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Requirement
You are required to develop a marketing plan for a service organization entering into a new market and draft a report on it.
Solution
Introduction
Omar Zawawi Establishment LLC (OMZEST) is a multi location conglomerate with diverse interests across a wide range of products and services. It has been in the business for almost five decades, and it is present in some form or the other in almost hundred countries around the globe.
The National Detergent Company manufactures various household products related to fabric care, dish care, personal care, and home care. It was established in 1981 by Mr. Abdul Hussain Bin Bhacker Al Lawati, who is the current chairman of the company. NDC is associated with OMZEST as an associate company.
After years of successful stint in Oman, NDC wants to explore new international market. And for that purpose, it has selected India based on certain analysis that are mentioned further in this report. It will be taking its flagship product ‘Bahar Detergent’ to the consumers of India.
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PESTEL Analysis
Before entering into any country or specific geography, understanding its external environment is imperative for every organization. It helps in the reduction of the impact and effects of potential threats to the organization. It will also present some opportunities that the organization can exploit to develop desired strategy to counter the situation and build the market.
Moreover, marketing objectives can be better defined if we understand all the factors that come under the shade of PESTEL analysis. Mentioned below are various factors NDC will consider before entering into Indian market.
Political Factor: The political situation of India is stable enough for any organization to enter into its market. It runs on a federal form of government and includes various governmental policies, political interests and ideological influence of several parties. There are various political factors that impact the decision of a business considering entering into this subcontinent. NDC can benefit from the stable tax structure of the country such as service tax, sales tax and income tax. The current government of India has primarily focused on bringing more foreign companies to invest in India through its various policy reforms and campaign such as ‘Make in India’. It is eyeing to get manufacturing growth to sustainable 10 percent over long term, and the central government is working with various state government to de-bureaucratize and deregulate things which act as a deterrent for operating businesses. The focus on simplifying the business procedures will help NDC get instant access to the Indian market without any political obligations.
Economic Factor: The stability of Indian economy is significant after it opened its market for foreign companies in 1991. The GDP growth rate of India has averaged 1.66 percent from 1996 to 2015 that reached an all time high of 5.30 percent in the second quarter of 2009 and a record low of -1.70 percent in the first quarter of 2009. Overall, the stability has helped many businesses to flourish and gain the benefit of growing economy.
Social Factor: Being the population of around 1.2 billion people, with about 70% of the population between aged of 15 and 65 years, it seems to be the most lucrative business condition for NDC. The education level and income level of the Indian masses are rising constantly, which is resulting into higher disposable income. Currently, Indian population has more time and money to spend on their personal lives and fulfill their innumerable desires.
Technological Factor: Population of India is getting more aware about the technology at a rapid pace, which can be seen from the increasing numbers of smartphone users in country. India is the 3rd largest smartphone market in the world and it is poised to reach 314 million mobile internet users by 2017. This technological advancement will help NDC to leverage the benefit of e-commerce business and reach its consumers rapidly and with less cost. It is evident that technology also influences the product development as it saves cost and time by the introduction of tools and methods for efficient and effective production. Various factors such as information technology development, rapid growth in software upgrades and other advancements has made this country a lucrative destination for International businesses.
Environmental and Legal Factor: The Government of India has implemented various policies for environmental safety such as recycling, minimum wage increase, and disability discrimination that has to be taken into consideration by NDC in the initial decision making. Other elements are: availability of raw materials; proper consumption of power and fuel; policies and availability regarding labour; and impact of production on local climate. There are no extensive barrier as per legality is concerned, however, NDC has to fulfill some legal obligations for example, tax laws, labour laws, environmental laws, and others. These laws are stable and clearly mentioned on various government portals, thus NDC will not face any issue in complying with all these.
After the analysis of external factors, we can conclude that environment of India is business friendly, and thus NDC should consider forming strategies for this new market. In the next chapter, we will discuss various objectives NDC has defined for itself based on the PESTEL analysis.
Marketing Objectives
Marketing Objectives are goals that a company sets to promote its products and services to the potential customers, and that should be achievable in a set time frame. It should be specific, measurable, achievable, realistic, and time-bound.
Mentioned below are the marketing objectives of NDC for its new market India:
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(a) Increase sales of Bahar detergent in India from 0 to 5 percent of the overall sale of Bahar detergent around the globe in the next one year.
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(b) Increase brand awareness among 20 percent of the population in the next one year.
Target Market
As per the Credit Suisse, India accounts for 3% of the global middle class with 23.6 million people. According to Credit Suisse, lowest threshold for a person to be considered middle class with annual wealth of $13,662 (or INR 61,480 per month).
Considering this report, we can say, NDC has the opportunity to garner the benefits from this population. Mentioned below is definition of this Indian Middle class population using various criteria:
Who are they?
They consist of various groups such as individuals earning average income, individual family without children, individual family with children, and large family. They have limited disposable income but never hesitates on investing on daily necessities such as household goods (detergents, eatables, and others), personal care products, and others.
What do they want and why?
They are full of aspiration and want to use quality products at cheaper rates. They want products that are backed by reputable brands, as it helps them feel more esteemed among their neighbors and society.
When do they buy and use it?
Their use of these products depends on how often they rely on wearing clean and shiny clothes. As things have changed a lot, and so their aspiration, therefore, consumption of care products such as detergent has increased significantly. According to NIIR Project Consultancy Services report (2014), the detergent sector in the laundry care industry has grown from INR 57 billion in 2003 to INR 130 billion in 2011 (NPCS, 2014).
Where do they buy and use it?
If we discuss about daily use products, their main purchase point is organized and un-organised retail stores. Heavy presence of un-organized retail stores in India has given the access to both consumers and businesses to reach other efficiently. According to an Indian company Godrej, soap, detergent and matches are highly penetrated product in this market. There use is largely in-house, as in India, most household is in practice of cleaning their own clothes on regular basis.
How do they buy and use it?
Their purchase decision mostly moves through the basic decision making process of marketing: AIDA (Awareness, Interest, Desire, and Action). They are made aware about any new product through various medium such as television, radio, newspaper, internet, and ‘Out of Home’ advertisements. Based on the attractiveness of the advertisements, they get interested into certain products and search for more information through local retailers and neighbors. The search of information leads to the development of desire regarding the product use, and eventually they buy the product for their use.
Marketing Strategies
According to Management Consultant Peter Drucker, “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.” Marketing strategy helps a business understand various technicalities of the market and then build its plan based on the same.
Mentioned below are the various marketing strategies, NDC will undertake while entering into the Indian market:
7 P’s
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Product: Bahar Detergent is the NDC’s flagship product in Oman and is one of the largest selling and most popular detergent brand. The company has launched new Bahar with FWA (Fluorescent Whitening Agents) that delivers the producr’s promise of superior whiteness and cleanliness. It comes in various formats that are compatible for front and top load washing machines and even hand washing (NDC, 2015). The new Bahar Detergent for Indian market will help the customers remove tough stain from their clothes with the help of enzymes present in the powder. It also contains water softening agents compatible with all kinds of water types. The enhanced fragrance agents effectively neutralize the malodor of dirty laundry.
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Price: As the product has target the middle class consumers, it will be available at the less price in comparison to its competitors. One kilogram of Bahar will cost INR 70 for the Indian consumer. The price is average in comparison to top competitors in Indian market such as Active Wheel Detergent (INR 44.22), Tide Naturals Lemon (INR 62.90) and Surf Excel (INR 190).
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Place: The distribution of channel of Bahar detergent will consists of Tertiary, Secondary and Primary level. Tertiary will be distributors, Secondary will be retailers, and Primary will be Consumers. CFAs (Carrying and Forwarding Agents) will be used to supply the products to local distributors, and then the wholesalers and retailers will procure the product from them accordingly. The customers will be the end buyer in the channel.
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Promotion: NDC will use various promotional techniques such as advertising, personal selling, sales promotion, public relations, direct marketing, corporate image, and sponsorship (Database Marketing, 1993).
Though the rest of the three Ps hold much significance in service industry or the products that are more dependent on services, therefore, product such as detergent, which holds more characteristics of a product, does not require explanation for these three factors.
Designing the E marketing strategy
The advancement in internet usages Indian sub-continent has given the opportunity to various media houses to leverage this opportunity and spin out better brand loyalty and product sale. E marketing strategy has reached the top chart in the marketing strategy tool of many marketers around the world due to its effectiveness in reaching the consumers and its cost effectiveness (Datta, 2010).
As Indian community is becoming more tech-savvy, NDC has the opportunity to utilize this trend to its benefit. NDC will take following actions to leverage this opportunity:
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(i) Placing Bahar detergent powder on various e commerce platforms that sell grocery and household products.
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(ii) Connecting with the consumers through online social media sites such as Facebook and Twitter.
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(iii) Placing ads on various blogs and websites that discuss related products. The ads will contain the link to existing Facebook, Twitter, and e-commerce page where they can interact with the company and buy products online.
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(iv) Through the use of online video sharing community site Youtube, NDC will post interesting videos that will demonstrate its product capability and utility.
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(v) Use of mobile marketing will be used, where the company will launch Android and iOS apps to engage the users that are more reliant on their mobile device to browse the product.
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(vi) SMS and Email marketing will be used to attract wholesalers and distributors to lucrative offers and schemes to promote the product.
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(vii) Email marketing will be mainly focused on generating more b2b sale of Bahar detergent powder. There are numerous hotels and organizations that are bulk users of this product, thus attracting those will be an added advantage for the company.
Designing the marketing channel
The marketing channel or the distribution channel of Bahar detergent will have dual focus, that is, rural distribution of the product and urban distribution. India is largely divided into two markets, and significant number of people resides in rural areas, therefore, tapping this marketing will be imperative in the NDC’s strategy (Yu, Cadeaux and Song, 2013). Appendix A contains the framework for marketing channel strategy in Rural India. It consists of Distribution Network Design, Distribution Network Logistics, Affordability, Education, Brand Trust, and Product Purchase.
However, there are various challenges NDC can face in distribution in rural areas. For example, (i) High CapEx/OpEx required to set up a distribution network in rural India, (ii) Fragmented distribution and logistics industries, and (iii) Potentially low chance of legal resource if partner contracts are violated. To handle this challenge, NDC can rely on distribution network piggybacking through various corporate partnerships, Local non-profit organizations, and business to business sales.
Mentioned below are few distribution strategies, NDC can undertake to help it grow in the rural areas:
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(i) Incentivizing local retail and wholesale shop owners to sell and promote Bahar detergent.
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(ii) Piggyback off on local retailers and wholesalers to establish Bahar brand.
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(iii) Educating consumers who use other detergent products and drive sales in local shops.
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(iv) Establishing Bahar distribution centers in each district to provide better product restocking time.
The distribution in urban India will follow the conventional pattern with below mentioned few improvements:
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(i) Partnering with modern retail chains situated in various Indian cities.
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(ii) Incentivizing these chains to promote the product by keeping it at the eye level of customers and also using Anchor pricing techniques of promotion.
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(iii) Educating customers through different promotion strategies.
Designing the integrated marketing communication
Integrated marketing communication is used to pitch a consistent brand message across both traditional and non-traditional channels. The message is reinforced into the mind of consumers through the use of various promotional methods. The integrated marketing communication uses almost every consumer touch point to spread its message, be it advertising, public relations, direct marketing, database marketing, sales promotion, sponsorship exhibits, personal selling, or through its websites.
The IMC strategy of NDC will consist of following given elements:
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(i) Create a single brand logo to display at all the channels after analyzing all the customer touch points.
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(ii) Involve company’s employee into the branding of the product, this will bring a sense of unison among them and they will try to represent the brand whenever they meet any customer, formally or informally.
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(iii) Product design and product content should match with the promotional message. Both should move simultaneously (Grinyer, 2011). So that customer will be able to get what they saw and expected after watching the advertisements.
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(iv) Involve all the channels of communication into the branding of the product.
Detailed Action Plan
Mentioned below is the detailed action plan that will be followed by NDC to bring its product into the Indian market. This plan will be implemented from January 1, 2016.
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(i) January 1, 2016: Discuss with various distributors in India and form a list of distributors who agreed to sell the product.
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(ii) January 15, 2016: Supply the products to all the distributors with the use of CFAs.
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(iii) January 30, 2016: Launch attractive offers for distributors to promote the product to retailers.
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(iv) January 10, 2016: Launch Facebook and Twitter page of the product.
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(v) January 11, 2016: Place ads on various channels such as ‘Out of Home’ advertisements that includes bill boards and banners; television, radio, video on youtube, and other social media.
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(vi) February 15, 2016: Incentivize retailers to promote and sell the product to the consumers.
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(vii) February 25, 2016: Recruit sales agents for b2b sales.
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(viii) March 10, 2016: Evaluate the marketing implementation results
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(ix) March 15, 2016: Reframe the marketing strategies and implement.
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Evaluation of the marketing plan involves various parameters. They are:
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(i) ROI: It is evident that implementation of marketing plan requires some investment, and therefore, understanding its return on investment is imperative for any business or organization (Schiff, 1963). It will help NDC to understand whether the money it has invested in the marketing initiatives has resulted in profit. Each amount invested in various campaign should be calculated specifically. Calculating overall return of investment seems an obvious choice, but specific calculations of each campaign will help NDC in understanding which marketing campaign performed well and brought better returns and which one fell off expectation.
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(ii) Sales Numbers: The sales number will be the correct marker for NDC’s growth in the Indian market. As in the initial period, it has no presence in the market, therefore, any increase in sales from none to something significant will entail that its marketing plan is resulting into something better.
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(iii) Customer Response: A proper survey of consumers will help NDC to understand how much its branding initiatives have worked in creating awareness about its product and brand. NDC can use local survey agencies for the purpose, and also online survey platforms can be used to find out the impact. Questions such as, “How you came to know about our product?”, will help NDC understand which marketing initiatives are contributing in creation of awareness and the segment that are more inclined towards purchasing the product (Finn, 2011).
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(iv) Expansion: If the NDC’s market reach gaining significant proportion, then it is the indicator that its marketing initiatives are contributing well. There are various instances where organizations marketing initiatives sometime push the product into some unknown market which was not in the target market criteria. Also, if the marketing budget is expanding gradually, then it can be considered as a sign that the plan is reaching its effectiveness.
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(v) Partner Response: There are various stakeholders and partners that will be working for NDC in promoting and selling its product to the customers such as distributors, retailers, and sales agents. Their feedback will help NDC determine whether the communication it is propagating has some effectiveness. The reason is, these partners are more close to the market than the NDC itself. Therefore, they will have significant idea about the market condition which will act as a building block for NDC’s marketing strategy.
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(vi) Salespeople: These people are like soldiers in the field who know the vein of the market and its customers (Engel, 1947). There feedback will be a true measure of the situation of the market and how much effectiveness the NDC’s plan has displayed in transforming the customers’ inclination to its first product, Bahar Detergent.
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(vii) Competitor Response: If the competitors are taking initiatives to counter the entry or growth of Bahar, then it is a clear signal that NDC’s marketing intitative is impacting the market and its customers. There can be instances where competitor has started copying the strategy of NDC, then it should be understood that the plan is working. If the market is showing no response to the marketing initiatives, or there is poor or no response from the market, then NDC has to rethink over the plan.
Above mentioned evaluation tactics will help NDC in keeping a gauge at the market movement and its marketing initiatives effectively. As per the suggestions are concerned, mentioned below points should be considered while implementing the marketing plan:
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(i) Phase Implementation: Implementation of all the marketing initiatives should be divided into various phases, so that no confusion arises in propagating the proper communication to customers (Banks, 1973).
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(ii) People: Right people should be assigned for the job. Those who have better understanding of the market. This can be done by pooling in marketing executives from other similar companies who are working and understanding the market for long.
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(iii) Agencies: NDC can involve various marketing agencies for the purpose. For example, involving advertising consultants will give better suggestions on what message to deliver and in what should be the choice of words. Local advertising agencies are well aware about the local customers’ tastes and preferences, therefore, they can mold the message accordingly (Bursk and Sethi, 1976).
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(iv) Government Initiatives: Other than implementing the marketing plan, NDC should involve government initiatives that support the community in some way or the other. This will help the company in gaining more importance in the eyes of local government and also customers will see NDC as supportive to local community which will result into more friendly gestures and inclination from them.
References
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"Database Marketing: The Ultimate Marketing Tool". Choice Reviews Online 31.04 (1993): 31-2191-31-2191.
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Banks, Seymour. "Trends Affecting The Implementation Of Advertising And Promotion". Journal of Marketing 37.1 (1973): 19.
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Bursk, Edward C., and Baljit Singh Sethi. "The In-House Advertising Agency". Journal of Advertising5.1 (1976): 24-27.
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Datta, Pratim. "A Preliminary Study Of Ecommerce Adoption In Developing Countries". Information Systems Journal 21.1 (2010): 3-32.
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Engel, George C. "The Importance Of Salespeople In Ready-To-Wear Stores". Journal of Marketing11.3 (1947): 282.
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Finn, A. "Customer Delight: Distinct Construct Or Zone Of Nonlinear Response To Customer Satisfaction?". Journal of Service Research 15.1 (2011): 99-110.
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Grinyer, Clive. "New Challenges For Product Design: The Product Of Design". Design Management Review 22.4 (2011): 14-21
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NPCS, Team. Market Research Report On Detergent Industry In India. Delhi: NIIR PROJECT CONSULTANCY SERVICES, 2014.
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Schiff, Michael. "The Use Of ROI In Sales Management". Journal of Marketing 27.3 (1963): 70.
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Yu, Kangkang, Jack Cadeaux, and Hua Song. "Distribution Channel Network And Relational Performance: The Intervening Mechanism Of Adaptive Distribution Flexibility". Decision Sciences44.5 (2013): 915-950.
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