INTERNATIONAL EXPANSION OF PRICELINE PHARMACY, AUSTRALIA IN TURKEY: INTERNATIONAL MARKETING REPORT
INTRODUCTION
This is a feasibility study report for Priceline Pharmacy, an Australian pharmaceutical company that seeks to expand into Turkey, within the primary peripheral of Istanbul and Ankara. This research project will involve a critical review of the internal components of Priceline Pharmacy and its female-oriented product portfolio. This will be followed by an analysis of the Australian business environment and markets.
INTERNAL ANALYSIS OF PRICELINE PHARMACY
Priceline Pharmacy opened its first store in Highpoint, Victoria in 1982 and it has grown and expanded into many developed countries over the past 30 years. “Priceline is dedicated to helping women look good, live well and feel great”. Priceline’s vision is to be a leading health, beauty and wellbeing retailer that has a focus on women and children. They have 330 shops in Australia and they provide services and products related to beauty trends, specialist advice and they seek to become cost leaders on the markets.
Figure 1: Standard Layout of a Priceline Pharmacy Shop
Priceline pharmacy shops are normally set up in strategic locations in cities. They are usually owned partially by the company and private owners who own the franchise of the company. They maintain very well structured layouts that have various products, sourced from Priceline and they also have a prescription section that provides specialised pharmaceutical services
Figure 2: Layout of Priceline Pharmacy
Figure 3: Prescription Section of Priceline Pharmacy
Priceline pharmacy is a strong brand name in the markets it operates. This is primarily because of their specialised services and brands. This is supported by staff members who are well endowed and knowledgeable in the specialised field of feminine care. They also have a large capital base and a good financial reputation.
However, their main limitation is that they primarily operate in developed countries in the Western world. Hence, they have limited knowledge of the Middle East. Therefore, it is apparent that they are likely to struggle in a foreign market like Turkey. This is because their competitors are entities that know the local markets well.
In spite of these challenges, Priceline pharmacy has a sufficiently large capital base that they can rely upon. They can consolidate their successes by replicating the model that has worked in their primary market – Australia. Appendix 1 provides a summary of the SWOT analysis of Priceline pharmacy.
In order to analyse the impact of a given market and a given process, there is the need for a firm seeking to enter the international market to assess the business environment of the country and outline the possible options for entry. In order to conduct this analysis there is the need for a researcher to conduct an evaluation of the Political, Economic, Sociocultural, and Technological factors that are relevant to the firm.
Political
Turkey has been a secular democracy since 1923. In recent times, the policies and plans of the current president has seen Turkey acquire help and support from the International Monetary Fund (IMF) and this has helped them to work hard to keep inflation low.
Turkey is also on its way towards European Union membership and they have been modifying their systems in order to streamline their political structures to conform with EU standards and requirements.
Economic
Turkey has a strong tradition that links it to the Western world. Hence, their economy is exposed to foreign exchange fluctuations and issues. Currently, Turkey is en road to recovery from the global financial crises that hit the Western world.
However, Turkey brands itself as the “China of Europe” and this is because they have an economic policy that provides low taxes for foreign companies and no taxes for research entities in the country.
Sociocultural
Turkey has a growing and expanding middle-class. This is because the country’s economy is quickly growing and the authorities are doing their best to expand the middle class and include other people.
Since Turkey is a secular nation, women have rights and are relatively more independent when compared to other countries in the Middle East and North African region. Also, a growing youthful population with connection to the Western world provides a market for foreign products and goods.
Technological
In the vision 2023 plan of Turkey, Science, Technology and Innovation (STI) was at the core of the plan which has been in motion for the past 2 decades. Based on this, Turkey has expanded and grown its technological infrastructure and there Internet penetration rate is at about 62% of the population which is much higher than other nations in the region and higher than some European nations.
In the general sense, Turkey offers a 0% tax rate on research firms. This has allowed many research firms in Europe and around the world to invest in Turkey. This shows that Turkey will continue to grow and expand in terms of technology.
INTERNATIONAL MARKETING OPPORTUNITIES & THREATS
Turkey being a secular democracy that has plans to expand into Europe makes it a positive nation that can guarantee a firm like Priceline’s continuous existence. This is because the democratic structures prevent the numerous threats of nationalization and political instability that exists in other nations in the Middle East and North American region.
Turkey’s government has demonstrated over the years that they are willing to improve the nation through inflation targeting. They also seek to make the economy healthier so they can meet EU standards. This is an opportunity for a firm like Priceline Pharmacy to enter the economy.
However, the economy is exposed to numerous volatilities on the European and American markets. Turkey is located in a region where refugee crises are ever present and this could have an impact on the economy and change issues. This poses a major threat to a firm like Priceline Pharmacy.
On the brighter side, there is a cheap labour and there is the opportunity for a growing middle class to be targeted by Priceline in Turkey. Finally, Priceline can pursue its online sales strategy as it utilises it in Australia. This is due to the high internet penetration rate and the strong and continuous research and development in Turkey.
INTERNATIONAL MARKETING MIX STRATEGIES
The circumstances of Turkey make it a propitious for the country to be made a regional operation. This will mean that Priceline will set up a full operation in the country and enter by registering a subsidiary in Turkey. This is based on the fact that Turkey is on the path towards an international autonomy and the Europeanization of their economy.
However, it is appropriate to concentrate on the two major cities of the country – Istanbul and Ankara. Also, due to the fact that Turkish ownership and cooperation might be necessary, Priceline might want to consider a franchising system to boost its marketing process. This will be done through contracts with numerous private investors and private owners. These owners will control various assets and the trading process and share profits with Priceline Australia.
The franchisees will use Priceline’s image and own the shops jointly with Priceline Australia. They will have to source from Priceline’s production systems that will be set up in the two cities and export channels. This will be complemented by national marketing and promotion which will be done by Priceline Australia, the franchise owners. Shops and franchise owners can do local marketing to promote their own shops.
Marketing Mix
The Price of products in Priceline Pharmacy should be set in such a way that it will be able to attract the growing middle class and encourage people from lesser privileged backgrounds to also acquire products from their shops. This will obviously be lower than Australian prices but must be reasonably priced to connect westernised shoppers to fair prices in order to preserve an element or aspect of ostentation.
The Products of Priceline Pharmacy need to be localised. This is because Turkish is somewhat different from Australia. And although Turkey is secular, the Islamic influence is really strong in the country. Therefore, there is the need for the products to be re-labelled. Due to the abundance of the research and development infrastructure in Turkey, it will be appropriate to set up research outlets through which Priceline Pharmacy can study the Turkish society and try to provide products that are modified and acclimatised for the local markets.
Promotion must be done by targeting the middle class. Priceline must continue to focus on their traditional markets – feminine markets and children’s market. In targeting the markets, there must be a focus on the middle class and the Westernised ladies of Turkey to be targeted in their processes and procedures. This will enable them to get a marketing niche similar to the Australian market which they are specialised in.
Placement should be done by setting up two types of shops. One type will target larger numbers of women and these shops will be set up in busy commercial neighbourhoods like downtown Ankara and Istanbul. These will be shops that will sell relatively cheaper versions of the products and services of Priceline Pharmacy to Turkish customers. They will be aggressively marketed and they will normally involve larger and well stocked shops of Priceline. On the other hand, there should be smaller Priceline Pharmacy shops located in suburban areas of the two cities that Priceline seeks to enter. This will involve small shops in malls and other shopping centres closer to richer areas and suburbs of the major neighbourhoods of the city.
Bibliography
Fletcher, R., & Crawford, H. (2014). International Marketing: An Asian-Pacific Perspective. Sydney: Pearson AU.
Frynas, J. G., & Mellahi, K. (2012). Global Strategic Management. Oxford: Oxford University Press.
Johnson, G., & Scholes, K. (2011). Exploring Corporate Strategy. Sydney: Prentice Hall.
OECD. (2012). Science, Technology and Industry Outlook. New York: OECD Press.
Priceline Pharmacy. (2014, January 13). About Us. Retrieved April 9, 2014, from Priceline Pharmacy Website: http://www.priceline.com.au/about-us
APPENDIX 1
SWOT ANALYSIS OF PRICELINE PHARMACY
