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International Marketing Plan Old Reserve Coconut Arrack 5/1/2009 ID Lanka Umar Executive summary A Market plan for ID Lanka’s Old reserve Arrack has been done in the context. The company is a large manufacturer of the Arrack alcoholic beverage in Sri Lanka. Entering the research a global screening and the country selection part is done with the help of many online resources such as; CIA ??? The World Fact Book etc… Adequate justification has been done in order to choose the most preferable target market.
The chosen country, which is Canada the PESTEL analysis has been carried to provide further details of the environmental analysis of the Target Market. A most suitable marketing plan has given in the body of market plan. Most suitable Market Entry Strategy for ID Lanka, at the current position is direct Exporting, which is through a Foreign Freight Forwarders. Analysis and justifications are given in the body. The Marketing Mix strategies are given based upon the company’s willingness and procedures. Part 1 1. 0 Introduction Company Introduction
Old reserve is a product of the ID lanka Limited (www. idl. lk) is the second largest alcohol beverage company in Sri Lanka renowned in the island as one of the highest quality producers. The company was established in 1981 (Contact Information) and currently the company headquarters is situated in Melfort Estate, Kotalawala, Kaduwela, Colombo, SRI LANKA . The company has played a major role in becoming one of the first company in the Spirits Industry in Sri Lanka to be certified to ISO 14001 : 2004 Environmental Management by Societe Generale de Surveillance (SGS), United Kingdom.
ID Lanka has gained a much appreciated reputation in terms of quality which has enabled it to gain a kick start into international recognition. An instance would be producing Smirnoff Vodka under license from one of the world’s leading premium drinks business’s “Diageo” Motive for internationalization (Mission) It is mainly through Culture that alcohol beverages tend to achieve its popularity. Cater towards the Large Sri Lankan community throughout different regions in the world. Achieve international recognition and become the “National” Arrack of the world. ” 2. 0 The product Product Portfolio Current: Old reserve is the highest quality arrack produced in Sri Lanka. It is manufactured at high quality ISO standard distilleries by carefully extracting and distilling the sap of slender coconut palms. The whole process is carried out at a certain level which guarantees product hygiene and quality. Currently no adequate publishing’s have been made to market the product
Proposed plan: Through internationalization, product portfolio would be renewed with the construction of a website dedicated solely towards ID Lanka Products and with a joint venture with the Liquor control Board in Ontario establish an online information hub about the product 3. 0 The market 3. 1 Description of the market In the present day Old reserve is a well known premium brand of arrack consumed mostly by the Sri Lankan recreational enthusiasts. It is one of the most popular alcoholic beverages in SriLanka.
It is not clear as to which precise as to which type of market old reserve caters to, but it’s usually a blend of Loyal, impulse and wandering customers. A large majority would weigh towards the “Need ??? based” where customers go along the patriotic lines, hence consuming something Sri Lankan ,Initiating a self identity of the tropical island or a memory of “Sri lanka” within themselves. Old reserve is widely available in liquor stores, Bars/pubs, Nightclubs and selected restaurants. Description of Proposed Target Market
One of Canada’s fastest growing communities, the Sri Lankan population has been one of the top Ten sources of immigration to this country in through the late 1990’s and in the past few years. Canada is home to the largest Tamil community in the world outside of Sri Lanka. Based on statistical surveys, the state of Ontario seems to contain the largest concentration of Sri Lankans. Sri Lankans are known to be quite patriotically and traditional, studying the lifestyles of Sri Lankans has helped to attain a conclusion that the consumption of Alcohol is more of a social gathering element in Lankan communities, especially Arrack.
Target Market comprises of median age of 35, mainly refugee descends from the war in the early Ninety’s. More than 70 percent of the concentrated Lankan population consists of middle and higher middle income groups. 3. 2 Competitive Market Arrack is taken as a tropical alcohol drink which is quite soother than any other alcohol, It comes under a different subcategory similar to beer, wine and various types of alcohol. Since currently there are no official licensed manufacturers or distributor of Arrack in Canada the competitive market is considered to be null and void.
Hence there is no Direct Competition as all the liquor that is being distributed is performed through the Liquor Control Board of Ontario; Arrack Distributors are nowhere to be found amongs the current distributor. Part 2 2. 1 Country Selection Targeted Countries for internationalization: England Australia Canada Country Selected Country selection is done mainly by monitoring the Sri Lankan population overseas. Through various resources . the following was obtained SriLankan Population in targeted countries
England ??? SriLankan are a minority population with an estimated number of over twenty one thousand in 2001* (Xavier, 2001) Australia – Srilankan’s are a large minority consisting of over sixty two thousand based on 2006 Australian Statistics . * (2008 Australian Bereau of Statistics) Canada ??? Comprising of a large concentration Of Sri Lankans of over Seventy Six thousand just in 2001. When forecasted for 2008 an additional 10 percent increase is estimated. (Association for Canadian Studies, 2005)
Based on the facts acquired through the Census department a conclusion has been reached to estabilish a joint venture towards Canada with the liquor control board of Ontario . As Canada Contains the largest concentration of Srilankans overseas and is one of the fastest growing community in Canada. [pic] 2. 2 Environmental Analysis Selected Country (Canada) would be evaluated under the PESTEL categorization: Sociological: ??? Population of 33,487,208 (July 2009 est. ) including a Sri Lankan concentration of 28 percent amongst the total population. Various Religions, but mainly Roman Catholic and Protestants comprising of more than half of the population. ??? English being the official language and French following through. ??? Ethnicity – British Isles origin 28%, French origin 23%, other European 15%, Amerindian 2%, other, mostly Asian, African, Arab 6%, mixed background 26% Economic situation ??? As an affluent, high-tech industrial society in the trillion-dollar class, Canada resembles the US in its market-oriented economic system, pattern of production, and affluent living standards.
Since World War II, the impressive growth of the manufacturing, mining, and service sectors has transformed the nation from a largely rural economy into one primarily industrial and urban. The 1989 US-Canada Free Trade Agreement (FTA) and the 1994 North American Free Trade Agreement (NAFTA) (which includes Mexico) touched off a dramatic increase in trade and economic integration with the US, its principle trading partner. Canada enjoys a substantial trade surplus with the US, which absorbs nearly 80% of Canadian exports each year.
Canada is the US’s largest foreign supplier of energy, including oil, gas, uranium, and electric power. Given its great natural resources, skilled labor force, and modern capital plant, Canada has enjoyed solid economic growth, and prudent fiscal management has produced consecutive balanced budgets from 1997 to 2007. In 2008, growth slowed sharply as a result of the global economic downturn, US housing slump, plunging auto sector demand, and a drop in world commodity prices. Public finances, too, are set to deteriorate for the first time in a decade.
Tight global credit conditions have further restrained business and housing investment, despite the conservative lending practices and strong capitalization that made Canada’s major banks among the most stable in the world. (CIA, 2009) ??? GDP – per capita (PPP): $39,300 (2008 EST. ) ??? Unemployment rate: 6. 1% (2008 EST. ) ??? Budget: revenues: $608. 3 billion expenditures: $606 billion (2008 EST. ) ??? Fiscal year: 1 April – 31 March ??? Public debt: 62. 3% of GDP (2008 EST. ) ??? Inflation rate (consumer prices):1% (January 2009 EST. ) ??? Exports:$461. billion f. o. b. (2008 est. ) ??? Exports – commodities: motor vehicles and parts, industrial machinery, aircraft, telecommunications equipment; chemicals, plastics, fertilizers; wood pulp, timber, crude petroleum, natural gas, electricity, aluminum ??? Exports – partners: US 78. 9%, UK 2. 8%, China 2. 1% (2007) ??? Imports:$436. 7 billion f. o. b. (2008 est. ) ??? Imports – commodities: machinery and equipment, motor vehicles and parts, crude oil, chemicals, electricity, durable consumer goods ??? Imports – partners: US 54. %, China 9. 4%, Mexico 4. 2% (2007) ??? Exchange rates: Canadian dollars (CAD) per US dollar – 1. 0364 (2008 est. ) Political ??? No war amongst nations ??? Against illicit Drugs – producer of cannabis for the domestic drug market and export to US; use of hydroponics technology permits growers to plant large quantities of high-quality marijuana indoors; increasing ecstasy production, some of which is destined for the US; vulnerable to narcotics money laundering because of its mature financial services sector Taxes and tarrifs
The government of Canada levies various taxes on alcohol beverage products, including: ??? Customs Duty: equivalent to excise duty, levied on alcohol imported into Canada ??? Excise Tax: levied on all alcohol beverage products ??? GST: Goods and Services Tax levied at 5% of retail price ??? Provincial Sales Tax collected on behalf of the provinces The North America Free Trade Agreement (NAFTA) created duty free access for most beverage alcohol products imported into Canada from the U. S. , and as such, the Customs duty does not apply.
The federal excise tax on alcohol, however, is imposed on all products, regardless of origin. As of April 15, 2008, the excise tax for wine is CAD$0. 62/liter, CAD$0. 3122/liter for beer, and CAD$11. 69/liter of pure alcohol (for spirits). Legal aspects ??? Legal system: based on English common law, except in Quebec, where civil law system based on French law prevails; accepts compulsory ICJ jurisdiction with reservations ??? Legal system: based on English common law, except in Quebec, where civil law system based on French law prevails; accepts compulsory ICJ jurisdiction with reservations ??? Executive branch: Head of state: Queen ELIZABETH II (since 6 February 1952); represented by Governor General Michaelle JEAN (since 27 September 2005) head of government: Prime Minister Stephen HARPER (since 6 February 2006) cabinet: Federal Ministry chosen by the prime minister usually from among the members of his own party sitting in Parliament elections: the monarchy is hereditary; governor general appointed by the monarch on the advice of the prime minister for a five-year term; following egislative elections, the leader of the majority party or the leader of the majority coalition in the House of Commons is automatically designated prime minister by the governor general Technological aspect ??? Telephone system: general assessment: excellent service provided by modern technology domestic: domestic satellite system with about 300 earth stations international: country code – 1; submarine cables provide links to the US and Europe; satellite earth stations – 7 (5 Intelsat – 4 Atlantic Ocean and 1 Pacific Ocean, and 2 Intersputnik – Atlantic Ocean region) (2007) ??? Internet users: 28 million (2007) ??? Up-to-date technology and international satellite links allow Maldives to have a sophisticated communications ??? Television broadcast stations: ??? 148 (2007) Cultural Analysis Analyzed using the Hofstedes Concept) (Hofstedes) |Power Distance |Uncertainty |Individualism/ |Masculinity/ |Long-Short- |Primary Language|Distance from | | |Avoidance |Collectivism |Femininity |Term | |English | | | | | |Orientation | | | |80 |20 |38 |53 |- |English |2 | Power Distance:
This is the extent that less powerful members expect and accept un-equal power distribution. There lies a highly centralized and top down control. Uncertainty Avoidance: Predictability of culture values are not towards uncertainty. Uncertainty accepting cultures, are more tolerant of opinions different from what they are used to; they try to have as few rules as possible, and on the philosophical and religious level they are relativist and allow many currents to flow side by side. People within these cultures are more phlegmatic and contemplative, and not expected by their environment to express emotions.
Individualism / Collectivism: Individuality is in a good concern; therefore, each personnel can have their own rights to some extent. Masculinity / Femininity There is quite an equal degree of gender roles. But individually in Maldives context, it’s more towards masculinity. Long-Term / Short-Term Orientation: Canadian businesses are not that long-term oriented since the players in the market are of various nations offering variety of products. Since ID Lanka does indirect export, it would not affect the company much. STP- segmenting, targeting and positioning
Segmentation The Products Segmentation section details the key products provided by this industry, highlighting the most important where possible to demonstrate which have a more significant influence over industry results as a whole. The Major Market Segments section details the key client industries and/or groups as well as giving an indication as to which of these are the most important to the industry. The Industry Concentration section provides an indicator of how much industry revenue is accounted for by the top four players.
The Geographic Spread section provides a guide to the regional share of industry revenue/gross product. Even though Canada is a westernized culture the Sri lankan trends and tradition still exists, Targeting the srilankan Communities flocked together and segmenting the Lankans from the others. Only two segmenting names would be enacted Sri lankans , Non sri lankans Targeting Even though our segmentation is as written above the consumers we are mainly targeting is the Sri Lankan generation who like being in touch with their traditional roots and socializing.
Since Canada is also known as a melting point for different cultures. The cultures surrounding the Sri Lankan’s would be indirectly targeted through the main Sri Lankan Population Positioning The way we are able to position our product is by being able to tie up with the Liqour control board of Ontario which would then distribute to selected Dealers. Since there is no known competition the Product would be placed amongst the Lankans as a traditional tropical retreat ,a product to be consumed on socializing purposes. High Price Low QualityHigh Quality Low Price 1. The market plan 1. 1 Product objective Prove Old reserve’s product value by promising the finest premium Arrack available. No other arrack could be found that could cater to the Sri Lankan community overseas. 1. 2 Product Strategy Packaging ??? 750 ml Bottle of Coconut Arrack ??? Cardboard well designed traditional Box Usage Old reserve Arrack could be consumed in 3 different ways (3jokers) ??? The Classic ( To bring back those Colombo nights) ? Glass Ice 1 shot Old Reserve Top up glass with Coke Rock on ??? Green Tea Reserve ( The best way to get those antioxidants in): ? Glass Ice shot Old reserve Top up glass with Coke Immerse a tea bag of green Tea into glass and allow sitting for 3-5minutes and removing. Enjoy the healthy vibes. ??? Old School( for when you’re feeling like an uncle) ? Glass Ice 1 shot Old Reserve Sip gently and reminisce about the ‘GOOD ol’ Days. 1. 3 Promotion Objectives The purpose of any promotion is to increase customers and create an entertaining and quality experience that brings your customers back. So, the experience created by any promotional effort must be strong enough to stimulate the consumer’s desire to return again.
Our promotion objective is to introduce our brand as a high quality, exclusive Value and uniqueness of our product. ? to maintain brand awareness ? to increase brand loyalty ? to develop memorable advertising ? to widen the range of promotion options 1. 4 Promotion Strategy ??? The product will be available first at selected Pubs and liquor stores only. ??? The product will be made familiar to the culture wrapped around the international Sri Lankan community by regular use ??? Product would be made more attractive by popularizing various Cocktail methods. The roduct is first going to be acquired licensed to be distributed by the liquor control board of Ontario. From there onwards selected pubs and alcohol outlets amidst the Sri Lankan community would be targeted. The product would be then distributed to these outlets by the LCBO (Liqour Control Board Of Ontario), throughout the process mini advertisements would be accompanying to help rise the popularity of the product. All in the entire exporter ID Lanka’s main job is to get the LCBO to be the intermediary between the product and the consumer. 1. 5 Price Objective
Since there is no competitive market , competitive pricing would not be considered but a pricing strategy would be allocated balancing the taxes, tariffs ,manufacturing and logistics costs added up 1. 6 Pricing Strategy Deliberate planning of the pricing structure in relation to factors such as consumer wants, product attributes and competition in such a way as to ensure overall profitability Since the Product is a product of value and tradition it would be based upon a need based product where consumers would want to keep in touch h with their roots. Market Price Analysis Old Reserve Price Details 50 ml bottle ??? 40 $( American dollars) Cost incurred by ID Lanka |Descriptions |Costs | |Total Average Making cost per Product | $100 | |Wastage (damaged goods) |(1% of Total Cost) | |BOI Documentation Cost |$. 3. 50 | |Transport Agent Charge* |$ 200 | * Transportation Agent Charges are inclusive of Import Tax, Gem’s Tax, Handling, & Security charges. . 7 Distribution Objectives In order to transport our unique products to our consumer, we need to choose the best transportation agents to distribute our products to Ontario (Canada). ? to increase product availability ? to improve product delivery times 1. 8 Promotion Strategy A distribution strategy defines how you are going to move products from point of creation to points of consumption in an efficient and cost-effective manner. Transportation Agents will be selected from Sri Lanka and the product will be sent through them to the terminal countries. Some Existing Foreign freight Forwarders are; MA Lanka o Amila Trade o Vrinks Distributors are found to do the marketing in the terminal countries, where they would; ? Inventories sent to the orders only ? After sales services are done by the distributors ? There is a long term relationship with distributors Transportation The products are packaged and labeled ID Lanka in Sri Lanka and then the Transportation Agents are being called to the company for the transfer of goods. These transportation charges will be included in the freight charges taken by the agents. Thereafter, Agents will be sending the products via Air to the destination. . 9 Entry Strategy Beverage alcohol must be imported into Canada through a liquor board or commission in the province where the product will be sold/consumed. Generally speaking, exporters must have their products “listed” by the liquor control agency in each province individually. The liquor board or commission usually serves as the importer of record and along with the registered agent coordinates the importation of the product. In most provinces, it is necessary to have a registered local agent who can assist in obtaining a provincial liquor board listing.
Agents also obtain label approvals and any other issues on behalf of the exporter. Exporters should contact the liquor control agency for the province in which they seek to do business in order to obtain a list of registered agents. To start off in international boundaries, Company intends to first distribute to Well known Night clubs, pubs and selected Liquor stores within a populated Sri Lankan Community . To attract the popularity in order to generate a push start a publicity stunt would have to be considered within the Lankan community.
The product would be first exported and licensed according to the L iquor control board of Ontario (LCBO). Since ID Lanka. has existing contacts with domestic transport agents(MA Lanka, Amila Trade, Vrinks), the best market entry strategy is for the ID Lanka is Indirect Exporting through Indirect agents called as foreign freight forwarders who simply manage overseas shipments of goods to foreign ports in return for a fee or product discount. Their responsibility is to deliver the product safely to the foreign buyer, where the importer will handle the custom of Canada. Type of duties |Foreign Freight forwarders | |Booking space with the carrier |Yes | |Completing export documentation |Yes | |Arranging for cargo insurance |Yes | |Advising on foreign import regulations |Yes | |Providing guidance on packaging, marking, and labeling |No | |Export clearance |Yes | |Extend to promotion and selling effort |Nil | Freight Foreign Forwarders for ID Lanka. o Even though ID Lanka. is a large scaled company, the involvement of risk level is very high for them to go for other exporting strategies. (Foreign production, direct investment, franchises etc. ) o The agent fee is very low compared to the profit potential of the exports. o HR, Capital and time required for other direct export strategies are very high. Implementation and control 6 Month Budget start 2009 Dec Net Sales |?? |$600,000 | |Cost Of Goods Sold: |?? |?? | |?? ?? ??Beginning inventory |($?? 35,000) |?? | |?? ?? ??Merchandise purchases |($130,000) |?? | |?? ?? ??Freight |($?? 20,000) |?? | |Cost Of Goods Available For Sale |?? |$355,000 | |?? ?? ??Less ending inventory |($?? 60,000) |?? | |Cost Of Goods Sold |?? |($140,000) | |GROSS MARGIN |?? |$ ??215,000 | |Selling, administrative, and general |?? |?? | |expenses: | | | |?? ?? ??Other Expenses |($ ?? ??2,000) |?? | |?? ?? ??State and local taxes and licenses |( $ ?? ??11,000) |?? | |Total selling, administrative, and general |?? |($?? 8,500) | |expenses | | | |Profit From Operations |?? |$?? 42,000 | |?? ?? ??Other income | $ ?? ??20,000 |?? | |?? ?? ??Other expense |($ ?? ?? ?? 300) |?? | |Net Profit Before Taxes |?? |$?? 19,710 | |?? ?? ??Provision for income tax |($?? 9000) |?? | |NET PROFIT AFTER INCOME TAX |?? |$246200 | Bibliography (n. d. ). Retrieved from Liqour Control Board of Ontario: Liqour Control Board of Ontario 2008, A. B. The People of Australia : Statistics from the 2006 Census. Association for Canadian Studies. (2005). Immigrant Statistics. Xavier, S. (2001). The UK ethnic population in April 2001. ONS. Contact Information. n. d. ). Retrieved from Trade India: http://www. tradeindia. com/Buyer-1441366-1631420-396-BRANDING/Alcohol/I-D-Lanka-Limited. html Smirnoff Vodka Invest in Lanka. (n. d. ). Retrieved from Asian Tribune: http://www. asiantribune. com/oldsite/show_news. php? id=15230 Gunasekera. , M. M. (2007). Global Impact on ID Lanka. CIA. (2009, april 23). CIA the World Factbook. 3jokers. (n. d. ). Cocktail Methods. Retrieved from Are you Reserved? : http://3jokers. com. au/ Hofstedes, G. (n. d. ). Geert Hofstede’s Homepage. Retrieved from Geert Hofstedes: http://stuwww. uvt. nl/~csmeets/ ———————– Thousand (s) International Marketing MKT 404