LINK NATURAL PRODUCTS (PVT) LTD

INTERNATIONAL MARKETING PROPOSAL

FOR YEAR 2010 - 2015

M.S.N.I.CHANDRADASA.
DBFA 2009/37
MARKETING
INDIVIDUAL ASSIGNMENT 01

NO OF WORDS 2977
 Link Natural Products (Pvt) Ltd.

TO : CHAIRMAN /BOARD OF DIRECTORS OF LINK NATURAL

PRODUCTS (PVT) LTD
FROM : MANGER – INTERNATIONAL MARKETING
SUBJECT: PROPOSAL FOR INTERNATIONAL MARKETING ENTRY
STRATEGIES
DATE : 31 DECEMBER 2009

PURPOSE OF THE REPORT

For the response to the request made by the Board of Directors of Link Natural
Products (Pvt) Ltd, I have outlined following proposal based on the
understanding about the Company, Industry & trends in the international
market which I have gathered through analyzing the case.

INTRODUCTION
Link Natural (Pvt) Ltd, which is a strong brand in the Sri Lanka, holds great
potential to expand its market to Global Market due to these positive global
industry trends. To determine the appropriate marketing approach in
introducing the Company’s’ products to the Global Market requires the
consideration of the nature and extent of the international market factors to
support the decision to expand into the global market as well as techniques in
successfully promoting products of the Company.
Company has modern Research and Development facility and the
uncompromised standards and total quality management maintained across all
disciplines at its modern ISO 9001, ISO 14001 and HACCP certified factory. Also
Company’s manufacturing facility is a totally environmental friendly “green”
complex, where “zero waste” is maintained with one of the most modern
“waste water” recycling plants and “energy regeneration” from solid waste, is
maintained. These quality products brought the National Science and
Technology Award for the Development of Standardized Quality Ayurvedic /
Herbal Products. These things will brings company lots of strength, opportunity
& good reputation to play as key player in the international market.
However, there is need to generate specific market data on the size and
demographics of the market for Link Natural (Pvt) Ltd, the competitive
environment that the company will likely face, and the internal and external

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issues that the company expects to face when it enters the Global Market to
support the identification and development of a strategic marketing plan to
drive the viability of the Endeavors.
Source: www.linkherbals.com

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SIGNIFICANCE OF GLOBAL MARKETING

Global marketing has become vital for the growth of the organizations as a
result of –
• Saturation of domestic markets.
• Liberalization of trading.
• Rapid technological developments that have enabled manufacturers to
produce good quality products at low prices. This in turn, enabled these
companies to enter new markets, where they could leverage the
advantage of their superior quality products.
• Current trend of people believe natural product rather than artificial
products

Global marketing will help the companies leverage the following advantages –
• Marketers can source good quality materials from places where they are
available at economical rates.
• Companies can reduce their development time and recover the
investments in research and development rapidly by marketing their
products in the global market.
• By entering new markets, the companies can meet the expectations of
the shareholders and capital market regarding earnings, growth
objectives, and future prospects of the company.

Source: http://www.idc.com

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 Link Natural Products (Pvt) Ltd.

ATTRACTIVENESS OF THE COMPANY IN THE INTERNATIONAL

MARKET
Consumers spending in excess of $25 billion on natural and organic food
alone, the natural products industry is rapidly maturing. Once the mainstay of
purists, hippies and back-to-nature people, educated consumers in multiple
demographic groups now understand the health and lifestyle benefits that can
be reaped by pursuing a diet of whole and organic foods, and they have
increasingly demonstrated a desire to consume them.

Natural and organic products have become much more mainstream over the
past few years and their popularity will rise further due to an average age
increase and greater awareness in the general population. Supermarket chains
will continue to fine-tune their natural/organic branded product assortments
and push more deeply into these profitable categories

All of these developments make it incumbent on natural products

manufacturers to understand the crucial nature of their branding and
packaging initiatives. This, too, is part of developing a comprehensive business
strategy for long-term growth and success.

Source: http://www.naturalproductsinsider.com

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POTENTIAL MARKETS
There is good market for Natural and organic products in any part of the world.
However, peoples of developed counties such as United States, Australia, and
European Union are more concerned about natural and organic products.
Further, they are willing to pay premium price for such products.
Therefore, I suggest that company should enter into international market by
exporting its products to European Union’s (EU ) counties because with that
region there are lot of markets and which would help to achieve ultimate
objectives of entering into international market.
However, company should select one country which as more demand for
natural and organic products that will enable company to establish in that
region. So United Kingdom (UK) is the most attractive country when considered
about the political, legal, social factors & consumer behavior.
Accordingly Company should first enter into the UK Market & then to the
markets on other European Union Countries. Company should make more
attention to capture sufficient market share since the market for company’s
products still at growing phase in its life cycle within the EU countries.
It is very important to create strong brand personality & make customers loyal
to the brand using smart marketing techniques.

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EVALUATING POTENTIAL MARKET

1. Evaluation based on PEST factors.

The Macro Environmental factors affecting to Link Natural (Pvt) Ltd is analyzed
below.

Political Factors

The EU supports the fair trading commitment for both the local consumers and

foreign producers. This is observed by a requirement on labelling that a stamp

of "Fair-trade" must be included in the products for consumer reference. This

shows that the EU do not have strict policies on fair trade.

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Economic Factors

There are numerous characteristics of EU that makes it an attractive

destination for exporter goods. EU is consisting with the globalized advanced

economies the world (UK Statistics). Free market is also the main framework of

EU countries which limits the influence of countries in trades. EU also has low

inflation, unemployment and interest rates and ranked one of the most

superior economies in the region. With this in mind, exporters can easily

attached bulk of positive issues to the production, start-up and marketing

environment in the countries. In the contrary, EU still has problems in reducing

income inequality. Although not a good sign in aggregate, exporters can use

niche marketing to exploit this bottleneck. Competition, thus, is reduced when

direct rivalry is spread over the income boundaries of the people.

There is an advantage of exporters who can offer innovative products. In this

way, the market will not rely on price factors to affect their decisions rather to

the qualities of products which are also the source of loyalty. With Asian touch

to the products, the market may also feel that exports have higher nutritional

value than local counterparts. However, there is a very high risk of failure in

the industry especially if the location is EU due to low Profit margins.

Social Factors

The health consciousnesses of consumers have revived several years ago.

Convenience in eating as well as provision for healthy diet is two of the primary

motivation of the consumer of their increased support. The typical intake of

healthy products is changing with the aid of governmental information efforts;

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more EU people are developing the habit of evaluating the nutritional content

of each product label before actual purchase. This improvement is an

extension of 2000 shifts on health beliefs of the population.

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Technological Factors

In European standards, EUROPEAN UNION agricultural production and its level

of technology is efficient and highly-atomized. For an instance, only 2% of its

labor is in required to support sixty percent of its agricultural sector. Nutri-

Ingredients medicinal value is believed to be redeemed for products that do

not undergo intensive technological application. To this part, exporters would

be encouraged to enter and compete in the EUROPEAN UNION market because

what they are offering are unique products. Historically, unique products have

the ability to run against market trends (e.g. avoidance of lower prices).

EU is consisting with those developed economies that maintained the role of

agriculture in the economy despite radical shift of sectors towards service and

manufacturing industries (IATC Website). The quality of EUROPEAN UNION's

products is reflected in its consumer protection against low quality and

sometimes foreign foods. This can be a source of weakness against products

from developing countries.

Source: http://ivythesis.typepad.com

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2. Evaluation SWOT Analysis for the Company

Sub- Strength Weakness Opportunity Threats

sectors

Raw • National • Insufficient • Diversificati • Destruction of

Materials initiative supply of on of herbal resources
on local raw herbal- due to
promoting materials; based unsustainable
herbal • Unknown products logging activities
plantation. exact (body care and agriculture
• Availability location of and beauty development,
of a wide species; products, etc.;
and and cosmetics, • Risk of losing
diverse • Information health potential
base of on soil foods, etc.); herbal species
herbal suitability • Domesticati through forest
plants; for herbal ng wild fire and illegal
• Increasing plants is plants in logging;
R&D currently nurseries • Commercialisat
interests not through ion may lead to
and available. mass over-
supports propagation exploitation;
for herbal , in vitro and
products; culture, • Intellectual
and etc.; Property Rights
• Latest • Establishing (IPR) issue.
governmen herbal
t policy to plantations
utilise idle at a large
land. scale; and

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Processing • Vast • Production • Developme • High overhead and

traditional efforts nt of new production costs
knowledge concentrate and may limit
by local d on a small improved involvement; and
inhabitants scale products • Absence of
on herbal industry; based on private-led.
preparatio • Lack of herbal
n; capital plants;
investment • Developme
s on nt of new
production and
facilities; improved
• Lack of processing
technologic and
al base for packaging
production; to produce
and higher
• Poor quality
adherence products;
to set
quality
control.

Marketing • Acceptanc • Absence of • Affordable • Export barriers;

e and clear medicines • Competing
increasing investment and food herbal
demand of and supply; products from
herbal- marketing • Investment other
based strategies; potentials; countries; and
products. • Inadequate and • Lack of
penetration • Ready diagnostic
to the market for treatment by
overseas herbal the suppliers.
market; and products.
• Inadequate
effort to
explore e-
herbal.

Transportati • Concession • High • Improveme • Inadequate

on s given by transportati nt of knowledge on
the on costs. existing exports..
governmen facilities;
t to and
exports. • Developme
nt of new

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infrastructur
es

Technology • Existing • Inadequate • Developing • Great control

technical skilled supporting of medical
and manpower; industries advances,
laboratory • Lacking such as technology and
support. efforts in information products by
incorporatin technology, Western
g managemen medicines.
technologic t and other
al support and
knowledge service
with industries.
cultural and
anecdotal
knowledge;
and
• Inaccessibili
ty of
entreprene
urs to
technology
know-how.

Source: IDS (Sabah), 2000

Consider above Political, Economic, Social & Technological factors affecting to

the region when deciding strategy, products to be introduced first to the
market & selecting promoting method etc.

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FOREIGN MARKET ENTRY MODES

The decision of how to enter a foreign market can have a significant on the
results. Expansion into foreign markets can be achieved via the following four
mechanisms.
• Exporting
• Licensing
• Joint venture
• Direct investment

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Source: James F. The Global Entrepreneur

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INTERNATIONAL MARKET ENTRY MODE COMPANY SHOULD USE.

Company should first start with the export to the UK market & then rest of the
European countries.
• Company’s primary objective should be enter the United Kingdom
market with the Herbal Health Care Products such as
Samahan,Paspanguwa,Five Herbs,Swastha Thripala& Tea after 18 to 48
months they can distribute these product to the rest of the EU countries

• In the short term company can introduce other products such as

Personal Care Products, Cosmetics, Generic Ayurveda Products,
Spa/Aroma Products,Essential Oils & Oleoresins to the first into the UK
market then to the other EU countries with the achieved high brand
awareness and brand knowledge through introduced Products which
represent a health-conscious and passionate point of view that hope to
bring to the UK market & rest of the EU countries.

Then the Company should select suitable party to make joint venture
agreement. When selecting such party company should evaluate such party
with the following criteria.

• Is this win/win and does every party benefits, or is someone being

taken advantage of?
• Are my partners ethical, honest and professional?
• How can the Company add a back end, further leverage this
situation, increase profits and/or distribution, or sell the deal?
• How can the Company meet better Joint Venture partners and find
better deals?

If the marketing through joint venture became successful company can

evaluate are there any opportunity to made direct investment in the countries
which have great potential for growth.

N.B. before going in to above mention entry modes Company should carefully
analyze the situation that will affect in the market when the strategy is going to
be implement. Also need to keep in mind the above discussed advantages &
disadvantages of each mode of entry.

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FIVE YEAR MARKETING STRATEGY PLAN FOR THE COMPANY.

I propose a five year marketing strategy plan for the company based on my
understanding as follows.

0-18 MONTHS – MARKET PENETRATION

Penetration occurs when a company enters a market with current products.

The best way to achieve this is by gaining competitors' customers

Marketing Decision Decision Features

Product  Within first six
months –
promote brand
names
Samahan
 Paspanguwa
 Five Herbs
 Swastha
Thripala
 Gotukola Tea
 Within next six
month –
promote above
products &
introduce
brands.
 Kesha
 Sudantha into
the market.
Basically give
more attention
on promote
Kesha &
Sudantha.

Within next six months give same
prominence to products introduced in
first & next six months. Give more
concentration towards products
quality, functionality & safety.
Price Use pricing strategies such as
• volume discount,
• cash & early payment discount,

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• bundling,
• seasonal pricing
However price should be minimum
to capture the market. (i.e. with a
minimum margin or no profit
margin)
Place Specify marketing channel members &
establish distribution centers.
Ensure order processing is with
minimum lead time & delivered to the
particular location without any delay.
Promotion Use push strategy as marketing
technique
Prepare marketing communication
budget and
Use extensive marketing techniques
through TV commercials, business
magazines & emails.

Source: http://www.netmba.com

18-48 MONTHS - PRODUCT DEVELOPMENT

Existing markets, New products

Marketing Decision Decision Features

Product The first step in developing product is
innovations.
Company can introduce new products
like Herbal Skin Cosmetics for Acne
problems.
Then the Company can improve
existing products like Kesha,
sudantha,peyava & etc by adding new
herbs which will give more value to
the product.

Price Should charge premium price for

enhance product features.
Place Further enhance existing channel
members & distribution centers.

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Promotion promote developed product features

to ensure that customers ready to
pays more for added value

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48-60 MONTHS- MARKET DEVELOPMENT

New markets, Existing products

Marketing Decision Decision Features

Product Introduce all products to the other EU
Countries.
Price Should be charge for cost & brand
personality.
Place Further enhance existing & establish
• new channel members &
• Distribution centers.
•
Promotion • Specifying the advertising platform
and media
• Organizing the sales force to cover
new products and markets

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FORECASTED SALES, COST & PROFIT FOR YEAR 2010-2015

Following table shows the expected profit from the global market & it’s not
considered domestic sales, cost of sales & profits.

Product Months Expected sales Expected cost Expected profit

Rs. (Mn) Rs. (Mn) Rs. (Mn)
Generic Ayuradic 0-18 100 90 10
Products 18-48 105 74 31
48-60 110 62 48
Personal Care 0-18 65 57 8
Products 18-48 68 54 14
48-60 71 51 20
Herbal Health Care 0-18 81 79 2
Products 18-48 85 75 10
48-60 89 77 12
Others 0-18 45 40 5
18-48 47 38 9
48-60 50 38 12

N.B. Above illustrations are subject to best estimate assumption made based
on the knowledge about the business, industry & global scenario.

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CONCLUSION & RECOMMENDATION TO THE COMPANY

Companies’ product has higher demand in the global market since most of the
customers moved from artificial to natural. They are very much keen on
keeping fit due to various deceases became treat to human life more than
ever. Also it has proven usage of artificial foods, western medicines having side
effects & herbal products are free from side effects or their impact is very low
when compared with the artificial products & medicines.

Therefore European market seems to be more lucrative for company since the
market for company products are still growing & this will help to earn more
profits. On the other hand there are so many herbal producers in the local
market & competition in the local market is intense. Also company is currently
underutilizing their operating capacity. This excess capacity will help company
produce for global market in the short run & Company can enhance the
production plant in the long run using the profits earn in the short run.

However though company has highest potential for success in the global
market, global market strategy need to be carefully designed, implemented &
controlled to achieve expected result as discussed above. Also need to focus
on enhance existing products while introduce new products to capture the
substantial part of the market.

Please feel free to contact me in any further clarification

Thank you

Yours sincerely,

Manager – International Marketing.

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Appendix 01

References

• Marketing Management 12th Edition by Philip Kotler & Kevin Lane Keller
• www.amazon.com
• www.linkherbals.com
• www.oup.com
• http://en.wikipedia.or
• www.lankabusinessonline.com
• www.oxfordreference.com
• www.ariadne.ac.uk
• www.bookmarketing.co.uk
• www.bookmarketingsociety.co.uk

Note: For the purpose of assignment it is assumed that the Company is not
currently engaged in international marketing though it is operating in the
current market more than 30 years.

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