Exporting Antimicrobial Packaging Products To Mexico: Analysis Of Market Size, Growth Rates, And Barriers

Market analysis

International marketing is necessary for every organization to effectively market their goods and services on a global basis and thereby gain larger market base and higher profit. This particular study deals with the concept of global marketing and discusses the advantages and risks concerned with international marketing.

Amcor Limited is a multinational packaging company based in Australia that produces both flexible and rigid plastic packaging. Being a well-known organization in Australia, the company aims to expand its business internationally. This particular report will discuss the expansion of Amcor in the markets of Mexico. Among the main products of Amcor such as the packaging of good, household items, hospital items, industrial applications, hospital packaging pharmaceuticals and others. Amcor decides to export its new products into the market of Mexico. This report, therefore, discusses the export of packaging material for alcohol wipes and iodine pad.

In order to understand the risks and benefits involved in the international marketing of Amcor in Mexico, the situation analysis of Amcor will be performed. In the situation analysis, market analysis, competitive analysis, and organizational analysis will be conducted. It will help to understand the market for in Mexico in a better way. In addition to that, the Porter’s five force analysis, BCG matrix, value chain analysis and the SWOT analysis will be performed to get a proper knowledge of the strengths, weakness, opportunity, and threats Amcor will have if it introduces its product into the markets of Mexico.

The market size of Amcor in Mexico is quite favorable for the business to grow. The macroeconomic performance of Mexico has developed as a result of the active fiscal and monetary policies. The business formation by Amcor becomes relatively easier in Mexico as the regulations regarding commercial operations are more streamlined (Nahavandi, 2016).

Figure 1: Development in the economic performance of Mexico

(Source: Nahavandi, 2016)

The market share is protected as the other strategy as the managers should aim to resolve the issues which may be a weakness of the company which is also an advantage to the competitor in the market. The managers should keep the prices of the products affordable for the customers to also improve the brand image. Later, the managers should also focus on the increment in the market shares as this helps to increase the sales of products as 1% increase in the shares can assist in the profit to around millions of dollars to the company (Cavusgil et al. 2014). Furthermore, the active promotions are also capable of building a large audience and also the employees should interact with the customers to help them with the products and services that the Amcor offers. Additionally, including different types of technologies to let the customers simplify their shopping sessions which involve the self-service box as this can make the customers, to easily scan the items and also the payment of their bills.

Organizational analysis

The current population of Mexico as per the statistical records of August 2017, is 130,403, 681. It is equivalent to almost 1.73% of the total population of the world. The GDP per capita as per the record of 2016 is 8,201.31 USD while the Gross Domestic Product itself is 1.046 trillion USD. This infers that Mexico has a large customer base and the GDP denotes that the purchasing power of the population is high enough (Czinkota & Ronkainen, 2013). Therefore, it can be assumed that Amcor will have a strong demand for its antimicrobial packaging product in the markets of Mexico.

Figure 2: Population growth in Mexico

(Source: Czinkota & Ronkainen, 2013)

The exporters have under-appreciated Mexico due to its size and diversity. In addition to that, there is a huge difference between their legal systems and the legal systems of other countries.  It becomes an issue for the exporters to discuss and decide on the legal counseling before entering into business agreements with the partners in Mexico. Mexico follows Civil Code of Law, and NAFTA guides the international laws. Thus, Amcor needs to have a proper knowledge about NAFTA so that it can abide by those rules without any complications (Choi & Yeniyurt, 2015). In addition to that, there is a relatively higher interest rate in Mexico although there has been growth in the economy after the stagnation. Even though the Mexican Government shows immense effort to increase capital for business, the companies find it difficult to receive finances at a reasonable rate. Another pitfall of marketing in Mexico is its custom regulation, standard products, and the laws concerning labors. Some areas of Mexico are further insecure for business due to its continued violence and the involvement of criminal organizations. These are certain barriers that Amcor has to face if it introduces its new antimicrobial packaging product in Mexico.

However, there are individual market drivers to that influence marketers, investors and companies to carry out business in the markets of Mexico. At times in the government of Mexico imposed a tariff on goods that ranged from 165 percent to 1000 percent. However, the tariff rate had been revised in the year 2011 at 35%. This caused some companies to enter into a partnership with Mexico. The real estate sector in Mexico, on the other hand, generated $3 billion in 2014. This acted as one of the primary reason for the growth of business in Mexico (Katsikeas, 2014). The middle-class section of Mexico makes about 53 percent of their total population. In the recent times, it has been noticed that the middle class has been proliferating. The middle-class individual is recently claimed to have a standard disposable income, and it has, therefore, become a primary target for the industries. 50 percent of the customer base for the major department stores in Mexico is formed by these middle-class citizens (Refer to appendix).   

4P’s

It is important for Amcor to completely understand what influences its customer’s behavior in order to build an effective marketing strategy. The consumer behavior audit of Amcor is simplified and generalized below:

Metrics	Components
Areas of marketing decision	·         Market segmentation ·         Product positioning ·         Customer satisfaction
External influence	Culture, subculture, and values Demographics, income, and social class Reference groups and family/households Marketing activities by the company
Internal influence	Needs, motives, and emotions Perceptions, learning, and memory Personality and lifestyle Attitudes
Situation influences	Physical features Time perspective Social surroundings Task definition Antecedent states and situations
Decision process influence	Problem recognition Information search Alternative evaluation Outlet selection Purchase Post-purchase processes

Table 1: Customer Audit and Buyer behavior

(Source: Fletcher & Crawford, 2013)

Areas of marketing decision- This can be considered as the market segmentation of Amcor and its product positioning, price, place, product, promotion, and customer satisfaction.

External influence- The external influence that is considered are Culture, subculture, and values, Demographics, income, and social class, reference groups and family, marketing activities of Amcor (Fletcher & Crawford, 2013).

Internal influence- The internal influence that is to be considered are the needs of the company, motives, and emotions. It also includes the learning, perception, and memory of the stakeholders, their lifestyle, attitude, and personality.

Situation influences- The situation influences are the physical features, perspective of time, social environment, the definition of the task and the antecedent task and situations.

Decision process influence- This includes the recognition of the prevailing problems within Amcor, searching information, carrying out an alternative evaluation, selecting outlets, purchasing and post-purchasing processes.

The 4 P’s of marketing are the organization’s price, product, promotion, and place. The 4 P’s of `antimicrobial packaging product that Amcor intends to export in Mexico are as follows:

Product: Product is the first P of the marketing. In this case, it is the antimicrobial packaging product that Amcor would likely to introduce in Mexico. It includes the chemical resistant aluminum foil laminates, lamination for alcohol pads, grid coated medical papers and Medical Form-Stable Tray for Medical Products.

Price: the price of the antimicrobial packaging product is set at a very nominal price so that it can be easily affordable by the middle-class section of the population (Cavusgil et al. 2014). The pricing of the product affects some factors such as the profit margin, marketing strategy, and the supply and demand. It is important for Amcor to place the products and brands differently depending upon the varying price points. 

Promotion: Just introducing the product and selling them in the markets of Mexico will be difficult for Amcor, as it won’t, can gain the targeted customer base. In order to create a proper market base and increase its revenue collection. It is important for Amcor to use effective promotional strategies to promote its product and business. Amcor, therefore, uses various promotional ways such as advertisement, sponsorship, event management, and discount offers to gain its objectives. However. Public relations, social media marketing, email marketing, search engine marketing, video marketing are also some ways Amcor can use to promote its business further (Majaro, 2013).  

Place: Placing the right product at the right place at the right time is very important. It is therefore important for Amcor to analyze the demand in the market, set the target customers and accordingly choose the correct place or the market to put its store.

Figure 3: 4P’s of marketing

(Source: Majaro, 2013)

The competition for The Amcor increased in recent times with the entrance of particular companies like the Sealed Air Australia, Pact Group and Visy Industries which caused an intense competition in the packaging sector. It made the consumers confused, and this led to the loss of customers because of the unclear communication for the products (Majaro, 2013). As the competitor analysis is an important aspect of every company as the managers miss certain decisions which are improved with a competitive analysis. The competitive analysis also helps in makes a relationship between the decision making strategy and the analysis for competitive purposes. The antimicrobial packaging is highly sustainable and does not hamper the environment.

The sustainable products are highly in demand for the cooking experts in Mexico as the antimicrobial packaging are of low costs and will lead the company to gain more customers with quality products. Therefore, the result of these steps will provide an increase in the marginal revenue of the enterprise. Also, the antimicrobial packaging is new for the customers in the market of Mexico and will gain a definite competitive advantage as the customers will get attracted towards the newer products in the market with the sellers being a well-known brand (Kaufmann, Czinkota & Zakrzewski, 2015). The various varieties of these antimicrobial packaging will ensure the increased sales for the Amcor Company in Mexico. The constant rates of the Amcor are the reason that it has loyal customers and hence, the antimicrobial packaging products will be sold effectively.

The Amcor organization utilizes the nature-accommodating fixing to make their items. It encourages the team to hold a decent picture decidedly. It is certain that the Company makes a legitimate and eco-accommodating business in Mexico. They grow their topographical locale in the new area or having a go at extending their business in Mexico. Amcor Limited Company has an impressive supply chain which enables the organization to accomplish their objective in Mexico. It causes the body to create more items and pick up the benefit from different ways. The body needs to confront an immense rivalry in the Mexico showcase. As another organization in Mexico the Amcor facing some brand character right off the bat. It likewise makes a few dangers to the society. In addition to that in the words of Wan, Luk & Chow (2014), Amcor has a strong brand image that acts as one of the competitive advantages. The brand image helps to increase the customer base of an organization. With a strong brand image, Amcor will be able to grab the attention of the larger number of customers even in Mexico. The higher the number of potential clients, the larger is the revenue earned by Amcor.

The positioning map of Amcor concerning its competitors are as follows:

Figure 4: Positioning Map of Competitors

(Source: Kaufmann, Czinkota & Zakrzewski, 2015)

Fundamental parts of completing a hierarchical investigation incorporate assessing external variables that can impact the execution of the company and also intentionally survey the organization’s assets and probable. Inner qualities and shortcomings alongside outside circumstances and dangers are keys to an organization’s prosperity. It encourages the team to deliver more items and pick up the benefit from different ways (Kaufmann, Czinkota & Zakrzewski, 2015). The Amcor Company has a decent sponsorship and promoting accomplice who helps them to support their business in Mexico. They were continually checking for another market, and they discover Mexico to build up their business and launch another item.

The five forces analysis of Amcor Limited is as follows

Bargaining power of the buyers	Availability of limited buyer information Sensitivity of low buyer price Importance of the product to the customers High customer base
Bargaining power of suppliers	Suppliers have high competition among them Diversity in the distribution channel Less cost in supplier switching Criticalness of volume to suppliers Similarity in critical production inputs
Intensity of existing rivalries	Low exit barriers
Threat of Substitutes	Limited Substitutes are present
Threat of new competitors	Competition is limited due to geographic factors Loyalty of customers towards existing brands

Table 2: The five forces analysis of Amcor Limited

(Source: Samiee, Chabowski & Hult, 2015)

From the above porter’s five forces analysis of Amcor, it can be inferred that the bargaining power of buyers is high because of its higher customer base, the availability of limited buyer’s information, the sensitivity of low price for the buyers. Furthermore, there is the high customer base for Amcor in Mexico, and the customers give importance to the product in Mexico. The bargaining power of suppliers is low as there is high competition between the suppliers, the distribution channel has high diversity which decreases the bargaining power of the suppliers (Samiee, Chabowski & Hult, 2015). The less cost of supplier switching further reduces their bargaining power. The similarity in the production inputs also adds to the factor. There are low barriers to exit which increases the intensity of the existing rivalries. However, the threats to substitute is low as the limited substitutes are low. The threat of competitor for Amcor is low as the geographic factor is limited and the customers are highly loyal to the existing brands in Mexico.

Amcor serves some of the biggest customer brands all over the world. There are some customers of Amcor who have high sustainability targets. Amcor plays an important role in helping those brands to achieve their targets. The Life Cycle Assessment (LCA) is included in their innovation and design expertise which helps them to develop and produce more efficient sustainable packaging solutions for their customers (Akaka, Vargo & Lusch, 2013). Amcor aims to unlock powerful social environment and opportunities all throughout their life cycle by efficiently working with their partners. The value chain of the company starts with the engineers, scientists, and designers. These stakeholders make use of new technologies and materials to improve the performance in packaging. They are further able to create the innovative packaging design that helps to stand unique (Refer to appenix).

The Boston Consulting Group Matrix or BCG matrix is a helpful tool that helps to understand the potential of a various business. The BCG matrix of Amcor is as follows (Refer to appendix):

Cash cows: the high market share denotes cash cows. The growth rate is fast in this case as the company is in the introductory phase. As a result of the large market share, the cash cow remains lucrative. Amcor can be considered as a cash cow as it is one of the leading packaging companies in the world. The brand offers a variety of products to its customers (Armstrong et al. 2015). With the increase in its sales rate, Amcor shows a strong performance over a period.

Stars: When a business holds large market share, it is deemed as a star. The difference between cash and cows is that although the industry experiences fast growth rate, it remains in the development phase. The other packaging developed by Amcor operating in the industry has the opportunity and potential to grow further (Paliwoda & Thomas, 2013). The brand Amcor has its supply in some countries which makes it a star. The potential for growth in the emerging markets helps Amcor to be recognized as a star.

Question mark: A company is considered as question mark if the company lacks market share even though it has high growth opportunities for a particular business sector. Such companies are unable to deliver the best outcome that the industry expects from it. Amcor will have to work harder and consider effective strategies so that it can grow effectively and not get considered as a question mark (Knight, 2015). In order to increase its sales in the domain, it needs to work towards improving its brand image and gaining the trust of the customers.

Dogs: That business that is operating in the industry and has attained the maturity stage is considered as Dogs. Such industries or organization normally holds little market share in the market and has the low potential for growing its market share (Papadopoulos & Heslop, 2014). It can be therefore inferred that Amcor does not fall under the category of a dog. 

The SWOT analyses of Amcor is a method that would help to launch their new product in Mexico. The SWOT analysis contributes to understanding the strength, weakness, opportunities, and threats linked to the international marketing of antimicrobial’s packaging. The reports are given below:

STRENGTH: Amcor serves as one of the largest packaging company in a long time. This reputation mainly helps the company to hold the market in Mexico. The company has very traditional technic to maintain their price, and they support it by providing some offers and price cuts, etc. They use some innovative idea to advertise their product or brand name (Paliwoda & Thomas, 2013). It might help Amcor to grow their popularity in an easy way. The company is maintaining their online orders process and delivery pickup service properly, so it can contribute to keeping a good image to the customer. The company uses the nature-friendly ingredient to make their products. It helps the company to hold a good image positively. It is sure that Amcor will make a legitimate and eco-friendly business in Mexico.

WEAKNESS: The biggest problem of Amcor is suppliers which harmed the reputation of the company. This issue also hurt the investment and public sentiment. Also, the company is facing an internal management problem (Samiee, Chabowski & Hult, 2015). On comparing with the other company in Australia; Amcor worked on the lower margin. If these weakness are solved in Mexico, then Amcor is the best in the packaging sector.

OPPORTUNITIES:  Amcor has many opportunities to grow their business in Mexico. The company use a private level strategy, it helps them in a right way. They always expand their geographical region in the new sector or trying expanding their business in Mexico Amcor has a great supply chain which helps the company achieve their target in Mexico (Eteokleous, Leonidou & Katsikeas, 2016). It helps the company to produce more products and gain the profit from various ways. Amcor has a good sponsorship and marketing partner which helps them to boost their business in Mexico. They were always scanning for a new market, and they find Mexico to develop their business and launch a new product.

THREATS:  Amcor is facing some threats, and the major threats to boost their business in Mexico is technology. The company has to face a huge competition in the Mexico market. As a new company in Mexico Amcor facing some brand identity firstly. It also creates some threats to the company (Akaka, Vargo & Lusch, 2013).

Figure 5: SWOT analysis

(Source: Eteokleous, Leonidou & Katsikeas, 2016)

Conclusion

From the above information, it can be critically analyzed that expanding into the markets of Mexico and introducing the antimicrobial packaging in the Amcor’s Store, Mexico can be beneficial for the company. The situational analysis and the market trend of Mexico infer that the demand for gluten free food products will be high in Mexico. However, the company needs to have effective strategies to stand out among its strong competitors. Effective customer service can help to increase the market base in Mexico. The SWOT analysis, on the other hand, concludes that proper utilization of the available opportunities with the support of the strengths can help Amcor to carry out effective international marketing by overcoming its weakness and threats. 

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