Mariano Ferreyra’s analysis of the Argentina and Australian market is commendable. Indeed, he’s future prospect and success in the exporting business starts from the research he has done on the markets. However, there are issues that he may have overlooked. One is the importance of researching on the uncontrollable factors such as the political legal environment and the economic environment, viability of the marketing since two-way trade between Argentina and Australia is relatively limited. He also overlooked the importance of sales forecast in a business plan. He feels that it is too difficult to estimate sales in the first few months and rather prefers to first test the market. The facts that Mariano chooses to sideline in his consideration are vital to the success of the venture. Take for example the political legal environment. When a country’ political system is unstable then most people are unwilling to spend money and liquidity preference among people is prominent. (Evans & Berman, 1990) Further, the political system in the Argentina market may also be against such exports into that market. He needs to do a further analysis into the uncontrollable factors in that market. Additionally, conducting an analysis of the industry players in that market.
The porters 5 forces model and SWOT analysis would come in handy in analyzing the environments. It would help Mariano to gauge the strengths and weaknesses in the Argentina market as well as identifying the opportunities and threats in the Argentinean market. With this clear understanding, perhaps Mariano would find a strategy of penetrating the Argentinean market given that the portable gas barbeque are unheard off in Argentina. Another thing is that the SWOT and porter 5 forces model would help Mariano be in a position to maximize his benefits and opportunities in that market and at the same time minimize the weakness and threats. (Doane, 2002) In this case the possible threats is the reoccurrence of a crisis in the economy which would mean that middle income earners exhaust or loss their money due to banks collapsing low incomes and high unemployment. The opportunities that exist for Mariano include the fact that Argentina is a member of the free trade Association. That would mean favorable terms of international trading for large as well as small-scale entrepreneur and starters such a Mariano. Furthermore, Argentina has a favorable economy for the products that Mariano intends to start selling. The company that manufacturers the portable gas barbeques has three models, which fit perfectly with the different income levels of the customers. For instance, a compact model, which has limited range of features, comes at convenient small size and a proportional price relative to middle-income earners living in apartments with small terraces the middle-income earners have a model that they can identify with i.e. the medium model. This model has greater range of features and comes at a reasonable price of $550.
This would be ideal for middle-income earners with bigger balconies or compounds in suburban homes. The deluxe model is designed for people with large disposable incomes and lifestyles that involve a lot of outdoor home entertaining. Mariano has an opportunity to provide these gas powered barbeque to the Argentinean market for one, they are reasonably priced and second, they would especially appeal to the population, as they are convenient. Mariano has found out that people usually build their own barbeque with brick and motor then purchase a grill on which to cook the food on. This great deal of process could be avoided with the gas-powered barbeque hence such an unequalled opportunity.
Mariano is a native Spanish speaker; he has worked in the Argentina before immigrating to Australian. He thus has a strong understanding of Argentinean culture and with the additional links to Argentina through his family, which stays in Cordoba; he is miles ahead in his bid to becoming successful exporter.
Mariano’s set of skills will assist him greatly in undertaking this venture. He has experience of Argentina in both Anglo-Saxon cultures in Australia and Latin American cultures. He has experience life in both countries and thus able to note that many products available in Australia lack in Argentina or incorporate lower level of technology. This has enabled him pick a product that is currently unavailable in Argentina market and export it. His choice is the gas-powered barbeque, which he is convinced is the perfect match to Argentina lifestyle. In addition, Mariano has undertaken a postgraduate degree in international in international marketing that leverages him to making smart decisions regarding the business venture. For instance, making decisions on an effective marketing strategy just incase Easy flame manufactures agree to his proposition to sell their products to him at less than wholesale price. He also needs.
The challenge that Mariano will have to contend with is the fact that the Australian company that manufactures the gas powered barbeques specializes only on barbeques in New South Wales, Victoria and Queens land. It has no practical experience in international market just same way as Mariano lacks practical experience in international marketer. It does not have any corporate plans of becoming an international marketer. Mariano on the other hand does not have links to Argentinean importing companies.
Mariano realizes that an alternative of using his graduate brother to market the products in Argentina could work effectively. This is because they have owned a chain of business in Cordoba, Argentina.
The social cultural factors should be considered. This includes consumers’ tastes and preference, lifestyle, demographics when deciding to venture in an international market. Mariano has a good picture of these social cultural factors and apparently, they work to his advantage. His product, the gas powered barbeque fits perfectly with the central feature of Argentinean cooking. The Argentinean love meat barbeques and enjoy out door lifestyles. For this reason, coupled with the fact that he does not recall seeing portable gases barbeques in retail outlets in Argentine makes the opportunity unbeatable.
Products, like living organisms have a lifecycle, which is divided into five stages namely; introductory stage, growth stage, maturity, decline stage and obsoleteness. (Sandhusen, 2000) Mariano realizes that gas powered barbeque may be at maturity stage in Australia but in Argentina the same product is on introducing stage, hence a great opportunity to cash in on. He is however skeptical because given the previous economic crisis, which eroded Argentineans confidence in the economy and hence spending their little income, the Argentinean market, is a considerably challenging market. However, Argentinean boasts of good infrastructure, skilled workforce, substantial natural resources and a sizable population. The manufacturing capacity is equally good, which implies attractive levels of income to Argentinean citizen. These factors greatly contribute to the success of a business venture such as Mariano’s
Due to Mariano’s lack of experience in international marketing, particularly export sector, and the absence of links with Australian export consultants or Argentinean import agencies, Mariano, has decided to settle for indirect exporting. He envisages his family back in Cordoba and his postgraduate brother, whom he will send the first shipment. The family will be responsible for security the container in a warehouse and approaching local retailers to convince them to stock up the products. He is particularly keen on stocking at department stores camping and kitchen stores. The advantages of indirect exporting are that it will enable Mariano have hand s on approach in dealing with exporting hence gain experience in the exporting market. He will also have direct control over his accounts locally and overseas. Additionally,
Exporting the barbeque to Argentina will differ from distributing the products in parts of Australia where the product is unavailable in the sense that Australia is a developed country and most of the consumer goods are at a mature stage. Similarly, the distribution channels are perhaps more advanced than those in Argentina may bring about a difference. Additionally the cost of exporting of distributing barbeques will differ since the proximity between the two varies. A cost effective means used the Australia may not necessarily be cost effective to use in exporting to Argentina. Given that the gas-powered barbeques are a new product in the Argentina market, the distribution channel is bound to be short and intense. That is it will not involve many intermediaries so that the ultimate price is not inflamed. Mariano envisages a short chain using his brother and family and eventually to the retail stores.
The economic environment is similarly uncontrollable to Mariano. He cannot dictate how much disposable income a household has at any given time. The economic factors influence Mariano’s business venture in the sense that low economic growth interferes with the buying power of customers. Furthermore, transportation costs are likely to hike during periods of inflation making the eventual price of gas-powered barbeque expensive, which is unattractive to customers. Although the economic environment is, uncontrollable, Mariano can work around the problem to ensure that he does not suffer adversely during economic fluctuations of inflations and depression.
Marketing risk decisions how ever intimidating they are to Mariano are a key component in determining the penetrative ability of portable gas barbeque into the Argentinean market. The marketing mix encompasses the 4 ps of marketing namely price, promotion, product and place. (KnowThis.com). Most individuals prefer to compete for market along the price variable, as it is the most flexible. However, in Mariano’s case, the level of competition is low as the product will be at the introductory stage where there are few or no competitors. He can price the products at any price level. The place at which the product is sold is also a key variable in the marketing strategy. A strategy place, which is accessible to majority of target customers, is important. In the case of the gas-powered barbeques, the target customers are the middle-income earners who love out door lifestyles and home entertaining. Marketing the products in places where they frequent is necessary; say campsite stares, kitchen and department stores. Promotion is very important especially in Mariano’s case. His products are undoubtedly new in the market and prospective customers are unaware of their existence. Promotion creates awareness of the product and lets the customers know where it may be found. Advertising, is a form of promotion which informs the customers what is new in the market and the additional features in the new product that make it a must buy for customers. (Kotler & Dubois, 2004) Promotion in this case will play a role in letting the barbeque lovers know that there is a fast and easy way preparing their favourite delicacy (carne). In addition, product as part of the marketing mix is equally important. Product refers to the amount produced by a manufacture or made available by a distributor in a given market. Mariano is perhaps not keen on mass marketing at the movement as he is unsure whether the demand for gas-powered barbeque is sufficient. He is also concerned that the local manufactures have considerable manufacturing capability to copy the easy flame brand. For starters like Mariano is advisable to take a bit by bit diving into mass marketing. This reduces the element of risk associated with product rejection in a market.
Doane, D. (2002) Market Failure: the Case for Mandatory Social and Environmental Reporting, New Economics Foundation, London.
Evans, J.R & Berman, B. (1990) Marketing. Macmillan Publishers Company
KnowThis.com. Principles of marketing. Retrieved from http://www.knowthis.com/tutorials/principles-of-marketing/consumer-buying-behavior/1.htm. accessed on 11/07/07
Kotler, P & Dubois B. (2004) Marketing management. France. Pearson Education
Sandhusen, R.L. (2000) Marketing. Barron’s Educational Series.
The case study
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