the year 2010. This would result in greater purchasing power of the buyers. Moreover, increasing consumption has been associated with rise in the comparative affordability of the alcoholic drinks, and in specific perks up in disposable incomes of the consumers. Price changes could be dictated through worldwide commodity marketplaces that offer MNCs a benefit.

Socio-Cultural

There has been an incessant rise in the lager consumption around the globe. With a rise in the buying power the consumers, who had preference for local hard liquor that is quite cheaper, are now capable of getting a taste of the comparatively expensive beer marketplace. The social pattern towards consumption of beer is modifying continuously and has observed a rise of 90 percent beer use from 2002- 2007. As a result, this signifies towards a constructive trend for alcohol companies. Other social factors affecting the alcohol industry include latest rise in café culture, rise in eating out, rise in underage alcohol consumption, health of customers, lifestyle changes, developing wine culture within chief marketplaces, rising health consciousness and lastly, preference for premium and speciality products

Technological

The alcohol Industry is progressing speedily with several foreign players stepping into the Indian marketplace. The technological expertise and knowhow would also step into the Indian marketplace with a rise in the level of competition. With latest technology stepping into the beer marketplace augmented manufacturing and decreasing production cost could perform an important part in the beer marketplace. Thus, this requires Foster’s Company to invest high resources ad time towards Research and Development (R&D), understanding market trends and recognizing customers buying preferences.

Legal

There are several legal Acts that have an impact on the operations of alcohol companies operating within India. These include Licensing Act 2003 and Private Security Industries Act 2003.

Environmental

The companies operating in alcohol industry in India need to lay high focus upon the sustainability agenda as well as corporate social responsibility. 

Barriers to Entry

The entry barriers are considerably low for entering the alcohol sector and for Foster’s Company. Restricted access to distribution networks does present an entry barrier. The wholesale beer marketplace is quite focussed, with the majority of geographic marketplaces holding only three or four beer wholesalers. All these wholesalers usually require a reasonable range of lager.  As a result, prevailing marketplace giants, who could expand their product range, hold a benefit over the new companies. Moreover, the government performs an important part in the alcohol sector and does put forward a major entry barrier. Foster’s needs to always follow regulations and policies associated with federal and state licensing needs; advertising and marketing procedures and lastly, distributor relationships.

Supplier Power

The supplier power is low in case of Foster’s Company. The components needed during the production as well as packaging of beer that take in hops, packaging products, bottles and water, are same and might be regarded as commodity items. Also, there are several suppliers within the marketplace, and there is issue of supplier-initiated forward integration.

Buyer Power

Buyer power is high in case of Foster’s Company.  The craft industry participants have relatively little power relative to the three or four area wholesale distributors.  In addition, many of the distributors have agreements with the larger national brands, making it difficult for craft brewers to obtain distribution.  Retailers are also hesitant to stock craft brands without a proven sales record.

Threat of Substitutes

Products having similar product performance and uses might impact the demand for Foster’s lager. There is lack of product differentiation within this sector. As a result, it is highly necessary for the company to facilitate its customers with new and innovative products on regular basis.

Rivalry

There is no doubt in the fact that Foster’s Company operates in a highly competitive business arena with several companies offering similar products. There are restrictions to price competition amongst the brewers because of the monopolistic nature of the marketplace. Moreover, there exist low switching costs amongst the retailers, wholesalers and buyers.  Brewers try to alleviate this through manufacturing seasonal ranges of their offered products.  Additional capacity increases internal competitiveness through generating incentives for brewers for using the capacity as well as declined price. Foster’s makes use of this approach and is capable of maintaining a lower price level as compared to other leading alcohol companies. Further, there is high level of segmentation and diversity within the brewing sector, enabling brewers to follow niche differentiation focus approaches. Additionally, while the beer marketplace sector is mature, it has persisted to expand progressively, further trimming down internal competition.

References:

Cannon, J. P. (2008) Basic Marketing: A Global Managerial Approach, New York: McGraw-Hill Irwin

Cravens, D. W. (2000) Marketing Strategy, Boston: McGraw Hill

Goldammer, T. (2008) The Brewer's Handbook: The Complete Book To Brewing Beer, Apex Publishers

Kotler, P. (1997) Marketing Management: Analysis, Planning, Implementation and Control, New Jersey: Prentice Hall, Inc

IBIS World (2013) Global Beer Manufacturing, Market Research Report

Urban, G. L. and Star, S. H. (1991) Advance Marketing Strategy, New Jersey: Prentice Hall, Inc