3. 2
EXECUTIVE SUMMARY
The following feasibility report was undertaken to determine the likelihood of
successfully launching Bondi Sands, an Australian fake tan product into the German
market.
For this product, the specific target market is women aged between 15 and 24. With
the total German population sitting at approximately 81 million, our target market
makes up 5% of this. This generates a figure of approximately 4,188,566 German
females encompassing this target market. An estimation of the revenue, which could
be gained, will give an insight into the potential success of the venture, and assist
Bondi Sands in deciding whether exporting their product this market will present as
a viable option. The approximate projected figure here, when making the
assumption that every woman in the potential market would purchase one tube
each, is revenue of $8 million.
The main competitors for Bondi Sands are other established tanning brands that
already hold a presence in both the Australian and German market. In Australia, a
major direct threat comes from J Bronze and St Tropez as they are the best
positioned when it comes to price and quality. Lower priced and lower quality
products such as Model Co, Le Tan & Dove summer glow must also be considered as
direct competitors as they are growing in the Australian market. Whilst when
analysing the main competitors Bondi Sands faces in the German market, FakeBake
and St Tropez are two well-established, high quality, commonly used tanning
products for Germans. As well as competing fake tan brands and products, indirect
competitors also exist and can be a potential threat to the future success of Bondi
Sans in the German market. Natural sunshine of course poses competition for the
use of fake tan products, as well as sunscreen brands, tinted moisturizers and
solariums. Perceptual maps have been created, illustrating the direct competition for
Bondi Sands in both the German and Australian markets.
When entering the German market, Bondi Sands will utilize direct exporting,
incorporating an extensive distribution strategy through the Australian foreign sales
branch into major pharmacies and supermarkets in Germany. A standardized
approach of the fake tan product will be adopted when introducing the product to
Germany, with only small changes being made in order to give the product the
greatest chance of penetrating the specified market.
Combinations of above the line and below the line marketing strategies will be
utilized in both the long and short-term promotion of Bondi Sands in the German
market. Effectively reaching the greatest potential consumers within our target
market can be attained through a combination of mediums such as newspaper and
magazine advertisements, as well as technological promotion via TV, radio and social
media, as this now plays a large part in Germany. These strategies all apply in the
initial stages of promotion, generating product awareness and customer attraction,
as well as in the longer term; however a shifted focus on the continued generation of
product sales is then experienced.
4. 3
Pricing of Bondi Sands will be based on the concept of a competitive pricing
structure, as we are aware there are already existing fake tan products in the
German market; prices will be tailored to what the competition is charging, until the
company is able to reach a level of equilibrium in the market.
Throughout the extensive research conducted, an executive decision has been made
that exporting Bondi Sands into Germany is a feasible decision, and it will be going
ahead.
5. 4
INTRODUCTION
The feasibility report concentrates on the marketing strategies that will be executed
by the company, Bondi Sands to establish their fake tan product into the German
market. Germany is located in the center of Europe with a population of
approximately 81 and is the most powerful economy of Europe. Germany is one of
the worlds most technology advanced countries and is a house to 11 of the world’s
100 largest organisation. The working class is dedicated to their work and their work
environment is one of their main priorities.
The company has considered several strategies whilst deciding on the establishment
of the tan in the German market. The report describes the segmentation and target
market strategy, which implies the main target population of the product and what
could be done to attract them. The report also talks about the competition that the
tan product will face from the existing local companies, as well as indirect
competitors. Strategies have been described on taking down the competitors and
expanding the product in the market.
The report revolves around the marketing mix strategy, which describes the market
entry strategy, retail pricing strategy, product strategy and distribution strategy. The
market entry strategy talks about the procedures and guidelines to follow to enter in
the new market. The retail pricing strategy talks about that how the tan will be
priced in order to attract more and more customers. Product strategy describes the
core and augmented elements of the tan and also talks about the labeling methods.
The last strategy of the marketing mix strategy, distribution strategy, emphasizes on
how tan will be distributed in the market.
Most importantly, on entering into a new country, the promotional strategy plays an
important role in the correct advertising of the product, which compels potential
customers to purchase the tan. The array of promotional strategies talk about steps
that can be undertaken in both the short term and long term to increase the
customer base in Germany.
6. 5
SEGMENTATION, TARGET MARKET STRATEGY & MARKET SIZE ASSESSMENT
As previously identified, the German population is currently at 81 million, comprising
49% male and 51% female. For this fake tan product, the total market is females
aged 15 to 64, which makes up 33% of the total German population. This figure
approximates to a total 26,554,760 females. The largest proportion of the German
population falls into the group of individuals aged between 15 and 64, which is
common in a highly developed country with low birth and death rates. This
particular age distribution model can see countries experiencing longer life
expectancies, high levels of education and good health care. Figure 1 below depicts
the approximation of the population age distribution of the entire German
population at the beginning of 2016. An estimate of the absolute figures is also
included.
Figure 1 – German population age distribution January 2016.
The specific target market is a far smaller portion of the population; comprising
females aged 15 to 24, which makes up 5% of the total German population. A figure
of approximately 4,188,566 women encompasses this target market.
In order for Bondi Sands to establish if exporting the Australian fake tanning product
into the German market will present as a viable option, attempting to create an
estimation of revenue will give an insight into the potential success of the venture.
To ascertain the potential revenue that could be gained from entering this German
market, the assumption is made that the wholesale margin for the fake tan tubes is
approximately $2. If every woman in the potential market purchased one tube each,
estimated revenue of $53 million is calculated. Whist when analysing the target
market, estimated revenue of $8 million can be attained.
• 10, 10 821 513 youngpeople under15 yearsold(5 554 161 males/5 268 165 females)
• 53 698 072 personsbetween15and 64 yearsold(27 153 313 males/ 26 544 760 females)
• 16 729 105 personsabove 64 yearsold(7 197 009 males/ 9 531 284 females)
13.3 66.1 20.6
- Percentage of populationunder15
- Percentage of populationbetween15 and64 yearsold
- Percentage of population65+
7. 6
COMPETITIVE ANALYSIS
The main competitors for Bondi Sands are other established tanning brands that
already hold a presence in both the Australian and German market. Specifically in
Australia, a major threat comes from J Bronze and St Tropez as they are the best
positioned when it comes to price and quality. J Bronze products last more than a
few days and sooths the skin with the green tea and aloe vera extracts it is enriched
with. This product doesn’t stain the skin straight away, as it takes a longer time to
develop. St Tropez doesn’t last as long, generally only 2-3 days and holds quite a
strong odor following application. However, this product is considered easy to apply
and has a quick development time. In terms of pricing, St Tropez is by far the most
expensive, costing $65.95 for 240ml lotion, comparatively to J Bronze at $34.95 for
150ml, and then Bondi sans at $19.99 for 200ml.
Model Co, Le Tan & Dove summer glow are all other direct competitors we need to
pay attention to as they are growing in the Australian market. When compared with
Bondi Sands all three products fall within the lower pricing category, however are
lower quality products. Specifically, Model Co holds strength in its natural colour
coverage, whilst also has a sweet smell which replaces the overwhelmingly strong
odor other fake tans commonly detect. Layers of Model Co in a spray can dry within
60 seconds, however the spray can often end up on areas other then your skin, for
example surrounding furniture where it has been applied!
When analysing the main competitors Bondi Sands faces in the German market,
FakeBake and St Tropez are two well established, commonly used tanning products
for Germans. Both are of a similar high quality to Bondi Sands, however FakeBake
products are more expensive to purchase. All three products provide a natural
looking tan and provide different application techniques; mousse and spray cans etc.
Furthermore, all of the products allow for different shades of tan to the skin, ranging
from light to dark. St Tropez, which is also an established product in the Australian
market, is a fake tanning product inspired by the bronzed Mediterranean skin found
on the beaches in South France. It is enriched with aloe vera to prevent the skin from
drying out, leaving you soft and smooth; however as mentioned earlier, is quite
expensive to purchase.
As well as competing fake tan brands and products, indirect competitors also exist
and can be a potential threat to the future success of Bondi Sans in the German
market. Natural sunshine of course poses competition for the use of fake tan
products. However, the average temperature in the winter months is 4 degrees, with
temperatures often dropping below 0 degrees; limited sunshine is experienced
throughout these months, whilst rainfall and snow are often common. In
comparison, the summer months of Germany average 24 degrees, with the
southwest of the nation tending to experience the highest annual temperatures,
averaging around 26 degrees. In general, Germany is a temperate country with
rather unpredictable weather. The risks of exposure to natural sunshine must not be
forgotten; tanning outside, and prolonged periods in warmer temperatures increase
8. 7
the risks of skin cancer. Of course carful and moderate exposure to sun rays over a
suitable period of time can create a nice tan for some though.
Further indirect competitors for Bondi Sans include sunscreen brands, tinted
moisturizers and solariums. Similarly to natural sunlight, solariums pose as a large
risk to humans, with detrimental effects on health if utilized. This is due to the
danger of exposing skin to the UV radiation emitted, which is five times stronger
than the midday sun. Individuals place themselves at a greater risk of directly
developing skin cancer and prematurely ageing skin due to the artificial UVA and
UVB radiation exposure during solarium use. However, solariums also referred to, as
sunbeds are widely available to the German population and for what they consider,
not an expensive price. The tan gained from a solarium also lasts longer then that
from use of Bondi Sans.
Tinted moisturizers are also available in Germany. Use of these products allows you
to gradually build up the colour you wish to achieve with coverage ranging from
light, medium or dark for all skin types. They can be easily applied and do not cause
the streaks that fake tanning products do. Furthermore, tinted moisturizers are
relatively cheap, but of course range across brands; however, they do remain
cheaper then Bondi Sans. Tinted moisturizers do of course take longer to appear and
require reapplications for consecutive days, in comparison to fake tanning products
that appear instantly and only take a few hours to develop.
9. 8
PERCEPTUAL MAPS
GERMANY:
The positioning map (above) indicates Bondi Sands competitive position in terms of
direct competitors in the German market, when considering solely two key decision-
making variables: price and quality. In this case, quality relates specifically to the
perceived durability of the tanning product. From this it can be seen that Fake Bake
is positioned the closest to Bondi Sans in terms of price and quality.
In the second positioning map (below), we are able to see the differences between
direct competitors in the Australian market, once again in terms of price and quality.
Bondi Sans is in fact the highest-ranking product in terms of quality when
competitively positioning the product; the map enables us to ascertain the
competitive advantage this tanning product has. Bondi Sands also has a lower price
then J Bronze and St Tropez, which are also, positioned as higher quality products.
Whilst Model Co, Le Tan and Dove Summer Glow are all products with a lower
quality and a lower price.
HIGH QUALITY –
(perceived durability)
LOW QUALITY -
(perceived durability)
HIGH
PRICE
LOW
PRICE
FAKE BAKE
BONDI SANDS
ST TROPEZ
NIVEA
11. 10
MARKETING MIX RECOMMENDATIONS
Market Entry Strategy
Germany is considered to be the biggest market in Europe, with a population of 81
million and over 38 million households. In addition Germany has the world’s fourth
largest economy, and since the enlargement of the EU, Germany’s GDP accounts for
more than one-fifth of the European GDP. As show in Figure 2 below, the German
cosmetics market is the biggest is Europe at £10.6bn
Germany has a social market which looks at satisfying the average consumers’ needs
and want’s rather than satisfying the marketers own desires, which a large focus on
local business as well. Germany also follows free-market principles, but with
considerable degree of government regulation to keep there markets fair and their
strong economy intact (tatsachen-ueber-deutschland, 2015).
As Germany has a market and economy mainly concerned with providing its
consumers with what they need and want, rather than having markets determined
by what marketers want to persuade consumers into purchasing, product adaption
can then take place when bringing Bondi Sands from Australian to Germany to meet
the specific desires of the target market which would be found through market
analysis conducted prior to market entry.
Understanding the German social culture, as well as business culture is key when
looking to enter the German market, and understanding what the norms are within
existing markets when looking to enter the market directly. Additionally, it is key
that extensive market analysis is conducted to ensure a successful and sustainable
entry is achievable. By conducting in depth analysis it will provide an understanding
of the local marketing environment and the potential competitors and customers
within. Based on the analysis’ results, a market entry strategy can then be developed
and that takes into account the local mentality and culture (EnterGermany, 2015).
Bondi Sands will be injected into the German market directly, utilizing an extensive
distribution strategy, which has had success when entering the Australian market
previously. There will be a standardized approach to introducing Bondi Sands to the
German market with only small changes being made to the product in order to make
the necessary adaptations to give the greatest chance of penetrating the fake tan
market. In the future, if adaptation is requested, changes to the product could
include possible introduction of sunscreen to the tanning product as well as only
providing darker colors of the tan; adaptation and continual evolvement of the
promotion strategy where possible could also occur.
12. 11
Figure B - the German cosmetics market is the biggest is Europe at £10.6bn
Pricing Strategy
Pricing of Bondi Sands will be based on the concept of a competitive pricing
structure. Prices will be tailored to what the competition is charging with existing
tanning brands in Germany. The competitive pricing strategy will be used until Bondi
Sands reaches a level of equilibrium in the German markets.
With Bondi sands being introduced into the German markets presently, we will also
incorporate bundle pricing to generate higher perceived value for a lower cost, with
“a buy one get one free” as it will make our consumer base feel that they’re getting
more than what they are paying for and will also draw us with more customers then
our competitors.
We believe our pricing strategies will be effective in marketing our product, as
Bondi Sands will be able to compete more effectively with existing brands in the
German market, increase sales and offer our German consumers a quality tan from
Australia. After consumers have a positive experience with Bondi sands, it will then
allow us to maintain a beneficial relationship within the German markets and the
accessibility to introduce Bondi Sands to other European countries and make the
brand known worldwide.
Product Strategy
Taking the Australian made tan into the German market will require a product
strategy. Out of all the aspects of augmented product, customer care and services
will be crucial for the establishment into the German market. As previously
discussed, there are other tanning products in the German market but a better
customer service support will help in increasing the customer base for Bondi Sands.
Grievances/support cell can be setup to provide the required assistance to the
customers. This will promote a feeling of care towards the customer and will help in
the positive brand assessment.
13. 12
Labeling is another important factor for the assessment of a brand. It speaks about
the quality of the brand and makes the customer feel confident about their
purchase. The label should address necessary details like expiration date,
ingredients, and using techniques to the potential customer. Cultural differences
should be considered while labeling, the usage of German language on the label of
the tan product should be mandatory. In a supermarket, there are several types of
varieties of the fake tan and the label should be designed in such a way that it
catches the attention of the customer straightaway. The labeling should be
administered in a creative a manner and should give a positive feeling to the
customer about the quality of the product.
The core product benefit should be the key factor of success in the German market.
A product is only successful if the customer purchases it repeatedly and it only
happens when the benefit derived from the product is highest among all the
products in the similar fragment. The fake tan should be made up of high quality to
ensure that the customer gets maximum benefit and thus helps in revenue
multiplication.
Distribution Strategy
Bondi Sands will be distrusted and introduced into the German market utilizing an
extensive distribution strategy. This is in line with the strategy that has seen Bondi
Sands successfully implemented into the Australian Market.
This strategy will have two dimensions that will ensure as much exposure as
possible. The Australian made and owned product will be distributed directly to the
customers from a centraliased warehouse, through the foreign sales branch. It is
important to note however, that when undertaking a two pronged strategy like this,
which encompasses direct distribution, that it is made sure other retail distributors
are not undercut price in this process as it can alienate the distributors.
The second component of this distribution strategy will be to export the product into
major pharmacies and supermarkets throughout Germany in order to ensure broad
market access. Places such as Supermarkets offer easy access to the product and
good visibility however it can be expensive to pay for prime shelf space to advertise
the product and as a result this will need to be reflected in the price strategy.
Promotional Strategy
Establishment of a new product in a new region/country requires a promotional
strategy, which helps in spreading the word in the community and wider nation. The
new fake tan product in the German market should be advertised in such a way that
helps in spreading the name of the product. A number of above the line and below
the line advertising techniques need to be employed in an attempt to suitably
market Bondi Sands, whilst also attract customers most importantly encourage
purchasing of the new fake tanning product.
14. 13
Above the line marketing is the initial stage of the promotion strategy and can be
used in both the short term and long term, where the company can advertise the
product in media, or can choose a local advertising agency that contracts the
advertising space on the behalf of them by paying the commission or a fixed fees.
Germany has commonly used television, newspaper, magazines and radio in
promoting local and foreign advertisement. Furthermore, Germany also has some of
the most substantial activity in the direct marketing area, with the average
household receiving almost three pieces of advertisement in the mail per week,
whether it is catalogs, flyers or other types of advertisement (Target Marketing,
2015).
Due to the technology-advanced world, the promotion shouldn’t be restricted to
only newspaper but can also be extended to online digital media like radio, music
streaming services and the Internet. Both a 2-minute promotional video on the
television, as well as radio segments could be adopted and utilized to assist in the
advertisement of the product and helps clients to know about the existence of the
fake tan product in the market. Bondi Sands must work towards forming a customer
base in Germany in order to generate large sums of revenue; this can be furthered
through utilizing advertisement opportunities, which social media sites provide,
specifically Facebook and Instagram, which will ideally promote Bondi Sands and its
accessible and affordable nature to our target market. Exploiting the social media
usage in Germany to our advantage can assist in creating a successful distribution to
the target market. As shown in Figure 3 below, 73% of social media users in
Germany accessing Facebook at least once a day and over 53% of users accessing
Instagram at least once per day promotion through these sites should provide our
target market with the awareness of Bondi Sands, specifically where it can be
purchased, what tones and the cost per bottle (Statista, 2015). These promotional
strategies can be used in both the long term and the short term to ensure ongoing
success.
Figure 3 – Frequency of social media use in Germany in February 2015.
15. 14
Furthermore, the company can use below the line promotional strategy, which
provides a more tactile incentive to purchase the product. This strategy involves
using the promotional methods such as catalog marketing, direct marketing and
trade fair marketing. Bondi Sands can invest money in catalog marketing, which will
help in advertising the fake tan directly to the potential customers. In the trade fair
marketing, the company can also distribute small samples of tan’s bottle to clients
who are keen on trying the sample before purchasing a full product. Getting to know
about the quality of the tan will make the customers return to buy the full size
bottles and will help in generating rapid demand of the tan. In an effort to advertise
directly, Bondi Sands’ can have temporary premium stalls organized in frequently
visited supermarkets and giving away a sample of the fake tan to clients will induce
them to return and buy the full sized product. A promotional strategy offering the
chance to win a free trip to Bondi Australia could entice German customers, and
encourage purchasing of the fake tan product; any customer who purchases a bottle
of the tan in a specific time frame would go in the draw to win this experience.
In the long term, these promotional activities previously listed can still be applied, as
well as the creation of a company website in Germany to allow customers with 24/7
access to order the product online. Adoption of both above the line and below the
line techniques in the long and short term must be implemented to increase and
retain product awareness, whilst also ensure consumer consumption of the Bondi
Sands fake tan product, to allow ongoing sales and revenue in the nation of
Germany.
16. 15
CONCLUSION
Following in-depth research into the potential exporting of Bondi Sands, the
Australian fake tan product into the German market, many marketing tools need to
be considered in order to meet the demands of the target market.
A current target market of females aged between 15 and 24, comprising
approximately 4 million individuals, with expected corresponding revenue for Bondi
Sands of $8 million, has been identified in this report. This presents as an
economically viable option of export into the German market, illustrating potential
venture success.
A strong position against both direct and indirect competitors in the German and
Australian market, as well as a competitive pricing structure, will aid Bondi Sands
presence as a competitive addition to the fake tan market in Germany. Direct export
and an extensive distribution strategy will ensure the greatest chance of penetration
into this market.
As mentioned above, the most effective mode of marketing to the German
community will be via social media, due to the large everyday usage experienced by
many in the nation. Other modes of promotion such as newspaper and magazine
advertisements, TV and radio, will also be utilized in both the short and long term in
order to capture the attention of German women, and ensure ongoing sales of the
product. Bundle pricing offering ‘buy one get one free’ as well as the chance to win a
trip to Bondi Australia will also be marketing techniques adopted by the company to
sell their product.
From this report it can be concluded that it would be wise for Bondi Sands to go
ahead with the decision of exporting their Australian fake tan product into the
German market, as it proves a feasible and viable decision.
