Discuss About The Functional Food Development European Market.
The following essay provides a detailed review of the case study “True Fruits: A Juiced up International Strategy”. True Fruits is a leading juice firm in Germany, Switzerland and Australia. Since its inception, the firm has been on the profitable stage. However, in the recent time, the firm is focused on developing expansion strategy for entering international market. The purpose of the essay is to review the existing scenario of the organization and provide suitable solutions that support the brand to fulfill its recent business goals. This essay is conducted by traversing different business areas of True Fruits such as the recent business challenges, the impact of the challenges on the stakeholders and managerial implication. Alternative solution to mitigate the impact of the identified challenges on the company has also been analyzed with recent strategic business options. Based on the review, appropriate business solutions have been proposed to True Fruits.
The case study indicates that as the growth True Fruits’ product are growing over time in the present market; the organization finds the scope for further expanding the business into the new market –international market. However, the overview of juice industry mentioned in the case study indicate that United State is one of suitable international market with growing demand of orange juice product acquiring 52.2% of the overall market share (Heckman et al. 2010). Nonetheless, the case indicates that regions with higher temperature, sea and the lake areas have an increasing demand of juice products. Thereby, the concern is, the focus should not be on United State only, the organization will also have to focus on other area such as sea and lake areas and region with higher temperature where people have thirst for drink items and concern for health. Nonetheless, as the demands of juice products are rapidly increasing in the global market, the competition is becoming stiff for True Fruits.
The case scenario particularly implies that there are many smoothie companies in the global juice market because of less capital required for entry in the industry, which minimize the switching cost for the consumers. Barfresh Food Group, Bolthouse Farms and Boost juices are the major competitors of True Juice. According to Dimitri and Oberholtzer (2005), some other emerging players and new entrants in the beverage and juice sector are trying to acquire a significant share of juice market on different tastes, preferences and flavors to a region. Nonetheless, this emerging challenge will not create much impact on True Fruits because these emerging players are still in the dilemma of sourcing fruits from and form the brand positions strategy.
However, Akgüngör, Barbaros and Kumral (2002) arguably motioned that some emerging players have been trying to target a mass as well as premium consumer segments to create a stiff competition to leading firms like True Fruit. On the other side, Wilhelmsson (2006) mentioned that the growth of fruit juice products in the global environment is largely dependent on the regional or geographical distribution of fruits. This fact is also found in the case study that when expanding to a new market, the organization must have to focus o the demands of the regions such as the regions with higher temperature and sea areas. Nevertheless, as the author has mentioned, availability of raw materials such as fruits in the new market and mentioned market could be a challenge for the organizations. The case study also indicates that the organization True Fruits also faced the issue of promotion of products, as once the firm was involved in an improper Billboard campaigns. Thereby, while entering into a new region in the internal market, the organization must have to think of its promotional content, which means the organization need to ensure that its promotional or advertising contents do not involve any improper elements that hurt the sentiments of public or the audience. When it comes to products, another significant concern is the variety of juice products. Leading the market by smoothies will not always be a suitable solution because the manufacturers of juice in the global environment are introducing different varieties of flavors of juice with innovative packaging and product development (Codron, Siriex and Reardon 2006). Lastly, one more challenge that True Juice would face, is the selection of appropriate entry strategy in the proposed market.
Customers- Customers of True Fruits are also the major stakeholders who should be considered when entering a new market. Rymon (2011) mentioned that as the demands of fruits products are rapidly increasing, the presence of new brands the in the market are also incasing. Therefore, customers’ bargaining may increase, where the pricing strategy in the proposed market may be affected, which the brand might have to apply an alternative pricing strategy. However, this growing bargaining power of customers remains ad the challenge before True Fruits’ goal of leading the global market.
Suppliers- Suppliers are one of important stakeholders holding the ability to strongly influence the business. If True Fruits expands in the international market, it has to find new suppliers because it is certain that the brand cannot send its suppliers of fruits and other material from the existing suppliers in the domestic market. Using the existing suppliers to export the materials in the internal market may require the firm to make a hug investment. In addition to this, if the firm targets the sea areas and regions with high temperature due to the growing demands of juice products, it has to endure the strong bargaining power of suppliers. This is because the demands of raw material of fruits and vegetables are high and the number of suppliers is less, as this is an emerging market.
Founders- The founders Koster, Knuff and Lecloux will have to face the challenge of restricting its business because when entering into a new market, the firm has to make investment of hiring a new market manager, operational manager and distribution heads of the respective market.
Regulatory bodies- Regulatory bodies are the important stakeholders and their involvement relevant to the above-mentioned issues. This is because, people have become more conscious about their health and the demand of sugar less drinks are higher, Trevor, the regulatory bodies must have to ensure that the organizations is following the product standard criteria such as less of use sugar fruit color and chemicals. The respective department such as European Union AIJN must have to take responsibility for the oversight and regulations of fruit juice in the industry in all European nations (Restuccia et al. 2010).
The case mentioned in the case study indicates that the organization True Fruits is in the need of expanding its business into a new level by acquiring new market. This is a challenge to the organization because due to the growing demand of fruit and vegetable juices, new players are entering in the market, which is easy, as the capital intensity is low. Thus, Fruit Juice has to apply alternative solutions to overcome this challenge and meet the goals to expanding the business into the desired international market. The following the solutions derived from Ansoff growth matrix have been analyzed.
Product Diversification: As the above analysis and scenario of the case study implies that demand for smoothies is depended on customers’ preference, and on per capita disposable earring; this determines customers’ affordability to make discretionary purchase. Hence, the customer preference clearly indicates that changing life style and the awareness about the use if healthy and balanced diet may steer the growth of global juice sector. Thus, the organization needs to introduce different varieties and flavors of juice with innovative packaging as well as product development. True Fruit may include blended vegetables in its product portfolio, as the demand for fruit and vegetables juices are also increasing.
On the other side, when developing the new fruit juice products, the organization will also have to cut out the amount of sugar in the juice, as people are more conscious abut their health now. However, in this context, Wheelwright (2010) commented that diversifying the products portfolio could be risky and challenging because there is a very limited opportunity for utilizing the existing expertise. Hence, True Fruits may have to make additional investment of hiring new expertise for the proposed product development. Nonetheless, Shaw (2012) commented that the major advantage that organization can gain by diversifying product is, if there is any adverse impact, only particular segment will suffer from the consequence, the other segments will remain same. Thereby, besides selling smoothies, if True Fruits pay attention to industry demand products , it may receives gains as the demand is high and if the product is not able to make a positive return, only the proposed segment will be affected and other segments will remain unaffected.
Market development: Market development is another significant marketing approach found in Ansoff’s growth matrix. According to this approach, the organization has to target a new market, where it would sell the same items, but to different people. As per the facts in the case study, Austria appeared to be the most favorable market because the rate of consumption of smoothies had topped the margin in the last year.
Thereby, the organization could focus on other region of Austria, where the organization has the scope for using the existing expertise, which saves the operation cost. In addition, the organization does not have to make any large changes in its existing supplier network. In addition to this, to support the product development strategy Hussain et al. (2013) mentioned that in the make development approach, the organization could us different sakes channels such as online or direct sales. This means as True Fruits currently have a strong market acquisition and control in Austria, in the new approach. It can open direct sale channels. This could e effective because the brand already had a positive market presence in Austria. To process the new strategy, the origination has to design new elements with the strategy such a new pricing strategy and special offer promotion. If the economy remains stable in the new regions, it can set a high price for smoothies or the economical state is average, it has to competitive pricing ,this means the products can be sold setting a low price, the profit remains same or higher as operational cost is low due to same expertise and existing supplies of raw materials.
Product development: By applying this approach, the firm can sell a different item or a related item to the same people. As True Fruits’ concern is about developing overall growth, it can achieve its objectives by developing a different product. As there is a high global demand for sugarless and diet juice, besides smoothies, the organization can pay attention to this new category. Martinet (2010) mentioned that if the organization want to achieve a short-term growth, cutting the investment of manufacture a new product, the firm could repackage the existing product items
Product diversification: The analysis of above three alternative solution help to determine that product diversification remains could be a suitable option for True Fruits. This strategy is effective because the case study and industry scenario indicates that there is a growing demand of juice product in the global environment. Particularly, it is identified that the market for smoothies is projected to increase to $15.8 billion by 2022 (Derbyshire 2017). This estimation indicates that the demand is supposed to remain in the growing stage; Thereby, getting into a new market could be effective instead of challenging. According to industry report provided by Pasvanka, Varzakas and Proestos (2017) some of EU nations contribute the majority of the demand within EU. UK, Spain and Poland complete the top five positions of juice market. Thereby, the organization can use choose any of three markets in EU for expansion. However, the organization has to use new expertise to design and develop the new product. When including the product standard criteria for developing new juice, the organization could follow the below mentioned fruit juice and nectar consumption per individual which stands below 40 litres. This particular age and wellbeing indicates that the chosen sector is mature for growth.
The above presented image demonstrate that orange is the mostly demanded and popular flavor, which holds one third of the overall consumption. Thereby, True Fruits must have to consider this element when developing a new product for its market expansion.
For expanding into a new market, True Fruits must have to choose a right entry mode strategy. As the organization is supposed to enter the EU nations for expansion, it can observe one favorable aspect –existence of distributors and agents in the chosen market. The organization will find many agents and distributors in the proposed market because True Fruits has a strong presence in the EU market. Therefore, by applying direct exporting mode, it can access the proposed market. With direct exporting strategy, the organization can directly sell the juice items to the market. Hence, direct exporting will be suitable for True Fruits because it has already established a sales program in the EU nations and to represent further in the proposed market, it may receive similar contacts of agents and distributors belonging to proposed market. However, direct exporting is not the only strategy that True Fruits requires to establish its market. It has to apply alternative method-which is Omni Channel marketing. In order to penetrate in the market speedily, the firm needs to use online selling. It can contact a popular e-commerce vendor who has a strong market presence in the proposed market. Here, online selling will create separate revenue. On the other side, distributors and agents will arrange offline sales.
Koster, Knuff and Lecloux have taken an effective decision of expanding the business into the foreign market, because the business is in the profitable stage. Thereby, taking the business to a new and global level is mandatory. Thus, if management of the organization applies the strategy of direct exporting and Omni channel marketing, it would provide them a desired and positive outcome. The management will approve the strategy of direct exporting and Omni Channel marketing because both the strategies help to penetrate and establish the market. Direct exporting helps the company to enter the market, while Omni channel marketing helps to penetrate in the market after getting in. Omni channel marketing is one such strategy, which helps to acquire the market speedily than conventional methods of selling. Moreover, the management of True Fruits can further shape this strategy by setting particular goals and measure them with KPI and SMART criteria. When the strategy is completely implemented, the origination can evaluate the outcome by measuring them with goals and KPIs.
Conclusions
In conclusion, it can be stated that True Fruits will experience a rapid growth in the business if the proposed strategies are applied properly. The estimated outcomes are certain to come, because the analysis indicates that there is a growing demand of fruits juice products in the European nations. Thereby, the strategy of expansion is required to apply to meet the growing demands of juice products. However, when the organization would receive its desired result from the proposed strategy, it should further think of developing its own stores and outlets to create a physical presence in the market, as it also required in gaining customer trust.
References
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Codron, J.M., Siriex, L. and Reardon, T., 2006. Social and environmental attributes of food products in an emerging mass market: Challenges of signaling and consumer perception, with European illustrations. Agriculture and human values, 23(3), pp.283-297.
Derbyshire, E., 2017. Where are we with Smoothies? A Review of the Latest Guidelines, Nutritional Gaps and Evidence. J Nutr Food Sci, 7(632), p.2.
Dimitri, C. and Oberholtzer, L., 2005. Market-led versus government-facilitated growth: development of the US and EU organic agricultural sectors.
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Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2013. ANSOFF matrix, environment, and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2), pp.196-206.
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Pasvanka, K., Varzakas, T. and Proestos, C., 2017. Minimally Processed Fresh Green Beverage Industry (Smoothies, Shakes, Frappes, Pop Ups). In Minimally Processed Refrigerated Fruits and Vegetables (pp. 513-536). Springer, Boston, MA.
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