EXECUTIVE SUMMARY
The Philippines and Singapore are both members of Association of South East Asian Nations (ASEAN) and has a free-trade relationship that makes it possible and easy for a business to enter each other’s market. In Singapore there is a good number of expats and Filipino migrants which will be the target market segment of Haibee Coffee.
In this generation of internet and market internalisation, eCommerce is a fast and convenient way for a company to reach the international market. Haibee Coffee can use Lazada, an online selling platform that exists in the Philippines, Singapore, and four other ASEAN countries. In 2015, they launched the Crossborder Selling that would allow local businesses to reach the entire market that Lazada reaches in 6 countries.
In a process that as easy as signing-up, listing the product, and using Lazada’s own global shipping service, the only trade-off is the small commission per sale that they require. Otherwise, there are no significant trade-offs or risks in this market entry strategy.
This paper recommends that Haibee Coffee must increase their online presence for them to be “searchable” and visible. Because of Lazada’s reach to other countries, the company may also expand to those countries at the same time. They should also pursue being HALAL certified to reach the Muslim population in other countries.
As convenient as using a phone, internet, Lazada website or app, Haibee Coffee can reach Singapore through eCommerce.
PURPOSE OF THE REPORT
This paper aims to present an analysis of the industry in the Philippines and Singapore and the environmental factors that could affect the exporting of Haibee Pure Native Coffee. This will also discuss about the company and customer analysis, the cultural differences among the countries, and the product’s potential competitors.
Moreover, this paper’s highlight is the market entry strategy to Singapore and the important marketing mix strategies that are needed for a feasible market entry. Lastly, points of recommendations and conclusion are discussed.
Industry Analysis
In the Philippines, coffee segment can be classified under two industries: Agriculture and Food and Beverage Industry. In 2017, President of the Philippines Rodrigo Duterte signed the Philippine Coffee Industry Roadmap 2017-2022 to lift production in the country to meet local demand (DTI Philippines, 2018).
Based on existing reports, the fast-economic causes an increasing demand for coffee in the Philippines as driven by demography. The consumption of cold beverage is higher during dry season, while hot beverage is high during rainy season. (Imapac.com, 2014)
On the other hand, the coffee segment is one of the retail trade segment imports in Singapore. The country is seen to be the future Southeast Asia’s coffee capital because of its openness to foreign imports. It is expected to generate US$256m by end of 2018 and is anticipated to grow by 3.7% in the next 3 years. The coffee market segment consists of caffeinated and decaffeinated ground coffee and whole beans as well as instant coffee. Instant coffee is the market’s largest segment with market volume of US$238m in 2018 (Statista, 2018).
Company Analysis
Haibee Pure Native Coffee is an independent distributing company established in 1963. The product is a mixture of Excelsa and Robusta coffee. Since the year 1990 the company started sourcing this type of coffee beans to be mass-produced in Zamboanga City. They distribute and supply premium roast quality of pure native coffee beans freshly grown and organically produced in the high mountain of Isabela and provinces in the southernmost part of the Philippines (FoodYas, n.d.). The company is also operating retail café where they sell and serve locally prepared native coffee.
The company is already exporting their 250g pack of ground and whole coffee beans to the U.S. through their partnership with Philippine Coffee Company located at Missouri City, Texas. Their products are also available in the well-known Chinese online wholesale shopping platform, Alibaba. A pack of 250g is priced at USD 12.00 excluding shipping fees.
Summary of the Environmental Analysis
PESTLE
Philippines
Political
Export laws and policies such as The Agri-Agra Reform Credit Act of 2009.
Member of Association of South East Asian Nations (ASEAN), an organisation that allows free-trade among the member countries
Economic
Low average minimum wage due to cheap labour cost in the country affect buying power
Lower corporate and individual tax under the new administration
Social
A large portion of the population belongs to price-sensitive market
Due to negative effects of coffee for some people, many are looking for alternative drinks such as tea for health reasons
Technological
Investment in latest equipment and product to grow industry and agriculture
The accessibility of the internet boost ecommerce enables businesses to engage in inline selling
Singapore
Political
Member of Association of South East Asian Nations (ASEAN), an organisation that allows free-trade among the member countries
Legal and technical support secure eCommerce laws such as Intellectual Property Rights and Tax Issues and Import and Export Procedures
Economic
High currency conversion rate affects pricing strategies
Singapore is highly-developed free-market economy
Social
Strong purchasing power of the local market
Popularity and rich coffee culture in Singapore
Technological
Booming eCommerce models in the country
Singapore as one of the most technological innovative country in the world in every aspect
SWOT of Haibee Coffee
Philippines
Strengths
It is well-established since 1990 and well-known to the locals in the south
Products are organically grown and sourced locally
Weaknesses
Lack of popularity in other parts of the Philippines
Distribution is almost confined in the south only
Opportunities
Expansion of distribution to all the parts of Philippines
Good Social Media marketing that could lead to online selling
Threats
Creation of similar products by already well-known companies
Natural disasters in the country
Singapore
Strengths
Has a good number of Filipino migrants market
New product in the market
Weaknesses
Not HALAL certified and cannot target the Muslim population in SG
New product in the market (unfamiliarity of customers)
Opportunities
To have partnership with Filipino-owned restaurants of cafes
Availability of the product in an online shopping platform in SG
Threats
Cheaper similar imported products from other countries (Vietnam, Thailand)
Natural disaster during shipping of products to Singapore
Summary of Cultural Differences
Figure 1. Country Comparison by Hofstede-Insights
PHILIPPINES
SINGAPORE
High Uncertainty Avoidance in the Philippines can affect the introduction of the product to the market
Long Term Orientation is low and can also mean that people do not have preference in food sourcing (whether it is organic or not)
Indulgence is almost average that can imply that people sometimes spend time in social engagement
The country’s population has 85% Christians
Uncertainty Avoidance is low that means the market is flexible and easy to enter because of their openness to new things
Long Term Orientation is high and can be considered as a factor where the product has good effect (organic coffee)
Indulgence is high (social engagement activities of the market can include drinking our product in café or home)
Muslim population requires products with HALAL certification
Competitor Analysis
A pioneer in supplying wholesale coffee in Singapore since 2004, Highlander Coffee has already established strong name and brand in the coffee market. It is founded by Singaporean brothers Phil and Cedric Ho who are very successful in expanding their company. They have established their own barista workshop at the end of 2004 and has expanded to an academy since. As early as 2007, the company has launched their online shop to sell their own coffee machines (Highlander Coffee, 2018).
At present, the company operates Highlander Coffee Bar, a retail showroom, coffee academies, and supplies wholesale gourmet coffee beans worldwide. Their coffee beans are mainly from South America, Africa, and Indonesia. They have existing offices in Singapore, Malaysia, and Brunei as of 2018. The company is well-known in Singapore as an honouree of the Spirit of Enterprise in 2010 and holds a reputable brand image of being Halal certified (Highlander Coffee, 2018).
STRENGTHS
WEAKNESSES
Pioneer in the industry
Has several branches across Asia
Supplies worldwide
Has several SBUs
Good brand image in Singapore
Does not have means to grow their own coffee beans
Has to import coffee beans from other countries
The company claims to be the largest specialty coffee beans e-marketplace in Asia. The company was founded in 2015 by friends Keyis and Eugene who were inspired during their trip to Melbourne, Australia which is known for its great coffee (Cafebond, n.d.).
The company is now an e-commerce marketplace for coffee beans that allows its customers to shop coffee beans all over the world while they do the consolidation, shipping, and hand-delivery. Their coffee beans are mainly from Melbourne, Canberra, Kuala Lumpur, Taipei, and London. The company only delivers to Singapore and Malaysia as of 2018 and is planning to expand throughout Asia in the future (Cafebond, n.d.).
STRENGTHS
WEAKNESSES
Unique position in eCommerce
One of the few suppliers of Melbourne coffee
Has unique coffee subscription program
Partnership with big companies like DBS bank
Has far reach of suppliers
Does not have means to grow their own coffee beans
Has to import coffee beans from other countries
Very young in the industry
Consumer Analysis
The potential target market in Singapore are the locals, expats, and Filipino migrants who are coffee drinkers and are in their early 20s to late 50s. These people are university students, office employees, businessmen, and retirees who are health conscious and are keen to try new types of coffee. Filipino migrants can also be the target market of the product because of its locality and taste of home. The product satisfies Physiological and Health safety needs of the target customers.
Market Entry Strategy: Ecommerce
Philippines Singapore
“Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions. Global retail ecommerce sales are projected to reach $27 trillion by 2020 (Shopify, n.d.).”
This modern marketing entry strategy can use direct or indirect selling. In this case, Haibee Coffee can use indirect Ecommerce by using an intermediary named Lazada as an online selling platform that would introduce the product to Singapore fast, easy, and convenient.
Lazada started in 2012 and is majorly owned by Alibaba Group Holding Limited, a Chinese eCommerce giant. This online shopping website is available in Indonesia, Malaysia, Thailand, Vietnam, Singapore, and the Philippines. The product offers ranges from beauty and fashion, electronics and household appliances, toys, sports equipment, and groceries. (Lazada, n.d.)
Lazada has been actively growing in the Philippines since its launching, catering to small retailers and even big companies. In 2015, the company launched Crossborder Selling which allows the sellers from the six South East Asian countries to reach each other’s market through one selling platform. This will be a good opportunity for Haibee Coffee to easily market and send products to Singapore.
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The procedure would start in simple steps, first, Haibee has to sign-up as a seller in Lazada’s local website, then there will be a simple test that they should pass after a webinar or interactive videos, and lastly, Haibee will be required to upload their product’s unique SKUs that would then be synchronised to the entire international inventory system of Lazada. Lazada, however, has a small commission on every sale of products. (Lazada South East Asia Pte Ltd, 2017)
The shipping methods to Singapore would also be as simple as the sign-up process. Lazada has four warehouses around the Philippines and 38 logistics distribution centres. To be able to send the order to Singapore, Haibee must ship the product to one of the logistics centres through a local courier, and then use Lazada Global Shipping service which would facilitate the entire shipping that would take 7-10 days. (Retail Without Borders, 2017)
ADVANTAGES
DISADVANTAGES
TRADE-OFFS
RISKS
Free product listing
Convenient internet transactions
Fast and easy international shipping
Wide market reach (among 6 countries)
Growing eCommerce in Singapore
No face-to-face interaction with customers
Must pay small commission to Lazada per sale
Customers might think the product is only sold by Lazada
Company’s unique promotional theme
Customer Loyalty (might direct to Lazada)
Product packaging from Lazada logistics centre
Natural disaster during shipping
Mishandling of product from Lazada logistics centre
Internet disconnection
Marketing Mix Strategy
PRODUCT
PROMOTION
STRAIGHT EXTENSION
The product can be sent to Singapore without any modifications. Labels, nutritional facts, expiry date, and place of origin are all written in English. Although it does not have a HALAL certification logo, this would still reach its target market segment: Filipino migrants and expats.
PUSH MARKETING STRATEGY
The product is new and just one among hundreds of listings in Lazada. Company may still increase promotional activities through their own website and social media accounts and link it to Lazada. They may create hashtags, videos, and even limited promotion bundles to be posted in Lazada.
PLACE
Haibee Coffee is in Zamboanga City, in Mindanao, the southernmost island in the Philippines
They can promote and sell products to Singapore through Lazada PH which can also reach other countries where Lazada operates
Transactions such as enquiries by customers and payments are facilitated online through Lazada website/app
For shipping, Haibee must ship their products to one of the logistics centres of Lazada in Mindanao
Lazada will send the products to customers in Singapore by Lazada Global Shipping service within 7-10 days after payment
Customer feedback can be seen online as reviews
PRICE
Market Penetration
Product is priced at US$14.00 per 250g of ground or whole coffee beans
Haibee can launch limited time offer of 2 packs for US$26.00 fortnightly and post it on their own social media with Lazada link for shopping
Price is cheaper compared to Cafebond.com’s US$17.50 basic coffee pack
Recommendation
Due to unfamiliarity of the market to the product and the large number of competitors with similar products, the company may increase their social media activities and internet search for them to have a good position in search results in Google and Lazada. In pricing, they may also reduce the product’s price or at least give freebies to the first 50 buyers in Lazada. Moreover, the company may also look after marketing to the other four countries where Lazada has its reach. This is to maximise their market reach as well as sales.
Lastly, as Haibee is located in the southernmost island of the Philippines where most of the Muslim population is concentrated, Haibee Coffee may apply for HALAL certification for them to be able to reach a new target market both locally and internationally.
Conclusion
Coffee segment is present in both the Philippines and Singapore. There is an existing potential target market segment in the international setting which comprises of Filipino migrants and expats who are in their 20s to 50s. In this present time, people are looking for more health friendly products that would suit their coffee fix.
Using Lazada as a way for indirect export marketing entry strategy would give Haibee an easy and fast way to expand online not only in the Philippines but also in Singapore through their Crossborder Selling service. The delivery method will also be as easy as 7-10 days because of Lazada’s own global shipping service. However, Lazada may require a minimum commission per sale.
It is said that “Within 10 years, the size of Singapore’s e-commerce market will grow more than five times to be worth US$5.4 billion (S$7.5 billion) — more than what the casino industry here was valued at (US$4 billion) last year — predicted Internet giant Google and Singapore state investment firm Temasek Holdings (Ministry of Communications and Information, 2016).”
, In conclusion, eCommerce as a market entry strategy to Singapore is feasible because of its growth not only in the country but also in other countries where Lazada operates. The use of internet and online shopping platforms have become a trend and even the payment methods have become more convenient.
Moreover, choosing this method will save Haibee time and effort. All they will need is internet connection, an online account, their product, and their inbox for sales notifications.
Cafebond. (n.d.). Retrieved from Cafebond: https://cafebond.com/
DTI Philippines. (2018, April 19). DTI SEES COFFEE INDUSTRY GROWING UNDER ROADMAP. Retrieved from http://citem.gov.ph/announcements/industry-news-list/3033-dti-sees-coffee-industry-growing-under-roadmap
FoodYas. (n.d.). Haibee Pure Native Coffee. Retrieved from https://www.foodyas.com/PH/Zamboanga-City/436006143182515/Haibee-Pure-Native-Coffee
Highlander Coffee. (2018). Retrieved from HIGHLANDER COFFEE PTE LTD: https://www.highlandercoffee.com/products-and-services/gourmet-coffees/
Hofstede Insights. (n.d.). Retrieved from Hofstede Insights: https://www.hofstede-insights.com/country-comparison/the-philippines,singapore/
Imapac.com. (2014, May 7). Latest Insights on the Philippine Coffee Market. Retrieved from http://www.imapac.com/wp-content/uploads/2014/05/14.45-Pierre-Yves-Cote.pdf
Lazada. (n.d.). Retrieved from Lazad: Effortless Shopping: https://www.lazada.com/about-us
Lazada South East Asia Pte Ltd. (2017). Retrieved from Worldfirst: https://www.worldfirst.com/downloads/guides/lazada-english-introduction.pdf
Ministry of Communications and Information. (2016). Retrieved from Gov.sg: https://www.gov.sg/news/content/today-online-spore-ecommerce-market-will-grow-to-s75b-in-10-years
Retail Without Borders. (2017). Retrieved from Retail Without Borders: https://rwb.global/marketplaces/lazada/
Shopify. (n.d.). Retrieved from https://www.shopify.com/encyclopedia/what-is-ecommerce
Statista. (2018). Coffee: Philippines. Retrieved from https://www.statista.com/outlook/30010000/123/coffee/philippines#market-globalRevenue
Statista. (2018). Coffee: Singapore. Retrieved from https://www.statista.com/outlook/30010000/124/coffee/singapore
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