Developing a Market Entry and a Product Launch Strategy - Assignment Example

Developing a Market Entry and a Product Launch Strategy Pharmaceutical industry was chosen as the most potentially profitable for development in Latin America, with Brazil and Mexico being the most boosting economies of the region. There was constant increase in this sector since 2007, which helped to attract new investments to the sector. One of the most important notions to take into consideration is that almost 90 % of the pharmaceutical products are consumed in Latin America with only insufficient export to Central America. Thus, launching any new product it is crucial to direct attention to the internal market first of all. Launching a new effective pharmaceutical drug will take much time due to a long process of clinical trials. Moreover, for any Mexican company it will be difficult to enter the competition with other Latin American and North American pharmaceutical companies on equal positions. So it is possible to concentrate on cosmeceuticals and nutraceuticals, the sectors of pharmaceuticals, which have not been universally recognized yet but are extremely promising. Cosmeceuticals incorporates cosmetics and pharmaceuticals and produces cosmetic products (lotions, creams) with biologically active ingredients, such as anti-oxidants, peptides, enzymes, that can be medically beneficial to humans. There also exist pharmaceutical technology companies, which have special subdivisions specializing in cosmeceuticals. Nutraceuticals is a blend of nutrition and pharmaceutical implying products which give certain therapeutic effect and can potentially aid in diseases treatment or prevention (Kalra 1). Such products as dietary supplements and functional food are usually referred to nutraceuticals. The product In Latin America the market of “healthy ingredients” is developed on the retailer levels. Plants, leaves, roots, seeds are popular among locals as they are perceived as ethnic and natural. Local home-made oils, powders, and extracts from these valuable plants are also demanded due to their easy access and low price (Lajolo 2). The products that would be optimal to launch can be dietary supplements received from local Latin American plants, such as asai, guava, camu-camu and others, which are not recognized in the world but are well-known to the regional consumers (Lajolo 3). All these plants are not examined thoroughly but even preliminary research suggests that they have huge potential. Certain subdivision of pharmaceutical company can arrange scientific research and manufacture of these products. Among the variety of dietary supplements I would advise to dwell on vitamins, minerals, herbs & botanicals, specialty supplements, meals supplements, and sports nutrition. All the products are exclusively organic without synthesized ingredients. Target Market and Positioning Latin American market is considered to be one of the most perspective and fast growing as the quantity of middle class consumers is constantly increasing. There is also significant shift in health awareness of the population connected to urbanization level growth. Taking into account Mexican demographic trends it is possible to conclude that the Mexicans is a fast growing and respectively fast aging nation, with the quantity of women prevailing the quantity of men. The target auditory of the functional food products can be described as men and women between 25 and 70 with a stable income. The average consumer should be aware of the latest health trends and eager to spend extra money on health improving. Moreover, middle aged consumers between 40 and 64 years old are the most financially stable consumers in Mexico. It is possible to target such people, as they usually take care of themselves and their extended families. This age category is also the most significant in Mexico, and what is more important, it is going to increase further due to aging processes. The product will be launched mostly for family members; however elderly people living alone and young single people can also become active consumers. The consumers of the dietary supplements will mostly be middle and big cities dwellers, those who do not have much time to go to the local market and buy plants to prepare special powders and mixtures themselves. Moreover, it is known that Mexico has a very high rate of obesity among middle-aged people, thus shifting into healthy way of life with the growth of health awareness among population is inevitable. Organic and ecological trends of global culture are also influencing Latin American population. Marketing Mix Among the existing companies offering functional food, it is possible to define Herbalife Internacional, Farmacias Similares, Boehringer Ingelheim Promeco. The success of Herbalife can be partially explained by a staggering amount of employees; around 19.000 distributors operate in Mexico and Central America. In 2012 in Mexico alone there were 67,959 sales leaders, and the country contributed $496m in net sales. Herbalife Internacional has the largest market share in vitamin and dietary supplement production in Mexico with 31 % of share and 14 % of constant growth. Just to put those 38,000 Nutrition Clubs in context, the popular chain of Dr Simi pharmacies, Farmacias Similares sells cheap generic drugs, has 4,000 outlets in Mexico and Guatemala (Macrum). Despite the fact that the prices which the company offers are almost equal to the prices of the competitors, the company reaches more consumers due to well-elaborated chain of individual distributors’ net and nutritional clubs. Farmacias Similares follows Herbalife Internacional with a 7% share, which demonstrates gradual decline of revenue. Boehringer Ingelheim Promeco is ranked third owing 6% of share due to persuasive marketing and retail stores distribution. Utilization of local materials, such as popular fruits, berries, and herbs will be that benefit which product will offer. For the consumers it will be easier to identify health benefits with familiar plants, to which they are accustomed from early childhood. Vitamins and dietary supplements can be promoted as the substances received according to recipes of Latin America ancestors or “grandma secrets of herbs and plants”. It is important that the consumers understand that instead of going to the market and buying these plants themselves they can rely on the company which had already processed these plants into ready-to-serve substances, powders, and drinks. Herbalife as a successful global company does not seek for unique approach to each country and region relying on its loud name and well-developed products and supply chains. However, taking into account modern trends in Latin America market it is possible to suggest that people are looking for personal approach and are ready to pay a little bit more to feel unique benefits. It will be impossible to compete with Herbalife, as this product will hit different audiences. However, it will be difficult to compete with such companies as Farmacias Similares and Boehringer Ingelheim Promeco, which are old players on the pharmaceutical market of Latin America. It is known that Farmacias Similares offers lower prices for the similar products, thus it attracts consumers with low income. Organic dietary supplements will be in a different product niche with prices higher for the quality offered. It is only successful and efficient advertising campaign that will be able to help for the product to take a decent place in this niche. It is crucial to arrange wide chain of distributors as well. Distinct accent on the Latin America materials for production the vitamins and dietary supplements can be an advantage when positioning the product into international market. World perceives Latin America as one of the richest regions in terms of flora species, and this image is beneficial to the brand, thus rebranding will be not required. The product will be exposed to North American and probably European markets later. Localizing the product it will be necessary to make some modifications. It is important to conduct a research regarding the ingredients knowledge among different countries. The product does not have to be perceived as exotic and strange. Thus, for Brazil, asai is a common product, and for Chile this berry is almost unknown due to geography location, so it is necessary to hit the markets with familiar names of the ingredients. The product will enter a new niche of organic products so sales forecasting will be problematic. Taking into account market demand for the new organic dietary supplements in the country with high level of obesity and increasing health awareness it is possible to suggest that the product will become a novelty to try. The pharmaceutical industry in Mexico had sales of $9 billion in 2004 of which 80% came from private sources. Pharmaceutical sales represented 1.3% of GDP and around 20.9% of total health (Spending on the Medicine). It is planned to distribute the products involving around 2000 drugstores and retailer stores apart from other channels during the first year. With the respective expenditures, the product can take 7 % of share for the first year, and is aimed to take 9 % the next year with a gradual consequent growth. Table 1. SWOT analysis of the product Strengths Dietary supplements were already introduced to Latin American market and proved to be demanded by the buyers. Organic dietary supplements made of regional ingredients will become a recognizable brand which is interesting to try. Weaknesses The product has competitors among the well-known global companies which share will be difficult to get. The company will have to elaborate the mechanisms of natural ingredients processing from the starts which can take much time. Opportunities Using local resources will be beneficial for employment rate in the region and will create additional positive image for the company. Threats Fast learning curve of competitors which can adjust the technology. Globalization which opens new tracks to Latin America as a perspective economic area. Channels of Distribution Natural & Specialty Retail. This channel will make possible to sell the products in natural & health food stores and specialty retail outlets. Department stores. Boutiques, salon/ spa, practitioner sales. Practitioners include Chiropractors, Traditional Chinese Medicine Specialists, Acupuncturists, Homeopathists, Massage Therapists, Naturopaths, and Osteopaths, Aroma therapy Specialists, Faith Healers, Biofeedback Specialists, Meditation/Relaxation Therapists, Hypnotherapists, Hydrotherapists, Ayurveda Specialists, and Mainstream/Conventional Medical Practitioners. Distributors. To hit the target audiences is needed to arrange multilevel marketing with the help of distributors or salespeople when the product will be sold during in-home demonstrations, special gatherings and other. Fitness trainers/ practitioner consultations. A wide range of specialists like chiropractors, acupuncturists, homoeopathists, massage therapists, naturopaths, and dietitians along with fitness trainers can add the product to the list of recommendations. E-commerce. Selling via Internet is one of the most important supply chains as it alleviates the process of choice and delivery. The purchases are made on site. Promotion In Latin America most population is unaware of functional food; however in urbanized areas there are consumers who recognize these products due to the information from mass media. The rest of population is prone to rely on cultural traditions (Lajolo 3). Brand positioning of the product will be performed with a help of multi-media strategy. Due to a stable position of the competitors using one media will be ineffective. Television, Internet, printed media will be utilized in advertising campaign. The accent will be made on television as most of the target auditory is middle-aged people not associating themselves with Internet. The key message of promotion will be Latin American organic ingredients usage for dietary supplements manufacture. It is important to underline the fact that the company had selected and processed well-known fruits, berries, herbs in order to offer ready-made products. Conclusion The main reason for choosing the sector of nutraseuticals is that is one of the most perspective branches of pharmaceuticals in the world. As the products of the industry are defined as food there is no need to conduct time consuming clinical trials that absorb bigger part of company budget. Nutraceuticals allows concentrating on dietary supplements, such as vitamins, herbs& botanicals, minerals, specialty supplements, meals supplements, and sports nutrition. Key point of the chosen campaign is the usage of organic ingredients for production from a local area excluding synthesized products. Appealing to familiar names of fruits, berries, plants, and herbs will create positive brand image among the Latin American audience. The population of the continent is increasing tremendously, and the level of health awareness is enhancing subsequently, thus teaching people about healthy lifestyle and offering them new organic dietary supplements will serve as a catalyst to the selling. Moreover, the population of the country is aging and facing digestive system problems, such as diabetes and obesity. Growth of healthy lifestyle awareness allows launching dietary nutraceuticals products successfully. Appendix 1. Market Shares of Nutraceuticals in Latin America Works Cited Kalra, Ekta. “Nutraceutical-Definition and Introduction”. AAPS PharmSci 3 Sep. 2003: 1-4. Print. Lajolo, Franco. “Functional Foods: Latin American Perspectives”. British Journal of Nutrition 2002: 145-152. Print. MacRum, Dan. “Herbalife Incredible Mexican Business”. FT Alphaville 23 Oct. 2013. Retrieved from:http://ftalphaville.ft.com/2013/10/23/1675772/herbalifes-incredible-mexican-business/ Spending on medicines as a share of all health expenditures was higher in Mexico than the OECD average of 17.7%. Source: OECD Pharmaceutical pricing and reimbursement policies in Mexico, mimeo, 2005. Read More