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International Marketing Student Details 1-1-2020 Word Count- 2943
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INTERNATIONAL MARKETING1 Executive Summary Cheers is an Australia based brewing company, specialises in craft beer. The organisation has achieved success within Australia and is focusing upon expanding its business operations within international markets, as a choice Cheers has selected India and Brazil for expansion ofitsbusinessoperations.ThemarketwithinIndiaandBrazilhaspotentialgrowth opportunities for a brewing company, but in comparison to Brazil, India is a better choice for the market expansion of Cheers, as India has a stable and developing economic condition as compared to Brazil, also the preference of customers within Indian markets is shifting towards premium quality craft beers. Cheers can effectively enter within the Indian industry through exporting its products within the market through a distributor, the organisation can focus upon the selection of the place where the products will be available for the sale and can focus upon the extensive distributive strategy, as the craft beers are premium quality products, therefore the customer segment who can afford such premium products can be targeted at high-end clubs, bars or at 5star hotels. Therefore, the organisation is required to focus upon the product quality as well as ensuring the effective distribution of its products within the industry so that it can ensure its success within the industry.
INTERNATIONAL MARKETING2 Table of Contents Introduction................................................................................................................................3 Risk and Opportunity Analysis..................................................................................................3 Opportunities available for the organisation..........................................................................6 Selection of the Destination for expansion............................................................................7 Market Entry Strategy................................................................................................................8 Marketing Strategy to be adopted by the company....................................................................9 Human Resource Strategy........................................................................................................11 Conclusion................................................................................................................................11 References................................................................................................................................13
INTERNATIONAL MARKETING3 Introduction The rapidly changing social preferences have resulted in the growth and expansion of the brewing industry, as with the changing lifestyle and the urbanisation of the societies the popularity of beer consumption is increasing. The developing economies including India and Brazil have shown effective market growth in terms of beer consumption. The attitude of societies within the nation are changing towards the consumption of beer, therefore with the changes in the consumer preferences, the competition within the industry is also growing, as the brands are promoting their products internationally within the global markets(Mifsud, 2018). Cheers is an Australia based start-up that brews craft beers, after the success within the Australian market, Cheers focus on its international expansion and selects India and Brazil as the market choices for its international expansion. The report is focused on analysing the risk and opportunities available within the nations, and effectively analysing the strategies that Cheers can adapt to ensure its business success within the nations. Risk and Opportunity Analysis The organisation operating within the industry is exposed to certain risks as well as opportunities, therefore it is required that the management of the organisation effectively focus upon analysing the internal as well as external environment of the business so that such risks and opportunities can be identified and the decisions can be made to avoid the risk factor and to work effectively so that the business performance can be improved. The risk and opportunities can be analysed through effective evaluating business environments. The management of the organisation is focusing upon the business expansion within India and
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INTERNATIONAL MARKETING4 Brazil, therefore to analyse the effectiveness of the business environment, PESTLE analysis can be conducted to analyse the risk within the business environment(Perera, 2017). Political Factors Various political factors influence the performance of the organisation within the nation. In India, certain political issues impacts the performance of the brewing industry, the political factors within India controls the taxation on the beer products due to which the price competition within the industry increases, also within India transporting beer across state border is also illegal; therefore, the organisation will have to face certain challenges in establishing its business in India(Knoth & Borrit, 2014). On the other hand, the Brazil brewing industry does not directly influence the brewing industry, as the Brazil Brewing industry stands at the third position in the world in terms of beer consumption. The tax system of Brazil is the main issue within the industry, due to the complicated tax system the product price varies from region to region and due to the taxes, the price gap for same product within the regions increase, which is a challenging factor for the organisations operating business within Brazil Brewing Industry(Canada, 2019). Economic Factors The beer industry in India is likely to grow and expand in future, despite the regulatory hurdles the industry seems to have high growth potential. Also, there is a continuous increment in the per capita income which indicates that the consumers within the economy have a higher buying power. The All India Brewing Association states that the sale of the craft beer is growing at a rate of 20% year-over-year(Economic Times, 2017). Brazil has recorded a slow growth from the 2015 recession, which has led towards high rates of inflation, unemployment, currency depreciation and falling wages due to which the consumer income and spending capacity has been reduced, despite the economic conditions the
INTERNATIONAL MARKETING5 consumers within the industry are spending on the premium quality products, the sale of the beer products in Brazil has grown by 9.3% on an average between FY 2013 and 2017 (Canada, 2019). The economy of Brazil isunstable as compared to the Indian economy. Socio-Cultural Factors The attitude of Indian Societies is changing towards alcohol consumption, and the industry is showing strong growth in terms of beer consumption. The consumers are now showing a positive response towards the beer in the social gatherings, and with an increase in the café culture in India, the social trends are changing towards beer consumption(Chakraborty & Suresh, 2018).The increase in beer consumption in India has recorded 90% increment from 2002-2007, the change is due to change in the lifestyleof the people and with the introduction of the health-conscious diet/light beers(Vashishth & Tripathi, 2016).Brazil has a high competition within the industry and the consumers within the society consume a large number of beers, and their preference for the beer depends upon the quality rather than on the price, and it is assumed that within the Brazil Brewing Industry there is a chance for expansion within the industry(Dias & Falconi, 2018). Technological Factors The improvement in technological factors has increased competition within the beer industry. As the technological factors influence the brewing industry production as well as distribution process, therefore the company having a leading technological resource to speed up its production process will be able to lead within the industry. Therefore, it is required that the organisation focuses upon the technological advancements within the organisation so that it can effectively compete within the international market(Didora, 2018). Legal Factors
INTERNATIONAL MARKETING6 Some certain legal rules and regulations guide the brewing industry within India, as per the law the brewing companies cannot directly advertise their products on various platforms, authorising regulation and licencing requirements within the industry limits the offering of beer products in specific states or region. Also, in India, some various laws and regulations govern the production, distribution and even the pricing of the alcohol. Therefore, the companies are required to effectively analyse the legal factors before expanding their operations in India(Chakraborty & Suresh, 2018). In Brazil, the major legal issues faced by thecompaniesoperatingwithinthenationisthetaxationpoliciesintroducedbythe government due to which the price of the products vary from region to region, and the companies are required to effectively analyse the policies as per the region(Agriculture and Agri-Food Canada, 2019). Environmental Factors The nations are focusing on the sustainable growth of the economies and to implement the growth strategies they are focusing on the effective utilisation of the natural resources and has also developed legal regulations so that the companies operating within the nation also focus upon the sustainable growth of the industry. Therefore, it is required that the organisation focus upon the effective utilisation of the resources during its production process and contribute towards the government initiatives towards managing climate change(HPS, 2020). Opportunities available for the organisation Beer is one of the most preferred alcoholic drinks preferred by consumers over the world. The developing countries including India and Brazil have reported a significant rise within the market sale of the premium beer products. The organisations have the opportunities to expand their business operations within the nations by meeting the customer's requirements for the quality products, also the organisations can focus upon the production of craft beer
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INTERNATIONAL MARKETING7 which is considered as a preferred choice of the customers within the industry(J.P.Morgan, 2018). CHEERS have an opportunity to be part of the expanding Indian brewing industry. The industry has shown a growth rate of 20% y-o-y which is higher in comparison with the global brewing industry which is 5-7%. Also, the choice of consumers within the nation is shifting towards the consumption of craft beer, and with rising disposable income the sale of the alcoholic beverages is estimated to rise to 25% till 2022. Indian industry is dominated by limited brands among which approx. half of the market is dominated by United Breweries, therefore the CHEERS can expand its business operations within the nation by developing effective strategies, as the company has competed with limited competitors within the industry(Connoisseur, 2018). Brazil beer industry is third in the world in terms of the alcohol consumption within the nation, the brewing industry in Brazil is experiencing a growth in its premium beer markets as the customers within the nation focus more on the quality of the beer that is being offered to them. The craft beers have limited availability within Brazil; therefore, CHEERS have an opportunity to effectively promote their brand and to compete within the industry by providing the market supply for craft beers. The brewing industry within Brazil is considered to be a major importer of the premium quality products from the countries like Belgium, Germany and the Czech Republic, due to local taxes such imported beers are sold at a high price as compared to the locally brewed beers. Therefore, locally brewing companies can effectively compete with international brands by providing quality products at low prices (FITM, 2015).
INTERNATIONAL MARKETING8 Selection of the Destination for expansion The risk and opportunities analysis within India and Brazil for CHEERS reflect that India is a better choice for the expansion of business operations as compared to Brazil. The economic or the financial stability of India is more as compared to Brazil, as due to the recession in 2015BrazilhasrecordedaslowgrowthwithintheindustryalsoBrazilhashigh unemployment level as well as high inflation rate due to which the sale of beers within the industry may get affected in future if the unemployment rate increases(Gallas & Palumbo, 2019). Also, due to Brazil government taxation policies, CHEERS will have to face a price competition within the nation. CHEERS being an Australian company requires that the nation in which it is operating its business to have good and effective trade relations with Australia. India and Australia have a balanced and effective free trade agreement which focus on promoting high-quality trade betweenthenations.Thenegotiationbetweenthecountriesisofficiallytermedasa Comprehensive Economic Cooperation Agreement (CECA). Such trade agreements provide Australian companies with an opportunity to develop and expand their business operations beyond the borders of the nation(TOI, 2018). Market Entry Strategy The market selection is based on the economic, political as well as legal factors of the home and the host country. India has a stable political and economic environment which promotes the business organisation to grow and expand their business operations. in case of the brewing industry, some certain rules and regulations are required to be analysed by the organisation and accordingly develop its operational strategies so that it can effectively compete within the industry. Australia and India have also signed a free trade agreement which limits the trade restrictions and regulations within the nation and promotes the growth
INTERNATIONAL MARKETING9 of cross-border business within the nations(Commonwealth of Australia, 2010). Therefore, CHEERS can effectively establish its business within the Indian Industry, if it focuses on the legal rules and regulations within the nation. CHEERS can make an entry within the markets of India through the direct export of its products through a distributor as a medium. The distributors are independent merchants who buy directly from the company and sell the products to the customers. The export of beer within the Indian industry is most preferable market entry option for CHEERS, as the global import of India has grown by 21% in 2016 amounting to 10,800 tonnes, which represents a high growth opportunity for international brewing companies(Connoisseur, 2018). Exporting of products also provides an option of withdrawingthe product from the market in case the product fails to achieve the targeted growth within the market. Government regulations possess a risk within the Indian brewing Industry, as due to strict legal rules and regulations the overall beer market(AWI, 2013). The organisation focusing on the export as an option for entry within the foreign market does not require that the organisation invest heavily on developing infrastructure, as it just requires that the organisation supply products to a local distributor who will be accountable for the sale within the region. The export mode of market entry provides the organisation advantage in terms of risk management as well as control within the market, as the distributor is dealing within the host market, therefore, he has better understanding of the legal rules and regulations, therefore, he conducts activities as per the rules and regulations and help the organisation to expand its business operations within the nation(Grünig & Morschett, 2012). Marketing Strategy to be adopted by the company The company is required to adopt marketing strategies so that effectively compete within the industry. As directalcoholads are banned in India, thereforeit is requiredthat the
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INTERNATIONAL MARKETING10 manufacturers focus upon innovative strategies so that they can effectively promote their products within the industry. The organisation can focus upon the distribution of its products within the market, so that it can be in the reach of the customers, and can establish itself as a brand within the industry. CHEERS can focus upon promoting craft beer produced by the company, as the trend of craft beer is increasing in India, therefore the company can focus upon craft beers as the key attraction for the promotion of the brand within the industry (Mallikarjunan, 2019). Apart from the promotional activities to develop an effective marketing strategy it is required that the organisation focus upon the target market, as the Indian industry is driven by the young population and with rising disposable income the choice of quality products is increasing, therefore the marketing strategies developed at CHEERS should promote as a qualityproductwithintheindustry(ET,2017).Theorganisationcanfocusuponits promotion through indirect channels such as sponsoring of events, creating social media pages as the target market of the organisation is available on the online platforms and especially on the social media platforms, therefore, CHEERS can effectively interact with its target customer over the social media platforms and can promote its products effectively (Moise, 2015). Craft beer is among the premium products, as the manufacturers maintain a premium pricing policy for the craft beers. Therefore, within the industry, the craft beer brewing companies face competition in terms of the product quality as well as the availability of the product rather than competing in terms of price of the product(Bhasin, 2019). Therefore, CHEERS can focus upon adapting price skimming strategy for the pricing of the product, as the product offered is of premium quality and entering into the industry requires the organisation to spend on the advertisements and promotions, therefore CHEERS can focus upon introducing its product at a high price within the industry(Spann, et al., 2015).
INTERNATIONAL MARKETING11 The organisation can control the distribution of its product within the industry through adopting exclusive distribution strategy, as craft beer is a quality and high priced product is not affordable for lower class, therefore the organisation can focus upon the selection of the high-end clubs, bars or 5star hotels where the organisation can focus upon its target customers. Human Resource Strategy The organisation operating in the international business environment has a diverse workforce in terms of culture, experience or knowledge; therefore, it is required that the organisation focus upon developing strategies through which it can effectively manage its workforce within the organisation(Briscoe, et al., 2012). To develop an effective workforce within the international organisation it is required that the organisation focuses on the factors within the nation, such as the nation’s employment laws and policies, as in India, government has established Employment and labour law to guide the employers and to protect the rights and interest of the employees working within the nation(GLI, 2020). The organisation should focus on the hiring of the employees within the nation in which it is expanding its business operations, as in India the workforce required by the organisation is easily available, due to the unemployment within the nation. As the employee hired within the nation understands the business environment within the nation and can effectively lead theorganisationtowardstheachievementofthebusinessgoalsandobjective.The organisation can take help of recruiting agencies to source candidates and based on the personal interview or screening the organisation can select the suitable candidate for the workforce of the organisation(Rees & Smith, 2017).
INTERNATIONAL MARKETING12 Conclusion The Indian brewing industry is under the development stage despite the legal restrictions on the industry. The attitude of people towards alcohol consumption within the society is changing, which led towards the rise in the sale of premium beer products within the industry. As compared to Brazil, Indian economy is a stable condition, as the Brazil economy has recovered from the recession but the industry is still showing slow growth in comparison to the other economies of the world, also Brazil has high unemployment rates and high inflation due to which the per capita disposable income has reduced. CHEERS want to expand its business in the international market; therefore, India is a better option for CHEERS to expand its business operations. Cheers brew craft beers, and the demand for the craft beers is increasing within the Indian market, as being a developing economy the consumers within the market prefer quality products, due to which the competition within the industry is based on the product quality rather than on price. Cheers can focus upon setting up high price for its products, as the customers within the industry require a quality product, therefore they will be willing to pay a highpriceforqualityproducts.Theorganisationcanfocusuponadaptingextensive distributive strategy so that the targeted consumers can be approached and the brand will be able to establish itself as a premium product brand within the nation. Developing an effective workforceisalsorequiredtocompetewithintheinternationalmarket,thereforethe organisation is required to focus upon developing strategies so that it can develop workforce within the organisation, and will be able to achieve the business goals and objectives.
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INTERNATIONAL MARKETING13 References Agriculture and Agri-Food Canada, 2019.Custom report service – Beer market in Brazil. [Online] Availableat:http://www.agr.gc.ca/eng/international-trade-of-agri-food-products/ international-agri-food-market-intelligence/reports/custom-report-service-beer-market-in- brazil/?id=1550776851322#e [Accessed 18 February 2020]. AWI,2013.Regulation&Legislation.[Online] Availableat:https://www.alcoholwebindia.in/content/regulation-legislation [Accessed 19 February 2020]. Bhasin, H., 2019.Marketing Mix of Craft Beer – Craft Beer Marketing Mix.[Online] Availableat:https://www.marketing91.com/marketing-mix-craft-beer/ [Accessed 18 February 2020]. Briscoe, D., Schuler, R. & Tarique, I., 2012.International Human Resource Management. 4th ed. New York: Routledge. Canada,2019.Customreportservice–BeermarketinBrazil.[Online] Availableat:http://www.agr.gc.ca/eng/international-trade-of-agri-food-products/ international-agri-food-market-intelligence/reports/custom-report-service-beer-market-in- brazil/?id=1550776851322 [Accessed 17 February 2020]. Chakraborty,S.&Suresh,A.S.,2018.DeterminantsofFactorsInfluencingBeer Consumption and its Impact on First time Drinkers: Evidence from Indian Beer Market. International Journal of Management Studies,5(3), pp. 24-38.
INTERNATIONAL MARKETING14 Commonwealth of Australia, 2010.Australia – India Joint Free Trade Agreement (FTA) , s.l.: Commonwealth of Australia. Connoisseur, B., 2018.Indian Beer Market Set for Strong Growth in 2018.[Online] Available at:https://beerconnoisseur.com/articles/indian-beer-market-set-strong-growth-2018 [Accessed 18 February 2020]. Dias, M. d. O. & Falconi, D., 2018. The Evolution of Craft Beer Industry in Brazil.Journal of Economics and Business,1(4), pp. 618-626. Didora, P. L., 2018.The Evolution of of Brewing Tech: Innovations that have redefined beer inthemodernage.[Online] Availableat:https://growlermag.com/the-evolution-of-of-brewing-tech-innovations-that- have-redefined-beer-in-the-modern-age/ [Accessed 18 February 2020]. Economic Times, 2017.India's beer industry holds long-term growth potential.[Online] Availableat:https://economictimes.indiatimes.com/industry/cons-products/liquor/indias- beer-industry-holds-long-term-growth-potential-report/articleshow/56425365.cms [Accessed 17 February 2020]. ET,2017.India'sbeerindustryholdslong-termgrowthpotential:Report.[Online] Availableat:https://economictimes.indiatimes.com/industry/cons-products/liquor/indias- beer-industry-holds-long-term-growth-potential-report/articleshow/56425365.cms?from=mdr [Accessed 19 February 2020]. FITM,2015.BeerSectorInBrazil.[Online] Availableat:https://www.flandersinvestmentandtrade.com/export/sites/trade/files/ market_studies/800151125155419/800151125155419_10.pdf [Accessed 18 February 2020].
INTERNATIONAL MARKETING15 Gallas, D. & Palumbo, D., 2019.What's gone wrong with Brazil's economy?.[Online] Availableat:https://www.bbc.com/news/business-48386415 [Accessed 27 May 2020]. GLI, 2020.government has established Employment and labour law to guide the employers and to protect the rights and interest of the employees working within the nation..[Online] Availableat:https://www.globallegalinsights.com/practice-areas/employment-and-labour- laws-and-regulations/india [Accessed 19 February 2020]. Grünig, R. & Morschett, D., 2012. Evaluating market entry modes.Developing International Strategies: Going and Being International,pp. 123-148. HPS,2020.BeerIndustry:EnvironmentalConcernsandRegulations.[Online] Availableat:https://www.hps-pigging.com/beer-industry-environmental-concerns-and- regulations/ [Accessed 18 February 2020]. J.P.Morgan,2018.What’sontapfortheglobalbeermarket?.[Online] Availableat:https://www.jpmorgan.com/global/research/beer-market [Accessed 18 February 2020]. Knoth, M. & Borrit, J. B., 2014.The Indian Beer Market: The Next “China” Or A Hyped Market With Little Future Growth?,s.l.: Scandinavian Brewers’ Review. Mallikarjunan, P., 2019.Why brewers of craft beer are on a high in India.[Online] Availableat:https://thefederal.com/the-eighth-column/why-brewers-of-craft-beer-are-on-a- high-in-india/ [Accessed 19 February 2020].
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INTERNATIONAL MARKETING16 Mifsud,C.,2018.WhyBeerIstheWorld’sMostBelovedDrink.[Online] Availableat:https://time.com/5407072/why-beer-is-most-popular-drink-world/ [Accessed 18 February 2020]. Moise, D., 2015. Organizations Communicating Through Events - Sponsorship.International Journal of Economic Practices and Theories,5(4), pp. 358-363. Perera, R., 2017.The PESTLE Analysis.s.l.:Nerdynaut. Rees, G. & Smith, P., 2017.Strategic Human Resource Management: An International Perspective.2nd ed. London: Sage Publications. Spann, M., Fischer, M. & Tellis, G. J., 2015. Skimming or Penetration? Strategic Dynamic Pricing for New Products.Marketing Science,34(2), pp. 235-249. TOI,2018.India,Australiaagreedforbalancedfreetradeagreement.[Online] Availableat:https://timesofindia.indiatimes.com/business/india-business/india-australia- agreed-for-balanced-free-trade-agreement-commerce-min/articleshow/64736995.cms [Accessed 18 February 2020]. Vashishth, A. & Tripathi, N., 2016. Study on Market Analysis of Indian Beer Industry. International Journal of Business and Management Invention,5(7), pp. 28-32.