Write market research report for Australian fresh fruit market particularly mangoes, in Indonesia.
This consist of a market research report for Australian fresh fruit market particularly mangoes, in Indonesia, one of East Asian states. In this regard, the report will highlight the socio-economic and political situation in the country, which would affect the viability of the business the existing competition for the same product, and then lastly provide recommendations on product pricing strategy, distribution, and promotional measures for mangoes.
According to the available data, Indonesia’s Gross Domestic Product was $ 890 billion in the year 2014. The country’s currency is the Rupiah, which is, pegged to different other monetary currencies. Its exports in the same year the exports were $ 176 billion while the imports totalled up to $ 178 billion dollars. The largest exports include palm oil and thermal coal (McClanahan 2013). This means that the country relies heavily on the export market as well as on imports. In 2015, the Indonesian economy contracted due to falling demand for exports, despite the government expenditure to stimulate the economy. However, the Indonesian government has strengthened its public investments in order to help the country to get out of a persistent slow down in the economic growth in the year 2015. There is higher funding for infrastructure in different sectors of the economy including different policies aimed at stimulating private investors (Pierre 2010). In this case, there are lower interest rates on borrowed loans currently. On the other hand, inflation will decelerate by around 2% according to the forecast (McClanahan 2013). The policies are intended to fix the problem of reducing demand for exports for their goods, relative to government expenditure. As indicated by Sara (2011), Indonesia is growing into a major foreign investment destination as there is increasing Foreign Direct Investment due to its huge population.
In the year 2014, the political stability index for Indonesia was at -1.23 relative to the maximum +2.25. This is because the country still faces challenges politically including too much bureaucracy and corruption in different government institutions and among the public. Since the fall of 1998 when the 30-year authoritarian rule of General Suharto collapsed, Indonesia has seen a positive political transformation (Denny 2008). There is now vibrant democracy, which growing stronger each day with policies from government and different sectors that parliamentary consensus agrees on. Extreme religious parties have over time risen and failed, giving way to secular but stronger nationalism among the Indonesians (Denny 2008). However, there is sometimes, the push for protectionism from some political parties despite the governments push for more open markets. This becomes an uncertainty for foreign investors. The widening gap between the poor and the rich is a major concern, as corruption is relatively rife in the region (Kaniz 2015). Even so, the country seems to accept its flaws and persists towards getting rid of these cases. Free media and higher electorate expectations from political leaders is changing the country’s political landscape positively.
Indonesia consists of a population of over 260 million people who are mainly Muslim. This population speaks more than 300 regional languages. This population includes urban elites and hunter-gatherer families living in the expansive rural areas. There is a growing middle class in Indonesia, that was expected to reach more than 150 million in 2014, and now that it is 2016, it is likely way beyond the figure (Kaniz 2015). These among the huge young population provide a huge market demand for products such as fresh fruits. In fact, according to Kaniz (2015), more than 50% of Indonesia’s population is below the age of 30 years and are very adaptive to novel technologies that can be used as promotional tools for goods and services.
The fresh fruit industry in Indonesia is very vibrant. The huge population provides a huge market for fresh fruits including mangoes. These are produced in the country’s Java region. It is the world’s seventh largest producer of mangoes (Courtney 2014). Australia on the other hand is world’s best producer of mangoes, as it is the country’s main fruit (Lara 2015). The Australia fruit quality is higher in all international markets (Lara 2015). The Indonesian government welcomes international fresh fruit investors, despite the existing companies in the country to allow competition. Some of the potential competitors in the mango industry in Indonesia include companies such as the Greenfarm Import and Export Trading Company, The Indofruits Company, and the Qingdao LSXY Import & Export Company Limited among others (Courtney 2014). The following is competition analysis in the mango industry.
This is a Chinese company that exports among other products, mango-related products into Indonesian market. China being the largest exporter f fresh fruits into Indonesia, gives this company has given this company good will and policy related advantage to operate, since it started its operations in 2003(Alibaba.com). The company has between 11 and 50 employees collectively on Chinese mainland and the Indonesian market. The company sell mangoes in both whole and frozen forms. More so, the mangoes are chipped into dices and slices, if not made into juice for sale. These are packed into sizes of 400g, 500g and/or 1000g (Alibaba.com). The company products including mangoes are branded as “LSFOODS.”The minimum purchases from the company are at US $100.
The Indofruits Company also deals in mango sales. It deals with manufacturing, trading, distribution and wholesaling of horticultural products, including mangoes on Indonesia. The brand name that the company uses for its products is the “Indo-fresh-fruits.” The minimum order for fresh mangoes that an individual can make from the company in terms of price is at 10 kilograms, ranging between $ 10 and $1000 (Alibaba.com). The company has been in the Indonesian market for the last 1 year. Therefore, it has probably adjusted to the existing business environment in the Indonesian market.
Greenfarm is a Philippine company based in Indonesia dealing in the export and import of among other goods, mangoes (Alibaba.com). The company has been in operation since the past 8 years in Indonesia. The mangoes sold consist of the tropical and subtropical type, green in colour and sold when fresh. The company has between 51-100 employees in total. The company makes total annual sales of the mangoes of US $ 1 million (Alibaba.com). Generally, the cost of freeze-dried mangoes in Indonesia as set by companies is around US $ 10-27 per kilogram (Alibaba.com). The fresh mango fruits on the other hand cost US $ 410-770 per tonne. Therefore, the Australian company must consider these prices as it prepares to enter into the market.
Based on the country’s market analysis including the prices set by competitors, it is ideal that the Australian company follows the following recommendations.
Since it is clear that freeze dried mangoes in Indonesia sell at approximately US $ 10-27 per kilogram while the fresh mango fruits cost US $ 410-770 per tonne, it is necessary that the Australian company set a slightly lesser price, as a market entry strategy. Originating from the best mango-producing country, Australian companies need to set lower prices, as they have a continuous supply of the fruit that can sustain the consumer demand supply. The surplus production of mangoes in Australia should enable the Australian to be able to set lower prices that will attract initial customers for their mango-related products (Mangoes.net.au). For instance specifically, the company can lower the cost of dried mangoes from US $ 10-27 per kilogram to range between US $ 9-26 per kilogram while the fresh mango fruits cost can be lowered to between US $ 415-765 per tonne. This will help the company realize more sales due to preferential purchases by customers, attracted by both quality and price.
In terms of distribution, the Australian company should choose have different product stores and a main warehouse in Indonesian major towns such as Jakarta, to be the main points collection of mangoes and products brought in from Australia, ready for distribution. The company can distribute mangoes to wholesalers and loyal retailers within the Indonesian markets by vehicles owned by the company, operating within different areas within the country.
In order to promote the mango sales by the company entering into the market, the country will need a special brand name to popularize their product. This needs to be coupled up with a mix of communication vehicles, since the population is mixed up of a few urban elites, majority hunter-gatherer communities in the rural areas. Further, the middle class and the huge young population conversant with latest technologies require special mix of communication vehicles. Thus, the company will use broadcast vehicles such as television for those who can access this media. The increasing number of middle class and the elites in the cities and suburban regions can read utilize the print-vehicles such as newspapers, magazines and billboard posters. Lastly, there is need to use digital vehicles such as advertising the mango products on social media, accessible to the youths. This will help the company make high sales at its start.
Conclusively, this report will help the Australian company come up with strategies to move into the Indonesian government.
References
Sara Schonhardt (26 December 2011). “As Indonesia Grows, Discontent Sets in Among Workers.” The New York Times. Retrieved 27 December 2011.
Kaniz Fatima (9 September 2015). “Textile workers protest for new minimum wage in Indonesia.” BanglaApparel.com.
Pierre van der (2010). “The sources of long-term economic growth in Indonesia, 1880–2008″. Explorations in Economic History 47 (3): 294–309. doi:10.1016/j.eeh.2009.08.004.
Denny Indrayana (2008) Indonesian Constitutional Reform 1999-2002: An Evaluation of Constitution-Making in Transition, Kompas Book Publishing, Jakarta ISBN 978-979-709-394-5
Courtney McCaffrey (November 27, 2014). “20 Reasons Why Indonesian Food is the Best in the World”. Flight Network Foodie.
McClanahan, Paige (11 September 2013). “Can Indonesia increase palm oil output without destroying its forest? Environmentalists doubt the world’s biggest palm oil producer can implement ambitious plans without damaging woodland.” The Guardian.
Lara Webster (2 Oct 2015). Australian mango production forecast down on last year. https://www.abc.net.au/news/2015-10-02/australian-mango-harvest-forecast/6818594 Retrieved 2016-5-21.
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