MK9709 Assignment Sample – Global Consumers and Marketplaces 2022
Associated British Foods plc is a British multinational food item producing, processing and retailing company based out of London, England. Ingredients division of this company is the second largest producer of both baker’s yeast and sugar in the world. Furthermore, Associated British Foods is major producer of other ingredients such as emulsifiers, lactose, and so on.
ABF is a diversified group of businesses that spreads over 53 countries in the world and enjoys a high degree of autonomy while running their operations.
The food ingredient and grocery manufacturing company are willing to enter the market of Malaysia in the coming years. Malaysia has a population of 31 million according to UN as estimated in 2012. Malaysia is one of the growing economies in the world and further expected to be flourished in the coming years. GDP growth rate of Malaysia was estimated to be 4.3 percent in 2019 with expected GDP volume 359 US Dollars in 2021.
Food and beverage market of Malaysia
Malaysian people are mainly responsible for increasing the beverage and food business in Malaysia as they are fond of food. As per the view of Renjith(2018), the main reason behind it is the presence of different cultures which gave rise to a variety of food items.
Associated British foods have a huge scope to make their brand famous as they are careful and appropriate to satisfy the customers. It has the opportunity to expand its business in the form of stores, cafes as well as restaurants which can attract customers of various choices.
Characteristics of new target market customers
The customers of the Malaysian market are food-friendly which can help the associated British food to increase its growth in the global platforms. The people are more digital-friendly which again helps the company to adapt to the latest technologies.
The implementation of the latest technologies provides possibilities to improve the productivity of the company along with the skills of the employees. Processed foods are normally consumed by the individuals of the nation’s adds an extra advantage to the associated British food (Ramanath et al. 2021).
Target market strategy
Licensing strategy provides possibilities to the company to have access to the international place to make a profit on their business. Passive income can be performed by associated British food without any kind of restriction from the higher authority of the nations.
The percentage of risk is less and the market can be entered without facing any obstacle.
Market Screening Strategy
Malaysia shows a very high score of 100 in power distance implying that people accept a hierarchical order in which everybody has a place and demands no further justification. Malaysia scores a low value on individualism that means people are habituated in being part of a group contrasting the UK. A high score on Masculine dimension indicates that society is driven by competition, achievement and success which are quite similar to the British culture.
The society feels less threatened by ambiguous or unknown situations and shows exact similar nature with that of the UK. People of Malaysia exhibit a willingness to realize their impulses and desires with regard to enjoying life and having fun although it is lower than UK.
- The study will propose the validation of the market entry strategy of British foods.
- Rationale of market entry in Malaysia has been discussed in this study.
The study has explained different alternative strategies generated while decision making in a balanced and critical manner. Adequate explanation has been provided in this study for the adopted strategy.
- Associated British foods have adopted the strategy of licensing as licensor companies have a greater knowledge about Malaysian food market.
- British foods will be relieved of the cost of production, promotion, and packaging as well as cost of selling products.
- Royalty payments can sustain for a long time, which depends on the terms of agreement (Ghaffarkadhimet al. 2019).
British foods are more eager to focus on its food items rather than the business operation of the company. According to the study of Ghaffarkadhimet al.(2019), licensing strategy allows another company to carry forward the products of a company in a different market.
Marketing operation, running the business activities is taken care of by the other company. Furthermore, British foods lack proper insight about Malaysian foods market and will be ineffective in penetrating the market.
- Associated British foods have less knowledge about the Malaysian food market and the market is culturally different.
- The cost of production through marketing, and other distribution channels will not be incurred by the company.
- Malaysian food market having serious trade restrictions is one of the major reasons for not directly investing in the market (Polaset al. 2019).
Malaysian food market is already congested with various players in the market and further direct entry in the market will increase the competition. As per the view of Polaset al.(2019), a licensee company with larger market share will help in accumulating greater market share as compared to direct investment.
Malaysian market is strictly regulated and investing a larger amount of capital in this market would generate greater risks which are much lower in the case of licensing.
- British foods can explore alternative ways of joint venture through partnering with a Malaysian food company.
- The food item manufacturing company can share risk as well the cost of business with the partnered company (Salim et al. 2018).
- Managerial skills of the local company within the local market can be utilized to implement market strategy and the products.
Alternative approach of joint venture is suitable for British foods as both parties agree to share equity for running a partnership together. Lack of strength in the overseas market combined with a promising growth in the market pushes a company to expand globally Salim et al.(2018); Joint ventures can promote the way for future market direct penetration in the Malaysian market.
- It can be concluded from the study that British foods has chosen licensing strategy for market entry in Malaysia.
- Malaysian food market is different as compared to the market British foods is operating.
Running cost for the business activities as well the marketing operation is managed by the licensee company. Joint ventures can promote direct penetration in the Malaysian market in future.
The main aim of the report is to focus on the present working strategy of associated British food in the UK market. It predicts the possibility of the organization penetrating the Malaysian market to gain its fame the same as the UK. Appropriate strategies are implemented by the authority of the company to make their business successful in the competitive market.
Associated British Food is rated to be one of the best food and beverage organizations in the UK. As mentioned by RAO and BERNAZ (2020), the organization consists of five parts namely sugar, ingredients, grocery, agriculture, and retail. The company is known to be providing a flexible working atmosphere to the higher authority such that they can make decisions for the welfare of the business.
Sharp, swift, and short communication is performed within the company which makes them unique from the other food and barrage firms in the UK. The main center of attention of associated British food firms is proficiency in industry, high capacity of operating, staying updated about the present market, innovation, and establishing healthy communication with customers.
The corporation is noted to be paying equal respect to all the shareholders such as investors, customers, and distributors. As stated by NADIN-DAVIS et al. (2017), the respective organizations can keep their promise of providing nourishing and shielded food items to their customers which are budget-friendly.
The effectiveness of the firm is high in society which provides them the opportunity to perform the task according to their requirement.
Associated British Food aims to deliver sheltered, healthy, fresh, and nutritious food for its customers. According to LITTLEJOHN and FINLAY (2021), they focus on delivering the food items at a low cost such that they can reach the maximum number of people of the nations.
The relation between the company and its customers is healthy and long-term which made them expand their business to more than 52 countries throughout the world. The firm has collaborated with more than 39 consumer brands which make the associated British food company reach more than 98 countries globally (Abf.co.uk, 2020). The firm is noticed to be putting equal emphasis on the domestic market patellar to the international one.
The following company believes that establishing themselves in a local area is important as transparent relations are already present among themselves. According to the view of DEBAST (2021), the support of the local people has made them successful in the domestic market.
The managers of the company have maintained adjacent connections with the customers to make them engage in the business. The demand of the customers is fulfilled by associated British food as their satisfaction level is high which increases their customers at a noticeable rate.
4P of the marketing mix
The four ps of the marketing mix are as follows:
The customers are provided value in various methods such as fixing and restoring the equipment, product purchasing plans, justice in pricing, convincing about the quality, persuading accessibility, and keeping all the promises.
As urged by Sturiale and Scuderi(2017), the products are sold under different product lines and maintain the 5 classifications and the name of the brand. Due to the presence of various categories, customers are noticed to be attracted as they get the opportunity to select from various options.
The pricing of the products is done by keeping in mind the competitive market as customers prefer to buy the best quality products at affordable prices. The products of associated British foods are budget-friendly due to the availability of many competitors.
The cost of the products is compensated when they are available to all the competitors as it helps to gain the market. At present, the firm sells a bunch of products at a lower price which makes both the company as well as its clients profitable.
The products are sold by the company using both online and offline mediums. In the case of online medium customers are delivered with the products directly and there is no need for any middle person (Mourtziset al. 2021).
The offline medium consists of two middle people such as the wholesaler to whom the company sells the product and the distributors who deliver it to the clients
Products are sold online as the promotions are done using different digital media such as Facebook, Instagram. Radio and televisions are used simultaneously by the organization to promote their business as they want to attract customers of all preferences. Different events are organized by them for advertisement purposes along with providing offers and discounts on both outlets and online stores.
Licensing strategy is one of the fundamental and essential market entry strategies that are used by associated British food to make its business in Malaysia. As per the view of Viswanathan and Sreekumar (2017), the Government of Malaysia is counted to be the licensor who would allow associated British food to make their business in Malaysia.
The usage of intellectual property such as product development methods, copyrights, and the use of digital media for a certain period are given to the organization if they are ready to follow all the rules and regulations to establish their business in the nation.
Licensing strategy provides an advantage to the firm to make it rich in knowing the market of Malaysia and introduce new products according to the requirement. As the company is already established in a national and is willing to increase its business license market entry strategies are counted to be the best option for associated British food.
The rate of the sales of the product can be increased at a noticeable rate in a foreign location. A license is needed to perform the advertisement, manufacturing, and dispensing of the goods (Kipnis, 2018). As the market is new for associated British food there is a presence of risks that are an integral part of the business and are needed to be managed by the firm.
The target market of Malaysian clients is the group of people from the age of 0 to above 50. According to Olden et al. (2021), the foods and the beverages of the organization are to be processed depending on the age of the clients. People age 0-16 are noticed to prefer chocolate foods and drinks which are completely different from the people of the middle-aged.
Differentiation is to be done based on the customer’s preference and age as it helps the firm to stay focused on its clients. People of age from 40 and above are found to be selecting healthy foods and drinks to stay fit and fine (Ice.it, 2020). The foods of this age group people need to be more nutritious and safe such that they allow their children to consume the company’s food.
Not only the food, but advertisements are also to be preferred as per the target audiences such that they feel essential and attracted to revisit the stores several times.
The existing target market of associated British food is similar to the new target market as there is scope for the respective firm to enter into the Malaysian F&B industry. A wider range of foods and drinks are accepted by the locality of Malaysia which provides permission to the company to try new food items. In the case of the UK, there are specific tastes of the people which do not allow the company to try new varieties, unlike Malaysia.
As there is diversification in culture, tastes are similarly diversified and the county provides space even for small and medium scale companies (SMEs). As urged by Suryonoet al. (2020), processed food is more accepted by the target customers of Malaysia than the UK individuals. Both the vegan and non-vegetarian can be satisfied as there is attainability of both kinds of people in Malaysia in comparison to the UK.
Maslow’s hierarchy of need theory is used in this perspective to enter into the market as it helps to understand the taste and demand of the customer in Malaysia. The five stages o the theory is:
- Psychological needs: The fundamental requirements of human beings are food, shelter, and clothing. To live a livelihood people need to consume food and thus associated British food provides food at the minimum price available in the market (Oh et al. 2019).
- Safety needs: Next stage is safety; foods are manufactured and processed with safety as it is directly linked with the health of the individuals. As soon as the basic needs are fulfilled people want the quality of the food to be higher such that it does not affect them.
- Love and belongingness need: As the food’s higher standard is accessible to the people they increase their love towards the brand. They could feel the importance of consumer products which describes the belongingness of the personalities.
Figure 1: Maslow’s hierarchy of need
(Source: Anastasiadou et al. 2019)
- Esteem needs: Esteem needs depicts the respect given by both the parties towards each other. Associated British food is already known to be paying respect to all the communities whereas the same is done by the clients of Malaysia as well.
- Self-actualization needs: The final stage at the peak is the self-actualization need where the consumers are mentioned to be loyal customers who are ready to establish a long connection with the organization (Anastasiadou et al. 2019).
The direct investment strategy is not echoed as the primary market entry strategy and licensing strategy is chosen as without obtaining license investment is not possible. Associated British Food has its huge business in the UK and wished to make it in Malaysia which was not possible without the license.
As per the view of Gurinaet al. (2020), direct investment strategy, in this case, is only possible after gaining a license in the foreign market. The organization has a high risk of economic loss if the investment is done and a later rise of issues occurs in maintaining all the rules and regulations of Malaysia as they are completely different from each other.
The direct investment approach can have complete as well as partial control over the business which constitutes a challenge whereas licensing has full control over the entire business and is thus used.
- The inventiveness of associated British food needs to be higher as people of Malaysia prefer variety of foods,
- To attract maximum number of customers, the foods are needed to be healthier such that it provides nutritious diet to all aged people (Gonzalez, 2020)
- The promotion of the consuming items is to be done based on the target customers such that they can relate it.
- Digitalization is required to be improved at a faster rate as it helps to increase the productivity of the business.
- Joint ventures with large-sized companies can be a profitable advantage for associated British food as it will help them to be informative about the Malaysian market.
Based on the above discussion it can be concluded that associated British food can set up its business in Malaysia. The main highlighting part of the report is the present business model of associated British food and the strategies that can be applied by them to enter into the new market of Malaysia. At present, the F & D is using 4 P of the marketing mix as their marketing strategies and for market entry licensing strategy is needed to be used as per requirement.
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