Background of Company
International Marketing theories have become extremely relevant and unavoidable, when it comes to international business context in contemporary times. With the gradual change in external marketing factors like the economic, social and technological changes, the business corporations have also modified their approaches and methods, in order to adapt to the dynamic marketing factors (Demangeot, Broderick and Craig, 2015). In order to analyze a Company’s situations appropriately, it is important to develop a strong groundwork of international business market. By understanding and critically evaluating the Company’s position, as against its existing external conditions, specifying strengths and weaknesses can be identified.
The aim of this research is to investigate the external marketing conditions of the KRBL Basmati Rice Company and develop a suitable Marketing plan for the Company, using the various marketing theories and concepts. Various marketing tools will be implemented to identify the particular strengths, weaknesses, opportunities and threats of the organization (Lee and Shin, 2015). With a thorough analysis of the particular strengths and weaknesses, the marketing plan would apply various marketing strategies to that would be most relevant for the Company. The inclusion of threats and opportunities would allow further space for cautions and recommendations that would make the process more sustainable.
KRBL Ltd. is a large scale rice manufacturing Company, based in India. With years of business in the international market, the Company is now one of the largest exporters of rice to various countries like UAE and other Gulf countries. The Company’s largest selling product is the India Gate Basmati Rice, which is now a well-reputed brand name in the international business market. India Gate Basmati Rice is the Company’s trademark product and its high frequency of export makes the Company a leading organization in the industry (Skarmeas, Zeriti and Baltas, 2016.). The Company’s multi-year legacy and experience in this industry has made it one of the largest brands, especially in the Middle-East countries like the UAE.
The PESTEL Analysis method is an important marketing research tool that helps in evaluating a Company’s external conditions that affect their productivity and performance (Atera, Onyancha and Majiwa, 2018). Since the KRBL Ltd. is expanding in the middle-eastern countries, like the UAE, a PESTEL analysis of the UAE would be conducted to identify the Company’s external environmental conditions.
- Political factors- The political condition of the UAE is not very stable as the country faces repeated conflicts with neighboring countries for oil and ownership of land (Akhter and Hafiz, 2015). However, the country itself being an amalgamation of seven emirates makes its government flexible regarding business decisions.
- Economic factors- The country shares a stable economic condition as the rate of unemployment decreases in the region. The GDP of the country is an approximate of 348.7 Billion USD and offers affluent consumers for businesses.
- Social factors- The society of UAE is culturally orthodox, though it welcomes employees from different cultures and races to be a part of their business forces. Better employment schemes and high-paying jobs have improved the standard of living of the consumers.
- Technological factors-Globalization and technological developments go hand in hand in the UAE as the boom in business sectors have improved affordability of individuals and enterprises. Therefore, UAE is an ideal country for the appropriate implementation of latest technological advancements.
- Environmental factors- Due to the country’s geographical location, it has unfavorable weather conditions for farming. However, its closeness to the sea makes it ideal for trading purposes.
- Legal factors- The country shares strict legal structures that make it challenging for new enterprises to join the market (Kireev, et al.2016). However, certain laws need to be abided in order to start up a new business venture.
The SWOT analysis is a marketing tool, essentially used to measure the internal conditions of a Company, as compared against the external factors of the industry. SWOT analysis helps to identify the particular strengths, weaknesses, threats and opportunities.
- Strength: Strong economic and technological framework of the UAE is one of the biggest strengths of the Company (Shukla, 2018). With affordability comes appropriate implementation of latest technologies.
- Weakness: Due to unstable political conditions and underlying tensions between India and the Arab countries, the socio-political factors would always pose risks for the Company.
- Opportunity: With availability of employees from various cultures and geographical location, the Company can employ an innovative and multi-cultural workforce.
- Threat: The biggest threat of the Company is potential religious or cultural conflicts that might cause a riff in external business interactions as well as internally, between organizational processes and employees.
Situation Analysis
As per the derived analysis of the Company’s internal as well as external business factors, the research would identify the key issues of the organization’s business process that need to be considered during the development of a strong marketing plan (Aungvaravong, Likitwongkajon and Yanakittkul, 2016). The key issues of KRBL Ltd., as understood by the extensive internal and external analyses are briefly discussed below:
- Location: Due to the geographical location of UAE, expansion of KRBL Ltd. in the country would be relatively easier via water transport. With extreme weather conditions, UAE is extremely unfavorable for farming purposes.
- Consumer base: KRBL Ltd. has the potential to enjoy a large consumer base in the UAE as the large-scale company would be the single largest distributer of Basmati Rice in the region (Demangeot, Broderick and Craig 2015). The improvement in economic and social standard of living has also led to a considerable demand for specialty goods like the Indian Basmati Rice.
- Multiculturalism: Another important issue identified was the issue of cultural-conflicts triggered by orthodox values and cultures of the place. Since UAE is a major hub for business interactions, multiculturalism is both a boon and a curse for the Company.
- Competitive market forces: Due to strict legal structure it is extremely difficult for foreign or new enterprises to enter the business space of UAE. Though strict legality might incur heavy taxes on the Company, it also enjoys a dominating market position with very few or almost no competitive forces.
The marketing objectives of a Company refer to the particular goals in product marketing that the organization wishes to achieve in a given period of time (Lindberg, Nichols and Yam, 2017). The marketing objectives of the KRBL Ltd. Company have been identified from the previously conducted situational analysis and are briefly described below:
- Increase in Sales:One of the main marketing objectives of the KRBL Ltd. Company is to bring about a huge increase in sales by expanding the organization beyond it geographical-political territories. With its expansion in the UAE, the Company would start building customer base in the Arab states and multiply their sales.
- Increase in Profit:The next most important marketing objective of the Company is to multiply its earnings by bringing about a successful expansion of the economy. By investing in the expansions of the organization in international markets, the Company aims to ensure a target increase in profits.
- Enhance Communication:Another essential objective of the Company is to improve the communication system amongst the various organizational levels as well as the employees (Skarmeas, Zeriti and Baltas 2016). The multicultural nature of workforce can prove to be extremely innovative and creative only when there is ample multicultural awareness and communication.
- Brand Awareness:One of the most important marketing objectives of the Company is to create a sense of brand identity that would add value to their participation in the international business market (Gottlieb and Bianchi, 2017). The Company aims to launch a kind of brand awareness, which will be relatable as well as inseparable from the Company itself.
The financial objectives of an organization constitute one of the most essential objectives, which define the success of the organization as well as its sustainability. The various aspects of the financial objectives of KRBL Ltd. have been briefly described below:
- Revenue Growth: Multiplying the revenue of the organization is a chief objective that needs to be achieved by relevant promotional and marketing strategies.
- Profit Margin: The profit margin essentially denotes the net earnings of the Company after all expenditures are done with (Effing and Spil, 2016). Increasing the profit margin by reducing cost of production is one of the main financial objectives.
- Sustainability: Ensuring basic economic sustainability to secure the organization from closing down is an important objective that is directly proportional to economic development of the organization.
- Return on Investment: The final objective is to ensure that the Company gains a higher return than the total expenditures in a given financial year.
With over 88% of the population from outside the area, rice is the staple food to Indians (27.49% of the population), Bangladesh (7.40%) and Filipinos (5.56%). Rice is also very popular among people from Pakistan (12.69%) and Egyptians (4.23%). Overall, the non-national households making up most of the work form, bring in an average of AED 15,000 (Tulasombat, Bunchapattanasakda and Ratanakomut, 2015). The non-national groups in UAE can afford the product, and have both sentimental and dietary needs tied to it. With 70% of the population being working non-nationals, higher quality lower cost raw food is a market up for grabs.
The image of the brand of product has to, primarily be affordable and good. The huge difference in cost in processing and selling in India and UAE, and low import tax in UAE, covers for transportation and profit margin, the latter of which has to remain low so that the brand’s better product, hypothetically priced at AED 7/kg can compete with other brands lower quality AED 6/kg rice and better quality rice priced at AED 12/kg (Keegan and Green, 2015). This allows the newer products to have the option to slowly increase price over some time but get customers first. The entire marketing around the positioning is, home far away from home, which consists of associating the taste and values (and monetary lower values).
As one of the major exporter of rice in India, KRBL has the necessary resources to meet the demands and even create demand of rice in UAE. The price of the packaged rice, at AED 4.5-7/kg not only makes it more accessible to people, it allows more working middle class people to consider the product. The cost is lower than the average cost of AED 6-12/kg of rice in UAE. The highest quality being available at nearly the cost or slightly above the already available lowest quality rice will lead to an increase in sale of not the AED 7/kg variant, but the ones priced between 4.5/kg to 6/kg. KRBL ability to process 195 metric tons per hour and its distribution line in India for over a decade makes it unparalleled when it comes checking and having the best combination of quality and price (Rice, P., 2014). Accounting for 30% of exports and 25% domestic consumption, KRBL’s position as a major player makes it the best option. Slower integration into the public mind over some time is preferable than a big move and nothing to follow up on the promotional end (Kaynak and Herbig, 2014). Making a series of ads separate to communities/countries, the focus is to make an emotional campaign followed by the reveal of the product and low cost.
- Formulating a marketing campaign for consumer awareness
Key Issues Summary
Develop a detailed series of ads and identify areas to advertisement in. Hire different consultants to make specific ads cater to group authentically.
- Create incentive for chains and review the costs of such measures
Develop plans to make lucrative deals for food chains and restaurants, for shelving and buying in large quantity (Wattanutchariya, Tansuchat, and Ruennareenard, 2016). Reach out to chains, and calculate the amount of money that can be redirected to make up for the incentives and not run into loss in the first few months, by maintaining slim but sustainable profit.
- Identify and create a sustainable model for minimal profits for bigger market share in some time
Review and reassess how much money can be spent and how much is needed to maintain a chain of supply while making it lucrative for businesses and not losing out.
- Going public with the campaign
After identification of areas to advertise, so as to cut down on cost of advertising in the wrong place, the campaigns go live (Charlebois, Dimitropoulos, et al. 2015).
- Have tie-ins and ethnic food festivals as organizer and sponsors with bigger restaurants at affordable prices
Have a series of food festivals targeted at non-locals with ethnic food and tie in with bigger names to confirm presence as sponsor in the public mind as far as quality is concerned, in multiple cities.
- Sustain supply and target a 10% share in a 3 quarters
Keeping a steady supply for some time until higher demand is observed to cut down on loss.
One of the most important sections of the International Marketing Plan comprises of the particular strategies that need to be adopted in the distribution and promotion processes, in order to successfully achieve the set objectives. The KRBL Company, as a major distributor and exporter of Basmati Rice in the Gulf areas, needs to have the following promotion and distribution strategies:
- It is important to know the market the Company is venturing in before trying to satisfy its demands. By having a thorough understanding of the nature of the specific customers, their culture, the Company can devise new plans and activities that would be highly relatable for the market in question (Charlebois et al. 2015).
- Having an in-depth understanding of the contemporary marketing forces is absolutely necessary in order to survive the stiff competition and the dynamic business environment. Adopting policies and strategies that fit best with the existing market position is important for the Company’s sustainability.
- Implementing CSR policies in existing organizational processes would be an important strategy to improvise on promotion and marketing (Yamashita 2016). Corporate Social Responsibility has become a parameter in measuring a company’s ethical viewpoints and dedication towards the development of environment and society. Therefore, achieving CSR objectives not only improves brand visibility but also creates more value.
- As an exporter in the Gulf region, KRBL needs to be inclusive of their culture and traditions in their respective distribution and promotion processes. Various promotional activities, like advertisements or physical distributions need to be more culture-specific.
With a potential market of 4 million people, and revenue of AED 1.8 billion and net profit of AED 180 million of the last year from India, KRBL has to invest in UAE. 2 months of advertising on TV and transportation is around AED 600,000. Hiring new research team and having its own team on it would come down to AED 300,000 (Kuazaqui, 2015). India exports AED 2 billion worth of rice to UAE in a year, with transportation and all considered. In the first 6 months, KRBL has to go from 40% of the value, making it necessary to AED 400 million worth of rice. All this comes down to approximately AED 500 million/USD 136 million minimum for 6 month operating period and heavy marketing. Marketing costs with go down in the future with volume increasing.
Conclusion and Recommendation
To conclude, an international marketing plan not only helps a business organization to increase its consumer base or profit margins, but also plays an important role in identifying relevant strategies that would help in building a strong brand reputation (Yamashita, 2016). The marketing theories emphasize on the detailed critical analysis of the external as well as internal positions of the Company with the help of various tools like the PESTEL and SWOT analyses. The particular financial and marketing objectives of the KRBL Ltd. have been identified and analysed so as to encourage the particular areas of strength and eliminate the undesirable factors.
Marketing Objectives
References
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