Global Marketing - Future Dynamics

Executive Summary of Fonterra Group (Kapiti Cheese)

The report deals with launching Kapiti cheese in Japan. It requires selecting proper policy decisions, channel decisions, and pricing issues and decisions. The Fonterra group has decided to introduce Kapiti cheeses in Japan. It is highly essential for the company to choose the right pricing, promotional, and distribution channel in order to become successful in Japan. In addition, Japan is the most suitable target market for Kapiti cheese. The main reason for choosing Japan as the target market is that its consumption of cheese in Japan is less than 5 pounds in a year and the annual consumption is increasing day by day. The country can provide immense opportunities for further growth and development.

 It has been concluded from the overall analysis that Japanese customers are slightly different so it is necessary to design effective marketing strategies that can capture their attention. Furthermore, the Fonterra group will use a product adaptation strategy in order to make any adjustments in the existing product (Kapiti cheese). In addition, convenience stores will be used by the company to sell directly to the customers. The analysis revealed that currency fluctuations may affect the profitability and success of the company. However, the inflation rate is low in the country. The analysis specified that soft-sell advertising will be used to capture the market share in the most effective manner.

Contents

Introduction.

Product policy decisions:

Extension strategy.

Adaptation strategy.

Channel decision.

Retailers.

Manufacturing importers.

Pricing issues and decisions.

Currency fluctuations and inflationary environment.

Government control and subsides.

Competitive behavior.

Promotional strategy and issue.

Promotional strategy.

Introduction to Fonterra Group (Kapiti Cheese)

The consumption of cheese in Japan is less than 5 pounds in a year. It was expected that cheese consumption will rise by two percent in the year 2016. The people of Japan are shifting towards the modernized culture therefore the consumption of cheese has increased in Japan. This increase is around 5 percent on a year to year basis as per the data from the government. Therefore there is a rise in the cheese factories in the country. The price of the raw milk which is the main ingredient for the cheese has also increased. The report deals with launching Kapiti cheese in Japan. It requires selecting proper policy decisions, channel decisions, and pricing issues and decisions. The particular report will focus on designing a global marketing mix strategy to introduce Kapiti cheese in Japan.

Product Policy Decisions of Fonterra Group (Kapiti Cheese):

Extension Strategy of Fonterra Group (Kapiti Cheese)

The extension strategy focuses on adopting a similar product or communication strategy used in the home marketplace to their overseas market. The extension strategy is used to augment market share for given manufactured goods or services. The extension strategy includes rebranding and seeking new markets (Steenkamp, 2017). Because of the dissimilarity in cultural and aggressive setting, frequently the similar product is used to present benefits or utility those severely vary from those in the home marketplace. This dissimilarity between international and domestic market drive corporation to promote a similar product using a modified advertising campaign.

One of the main advantages of the extension strategy is that it helps to increase the market share and saved the cost of developing a new product.

However, brand extension in unrelated markets may lead to a loss of reliability.

Adaptation Strategy of Fonterra Group (Kapiti Cheese)

The strategy assists to cater to the needs and requirements of the overseas customers. Furthermore, firms adopt this strategy but market it using a uniform communication strategy (Kwon, Lee & Kim, 2018). With the help of this strategy, effective market ideas can be conveyed from one nation to another. In this strategy, the core brand value remains the same and the communication approach and advertisement are very alike in each market.

For Kapiti cheese, product adaptation strategy would be useful. Furthermore, the strategy focuses on fulfilling the needs and requirements of a specific population. The evidence also specified that cheese imports into Japan have been increasing since 2014. This also indicates that country needs a high amount of high-quality cheese in order to fulfill the existing demand of customers (Anusha, 2016). Furthermore, the per capita consumption of cheese has increased in the country which may provide a competitive advantage to the Fonterra group. The strategy can also help in making adjustments in the products and their properties in order to capture the foreign market. With the help of an adaption strategy, the company can make an effective suitable change in packaging, size, and symbols. However, a large amount of capital and experience is required to implement the strategy in the most effective manner.

Channel Decision of Fonterra Group (Kapiti Cheese)

Retailers

There are different kinds of retail channels including department stores, chain stores, discount houses, and nonstore retailing. It is also necessary to choose the most suitable channel in order to sell the product directly to the customer. Furthermore, the rapid development of convenience stores is a new and successful type of retailing in Japan. In today’s scenario, convenience stores have a stable position in the Japanese market (Korany, 2019). The consumers have also adopted this form of distribution in the country. This form of retail channel is effective as it helps to fulfill the current demands of the customers in the most effective manner.

The Japanese market is an indigenous type of distribution channel which frequently disfavors international companies because of lawful obstacle or the channel member association with Japanese firms. The distribution channel of japan is complicated, lengthy, and involves numerous middlemen like wholesalers, manufacturers, importers, and retailers (Venaik & Midgley, 2019). Furthermore, there is a high dominance of wholesalers in the country. It is also necessary to understand that Japanese retailers purchase 92 percent of their merchandise from wholesalers.

The evidence specified that it is necessary for the Fonterra group to align itself with the web of wholesale network. The main reason for selecting a wholesale network of distribution is that it helps to keep a steady supply to a trader who typically orders in a smaller amount.

Manufacturing Importers

Manufacturing importers mean a person who manufactures goods and simply sells to the network of regional distributors or wholesalers.

Pricing Issues and Decisions of Fonterra Group (Kapiti Cheese)

Currency Fluctuations and Inflationary Environment

Currency fluctuations are an expected result of the floating exchange rate system, which is the standard for the majority main economies. Usually, a weaker currency stimulates export and make imports costly, therefore declining the country's trade shortage depending on the sector. Constant currency fluctuations can also distress the market unfavorably, causing it to turn out to be unpredictable, and disturbing both local and foreign deals. Inflation affects imports and exports mainly through their impact on the exchange rate (Ghuman & Merchant, 2018). Elevated price increases usually lead to higher interest rates and this results in a weaker currency. However, in the current scenario, the inflation rate of Japan has reduced by 0.6%. Furthermore, an inflationary environment highly affects the profit margins of new players.

It is highly essential to understand and study the environment in order to launch the product at the right time. Japan’s Exchange Rate against AUD averaged 71.680 (JPY/AUD) in Apr 2020, compared with 69.569 JPY/AUD in the previous month.

Japan's customer price inflation stays unaffected at 0.4 percent in March 2020. Still, it was the smallest possible inflation ever since last October. The yearly core inflation rate, which excludes fresh foodstuff, stays unaffected at 0.6 percent and well underneath the Bank of Japan's 2% target (Ito, Koibuchi, Sato & Shimizu, 2018). In addition, inflation requires periodic price adjustments.

Government Control and Subsides

Pricing decisions are influenced by central and state policy. Regulations are intended to guard customers, encourage competition, and support moral and fair performance by businesses. 

Government actions limit the freedom of management to regulate prices and the preservation of margins is absolutely comprised. Furthermore, government subsidy can also pressurize a business to make strategic use of sourcing to be cost-competitive (Schlegelmilch, 2016). However, the Fonterra group cannot put its price procedure against the regulations and system set by the government. Furthermore, the leaders must set the price within the limit of lawful structure to evade needless intervention from the outside. Sufficient information on these provisions is necessary for any organization.

Competitive Behavior

If a competitor does not adjust their price in response to increasing cost, the margins of the new players will e severely affected. Because companies desire to set up and uphold loyal clients, they will frequently match their opponent prices. Also, if one corporation presents free shipping, customers might determine other companies will offer the same (Keegan, 2017). With so many merchandises sell online, customers can evaluate the cost of many merchants before making a buying decision. The availability of substitute merchandise influence a company’s pricing choice as well. 

Promotional Strategy and Issue of Fonterra Group (Kapiti Cheese)

When exporting foodstuff merchandise, the exporter must be conscious of import actions, rule, and managerial forms, in order to ease this procedure. The Japanese authorities have developed numerous systems concerning a variety of facets of food exportation (such as wrapping and containers, food additives, biotech events, pesticide, and other contaminants, etc.) which must be obeyed with.

Bureaucracy is a widespread topic in Japan, and once legalized to enter, starting up and running a corporation can be endlessly affected by the policy (Steenkamp, 2017). Registering and building company structure and workspaces can be one of the primary problems for the executive. It can take commerce an average of 193 days to be approved construction sanction. Japan is a market economy in which the price of merchandise and services are determined in a liberated price system and has a structure of civil law. Japan’s Trade Policy agency is vigorously implementing including domestic and external financial policies intend at preserving the conventional world free trade system and to generate a business setting in which Japan’s financial growth is sustainable and producing high value-added.

Rigid import quota on certain merchandise including wheat, barley, starches, peanuts, dairy products was replaced by tariff-rate quota.

Overseas organizations increasing into Japan face numerous issues when executing a compliance agenda in the country. These major challenges are:

  • understanding the authoritarian surroundings and threat
  • educating home employees on the international anti-corruption regulation that may apply to them
  • efficiently communicating the significance and worth of compliance with local personnel
  • Checking the efficiency of the compliance program and reporting on its development.

Promotional Strategy of Fonterra Group (Kapiti Cheese)

Fonterra group will also collaborate with local companies and retailers in order to promote Kapiti cheese. Furthermore, ‘Soft-sell’ appeals, by all accounts, appear to be the method of advertising that can be used by the company to attract and capture the attention of Japanese customers. In addition, image and theme-based messages will use in the promotion of new products. Furthermore, this type of advertising sales approach includes delicate language and a non-aggressive method (Moriuchi & Takahashi, 2016). A soft sell is intended to evade annoy probable customers and pushing them away. The rationale is that the choices to buy something depending upon the client’s judgment. Furthermore, traditional methods including television commercials and trade shows can be used to capture the attention of customers in the most effective manner.

Reference for Global Marketing - Future Dynamics

Anusha, K. S. (2016). Brand a marketing mix: a review. Journal of Global Economics4(3), 1-4.

Distribution channels in Japan: Challenges and opportunities for the Japanese market entry | Emerald Insight. Emerald.com. (2020). Retrieved 13 May 2020, from https://www.emerald.com/insight/content/doi/10.1108/09600039610150433/full/html.

Ghuman, K., & Merchant, H. (2018). Reconfiguring the Marketing Mix to Counter the Counterfeits in the Global Arena. In Emerging Issues in Global Marketing (pp. 179-204). Springer, Cham.

Huysveld, P. (2017). Mastering Japan Business (Vol. 5). Philippe Huysveld-GBMC.

Ito, T., Koibuchi, S., Sato, K., & Shimizu, J. (2018). Managing currency risk: How japanese firms choose invoicing currency. Edward Elgar Publishing.

Japan Inflation Rate | 1958-2020 Data | 2021-2022 Forecast | Calendar | Historical. Tradingeconomics.com. (2020). Retrieved 13 May 2020, from https://tradingeconomics.com/japan/inflation-cpi.

Keegan, W. J. (2017). Global marketing management. Pearson India.

Korany, B. (2019). How foreign policy decisions are made in the Third World: a comparative analysis. Routledge.

Kwon, W., Lee, H. W., & Kim, Y. (2018). Global marketing of Formula One: Local variations and geocentric marketing mix. International Journal of Applied Sports Sciences30(2).

Moriuchi, E., & Takahashi, I. (2016). Satisfaction trust and loyalty of repeat online consumer within the Japanese online supermarket trade. Australasian Marketing Journal (AMJ)24(2), 146-156.

Schlegelmilch, B. B. (2016). Global marketing strategy. Cham: Springer Nature.

Steenkamp, J. B. (2017). Global Marketing Mix Decisions: Global Integration, Not Standardization. In Global Brand Strategy (pp. 75-109). Palgrave Macmillan, London.

Steenkamp, J. B. (2017). Global brand strategy: World-wise marketing in the age of branding. Springer.

Venaik, S., & Midgley, D. F. (2019). Archetypes of marketing mix standardization-adaptation in MNC subsidiaries. European Journal of Marketing.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Global Marketing - Future Dynamics Assignment Help

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