Discuss about the implementation of the principles of International Marketing and Global Business on the business strategies and operations of Kawan Food Berhad.
International Marketing is the procedure for modifying the strategies of the company to adapt the conditions in the other countries. It is the process of creating relationships through planning, executing and regulating the strategies of pricing, promotion and distribution of ideas, products and services to create mutual exchange which satisfy individual and organizational necessities and goals (Kozak et al., 2015).
These principles can be applied to Kawan Food Group which is the leading exporter and manufacturer of frozen food in Asia. It is headquartered in Shah Alam, Selangor. It is known for providing safe, authenticated and quality products at nominal prices to its customers. The reason behind its growth is that is committed to the values of excellence, creativity, consistency, development, and good citizenship (Kawan Food Berhad, 2013).
Its vision and mission statements attribute to its goal of becoming a famous and reliable company in the food and beverage industry. It aims to expand its business internationally.
So, in this report, the various aspects of international marketing would be implemented on Kawan Food Berhad. The various aspects of its business strategies such as its operations and strategies regarding global, social, cultural and economic environment and information and marketing research systems would also be analyzed and recommendations would be given to develop them further.
Global economic environment
The economic trends in the present scenario in the global market are the growth of ready to eat foods in the industry. The fast food industry is growing at very fast rate. With reference to the global environment, competition is the main factor (Sarathy & Banalieva, 2014). It occurs when a company takes a global view of competition and aims at maximizing its profits by earning revenues in the foreign currencies. Thus, Kawan Food Berhad is facing a tough competition from its competitors Strauss Group, Burton’s Biscuits and Popcorn Indiana. Also, with the increasing competition, it should develop its competencies in functional food, health food, food ingredients, halal food and convenience food (Ayupp & Tudi, 2013).
The main recommendations to boost the growth of the company in the global economic environment are that the company should maintain strong competitive position in the global market. Growth is important for Kawan Food Berhad to ensure that it maintains a competitive position in the international food market. Also, the strategies and the approaches adopted by the company should be according to its size (Deloitte, 2017). So, Kawan Food Berhad, being a large organization should adopt the strategies so that it can accomplish its goal of expanding itself in the international food market. With the help of intensive strategies and marketing skills, the company can achieve greater sales in the international market (World Bank Group, 2016).
Social & cultural environment
The food choices are based on type of cultures and societies in which citizens of a particular country live. Several factors such as media as a part of the routine life of the individuals also create a strong impact on their food choices. It also depends upon the type of lifestyle, job and education, hospitality and size of family.
According to Omara et al, (2015) the cultures and traditions of the country are associated with special occasions involving food. The festive and special occasions are always concerned with food and it is often focused on the type of event such as marriages, births, shaving the crown etc.
As Kawan Food Berhad is globally renowned company in the frozen food industry, so it takes initiatives to promote the Malaysian food to the global level. It should manufacture the traditional food of Malaysia which reflects the three major unique ethnic food tastes; Malay, Chinese and Indian.
In the recent scenario, through the social transformation of urbanization, the value of Malaysian traditional food has increased. So, it has given the company a chance to explore this opportunity to make the traditional Malaysian food popular in the international market.
As the company is operating in Europe, North America and many parts of the world, it should promote the Malaysian food to those countries (Ahmeti, 2015).
Global information systems & market research
According to Bohari, Hin & Fuad (2013) the market research of Kawan Food Berhad using the PETLE analysis are as follows:
Political Analysis: There are low trade restrictions on the global transactions of the organization and appropriate assistance is provided by the Malaysian Government to the company. Also, the company has signed various international trade agreements with various companies operating in the same industry in the global market.
Economic Analysis: Due to its economies of scale, the company is incurring low costs on its production. Also, it has big market internationally. It invests on its research and development activities so that it can expand itself worldwide.
Social Analysis: Due to different family life cycles, various families seek various types of foods. So, the company serves different food according to the tastes and preference of the customers. Also, the spending habit of the consumers is increasing due to raise in their incomes.
Technological Analysis: The Company has been adopting the use of new technology in manufacturing its food. But simultaneously, there is an increase in the developmental costs due to which there is a decrease in the revenue.
Legal Analysis: with the expansion of the business internationally, Kawan Food has to comply with the international trade agreements.
Environmental analysis: With the dynamic changes in the global market, there might be too less suppliers of the raw materials required by the company. Also, there are possibilities of the company signing new trade agreements with different countries.
Malaysia is leader in the halal food. So, Kawan Food can remain competitive in the global market as halal food does not have serious market competition. The challenge in front of the company is that the product variations should meet the demands of the consumers. The company’s failure to respond to this challenge can corrode its competitiveness of halal food enterprise as an international player.
As per Rashid (2018) to meet the challenges posed by the rules and regulations, the company should adopt an advanced level of integration information mechanisms across the supply chain. It would help in governance and compliance and efficient internal and external communication systems.
Segmentation, targeting & positioning
Segmentation, targeting and positioning comprise of three levels in the marketing strategy. Segmenting refers to determining the type of customers in the market while targeting refers to selecting the target customers and positioning refers to applying segmentation to customize the product for the selected segment and adoption of appropriate marketing strategies to market the product to that specific segment of consumers (Agarwal, Malhotra & Bolton ,2010)
In the context of Kawan Food, segmentation comprises of analyzing about what kind of customers exist with various necessities. Customers, especially the working couples can demand ready to eat and healthy food for themselves or for their children. So, the company can develop suitable products for the working youth particularly, couples.
Targeting involves analyzing the number of manufacturers serving the target segment. Also, the company should assess the area and the possibilities of developing itself in the segment while Positioning involves applying the targeting principles upon the chosen segment (Danjuma, 2016).
Different types of variables can be used for segmentation by Kawan Food. The demographic variables pertain to income, gender, age, education and location. Another variable is behavior of the consumers for the product. Some consumers are loyal to their brands. They are not willing to change their choices in spite of the competitor company charging low price for the same product. Another type of consumers prefers benefits over the price and other features. They are specific about their choices and would not shift their choice easily.
In targeting, the consumers can be targeted on the basis of advertising in magazines, past purchases and demographic variables. In order to apply the positioning principle, it is crucial to comprehend how the brand and competitors are observed by the customers (Boone & Kurtz, 2014).
Global market entry strategies: licensing, investment and strategic alliances
According to Azuayi (2016) there are various entry modes for Kawan Food to enter into the foreign markets .These are divided into two mode viz. non-equity modes and equity modes. The former consists of export and contractual agreements and the latter includes wholly owned subsidiaries and joint ventures.
Another strategy which is equally famous is licensing. The licensing firms operating internationally grant patent rights, copyrights and trademarks on processes and products. Franchising is another strategy of international market entry. It is a mechanism in which the franchisers pay royalties to the parent companies in exchange of trademarks being granted to them by the parent companies.
Kawan food should enter into the emerging market since they provide the most promising environment for conducting commercial activities. It should adopt a suitable mix of equity and non-equity modes for entering into the foreign markets (Russo & Cesarani,2017).
Brand & product decision in global marketing
Product is the most crucial component of the company’s marketing strategy. Kawan Food is facing the challenge of formulating the appropriate product and brand strategies for its international market. The decisions relating to product must always address packaging issues such as aesthetics and labeling.
Branding decisions are important for Kawan Food as it is an important component for the company to differentiate itself from its competitors. Kawan Food has to develop logos and innovative and creative packaging styles to provide pictorial representations of its brand (Išorait?, 2016).
Since product is the good, service or idea with its physical and incorporeal aspects which create value for the user or the buyer, it is the most important attribute in the marketing strategy. It forms the basis for creating goodwill of the company in the market.
The company promises its customers about its products through its brand value. Thus product and branding decisions are crucial components of the marketing strategy of the company. Thus if Kawan Food aims to develop its market globally, it should develop its products to meet the international quality standards. Also, it should leverage its brand equity on a worldwide basis (Ghasham, Abdullah & Ghani, 2016).
Global marketing channels & physical distribution
As per An?elkovi?, Barac & Radosavljevi? (2017) distribution channels are pathways through which the products flow from manufacturers to consumers. These include various intermediaries amongst the two such as wholesalers and retailers which direct the path of goods from producers to industrial or domestic consumers. For Kawan Food, who is expanding its business globally, the various global distribution channels include peer to peer selling which comprise of the use of internet and other related media to sell and distribute its products.
The company can establish direct or indirect channels in the form of retail stores and wholesalers, agents and distributors to develop its brand image and sell its products (Yip, 1997).
The company can adopt global retailing methods such as establishment of departmental stores, specialty retailers, convenience stores, supermarkets, discount stores and warehouse clubs to sell and distribute its products internationally. The global retailing strategies should be according to the rules and regulations of the host country (Magnusson et al., 2013).
The global retiling strategies include the following:
Franchising: Franchising is referred to the payment of royalty to the parent company in exchange of granting of copy rights and patents to the franchisers.
It includes adoption of appropriate strategies in the case when barriers of entry into the market are low. But at the same time, the market is culturally different in terms of customer behavior and retailing structures.
- Joint venture: The Company can adopt the strategy of joint venture with the company incorporated in the host country. It is advisable when the culture of the host country is different and the company is facing problems in entering into the markets.
- Chain acquisition: It enables the company to acquire the company operating in the host country.
- Utilization of the existing resources by the company to open its outlets in the host country: The Company utilizes its own resources or acquires one or more existing retail facilities to open its stores in the host country (Szopa & P?ka?a, 2012).
Global marketing communications decisions
In order to survive in the international market, the management of Kawan Food has to take some important decisions regarding global market communications. So, the crucial element of international marketing communication decisions comprise of targeting the consumers for which the product is to manufactured and distributed. Since different markets are at different phases of development, the strategy for each of them should be appropriately designed and implemented (Percy, 2014).
For example: the communication in a new market should be based on consumer education and awareness about the product. The communication in the existing market should be based on outperforming the competitors. There are four major parts of communication viz. its content, structure, source and format (Saenko et al., 2016).
The decisions regarding global marketing and communication are essential for Kawan Food for establishing itself in the global market. The decisions regarding the modes of advertising or market communications are important aspects in this. Various privacy laws and advertising regulations have an impact on the type of marketing communications in different markets internationally. Also, the effectives of various means of media in the host country also affect the type of communication mode used to advertise. For example, a new product in India can marketed in a better way through radio while the same product can effectively be marketed through television in U.S.A. (Shkurkin et al., 2016
Hence, to conclude, it can be said that Kawan Food should select the appropriate strategy for its success in the international market. It should strengthen its capabilities and resources to expand it globally. Also, global communications play an important role in the success of the organization worldwide. The company can adopt various marketing strategies to penetrate into the market. The management should decide which methods of market entry should be appropriate for the company. These include franchising, licensing, chain acquisitions and joint ventures. The company should follow the suitable distribution channels to enter into the international market so that it is well accepted by the target consumers.
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