Simulation Report

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Simulation Report

INTRODUCTION

Allstar Brand is a big consumer product with recognition in numerous regions such as Asia, Europe and the place of origin, the United States of America. The brand was established in the United States in the year 1924 with an aim of providing consumers with affordable medication and toothpaste for proper mouth hygiene. The entity produces over the counter medication and toothpastes, which were, received good market penetration when they were launched. However, due to a saturated market, slow growth in populace numbers the entity has resorted to find new markets. The new markets identified by the organization are Latin America, which would provide the entity with new ideas and sources of revenues for the entity.

COMPETITIVE STRATEGY

Allstar Brands’ was the efficiency and effectiveness in the conduct of its operations to ensure there were no deviations form its goals and thus creating a competitive advantage over other similar entities within the same markets of operation. Through this approach, the organization has been able to achieve its organizational goals and objectives with the outlined strategy of ensuring that all the goals and objectives are achieved effectively and with utmost efficiency. Through this approach, the entity was able to achieve its goals in the respective markets of the United States, Europe and Latin America (Belch, & Belch, 2012).

The Allstar Allsmile brand enabled the expansion of option available for the consumers in terms of healthcare and consumer products with specific reference to the toothpaste products availed into the identified markets by Allstar. Execution of strategies requires adequate coordination with the respective stakeholders for the achievement of goals and objectives effectively and efficiently (Huggins, & Izushi, 2011). Hence, the entity identifies the appropriate supply chains to ensure that the Allsmile brands are able to reach the respective markets with specific reference to the markets in the Latin America region such as Mexico, Chile, and Brazil.

Another identified strategy included acquisition of relevant and appropriate knowledge about the identified markets to enable the formulation of suitable approaches for each individual market. The strategies applied for each market were varied. In Mexico, the entity was able to penetrate with ease into the market through the NAFTA agreement, which provides that there are not import duties and related taxes for products manufactured in the United States. This provided the product with a competitive advantage over their rivals. In addition, the next strategy was also influenced by the presence of the NAFTA agreement enabling the entity to establish a cost leadership model. This model enabled the entity to set the prices of the toothpaste ate considerable lower prices than those of their competitors in the market.

The entity identified Chile as the venue for setting up the new Latin America manufacturing plant due to the presence of adequate and low cost labor coupled by the presence of other low costs of doing business within the country. This was necessitated by the organizational need to lower costs of operation and subsequently increases profits, which was a high priority for the management of the organization. In addition, prices were also informed by use of decision criteria in that they were set using the brand preferences in the three identified markets of Brazil, Chile and Mexico. The decision criterion was set as Brazil 51.6%, Chile 45.9%, and Mexico 52.7%.

MARKET ENTRY

Market criterion entry was established to ensure that the set goals and objectives were followed. The criterion was set as:

• Ensuring that market entry was in line with the organizational goals and objectives towards international markets.

• In addition international and foreign market entry was made with consideration of the operations of management in international

• The entry into the market also put into consideration the presence of external market factors such as socio-cultural beliefs, political hurdles and economic factors, which vary form one region to another due to different market fundamentals.

• Competition was also another factor for consideration in that competitors within these markets influence the entry into the market (Huggins, & Izushi, 2011).

• The presence of different laws and regulations which vary from one country to another influence the strategies of entry into the identified markets such as trading agreements, tax laws and revenue remittances. Labor laws in these countries also influence the strategies of entry into the market.

In addition, other issues were also put into consideration for framing the different necessary approaches for entry into these markets. Such considerations included the consumer habits within the identified markets, costing appraisal and other production related costs such as transport and shipping of the equipment, raw materials and products into these countries. The presence of different market fundamentals in terms of consumption behavior within these markets varies necessitating the need for an approach that is relevant and appropriate for each identified market (Kerin, Hartley, & Rudelius, 2009).

Entry into the market was first initiated by in depth analysis of the markets. The analysis involves the evaluation of the population size of these markets, the political stability, GDP per capita, which influences the amount of labor costs, amount of disposable incomes for the consumers within these markets. The GDP is also influenced and affected by the economic growth rate and the presence of poverty, foreign exchange rates and the purchasing power of the populace of these countries. In addition, the use of benchmarking method was highly beneficial in the valuation of the existing competition in the respective markets in these countries. It revealed vital information such as the market shares held by the competitors.

The selection of the three locations was due to the presence of different favorable characteristics of these locations. Brazil was selected because of the high sales turnover of identical products in the market. This provided a good opportunity in that with the use of the right approach the entity would manage adequate penetration of the market. The proximity of Brazil from Chile was perfect because it would enable easy movement of exports from Chile to Brazil in ample time with minimal costs.

Chile on the other hand provided the perfect the best location for the setting up of a manufacturing plant because of the presence of cheap and adequate labor coupled also by the presence of cheap operational costs. Production in Chile proved to appropriate because the costs were lower in comparison to the other Latin states. On the other hand, Mexico was selected due to its proximity to the United States and the presence of bilateral trade agreements with the United States providing free tariffs on entry of goods into the Mexican market and the shipping cost per unit of 20%.

MARKETING MIX

Product

The product in essence is the brand of an entity in terms of the services or goods sold to the entity. The product packaging, appeal, quality and quantity were a major determinant in influencing the consumers in their purchases decision. The products developed by the entity were based on consumer preferences with different consumer segments within the market. There were several considerations such as quantity, which ranges from 25g, 75g and 250g. Other choices include the delivery systems or means of application such as gel or paste depending on consumer preferences. Other considerations included the classes and ages of individuals to include economic brands, whiteness formula brands, healthy brands and kids brands such that different segments are able to make easy choices on the products depending on their needs. Competitors also influenced brand development in that the highest selling brands were a priority for development of the new products. Forecasting was also used to evaluate the sales volumes of the competition manufacturers in these regions. This approach was essential in that it enabled forecasting for the demands of these markets.

The various products were distinct in their quality and type, which made them appealing to the various market segments. The younger ages preferred pump toothpastes as they found using these pumps as fun despite these pumps being expensive to produce. In addition, the young adults and adolescents alike preferred the whitening toothpastes due to the whitening effects giving them appeal that their teeth became whiter.

Price

Price is regarded as the purchasing quantity of a product usually in monetary terms. The prices were set with consideration of the numerous issues. The profit margin was one of the main factors in the formulation of the relevant prices within these foreign markets (Kerin, Hartley, & Rudelius, 2009). Because of entry into a new market, it was paramount for entity to include discounts to attract the consumers. In addition, price reduction was necessary to make the products cheaper in comparison to other competitors’ products to attract as many consumers in the market as possible. Criterion weighting enabled the entity to improve on the effects of the low prices, which led to reduction of cashflows as costs became higher than the expected revenues.

Promotion

Promotion was used to ensure that the entity was able to reach majority of the populace within these markets. Promotion budgets were influenced by the competitor budgets such that the budget was formulated with the highest returns in the market for the competitors in the market. In addition, it was paramount for the entity to launch advertising campaigns based on the funds allocated by competitors within the market such that =the entity would be able to counter competition. Advertising also considered the socio-cultural aspect such that the commercials were relevant for the identified markets’ populace.

Place

The locations of these markets influenced the channels selling and distributing these products with utmost effectiveness and efficiency. In addition, the element of place also influenced the selection of the means of delivery for the customers in the supply chains. On the other hand, the location of the operational branches was influenced by the need to reduce costs and efficiency of reaching the ultimate consumers in all the three identified markets.

People

People in essence are the consumers of the products. Hence, all these strategies were formulated with the consumer in mind to enable ease in accessing the developed commodities. The selection of the location was influenced by the need to get closer to the consumers to facilitate influence in using the products (Kerin, Hartley, & Rudelius, 2009). The products were developed with the consideration of the different market segments such that they would have individual appeal to these consumers. People are the most important aspect when formulating marketing strategies as these efforts are aimed at attracting the people or consumers 

References

Belch, G. E., & Belch, M. A. (2012). Advertising and promotion: An integrated marketing communications perspective. New York: McGraw-Hill/Irwin.

Huggins, R., & Izushi, H. (2011). Competition, competitive advantage, and clusters: The ideas of Michael Porter. Oxford: OxfordUniversity Press.

Kerin, R. A., Hartley, S. W., & Rudelius, W. (2009). Marketing. Boston: McGraw-Hill/Irwin.