Marketing Strategy for Herborist in Malaysia - Essay Example

Marketing Strategy For Herborist In Malaysia Table of Contents Introduction 3 Industry overview of personal care industry 3 Background 3 Discussion 4One country that Herborist might prioritise 4 The competitive advantages of Herborist 7 Entry Mode to Malaysia 8 Analysis 9 Growth strategies to be used in Malaysian market 9 Marketing strategy and sales network to be used in Malaysia 9 Ways to implement the above mentioned strategies 10 Conclusion 10 References 11 Introduction Industry overview of personal care industry The international personal care industry is extremely competitive due to the presence of numerous competitors. Due to which its market value enhanced from US $ 356.14 billion in the year 2003 to US $ 487.72 billion by the year 2010. However, due to economic downturn, the market value of the personal care products reduced offering considerable impact over the top three market players such as Procter & Gamble, L’Oreal and Johnson & Johnson. Background Herborist is recognised as one of the most reputed Chinese personal care brands that tried to expand its market share and brand image in numerous other global markets such as Hong Kong, Europe, Paris, Malaysia and many others. Among all these markets, Malaysia is recognised as the most prioritised market for Herborist. This is mainly due to its similar demographic features and cultural background as that of China. Other than this, Malaysia is regarded as the 6th largest country on the basis of the expenditures on personal care products among all other 12 Asia-Pacific countries. In addition to this, Herborist might become successful in enhancing its brand image in Malaysia mainly due to its similar Asia skin tone, diet habit and lifestyle. However, due to the presence of numerous competitors, the rate of business threats and risks for the organization of Herborist might be extremely high. But in order to make its operations successful, an effective analysis of the target market is extremely essential. Only then, it might analyse the pros and cons of the competitors and might compete easily. Furthermore, the prime desire of this project is to devise the market entry and development strategy for the organization of Herborist within the market of Malaysia. Discussion One country that Herborist might prioritise The most prioritised country for the development and expansion of Herborist is Malaysia. This might be analysed only by evaluating the macro environment of the country of Malaysia with the help of PESTEL analysis. Political scenario- Malaysia is a democratic country so the political environment is quite stable and the rate of corruption is also quite less. Moreover, as the ruling party named Barisan Nasional party desires to improve the economic standard of the nation, so it prepared laws and regulations in favour of the industries. This might prove extremely favourable for the organization of Herborist so as to amplify its market share and demand. Economic scenario-as the economy of Malaysia is considered to be a vibrant economy with an average growth of 9 percent per year, so the per capita income of the citizens is also quite high. This is considered to be one of the positive factors for the organization of Herborist to position its products profitably as compared to many other rival players. In addition, as the per capita income is high, the living style is also quite high, which is another positive factor for the organizations, operating in the segment of personal care. So, the market of Malaysia might prove effective for Herborist. Social scenario- the citizens of Malaysia is a mixture of three nations, Malay, India, Chinese. Due to which, the culture of Malaysia is highly vibrant with high preference in various religious gatherings. Due to which, the level of preferences and fondness of the personal care products is also quite similar in nature. This is also recognised as one of the most important causes for the improvement of the demand of the products of Herborist within the citizens of Malaysia as compared to other rival players. Technological scenario- as Herborist offers varied types of modern products with the help of contemporary cosmetic science, so it might be highly favoured by the customers of Malaysia. This is because; they are highly conscious about their skin and beauty and also desire to utilise modern products to attain a healthy skin. Environmental- as the products of Herborist are entirely herbal in nature so it may not offer any sort of negative impact over the environment of the country of Malaysia. This is also recognised as one of the vital reasons for which, the products of Herborist might be highly preferred by the customers of Malaysia. Legal- Malaysian government and Malaysian Investment development authority did not imposed any sort of taxes over the beauty or personal care products. This is one of the vital reasons for which, the demand and sale of the products of personal care is quite high in Malaysian market as compared to others. Thus, from the above mentioned PESTEL analysis, it might be clearly evaluated that Malaysia is one of the best market for the Herborist to enhance its profitability and brand value. Micro environment of Malaysia The micro environment of Malaysia is judged with the help of Porter’s five forces. It is also regarded as one of the popular analytical technique. Rivalry among the competitors- the top-most competitors of Herborist in the market of Malaysia are P&G, Jahwa, Lo’real and Unilever. Moreover, as all above mentioned brands hold a strong image and position in the market of Malaysia, so the level of rivalry among these competitors might be extremely high. However, in order to create a distinctive image and position within the minds of the customers, Herborist need to be offer high-ended products in the segment of basic care, special treatment, and aromatherapy and food therapy. Only then, the organization might increase its range of customers as compared to others. Bargaining power of the consumers- due to the presence of numerous personal care brands, the rate of bargaining power of the customers is quite high. Due to which, the organization of Herborist need to develop high-quality products of basic skin care, aromatherapies and food therapies so as to attract and retain the customers among other competitors. Bargaining power of the suppliers- the bargaining power of the suppliers is quite also quite high due to the presence of few suppliers. Due to which the organization of Herborist need to fulfil their requirements in an effective way in order to attain the raw materials for the products. Presence of substitute products- due to the presence of numerous competitors, the rate of existence of substitute personal care products is also quite high in the markets of Malaysia. As a result of which, the rate of switchover costs of the customers is also quite high in the markets of Malaysia that may offer hinder the growth and demand of the products of Herborist as compared to others. Entrance of new competitors- as the craze of the personal or beauty care products in the market of Malaysia is quite high. So a wide range of competitors desire to penetrate into the market of Malaysia. Moreover, the rules and regulations of the government of Malaysia are quite favourable for the cosmetic or personal care organizations, so most of the multinational organizations desire to penetrate the market of Malaysia. Therefore, from the above mentioned information, it might be clearly depicted that, the rate of competitive rivalry in the market of Malaysia is quite high. So, Herborist need to develop a wide range of Sku’s or personal care products to attract and retain the customers of varying cultures. The competitive advantages of Herborist The competitive advantage of Herborist might be analysed with the help of SWOT analysis. It is also another remarkable analytical technique utilised to evaluate the strengths and weaknesses of the firm. Strengths- Diversified geographic presence- the organization of Herborist includes a diversified geographic presence. The organization of Herborist operates in numerous markets of Hong Kong, Europe and many others with more than 100 retail outlets. As a result of which, its retail sales exceeded by US$12.4 m by the year 2005. Moreover, by the year 2008, it exceeded its number of retail outlets by more than 800 in 80 cities of China. This also acted as a boon for the organization that amplified its customer bases as well as profit margin as well (Herborist, 2014). Strong research and development capability- in order to increase the range of customers and brand image, the organization of Herborist desired to offer high attention over its research and development department. By doing so, it became capable in developing wide range of Sku’s on basic care, special treatments, and aromatherapy and food therapy. This proved effective for the organization to increase its range of customers and position in the market of Malaysia among others. Strong brand- in order to increase the level of awareness of the product lines, the organization of Herborist desired to offer high attention over promotional activities in newspaper and lifestyle magazines. This is because; these media’s might prove effective for the organization in developing a strong relationship with the interested customers of different countries. Weaknesses- Numerous competitors – due to the presence of numerous competitors such L’Oreal, Jahwa, Unilever, the rate of growth of the organization of Herborist is quite low. Along with this, the rate of switchover costs of the customers is also quite high due to these remarkable brands. Low level of revenue- as the level of preference of the product lines of the brand of Herborist is low, so its rate of revenue is also low. This is recognised as one of the most important weakness of the organization of Herborist among others. Opportunities- Demographic trends in Chinese and European markets- as the level of consciousness over the beauty is increasing rapidly over the individual of all age groups, so the rate of the beauty or personal care products is increasing. This is one of the vital opportunities for the organization of Herborist that may increase its image and position (Guillén & García-Canal, 2012, pp. 657-678). Improvement of cosmetic market in emerging countries like China- as the consciousness for beauty is increasing, the market scenario of the beauty or personal care products is also enhancing. Due to which, the cosmetic market of China worth about JPY1.2 trillion. This is quite advantages for the organization of Herborist. Threats- Intense competition- due to the presence of numerous substitute products, the level of competition is increasing among the beauty or personal care organizations. Entry Mode to Malaysia In order to enter the markets of Malaysia, the organization of Herborist might implement the strategy of Franchising. In this process, the organization, builds and develops numerous stores without taking the liability of the store. This process might help the organization to enhance its position and awareness among the customers within the region of Malaysia. Along with this, the organization of Herborist might also become able to know the best methods to attract the customers that may amplify its total revenue and sale as well (ESOMAR, 2008, pp. 367-378). Analysis Growth strategies to be used in Malaysian market In order to increase the brand portfolio and image in the market of Malaysia, the organization of Herborist might try to implement premium pricing policy. This is because; the per capita income of the individual of the region of Malaysia is quite high and highly relies over branded products (Drummond & Ensor, 2006, pp. 323-343). Apart from this, by implementing premium pricing policies, the organization of Herborist might become able to position itself as a premium brand that may prove effective for it. In addition to this, the organization might utilise simple distribution strategy, so that the product lines might be available in all its retail outlets. Only then, it might improve the brand value and market share of the organization of Herborist. Marketing strategy and sales network to be used in Malaysia The organization of Herborist might try to offer high attention over promotion of its product lines. This might help the brand to attract a wide range of customers of varying income groups and living standards that might amplify its total sale and revenue. Along with this, it needs to develop a wide range of product line with the best quality of herbs in order to offer high-level of satisfactions (Bradley, 2007, pp. 123-223). Apart from this, in order to increase its sales, the organization might recruit highly experienced and talented staffs within its organization. Only then, it might beat its competitors effectively thereby positioning itself as a strong brand. Ways to implement the above mentioned strategies In order to increase the competitive advantage and position of the organization, the management of Herborist might try to implement the above strategies within its organizational structure (Herborist, 2014). Only then, the employees might follow the similar rules and policies that may improve the portfolio and position of the organization in the international markets. Conclusion Conclusively, it might be stated that, if the organization of Herborist implements the above mentioned strategies, then it might surely become successful in the markets of Malaysia. Not only this, it might amplify the profit margin and total sale of the organization of Herborist as well in the market of Malaysia. References Bradley, N. 2007. Marketing Research: Tools & Techniques. New York: McGraw-Hill. Drummond, G. & Ensor, J. 2006. Introduction to Marketing Concepts. New York: Cengage Learning. ESOMAR. 2008. Market Research Handbook. London: Sage. Guillén, M. F. & García-Canal, E. 2012. Execution as Strategy. Harvard Business Review Vol. 90(10). Herborist, 2014. A tradition of refinement and beauty. [Online]Available at: http://www.herborist-international.com/brand/herborist [Accessed on 3rd March, 2014]. Herborist, 2014. The Chinese beauty remedy. [Online]Available at: http://www.herborist-international.com/ [Accessed on 3rd March, 2014]. Read More