Action Plan for New Nivea in a New Market Segment
The improving economic conditions in various parts of the world provide individual companies with market opportunities that need to be exploited completely.Some Fast Moving Consumer Goods (FCMG) manufacturers have already made this move whereas others are still concentrating on traditional highly developed economies.This paper illustrates how Nivea, the skin care manufacturer, can exploit market opportunities offered by the fast developing nations.
The paper will specifically extrapolate on how Nivea can develop a wholly new skin care product that would be marketed to specific market segments in the aforementioned nations.
The first section highlights on external audit of the new market and product situation, whereas the second part provides internal audit. An action plan for two months before product launching and 12 months after the launch is illustrated throughout the paper. Part I: External Audit The fast developing nations, especially in Asia, provides FCMG manufacturers with grand opportunity to expand global sales. The past three decades have indeed seen disposable incomes in formerly poor countries s increase tremendously. China and India are the best example of countries whose inhabitants have experienced ever-increasing incomes.
Higher incomes mean that Indians and Chinese are able to afford products that seemed to be luxury before. Skin care products fall in such category, meaning that Nivea has a ripe market its product portfolio. The younger generation in both countries is especially the ones that Nivea needs to target. The growing taste of luxurious skin care products demands that Nivea embark on supplying products to this lucrative market segment. In addition, the company has to consider developing new products that are specifically designed for this generation; just supplying products from traditional markets might not make significant impact.
This market segment need products they can easily associate with, not just imports. Developing a product specifically for the Asian market would therefore get better reception before competitors think of making a similar move. Customers in this market segment would take a pride in using product specifically developed for their uses, as the company reaps benefits through improved sales and market dominance. Nivea is not the only skin care product manufacturer eying the lucrative Asian market, as other global companies are making onslaught in the region (Haig 2006).
A greater number of competitors are also supplying imported products to this market segment, meaning that Nivea would be making the initial move of developing and marketing products for this new market. Nivea competitors in these markets can be classified into three groups. First is the group consisting of local manufacturers that have been in the business for many years. The availability of modern technology has enabled these local players to perfect respective products to international. The perfection of respective products mean that indigenous companies are able of competing effectively and defend their market position.
The second group includes international players with experience in other markets. This group is most competitive and indeed the one that Nivea should not ignore. The improving economic situation in the region will continue attracting more competition from existing firms. The third group includes companies willing to enter into the Asian lucrative skin care market. Nivea management should further consider that local and international companies could get into joint ventures that could be hard to out-compete. The company should therefore consider a similar approach.
A joint marketing venture with local companies should especially be considered in the two months before the launch. This is in understanding that professionals working on local companies have better understanding on consumers and their needs (Riezebos, Kist & Kootsra 2003). PESTLE Analysis Pestle Analysis is hereby used to illustrate externalities that Nivea will have to handle in the process of introducing new product in the market segment. These are the issues that the company has little control; they factors are discussed below in detail: Political
This factor refers to issues that may affect company operations and thus entry of the new products into the new market segment. National or regional politics have recently determined trade issues in various parts of the world, including Asia. Senior management should therefore consider being informed on political policies that may affect future business. China and India have been on the forefront on the process of creating friendly political processes for companies to establish operations (Pelsmacker 2006). Nivea is thus poised to benefit from friendly trade regime from the two countries.
The company can even take advantage of improving investment opportunities in the region to produce therein and consequently supply to other countries in the region as well as worldwide. The company will thus be creating a strong foundation for competitiveness against local and international industry players. Economic: This is among the driving factors leading to Nivea’s entry into the Indian and Chinese young adult market segment. Indeed, as described earlier, this segment has been experiencing expanding disposable incomes that can be used to become Nivea customers.
Just like in other countries, the expanding middle class in China and India are having influence over rest of society that would like to copy behavior (Kapferer 2004). Endearing Nivea products to the middle class would eventually see rest of population in the two countries becoming consumers. The region holds good fortunes considering that economic progress being experienced currently is poised to continue in coming decades. It is for this reason that Nivea should seize the opportunity of embarking on supplying new products in the Asian sub-market.
Social: This factor regards social sensitiveness that the company has to consider, especially before entering the market segments. This should especially be considered in the two months prior to supplying company products in the region. The social issues should further be considered when preparing for advertisements that must not be offending in any way. In addition, the target market should be able to connect with the product socially, which could include packaging and presentation. Having products connecting with people socially, or which tend to promote local culture would go a long way in endearing the new Nivea to target market.
Any clash with the local culture and customs could result to the company being out competed by other industrial players. Technological: The technological factor refers to production and production processes used to manufacture products and subsequently supply to consumers. Nivea management should in the two months before rolling out the products ensure putting the technology in place. In addition, Nivea’s senior management should embark on being on the forefront of using modern technologies that would improve productivity.
Embarking on taking this route would provide the company with long run high productivity, meaning that only high quality products would be generated from Nivea. Relying on technology for continued quality improvement would result to more endearment with consumers in the region. Management should thus embark on improving technology in order to keep improving. Environmental: The environmental factor is hereby taken to mean issues affecting the industry as a whole. This especially includes the size of competition and the future of the industry.
The number of competitors is a key determinant of competitiveness. Few players does not necessarily mean low competition as more companies can enter the industry in later time periods. Industrial effect on environment is also addressed in this factor. Participants have to thus ensure reducing and totally eliminating the effect of operations on the environment, such pollution. Governments in various parts of the world have heavy fines and punishments to companies and individuals whose operations affect environment negatively.
Companies have on the other hand embarked on reducing effects on environment as part of their corporate social responsibility (Bruhn 2002), which is something that Nivea should take seriously in China and India. Legislative: This factor applies to government policies that could affect operations relating to production and supply of skin care products in respective jurisdictions. This is a factor that Nivea cannot in any way control. The company should be well prepared to deal with new legislations that could come before and after launching new products in the market.
In addition, the responsible managers should embark on developing ways and means of coping with operational changes that could come with new legislations. Overcoming legislative challenges should form the key foundation for success in the market segments, considering positive relationship between the company regulatory authorities and consumers. Part II: Internal Audit This second part highlights internal factors that Nivea can use to create strong foundation for success in the new market segments and its new product line. The company has been in the business of manufacturing and supplying skin care products since 1911 (Nivea 2008).
The company has since expanded operations to many parts of the world, but has in most cases supplied products manufactured for older market. Indeed, the current undertaking would be among few occasions that Nivea has embarked on developing new products for new markets. The SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis below illustrates how the company needs to apply before, during and after launching. Strengths: Nivea’s track record of manufacturing is among the strengths that will make market penetration in the new segment possible.
Company products thus command a huge following in historical markets, which could be replicated in the new markets. The strength of going at greater lengths to meet consumer demands is best being applied in the Asian market through new products. This start by designing products that easily meet consumer skin care needs adequately. The second step is the organizational culture of getting customer feedback on all products, whether new or old in respective markets (Flapper 2005; Pecotich 2006). This allows consumers to express their concerns or satisfactions with the products.
The target market in India and China would thus get opportunities to inform Nivea representatives on how the new products could be improved. The company can thus embark on improving the products in line with consumer demands and tastes. The long-term result is continued improvement of company products’ competitiveness in the lucrative Asian market. Weaknesses: The entry into wholly new market segment with brand new products serves as the greatest weakness, considering that the company has certainly never had such undertaking in the region. There are few learning opportunities for the involved officials to get lessons.
However, notes Keller (2006) Nivea has a history of turning weaknesses into business opportunities that have been exploited to the maximum—this should also happen with introduction on new products in the Asian sub-market, especially in the beginning stages. Opportunities: The improving economic conditions in the fast developing Asian countries provide ripe market for Nivea skincare products. Ever increasing segment of the populations having more funds to spend on company products. Nivea should thus position itself in tapping into this lucrative market.
In addition, the company should take advantage of the improving business environment in the region. China and India are increasingly becoming competitive in the international arena, which has resulted to many companies setting operations there. Companies that have taken advantage of reduced operational costs. Nivea, too, should embark on setting foot in the two countries, and subsequently produce for local market and export to other countries. Threats: Competition from local and international firms brings out major threats for Nivea entry into the new company.
Local companies have for many years been able to perfect respective products to international standards (Hymes 2007). This has made them formidable competitors in skin care industry. New entrants therefore understand they are up against tough players. Naivea management further needs to consider that international skin care industry participants are also eying the same Asian market, which compounds competitive challenges. Bust as illustrated earlier, Nivea has had a history of outdoing competition on many fronts. Repeating this feat in China and India is thus more likely to happen.