Good Example Of Market Overview & Potential Report

Type of paper: Report

Topic: Business, Company, Brazil, Products, Market, Politics, Potato, Customers

Pages: 8

Words: 2200

Published: 2023/04/10

International Marketing Plan of Burts Potato Chips

Executive Summary
The globalization has changed the face of the international business, and the companies are now expanding their operations to more than one country so that they can tap untapped segments to increase profitability. Some of the benefits of the international expansion into emerging economies are a large base of potential customers, decreased costs and economies of scale due to large operational capacities. Burts Chips is also planning to achieve these benefits of international expansion by expanding the operations to Brazil. This document provides detailed insights into the economy of the Brazil and suggests suitable entry method along with a well-drafted marketing plan to ensure success through international expansion.

Introduction

Burt Potato Chips is an English company based in Dave, United Kingdom. The company was formed in 1995 and provides hand cooked potato chips to the end consumers. The company is serving the consumers for more than 20 years now and never compromises on quality and its values. The basic operational values of the company are to source fresh potatoes and then cut them thick for cooking. The chips are hand cooked in fresh oil in small batches. The cooked chips are seasoned with natural flavors to serve the taste buds of the consumers. The flavors are often sourced from the local sources. The value chain of the company aims at delivering fresh hand cooked potato chips seasoned in various natural flavors. The company is successful in capturing a market in the United Kingdom. However, the management wants to take the edge of the growing globalization trend and emerging economies. Therefore, they focus on expanding the consumer base to the other growing potential markets. For this purpose, the management aims to internationalize initially with the potato chips to the Brazilian market. The environmental analysis of the chosen country stating the attractiveness of the market with a suitable entry mode is described in the coming sections.

Internal Analysis

2.1 Values of the Firm
The operations of the company are by the values of the company that they have formed over the years. These values in one line are Authentic, Uncompromising, Proud and Courageous taste. Burts Chips uses authentic raw materials for tailoring the chips to satisfy the taste buds of the valued customers. They stick to their values to bring best out of their products. They are using authentic spices from Devon and Chorizo from Topsham and all the other materials from the local suppliers to ensure the local taste for the local masses.
2.2 Core Competency
The core competency of Burts Chips is their value for the local sources and the hand-cooked potato chips. The chips offered to the customers are thick and hand cooked. These competencies define their Unique Selling Proposition (USP) as well (Vergnault, 2014).
2.3 Capital Analysis
The capital analysis of the Burts Potato Chips shows that it is a private company with share capital. The company has a total of 101 employees working at its payroll. These employees include all the workforce of the company including fryers, directors, managers and the sales force. The total turnover of the company according to the financial statements of year end 2014 was 15,499,890GBP. The total assets of the company amount to 8,774,638GBP. The tangible assets are valued at 3,589,543GBP while the intangible assets have a value of 10,431 GBP. The inventory or the stocks show a value of 1,209,169 GBP. The total current liabilities of the company during this year were valued at 7,313,152 GBP. The company has total liabilities of 10,873,935 GBP. The total liabilities are far more than the total assets and show that the debt to equity ratio of the company is higher than 100% and has a value near 123.54%.
2.4 Accounting Analysis
The accounting analysis of the firm as per year end report of 2014 show that company is showing deficit and the profitability is declining when compared with the financial statements of the previous years. The total cost of the sales and the gross profit for this year remained at 11,580,586 GBP and 3,919,304 GBP respectively. The post-tax profit shows a negative value that is interpreted as the loss. The value of the deficit was -445,147 GBP. The profits were retained and no dividends were paid to the shareholders. The income statements reflect the negative trends in the performance of the company and increased operational expenses. These financial statements show a loss and the value of the return on investment (ROI) stands at -32%. The firm has high debt to equity ratio that shows a high credit risk. The payments to the debtors are already pending and delayed. The conditions suggest that company need to cut its operational expenses to increase profitability.

The US-style chips and the UK-style chips both belong to the fast food industry. The growth rates of the chained bakery products are attractive. There are new entrants and new players in the given category in the following year. The famous example can be related to the spread of the Quiznos that is an international chain of bakeries in the Brazil. Initially, it was working in sandwich specialties in Brazil in 2011 and later by expanding product mixed its spreader to 21 localities in 2013. The Brazil has been witnessing the proliferation of the food industries at a rapid pace. The demand for the conventional food has risen in the country due to the tight schedules of the busy routine of the consumers. The necessary expansion of the businesses is among the metropolitan areas. Most of the businesses prefer to have franchises in the fields. The trend of franchises becomes common in Brazil after the fiscal year of 2012. The fast food industry of the Brazil has been developed rapidly at a quick pace. It indicated that there was much potential for expansion for the potato chips market in the Brazilian markets (O’Connell, 2004).
The most popular snacks in the country are of the similar taste and nature to that of the Burt Potato Chips. For instance, Batata Palha and Salgadinhos are typical examples with which each Brazilian grew up with. The Salgadinhos is the Brazilian chips that were common when Doritos, Waffles, and Cheetos took over the market. Similarly, Batata Palha is the fried potato sticks of the slick slimmer version. However, in addition to it, the chips industry of the Brazil has many other local snacks included such as Polvilho, Biscoito, Pipoca de Arroz, Passatempo, etc (Coopers, 2005). It is elucidating that the potato chips are the most favorite snacks of the target audience in the country. Along with it, the demand for the frozen products and ready to use products is high. These products mostly include the French fries, potato chips, etc. The request regarding the food that can be consumed outside the house during working hours is preferred. The leading fast food dealers around the globe have announced to invest in the Brazilian market for the coming year up to 2017. The new stores have been opened in the big cities of the country that enhanced the significant of the market of the region. According to the reports of the ABF, the more than 60 percent of the chains of the food services are concentrated in the southern region. It indicates that there are potential resources and chances available for other localities to grow in this industry. The Brazilian French fries and potato chips market have an extensive preceding growth witnessed around the globe in the coming years. There is brilliant future of the potato chips in the Brazilian market that automate the development of the company as well in the region (Jadhav, 2012).

Environmental Analysis

4.1 Political Environment
In Brazil, the political environment is rather stable and consistent. The federal body is elucidated to be the independent operating unit. It has three branches that work under the independent federal unit. These branches are named as judicial, legislative and executive. The executive branch has been headed by the President of the state. The president is also responsible for overseeing the matters of the departments of the executive branch. A cabinet has been created under the branch of executives where the heads have been appointed as the member of the cabinet. The cabinet is controlled by the President as well as other executive units. The political structure of Brazil is unlike the various parliamentary democracies where the members of the cabinet have no compulsion to be the part of the judicial system as well. Many independent agencies are working beside the executive department. Most of them are of regulatory nature. There are two types of courts working in the judicial system of the country (Jose et al, 2014). The federal courts of the country are under the supervision of the constitutional law. However, the supreme decision power lies with the Supreme Court, whose decisions cannot be challenged any further. There are many lower level federal courts. These courts are operative under the laws of constitutionality. The decisions of such courts can be a challenge in the Supreme Court, whose decision can be the final one (Business, 2013).
Similar to it, the government is following the pattern of the above mention judicial system for the regulation of the rules within the states. The municipal and state courts are independent authorities. They do not fall under the supremacy of the federal courts. The federal government pattern has been followed to operate the state and municipal courts by the government. Conclusively it can be told that the power has been distributed among the branches of the state judicial system, legislative system, and executive system (Beath et al, 2008).
4.2 Economic Environment
The economy of the Brazil is stable and growing in nature. It is regarded as one of the biggest economies in the world. In the ranking among the most economic countries, Brazil's economy is ranked at seventh position. The economy of the Brazil was depreciating in the previous century. But the privatization of the telecommunication sector of the Brazil stabilized the economy and proved as the milestone in the history. In addition to the privatization of the telecommunication companies, the state privatizes various companies of different sectors to improve the economic condition. In the uprising of the economy of the country, various factors are involved such as state factors and semi-state factors. The basic key to the economy of the Brazil is agriculture sector and the availability of the abundant natural resources. The units of utilities and the transport are also included in the success of the economy. In the early 1960s, the government provided easy loans and heavy investments to boost the industrial sector. The industrial sector's growth was dependent on the agriculture. The growth in the agriculture and industrial sector, the exports of the manufactured goods and the commodities was enhanced. In the 1970s, the imports were banned due to the scarcity of the foreign exchange (Young, 2015). However, the decrease in the trading barriers has enhanced the situation and globalization made it easy to develop global free markets for the enrichment of the trading activities. The northern areas of the Brazil are enriched in the agricultural activities that are providing raw material to industries. However, the southern area has converted to the industrial zone. So the region is providing the opportunities to the foreign investors to increase the job opportunities and stabilizing the economy of the country. The economic conditions are favorable for the industrial units and organizations. It provides the human resources, raw material and potential market to businesses with greater profit margins (Asiedu, 2006).
4.3 Legal Environment
The legal environment of the country is not stable. The source of the Brazilian civil law is the Civil Code. The Civil Code was dated back to 2002. The legal system is not efficient enough and is unable to manage the legal matters involves. In the initial years, there were no imports due to the heavy taxes and tariff burdens. All the imports and exports are handled by the department of the foreign trade namely BCB. The provided trade barriers were introduced to promote and develop the local industry of the Brazil. The contemporary condition is very favorable for the companies like the given one related to the food industry because the trade barriers have been decreased to a minimum (Czinkota & Ronkainen, 2012).
4.4 Social Environment
The social environment of the Brazil is favorable for the given company and its products. The population of Brazil has been increasing the growth rate of 1.17 percent per year. According to the reports, the population of Brazil has reached to the 194 million in the year 2012. The eating habit of the population is built up for the snacks and the junk food. The products offered by the organization are socially desired and are used by most of the consumers. There are economic disparity and inequality within the population, where approximately 20 percent of the population lived under the poverty line. There is disparity among the states. The most populous state in Brazil is Sao Paulo, so it has more business opportunities for the organizations. The Gerais is also the second largest state regarding population. The companies have opportunities for the potential markets of these states. The citizens have healthy habits for the ready food considerably. However, there is a huge segment of the population who has minimal income and does not fall in the target audience for the businesses. The Brazil has the advantage that it has the up to date fashion industry and brand industry. The people are keen on buying the luxurious and expensive products. So the country's social environment is accepting the businesses of all sorts with greater profit margins (Koh & Wong, 2015).
4.5 Technological Environment
The country is focusing on the development of the technology-rich environment within the industry. The efforts have been initialized to promote the technology. However, the technological environment in the country is weaker as compared to the technological soundness of United States, Russia, and the United Kingdom. Apart from it, the Brazil still scored 53rd rank among the lists of the countries who are working in the achievement of the sound technological infrastructure of the industry. The government has been focusing on the national interest that aligns with the development of the technology. The local governmental policies are on run for the promotion of the new techniques. The funds have been imbruing to introduce technology-based systems among the organizations in the country. The efforts have been made to put in effect the technological advancements (Kuntz et al, 2012).
4.6 Taxation Policy
The taxation policy of the Brazil is favorable for the promotion of the local industry and local businesses. The taxation policy is not favorable for the foreign investment. The foreigner investors have to pay the taxes as the local businesses have to pay. The federal taxes are also the hindering factor. The taxation policy is appeared to be biased for the foreign investments. However, the foreign investors are entitled to the benefits that the local investors have, so it goes in the favor. Apart from it, the municipal parties and states actively seek the foreign investments. The companies planning to invest in the Brazilian market finds it attractive and profitable. The foreign investors have various sources of attraction such as cheap raw material and abundant of the low-wage human resource. The natural resources are also one of the favorable elements for the foreign investors. The joint ventures are also appreciated within the country. The imposed trade barriers are now at rest by the government. It is good for the businesses to go for Brazilian markets (Mayhew et al, 2015).

SWOT Analysis

The SWOT analysis of the company is given in detail in this section
5.1 Strengths

The main strengths of the company are:

Perfect Branding and Advertising: The Company uses the practices to position itself as a true manifestation of its brand image. The unique selling proposition of the company is its thick potato chips that are cooked by the fryers and are not processed in automated machines. This USP of the brand is printed on the wrappers and packages. Moreover, the company uses extensive and innovative advertisement strategies. It is exploiting the internet as well and taking full advantage of the dot-com revolution. The website of the company is updated and tells the masses about the available flavors specialties and current happenings (Papadopoulos & Heslop, 2014)
Great Variety of Flavors: Burt potato chips offer a wide variety of flavors to suit the customer’s tastes. The flavors offered are not synthetic like the other brands. They are sourced from the local natural sources. The company is not only offering broader choice, but the unique flavors seasoned naturally (Berry, Whybark & Jacobs, 2005)
Reasonable Pricing: The prices of the company products are reasonable and are slightly less than the other competitors in the market like Lays and Bingo. The less than competition prices drive the impulse buying behavior in the customers (Paliwoda & Thomas, 2014).
5.2 Weaknesses

The weaknesses of the company are explained below

Growing Health Concerns: The health conscious people do not like the potato chips. The growing health problems and increasing awareness regarding fitness and lifestyle have raised concerns for the entire potato chips producers in general and Burt Chips in specific. There is another drawback in the packaging of the company products that it does not mention the nutritional value of its packages. Therefore, the conscious people may avoid the products (Sheth, 2011).
Brand Switching of the Consumers: The potato chips involve less consumer involvement. According to the decision-making framework, the brand switching is higher when the consumer involvement is less. Therefore, it is a weakness for the company that despite the perfect branding activities the brand switching is more. It implies that the brand loyalty is low (Terpstra, Foley & Sarathy, 2012).
5.3 Opportunities
There are many potential opportunities for the company to leverage the weaknesses. One of the opportunities is to expand the distribution and the operations to the other geographical areas to increase the customer base. The company should focus on the other media channels for the promotion of its products. These channels include TV commercials and print media. The presence of these media will increase the brand awareness and decrease the brand switching. Moreover, the business should strengthen ties with the local partners in the global market to buy out the competition. The firm is already using this practice and has partners mentioned on the website as well. However, the business should focus on partnering with businesses in related sectors like hotels, clubs, and bars. It will lead to synergies and increased customer reach (Teixeira et al, 2015).
5.4 Threats
The main threat to the business is the intensive competition in the market. The other competitors are using automated machinery and plant in their production. Therefore, they enjoy economies of scale and extensive production that Burt Chips lack due to reliance on the fryers. The snack players from the local market also serve as substitute products and act as a threat to the business. Moreover, the consumer demand is shifting towards the healthy food and healthy products. The potato chips are considered to raise the cholesterol and obesity. Therefore, this trend is also a threat to the products (Yokoyama, da Silva & Piato, 2014).

Marketing Objectives

The SMART marketing objectives of the firm for the first two years are given below:
6.1 Segmentation
The segmentation is the market division of the homogenous groups within the market. The primary target segment for the Burt Chips is the Brazilian Hispanics. The product of the company is sold to the Hispanic before other target groups in the Brazilian market. The roots for the Burt Potato Chips are English in nature. It is the reason that the organization prefers to expand in the Brazilian market rather than any other. The Hispanic in Brazil has a high demand for the snacks. Owing to it, the company namely Burt Chips prefer the target audience with high product-specific demand. However, the primary reason for segmenting the marketing related targeted audience is to penetrate into new sectors for diversification especially among teenagers. The Hispanic population has been demanding the spicy and boldly flavored snacks. The snack purchasing decisions are highly related to the kids. The newly emerging y generation has busy daily life, and they prefer the ready and instant food. The lifestyles of the generation are set for the snacks and junk food and all the purchasing power lie with that segment of the population for the product of the Burt Chips. The organization is one of the leading players in the dip market. Apart from it, the increase of the competitors, the company has decided to move to the vegetable dip segment along with the current division. It improves the product mix of the enterprise and provides the new section of the shelf stable sour cream dips with the primary product of chips. The portion of the chips dips is in the maturity stage of the product lifecycle. So the company has to focus on new products to retain the position in the market of the Brazil (Snow & Hrebiniak, 1980).
6.2 Targeting
The targeting is elucidating the audience for whom the product has been marketed to increase the likelihood of the target audience. From the above discussion, it can be seen that the primary target audience of the organization is the Hispanic population of Brazil. It is further extending the segment to the X generation and Y generation for diversity. The target audience base of the Burt Chips has been widened with the effort. The teenagers are also one of the considerable amounts of the purchasers of the products of the company. However, this segment of the target audience is very particular in the value of the money. So the company can make a considerable effort for the expansion of the target audience to achieve more return. Therefore, the firm will go differentiated marketing mix to cater to the needs of the both these target segments.
6.3 Positioning
The positioning is reflecting the building of the image of the product and the company in them the mind of the target audience. The spicy and bold taste of the Burt Chips accompanied with the flavor, crunch, and exceptional taste is one of the value propositions for the brand image. The well-developed product mix of the organization can be used to position the picture among the users. The image of the brand can be enhanced with the bold flavor collection. The marketing team needs to develop the innovative campaigns consistently for the positioning of the product image from time to time. It is crucial for the sustainability of the product.

Entry Method

The suitable entry mode for Burt Chips is a direct investment into the local economy of Brazil. They should acquire a production facility in the country so that the internalizing may give them maximum control. In this way, the business will be able to withstand competition from the other players in the market by offering a competitive price and fresh quality. The business will be able to maintain its USP of providing thick hand cooked chips seasoned into the local flavors. The flavors, spices, and potatoes will be sourced from the local providers that will help in maintaining a low cost. The exporting is not feasible in the case of consumer products as Brazil has import restrictions to support local industry. However, direct investment is favored as well. There are many areas particularly in the north of the country where industrial facilities can be set up with lower cost. The labor is abundantly available as well. However, the business will have to train the workforce for the labor in Brazil is mostly semi-skilled. Another benefit of direct investment in Brazil is that it gives the products of Burt Chips reach to the neighboring countries of South America like Peru. These small countries have low trade and import restrictions. Having a local production facility in Brazil makes exporting easier for these countries (Armstrong & Baron, 2000).

Marketing Mix

The marketing mix of the company for Brazilian market is explained below
8.1 Product
The product part of the marketing mix will contain the potato chips in the flavors Spicy Chorizo and the Sea Salt. The Spicy Chorizos to cater to the taste of the young Hispanics and the Sea Salt for the generation Y of the Hispanics residing in Brazil. There will be other flavors offered namely Vintage Cheddar, Malted Vinegar, Thai Sweet Chili and the Devon Roast Beef
The other important part of the product is packaging. The packaging of all the flavors will show the nutritional value in grams mentioned on it. It will specifically have information regarding fats and carbohydrates so that the information flow is proper and stigmas held with the potato chips are minimized. The packaging will also show brief recipe of the chips. The recipe part will mention the flavor name along with the added natural and synthetic preservatives used if any. The packaging will be printed with local language Spanish (Olins, 2014). It will also show all the information in English so that the communication process becomes efficient and helps the local Hispanics as well as foreign tourists to understand the message printed on the packaging (Bickhoff, Hollensen & Opresnik, 2014). The product packages will show sizes in Oz, and two servings in 7.0 Oz and 13 Oz respectively will be offered.
8.2 Price
Burt Chips will use penetration pricing technique to penetrate into the new market. Initially, the prices will be kept lower than the market average and competitors so that impulse buying benefits are also achieved (Calof & Beamish, 1995). Higher sales volumes will offset the lower prices. The company will enter the market with direct investment to keep the costs lower so that lower prices can be offered at the entry level. The introductory prices for the 7.0 Oz and 13.0 Oz servings will be 1.92 R$ and 3.2 R$ respectively. However, after the two years of the operations, the competitive market prices will be charged (Abbott, Parker & Peters, 2012).
8.3 Place
The place refers to the physical selling point of the product. The products of the Brut Chips will be available at all the superstores, convenience stores, cinemas, bars, theaters and the gas stations through the extensive distribution network. Intermediaries will be involved to cover the extensive geographical areas. These intermediaries will be the retailers and the distributors. These distributors will ensure the product reach to the customers at all the places mentioned above. The logistics services will be outsourced to the third party vendors so that the company may focus on its core competencies and the cost can be minimized. The extensive distribution network may increase the control of the intermediaries. However, it will also help to reduce the cost as the inventory holding and storage cost will be reduced (Han, Lerner & Keltner, 2007).
8.4 Promotion
It is the most important element of the marketing mix that defines the success of any business. The marketing objectives of the Brut Chips are directly related to the promotional activities. Therefore, extensive promotion activities at the entry stage will be carried out. For that special budget combined with 3% of the annual sales will be dedicated to the promotional activities. The main focus will be on advertising so that the company may reach the potential customers and communicate the product message to them. The young Hispanic population spends more time on the internet as well as digital channels. Therefore, the digital channels will be employed in advertising efforts. These channels will include TV and the internet. The company website with a local domain name will serve the purpose of advertising as well as product information gathering. The company will list all the available products with complete product messages on the website. Moreover, social media presence will also be ensured through the use of Facebook, Twitter, and Instagram (Solomon et al, 2014).
Moreover, to reach Generation Y the channels with increased reach to the corporate people will be employed for advertising. Print media predominantly has more reach to the generation Y in the country. Therefore, print ads in the daily newspapers will be published. The websites of these newspapers will also show electronic ads of the product. These advertising activities will be outsourced to the external media agencies (Blomstermo & Sharma, 2003).
Similarly, to reach walk in customers, the point of sale advertisement (POS) will be used. 1% of the annual sales will be dedicated to the POS advertising. The POS advertisement will make it easier for the customers entering the super stores to identify the racks of the Burts products from a distance.

Conclusion & Recommendations

The crux of the whole discussion is that the Burts Chips is leading hand cooked potato chips provider in the UK. The business has planned to expand into the emerging economies and aimed to start its operations in Brazil. The economic conditions of the Brazil combined with the entry requirements in the market support the business. The business environment is friendly, and ease of doing business in the market is supportive as well. However, there are some import restrictions that favor direct investment into the country rather than exporting. The business will expand through hierarchal means to have maximum control so that costs can be controlled and the competitive advantage can be sustained while maintaining lower prices. The company aims to achieve 10% market share in the Brazilian market in first two years of operations. For that, extensive marketing efforts particularly advertising will be carried out to reach out maximum people and to convey the product message (Mirvis, 2008).

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WePapers. Good Example Of Market Overview & Potential Report. [Internet]. April 2023. [Accessed March 29, 2024]. Available from: https://www.wepapers.com/samples/good-example-of-market-overview-potential-report/
"Good Example Of Market Overview & Potential Report." WePapers, Apr 10, 2023. Accessed March 29, 2024. https://www.wepapers.com/samples/good-example-of-market-overview-potential-report/
WePapers. 2023. "Good Example Of Market Overview & Potential Report." Free Essay Examples - WePapers.com. Retrieved March 29, 2024. (https://www.wepapers.com/samples/good-example-of-market-overview-potential-report/).
"Good Example Of Market Overview & Potential Report," Free Essay Examples - WePapers.com, 10-Apr-2023. [Online]. Available: https://www.wepapers.com/samples/good-example-of-market-overview-potential-report/. [Accessed: 29-Mar-2024].
Good Example Of Market Overview & Potential Report. Free Essay Examples - WePapers.com. https://www.wepapers.com/samples/good-example-of-market-overview-potential-report/. Published Apr 10, 2023. Accessed March 29, 2024.
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