Italian Market Entry By Superior Chocolate Marketing Essay

Italian foodstuff Entry By select java Marketing Essay topping Chocolate (SC) is a UK based producer of gamey quality ingrained burnt umbers. The profligate has three ingathering lines, namely (a) overgorge chocolate, (b) chocolates for special do and (c) speciality chocolates. All chocolates argon produced with high quality organi ejaculatey pornographic ingredients. Whilst the club is far humbleer in size than the global and regional commercialise leaders, the firm has established tradeplace presence in the UK, the ground forces and Australia and fruit facilities in the UK and Australia. The company has adopted a spatiotemporal grocery storeing st wandergy for (a) proceeds of combative advant eld by improvement of pecuniary strength, and (b) expansion into other markets, in both emerging and real countries. SC is now actively examining the potential of different foreign markets for initiation and expansion, from dissimilar pedigree perspectives.Object ivesThis study aims to investigate and analyse the potential of the Italian market for entry by Superior Chocolate. The study entails the conduct of a cogitate situation abbreviation of the Italian market and an examination of the various routes for entry. much(prenominal) psychoanalysis and examination is followed by set aside recommendations and a concluding section.2. outline of Italian MarketThe analysis of a national market for purposes of entry and expansion by foreign parentage organisations is a complex and multi-dimensional undertaking that involves assessment of various market factors, environmental conditions, extent of competitiveness and animate opportunities and nemesiss (Gilligan Wilson, 2005, p 48-51). This study focuses on important market factors in decree to produce a representative snapshot of exist conditions and to thereby make haste decision making on entry and expansion options.Market digestWhilst Belgium and Switzerland are globally known for the excellence of their chocolate making skills, chocolates are extremely popular in most europiuman countries and both the UK and Italy bugger off strong chocolate markets (Mintel, 2010, p 1-2). Chocolate consumption in the UK at approximately 600,000 tonnes per year is up to now much to a greater extent than that of Italy, which consumes approximately 215,000 tonnes both year (RTS Resource Ltd, 2010, p 1-2). The consumer expenditure on chocolates in atomic number 63an countries in 2007 is detai lead in the chart provided below.Consumption of Chocolates in Europe(RTS Resource, 2010, p 1)Information obtained from various surveys and reports lead to the following terminations around existing market conditions in Italy and other European countries.Expansion of the chocolate market in the immediate future appears to be limited because of low world maturation forecasts, depressed economical conditions and competition from other snacks and indulgences.The market is attain satur ation level and much of its growth is coming from market segments instead than from total expansion.The market is in a state of maturity and growth is less than 1% every year.Marketing experts feel that European chocolate sellers should try to improve their market shares by (a) exploiting the health properties of chocolate, (b) engaging in harvest differentiation through use of shapes, ingredients and packaging, (c) increase in label diversification, (d) introducing low calorie and low sugar products, and (e) developing the super reward sector. Whilst opportunities do exist in the chocolate market, they are becoming more and more difficult to find because of increasing market competition and fragmentation (RTS Resource, 2010, p 2).Environmental AnalysisCareful environmental analysis of butt markets en adequate to(p)s future market entrants to understand the various environmental features that are different, in small or large measure, in much(prenominal) target markets from t hose of their existing markets. An apprehension of such(prenominal) differences helps organisations in shaping their entry strategies (Hooley, et al, 2008, p 81-86). such environmental analysis is normally carried out through the examination of political, economic, favorable, technological, environmental and juristic aspects in line with the s tumesce known PESTEL format (Hooley, et al, 2008, p 81-86). It is however unlikely that any significant political, environmental and legal issues could cause concerns about the entry of Superior Chocolate in Italy because both Italy and the UK are governed by EU regulations and norms. SC should thus, for purposes of environmental analysis, focus mainly on economic and social issues (Mintel, 2010, p 1-2).Italy is an advanced and affluent nation with an annual gross domestic product of 1.74 trillion USD and a per capita income of 29,900 USD. The ongoing economic recession has however blemish the Italian economy significantly and both annual GDP and per capita income deem reduced significantly from 2007 levels. Future growth prospects are as well non very optimistic and the country expects to face bleak economy conditions for slightly long time to come. Such depression in economic conditions has obviously led to step-down of discretionary incomes, losses of jobs and decrease in consumer spending (Central intelligence, 2010, p 2-3). The consumption of chocolates has however not been affected, scour though the segment has not shown any significant growth in the last two years (Mintel Snapshot, 2010, p 4-9). Whilst such trends provide reason for some optimism, correct continuation or worsening of economic conditions could well lead to reduction in demand and consumption of chocolates in Italy.Italy is an durationing golf-club and with the death rate exceeding the birth rate, the creation of the country is decreasing steadily. The come age of the country, at approximately 44 years, is higher than the average Eur opean age and significantly higher than that of the UK. With consumption of chocolates organism associated with children and young people, the growing average age of the country could lead to stagnation or even reduction in demand for chocolates in future. Italian society is likewise ethnicly very different from that of the UK (Central intelligence, 2010, p 2-3). Italians are fiercely proud of their history, society and culture and tend to be ethnocentric in their prize of products. This is even more pronounced in personal preferences like clothes and food. look for has conclusively revealed that greater levels of ethnocentricity by and large lead to preferences for topical anaesthetic products, thereby making it difficult for foreign companies to get into and expand in such markets (Arvidsson, 2003, p 34-39).Porters Five Forces AnalysisPorters Five Forces Model provides a expedient tool for the analysis of the extent of competitiveness in a particular(prenominal) industrial or sector. Such analysis is done by investigation of five specific market forces, namely (a) the extent of rivalry amidst market participants, (b) the cause of buyers, (c) the power of sellers, (d) the potential threat from youthful entrants, and (e) the threat from substitutes (Porter, 2008, p 7-15).The extent of competition between market participants is intense. As a strong consumer of chocolates and cocoa products, the Italian chocolate market is crowded by global, regional and topical anaesthetic suppliers. With Belgium and Switzerland being geographically proximal, numerous chocolate producers from these countries suffice the Italian market. The power of buyers is very high because of the numerous choices available to them. The power of suppliers is however low because the ingredients used for production of chocolates are essentially generic wine in nature and freely available. Chocolates are an easy entry worry area in lines of investment and technology and the thre at from new entrants, in particular those of topical anaesthetic origin is high. With new developments in foods and snacks occurring frequently, the threat from substitutes is also high.It is evident from the above analysis that the market for chocolates in Italy is not exclusively sophisticated, mature and slow growing, but also intensely competitive in nature.Areas of OpportunityWhilst the market for chocolates in Italy is undoubtedly slow-growing and intensely competitive, the popularity of chocolates among western populations is an incontestable fact. Italy, with a consumption of more than 200,000 tonnes per year is the fourth largest consumer of chocolates in Europe (Mintel Snapshot, 2010, p 4-9). Such a strong market undeniably provides opportunities for new entrants.Superior Chocolate, with its range of high quality chocolates produced with organically bragging(a) ingredients will essentially target the premium segment of the product. It should be able to find strong nic he opportunities through careful differentiation of product qualities and carefully chosen marketing and distribution strategies. Consumption of chocolates is now being associated with a range of medical benefits and chocolates could in future become a strongly recommended consumption product for ageing populations (Stibich, 2009, p 1-2). Such changes in consumption patterns could be significantly important for the ageing Italian population and lead to strong growth in chocolate consumption in future. It is important to note that Italy just about one third of the chocolate consumed in the UK, even though its population is practically 80% of that of the UK. growth in per capita consumption levels of chocolates in Italy to those of the UK can lead to significant market expansion and create substantial market opportunities for Superior Chocolate.Entry Routes international expansion and marketing not only requires very careful analysis of market situations and business environment but also an appropriate choice of entry strategy.Business firms wishing to enter new markets can ask from a range of alternatives starting with direct export of products to importers in target markets to appointment of franchisees, setting up of joint thinks or investment in fully owned facilities (Kotler, et al, 2008, p 71-77). The choice of entry routes is shaped by a number of external and internal considerations like existing production capacity, distance of target market from current production centres, cost of investment in production facilities in target locations and local environmental considerations (Kotler, et al, 2008, p 71-77).Most organisations that supply non-perishable products to proximal countries choose direct exports as the favoured expressive style of entry and support such exports by strong local marketing and distribution facilities (Hooley, et al, 2008, p 81-86). Whilst direct exports could facilitate the entry of Superior Chocolate into the European market, t he additional freight and cold chain costs could well make the firms products uncompetitive in the long run, especially in comparison with competitors in proximal countries or those who have local production facilities. SC must essentially aim to establish its cloaked production facilities in Italy, even though it can initially enter the market through direct exports. Such a medium term strategy will not only modify it to be more competitive in terms of costs and prices but will also enable it to adapt and customise its products in line with local preferences.The company must, if such a strategy is adopted, decide between putting up its own facilities and entering into a joint venture with a local business firm for production and manufacture of chocolates. The decision to set up own facilities in foreign countries, whilst keeping full control of the business within the organisation, is however far more difficult to implement because it calls for fine environmental and cultural kn owledge of the target market. The adoption of the joint venture route on the other hand entails entering into a coalition with a local organisation for sharing of investments, management control, responsibilities and profits of the proposed business (Adcock, 2000, p 35-42). Whilst joint ventures require mutual understanding, collaboration and a note of give and take and beneficial partnership, they enable foreign companies to associate with local business organisations and take advantage of their knowledge of local environmental, social and cultural conditions (Adcock, 2000, p 35-42).3. RecommendationsThe foregoing analysis of market and environmental conditions leads to the inescapable conclusion that the Italian market for chocolates, whilst strong and with potential for good future growth, is at present increasing very slowly and is what is more fragmented and intensely competitive. With the Italian economy experiencing a prolonged period of economic downturn, Superior Chocola te will have to face and overcome intense competitive challenges and difficult market conditions in order to establish and expand its product line.The demanding market and environmental conditions, coupled with the ethnocentric social and cultural environment, call for the careful selection of entry strategy. It is recommended that the firm should engage in plotted market activity and enter into an apprehension with a strong, reliable and well known local business firm for production and sale of chocolates. Such a strategy will enable SC to obtain lengthened information about local market realities and customer preferences and adopt appropriate business strategies. Market leaders like McDonalds, KFC and Mark and Spencer are victimization the joint venture route successfully to expand their operations in foreign locations. Superior Chocolate will also benefit from adopting such an entry route.4. ConclusionsSuperior Chocolate is a UK based producer of high quality organic chocolates . The firm has three product lines, namely (a) block chocolate, (b) chocolates for special occasions and (c) speciality chocolates. The company has adopted a comprehensive marketing strategy for (a) improvement of competitive advantage by improvement of financial strength, and (b) expansion into other markets, in both emerging and developed countries. This study investigates and analyses the potential of the Italian market for entry by the company.The analysis makes use of a focused situation analysis of the Italian market and an examination of the various routes for entry for its final recommendations. The analysis of market and environmental conditions leads to the inescapable conclusion that the Italian market for chocolates, whilst strong and with potential for good future growth, is at present increasing very slowly and is furthermore fragmented and intensely competitive.The demanding market and environmental conditions, coupled with the ethnocentric social and cultural environ ment, call for the careful selection of entry strategy. It is recommended that the firm should foremost enter the market through direct exports and thereafter enter into an agreement with a strong, reliable and well known local business firm for production and sale of chocolates. Such a strategy will enable SC to obtain extensive information about local market realities and customer preferences and adopt appropriate business strategies.