Introduction
Beaver Tails is a Canadian business specializing in hand made pastries, snacks and sweets. The company is currently operating in four countries namely Canada, USA, Japan and South Korea. The head office of the company is in Montreal, Canada. The business is aspiring to pursue an international business strategy for the growth. The increasing trend of globalization and increased competition has forced the business to consider the expansion into the Europe. Europe is home to the fashion industry with many tourism sites and attractions. The country selected for the expansion is Switzerland. This report addresses the various issues related to international expansion. The marketing that will be faced by the company is expanding its operations to Switzerland. The marketing mix strategies followed by the key success factors are given at the end of the report.
Market Situational Analysis
Market Size and Opportunities
The population of the Switzerland is estimated at 8.3 million in 2016. This size of the population makes Switzerland an attractive market for the fast food chains. Moreover, it is known as a famous tourist destination all around the globe. The tourist influx in the country is reasonable. The attractiveness of the place for tourists can be gauged from the fact that three percent of the GDP is contributed by the tourism sector of the country. The lodging nights by the tourists in the hotels of Switzerland were 39 million in 2014. If a single person lodges in each of the hotel room, estimated half the size of the population stayed in the country for the period of one year. It adds to the attractiveness of the market and increases the market size. All the tourists can be targeted and turned into the customers of Beaver Tails. The free trade policy adopted by the country, free movement in the European Union Zone and the influx of the tourists make Switzerland an attractive place for the fast food chain retailers to target. Moreover, the growing economy, highest living standards and reasonable purchasing power parity make Swiss market attractive and full of opportunities (Fraser et al, 2010).
Beaver Tails will segment the market by age and income. The focus is particularly on the middle class as the segment reflects according to the prices of the products. This segment is attractive because of the social and the work habits. The middle-class segment contains mostly the office going people who are self-dependent and earning. These people ought to spend more on the social activities and have more eating out habits. The segments of the Swiss population by age are three. The first group ranges from 0-17 years. This group is dependent and is least attractive to the company. The second segment ranges from 18-49 years. These are independently working people. The third segment ranges from 50-80 years. This segment mainly contains the aging population of the country who are in later stages of their career or planning their retirement (Laesser and Zehrer, 2012).
Target Market of Beaver Tails
The target market of the Beaver Tails in Switzerland based on the above segmentation is the middle-class population ranging from 18-49 years. The people of this group are independently working individuals and have more finances at their disposal to spend on the social, recreational and eating out of the house. The target segment is living a fast life and working 8-10 hours a day. This fast lifestyle brings with it increasing need of fast food. It adds to the attractiveness of the segment (Neelankavil, 2015). The demographic and psychographic characteristics of the target segment are given below
Demographic Characteristics
The demographic characteristics and profile of the target segment suggest that people ranging from 18-40 years contribute to 35 percent of the total population of the Switzerland. The sex ratio (male/female) of this population is 1.01. It suggests that the target segment contains nearly equal male and female individuals. The population growth rate of the Switzerland is 1.6% for 2015. This growth rate accounts for the foreign immigrants as well. The immigrants entering the Switzerland are mostly between the ages of 25-45 years. Therefore, the influx of immigrants and the tourists broadens the target population as well (The World Factbook, 2016).
Psychographic Characteristics
The psychographic analysis of the target population suggests that people have a fast lifestyle that promotes the eating patterns of the fast food. These people and working independent individuals with increased spending on the leisure and social activities. The persons of the age group 18-40 have a Western European mentality. This mindset is based on freedom, democracy, tolerance and pluralism. The people are multilingual and multicultural. The target population includes 59 percent of individuals with German background. Similarly, 8 percent Italian and 15 percent French origin constitutes the target segment (Deninison and Ogilvie, 2016).
Major Competitors
The product is unique in its concept to the Swiss market. The people of Switzerland consume Chocolate and the sweet bakery products, but this concept of hand stretched dough baked pastries to resemble a Beavertail is new to the market. However, the substitute products are the fast food Burgers, Ice-creams and the chocolate products. The major competitors of the Beaver Tails in Switzerland are Swiss Pastry and Bakery Shop, Baskin Robins and McDonalds. The McDonalds has a market share of 52 percent in the fast food business. This market share is a total of all the fast food items offered by the company. It suggests a strong presence of the brand and increased competition. McDonalds has a vast distribution and store network throughout the Switzerland and poses serious competition to the new entrants (Lugauer and Redmond, 2012).
Uncontrollable Market Environment Factors in Switzerland
There are a lot of environmental factors that cannot be controlled by a business in the course of the operations. These are mostly the external factors that are not under the control of a single enterprise of the group of enterprises. These factors play a critical role in the success of any business. However, the external factors are beyond the control, but these factors can be analyzed to plan strategically and devise the strategies to maximize the benefit of the business. An analysis of such critical factors and the anticipated impact on the business of Beaver Tails is discussed below
Political Factors
The analysis of the political environment of the country suggests that it is a neutral country and negates the concept of formation of blocks and alliances for and against any countries. Switzerland is a peaceful country with minimal interests and participation in the war. The negligible interest in the balance of power and international politics and conflicts has enabled Switzerland to maintain a stable political environment and peaceful habitat for its citizens. The country has a federal council that consists of the veteran politicians. The Federal President is elected each year for one year from the council. The Federal President is hardly known to the masses that suggests the minimal involvement of political individuals in the normal working of the business in the country. The decreased influence of the Federal Government suggests that people have wanted to keep it weak to avoid undue involvement in the business activities of the country. The Swiss people have a free right of referendum to practice. It makes the country a democratic country and bestows people more power over their bureaucracy. Switzerland is not the member of European Union. However, it is an active neighbor and has bilateral relationships with the EU on different matters of mutual interest such as environmental policy, refugee intake and the counter-terrorism initiatives. The bilateral cooperation with the EU adds to the political stability of the nation. The political landscape of the country makes it a favorable country for the international as well as domestic business. The burgeoning role of masses and minimal involvement in politics gives the market an autonomy and perfect competition state (Glavas and Mathews, 2014).
Economic Factors
Switzerland is an economically stable country. The economy is modern, and the competition is fair in the businesses. The GDP of the country is $380 billion that has the representation of 1.05 percent of the total economy of the world. This participation from a country of small size is astounding and commendable. It hints at the strong economy of the country. The service sector of the country contributes a major portion of 75 percent to the overall GDP of the country. The rest is contributed by the industry and craftsmanship. The service sector of Switzerland consists of banking and insurance sector and has its recognition all over the globe. The strong banking sector makes the availability and accessibility of finance easier for the businesses. The GDP per capita of the Switzerland is among the countries having highest GDP per capita. It reflects the 450 percent of the overall population of the world. Moreover, the inflation rate in the country is in the negative figure that again suggests the strong market working mechanism (Switzerland, 2016). The unemployment rate is 3 percent. The local currency of the Switzerland is Swiss Franc, and it is almost equal to 1.09 US dollars. The stability of the currency and the exchange rate is higher as compared to the Euro and the US dollar. The depreciation of the US dollar never affected the Franc. Moreover, the exports of the country are estimated at 308.4 billion as compared to its imports of 288 billion. The higher value of the exports suggests that the country is mostly relying on the local products for the needs of the domestic individuals. Switzerland has trade quotas and licensing arrangements to product the local industry, and it is protected as well by the government. It suggests the need for trade licenses for starting a business in Switzerland. The overall economic profile combined with the other external factors puts the country on 28th rank in the ease of doing business. It is an attractive position and makes the business operations favorable in the economic conditions of the Switzerland (The World Factbook, 2016).
Social Factors
The social and cultural profile of the Switzerland suggests that the masses of the country are highly qualified, hardworking and disciplined individuals. The creativity and the hard work of the population make the country wealthy and rich in the workforce. The workforce is diverse and contains male, female and people of other ethnicities as well. The country has arrangements with the EU in the areas of public health, safety and bilateral free movement. In this way, the workforce of the country is highly talented comprising of the rich and diverse workforce. Switzerland has a free social environment that favors free movement of the individuals to satisfy the diverse needs of the local businesses in the country (The World Factbook, 2016).
The cultural landscape of the country is open, and the ethnocentrism is minimal. This culture attracts the tourists and foreign immigrants. The country has a Lifelong Learning Program for the equal distribution of educational and vocational initiatives among the masses. This initiative of the country leads to the empowerment of the people and contributes to the overall prosperity of the country (Wild, Wild and Han, 2014).
Technological Factors
The technological advancement is a leading player in the overall success of the country. The perquisites of the success of the Swiss economy are the Research and Development efforts. Switzerland is distinct in natural resources like gold, oil and minerals. However, the country is rich in people with brains. The major portion of the exports of the country includes the technologically advanced equipment, machinery, pharmaceutical and the medicinal products. All these products involve advanced technology and rigorous R&D. The investment in R&D is evident from the fact that every 12th person in overall population finds its living in R&D activities. The institutions of the country have absorbed the technological and electronic revolution wave. The banking sector has adopted an electronic business, and the E-Banks of the Switzerland have utility all around the Europe. The technological advancement has increased the Chocolate production and export of the country. The increased chocolate production is favorable for Beaver Tails as it will increase the readability in sourcing of raw materials from the country (Barel, Paye and Maibach, 2014).
Marketing Mix Strategies
Product
The products that will be offered in Switzerland by the Beaver Tails will be Beaver Pastry, Poutine, Beverages and Beaver Dog. These products will be offered in containers bearing the product logos and the nutritional facts in the local language. The people are becoming more health conscious and keep a track of the calories that they intake. Therefore, the product containers will bear the nutritional values in the local language (Beaver Tails, 2016).
Place
The market entry method adopted by the Beaver Tails will be licensing and franchising. The company will ensure a presence in the four major cities through the franchising arrangement. Initially, the highest population cities of Switzerland namely Zurich, Geneva, Bern and Basel will be targeted. The company will open the stores in the proximity of the chains of McDonalds. It will allow the company to focus the walk-in customers. This strategy suggests an extensive network of branches in the four major cities in the first phase of market entry (Ball and McCulloch Jr, 2012).
Price
The people of Switzerland are among the highest earning and spending individuals of the world. One of the reasons is the high GDP per capita. The pricing strategy followed will be competitive market pricing. The prices of the products will be set keeping in view the prices of the competitors. The product prices will range between 4 Francs to 10 Francs. The sourcing of the raw materials from the local environment market will enable the company to maintain competitiveness (Vos and Vos, 2004).
Promotion
It is the most important element of the marketing mix and determines the success of any business. The company will adopt guerilla marketing strategy involving rigorous advertising and promotional moves. The advertising media selected for the advertisements is TV ads, billboards at points of sale, Point of Sale (POS) advertisement. Moreover, online ads through Google Adsense and other online marketing affiliates will also be run. The target population uses the technological gadgets and internet and the possibility of exposure to advertisements through online medium increases by many folds (Wagner and Schaltegger, 2004).
Key Success Factors for Beaver Tails
The key success factors for the Beaver Tails are discussed below
Aggressive Marketing Strategy
The business should adopt aggressive marketing strategy for the market entry in the Switzerland. The aggressive marketing strategy suggests that the business should capitalize on all the traditional and contemporary advertising channels for reaching the potential customers. The aggressive marketing will require an additional budget during the entry phase. However, it is necessary for creating product awareness and brand recognition among the people (Kroeza and Keulen, 2013).
Adaptability
The change has gained a central position in the business organizations of the Switzerland. This change is regarding the ways business conducted to cater to the changing needs and lifestyle of the business. The company should rely on the market reports and most importantly the primary research conducted through the frontline staff to adapt to the changing market trends and the consumer preferences. The adaptability will make the business suitable to the changing trends at a faster pace than the competitors giving it a competitive edge over the other players (Freeman, 2010).
Conclusion
The crux of the whole matter is that Switzerland is an attractive destination for the operations of Beaver Tails. The country has a strong political and economic system. The societal cues are favorable for the company. Therefore, the business should expand through the franchising. The sourcing of the raw materials should be done by the local market. The reliance on the local products will make the supply chain more sustainable. It will help the company to stay competitive regarding prices. Initially, the business needs to invest in the advertising and marketing efforts to build a brand image.
References
Ball, D. A., & McCulloch Jr, W. H. (2012). International business.
Barel, A. O., Paye, M., & Maibach, H. I. (Eds.). (2014). Handbook of cosmetic science and technology. CRC Press.
BeaverTails - BeaverTails Pastry since 1978 | Our products. (2016). Beavertails.com. Retrieved 28 March 2016, from http://beavertails.com/en/our-products/
Dennison, T. K., & Ogilvie, S. (2016). Institutions, Demography, and Economic Growth. The Journal of Economic History, 76(01), 205-217.
Fraser, L. K., Edwards, K. L., Cade, J., & Clarke, G. P. (2010). The geography of fast food outlets: a review. International journal of environmental research and public health, 7(5), 2290-2308.
Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press.
Glavas, C., & Mathews, S. (2014). How international entrepreneurship characteristics influence Internet capabilities for the international business processes of the firm. International Business Review, 23(1), 228-245.
Kroeze, R., & Keulen, S. (2013). Leading a multinational is history in practice: The use of invented traditions and narratives at AkzoNobel, Shell, Philips and ABN AMRO. Business history, 55(8), 1265-1287.
Laesser, C., & Zehrer, A. (2012). Tell me whom you think you are and I tell you how you travel. Exploring the viability of market segmentation by means of travelers' stated personality: Insights from a mature market (Switzerland).Tourism Analysis, 17(3), 285-298.
Lugauer, S., & Redmond, M. (2012). The age distribution and business cycle volatility: International evidence. Economics Letters, 117(3), 694-696.
Neelankavil, J. P. (2015). International business research. Routledge.
Switzerland. (2016). Country-facts.findthedata.com. Retrieved 28 March 2016, from http://country-facts.findthedata.com/l/180/Switzerland
The World Factbook. (2016). Cia.gov. Retrieved 28 March 2016, from https://www.cia.gov/library/publications/the-world-factbook/docs/profileguide.html
Vos, M., & Vos, O. (2004). Setting up a strategic communication plan. Boom Koninklijke Uitgevers.
Wagner, M., & Schaltegger, S. (2004). The effect of corporate environmental strategy choice and environmental performance on competitiveness and economic performance: an empirical study of EU manufacturing. European Management Journal, 22(5), 557-572.
Wild, J., Wild, K. L., & Han, J. C. (2014). International business. Pearson Education Limited.
