EXECUTIVE SUMMARY
The objectives of the report is to analyze the German natural home spa product market based on the previous Socio-cultural analysis and Economic analysis in order to devise marketing plan for Harnn and Thann. This report describes the detail plan for Harnn and Thann’s premium products that will penetrate to German market.
To start with Market Audit, it is important to understand our own company’s strengths and competencies as well as the foreign market needs. An absolute research is required for Harnn and Thann’s aggressive advantage and the major problems as well as resistances that might challenge their product acceptance. The competitors’ analysis which is mentioning in this report, are L’Occitane of France, Crabtree and Evelyn of US, Aveda of US, Molton Brown of the United Kingdom
Another part is the preliminary marketing plan which consist of Marketing objectives, the types of promotional mix, the distribution mode and distribution channels which fit to German market. In this section also mention about price determination, term of sale and methods of payment which will be used in this case and finally we provide the Pro forma financial statement and budgets and analysis of resource requirements. With the successful research and marketing plan is resulting in company’s achievement in its goal and ability to expand its business with broaden opportunities in Germany.
A. PART ONE – MARKET AUDIT AND COMPETITIVE MARKET ANALYSIS
I. Introduction
The purpose of this paper is to do marketing plan for retail and wholesale Harnn and Thann natural home spa products, natural skin care, unique aromatherapy products and gift sets in Germany. Since Harnn and Thann, a young energetic Thai company, has a plan to expand their business to Germany by setting up their outlets and distribute the products to local distributors. Based on the result of Socio-cultural and economic analysis, today, Germany has an undeniable potential market and opportunities becoming available in the beauty, wellness and health therapy sector which has the reputation as one of the most comprehensive spa cultures in Europe.(Spa: Sanus per Aquam an Old Roman Cure, n.d.).(13) In other word, Harnn and Thann are convinced that Germany is the next treasure for them to spread out their premium products and verifying their reliable name in EU market after their previously disclosure in few countries in EU. However, the marketing strategies to be used in German market is crucial and thus, the research need to be done carefully by analyzing market audit and marketing plan based on provided socio-cultural analysis and economic analysis in assignment one and two respectively.
II. The Products
Harnn and Thann aromatherapy products which uses natural ingredients.
2.1 Perceived Product Innovation
2.1.1 Relative Advantage
i. Harnn natural plant extracts are active ingredients which can counter stress and allows you to exile yourself from the urban environment and way of life. These traditional extracts/ medication have been proven by scientifically.
Harnn natural plant extracts in hair and body care products nourish, clean, soothe and also protects the natural balance of ones skin and hair.
ii. Harnn natural spa products improve circulations and stimulates ones senses when used with traditional massage techniques.
iii. Harnn home fragranced products and other similar accessories create a different environment within ones home. Such products come in different dynamic colors, shapes, textures and fragrances which craft a relaxing and a pleasant environment. (Harnn, 2008)
iv. Thann products concentrate more towards using plant extracts to develop natural aromatherapy products. (Thann, 2008)
2.1.2 Compatibility
Harnn and Thann products are made from natural plant extracts and work towards creating a more natural environment through their diverse and dynamic characteristics of their products. According to International Social Survey Program, the data shows that there has been increased spending on the environment in countries like Germany. This shows great compatibility between Harnn and Thann’s product theme and the objectives of creating a “greener” and natural environment in Germany.
(Skrentny, 1993)
2.1.3 Complexity
Harnn and Thann products are easy to use without complicated packaging. The layout makes Harnn and Thann’s products more appealing yet simple.
2.1.4 Trialability
Harnn and Thann aromatherapy products when on display in stores create a closer bond between customers and the product. It allows customers to choose which smell of their preference.
2.1.5 Observability
Its appealing yet simple packaging creates a competitive advantage over other spa products.
2.2 Problems and Resistances to product acceptance
German consumers prefer to use its country’s products rather than foreign products. Studies have shown that most youth, the more educated, and consumers who are more familiar with the products would be more willing to try out foreign products. However, a big factor that can cause product acceptance in Germany is consumer nationalism. For example, Japanese cars are more favored over American cars by Americans. However, because of consumer nationalism, in Germany, German made cars are rated higher over Japanese cars. (Papadopoulos & Heslop, 1992)
Harnn and Thann could face product acceptance due to such factors. However, Thai spa products have created a good reputation around the world for its traditional and natural approach.
Harnn and Thann has expanded it stores into countries like Australia, Canada, Cyprus, Finland, France, Guam, Indonesia, Japan, Malaysia, Estonia, Poland, Portugal, Spain, Sweden, Singapore, Taiwan, Thailand, Vietnam and Ukraine. Its expansion into Europe especially, shows the company’s growth and success.
In the period from 1996 to 2006, the number of wealthy people earning more than 200 percent of the average income level went from 6.4 to 9.2 percent and the number of poor earning less than 50 percent of the average increased from 7.3 to 11.4 percent. (Germany’s Middle Class Shrinking Fast, Study Says, 2008)
This tells us that the average income levels have been rising. With increased incomes come increased spending, therefore we look at opportunities where Germans can spend more on luxury products and other wants.
2.3 SWOT Analysis
a. Strengths
? Thailand is one of an undeniable world renowned destination spa.
? An excellent reputation which considered #1 in Asia.
? Natural, organic, and non-animal tested ingredients
? Rich& powerful mother company – No franchises
? EU accepted as it is already disclosed in some EU countries.
? Romantic and relaxing image with huge product range
? Premium product with high affordability.
b. Weaknesses
? Low brand awareness
? Harnn and Thann has no experience in Germany especially, high challenges with local competitors who are already well established. Therefore Harnn and Thann probably have to face some problems initially.
? Young company which has established in 1999 for Harnn and in 2002 for Thann.
? There are a lot of gaps to fill in terms of Research & Development in EU.
c. Opportunities
? Boosting confidence of consumer by falling unemployment rates and rising GDP
? Germany has one of the most comprehensive spa cultures in Europe
? Booming demand of skin care products by aging population
? Market development space
d. Threats
? Strong competitors
? Adapting to the culture differences
– Tendency of male caring about appearance
– Tendency of free time activities
? Culture differences
III. The Market
3.1 Market in which the product is to be sold
3.1.1 Geographical Region
i. Spas are very popular in Germany and have been around since Harnn and Thann will look at opening in three major towns/ cities where it can reach its target market easier in Germany.
? Aachen is a town on the west of Germany bordering with Belgium and Netherlands. This spa town offers many historic sites and hosts many annual cultural events and festivals. Aachen is an ideal place to get away and spend a good few days to relax and get away from the city life. One can drive or take a train to Aachen. Aachen is a major hub for the European trains. Trains connect to cities like Cologne, Brussels, and Herleen. (Hartley, n.d.)
Harnn and Thann will benefit from such a town because it makes it easier to reach its target market. Aachen being a tourist destination will allow Harnn and Thann to sell its products to hotels and spas.
? Munich is a vibrant city south of Germany. This city attracts a lot of tourists from all around the world. Opening Harnn and Thann retail outlets in malls will allow consumers to bring a natural and a relaxed environment to their homes in comparison to the fast moving city life. Munich offers travelers the choice from its international airport, underground railways, suburb trains, trams and buses.
? Baden-Baden is situated at the foot of the Black Forest. This is another relaxed tourist destination with a number parks and gardens. It is a small town which is easy to get to either by air or train. (Baden-Baden, n.d.) Sale of Harnn and Thann products can be sold to hotels and spas in this small tourist destination once again reaching out easier to its target market.
3.1.2 Consumer buying habits
The idea of Germans loving spas is to relax. There are a lot of spa towns and holiday destinations in Germany. Due to the trend of turning more environmental, consumers are more conscious about the environment and prefer more environmental friendly products. However, research has shown the buying trends of foreign products to be less attractive to Germans. (Papadopoulos & Heslop, 1992)
3.1.3 Distribution of the product
Distribute to retail outlets at shopping malls, hotel retail store and direct selling and distribution as accessories for hotels and spas.
3.1.4 Advertising and Promotion
3.1.4.1 Media Used
Advertise in Magazines like Elle, GQ, Marie Claire to promote Harnn and Thann natural spa products (promote here only because we want to reach a niche market rather than target a mass audience. Another media used is through brochures placed at information desks of shopping malls.
3.1.4.2 Sales Promotions
Registered members of Harnn and Thann are given product discounts up to 15 percent retail outlets/stores, and discount coupons to established spas.
3.1.5 Pricing Strategy
In the period from 1996 to 2006, the number of wealthy people earning more than 200 percent of the average income level went from 6.4 to 9.2 percent and the number of poor earning less than 50 percent of the average increased from 7.3 to 11.4 percent. (Germany’s Middle Class Shrinking Fast, Study Says, 2008)
Even though we see an increasing rate of average income, entering the reserved German market as a foreign product is difficult. Germans are less price sensitive due to their high incomes but are more hesitant and reluctant to buy imported products. Therefore, our prices should be positioned well for the middle income earners yet still delivering quality aromatic natural spa products. Harnn and Thann’s pricing objective is to offer rising income earners a taste of luxury and comfort.
3.2 Compare and Contrast your product and competition product(s)
3.2.1 Competitor’s product(s)
3.2.1.1 Brand name
3.2.1.2
B. PART TWO – PRELIMINARY MARKETING PLAN
I. Marketing Plan
Enter the German market and create awareness of Harnn and Thann aromatherapy natural home spa products.
1.1 Marketing Objectives
To gain spontaneous consumer awareness to 20 percent of the target market within one year and to communicate that Harnn and Thann is the only one that provides a sense of authentic home Thai products for better physical health and natural radiance.
1.1.1 Product Objectives
i. To offer the German market a sense of authentic home Thai products for better physical health and natural radiance.
ii. To exploit a holiday destination in Germany as a market for authentic Spa products from Harnn and Thann, a product of Thailand that is well renowned for its traditional spa products.
iii. To create awareness of Harnn and Thann spa products, in a holiday destination in Germany.
1.1.2 Selling Objectives
i. Gain spontaneous brand awareness of 20 percent of the target market within the first year upon entry.
ii. Gain a market share of 5 percent within the first 6 months upon entry.
1.2 Product adaptation or modification
Core Component
The design will not change according to German culture since we are emphasizing on the Thai traditional natural spa products.
Packaging
Packaging will differ from products; however we would emphasize on products like for example natural hair products will come in different sizes like in bottles of 50ml or 100ml. Labeling and text used will be inscribed in German.
As for products sold for hotels and spas, bundled packaging will be employed.
1.3 Promotional Mix (personal selling, advertising, publicity, and sales promotion)
A. Advertising
i. Objectives
Gain spontaneous brand awareness of 20 percent of the target market within the first year upon entry.
ii. Media Mix
Print media- Magazines like Elle, GQ and Marie Claire
Brochures
We use magazines and brochures only due to cost factors. In addition, magazines such as Elle already have a certain group of people who read it, therefore making it more effective for Harnn and Thann to reach its target market.
iii. Message
Take your body, mind and soul closer to nature with Harnn and Thann’s aroma therapeutic natural home spa products.
iv. Sales Promotions
Registered members of Harnn and Thann are given product discounts up to 15 percent retail outlets/stores, and discount coupons to established spas.
PEST Analysis
? Political (and legal) forces
i. Stable political environment
ii. Reduce the Trade Restrictions
? Economic forces
i. The German economy has been improving since early 2006.
ii. Both GDP and consumer spending have increased to +2.7% and + 1.8% respectively.
iii. Positive changes in the economy in 2009.
? Sociocultural forces
i. Nuclear family, high family income, 66% middle age population
? Technological forces
i. Germany has 50.4 million internet users.
ii. Ranked 4th of the World’s internet users
1.4 Distribution
1.4.1 Mode selection
Harnn and Thann choose Multi-distribution mode like air freight, ocean freight and road transport for their product distribution. The company plan to distribute the products to retailer or distributors by Air freight via Dubai (DXB). (Airfreight, n.d.) (10) By choosing this option helps the company to distribute their products on time. On the other hand, as for distribution to their 3 outlets in Aachen, Baden-Baden and Munich Harnn and Thann use Ocean freight which categorize in Less- than- container loads. It is the ideal solution for smaller shipments as it is more suitable for larger quantity and time constraints is not crucial. Furthermore Harnn and Thann can use road transport to distribute their products to their distributors in other major city. (Ocean freight, n.d.) (9)
1.4.2 Port selection
Harnn and Thann ship their products from Lat Krabang port to the port of Hamburg which is Germany’s biggest seaport, and Europe’s second largest, turning over almost 6.1 million TEU – standard containers in 2003. (The Largest Ports, n.d.) (11)
The port of Hamburg handles 28 percent of all container traffic in Northern Europe. (Germany: Europe’s Logistics Hub, 2005) (12)
1.4.3 Freight forwarding
Harnn and Thann choose Maersk Logistics Thailand as a freight forwarder since Maersk Logistics is one of a recognized and leader of international logistics companies with an excellent wide range services. Moreover, the forwarder will handle all documentations needed to meet the export customs and destination requirements such as Bill of lading, and all shipping documents. Maersk Logistics will also help in arranging warehouse storage and distributions as well as insurance claim if required (Value added services, n.d.) (14)
1.5 Channels of Distribution (Micro analysis)
1. Retailers
a. Type and Number of retail stores
b. Retail Markup for products in each type of retail store
c. Method of operation for each type (cash/ credit)
d. Scale of operation for each type (small/large)
2. Wholesale middlemen
a. Type and number of wholesale middlemen
b. Markup for class of products by each type
c. Methods of operation for each type (cash/ credit
d. Scale of operation (small/large)
3. Import/ export agent
4. Warehousing
a. Type
b. Location
A. Retail Distribution
Harnn and Thann will open in three outlets in Germany, one outlet in each city/town Aachen, Munich, and Baden-Baden. When the products have arrived at the airport, a delivery truck will transport the products to the retail stores. There will be no middleman in terms of warehousing. A trucking company will be picked after a bidding session to transport the products.
1.6 Price determination
Price of Harnn and Thann’s products for exporting to Germany need to be calculated in detail as when it comes to international business, it is not only the cost of raw material, but it also has additional costs that need to be included such as cost of shipment, cost of transportation, Insurance costs, all handling expenses as well as custom duties, Import taxes and VAT etc. Moreover, the company needs to ensure that the products’ margins are decent and hence price will be set according to the level of market segment.
1.7 Terms of sale
In term of sale, Harnn and Thann use Cost, Insurance and Freight or the so called CIF which has an agreement that the cargo insurance and delivery of goods to the named port of destination (discharge) at the seller’s expense. On the other hand, buyer will handle for the import customs clearance and other costs and risks of loss and damage.
( http://www.bmishipping.com/inco.html). This method has selected as the Head Quarter (Thailand) needs to ensure that retailer or distributors will pay the expenses and the especially, to make sure that the products are not spoiled by the time it is delivered to distributors’ hand.
1.8 Methods of payment
Since Harnn and Thann has a plan to open outlets in Germany as well as distribution the products to suppliers or distributors, the method of payment will be done through Letter of credit (L/C) or Cash in Advance for those distributors which the commodities will be delivered once the payment have made and documents are completed. These modes of payment will help in reducing the risk of nonpayment due to the Bank guarantees. As for the outlets’ operation, Cash and Credit Cards will be used as modes of payment.
II. Pro forma financial statements and budgets
2.1 Marketing budget
1. Selling expense
2. Advertising/ promotion expense
3. Distribution expense
4. Product cost
5. Other costs
III. Resource requirements
3.1 Finances
The financial resources of Harnn and Thann outlets in Germany in the first few years will be received from its Head Quarter in Thailand. After that, each of those outlets will be operated financially by its own profit.
3.2 Personnel
Personnel resource is one of the most important resources requirements. In each outlet should consist of Outlet manager, Sale and Marketing Department, Administration and HRM department and operation teams with majority are local people in order to save cost and avoid challenges in hiring foreign staffs as well as language barrier as German language is used throughout the country. Thus, the total personnel should be up to 60 initially.
3.3 Production capacity
Since Harnn and Thann use all the raw material and ingredients from its own mother company with a factory in Thailand, the production capacity is very challenging for them. However, the company is well prepared by forecasting the market demand and ensures that their production capacity is able to support high volume of products’ order.
V. Conclusion
According to Chin (2006) over 2500 people worldwide have already been chipped, with floodgates potentially about to open. While there is no doubt about the benefits for society and commerce in general this product is revolutionary and requires a significant cultural shift in South Africa to gain acceptance. This paper has performed a market audit and preliminary marketing plan drawing on the findings of socio-cultural and economic analysis completed in the previous assignment. We have taken the facts presented in the analysis identified problems and suggested solutions on how to address them. Ultimately we have identified the market and document how to go forward with introducing the product to the South African market once certain socio-cultural barriers are deemed to have been removed.
Through this market audit and marketing plan, Blackberry is able to formulate well preparation strategies before implementing the real operational of sales and marketing subsidiary in Singapore based on the economical and socio-cultural analysis (summary in appendix 12 and appendix 13). During the first year, the marketing will focus on attracting people attentions and awareness; encourage trial or interest of the Blackberry brand by several marketing methods. In addition, the next years will be focusing on increasing the desire and purchasing that pilot the rises’ number of sales and profit. Therefore, eventually Blackberry is capable to be the smart-phone leader in Singapore, and in the same time embraces the Southeast Asia market.
The scope for growth in the German leather industry is high. Tata international have to adopt the marketing strategies recommended to differentiate them from its competitors in international market. These marketing Mix strategies are to be followed to attain high relative market share and for the growth of the company. They should keep themselves aware of their competitors move and should react quickly to their actions. Should develop a good recognition to them in market and should rise to a leading leather exporting company in Germany.
VI. References
1. http://www.german-business-partners.com/index.php?id=home
2. http://www.industry-park.de/eng/index.html
3. http://www.germany-tourism.de/ENG/nature_active_recreation/spa_vacation.htm
9. http://www.maersklogistics.com/sw35555.asp
10. http://www.maersklogistics.com/sw34805.asp
11. http://www.nordcapital.com/main/nca/en/impressionen/largest_ports.jsp
12. http://www.kompetenzcluster.org/fileadmin/vdidaten/Logistik/Fakten/Germany-Logistics-Hub.pdf
13. http://www.howtogermany.com/pages/spas.html
14. http://www.maersklogistics.com/sw34806.asp
15.
Reference
1. Skrentny, J. D. (1993). Concern for the environment: A cross-national perspective. International Journal of Public Opinion Research. Extracted 26 June 2008. From: http://ijpor.oxfordjournals.org/cgi/content/abstract/5/4/335
2. Papadopoulos & Heslop (1992) Product Country Images: Impact and Role in International Marketing. Extracted 25 June 2008. From: http://books.google.com.sg/books?id=z8PE4zEFSGkC&pg=PA96&lpg=PA96&dq=foreign+product+acceptance+in+germany&source=web&ots=9zIXIpm4G6&sig=uwW47zKnoPK4U2O26jJhNRZG1VM&hl=en&sa=X&oi=book_result&resnum=1&ct=result#PPA96,M1
3. DW World (2008) Germany’s Middle Class Shrinking Fast, Study Says. Extracted 26 June 2008. From: http://www.dw-world.de/dw/article/0,2144,3311197,00.html
4. Hartley, M. (2008) Aachen Travel Guide – An Introduction to Aachen, Germany. Extracted 25 June 2008. From: http://gogermany.about.com/od/greatdestinations/p/Aachen.htm
5. Munich (2008) Munich Germany. Extracted 23 June 2008. From: http://en.wikipedia.org/wiki/Munich
6. Wikitravel (2008) Baden-Baden. Extracted 27 June 2008. From: http://wikitravel.org/en/Baden-Baden
7. The World Fact Book. (2008) Germany. Retrieved on June 14, 2008 from https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html
8. Worldbank (2008) The World Bank, Key Development Data & Statistics – Germany. Extracted 27 June 2008. From: http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20535285~menuPK:1192694~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html
9. Harnn (2008) Harnn Story. Extracted 27 June 2008. From: http://www.harnn.com/store_location.php?zone=thai
10. Thann (2008) Corporate Philosophy. Extracted 27 June 2008. From: http://www.thann.info/
The political stability assured the distribution preferences in Singapore. Moreover, the government plays a major role in deciding and implementing economic development, which it is excellent. Blackberry will do direct export, which is the manufacturer undertakes the exporting rather than delegating the task to other agent distribution (Fletcher & Brown, 2005). Direct distribution is done through blackberry web-store at www.shopblackberry.com. The customer who buy online may subscribe the solution from those three providers.
However, with setting up the subsidiary office, either corporate or individual customer can directly contact the office to get information and purchase the products instead of buying online. They can subscribe the e-solution separately after the purchasing.
For the retailer partner in Singapore who interested in selling blackberry product can directly contact the Singapore’s subsidiary office to make an order. After that, BlackBerry in Singapore will send the products ordered from manufacturer in Canada to blackberry’s warehouse in Singapore. After that the devices are checked, the retailer may collect it from the office or directly from the warehouse