Global marketing strategy and product launch: Superdrug to India - Essay Example

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Global marketing strategy and product launch Superdrug to India Contents Contents 2 Part A 4 Executive summary 4 Part B 4 Introduction 4 Backgroundof the Superdrug 5 Current Market Position and Global Vision and Ambitions of Superdrug 5 Needs for expanding into Emerging Markets 5 Scanning Indian consumer markets to identify and analyse opportunities 5 Building marketing information systems to monitor environmental trends 6 Primary marketing researches 6 Target market Audit for Indian Market 8 The Macro-Environment (PESTEL analysis): 8 The Intermediate Environment Analysis through Porter’s Five Forces Model 9 Evaluation of the Options for a Product and Branding Strategy in the Target Market 10 Strengths and Weaknesses 11 Opportunities and Threats for Superdrug 12 Global marketing objectives for Superdrug 15 Marketing Strategy 15 Marketing Strategy: Target segments and positioning strategy 15 Branding strategy 17 Marketing Mix to deliver the strategy 17 Issues & Challenges 18 Recommendations for overcome the issues and challenges 18 Conclusion 18 Bibliography 18 Appendix 21 Part A Executive summary The paper focuses on product and marketing strategies of a cosmetic and beauty products retailer, Superdrug based in United Kingdom in its bid to make a foray into emerging markets like India. Superdrug is an established retailer in United Kingdom through conducting its operation via 900 stores. Herein the paper endeavours to highlight on the several issues in regards to the different marketing mix elements that Superdrug would encounter while tending to operate and gain a formidable share in the Indian market. Finally the paper concludes by citing potential recommendations in regards to the issues and challenges faced by Superdrug in its operational endeavours in the Indian market. Part B Introduction Superdrug a retail company focusing on the trading of toiletries was formed during 1964 by the Goldstein family. From then on the company changed many hands and is now managed by the AS Watson Group who took over the ownership of the company during 2002. The company based in United Kingdom operates based on a network of around 900 stores that focus on enhancing on the dimension of quality and innovation in the course of rendering beauty products to its customers. Superdrug works in regards to its own private label brands and also through conducting sales of products of other established cosmetic companies like L’Oreal. Background of the Superdrug Current Market Position and Global Vision and Ambitions of Superdrug Superdrug in its home market, United Kingdom is found to rank the second in regards to the retail market for beauty and health products in conducting its operation through a network of 900 stores around the region. Apart from the sole 900 stores the company also conducts its operation through acting in-store in around 226 pharmaceuticals. However in regards to the global markets, Superdrug fails to reflect any store and thus fails to get any positive ranking (Superdrug, 2012). Needs for expanding into Emerging Markets Superdrug identifies great opportunity in its endeavour to expand into foreign emerging markets that reflect a rise in high income level consumers. During the period ranging from 2010 to 2015 the rise to high-income level consumers is 46 million for China and 34 million for India. It is held that by the end of 2015 the population in the emerging cities would amount to around $2.6 trillion spending on luxury items. Moreover the consumer pie in the emerging economies constitute a larger segment of educated people the product cart of whom is increasingly filled by health and beauty products (Kearney, 2006, p.5; . Jin, et al., 2010, p.13-14). Illustrations for the above are reflected in the Appendix in figure 2 and 3. Critical Evaluation of Environmental Trends (opportunities and threats) that have led Superdrug to expand to India Scanning Indian consumer markets to identify and analyse opportunities The market for consumer products in the Indian subcontinent is gaining a huge momentum. The rise in the income level of consumers in the region has prompted the rise in the high income groups. Thus by the end of 2015 high income level of people is expected to rise by 34 million. This rise in the income level among Indian consumers thereby signifies an increase in the level of consumerism among the consumers. Consumer segmentation in regards to age reflects that the youth population reaching their teens are the biggest consumers in India. However the consumers tend to prioritise on the concepts of branding and pricing before attempting to take a final purchase decision. However in spite of such growing opportunities the foreign retail companies need to counter potential challenges to operate effectively in the Indian markets. Firstly the Indian market owes to the foreign retailer several infrastructural and financing problems. Secondly the Indian government renders potential obstruction to the foreign retailers to set up their own stores. Rather they have to work in alliance with other existing firms to gain the benefit of supply chain systems. These drawbacks amount to the growth of the unorganised retail sector that constitutes only 3 percent of the total retail industry in an evaluation conducted in 2010 (Strategic Management, 2008; Kamboj, 2012, p.294-296, 310-311). Building marketing information systems to monitor environmental trends The retail companies operating in the Indian region are found to take resort to market information systems like electronic point-of-sale systems which helps in understanding the preferences and consumption styles of the consumer. Bar codes tied to the product and consumer cards being scanned render information to the retailers about the items that consumers tend to purchase frequently. In that inventory levels in the store can be managed to gain efficiency and productivity. This market information system helps the retail companies in understanding the trends of consumers and thereby stocking products accordingly to gain productivity (Parasuraman, Grewal and Krishnan, 2004, p.162). Primary marketing researches The primary market research of the Indian consumer retail market would be conducted based on the ‘Business Portfolio Matrix’ that can be depicted as follows. Figure 1 (Source: Doole and Lowe, 2008, p.111) In regards to the above matrix the primary markets are such that renders ample opportunities for strategic development of the companies. Secondary markets are such that though render opportunity in regards to company growth yet also encompass several political and economic constraints blocking development of the companies. The third grid refers to markets having tertiary opportunity or those that reflect high amount of risks for companies in effectively allocating and utilising resources (Doole and Lowe, 2008, p.111-112). The Indian market reflects a large untapped business area for the growth of consumer retailing opportunities to effectively thrive in. The untapped business market for retail in India is filled up by a large number of unorganised players. An estimate made during 2006 reflects the total market for retail in India values around Rs. 1,200,000 Crores. However several political and economic constraints like restriction of entry of foreign direct investment in the retail industry, large amount of real estate and infrastructural costs with the existence of a complex taxation structure make it difficult for the foreign retail companies to gain an effective stand in India (Pradhan, 2009, p.36). Target market Audit for Indian Market The Macro-Environment (PESTEL analysis): Political Factors Political factors in India are not commensurate in welcoming foreign retail firms to gain potential stand in the region. Thus taxation system is quite complex with also non-allowance of foreign investment to help the growth of retail sector. Economic Factors The economy of India is a growing economy with GDP measuring at around $4.463 trillion during 2011. Consumerism in India is on the high with a growing population of high income people expending largely on retail products (CIA, n.d.). Social Factors The teenage population constitutes a larger pie of the retail consumer portfolio in the Indian market. These consumers are found to be highly curious in their approach in trying to procure new things from the westernized market. Technological Factors The retail stores operating in India are working on the use of point-of-sales systems to share large amount of consumer databases with the inventory networks to help in the reaching of the right goods to the consumers on time. Environmental Factors The Indian government is found to take key steps to reduce the impact of pollution and carbon emission upon the natural environment and thus requires the retail companies to work accordingly in working based on a carbon footprint. Legal Factors The legislations pertaining to sales tax and value added taxation policies are quite complex in regards to their implementation in the Indian consumer retail market. Moreover the sales tax legislation in the country is also found to vary from region to region thereby adding to its complexity (Pradhan, 2009, p.36). The Intermediate Environment Analysis through Porter’s Five Forces Model Consumer Power The Indian consumers in regards to the retail industry tend to reflect high amount of bargaining in terms of quality, service and price standards. Consumers in India tend to act on their purchases through gaining information from the internet and thus gain higher power to bargain. Supplier Power The retail industry in India especially for consumer products is constituted by large number of suppliers. Thus the retail company can switch over from one supplier base to another making their bargaining power low. New Competitors The entry of new competitors to the Indian retail market is restricted owing to infrastructural, capital and financing problems. Further the large amount of cultural and economic diversity makes it hard for new companies to perform effectively. Existing Competition Existence of organised retail companies in the Indian retail industry being less renders low competition between the existing players. Substitute Products Indian retail industry being largely unorganised in nature calls for the existence of small retail companies working in the rendering of substitute products for the main company. Existence of substitute products renders a threat in eating up the market share for the quality products (Pradhan, 2009, p.57-59). Evaluation of the Options for a Product and Branding Strategy in the Target Market The target market for products produced by Superdrug in the Indian consumer market is considered the teenager consumers and those people who fall in the category of above average income. The company in its endeavour to gain a larger market share in the Indian market go for two types of branding strategy viz. Umbrella or Single. In regards to the former one Superdrug needs to first evaluate the attribute of each product. The products mainly belonging to the beauty, cosmetics and skincare types can be grouped under an umbrella brand of the company. This strategy would help the company in setting a set promotion and distribution mix for the products belonging under one umbrella and thereby would help the company in incurring less cost for the same. However in cases where the company tends to offer to the consumers new products governed by offers or bearing an impulsive attribute then the company can go for a single product branding strategy. This strategy would enable the company to highlight the attribute or benefits for the particular product as different from others (Panda, 2009, p.360; Majumdar, 2004, p.50). SWOT Analysis of Superdrug and Challenges in the Indian Market Strengths and Weaknesses Strengths Superdrug in its retail endeavours in the United Kingdom market for beauty and health products reflects key strengths in regards to sustaining continuous innovation in the product portfolio and empowering employees through training. The company works on the engaging of apprentices whose skills are developed through effective training programs. Furthermore the company also reflects huge potential in rendering huge investments in regards to promotional and advertising activities thereby helping in creating consumer hype. Superdrug also renders potential investment in regards to the ambit of social responsibility in the realm of charitable and school funding activities with also reducing carbon emissions. This creates a favourable image for the concern (Superdrug, 2012). Weaknesses Superdrug in its retail endeavour however tends to suffer from certain shortfalls that can be listed as follows. In the first case though the company has developed an online portal for attracting consumers round the globe yet the online portal suffers from a salient weakness in failing to create an opportunity to conduct online transactions. Secondly the company management works on policy changes like changing the working durations and also enabling financial cuts in regards to the bonus and pension schemes of the employees. Such matters tend to create strife between the company management and the employees leading to strikes and lockouts. These problems tend to disturb the production and market operations of the company (Socialist Party, 2009). Opportunities and Threats for Superdrug Opportunities The Indian market for retail reflects a large opportunity for companies like Superdrug to gain market. A larger concentration of the market for retail products in India remains untapped and unorganised. Further the consumerism in the region in regards to retail products is also increasing with a rise in the income level of the consumers and also the growing interest for western products. With these opportunities in the foray the company can increasingly gain a higher market share in the Indian cosmetic and beauty retail market. Again the Indian consumers reflect a salient feature of gaining information through the internet that again can be enchased upon by Superdrug to enhance its market share (CSIS, 2010, p. 23-24). Threat Despite the above opportunities the Indian retail and consumer market reflects some growing disadvantages that tend to pose a threat to the probable operations of Superdrug in India. Firstly the consumer retail market in India is largely unorganised in nature for which the switching cost of the consumers tends to be quite high in regards to products and services of retail companies. They can easily avail like type of products at a lesser cost somewhere. Secondly the market being huge is also characterised by large scale diversification in regards to consumer ideologies and thus tastes and preferences vary. In that Superdrug needs to customize its products and services differently fitting to the needs of the consumers spread along different regions. Thirdly the Indian market tends to pose both infrastructural and financial problems to the company owing to lack of resources and thereby increase in costs. Fourthly legislative and administrative practices tend to restrict the emancipation and establishment of trade functions of a foreign retail company like Superdrug in the Indian market. Situational Analysis of the Indian market for Superdrug The situational analysis of the Indian market conducted for development of a retail company like Superdrug reflects the following parameters. The national economy of India reflects a huge growth rate thereby enhancing the parameter of disposable income in the hands of the citizens. This fact thereby helps in augmenting the number of articles in the consumer basket in the region which in turn enhances the sale of retail products in the country. Rise in per capita income level of the consumers enabled through a growing economy also reflects an increase in the desire of the people to try for new and innovative products rendered buy companies operating in the retail market. However a larger section of the retail market is constituted by companies operating in the unorganised sector and thereby competition is also less in regards to organised retailing. Organised retailing works on the basis of some different formats like hypermarkets, lifestyle zones, discount stores, departmental and other speciality stores. The consumers in the Indian region also tend to reflect being health and fashion conscious for which they tend to reflect an increased liking for the products offered to them by beauty and fashion retailers. However in regards to such positive situational mix the region also depicts some definite challenges for retail markets to develop. One of the significant challenges reflected by the Indian market is lack of proper infrastructural and financial support for retail markets to develop along the consumer sphere. Further the government of the region also renders potential constraints restricting the flow of foreign direct income in regards to retail markets. The tax climate of the country is also very complex with different taxing legislations pertaining to sales transactions conducted in different regions. Existence of consumer diversity along the different regions of the country also adds to the problem (CII, n.d., p.5, 7-8). Marketing entry strategy of Superdrug The market entry strategy for Superdrug would be conducted based on the four P’s of marketing mix elements like Product, Price, Place and Promotion. An evaluation conducted during 2010 reveals that the consumer expenditure for cosmetic and beauty products is quite low in India in comparison to other products. However the Indian consumers are found mostly interested in procuring skin and hair care products along with other colour and fragrance items. Thus Superdrug can enter the Indian market by presenting to the consumers the above product choices with also shaving creams and skin products for male consumers. The company can also wrinkle free and other anti-aging products to the consumers. Labelling standards needs to be adequately followed by the company where information pertaining to batch number, expiry date, name and address of the manufacturer requires to be specifically rendered. In regards to price the Indian consumers tend to go for companies rendering small packages. It is because the Indian consumers tend to prioritise value over quality and thus tend to go for packaged products and services rendering more or less the same satisfaction. Henceforth, Superdrug can also market the products by offering to the consumer value packs that would entice their interest in buying. However in addition to the value packs the company also needs to work out a premium pricing standard for its selective products focusing on above average income level consumers. The company also needs to work effectively in regards to the distribution paradigm through creating a network of wholesalers and retailers and in turn monitoring their performance effectively. Moreover the company can also work in the development of spas for largely promoting its products. In regards to promotion, India encourages the cosmetic and beauty companies to increasingly participate in cosmetic and trade fairs to largely promote its products before industrial and consumer buyers (Phookan, 2010, p.2-5). Global marketing objectives for Superdrug Superdrug sets the following marketing objectives while tending to expand its operations to India. The company in about three years time desires to gain hold of around 45 percent of the market share in cosmetic and beauty retailing in India and gain a sales turnover of around Rs. 12 Crores. For that the company plans to go for partnerships with existing retail companies in the prior stage to gain entry into the organised retail markets and also to pervade the consumer space through gaining shelf space in retail formats. Superdrug plans to innovate and customize products and pricing policies for the Indian consumers. Setting up local assembling and distribution centres would help in lowering cost of production and dispatching. The company can also work to design a web marketing portal to gain further hold of the consumer space. Marketing Strategy Marketing Strategy: Target segments and positioning strategy Herein the target markets being defined as teenage population and also the affluent consumer base in the Indian market competitors for Superdrug chosen are Hindustan Lever (HUL) and Revlon. Hindustan Lever, Revlon and Superdrug tend to render quality services and products to the consumers through the people operating in the different stores and distribution channels. However Hindustan Lever and Revlon also focus on rendering small packs other than special offers. High Quality/ High Physical Evidence/Large People Mix Less Price Offers Large Price Offers Low Quality/Low Physical Evidence/Low People Mix Hindustan Lever and Revlon participate in promotional events like expos and cosmetic fairs apart from television and print marketing while Superdrug mainly focuses on the latter mix for promoting and marketing the products. HUL and Revlon also market its products through gaining the shelf space of other retailers and also through a distribution network while Superdrug only operates based on its own stores. More Distribution Channels Less Promotional Elements Higher Promotion Elements Less Distribution Channels Branding strategy Superdrug can effectively work on the strategy of Umbrella Branding to deliver the large assortment of products to the consumers. Such a branding strategy would help the company in employing lesser distribution and promotional channels for each of the different products in the Indian market. Henceforth it would help the company enhance the profit margins. Marketing Mix to deliver the strategy Superdrug needs to operate based on both the ‘Push’ and ‘Pull’ strategy in its endeavour to gain a larger pie in the Indian market. On the consumer plane the company can work on rendering value packs other than discounts and occasional offers to create consumer attraction. On the distributor plane the company needs to work out separate allowances and trade schemes to entice the distributors to stock and sale the company’s products (Bowersox and Cooper, 2004, p.182). Superdrug can also work on direct mailers sending offer and coupons to consumers based on a consumer database along with interacting with the people through the web sphere. The company can also create street events and render samples of the products to the people as gifts and rewards (Bowdin et al., 2010, p.411). Issues & Challenges Superdrug in the absence of proper infrastructural and financial support would find it hard for gaining a potential space in the Indian retail industry. Moreover a larger existence of an unorganised retail space in the country makes it hard for the company to enhance its market share. Recommendations for overcome the issues and challenges The company needs to effectively build up strategic partnership with existing companies in the retail industry to gain a formidable entry into the retail markets. Further the company management also needs to enhance the liaison aspects with administrative and local authorities to gain a stronger support. Conclusion Superdrug, a retailer of cosmetic and beauty products operates in an effective manner in the United Kingdom retail market through its network of 900 stores. However its endeavour to enter key emerging markets like India would tend to counter seeming challenges. Indian retail market is full of unorganised companies and is largely governed by legislations restricting the entry of foreign investment and other complex tax policies which make it hard for foreign companies to gain stay. Thus Superdrug needs to work on forming effective partnership and relationships with key players in the market and competent authorities respectively to fulfil its marketing objectives in terms of market share and revenue. Bibliography Bowdin, G., et al., 2011. Events Management. United Kingdom: Routledge. Bowersox, D., and Cooper, M., 2004. Strategic Marketing Channel Management. New York: Tata McGraw-Hill Education. CIA, No date. India [online]. Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/in.html [Accessed April 6, 2012] CII, No date. Retail Scenario in India: Unlimited Opportunity [pdf]. Available at: http://www.ibef.org/attachdisplay.aspx?cat_id=375&art_id=4165 [Accessed April 6, 2012] CSIS, 2010. Global Aging and the Future of Emerging Markets [Pdf]. Available at: http://csis.org/files/publication/110307_Global_Aging_Future_of_Emerging_Markets.pdf [Accessed April 6, 2012] Doole, I., and Lowe, R., 2008. 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Available at: http://www.superdrug.com/press-centre/page/presscentre/ [Accessed April 6, 2012] Superdrug, 2012. Superdrug Today [online]. Available at: http://www.superdrug.com/superdrug-today/page/superdrugtoday/ [Accessed April 6, 2012] Appendix Figure 2 (Jin, et al., 2010, p.13) Figure 3 (Jin, et al., 2010, p.14) Read More