Favorable and Unfavorable Aspects of Korean Honey Markets
Question 1 – What aspects of the Korean honey market are favorable for Korean Food? What aspects of the Korean honey market are unfavorable for Korean Food?
Honey is regarded as a wholesome natural food that is nutritious, has several goodness of a super food and is also tasty. Honey is used as a substitute of sugar and is considered a much more healthy option as well glucose and fructose are the main contents of honey, where as there is also some traces of proteins and vitamins. During the 1980s with the increase of Asian immigrants to the US, the food market of the Asian decent got a boost also the 1965 immigration law helped a lot of immigrants to set up business and livelihood in the US and since then the Korean food has established their business to a multimillion dollar turnover. The management of Korean Food has been looking for opportunities to expand their business in exporting North American products banking on the business contacts the management has made over the years. There are many sellers in the Asian market who have showed their interest in moving to the American market. Michael Fong is the cousin of the founder and president of Korean Food Importers of Canada Benny Fong. Michael Fong is young and has a fresh outlook to any business opportunity; he also has been a graduate of the Harvard which also gives him skills and expertise in business management. He suggested the export of Canadian honey and the management decided to export honey as the frits product of export (Foxall 2014).
There are clearly some favorable aspects of Korean honey market for Korean food. First of all, the company has financial stability as it has been operating for a long time the earnings are estimated to be several million dollars. Second and one of the most important plus point in favor of the company is that it has established a goodwill and business contacts in the Asian food market and have got good reciprocation form the contacts as well. Lastly, to smooth the day to day operations of an import and export business that are certain establishments and infrastructure that are required, as food products are perishable items they have to be loaded and stored with a lot more care and security for example: shipping, customs brokerage, and telecommunications networks. The company already has this infrastructure in place.
Along with the advantages there are some challenges and some unfavorable circumstances as well. Firstly,, this is the companies new venture and it is a new place to begin form exporting to Korea is a new market uncharted territory by the company. Korean food had exported first to Japan as the market there was better known but research had found that the Korean Honey market was a better opportunity. The company also recognized the fact that the Korean culture and business market was different from that of Japan. The Second challenge that the company is going to face is that the nature of business of the company is that of a middleman that is it has not been in the manufacturing or production department it has been in the trading sector. Hence the control and the power over the suppliers were relatively lower especially in terms of quality, quantity and the technology available. The reliability on the new suppliers, in this case is Canadian Honey suppliers who were new clients and were unknown to the company (Baker 2014).
Key Uncertainties in the Market Strategy Plan
Question 2 – What are the key uncertainties in the strategy suggested in the marketing plan? How can these uncertainties be reduced? Is it worth doing so?
A strategic marketing plan is well organized choked out plan to promote the product or service the business has to offer to the target market. Both the companies involved in the business that is the Korean food importers Canada and Canadian honey have together recognized the Korean market as an appropriate environment to begin their venture (Hollensen 2015). In order to do so Michel Fong, of the Korean food importers Canada was put in charge to set up a team to look after the marketing plan of the venture. It would be a plan of four phases and the investment that was settled was of $500,000 and not more than that.
In the first phase, pertaining to the present import regulation of the country deals will be cracked only with the hotel industry in Korea, the focus of this stage is to give is to gain a foothold in the Korean market and to establish a good name for the company in order to penetrate the market further. The main challenge of this phase if that the prices will be too low even uncertainty to break even. The low price strategy might give make the people perceive that the quality of the product is low.
The second phase will be initiated when the government restrictions are a little relaxed and along with the hotels the medicinal aspect of honey will be brought forwards. The product will not be marketed as a wholesome food item in this phase; rather it is going to take up the mantel of the medicinal aspect. The main strategy is to create and develop sales in the medicine market and thereby gain control in this market segment (West, Ford and Ibrahim 2015). By the end of this phase a little effort will also be made into the food sector as well. Even at this stage the honey market will not receive full confidence from the government and hence there will be certain unpredicted restrictions available which the company needs to overcome before the next phase. Pertaining to the political pressure from honey producers and the possibility of a swing in public opinion against opening agricultural markets to international competition hence it will take time for the government to open up the market freely (Tello et al. 2015).
In the third stage the efforts will be focused in changing the previous set view and make the item more food based rather than viewing it as a medicine. The prime focus of the strategy is to keep a check on the medicine market and to make way into the food market sector. As honey changes from being a medicine to being a food, the volume of sales is expected to increase rapidly. The issue that the company is going to face is severe competition in the honey market form the domestic honey market of Korea. The Korean Trade Commission will take actions to develop and to build the popularity of the farmers in Korea. The imposition of import tariff is anticipated which in turn will keep the price of the product high maintaining the target market to be the higher income group of consumers.
Improving the Marketing Plan
The fourth stage is to build the up the market that is much like the one that persists in North America where people consume honey on a daily basis, in this stage people will be aware of the goodness and the positives of honey as a super food and how it can be incorporated in to the daily diet. At this stage the idea and the prime focus is to maintain an equilibrium profit and at the same time strategize to combat the competition that is already prevalent in the market.
To combat the resistance from the government the company has to precisely stick to the goodwill and create a favorable side for the government. The initial low price is a necessity to build and to penetrate the market in the country and also there is already competition from the domestic market. The plus point of the company is that the products that will be supplied to the hotels will be of premium quality and will be better than what is available. Hence the risk is worth it (Ondari, Awino and Machuki 2016).
Question 3 – How could the marketing plan be improved?
The four phase plan that the company has come up with is a full proof strategy to penetrate the Korean honey market. It is a potential market but there is a lot of domestic competition from the local farmers and honey industry in Korea.
The target market of the end consumers is not clear in the marketing plan. There is no market segmentation where the demographic, psychographic, behavioral and geographical aspects are clearly stated in the plan (Krush, Sohi and Saini 2015). The hotel market or the medicine market is a sector that will be penetrated but they are not the end consumers by the end of the fourth phase a clear idea about the target market has to be set to position the promotional activities in place (Lee 2013).
Culture is a part of an individual which shapes his or her behavior and attitude in the long run. Culture may be dependent on geographical location and also on religion. Korea is a place where culture is valued as one of the most prized possession and the country has a very rich and unique cultural background which is visible in any product or service that is available in the country (Petersen, Kushwaha and Kumar 2014). There is a set pattern for every aspect in the country and the marketing plan of the Korean Food Importer of Canada lacks to tap on the cultural side of Koreans. The language, the colors, the clothing also the way people interact with one another has a potential to be included in the promotional plan to connect with the common people, who are the end consumers of the product (Samaha, Beck and Palmatier 2014).
There is hardly any confrontation with the challenges that can pose in the way of the marketing plan. A marketing plan will be fruitful when all the pros and cons will be discussed in details. The pros are stated with much confidence but there are hardly any discussions about the challenges that can be faced by the company in the process. One of the main challenges that the company will be facing is the language barrier. And the understanding of the internal market and the type of competition that is already in the market. It is presumed that the quality of the honey is lower than that is offered by the company (Goetsch and Davis 2014).
Question 4 – Kevin Lee opposes Korean Food’s expansion into export, on the grounds that they don’t really know what they are getting into. Take Kevin Lee’s point of view and address the issues he raises.
Kevin opposes the idea of expansion in export as the company had no idea what they are getting into.
Firstly the company is novice in the field of export and has just exported to Japan which is a relatively known market for the management of the Korean Food Importers of Canada as they has suppliers form that area. Korean food market is a new territory and is not known to the management. This gets the company into risks that are of twofold: first of the all export is a new vision to focus for the company (Stead and Stead 2013). Previously the company focused their business in importing food items to America which is again a known market territory. Then there is a risk of a new location which is unknown to the company as well (Craig 2015).
The export business requires a lot of investment which the company can bear but if the company suffers losses then it is going to affect the old business as well as the company generates the cash flow form that business and this money only will be invested in the expansion.
Expansion and diversification is happening at the same time, which includes a lot of risk and risk management. The domestic market of Korea is completely unknown to the company. There is little knowledge about the restrictions from the government and also regarding the competition (Lunt and Mannion 2014).
Expanding in a territory that is first of all geographically distant form the area of operation can be a challenge for the enterprise. A good and in-depth market research is required before taking any step and also the management should physically frequently visit the country in order to understand the market scenario and the demand situation of the honey industry.
Reference List:
Baker, M.J., 2014. Marketing strategy and management. Palgrave Macmillan.
Craig, C.S., 2015. Researching the global marketplace: Susan Douglas’ legacy. International Marketing Review, 32(2).
Foxall, G., 2014. Strategic Marketing Management (RLE Marketing) (Vol. 3). Routledge.
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Krush, M.T., Sohi, R.S. and Saini, A., 2015. Dispersion of marketing capabilities: impact on marketing’s influence and business unit outcomes. Journal of the Academy of Marketing Science, 43(1), pp.32-51.
Lee, E.S., 2013. Competitive Action and Response in Global Marketplace: The Drivers and Consequences. Journal of International Logistics and Trade, 11(3), p.3.
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Petersen, J.A., Kushwaha, T. and Kumar, V., 2014, October. Marketing communication strategies and consumer financial decision making: The role of national culture. American Marketing Association.
Samaha, S.A., Beck, J.T. and Palmatier, R.W., 2014. The role of culture in international relationship marketing. Journal of Marketing, 78(5), pp.78-98.
Stead, J.G. and Stead, W.E., 2013. The coevolution of sustainable strategic management in the global marketplace. Organization & Environment, 26(2), pp.162-183.
Tello, B., Winterrose, M.L., Baah, G.K. and Zhivich, M., 2015, July. Simulation based Evaluation of a Code Diversification Strategy. In SIMULTECH (pp. 36-43).
West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage. Oxford University Press, USA.
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