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Thai food in Europe

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mktg 3116

on 3 June 2014

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Transcript of Thai food in Europe

Thai food in Europe
Demand and initiatives from buyers

Growing of the functional drinks market in Europe

Eastern European customers
- share a similar life style - seek for a better quality of life
- not so conservative and are more willing to try new products

Indirect Exporting - lowest risk and tap into importer's knowledge on local market conditions
Leading brand in the Thailand functional drink category

Very accessible - stimulate curiosity amongst interested buyers

Positioned as a fun, modern and stylish drink for the 'health conscious' - reaches out to the masses

Financial support and first-hand experience
Sapanan commercial in Europe
Coordinating Marketing Activities
Initial success in Slovakia attributed to importer's (IMS) idea of 'hip' advertising
- raising issue of standardizing advertising across markets

Profits for financing brand-building

Sapanan and IMS began adjusting Sappé Aloe Vera Drink's image to one that's more wholesome
SWOT Analysis
who/what
Family business
Selling cookies & local snacks at trains and bus stations
In 2002 - 2 brothers took over the business
While studying in Japan, noticed that Japan offered more selection
Searched for new product lines
Products
4Ps
33 THB
7-11 convenience store

Initial Stage - could not afford mass-marketing activities
Subsequently - sufficient profit to invest in advertising via mass-media channels & a national celebrity to represent the brand
Why was Sappé able to penetrate
the Eastern European market?

How did the brand's success in its domestic market facilitate this entrance?

Strengths
Weaknesses
Opportunities
Threats
Brand reputation
Brand identity
Market share
Distribution Channel
Word of mouth
Narrow product line
Lack of internet presence
Increasing health and wellness concerns
Rising disposable income
Aging population
Changing lifestyles
Competitors
Government
regulations
Competitive Rivalry
High
Relatively concentrated
Top 3 players holding 46.2% of the market share

Differentiation of products lowers the level of rivalry but at the same time decreases the commodities' price and forces players to spend more on advertising, hence increasing rivalry

Supplier Power
Threat of New Entrants
Very high
Growth attracts new entrants
Lucrative market
Major drink companies have the capability to penetrate the market and require little investment
Buyer Power
Low
Large number of suppliers
Essential commodities are available from several sources
High
Variety of brands to choose from
Low switching cost
Easily swayed by economical reasons (eg. Price & Promotions)
Threat of Substitutes
High
Some drinks (eg. sports drinks, coconut water) may have similar functions at relatively lower prices
Porter's 5 Forces
in
Eastern Europe
What challenges did the company face when expanding into other Eastern European markets? How should it deal with these challenges?

PEST Model
Political
Strict regulation set by European Commission

Potential higher taxes

Regulations restrict promotion campaigns and advertising
Economical
More disposable income

Global economic crisis makes consumers more price sensitive
Social-Cultural
Increasing time pressures

Working longer hours

Increasing concern around personal health

Look for products to improve their living standard
Technological
Internet and social media influence

Improved techniques can increase production
#1
#2
Challenge
Large number of imitators
Price war

Recommendation
Register brand before entering
Develop more specialized capabilities
Challenge
Strict regulation
Hard to educate consumers
Difficult to promote

Recommendation
Respect regulations
Oral communication
#3
Challenge
Standardize advertising across markets
Cultural difference and various consumption behavious

Recommendation
Marketing research
Analyze the similarities and differences
#3
#4
Challenge
High price
Price sensitive

Recommendation
High-end drink product
Emphasize good quality
Core and augmented features
#5
Challenge
Export pricing methods
Thin margin
Difficult to cooperate with large distributors

Recommendation
New pricing method
Higher price
Better partners
Considerations
1. More stringent regulations in Western Europe by EU

2. Additionally, each Eu member country has own standards from those of the EU

3. Influence of demographic mix of nations population


In coordinating marketing activities, Sapanan must consider fragmented nature of the European market
Was Sapanan's process in searching for and selecting suitable partners appropriate?


Why is Sapanan searching for partners?
Expansion to other European markets

2011
-Joint venture with Ital Market Slovakia (IMS)
-Representative office in Czech Republic
Sapanan's Partner Search/Selection
Sells its products to several importers,
a. At very low prices
b. without an exclusivity agreement

Expectations of increased product awareness amongst importers

Suitability assessed by their interest in brand building, available resources, market knowledge and access to extensive distribution networks
Appropriateness of Expansion Strategy?
Joint Ventures
Ital Market Slovakia
Marketing support
Timely supply of goods
Import, customs clearance
Large, safe storage facility
Customer support
Trusted importer for many functional drink products in region
Representative office in Czech Republic
Central Europe
New member of EU
Sustained enhancements to business environment and intellectual capital
Internationally competitive business environment
Appropriateness of Partner Selection Process?
Several importers with no exclusivity agreement
Benefits of promoting product awareness > increased ability of competitors' to 'pull' these importers away

Parallel importation (i.e Grey market)
Export pricing structure

During initial export arrangement to Eastern Europe, prices were set very low to attract importers
- More margins for importers and distributors but thinned Sapanan's own margin

When importers requested financial support to promote the products, the company didn't have surplus for it

Once price is established, difficult to raise
Alternative Methods for Partner Selection?
1. Different export pricing structure based on market demand
In quoting FOB (Free On Board) price for importer, consider various costs incurred during shipping products
- If retail price too high, importer lower change of success
- If importer no direct access to outlet network, higher retail price to allow for more margins for distributors

Integrated distribution
Marketer invests into foreign market to sell its products there or more broadly in the region
Future Outlook
Ships to 37 countries
- Singapore, Hong Kong, Israel, Middle East, Africa

Production facility in Eastern Europe

Expansion into Japan
Moving
Forward

Q3
(cont'd)
Q3
Are there any other ways to find suitable importers who could support the company's brand building activity?
2. Governmental agencies

3. Private sources
Trade direcectories (Kompass for Europe)
Facilitating agencies (banks, advertising agencies, shipping lines, etc)
Associations, Chamber of Commerce
Advertisements, Trade fairs, Websites
Q1
Q2
Cont'd
Aloe Vera drinks in Eastern Europe
Q&A
Full transcript