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
|
Organic Virgin Coconut Oil
|
7.5–22.5
EUR
|
Tropical
Traditions/ Philippines
|
Fabulous Oil
|
36.6 EUR
|
L'Occitane en Provence / France
|
Organic Virgin Coconut Oil Moisture
Melt
|
4.5-11.3
EUR
|
Dr.Organic/
UK
|
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.
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.
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.
·
Package:
Package:
Firstly,
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:
 |
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
 |
Figure 14: Ads on railway station
Point of
Purchase (POP) and personal selling
Objective
Lacocovie
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
 |
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.
