Discuss about the Research in Finance and International Marketing.
Entering in the foreign market is one of the major considerations for the contemporary business organizations due to the reason that competition in the existing domestic market is rapidly increasing along with the reduction in the profitability of the companies (Gnizy, Baker and Grinstein 2014). Thus, it is becoming more important for the business organizations to consider the foreign markets in order to lower the dependency on the domestic market and enhance the global market share and revenue. However, entering in the foreign market is having different advantages and disadvantages for the organizations and these factors should be effectively determined prior to the entry in the new host country.
This report will discuss about the potentiality of Daily Juice of Australia in entering in the foreign market. Daily Juice is one of the leading local juice brands in the Australian market and is 100 percent Australian grown brand. They were founded in 1989 and are a well known brand in the Australian juice market. Currently they are having number of products in the juice category ranging from orange juice to apple and mixed fruit. They are also offering vegetable juices as well. Thus, with the growth in demand for the authentic juices over the carbonated drinks in the recent time, it will be a huge potentiality for Daily Juice to enter in the foreign market.
India is selected as the chosen country for Daily Juice to enter and start their foreign business. India is chosen due to the reason that it is the country with having highest rate of economic growth in the world. According to the report, the current growth rate of India is standing at 7.1 percent, which is the highest in the world. This is denoting that market growth and market opportunity in the Indian market will be more for Daily Juice. In addition, it is also to be noted that India is having the second largest population in the world and thus the potential market size for Daily Juice will also be more for Daily Juice (Boutabba 2014). This is another reason behind selecting India as the host country. Another major favorable reason behind selecting India is the Make in India initiative by the government of India. Under this initiative, foreign investors are given tax and other benefits for manufacturing in the country (Sangwan 2015). Thus, Daily Juice can also avail this facility and can have favorable business process in the host country. It is also being reported that free trade agreement between Australia and India is proposed and having this will help Daily Juice to have favorable international business process between their home and host country. In terms of the political environment also, India will be the most effective and favorable country for Daily Juice due to the reason that India is the largest democracy in the world and having stable government structure (Malhotra 2014). Thus, the political risk will also be low for Daily Juice in operating in India.
India with having huge population and market opportunity is also having high intensity of competition in the market. There are number of competitors present in the Indian and offering wide variety of products in the market. The major competitors for Daily Juice in the Indian market are Real, Tropicana, Minute maid, Saint and Tang. Majority of these brands are backed by the multinational organizations and having favorable market penetration in the Indian market (Han, Dong and Dresner 2013). However, in the Indian market, the intensity of the competition is not balanced and it is mainly segregated in the urban areas. According to the report of world economic forum, India is having the ranking of 98 in terms of the intensity of the local competition (www3.weforum.org 2018). Thus, it can be concluded that though Daily Juice will face a number of competitors in the Indian market but they will also have the advantage of lower intensity of competition.
In the recent time, market for fruit juices is rapidly growing in the Indian market. This is mainly due to the reason that customers are increasingly changing their preferences from carbonated soft drinks to healthier options such as fruit drinks. It is reported that currently, the fruit juice market in Indian is standing at US$ 200 million that is huge compared to some other major economies (Grandviewresearch.com 2018). It is also being reported that the market will grow at a rate of 15 percent in the next three years. Thus, it can be concluded that Daily Juice will be able to have a huge market opportunity by entering in the Indian market.
Figure: 1
Growth rate of the fruit juice industry in India
Source: (Grandviewresearch.com 2018)
According to the above figure, it is see that the major competition of the fruit drinks will be with the vegetable based drinks. In addition, it is also being stated that the proportion of the fruit drink will increase compared to the vegetable drinks. Thus this is also denoting that the fruit juice market of India is having huge market and business potential. Daily Juice will be able to tap the market potentiality by entering in the Indian market. Moreover, it is also reported that the average price level of the fruit juice market in India is relatively higher compared to the carbonated drinks. Thus, it is important for Daily Juice to properly design their pricing strategy in operating in the Indian market.
Figure: 2
Top 5 brands in the Indian fruit juice market
Source: (Bhushan 2018)
According to the above data, majority of the market share in the Indian fruit juice market is being held by Real and Tropicana with having more than 80 percent of the market share. Thus, for the new entrants in the market such as daily Juice, the major competition will be with these two players in the market. In addition, it is also to be noted that there are other various small and medium brands currently operating in the Indian market. However, the smaller brands are mainly operating in the lower price level in the market while the bigger brand such as Real and Tropicana are operating in the higher price level (Garg and DIRD 2015). It is being identified that the existing competitors in the Indian market are offering global products such as orange and mango juice along with offering some localized products concentrated to the Indian market. Thus, it is important for Daily Juice to offer their existing products as well as offering new products in accordance to the taste and preference patter of the Indian customers.
Figure: 3
Cultural differences between Australia and India
Source: (www.hofstede-insights.com 2018)
According to the Hofstede’s cultural dimensions, India is having more concentrated towards the hierarchical structure along with having the major influence of the society on the individualistic choice. In addition, it is also stated that India is less concentrated towards innovation and thus Daily Juice should take the tried and tested way for operating in the Indian market. One of the major features of the cultural dimensions of India is the social and collectivist orientation. Thus Daily Juice should have products in the market that will be socially acceptable over offering any radical products. In addition, due to the reason that India is having more collectivist type of society, negative word of mouth will affect the business potentiality of Daily Juice (www.hofstede-insights.com 2018). This is due to the reason that in Indian society, generation of the negative word of mouth will hamper the business and will influence the individual buying preferences. Another major cultural factor that should also be considered by Daily Juice is influence of religions on the society. India is having higher influence of religion in the society and thus any offerings contradicting with the traditions and religious pattern of the society will not get succeed.
Another major challenge to be faced by Daily Juice is the cultural difference between their home and host country. According to the Hofstede’s cultural dimensions, Australia and India are having different cultural factors and it is important for Daily Juice to effectively consider the differences. One of the major differences is the power distance. In Australia, the positioning of the products is not much important and a single product can be marketed across a diverse customer segments. This is mainly due to the reason that power distance in Australia is less. On the other hand, the power distance of India is more and thus, the positioning statement of Daily Juice is important in the Indian market in order to have a certain level in the target market.
Consumer’s attitudes are one of the major factors in determining the sales potential of a particular product in the host country. This is due to the reason that if the customers are having the positive attitude towards the home country, then the probability of getting succeeded in the host county will be more. One of the major elements in the consumer’s attitude is consumer ethnocentrism (Lee and Yun 2015). This refers to the value given by the host country consumers towards from the products from a particular home country. In the case of Daily Juice, they will have positive consumer ethnocentrism towards the majority of the foreign countries including Australia. In addition, it is also being perceived by majority of the Indian customers that foreign brands hold more quality over the national brands.
The next element is the consumer animosity. This refers to the anger or negative attitude of the host country population towards the home country of the organization. However, in the case of Daily Juice, the relationship between India and Australia is favorable and the people of India do not hold any negative attitude towards Australia (Fong, Lee and Du 2014). Thus, Daily Juice will have favorable environment in this case. The next element is consumer affinity. This refers to the concept of emotional attachments between the consumers and the organizations. In the case of Indian fruit juice market, the major two brands already built favorable brand attachments with the target customers. Thus, it will be difficult for new entrants such as Daily Juice to create that level of attachment with the customers. Thus, Daily Juice will have the advantage of the favorable image of their home country Australia in the Indian market but they have to enhance their brand value in order to create the brand attachments in the market.
Segmentation strategy for Daily Juice in the Indian market should be wide and diverse and based on different aspects. In terms of the geographical segmentation, target customer segments can be divided on the basis of different regions in India. This is possible due to the reason India is a vast country with having different regions with different geographical elements. In terms of demographic segmentation, the target market can be segmented on the basis of gender, age groups and occupation (Cross, Belich and Rudelius 2015). In terms of the psychographic segmentation, customers can be segmented on the basis of personality and lifestyle. The most potential target segment for Daily Juice will be the age group between 14 to 60. The target demographic segment is vast due to the reason that fruit juice can be offered to both younger and older generation. Both the genders will be targeted. In terms of the geographic segmentation, market can be segmented on the basis of potentiality in tier I,II or III cities.
Targeting strategies can be designed on the basis of local taste and preference of the target customers. This is due to the reason that the targeting strategies followed in the Australian market will not be applicable for the Indian market (Haenlein and Libai 2013). For instance, media used in promotional activity in the Australian market will not be effective for the Indian market. On the other hand, the positioning statement should also be designed based on the intensity of the competition in the market. This is due to the reason Daily Juice should position their products in the market in such way that the intensity of the competition will be lower.
It is recommended that Daily Juice should initiate joint venture mode of entry in operating in the Indian market. This is recommended due to the reason that initiation of the joint venture will help Daily Juice to have their physical presence in the host country as well as having less risk and responsibility in operating in the host market. The major advantages that will be gained by Daily Juice from the initiation of the joint venture market entry strategy are presence of less risk and responsibility (Laufs and Schwens 2014). This is due to the reason that in the case of joint venture, Daily Juice will come in to partnership with a local Indian firm in doing business. Thus, they will not to invest the entire capital in the host market. In addition, initiation of the joint venture market entry mode will help Daily Juice to effectively determine the local taste and preference. Daily Juice being an Australian born company will find it difficult to have the idea about the local market trend, which can be effectively and properly done by the local partner.
However, apart from the advantages to be gained from the initiation of the joint venture, there are few disadvantages also to be faced by Daily Juice. One of the major disadvantages to be faced is lack of control in the venture. This is due to the reason that in the joint venture, Daily Juice will not have full control on the organization and it have to be shared with the local partner.
It is recommended that that Daily Juice should initiate the market penetration strategy in order to expand their current market. This will help them to penetrate in the host country market by offering more product assortment. Currently, fruit juice market in India is not heavily penetrated due to having lower product assortment (Rousseau and Vranken 2013). In addition, it should also be noted that India is having hue diversity in its population with having different taste and preference pattern. Thus, initiation of the market penetration strategy will help Daily Juice to offer more assortments of products in meeting the diverse customer requirements and it will also help Daily Juice to expand their market vertically. It is also being recommended that Daily Juice should initiate their market expansion strategy through phased manner (Sui and Baum 2014). This is due to the reason that phased implementation process will help Daily Juice to identify the shortcomings in the first phase and rectifying those accordingly. This will ensure that the entire processes of expansion strategy will be more effective.
Conclusion
Therefore, from the given analysis it could be inferred that the host country of India seems a considerably attractive market for the juice company, Daily Juice. India is considered to be an emerging economy has been on a high growth rate in the recent years. Daily Juice can take the advantage of this fact and invest their product base in India where there is an increasing population of the young generation who are health conscious. He report outlined the various strategies which need to be adopted by the brand in order to ensure that it is successful in India. The only consideration which Daily Juice needs to take is that there is an environment of cut throat competition in India and that there are several international brands competing for the top position. For this purpose, the company needs to have a good strategy with respect to pricing and positioning in order to ensure it is able to ace in the domain. The next section will be discussing certain recommendations which need to be adopted by the company to ensure success.
Given below are certain recommendations that Daily juice of Australia can follow to ensure success in Australia:
As stated previously, there are various juice brands present in the country and they have established themselves as the leading competitors thereby undertaking a huge market share. If the Daily Juice of Australia wants to be successful in its domain, it will be required to ensure that it follows an appropriate pricing strategy, specifically the competitive pricing strategy. The adoption of the competitive pricing strategy will help the company in competing with the different juice brands (Foxall 2014).
India has a vast population of younger generation and a majority of these youngsters are extremely health conscious (West, Ford and Ibrahim 2015). They want to keep up with the western brands and engage in the consumption of the healthiest products. Hence, in order to attain success, it is the duty of Daily Juice of Australia to position itself as a 100% natural juice brand. This perception in the minds of the different customers will go a long way in helping the company to attain success in the long run.
Daily juice needs to select the correct distribution channel. It is recommended that at present Daily Juice seeks to target the urban population and thus, for this it needs to form an alliance with the distributors and maintain good relationships with them in order to ensure that they are successful in reaching the target market (Chernev 2018).
Lastly, Daily Juice needs to understand the social-cultural background of the Indian market and modify its products accordingly. It needs to consider the fruits which are preferably consumed by the target market and modify the juices in that perspectives. Doing so would make it largely popular in the business domain (Proctor 2014). If the company is unable to do so then it may not be successful and the Indian crowd would not like to consume an alien taste. Hence, customization and modification according to the host country`s taste is crucial for the successful expansion.
Reference
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