HBI 223N INTERNATIONAL MARKETING

INDIVIDUAL INTERNATIONAL MARKETING ENVIRONMENT AUDIT ASSIGNMENT

Marketing Environment Audit on Australia for the penetration of Vedablu Sdn Bhd

Name: Chin Yee Wei Student I.D.: 4212967 Lecturers Name: Mr. Rodney Lim

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Executive Summary This report is written to conduct a marketing environment audit of Australia for Vedablu Sdn. Bhd to penetrate into the market. Firstly, the background of Vedablu Sdn. Bhd and the description of Vedablu Premium Ice Cream will be reviewed. This brand of ice cream is only available in Kota Kinabalu, Sabah and the recipes of the ice cream are mostly inspired from Italy. It is made from natural ingredients which are mostly imported from other countries. Secondly, the description of Australia as well as the location of the business going to be set up will be shown. New South Wales, one of the states of Australia is being chosen as the location to operate the company as well as setting up an ice cream manufacturing factory. NSW is being chosen as the climate of NSW is more suitable for the business compared to the other states. NSW will not have extremely cold winter like Victoria which might affect the business selling and it is the most visited state by tourists in Australia. Thirdly, a PEST (Political, Economic, Socio- cultural and Technological) analysis on Australia was done to evaluate the environmental forces that will affects the marketing strategy of the company. The political stability and legislation of Australia has shown the benefits of operating business in the country. However, the restriction on importing fresh fruits from other countries has caused a difficulty to Vedablu as fresh fruits are the main ingredient to complete the process of making the ice-cream. In economic factor, there is a high market potential for Vedablu due to the high level of income, purchasing power parity as well as the large population in NSW. The socio- cultural in Australia is very diverse and openness, therefore there is very little of culture influences on the business marketing. Vedablu has to put more attention when deciding on the advertisement and promoting the product in terms of the low context culture of Australia. Due to the advancement of technology in NSW, it is convenient for the delivery of the products to the customers as well as for the marketing purpose. Fourthly, recommendations for the company will be stated and explanation will be given. Last but not least, the conclusion of the overall findings will be shown.

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Contents
1.0 Introduction .......................................................................................................................... 1 1.1 Company background ........................................................................................................ 1 1.2 Description of product ....................................................................................................... 1 1.3 Country chosen .................................................................................................................. 1 2.0 Pest Analysis ......................................................................................................................... 2 2.1 Political ............................................................................................................................. 2 2.2 Economic .......................................................................................................................... 2 2.3 Socio- cultural ................................................................................................................... 3 2.4 Technological .................................................................................................................... 4 3.0 Recommendation .................................................................................................................. 4 4.0 Conclusion ............................................................................................................................ 4 5.0 References ............................................................................................................................ 5

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1.0 Introduction 1.1 Company background Vedablu Sdn. Bhd is an ice cream company that produces Premium Italian Ice Cream and Sorbet with more than 50 types of selection. This company introduces Vedablu Premium Ice Cream to Sabahan in 2006 and has its own factory in Kota Kinabalu to manufacture small quantity of Vedablu Premium Ice Cream daily. The company delivers the finished products to their kiosks, parlours and shops every day to ensure the customers get the fresh Vedablu ice Cream. Vedablu Sdn. Bhd import machines from Italy to produce a quality and more solid ice cream (Layne 2007). Vedablu Sdn. Bhd has eight outlets separately in Kota Kinabalu, Sandakan and Tawau. Apart from ice cream, the company also sells other products in the outlets such as ice cream cake, cheese cake, coffee, smoothies and milkshakes, desert and Italian pastas. 1.2 Description of product The main product of Vedablu Sdn. Bhd is Vedablu Premium Italian Ice Cream which is produced by natural ingredients which are mostly imported from other countries. For example, fresh strawberries are imported from France to make strawberry ice cream. One of the Vedablus strength is it does not have artificial flavours, colouring and preservatives in the ice cream. The second strength of Vedablu ice cream is it is more solid than industrial ice cream as it contains lower percentage of air being whipped into the ice cream. This is the reason why the price for Vedablu ice cream is higher than industrial ice cream which is RM 5.60 per scoop (100g). Apart from that, Vedablu uses vegetable fats instead of dairy fats to produce 99.9% of cholesterol free and 9% of fats on average (FAQs n.d.). 1.3 Country chosen Australia is a special country due to the fact that it is both a continent and an island which is situated in Southern Hemisphere. It becomes a single country and it is officially known as Commonwealth of Australia after the Federation of English Colonies on 1 January 1901. Australia is the sixth largest country due to the area occupied as well as the largest island in the world. However, it is the smallest continent among the seven continents (Australia Overview 2011). Every part of Australia has different climates such as New South Wales, Western Australia and Queensland tend to have hot summers and pleasant chilly winters while Tasmania and Victoria experience drastically cold winters. An analysis on Australia had been done and it had been found out that the consumption of ice cream in Australia is relatively high based on world standards (Fresh Products 2011). The business will be set up in New South Wales (NSW) with Vedablu ice cream manufacturing factory due to its climate and it is the most populous state in Australia.

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2.0 PEST Analysis 2.1 Political Country Australia Singapore New Zealand Germany Rating1 9.24 8.78 8.76 8.49 Footnotes: 1: 0 = very high, 10 = very low

Figure 1: Risk of political instability, 2010 Source: The IMD World Competitiveness Yearbook, 2010, Switzerland, http://www.imd.org/research/publications/wcy/index.cfm

Australia is a democratic country which governs based on federal constitutional monarchy. According to IMD world competitiveness Yearbook 2010, Australia had been ranked the third place in the world for political stability with the ranking of 9.24 (Figure 2), thus it is an opportunity for Vedablu to start a business in NSW without facing any political risk (Political stability 2011). Other than that, Vedablu does not have to go through complicated procedures during the registration of company in Australia as Australia imposed simple legislation which takes only two days (NSW business environment 2011). However, Vedablu might faces some threats on importing fresh fruits from other countries for the manufacturing of ice cream as Australia has high security on the importation of fresh products due to fire blight and every imported foods are only allowed to go into Australia after it meets the quarantine requirement. For examples, the prohibition of importing substances in the kiwi-fruit plant from Italy and New Zealand (Terrible kiwi- fruit bacterial disease imports must be stopped 2010) as well as the fresh products from Japan due to the radiation (Perrin 2011). Vedablu will have to acquire an import permit to import fresh fruits into Australia (Food 2011). 2.2 Economic State/Territory New South Wales Victoria Queensland GSP ($ million) 402,334 291,637 243,901 GSP as % of Australian GDP 32.1 23.3 19.5

Figure 2: Gross State Product (GSP) at current prices- Australia States and Territory, 2008-09 Source: ABS Cat. No. 5220.0, State Accounts, 2008-09

Australia is a developed country where its main incomes derived from services as well as tourism industry. The Australians are highly educated and the infrastructures in Australia are
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world- class standards which lead to the development of economy in Australia (Economic and business climate 2011). The purchasing power parity of Australia increases every year whereby a quarter of it is contributed by NSW as shown in Figure 2. Moreover, the population of NSW covers almost one third of the Australias total population. The level of income in NSW is relatively high as its per capita income was the second highest of all states in 2008 to 2009 (State economies 2011). In 2010, NSW suffered from global downturn but it was the first state in Australia that recovered from the crisis (Keneally 2011). The NSW Innovation Council has come out a business sector growth plan with the vision of the economy of NSW in 2020 will be 30% larger than presently (NSW business sector growth plan 2011). It is also easier to enter into Australian market due to its relaxed tariffs and minimum barriers to entry (Fumeaux 2009).Based on the analysis on PPP, level of income and population in NSW, there is a market potential for Vedablu to develop its business in NSW and will be able to make a big profit on the business. The high pricing of Vedablu will not be a weakness to the company to market the product in Australia as the Australians do not take concern on the price of a product since they are affordable and willing to spend the money on a good quality product due to their high level of income. 2.3 Socio- cultural Australia is considered an egalitarian and a diverse culture society. Everyone in Australia is equal under law and civil rights and they have the rights to choose their own religion as it does not have an official national religion. However, it is acknowledged as a Christian country as there are more than 64% of the Australians are Christian. English is the national language of Australia while there are another 200 languages spoken as well (People, culture and lifestyle 2008). As English is a well-known language, Vedablu will not face language problem such as language mishaps during promotion in NSW. Australia is regarded as a heterophilious and low context culture. This might cause some advantages and disadvantages to the marketing activities of Vedablu. In a low context culture, there is a great flexibility where the people are easier to accept new things and change is much more easily promoted. However, communication tends to be inefficient as they practices individualism. They might insist on their own opinion and refuse to hear what others say. In addition to low context culture, verbal communication carries a direct message and factual data and reasoning are mostly used in advertising which means the advantages of the product are pointed out in the advertisement (Kotabe et al. 2008, p.139). Highly educated Australians have created a benefit for Vedablu in terms of promoting as they can easily understand the message derived through the advertisement. Therefore, Vedablu might be easily accepted by the Australians when it enters into the market but more efforts have to be done on marketing communication to promote the product.

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2.4 Technological The advancement of transportation in NSW has become an opportunity for Vedablu. With the current transportation system, Vedablu can have the freshest ingredients coming from all around the world to produce the best ice creams for their customers. Imports can reach Port Botany or Sydney Airport and be transported to NSW in a short period of time (Transport and logistics 2011). Besides that, the advancement in Internet can also be a benefit for Vedablu to promote their products and collect feedbacks for customers. This helps to save a lot of time and money in promoting Vedablu in the market of Australia. Furthermore, food bloggers can be invited to provide suggestions to their readers to further promote the ice creams produced by Vedablu. Even so, Vedablu may face competitions in the Internet with their competitors as they may use the same tactics of promotion. 3.0 Recommendation Vedablu can focus more on manufacturing ice-cream flavours which the ingredients can be easily available in Australia such as pears, peaches, apricots and apples. This can minimise the problem on importing fresh fruits from other countries. Vedablu has to ensure the advertisements in the media send a direct message to the public so as to prevent any misunderstanding and Australians do not like to guess the message due to their low context culture. 4.0 Conclusion After a comprehensive analysis and interpretation of information regarding of establishing Vedablu Company in NSW,Australia, NSW is a good market to venture into due to the fact that the opportunities are abundant. The products produced to by Vedablu will distinctive as compared to other major competitors in terms of quality, freshness and the ingredients used for the production of ice cream. This would allow the company to gain a competitive advantage in the market by offering a natural ice cream whereby customers can really eat the fruits when consuming Vedablu ice cream. High level of profits is expected to be generated in the long run.

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5.0 References Australia Overview 2011, AsiaRooms.com, viewed 7 April 2011, http://www.asiarooms.com/en/ travel-guide/australia/australia-overview/index.html. Economic and business climate 2011, Industry & Investment NSW, viewed 9 April 2011, http://www.business.nsw.gov.au/invest-in-nsw/about-nsw/economic-and-business-climate. FAQs n.d., Vedablu Global Sdn Bhd, viewed 31 March 2011, http://www.vedablu.com/faqpage. html. Food 2011, Australian Quarantine and Inspection Service, viewed 8 April 2011, http://www.daff. gov.au/aqis/import/food. Fresh Products 2011, Dairy Australia, viewed 7 April 2011, http://www.dairyaustralia.com.au/ Our-Dairy-Industry/Industry-Statistics/Fresh-Products.aspx. Fumeaux, G 2009, Doing Import Export Business in Australia the Beginners Guide, Artipot Article Directory, viewed 8 April 2011, http://www.artipot.com/articles/284341/doing-importexport-business-in-australia-the-beginners-guide.htm. Keneally, K 2011, Skills for growth, NSW Labor, viewed 9 http://www.nswalp.com/media/blogs/alp-blog/march-2011/skills-for-growth/. April 2011,

Kotabe, M, Riege, A, Griffiths, K, Noble, G, Ang, SW, Pecotich, A & Helsen, K 2008, International marketing: 2nd Asia-Pacific edition, 2nd edn, John Wiley & Sons Australia Limited, Queensland. Layne 2007, FAQ on Vedablu, Laynes blog, 21 November, viewed 31 March 2011, http:// scooponlayne.blogspot.com/2007/11/faq-on-vedablu-part-1.html. NSW business environment 2011, Industry & Investment NSW, viewed 9 April 2011, http://www.business.nsw.gov.au/invest-in-nsw/nsw-business-environment. NSW business sector growth plan 2011, Industry & Investment NSW, viewed 9 April 2011, http://www.business.nsw.gov.au/doing-business-in-nsw/nsw-business-environment/nswbusiness-sector-growth-plan. People, culture and lifestyle 2008, Department of Foreign Affairs and Trade, viewed 10 April 2011, http://www.dfat.gov.au/facts/people_culture.html. Perrin, CJ 2011, Australia imposes ban on some Japanese food imports, International Business Times, 24 March, viewed 8 April 2011, http://in.ibtimes.com/articles/126217/20110324/australia -japan-us-food-food-standards-australia-new-zealand-radioactive-iodine-radiation.htm.

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Political stability 2011, Industry & Investment NSW, viewed 9 April http://www.business.nsw.gov.au/invest-in-nsw/about-nsw/economic-and-businessclimate/political-stability.

2011,

State economies 2011, Industry & Investment NSW, viewed 9 April 2011, http://www.business.nsw.gov.au/invest-in-nsw/about-nsw/economic-and-business-climate/stateeconomies. Terrible kiwi- fruit bacterial disease imports must be stopped 2010, Sharman Stone, viewed 8 April 2011, http://www.sharmanstone.com/OurAgriculture/tabid/90/article Type/ArticleView/ articleId /244/categoryId/15/Terrible-kiwi-fruit-bacterial-disease-imports-must-be-stopped.aspx. Transport and logistics 2011, Industry & Investment NSW, viewed 9 April 2011, http://www. business.nsw.gov.au/invest-in-nsw/key-industries-and-industry-centres/transport-and-logistics.

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