New Product concept
Discuss about the Start Up Business and Market Entry Strategy for a New Product in New Zealand.
The report would be based on market entry strategy for a new product that would be developed in New Zealand and would be exported to San Francisco. The particular product selected for the venture is ready to eat food for employees of the Silicon Valley in San Francisco. The product would be mainly targeted at the Niche segment of the employees who depend on ready to eat products due to unavailability of time due to their strict work schedule. The main aim of the SME that would be discussed here would be to develop unrivalled ready to eat for the targeted sector and undertake an appropriate market entry strategy to enter the much competitive ready to eat food industry in San Francisco.
The product that would be developed for the purpose of exporting to San Francisco would be ready to eat food for the niche segment of employees working in the Silicon Valley in San Francisco. Reports highlight that the convenience and demand for ready to eat meals have played an important role in encouraging the growth of ready to eat meals in New Zealand. These convenient meals are seen to be very beneficial for time-poor consumers who do not have time for cooking or do not find it convenient to cook a proper meal. Companies like My Food Bag are major competitors in the ready to eat meal industry in New Zealand. The company offers ingredients and recipes in order to cook nutritious and delicious food quickly. However this effort by the company to promote nutrition in the ready to cook meals have been encouraging other companies in the ready to eat food industry to look for more nutritious alternatives like glutten free products etc. Thus the main aim would be the development of ready to eat meals that have nutritious ingredients that have value addition for the consumers. The key trend that is likely to influence the ready to eat food industry in the coming years is health and wellness. Thus the main aim should be the development of ready to eat products that are both delicious as well as do not compromise on the nutritional value. There are several players in the local market in New Zealand who have been developing niche products in this category which are gluten free and nutritionally beneficial as compared to the ready to eat meals which compromised on the health and wellness factor. However major players like Heinz and My food bag could be expected to enter this segment with the growing demand for nutritional ready to eat meals in New Zealand. More over market research in the ready to eat meals in New Zealand also highlights a growing demand for oriental and Asian flavors with changing ethnic demographics and focus on variety in taste.
Bundle of benefits” for the targeted Niche market
The product development that is being focused in this particular paper is “ready to eat food” for IT and business people who are time- poor consumers and do not have the time to cook a delicious and nutritional meal. The product would be developed in New Zealand and would be exported to San Francisco Silicon valley and would use retort packaging. The existence of ready to eat meals could be seen in San Francisco but the main difference between those available ready to eat food and the one that would be exported from New Zealand would be the fact that these ready to cook food would be developed for the targeted niche market that is the IT and business people and would be completely nutritional products with a focus on gluten-free products (Chung and Enderwick, 2001). More over a focus could be seen on oriental and Asian flavors being developed in different parts of the world thus the SME in concern would be developing ready to eat food with oriental and Asian flavor which also have nutritional value. The ready to eat products would not only be developed on Asian and oriental flavors but different food items would be available catering to different taste buds.
The targeted market here would be the IT and business people in San Francisco Silicon valley and thus would be targeting the niche market in the ready to eat food industry. The main benefits of these products exported to the targeted market would be nutritional benefit which is mostly missing in ready to eat food items owing to the presence of gluten and other preservatives that could be harmful for daily consumption. More over the focus on development of oriental and Asian tastes would be a welcome change in the ready to food industry in San Francisco. The exporting of the ready to eat food products would be done with the help of retort packaging which are durable pouches for ready to eat meals. All ready to eat food products are sold in pouches and barrier bags which are double laminated layers and protect from spill, puncture and contamination. But the new product developed would be exported to the niche market in retort packaging which is a unique stand up pouch which are mainly used for meals like pasta, rice, soups etc. since many products would be having gravy retort packaging would be best suited for the product delivery (Doherty, 2007). More over the products would be targeting the niche business and IT employees and thus would have to provide food grade material for packaging and retort packaging is also well known for increasing the shelf- life of the product. Since the products would be exported to another country it would be important to use packaging which would increase shelf- life of the products. Retort packaging has become an important alternative to traditional canning methods and would be suitable for export purpose of ready to eat food products from New Zealand to San Francisco (Buckley and Casson, 1998). The targeted market segment would thus have multiple benefits from these newly developed ready to eat meals. Firstly time-constraint customers would be able to consume them without having to worry about nutritional factor and secondly they would have access to different flavors from around the world in ready to eat meals which is quite difficult to find in this segment (Anderson, 1997).
Analysis your key competition in the target market and present their brief profiles
The key competition in the targeted market could be tough with the presence of ready to eat meals in San Francisco. Wise company is a reputable name in the ready to eat and cook meals in the targeted market and with their online shopping option they could be the main competitors for the SME developing and exporting ready to eat meals from New Zealand. The company also has a special gluten-free food storage section which specializes in gluten free products in general. However the pricing is somewhat lower than the expected pricing of gluten free products to be exported to San Francisco Silicon Valley for Business and IT people (Goodnow and Hansz, 1972). Another competitor in the packaged food segment in the targeted country would be ADF food which mainly engages in exporting ready to eat food in different parts of the world. The company operates in 55 countries and deals in canned foods, chutneys, pickles, frozen food and ready to eat food. The company specializes in distributing organic Mexican food across the main stream US market. Thus could be seen as a major competitor in the ready to eat food industry. The company also has manufacturing units in different parts of the world like India and other regions which has brought down manufacturing costs. The company does not only cater to the niche market rather with their different brands like Aeroplane, Truly Indian, Ashoka, Soul, PJ’s, Camel etc they cater to different market segment from economic segment to the Niche Segment.
The PEST analysis would help in identifying the external market factors that could influence the expected ready to eat food business from New Zealand to San Francisco. The PEST analysis would help in highlighting the political, economic, social and technological factors that could influence the export business of ready to eat food in US.
Political factors- The effective rule of law and the strong democratic set-up in US makes it an attractive business destination for the ready to eat food segment. The political condition of US could be said to be stable for export business. However the rules and regulations are strict and hence while targeting the niche market the quality of products would have to be maintained to keep on exporting ready to eat food in the country (Omar et al. 2009).
Economic- US is the largest economy in the world and the services and manufacturing industries are the main source of its economic strength. With the 2008 recession there were growth in unemployment rates and an adverse impact on the economy of the country but the third quarter of 2014 witnessed economic growth with increases spending power of companies and both consumers. Hence the economic condition of US could be seen an important factor which could positively influence the exporting business. More over the ready to eat food could be said to be targeted towards the niche segment of business and IT people and the high spending power of the targeted segment suggests that the products would be instant hit with them (Burns, 2010).
PEST Analysis of US
Social factors- Us has an increasing aging population which could be both negative and positive for the ready to eat segment. The ageing population would find it feasible to have ready to eat food but would focus on more nutritional option and hence these products would be suitable for them as they would be prepared keeping in mind health benefits. The products would be gluten free thus would be suitable for consumption of all age group. However the main targeted segment is the niche market of IT professionals and Business people. The products would be developed focused on several tastes like Asian, English, and Oriental etc and thus would cater to every taste bud. The growing time constraints of people are also encouraging them to look for easier alternatives and this is also applicable for food where more and more professionals prefer ready to eat food. But a healthier option is also preferred thus the export business of ready to eat food to the niche market would be much positively influenced by the social factors prevailing in US.
Technological factors- innovation and technology could be said to be the corner stone of US economy and technological developments have helped the economy to grow. In such a scenario people would always prefer innovation in everything as well as food. They would require innovation in ready to eat food too and the export of gluten free Nutritional food would thus be welcomed in US.
The persons of the niche targeted buyers would be the IT professionals and Business people of the Silicon Valley in San Francisco. These segments have been targeted for the new product which would be developed in New Zealand and exported to San Francisco since the products developed would be done for the niche market. The nutritional factors involved in ready to eat food segment would require the SME in New Zealand to develop gluten free products and products that have nutritional value for the targeted segment. Thus the pricing for development and packaging would be higher as retort packaging would be used for keeping the food fresh with a longer shelf-life. The targeted segments are the IT professionals and business people in Silicon Valley in San Francisco since these professionals have higher spending power and owing to their time constraints they majorly depend on ready to eat food. However with higher spending power they also look for more healthy alternatives as most of the ready to cook food is developed with gluten as the main element and thus compromising on nutritional factors (Kolvereid and Isaksen, 2008). Thus the products developed on basis of health and wellness would attract the targeted segment. More over the availability of different flavors from around the world would make these products more popular with the targeted segment that have the money to spend on different flavors but not the time to cook.
The product is mainly targeted at the business and IT segment. These sectors are extremely stressful and prefer ready to eat food as compared to cooking food. The growth of the fast food industry in the US has been mainly because of such factors. However, the fast food industry also accounts for obesity and diabetes and therefore a healthier option is needed. The business conceptualized here has been to provide fresh healthy ready to eat food. Retort packaging technology would be used which would ensure the food value is retained and the food is fresh. Further, this process would also save space and thus exporting will be convenient. Canning process takes a lot of space and hence export costs would be high but in retort packaging the costs would be lower.
Start-up businesses need funds and these funds are mostly in form of venture capital or bank loans. It is quite difficult for a start-up to secure a bank loan because bank loans are mostly against securities. However, venture capitalists provide funds based on the lucrative business idea. Venture capitalists not only seek a percentage of return on the their investment but also claim equities in the company. The Silicon valley has been extremely successful mainly because of the availability of venture funds. The crowd funding concept has also been extremely popular in the US. After, the 2008 recession there has been a depletion in the global capital market and this is a major challenge for start-up businesses. The crisis in Europe too has been a major cause of concern for the global capital market. For this organisation there can be two options, either to secure venture funds from the domestic country or to look for international funds. The capital market has been highly fragmented and local capital markets can be small and therefore looking into the global capital market can be effective (Carter et al. 1996). However, there are few considerations that have been illustrated in the figure below
The capital market in New Zealand has been stable and the effects of recession did not deplete the market. There are several venture funds that are available in New Zealand. The New Zealand private equity and Venture Capital Association Inc (NZVCA) is one of the organisations which aims at providing the world’s best platform for private investors. The organisation has been proactive in developing angel funds, seed funds and venture funds. The New Zealand Venture Investment Fund (NZVIF) is also another organisation which has been into private equities. There are several other organisations and angel investors who promote entrepreneurship in New Zealand and therefore it can be stated that the business would be capable of generating the funds that it needs for this start-up
There are different market entry strategies available for the SME who would be developing ready to eat food for the niche market in San Francisco. The best entry strategy for the beginning would be exporting and joint ventures. But since it is an SME export strategy would be the best market entry strategy for the company for targeting the niche market in the ready to eat food in San Francisco Silicon Valley. Exporting is the most well established form of operating in a foreign market. The foreign market in San Francisco could be targeted with this market entry strategy. Direct manufacturing would not be required but significant investment would be required for marketing strategies.
Thus the market entry strategy that would be used for entering the ready to eat food market of San Francisco would be exporting where products would be exported to San Francisco to a central importing division that would be selling the products in the targeted market of the country. The main advantages of this market entry strategy is that it is less risky as the manufacturing would be home based. More over this strategy would help the SME to identify the overseas market before they invest in a Brick and mortar store for direct selling. It also reduces the potential risk factors while operating in an overseas market. However a major disadvantage could the fact that in the initial stages the company would have to be at the mercy of the overseas agent and would have a lack of control. However ready to eat products that are nutritional and gluten free are lesser in ready to eat food industry in San Francisco and hence these new products exported from New Zealand would be able to attract customers with their nutritional benefits as well as varied range of flavors.
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