Wednesday, February 25, 2015

Global Marketing Report - Italy - Coconut Oil

Executive summary
Lacocovie is the Vietnamese brand established in 2013 by Mekong Coconut Oil Company Limited. It produces coconut oil with the main feature is 100% natural, using no chemicals and the production is the combination of traditional manual methods and modern technology; this product is to meet the demand of natural health care and beauty caring. This report is to analyse the Italian market and the related factors in order to decide whether Lacocovie should enter Italy to expand their business.
 Firstly, the report focuses on the macro-environment factors including the strength and barriers in Italian economic, political, and cultural factors. The free trade agreement which reduce the tariff for Vietnamese products exporting to Italy to only 4.1% in late 2014 is the huge advantage in economic factor. Furthermore, the purchasing power parity of Italy is really high and it is steadily increasing which indicate the high consumption of Italians and this also the benefit for Lacocovie. Next is the Political factor, the main point of this is the low protection of intellectual property right from the government. The last factor is culture, the report examine that Italian modern infrastructure, which is good for distribution and the strong color perception of Italians, which Lacocovie can take this and develop the package to catch customers’ attention are some benefits for the firm. In contrast, the majority of native Italians speakers in the country can be a threat that Lacocovie has to consider carefully whether using what language in the packing.
Second part of the report is about the Segmentation and Targeting, Lacocovie is an attractive foreign coconut oil brand with competitive price and it targets both B2C and B2B markets. The B2C target market is classified based on the following segmenting variables: Geographics, Demographics, Behavior Graphics and Psychographics. Analysing those variables, Lacocovie targets the female consumers from 18 – 50 with the variety of social status (Lower middle, Middle and Upper middle).  Following the segmentation part is the Competitors Analysis and Positioning. The Italian beauty cosmetics market is extremely competitive with many different domestic and foreign brands, Lacocovie places itself as a brand that offers high benefit with low price to attract customers.
The third part will discuss about the Market entry Strategy. After analysing the internal and external factors, Cooperative exporting is the most appropriate method of entering Italy markets. Lacocovie will cooperate with Fresh & Clean Company which produces body hygiene. The two products are compliment and Lacocovie could use Fresh & Clean distribution network to reach more consumers. However, to take the advantage of free trade agreement, Lacocovie should enter Italian market in 2015. The steps to export to Italy are also listed in this part.
 The final part is the Marketing mix recommendations for Lacocovie. In Product part, the company will keep the same product, brand name to globalize the brand image; they only have to label the package in Italian. For the Price, in order to compete with others brand and reach the consumers as soon as possible, Penetration pricing strategy is applied in the case of Lacocovie. In term of Place, Lacocovie should use multi-channel distribution system; they could distribute their products through retailers (including barber shop and beauty salon) and cooperate with Fresh & Clean to take the advantage of using their distribution network. DHL is advised as the logistic company because its convenience and safety, it is also the well-known brand in the world. Finally, the Promotion part, we suggest Lacocovie use Out of home advertising, Sample, POP along with Personal Selling and Magazines advertising in the Sale Promotion strategy.
In a nutshell, after discussing all the factors above, we suggest Lacocovie should enter Italian market as the potential market to expand the business but since 2015.



     I.        Introduction

1.   Background information

In 2006, Mekong Coconut Oil Company Ltd (MKO) is established which located in Ben Tre Province (Lacocovie 2014). The MKO product is made of 100% natural ingredients, which are produced, based on a combination of traditional manual method with modern technology. After the success in export markets such as the USA, Canada, Japan and South Korea, the company has decided to expand their brand reputation in the domestic market. Therefore, Lacocovie was born in 2013. Lacocovie commits to produce high quality coconut oil to satisfy the demand of natural beauty and health care. Moreover, Lacocovie not only guarantee on product quality, but also take responsibilities for community.

2.   Product Profile

Lacocovie provides customer several types of coconut oil products with multiple purposes. The table below will illustrate more detail on Lacocovie portfolio products (Appendix A).

   II.        Macro-environment factor

1.   Economic

*     Trade agreement

Italy is the member of the European Union, which belongs to Economic Union (European Union, 2014). According to Vietnam Briefing (2013), there will be a free trade agreement between Vietnam and EU in late 2014. In this agreement, tariffs on Vietnamese goods will be cut down to 4.1%. This relationship aims to support the process of Vietnam’s social and economic reform, also encourage the integration of Vietnam in the international economy. Therefore, coconut oil could have lower tariff concern and importation cost. To conclude, Italy would become a potential market for Vietnamese companies who want to invest in the international market.

*     Exchange rate EUR/VND








Figure 1: The exchange rate of EUR and VND
As the statistics shown on the graph above, the exchange rate of EUR and VND has been fluctuated over the 3 years. To be more specific, the exchange rate decreased sharply in the end of 2012 (from nearly 30,000VND to over 25,000VND). However since 2013, the exchanged rate has been increasing steadily to over 29,000VND and expected to be growing continuously. Base on financial market theory, this means the EUR is appreciated and the Italians just have to pay a little amount to pay for Vietnamese products which lead to an increase in the demand of Vietnamese goods then an increase in the quantity.

*     Purchasing power parity (PPP)

The purchasing power parity of Vietnam in 2012 is US$ 3,133while the PPP of Italy in the same time is US$ 26,328(nearly 9 times compare to Vietnam) (Trading Economics 2014). According to CIA (2014), they predict that these numbers will keep increasing in the next five years for Italy, while Vietnam is stable. This indicates Italians tend to consume more and this is an opportunity for Vietnamese companies to export the product.
Figure 2: Italy GDP per capita PPP

*     Cosmetic Industry

According to Cosmetica Italia (2013) Italy is the country that consumes fourth highest cosmetic products in the world (€ 9,631 Million). In Italy, consumption of female cosmetic products account for 72.4%, while male products is 27.6%. This reflects that Italian women believe that they can look beautiful and attractive at any age and they are willing to take any opportunities to take care of their appearance.  Moreover, the trend of body oil products is increasing in sales values of approximately € 107 million which accounted for 4.5%. On the other hand, the category of hair product drops of 2.3% (Australian Trade Commission n.d). From all of above factors it seems that Italy is the attractive market for Lacocovie to export coconut oil that have multiple effects on body and hair that could satisfy Italian.

2.   Political

*     Political stability and government system

Italy is a demographic republic country since 1946 and their legal system is based on the constitution of 1948 and Italian government is a multi-party system, so the process to get a licence to do business in Italy may be more difficult and take a longer time since they have a quite complicated government system. Therefore, this may be the first challenge for Lacocovie when they enter Italian market. Next, there is no political event that affects foreign investment and there is no serious concern about the politics in Italy in recent years. Furthermore, according to Marsh (2013), Italy is ranked as a safe market for investment. Therefore, although there is a challenge in getting the license to do business in the host country, Italy is a country that has a stable political coupling with economy and it is also a good market place for foreign investment.

*     Protection of intellectual property right

The lack of enforcement of intellectual property right is one of the serious concerns in Italy. While the anti-piracy and anti-counterfeiting are strictly enforced by the government. In fact, there are many violations of intellectual property right, but relatively few cases are judged, so other companies can copy the bottle and the package of the company product and put the lower quality oil or other products in those bottles with the package that is similar with Lacocovie’s package. Therefore, this may lead to a disadvantage for the company product. 

*     Regulations for product

The coconut oil must follow the standard, which is included in Regulation (EC) No 178/2002 of the European Parliament (Biasetti 2013), to help and protect the customers. To be more specific, the government will protect the customer by giving them the information such as the quality and also the origin about the product.
According to Biasetti (2013), many international companies usually label their products with a multi-language label to ensure the effective sale through the global market. However, Italy strictly requires all products to be labelled Italian. Furthermore, according to the new regulation (European Parliament and Council Regulation 1169/2011) the products such as fruit, vegetable, eggs, poultry meat, wine, honey and vegetable oil must have the country of origin labelling (Biasetti, 2013). As a result, Lacocovie should label their products in Italian and they should have country of origin labelling. Thus, this is not a huge challenge for Lacocovie since they only have to label their products in Italian and put the country of origin labelling on their products.

*     Corruption

The corruption score in Italy is 43, which is higher than the level in Vietnam. For this reason, this rank level is an advantage for the Lacocovie to enter the Italy’s market. It means the business environment in Italy is cleaner; the company do not need to give out some illegal money like in Vietnam when they want to get the license.  The company can just follow the regulation of Italy’s law and keep maintaining the good image of Lacocovie when publishing in the new market (Appendix B).

3.   Cultural

*     Material life

According to the article ‘Italy - Infrastructure, power, and communications’ (n.d), Italy is characterized as high living standard with many efficient and modern infrastructures such as the Railways, Express ways, National roads, Seaports and approximate 136 Airports in around the country. Moreover, in comparison to the other countries in Europe, Italy’s train systems are quite “cheaper and more punctually”. Thus, Italy is a potential distribution for Lacocovie coconut oil Company since the convenience in Italy’s transportation.

*     Language




It can be said that Italy is a monolingual country with ‘93% of population are the native Italian speakers’ (Kwintessentialn.d). Therefore, this is the reason why Italy’s regulation in international products that the products’ labels have to be in Italian (Sloop, C 2013). This also means that Lacocovie Company has to consider using Italian in the products’ packaging to avoid the risk.
Figure 4: The percentage of language spoken in Italy

*     Aesthetics




The Italian Information (n.d) states that the Italians think green is the colour of hope and environmental-friendly, while white stands for the purity, faith and virtue. In addition, these two colours are also parts of Italy’s national flag. Fortunately, green and white are the main colours in Lacocovie’s product design (See figure 2). Hence, this is can be an advantage of the company in exporting to Italy.
Figure 5:Lacocovie product design

*     Value systems

According to the ‘Italy – a success story’ article (2010), Italian consumers tend to look at the safety of the cosmetic products before buying. Thus, they prefer the cosmetic products, which are recommended by some famous beauty magazines such as Cosmopolitans (Top 10 Italian Fashion Magazines 2011), Vogue Italia, and are sold at reliable distribution. This can be a challenge for Lacocovie that they have to be careful in building their image of natural and safe cosmetic products to gain the trust from Italian consumers.

*     Cross-culture Comparisons

·        High – context culture versus Low – context culture:
Recent research on Italy’s context culture (DePauw University (n.d)) has showed that Italy is both High – context and Low – context cultures (See Figure 3) since the religion difference between the North and the South of the country. Southern Italy, where is defined as low – context culture, the people toward more to the “tradition”, they are accurate in the business value in term of expressing clearly what they actually want by the “formal greetings” or “social gathering”. In contrast, Northern people seem to consider implicit messages because they can “perceive messages as more than just words” (Academic2 n.d).



As a result, when Lacocovie enter to Italy to run the business, it is substantial to understand Italy’s difference in Context culture value between the North and the South to apply the proper business strategies.

Figure 6: Reproduced from Nishimura, S &Nevgi, A &Tella, S 2008
·         Hoftede’s classification scheme:
As a Vietnamese firm that wants to enter to another country’s market, the understanding in differences between the home country cultures with the others is totally necessary.  Hence, the last part of culture factors will look at the comparison in Hoftede culture value between Vietnam and Italy (See figure 4). Since they are not much different in Masculinity, Pragmatism and Indulgence, the other three values will be determined below.
§  Power distance: The gap between rich and poor people in Italy is lower than Vietnam with the power distance score is 50. This can be an advantage for Lacocovie because the coconut oil product might accept by everyone. Because the price that our company set is cheap with the organic ingredients – 100% nature.
§  Individualism: 70 is the score for Individualism in Italy, that means Italy is an individual society where people tend to be more independent in their decision made and less effected by the others (family, friends,..). Thus, in term of business strategy, to persuade they purchase the products, it must be taken by many efforts that influence the Italian consumers positively.
§  Uncertainly avoidance: Italy’s Uncertainty Avoidance score is higher than Vietnam’s by 45 scores, which means the Italian people, tend to consider carefully in new products than the Vietnamese. Hence, Lacocovie Company must be certainly in the products’ quality to satisfy the Italians’ high requirements.
Figure 7: Italy's Hofstede in comparison with Vietnam

  III.        Segmentation and Target Market

1.      B2B Market

(Appendix C)









2.   B2C Market

Segmenting variables
Sub-categories
Target segments
Geographic
Country region
Italy
Mainly focus on Urban area (Rome and Milan)
Demographic
Age
18-50
Gender
Female
Social Status
Lower middle, Middle and Upper middle
Income
(Euro)
Income: higher than 1,200
Behaviour Graphic
Occasion
Daily use
Benefit sought
Easy use, positive effect, non-side effect, long duration
User status
Mostly target the first user and potential user
Usage rate
Heavy user
Psychographic
Life-style
Innovator
Thinker

*     Geographic

The company will export the product into the urban area in Italian market, because Italy is one of the few countries, which cannot grow the coconut tree. Furthermore, according to Khai et al. (2011), Italy is one of the ten countries, which import the highest amount the coconut oil in the world. Therefore, this is a potential market for Lacocovie Company to export their product.

*     Demographic

Lacocovie aims to target females who are from 18 to 50 and have the income over 1,200 USD. There are many reasons why Lacocovie decides to choose this age group to be its target customer. Firstly, women are usually more concerned about their beauty than men. Secondly, females start to take care of their appearance by using the cosmetic products at this age since they have realized the importance of their beauty. Next, the company also focuses on people who are from low middle class to upper middle class. To illustrate, the products from Lacocovie are not premium products, so it will not attract the upper class people who are usually looking for premium products made from well-known company such as L’occitance, The Body Shop and Oliva. 

*     Behavior

In order to utilize all the benefit of coconut oil from Lacocovie, customers are encouraged to use it daily. Next, consumers usually look for cosmetic products, which are easy to use, positive result without side effect and have long duration. To be more specific, coconut oil is the anti-aging product that can help people to have a softener and moisture skin (Bruce, 2004).

*     Psychographic

Innovator: Lacocovie will aim at innovators because they are willing to change and they are also active customers, so innovators will compare the price and quality between different brands but in the same product category. Therefore, Lacocovie can attract this type of customers to use their products, when it first comes to Italy
Thinker: thinker is the second type of customer that Lacocovie aims at. To elaborate, they are well-educated people and they value knowledge, responsibility and order. In fact, they are actively search for the information before making a purchasing-decision although they have high income. Therefore, they will look for a product that environmentally friendly, has long duration and good for their health. Lacocovie has matched the requirement of this type of customers

 IV.        COMPETITION ANALYSIS AND POSITIONING

The Italy market is very competitive for the beauty cosmetics with many different type of oil from local and foreign country. These product come from many companies has long-standing reputation such as L’ocitance, The Body Shop. Moreover, there also have some Tropical Traditions, Oliva, Dr.Organic.

1.   Competitors Analysis

Brand name
Price
Product Company/ Original country
Description: C:\Users\s3373136\Desktop\Untitled.png
Organic Virgin Coconut Oil
7.5–22.5 EUR
Tropical Traditions/ Philippines


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Fabulous Oil
36.6 EUR
L'Occitane en Provence / France

Organic Virgin Coconut Oil Moisture Melt

4.5-11.3 EUR
Dr.Organic/ UK


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Coconut Beautifying Oil

10.5 EUR
The Body Shop / United Kingdom



Oliva Oil Massage Body Oil
Olio Da Masaggio Oliva Oil
18-21 EUR


Amerigo/ Italy


2.   Positioning map

Lacocovie’s competitors has a same type of product is oil for hair and body, but with different ingredients such as coconut, olive, Shea oil and desert date palm. The company guarantees that 100% pure coconut and healthy nutrient to extract by cold press technology that can ensure the quality of our oil cannot be compromised. For this reason, the quality of oil is our most important competitive advantage. Because of the cost of manufacturing and materials do not high, Lacocovie offers an affordable price for Italian customers. Lacocovie should use the uniform positioning strategy.


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  V.        Market Entry Strategy

1.   External factor

*          Advantage

Because of the high consumption of cosmetic products (compare to other European countries, Italy is the top 4 leader in the high cosmetic consumption - Cosmetica Italia 2014), Italy is the attractive market for cosmetic companies that want to invest.
Italy also has good infrastructure especially in the transportation system. To the foreign companies, the high number of seaport creates the advantage in shipping. The development of national roads and express ways make the distribution become easier if they want to spread out their products; it connect the whole peninsula especially in the north and the centre. In the late 2013, it received $4 billion of fund from the government, this ensure that the Italian infrastructure will soon be upgraded (Martinuzzi, E 2013).
In the late 2014, there will be a free trade agreement between EU and Vietnam which reduce tariff of goods from Vietnam to 4,1% (Vietnam Briefing (2013). With this, Lacocovie can set a low price to attract customers and compete with other Italian domestic brands.

*          Challenge

However, since 2012, the Italian cosmetic consumption decreased and it is difficult to predict the future of Italian cosmetic industry (Appendix D). Moreover, the amount of cosmetic product that is imported in Italy had grew slowly in the past 11 years and started to drop since 2011 (Appendix E) which make the foreign company have to consider carefully when they export to Italy. One more point is the domination of the domestic company, they make up a high percentage in the market share and this becomes the real challenge for foreign companies (Euromonitor International, 2014).

2.   Internal factor

The coconut oil production process is made of high modern technology combined with traditional craft which indicates that Lacocovie have their state-of-the-art factory in Vietnam and there is no point for them to build another factory in Italy to product coconut oil. Moreover, the coconut oil is a convenience product with intensive distribution. Therefore, Lacocovie may not have much level of control over their distribution network in Italy. Moreover, with the limited financial assets of Lacocovie, it is difficult for them to have high commitment entry modes which are required much demanding on their resources.
Base on the external and internal factors analysis above, Cooperative exporting is the most appropriate method of entering Italy markets. In order to approach this strategy, Lacocovie should find Italian company such as Fresh & Clean which its product and Lacocovie product are complement product such as body hygiene and coconut spray oil. Moreover, Lacocovie could use Fresh & Clean distribution network to export their products over Italian cosmetic market. By apply this method, Lacocovie not only commit less resources to establish logistic network, but also have some control level over their foreign partner. In addition, Lacocovie could avoid the high “uncertainty avoidance” rate of Italian because Fresh & Clean have sustainable in bath & shower Italian market share over last 4 years( Euromonitor International, 2014).

*          Time of entry

As shown above in the economic factor, because the reduction on tariff will be applied in the late 2014, Lacocovie should wait until this time to enter the market because this will give them a great advantage. Moreover, the fund for Italian transportation in 2013 must take time to be fully completed so we suggest Lacocovie should enter the Italian market in the middle 2015 to take full advantage of the tariff reduction and the upgrade of transportation system.
Ø  Export transaction between Vietnam into Italy:
(Appendix F)

 VI.        Marketing Mix Recommendations

1.   Product

·         Product line extension:
There are three flavours of coconut oil, which are coconut oil mixed with orange oil, origin coconut oil and coconut oil mixed with YlangYlang oil. The company will keep the same flavours when they export to Italy. Moreover, the company will pay more attention on the satisfaction of the customers in the introduction stage to know whether they prefer the current flavours or the company should change the flavour (Appendix G).
·         Product communication adaption:
As a new entrance in the Italian market, the Lacocovie should apply the product adaption strategy, which means that they should try to do more research and understanding all the activities required in the Italian market in order to perform good product adaption and communication strategy to suit with the host market. This strategy is less risky than other methods because Lacocovie does not have to change or produce new products, so they can save money for other processes. Furthermore, the Lacocovie can adapt the Italian market by changing the product’s package to make it more suitable with local people. Lastly, the Lacocovie also needs to add more information on the label to meet the requirement of imported product in Italy.


·         Description: Macintosh HD:Users:MBPro13:Downloads:DSC_4761232.jpgPackage:
Text Box: Figure 11: New package of coconut oilFirstly, the current colours of the coconut oil package, which are green and white, are suitable with the Italian fancy as mentioning in culture facture, green and white are the two colours, which imply positive meaning for Italian people. Thus, these two main colours will be remained. However, the Lacocovie Company must give the information of the country of origin labelling on the package, and the language of the package should be labelled in Italian in order to satisfy the regulation of imported product in Italy (Biasetti 2013). Finally, there will be a small paper in the package, which contains the use, the ingredients and the instruction of the product, and it will be written in Italian language.
·         Brand name:
The company will keep the same brand name as the origin, which is Lacocovie, so that the value of the company will be kept in foreign market.
Level of Product
·         Core benefit:
As a good antioxidant, coconut oil can prevent people’s skin from aging. In fact, the coconut oil can remove the external dead cells and also pushing the fresh new skin cells out, which helps people look younger. Furthermore, the powerful antioxidant can also help people to protect their skin from inflamed and burned due to the long exposure to the sunlight. Lastly, coconut oil also contains a high amount of a human hair protein which can protect people’s hair from the dry and split end hair.
·         Actual product:
Quality: Lacocovie products have high quality standard due to a complex process of refining and making oil coupling with modern equipment
Packaging: there are 1-package sizes
o   100ml plastic bottle    
o   Brand name: Lacocovie
o   Label: written in Italian

2.   Price

*          Price Escalation

Transportation Stage
Description
B2B Price (Estimation)
B2C Price (Estimation)
1.   Manufacturing cost
Raw materials costs, Producing process cost and 10% VAT
60,000VND – 80,000VND
90,000VND – 110,000VND
2.   DHL- Door To More Package (from PhuNhuan District to SaiGon Harbor)

-    Truck capacity: 7,000l -> 7,000,000ml
-    Number of 100ml bottles delivering: 70,000 units.
- Package price for this process: 2,700,000 VND
=> Cost of a bottle (100ml): 39VND

60,039VND – 80,039VND
90,039VND - 110,039VND
3.   Free on Boat (FOB)
(Estimated cost after round up)
61,000VND – 81,000VND
91,000VND – 111, 000VND
4.  Cost, Insurance and Freight (CIF)
According to PjicoInssurance (2013),
-   Main fee: 14%
-   Flow fee: 3%
(0.14 x 0.03) x 61,000 = 10,370VND
(0.14 x 0.03) x 81,000 = 13,770VND
(0.14 x 0.03) x 91,000 = 15,470VND
(0.14 x 0.03) x 111,000 = 18,870VND
71,370VND – 94,770VND
106,470VND – 129,870VND
5.  Exchange rate (VND to EUR)
1EUR = 29,000VND
2.46EUR – 3.27EUR
3.67EUR – 4.48EUR
6.  Tariffs on Vietnamese Products




4.1%
0.041 x 2.46 = 0.10066EUR
0.041 x 3.27 = 0.13407EUR
0.041 x 3.67 = 0.15047EUR
0.041 x 4.48 = 0.18368EUR

2.56066EUR – 3.40407EUR
3.82047EUR – 4.66368EUR
7.  DHL – Door to More Package (arrived Civitavecchia Port and Milano Port)
(Estimated cost after round up)
2.6EUR – 3.5EUR
3.9EUR – 4.7EUR
8.  DHL – Door to More Package (Distribution Process)
Estimated cost is 550EUR -> 0.001EUR/1 unit
2.601EUR – 3.501EUR
3.901EUR – 4.701EUR
9.  Consignment fee
Estimated cost is 30% of the product price
0.03 x 2.601 = 0.07803EUR
0.03 x 3.501 = 0.10503EUR
0.03 x 3.901 = 0.11703EUR
0.03 x 4.701 = 0.14103EUR
2.67903EUR – 3.60603EUR
4.01803EUR – 4.84203EUR
10.  Incurred cost
Including in Italy Product Promotion costs (advertising, PR), inflation rate, exchange rate in future
3.4EUR - 4.3EUR
4.7EUR – 5.5EUR

*          Price Strategy

Market penetration pricing is the strategy that the company should apply when enter into Italy. It means Lacocovie product set the low price for coconut oil to catch the attention from customer in Italy to try our product. Because of the competitors are these companies which strong, famous, long-time reputation and luxury ingredients. Moreover, the manufacturing cost of Lacocovie is quiet low than others product. Although, the Lacocovie have lower price, they still guarantee the quality of coconut oil is 100% nature. For this reason, this strategy may help the company increase market share and sales volume in new market. After gaining the market share in Italy, Lacocovie may increase the price.

3.   PLACE

With distribution channel, we suggest Lacocovie to use hybrid marketing channels as known as multichannel distribution system.
 











                       Figure 12: Multichannel distribution system of lacocovie in Italy
The reason why Lacocovie should use many distribution channels rather than stick in one main distributor such as Fresh&Clean (as the market entry analysis above suggested) because the Retailers (supermarket)  accounted for 22% the weight of distribution channels in Italy, the rate of Hairdressing and beauty salon is nearly 10%.

*     Retailer- Supermarket

·         Gruppo Coin
Gruppo Coin currently own approximately 5 departments in Milan City and 8 shops in Rome (Gruppo Coin 2014). Coin Group serves in different various sections such as Men’s, Women’s, Children’s fashion and cosmetic. Thus Lacocovie can take advantage of widely and variety of distribution channels to match different segmentation and Geographic target market as
·         IperCoop
·         CONAD - Consorzio Nazionale Dettaglianti Scrl
Conad is a retail store brand that has one of the largest supermarket chains in Italy. Founded in 1962, Conad is the retail store, which has highest market share and its market share also increasing steadily since 2010. It also has many expansion plans in order to keep its strong position in retailing industry such as holding many activities and contest to promote an image off a friendly store which focus on consumers’ need to save money. Cooperating with CONAD give Lacocovie a big opportunity to reach a great amount of consumers. In Milan, Conad has 5 supermarkets (as known as CONAD CITY) and 1 hypermarket. In Rome, Conad has an expressive distribution system of 19 hypermarkets and 63 supermarkets.

*     Baber Shop & Beauty Salon

In order to reach a large number of customers, we also suggest distributing the products through barbershops and beauty salons in 2 big cities Milan and Rome. Because coconut oil can be used for maintaining the moisture of hair, we want to take this advantage and use barber shops and beauty salons as retailers. After having their hair cut or taken care of, customers will take advice from the hairdressers about how to take care of hair and may want look for products that can afford these needs. Having the products displayed in these places may attract customers’ attention and also increase the brand awareness of customer about Lacocovie.
By using Gruppo Coin, CONAD, Iper Coop and Local Barber shop as the distributors for coconut oil, Lacocovie would gains some benefits. Firstly, they can avoid the problem of finding final customer because these supermarkets and salons will take response for this mission. Secondly, Lacocovie have sustainable sales volume during the period due to purchasing from these business partners regularly. However, Lacocovie will face with another problem is that they are hard to win a large profit over the distributors and lose opportunity to develop direct relationship with other retailers because they have more power in entire marketing mix including payment method, local support, negotiation.

*     Logistic Process

                            (Appendix H)

4.   Promotion

*     Out of home Advertising

Objective:
It is suggested that Lacocovie should apply the out of home advertising to promote the Lacocovie brand in Italy. The public transportation such as bus and railway can be used as one of the tools to advertise the cosmetic product such as Lacocovie. In fact, most of Italian people travel by the public transport because the cost of traveling by these vehicles is quite cheap (Redman et al, 2012). As a result, if Lacocovie can apply this method, they will be able to attract a lot of people. 




Description:


Description: Macintosh HD:Users:MBPro13:Downloads:White-coach-bus.jpg

The advertising of Lacocovie will be showed in the railway station and bus. Moreover, the side of the bus will be also utilised for the company advertising to attract attention. Furthermore, the company can attract Italians’ curiosity since the advertisement information will be a girl with a brand name and a slogan, which are “living naturally”.
Figure 13: Ads on Bus


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Figure 14: Ads on railway station


*     Point of Purchase (POP) and personal selling

Description: Macintosh HD:Users:MBPro13:Downloads:POP1.jpgObjective
Text Box: Figure 15: POPLacocovie is the new cosmetic brand in Italy, so the company needs to introduce to customers about their existing products in the market. In addition, according to the Hostefe’s classification, Italian people are not willing to try a new product. As a consequence, the organisation should use the POP coupling with personal selling as one of the marketing techniques to draw the attention from the Italians, so the salesperson can fulfil the customers’ confusion about the product. In fact, according to Dwyer et al. (1987), the personal selling also increases the relationship between the customers and the organization. As a result, Lacocovie can improve the relationship with the Italian customers by using the salespeople. Moreover, the salesperson must meet the requirements of Lacocovie such as self-motivated, excellent listener (Brewer 1994).

Description
Lacocovie Company will select the two supermarkets such as Gruppo Coin and Ipercoop, which are the Lacocovie’s retailers. The company will set up a POP in each supermarket and there will be one to two girl stands nearby the POP. This person will present the benefits of the product to and also reply the confusion of the customers.

*     Sample

Objective
According to Wu (2010), sampling has become one of the popular techniques for the marketer to promote the new product in a market. In fact, the sampling promotion is an effective way to encourage customer to have trial, and the company can also raise the brand awareness of its target customers. To illustrate, Lammers (1991) stated that there is a significant increase in sales, when the free samples are given. Therefore, as the new entrance in the Italian market, Lacocovie can apply the product sampling to not only increase the sales, but also the company can convince the customer try the product.
Description
The sample will be given at the POP in the retailers that are mentioned above. Furthermore, Lacocovie can also give a trial for customers through magazine. To be more specific, the sample will be sticked in the page of the Lacocovie advertising such as Vouge and Cosmopolitan

*     Magazine

Objective
Due to the deliberateness in purchasing new cosmetic products, Italian people would like to purchase the products, which are recommended by prestige sites. Therefore, magazine advertising can be an effective marketing tool for Lacocovie’s products since they want to sell their products in Italy. Moreover, Italian beauty magazines are extremely popular in the country and as well as many other countries in Europe. According to ‘Top ten of Italian beauty magazines’ (2011), it lists out several potential magazines that the team suggests Lacocovie can use to advertise their products, there are Cosmopolitan, Elle, and Vogue Italia. According to the Mondadori Group (2013), Italy is the biggest magazine industry which is one of the leaders in Europe. For this reason, instead of using advertisement online magazines to reduce cost of promoting, Italian prefers printed hard copy.







Description


Description: Macintosh HD:Users:MBPro13:Downloads:Michelcurly_ads.jpg

Lacocovie can sign a contract with some famous beauty magazines such as Elle, Vogue Italia. The company advertises full page or 1/3 page depending on the quarter of the year, the sample of product may include in magazine at the first stage when lacocovie has just entered Italy’s market.
Figure 16: Ads on Magazines









VII.        Conclusion


In conclusion, this report has researched some critical factors about Italy, so the Lacocovie Company can base on this information to decide whether the organisation should enter the Italian market or not. In general, the research team has analysed deeply about the macro-environment, market segmentation, positioning strategy, competitor, market entry and also the 4Ps analysis along with the recommendation strategies for the each P for the Lacocovie to adapt the Italian market. In fact, there are a lot of opportunities that come from the macro-environment such as a free trade agreement between Vietnam and EU, and a potential increase in consuming goods. However, there are some external factors, which also give some challenges for the Lacocovie such as the different labelling language. Secondly, the Lacocovie Company has to compete with many strong competitors, which gained a certain market share in Italy. However, the Lacocovie can also gain its market share and raise the Italian awareness about the brand through applying some promotion strategies. Although Lacocovie has to face with some difficulty when they want to enter into Italy market, the company still can overcome by the quality and differentiate of coconut oil. In addition, the reduction on tariff will be applied in the next year and the improvement of transportation can be a huge advantage for Lacocovie to export. For this reason, the coconut oil of Lacocovie should be expert into Italy in the middle of 2015.

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