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market entry strategy of kohinoor basmati rice in Tunisian market - MIB Assignment


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market entry strategy of kohinoor basmati rice in Tunisian market - MIB Assignment

  1. 1. Marketing Assignment.KOHINOOR BASMATI RICE MARKET ENTRY STRATEGY FOR TUNISIAN MARKET. Submitted By: Samik Sarkar MIB 2nd Semester.
  2. 2. KOHINOOR BASMATI RICE MARKET ENTRY STRATEGY FOR TUNISIAN MARKET.Choice of Market:Accelerating Indias export growth to the Middle East and Africa (MEA) provides an opportunityto add 1-2 percentage points of GDP growth to our economy. Indias exports to MEA went upseven times over the 2004 level to about $60 billion in 2010. This was significantly faster thanIndias overall exports, which went up about five times to $250 billion at the same time. Theshare of this region in Indias total exports has gone up from about 18% to almost 25%.We still have barely scratched the surface of MEAs true potential. In years when retaining the8%+ GDP growth is such a challenge, focusing on MEA exports makes a whole lot of sense.Currently, our exports to MEA are lopsided, with about half our exports going to a singlecountry, the UAE. This fact seems odd, considering the UAE is one of the smallest countries inMEA in terms of population, till we understand that the UAE plays a role as a trade conduit toother countries in the region.However, it also shows the enormous potential we have if we market our products and servicesdirectly to these countries.In Middle East we have countries like Iran , Iraq and Sudan. Iran, which is one of the largestmarkets in the region, contributes a tiny $2 billion, or 3%, to our exports to the region. Iran hasexceptional potential and it is a culture Indian businesses can intuitively relate to and thrive in.Itis critical that our industry and government make a concerted effort to export more to thiscountry. Iraq and Sudan deserve specific focus. But the main problem with these countries arethe political instability. they are still in recovering mode from years of strife.In North Africa, besides obvious markets like Egypt, we have new emerging markets likeTunisia and Algeria, all with tremendous potential. Sub-Saharan Africa is also a high potentialcluster of markets which can be served by operating from these countries.The Tunisian Market is chosen as it is the most diversified and politically stable economy in theregion.Target Market Analysis:Market OverviewTunisia is a small and politically stable country on the North African coast. It has the most diversifiedeconomy in the region. With a population of slightly over 10 million, it has one of the highest standardsof living on the continent. The 74.3% national literacy rate is one of the highest in North Africa and theMiddle East, and the 2009 average annual income per capita reached $3,775 and is expected to reach
  3. 3. $4,047 in 2010. The International Monetary Fund projected that the 2009 GDP based on PurchasingPower Parity (PPP) per capita was $8,284.The Tunisian economy, which maintained a steady average annual growth rate of about 5% between 2004and 2008, grew by 3% in 2009. Government of Tunisia (GOT) planners have predicted that GDP wouldgrow at an annual average rate of 6.1% over the coming five years although this may be reduced in lightof the continuing global financial crisis. The average inflation rate in 2009 reached 3.7%. Hard currencyreserves reached $10.280 million (13.260 million TD) in December 2009.Market ChallengesThere are two investment regimes in Tunisia: offshore and onshore. Offshore investments, in general, arefor export-only goods and services and benefit from a series of tax breaks and other incentives. Onshoreare those destined for the Tunisian market and general have requirements to partner with a local Tunisianfirm, with some exceptions .Imports from the EU enjoy a considerable price advantage over other countries products, as many EUproducts are now totally exempt from import duties.The EU and many European countries offer excellent financing terms for trade. Tunisian companies arefamiliar with these opportunities.A company planning to invest in offshore or export-oriented operations in Tunisia faces few obstacles.The Government of Tunisia’s investment promotion authority has established a generous package ofincentives for such operations.Entering the domestic market, particularly in the services sector, is more difficult as the foreign companyhas to have 51% Tunisian equity. Unless the company is working on a project actively solicited by theTunisian government or is closely associated with one of the country’s well-connected business groups,the process can be fraught with obstacles. But the agricultural market in Tunisia is liberal though theyhave some restrictions regarding the agricultural products that are produced domestically.Market OpportunitiesAgricultural commodities represent a significant part of total Tunisian imports, particularly duringdrought years when rain-fed cereal and rice production is not sufficient for domestic consumption. In2009, local cereal production (wheat & barley) increased significantly (+110%) over the previous year,due to good weather conditions and higher yields. As a result, Tunisian wheat and coarse grain importsdeclined sharply in 2009. According to data from Institute National de la Statistique (INS) total Tunisiancereal imports for the first ten months of 2009 were estimated at 1.58 million tons, valued at nearly $395million. Therefore the demand for rice in Tunisian market can be easily fulfilled by the Indian riceexporters. The main competition is from Pakistan who also export rice at a lower price but the qualityoffered is lesser than that of the Indian exports. Moreover Tunisia prefers import of agriculturalcommodities in bulk which is an advantage for Indian exporters as the production of rice is much higherthan that of Pakistan.In Tunisia rice is a staple food. Rice also used in various recipies and salads. The rice export in Tunisiahas got immense potential. Then again Tunisia by itself produce a moderate quantity of rice. Therefore
  4. 4. the market for regular rice is not that demanding. But the market for long grain flavoured Basmati rice isincreasing in Tunisia as in the case with other MEA countries. It is going to increase further in future.Basmati rice industry in Tunisia is still in very nascent stage and so a lot of opportunities esisting in thefollowing industry. The only competition exist in the form of Pakistan exporters of Basmati rice thoughthey lack the quality their Indian counterparts offer. Tunisia also offers an strategic location for Indianexporters to export their product in the Sub-Saharan countries as well as in the Europe easily.SWOT Analysis:Strength:-India is the only country which hold the patent right of Basmati rice. The only other country thatproduces Basmati is Pakistan who doesn’t have the patent right. Kohinoor is the most reputed companythat is renowned for its quality in domestic market as well as in world market .-The total production in the year 2009-10 was around 4 million metric tones of which India produced75% and the rest 25% by Pakistan. Therefore India has a clear advantage over its competitors inproduction. Moreover the Indian Basmati receives more accolades in world market because of the Indianprocessors ability to keep it whole grain because of the better technology used by them.-The Kohinoor Portfolio consists of all kinds of Basmati rice – of different qualities and prices.-Kohinoor’s global distribution network consists of both exclusive and non exclusive distributors.Weakness: - High price due to high tariff and non tariff barriers in Tunisia as well as increasing labor cost in India. - High dependence on Monsoon.Opportunities: - . A new credit culture has sprung up, marked by a rapid change in the behavior of Tunisians who are adopting a means of consumption closer to that of more developed countries. Therefore there is an increased consumption drive. - Tunisian consumer’s willingness and ability to pay for the quality products. In purchasing power parity, Tunisia is close to the income levels of developed countries - Tunisia also offers an strategic location for Kohinoor Basmati to export their product in the Sub- Saharan countries as well as in the Europe easily. Therefore Kohinoor will get a greater access to global market.Threats: - Emergence of low cost substitutes by Pakistan exporters. - Improved performance by Pakistan exporters. - Significant change in government policies could disrupt the business.
  5. 5. Market Entry Strategy:Mode of Entry:Direct marketing is still in its infancy. Tunisian business is largely dependent upon personal relationships.Customers increasingly expect access to after-sales service and are sometimes reluctant to purchase newproducts, technologies, or brand names in the absence of a local representative. Good localagents/distributors are crucial to introducing products into Tunisia. Their knowledge of the local marketand local contacts can make the difference between success and failure. Therefore distributing andmarketing of the Kohinoor Basmati rice should be done by local distributor and agents.-Potential Agents/Distributors:BFTRADE -Import-export - agents |Rice , cereals , fruit, vegetable and food export trading | buildingmaterials and products.FACCHINETTI SRL - Food and beverage | sweet and savoury pistachio food flavouring .AUGUSTO BELLINVIA SRL -Since 1948, we have been producing and exporting the very highestquality of food , wines, vermouth, fragrances for industrial perfumeries and herbal extracts for cosmeticand parapharmacy.Entry Timing:The Tunisian government announced a reduction in Tax rate of 10% (where the normal rate is of 18%)applicable to companies whose activity is agricultural or in crafts. Therefore it is justified to launch aproduct at this moment in the Tunisian market.More-over the last few years have witnessed the modern distribution sector has seen in-depthdevelopment. In five years, three new international names have penetrated the market (Carrefour,Champion and Géant) bringing about substantial changes in consumer behaviour. The emergence ofhypermarkets, a new concept in full expansion in Tunisia, has undoubtedly contributed a lot to this.Therefore entry into the market with a new product is justified.Marketing Mix:Positioning:The Tunisian consumer has become demanding about information given on goods, their availability,competing products, their brand, their value for money, etc.-93% of Tunisians consider that in order to buy well, it is essential to have a certain level of informationabout the products available;-78% compare the quality of goods before buying;- 65% like to have plenty of choice for their purchases.
  6. 6. -The importance of the idea of a brand: the brand image is a fundamental part of the positioning of aproduct and the reassuring of the consumer.-The reputation of the brand seems to be an important factor for 81% of people polled.The importance of communication: the effect of a persons family or friends (58%) influences purchasingmuch more than advertising (26%).Therefore the Positioning of Kohinoor Basmati rice should be designed as followed- - The patent right of the Indian Basmati must be discussed with the consumers in order to provide them information and to leverage the product. - The consumers should be informed about the quality of Indian Basmati in order curb the competition from the Pakistani brands. - All the product range of the Kohinoor Basmati Rice should be offered together to provide the Tunisian consumer with the choice. - Proper PR campaign should be done to establish the brand Kohinoor.Product Portfolio:KOHINOOR BASMATI PRODUCT RANGE: 365 Basmati Rice Presenting a novel scrumptious brand of basmati rice from the house of Kohinoor . Authentic Basmati Rice From the ethereal snow-fed valleys of the Himalayas, comes to you Indias finest authentic basmati rice. Brown Basmati Rice In the wake of dietary consciousness, people across the world have started making healthier choices . For them the special Brown Basmati.
  7. 7. Charminar Basmati Rice Presenting a novel and scrumptious brand of basmati rice from the house of Kohinoor – Charminar. Organic Basmati Rice World over, organic foods are now synonymous with healthy lifestyle, nutrition and absolute purity. ... Special Basmati Rice Around the world, different people have different tastes. To cater to all of them, Supreme Basmati Rice Supreme, the pure traditional basmati rice is a glorious indulgence for this generation. Aged to per ... Trophy Gold Basmati Rice With Trophy Gold Basmati Rice, We brings to you the most superior form of Basmati rice available on the globe. Trophy Royale Basmati Rice With Trophy Royale Basmati Rice, Kohinoor Foods brings to you the most special and the longest of all Basmati.Pricing:The Tunisian market have moderate per capita income and hence price conscious. On the hand a rapidchange in the behavior of Tunisians who are adopting a means of consumption closer to that of moredeveloped countries. This particular fragment of society is not hesitated to pay the price for a quality
  8. 8. product. Therefore the price differentiation among the various products of the product line should rangefrom moderate to high in order to target all the segments.Marketing Communication and Promotion Strategies: - Sponsoring the food festival of Tunisia – The SIHAR - Being one of the sponsors of Carthage International Festival - Tunisia’s largest cultural festival with music, dance, theater, art and Tunisian cuisine amid the ancient ruins of Carthage. - Print Media: Advertising in popular Tunisian dailies like 3ichnnews , African Manager ,Akhbar Tounis , Al Anouar etc. - Electronic Media: Advertising in Tunisian TV channels like Naseema TV, Tunisie 21, Tunisia TV, TT1 TV, CSS Sfaxien TV etc. - Roping a brand ambassador most likely a Tunisian actress (Like Hend Sabry). - Tie up with leading Tunisian luxury hotel and restaurant group Yadis . The tie-up will enable the hotel chain to get different basmati varieties transparently priced and bagged with consistent quality throughout the year. This will help Kohinoor to promote their product (by imposing faith about the brand among Tunisian People) as well as to maintain a certain constant business throughout the year.