MKT800: International Marketing Strategy & Market Entry in Malaysia

This report analyzes the strategic management approach for an Australian organization, Mr. Smith shampoo and conditioner, entering the Malaysian market. It uses the Walvoord model, employing PESTEL analysis to assess macro-environmental factors, market growth prospects, specific product factors, and target market considerations. The analysis covers political stability, economic growth, social trends, technological advancements, legal frameworks, and environmental concerns in Malaysia. The report explores the potential of e-commerce platforms for market expansion, and considers the Malaysia-Australia Free Trade Agreement (MAFTA) benefits. Ultimately, the report evaluates the suitability of the Malaysian market for Mr. Smith's products, considering factors like consumer spending habits, competition, and import duties.

Running head: INTERNATIONAL MARKETING
International Marketing
Name of the Student
Name of the University
Author’s note

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Executive Summary
The purpose of this assignment is to understand and analyze the strategic management approach
taken by an Australian organisation to the South-East Asian country. The country that has been
selected is Malaysia and the product that is selected is Mr Smith shampoo and conditioner duo.
The Malaysian market is attractive for Australian investors for a number of reasons which are
discussed in the assignment. The findings show that the company can expand in the market with
the help of e-commerce platforms that are available in the country.

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Contents
Introduction......................................................................................................................................3
Findings...........................................................................................................................................3
Overview of the company and the product..................................................................................3
Analysis of the strategy...............................................................................................................4
Filter 1......................................................................................................................................5
Filter 2....................................................................................................................................10
Filter 3....................................................................................................................................11
Filter 4....................................................................................................................................14
Conclusion.....................................................................................................................................15
Reference List................................................................................................................................16
Appendices....................................................................................................................................18

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Introduction
Globalization has made trade and commerce in between two countries easy and hassle
free. Companies want to improve their market by reaching out to potential customer beyond the
geographical horizon of the home country on the other hand, governments of the countries want
to improve their exports and in turn uplift the economic condition of the country. Thus, it can be
said that globalization has provided the opportunity both for business organisations as well as
countries to grow and expand. International marketing is the process by which a company can
distribute their product or services to another country. The process includes a number of factors
that directly impact the failure or success of the strategy for example: pricing strategy, expansion
process etc. with technology and lifestyle advancement, companies can easily reach out to a
wider target market beyond the geographic boundaries of the country. This assignment follows
the purpose of establishing strategies and factors that impact the decisions of an organisation
with respect to international marketing. An iconic Australian product has been chosen to conduct
the study: Vegemite and the country that is selected is Malaysia.
Findings
Overview of the company and the product
The organisation is a company that has quickly gained popularity in the Australian
market owing to the superior quality of the products that the company offers. The company
manufactures hair care products which are completely Australian made. The company boasts of
its Australian grown ingredients like botanicals and essential oils. The company is driven by
values and principles and assures that their products are free of sulfates or parabens. Also the

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organisation has gained authorization from PETA making the products free form animal testing.
The product line of Mr Simth contains of styling and hair care products which are of high quality
organic and vegan brand. In a small period of time the company has gained a lot of prominence
in the fashion and beauty industry (Mr-smith.com.au, 2018).
Motto of the company
Style, substance and simplicity
Vision of the company
To create exceptional, Australian made hair care products, meticulously crafted from a
selection of Australian botanicals and essential oils (Mr-smith.com.au, 2018).
Product to be marketed:
The range of products are low as the company is fairly new, the most popular product
duo that are chosen to market in Malaysia are the shampoo and conditioner duo. Many critics
and beauty and hair experts have approved of the quality of the product as well as the effect
regular usage of the items have on the hair quality. The packaging is minimalistic and the
simplicity of the product along with the positive attributes that are associated with the brand will
help the company to expand in the new international market with the product. The products of
the company are price in the medium to high range it cannot be deemed to be a luxury item but
the company explains that the price strategy is kept in a medium to high level as the ingredients
that are used by the company are premium and chemical free (Mr-smith.com.au, 2018).

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Analysis of the strategy
With the help of Walvoord (1980) model the assignment is going to be studied, this is a
framework that provides suggestions for companies to select the foreign markets.
Filter 1
Any business organisation has to analyze the macro environment conditions so that the
company can mitigate any unforeseen circumstances as well as recognize the scope of the
business. In order to understand the industry and the opportunities in the Malaysian market the
PESTEL analysis tool is used. This will help in determining the scope of expansion of the
product in the Malaysian market. The country is one of the most geographically blessed
countries and the government uses this location as an opportunity for foreign investment and
trade. The beauty industry in Malaysian is booming as the people of the country have a high
standard of living ensuring that they spent money on hair and skin care.
Political factor: The country enjoys a Federal state with constitutional elective monarchy. There
is fair amount of decentralization in the country in 13 states. The political condition in the
country is stable and the government looks ahead to improve the economy therefore encouraging
trade and commerce in the country. The ruling party has been in the position for the last 25 years
making the scenario politically stable and attractive for foreign investors as there are fewer
chances of the government falling and the trade policies changing. One of the major drawbacks
of the country’s political aspect is the corruption that is prevalent in the country. The country is
also featured with strong current account surplus and high foreign reserves making the market
attractive for the foreign investors. The company has a well-established legal framework, and the
political infrastructure of the company also allows foreign investors facility to market their
products in the country. Furthermore: there is Malaysia-Australia Free Trade Agreement

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(MAFTA) which facilitates business in the country; Malaysia is Australia’s 10th largest trading
partner, with two-way trade worth A$19.2 billion in the 2015 calendar year (Dfat.gov.au, 2018).

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Figure: Snapshot of the Malaysia market
Source: (Dfat.gov.au, 2018)
Following are the major benefits of the agreement:
 The eligibility of tariff-free trade of Australian goods currently exported to Malaysia is at
97.6 per cent and is on the rising trend to reach 99 per cent in 2017.
 The financial services, education, professional services and telecommunications
industries are some of the sectors in the Australian market that will benefit from increases
in foreign equity limits.
 MAFTA addresses non-tariff barriers to trade.
 MAFTA increases the number of Australian managers and specialists allowed to work in
Malaysia and enables Australian workers and their families to acquire Malaysian visas
more easily.
 MAFTA allows exporters to use a simple declaration of origin to state where their goods
came from when trading under the Agreement (Dfat.gov.au, 2018).

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Economic factors: The country stands as the 4th largest economy in Southeast-Asia making the
country one of the most lucrative in terms of investment. The economic condition of the country
has been growing and the trend has been on the rising end. Though the country has been going
through major ups and downs due to the global market trends but he average rise in the economic
growth has been around 7 percent (Dfat.gov.au, 2018). Exports in Malaysian economy contribute
to a major chunk of the economy. Furthermore the economic aspects such as inflation rate,
exchange rate and taxes are favorable to foreign investors encouraging them to invest and market
their products in the country (Thestar.com.my, 2017). The GDP of Malaysia is around 296.54
billion US dollars in 2016. According to the predictions of World Bank the country is going to
become one of the high-income countries by 2020. In 2017, Malaysia's average GNI per capita is
estimated to stand at US$9,660 (RM39,407.97), just short of US$2,576 (RM10,508.79) of the
defined threshold level (Thestar.com.my, 2017). Therefore it can be concluded that the above
aspects of the Malaysian makes it lucrative for the foreign investors.
Social: There is an issue with unemployment in the society that has recently risen in the
economy apart from this society is liberal outlook regarding lifestyle and fashion and has secular
approaches towards religion. As the per capita income of the people in the country is high and
the economy is on the rising trend it can be said that the standard of living among the population
is high. Therefore, a product like Mr Smith’s shampoo and conditioner which is on the medium
to higher end price will be welcomed by the target market (Khan et al., 2013). The population of
the country is also diverse in nature and can be widely segmented as 60 percent Malay, 30
percent Chinese and 10 percent Indian therefore the culture and the traditions in the country is
vibrant and diverse in nature (Jomo, 2016). The people like to lead and adapt to new and
advanced standard of living therefore this impacts the buying behavior of the people as well. The

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main consumer of the product or services prevalent in the country is slowly moving to the e-
commerce sector owing to the advances in technology and the adaptability of the people (Jomo,
2016). The product has prospects in the country as the people of the country like to pamper
themselves with skin care and beauty. The make-up and skin-care product category have the largest
market share in the cosmetics and personal care market (Yüksel, 2012).
Technological: The usage and adaptability of technology has improved in the country. There
are approximately 20.6 million internet users in the country and the information and
communication technology is significant in the industry. The country is expected to generate 6.2
billion in the e-commerce industry. Therefore, it can be said that the country is technologically
ahead and has a possibility of improvement in the future as the government also acknowledges
the power of technology and has invested in providing the population with connectivity and
upgraded technology. The research and development in the country is also backed up by the
support of the government and the infrastructure of the country (Lucas & Verry, 2016).
Legal: The legal framework that the country follows is inspired form the constitution of Britain.
But the country also follows the religious laws for example the Islamic legal enforcement is
applied on the Muslim population of the country. The labour laws in the country are strict and
the labour is expensive compared to other Southeast Asian countries. There is a minimum wage
cap for the employers below which they cannot pay for the services of an employee (1000 Rm)
(Lucas & Verry, 2016). Any foreign investor in the country is expected to know the legal
proceedings and follow the law strictly. In case of this product as the company claims to be
vegan, organic, and paraben free the company has to be certified with the countries authorizing
bodies for the company to make such claims in the country refer to appendix 1 for import duties.

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Environmental: The country is impacted with issues in the environmental front like
deforestation and pollution this due to infrastructural development and urbanization. According
to FAO deforestation rate has escalated by 86% from 1990 to 2005. Despite of having rain forest
protection policies the country has suffered adverse effects of the issues mentioned. Borneo in
Malaysia has suffered huge deforestation by loggers. The head land of Malaysia experienced
mining at the cost of deforestation and pollution (Bekhet, 2013).
One of the major issues in the pollution is air pollution as there are toxic gases from vehicles and
industries to escalate the process and it is on a growing trend. The country has been listed 4th in
the world for emitting most amounts of green house gases per capita.

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Filter 2
Growth prospect
The product that is selected operates in the personal care and cosmetic industry. The
market value of the Asia Pacific has increased to more than US$70 billion, which is the second
highest market after the Western European market. People of the country are influenced with the
help of heavy advertising, marketing and popularity among the international market. Therefore
the population is interested in brands like Mr Smith, as it is acclaimed by many critics and is
approved by several international magazines and hair care experts (Bekhet & Mugableh, 2013).
Competitive strategies are used by the local cosmetics and personal care companies in Malaysia
with promotional strategies in sales promotion. The industry in Malaysia is crowded with
competition and the trends of the industry are rising. The revenue of the country in the "Personal
Care" industry amounts to US$58m in 2018 and is expected to generate an annual growth rate
(CAGR 2018-2022) of 9.4% resulting in a market volume of US$83m in 2022 (Statista.com,
2018).
Cultural Acceptance
The products from the company that has been chosen are two basic items which are non-
controversial in any form. The Shampoo and conditioner duo of Mr Smith is the star product of the range
and internationally several bloggers and magazines have raved about the products. The acceptance of the
product in terms of its ingredients is also not a problem as the company assures with authoritative support
that the products are organic and vegan. Apart from that it is free of any sulfates or parabens. More and
more people are now being aware of the harmful effects of these chemicals thus making the product more
attractive in the Malaysian market. Appendix 1 reflects the import duties of the products.