GLOBAL MARKETING.docx

Module: Global Marketing

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Marketing plan Mission, Goals and ObjectivesOn entering the Latin American toothpaste market, our group aims to create a profitable business with a dominant market share within a ten-year period. Initially we plan to enter the Mexican market due to the low shipping costs from our home plant in the USA. Our focus for the first period is to generate good brand equity through abundant promotion and a forceful advertising campaign. Provisions for a loss in the first period will be made. We believe we have spotted a gap in the market in Mexico for healthy toothpaste products. We intend to exploit this potential gap by means of focusing our advertising on the younger, more health oriented generation. We identified the hypermarket as the promotional channel with the greatest potential and intend to distribute through it in the greatest numbers. We hope to be in normal profit by the end of period 2 at which point we will reevaluate our promotion and advertising budget and strategy in order to increase profit margins. In tandem with this we will reduce allowances and increase prices. Pursuing this strategy we hope to have a generous market share, strong brand equity and abnormal profits in Mexico by the end of period 4. With the company making profit in Mexico, by period 5, we intend to expand the company into Brazil. With the biggest population in Latin America, Brazils market potential is enormous. We hope to make abnormal profit within 2 periods, during which we hope to open a plant in Brazil with the capacity to supply for all products sold in the country, thus reducing shipping costs. Should expansion in Brazil be particularly successful we will look to expand further into South American markets.

Industry Analysis Toothpaste in South AmericaNew Market Entrants: Medium PressureConsidering Mexico falls under the NAFTA agreement, along with the US and Canada, there is great potential for competitors in this market. This agreement reduces trade barrier and offers a large incentive to enter the market of Mexico.Competitive Rivalry: Medium to High PressureCurrently in the Toothpaste production industry in South America, Allsmile faces the competition of B+B, Caremore, Driscol and Evers. Driscol is the strongest competitor in relation to Market Share because they have implemented a very strong marketing campaign throughout the companys lifecycle which has been a strong contributor in maintaining their position as the leading brand of toothpaste in Mexico. Driscol has the most diverse product range with their brand Dentacare, which has 18 different products spread between Argentina, Brazil, Chile and Mexico.With consideration to Allsmile entering the market of Brazil and building a plant, it is visible that this would be a worthwhile decision as there is no evidence to prove this would be detrimental.

Buyer Power: Low to Medium PressureThe Allsmile brand is not under serious pressure from the power of the buyer, as our target market is relatively broad and we intend to cover several market segments. However the company will be threatened, to an extent, by the amount of competitors they will face, and the fact that many of said competitors are better established and achieving higher revenue .is an obstacle we wish to attack with our pricing and advertising.

In reviewing the figures of buyers decision criteria, one can see that the primary factor that encourages buyers in all countries, is the price of the product, followed by the effect.

Supplier Power: Low PressureDue to the fact that we have a home plant as well as the objective of a plan in Brazil, the Allsmile brand will not be under any supplier-based pressure. Potential to build a plant elsewhere increases substitutes and therefore decreases the potential power of suppliers.

SWOT ANALYSISThe SWOT analysis is a strategic planning tool that stands for: Strength and Weaknesses (internal factors), Opportunities and Threats (external Factors) (Charmayne Smith, Demand Media, 2013). The internal factors are those that the business can control, such as quality procedures and reputation, whereas external factors cannot be controlled and include international markets and competition (Charmayne Smith, Demand Media, 2013). The SWOT will be used to analyse aspects of Mexico and Brazil, our intended markets, to depict how attractive they are.Mexico (2000 2012 Interpretive Software, Inc.):StrengthsWeaknessesOpportunitiesThreats

Low wages18.2% using food definition of poverty.Depreciated pesosNatural hazards occur often.

recovered from the financial crisis in late 200847% asset based poverty.GDP expected to post positive growth in 2010.Competition is very high, already companies with high market share.

77% population lives in urban places.Public debt 42.6% of GDP (2009).64% population is between 15-64 years old (target market).

Free market economy.High unemploymentMexico has a strong dependence on US exports.

Provides all kinds of transportation.Tariffs are 0%

Mexico is a border of USAFree trade agreement with the USA

Second highest toothpaste sales 229.3 million $.

Brazil (2000 2012 Interpretive Software, Inc.):StrengthsWeaknessesOpportunitiesThreats

Largest population of South America.Highly unequal income distribution and crime remain a problem.Shares boundaries with every South American country except Chile and Ecuador.Recurring droughts in northeast.

leading economic power and a regional leader.Population below poverty line 26%.66.8% are 15-64 years old (target market).Floods and occasional frost in south.

86% live in urban areas.Pollution is a big issue in Brazil. Opening a factory might bring external problems, like riots.

Brazil is expanding its presence in world markets.Competition is very high, already companies with high market share.

Large and well developed agricultural mining, manufacturing and service sectors.Tariffs are 21%.

Low debts.

Provides all kind of transportation.

Has the highest toothpaste sales, 507.9 million $

Marketing mix: ProductWe are going to focus on a few products so that we can more effectively build a brand identity and awareness. We fear that an introduction of too many toothpaste products from the AllStar brand will have an adverse effect on consumers. Although we are going to be selling one or two products the same as our competitors, we have opted for an approach of diversity, and we have based these products accordingly with the high demand.

We are going to focus on one main product that is going to be highly competitive in the current Mexican market, and three other products that, although are not as competitive as the first one, will have a positive impact on our sales. As for Brazil, we want to bring that same diversity along and try to introduce new products to the market. This may initially prove difficult, as the Brazilian market has the toughest competition and we realise that eventually we will have to introduce products that are already sold by other competitors.

Marketing mix: PriceWe plan to set the initial prices for our products in Mexico, as well as in Brazil, lower than our competitors so that we can gain market share more rapidly. Being a new company in a new market, we need to raise awareness of our products in order to become a strong competitor and we believe that setting competitive prices from the beginning is a strategy that will help us achieve this in the future. The goal is then not to make necessarily profit right away, but to gain potential customers quickly, and to offer an attractive alternative to what is already being sold on both Brazilian and Mexican markets.

Moreover, we are thinking of introducing psychological pricing; prices ending in .99 that people would go for, thinking of it as cheaper.

Marketing mix: PlaceWith Regards to Mexico, we are going to sell through the traditional, self-serve, hypermarket and wholesale channels for the distribution of our products. From the information given concerning consumer shopping habits, we were made aware that 37.4% of our target market (the younger segment), prefer hypermarket shopping. We therefore anticipate that the Hypermarket distribution outlet will prove the most successful and so we aim to start period 1 with higher levels of salespeople in this channel. We do not plan on distributing through the web channel, as the percentage of sales is insignificant and unnecessary to concentrate on. As the simulation progresses, we hope to gain more market share and reduce the sales force in these channels, and adapt to the consumer preferences.

When we enter Brazil, we will also place more attention on the hypermarket channel as it is the recipient of the largest percentage of overall demand for toothpaste, and as we gain more knowledge about the market, we can adjust the figures as to how successful or ineffective they seem. It appears as though all of the consumer segments prefer the hypermarket, yet this does not mean that we will neglect the other channels as they also depict high contributions. Allocating more resources to this specific channel will allow us to keep in line with our competitors, and then to be able to judge which figures to manipulate.

Marketing mix: PromotionOur promotional plan for Mexico is to implement decisions which are attractive for the consumers as well as profitable for All Star brands, because this is important for our expansion to other markets. Promotion will be customised to every country, and will reflect on consumer preferences. As our group profit margin will increase, we aim to customise to a greater extent. To build a presence in the market, each of our SKUs will have individual advertising campaigns relevant to the Mexican market. Advertising campaigns will be in Spanish, addressing the 92.7% of the population of whom speak the language. Our budget will be slightly higher for our campaigns focusing on younger people and families, so that we can reinforce our sales strategy on these segments. Entering the Brazilian market in period 4, we will address the communicational, social and cultural differences in conjunction with our market knowledge, to create campaigns which are effective in attracting consumers. We will update advertising campaigns when they are two years old in order to maintain our market positions and sales. Target MarketFor the AllSmiles brand, in the first five periods, there will be three main market segments, based on the data collected about the competitors in Mexico and Brazil. The products of our company are going to be directed mainly at the Young and Healthy group, which neither of the other toothpaste brands has targeted and which we consider to be a potential profitable segment. Although, it currently represents only about 4.5% of the population in each country, through advertising and promotion we will raise awareness among youngsters about the importance of dental health, anticipating a significant growth on the segment.

The second group, which is the largest, representing 50.1% of the population of Mexico and 40.1% of the population of Brazil, is the Young and Families using Economic toothpaste. This segment will be the hardest to achieve because the other brands are already established in the market, having great market share and probably a high percentage of loyal customers. The third segment is the group using Whitening toothpaste, mostly Young and Families, through which our brand will gain customer awareness and market share.

Financial InformationIn Mexico, we predict to sell approximately 65 millions of units and then, we expect the figures to grow about 25-30% in the second period, which will give our company approximately 38-40% of the market share, becoming the market leaders. The sales should stabilise around that figure for the rest of the periods, with slight differences of 2-4%. MEXICO PeriodEstimated Unit Sales (mill.)Estimated Mfr. Sales (mill. of $)Estimated Costs (mill. of $)Estimated Profit for the period (mill. of $)Cumulative profit (mill. of $)

1.65 69 76.8 -7.8-7.8

2.85 89 81.3 7.7 -0.1

3.87 92 8012 11.9

4.89 94 81 13 24.9

5.91 95 81 14 38.9

The numbers of unit sales are estimated based on our performance in the trial session and the market size of Mexico.The estimated manufacturer sales are calculated at an average price of $1.07 per unit.BRAZILPeriodEstimated Unit Sales (mill.)Estimated Mfr. Sales (mill. of $)Estimated Costs (mill. of $)Estimated Profit for the period (mill. of $)Cumulative profit (mill. of $)

4.95 104.5 110 -5.5 -5.5

5.125 138114 2418.5

The numbers of unit sales are estimated based on the market size of Brazil.The estimated manufacturer sales are calculated at an average price of $1.1 per unit.The estimated costs for both countries include the Costs of Goods Sold (approx. 55% of the estimated manufacturer sales), advertising, promotion, sales force, shipping (approx. $0.02 per unit) allowance and other costs.

Contingency PlanMost Latin American nations are notoriously politically and economically unstable, as well as being historically riddled with corruption. We have identified Mexico in particular to have these associated risks. Should instability become apparent or the business finds itself battling waves of corruption we will enter the Brazilian market earlier than anticipated and focus our resources primarily on that.

Should Brazil not prove as initially profitable as hoped we would opt to enter other South American markets and would most likely look to Peru to build our plant due to its consistently low shipping costs.

A critical evaluation of the performance of the firm from a marketing perspective Period 0In this period we decided in which country to start Allstars expansion into the South-American toothpaste market. Our aim was to find the most appropriate country, which had to involve fewer risks and give out a higher possibility of a profitable future. By looking at various information from each country, Mexico stood out to us the most. Mexicos geographical location by the USA, which is where our plant is, was a significant factor for us which aided our performance. With its low wages and second highest toothpaste sales, it seemed to be very appealing. Furthermore, Mexico was far more appealing than any other countries as it has the second largest population of South America, with 77% living in urban areas (20002012 Interpretive Software, Inc.) and the lowest shipping costs.Other reasons (20002012 Interpretive Software, Inc.): Stable exchange rate. Provides various transportation. Reasonable inflation rate (predicted to go lower). High population of Mexicans in the USA might know the brand already.Distribution:We decided to distribute our products using Traditional, Self-Serve, Hypermarket and Wholesale. This is because they were the main channels where consumers bought their toothpaste (Figure-1). We gave a higher promotion budget than our competitors, because we knew that Mexican customers were very sensitive about the prices (Figure-2).Figure 1:Figure 2:

SKUs & Pricing:We introduced four products, of which two (Economy/Medium/Tube/Paste and White/Medium/Tube/Gel) were the same as the competitors. This is because they were the most profitable in the market. The other two (Healthy/Medium/Tube/Paste and Healthy/Medium/Tube/Gel) were less sold in Mexico, so we decided to introduce them to increase the awareness of healthy tooth paste and hopefully be a market leader. The prices of our products were lower than our competitors and by using psychological pricing and high allowances, we wanted our new customers to switch to our products.

Period 1The first period was a success even though the net contribution was -2.9 $ million. However, this was not a major setback, because most of the new investment doesnt make a profit in their first period due to the initial high costs (Jon Xavier, 2012). We had a lot of other positive figures: highest unit sales of 71.1 million units (1135 million MXN), market leader of Mexico with 33.4% and 67 BEI. This gave us hope for the future and that our analysis and decisions made were correct.

As Mexicos economy was improving, the GDP growth went up to -6.4% and predicted to go to -2.5% and the inflation rate from 3.3% to 1.5%.

For next period we used the same distribution channels, allocated more salespeople in Hypermarket, since it is where most of our customers bought our products. We kept our prices the same, but decreased the allowance and advertising so that we could boost our profits.

Period 2As we progressed with the simulation, we made profit of 3.4 $ million. Our sales were slightly higher than period 1 with 1241.2 million MXN. The market share increased to 38.8% and BEI to 71. This was thanks to our strong policy in advertising and promotion budget which were still much higher than our competitors, spreading a much higher awareness of our Brand and products.

All Star was perfectly established in Mexico now, more consumers where switching to our products. However, to stay successful and ensuring that our competitors didn't take over us in the future, put us on a low profit margin (due to the high promotion and advertising costs).

Since the decisions used so far resulted in positive outcomes, not major changes occurred.

Period 3In this period we decided that we were going to enter Brazil in order to expand the Allsmile brand and potentially gain more revenue in the following periods. There were various reasons for this decision, the main one being that in this period Brazilian manufacturer sales totaled $632.9 million, which was $369.8 million higher than that of Mexico at $263.1. It also had the largest sales in South America, and as we were looking for a country in which to locate our production plant this seemed the most logical location as the Allsmile had very high potential to benefit from the low tariffs and shipping costs for sales in Brazil.

Other reasons also included: Largest population in South America at 198,739,269 as of July 2009. Stable Government. Advanced transportation systems. Stable inflation rateThe only negative factor in the market entry was that it would cost a lot of money and the company would have to be willing to accept a loss over the coming periods in order to benefit in the long term.

We maintained our position as market leader in Mexico between period 2 and 3, however we did drop from MXN 1241.2 million in sales to MXN 1233.6 million. This was due to a reduction of our sales force in Mexico in anticipation of an entry to Brazil with intentions of cutting costs in order to increase investment.

Period 4In period 4 we began production in Brazil in order to supply to Brazil, whilst maintaining production for Mexico from our home plant as the shipping costs from Brazil would have been 0.20 dollars/unit more expensive.

Distribution:We decided to distribute our products similarly to how we had done in Mexico, although with an increased amount of salespeople and a much larger promotion budget, with the intention of instantly gaining a proportional market share in order to compete with the other, already established, brands. Traditional distribution made up 30% of our total, self-serve accounted for 21%, hypermarket 43% and wholesale accounted for 4%.

SKUs and Pricing:We entered the Brazilian market with four SKUs (Economy/Medium/Tube/Paste, White/Small/Tube/Gel, White/Medium/Tube/Gel and Healthy/Medium/Tube/Paste). We based these decisions on viewing cross sections of the effective supply and demand of various combinations of size, effect, texture and delivery. We then chose accordingly based on both, popular products, as well as products that were not necessarily being supplied relative to their demand. We used lower prices than our competitors as well as psychological pricing. We also introduced a new product Small/Pump/Gel for kids in Mexico in order to exploit a market that was not really catered for.

Advertising:We put a very high focus on advertising in Brazil as we believed it would be integral in order to gain market share and be in competition. Our advertising budget totaled $26.6 million which in hindsight was extortionately high in comparison to the other companies, with the next highest budget being $15.3 million. This was undoubtedly a large contributor to our large loss during this period; however it may well have contributed to our establishment in the future periods (in which we did achieve a profit). Our advertising budget was also extremely high in Mexico, even though we were maintaining the market leader position, and it would most probably been better to drastically reduce this in order to justify the large expenditure in Brazil.

Period 5Period 5 saw even further losses despite us cutting prices in various areas of the business. This was due to an increase in expenditure in Brazil on advertising from BRL 51 million to BRL 74 million in an attempt to gain more sales and recognition. This did somewhat increase our revenue in the country; however it was not representative of our expenditure.

Mexico, however, saw an increase in cumulative contribution from $20.8 million to $40.1 million, which somewhat dampened the effects of the severe drop in cumulative contribution from $-43.5 million to $-79 million.

Period 6We made a profit from period 5 to period 6 of $ 0.7 million, not enough to recover from our losses. This encouraged our group to undertake bolder decisions in order to eliminate our deficit. Firstly, it was necessary to enter a new market to create more profit. Having entered Mexico and Brazil already, we needed to enter a market that would be stable enough to generate substantial profit quickly.

We decided to enter Chile because the sales of toothpastes were attractive (over $180 million) despite the small number of inhabitants (17 million)(appendix: 1), which represented a share of 10.6 units a year per inhabitant, more than in Brazil (4.15) units and in Argentina (6.7 units). Also, the situation in the country, politically and economically, seemed to be stable enough for us to break through (appendix: 1). On the downside, the low number of inhabitants appeared as a threat, given that it has to be shared between a larger number of competitors (appendix: 1).

Period 7The first figures coming back from Chiles market were not too good as we made a loss of $19 million. We only introduced 3 products, which could explain why the sales were not as high as expected. The strong pricing competition in this market was also more intense than we originally thought which may have affected our ability to do well.

We kept on losing money in Brazil (-$6.8 million), but we were still generating profit in Mexico ($20.5 million), not big enough to compensate our losses in Chile therefore we ended up the period with a deficit of $15.3 million.

We decided then to invest $109.1 million in our plant in Brazil for an increased capacity, to use it to ship to Chile, making its capacity grow from 80 million units to 150 million units.

However, we thought of offering a larger range of products so we could raise our profit. From 3 products in Chile we expanded to 8. We were to offer 10 products in both Mexico and Brazil, instead of respectively offering 5 and 4 SKUs.

Period 8Performance results of period 8 confirmed our aforementioned need to increase the number of products. Moreover, despite the cost of the increase of the plant capacity in Brazil, we made a profit of $37.1 million. We improved in Mexico and increased our profit from $21.4 million to $29.9 million, but the most spectacular improvement appeared in Brazil, where we went from making a loss of $7.5 million to making a profit of $36 million. Although Chiles sales improved, passing from 27.6 million units to 53.2 million units, we were still making a loss of $8.5 million.

More positively, our brand equity went from 69 in period 7 to 77 in period 8. Also, our overall market share improved. We went from holding 14.9% of the market shares to holding 20.6%, making us the leading brand in Latin America. We then focused on how to make of Chile a profitable country, and we made the decisions necessary to keep our lead in Mexico and in Brazil.

Period 9Our strategy to introduce 5 more products in Brazil, 3 in Mexico and 3 in Chile was a success as we improved spectacularly regarding sales and profit. In Brazil, we made a profit of $98.7 million, and in Mexico and Chile, a profit of respectively $43.8 million and $5.9 million. Overall, with the cost of the plant capacity increase, we made a profit of $128 million. We lost 1 point in our BEI, mainly because of our price increases in the 3 countries we made accordingly to the rising inflation rate.

We increased again our market share that went from 20.6% to 21.7%, thanks to our advert adjustment and the implementation of new products. More significantly, our cumulative contribution was, for the first time since period 3, positive. Even better, the number in question was $92.6 million, a very satisfying figure.

Period 10In the last period we made a contribution of 169.1 million dollars, giving us a cumultative contribution of 261.1 million dollars. We became market leaders in Mexico and Brazil and second biggest in Chile . However, even though our BEI decrease from 76 to 73, this was a big achievement, thanks to our new policies introduced over the simulation such as allocating investments in advertising and promotion and introducing lots of new products in all the markets, we were able to defeat the competition, and secure the the Allsmile brand a profitable future.(Note: most of the information has been taken from the actual simulation and SWOT analysis)

A critical review of the usefulness of global marketing theory in helping or hindering your decision makingLee and Carter (2012) argue in their book, Global Marketing Management: changes, new challenges and strategies, that there are three stages in the process of developing international strategic market entry. The first level is a theoretical approach, and out of the four most popular theories stage models, networks, bargaining power and born global, we used the Uppsala approach a stage model, which was first developed in 1977 by Johanson and Vahlne. This model outlines the importance of knowledge acquired from experience into the market rather than knowledge acquired from studying the market (Johanson & Vahlne, 2009). We observe that, organisations expand first into markets that are physically close and then into more distant markets, as their knowledge develops (Lee & Carter, 2012, p. 226). Using this model, we decided to enter Mexico first, and after three periods, when we gained enough understanding of the international market and the factors that we needed to consider for our decisions, we entered another market.

The next step was to make a strategic decision and set our objective with respect to the business model, which, according to Lee and Carter (2012, p. 236) is the mechanism by which a business intends to generate revenue and profits. The most straightforward way of achieving this was by becoming a successful, well-known brand with a high degree of recognition by the general public and this represented, according to its definition, the Loyalty business model. We believe that we have successfully achieved our goal, and the figures below demonstrate the level of awareness for our brand in the three countries that we had entered at the end of period 10.

Finally, the third step was to decide the market entry mode for each country. Although in reality there are many other options of entering a market, in the simulation we only had two choices: either the export mode entry or building the plant in a country and supplying the local market from that plant, in other words a greenfield investment(Lee & Carter, 2012, p. 244). For the Mexican and Chilean market we chose to export from the home plant because of the low shipping costs in Mexico and the relatively small number of units sold in Chile due its smaller population. Our plant was built in Brazil as we had anticipated that the highest number of sale units was going to be in this country.

It is extremely important for a global organisation to understand the countries they are entering from several points of view (political, economic, social, cultural etc.) and how this impacts on their business. That is why we used SWOT analysis (Hooley et al, 2008) in order to decide which countries were more attractive for our company, hence minimising the risk of failure and focusing our attention on the most significant factors. We identified two types of factors that would affect the outcome of our decisions: the macro environment, concerning the countrys economy, competitors and currency, which are generally uncontrollable; the intermediate environment factors such as distribution channels and customers which are semi-controllable (Lee and Carter, 2012).

It became evident that the best approach to achieve our goal, of becoming a loyalty business, was through advertising and promotion, which is part of the marketing mix. In fact, Johansson (2009) describes the effects of advertising exposure in a so-called hierarchy of effects that, after stages like Awareness and Knowledge, eventually leads to Repeat Purchase/Loyalty. To illustrate this, in the simulation, in Mexico we heavily advertised for the Young/Healthy group and we achieved a level of awareness of 51.7% while the level of purchases was 44.6%. However, in Brazil, where we did not specifically advertise for this group, the awareness level was only 36.8% with a level of purchases of 25.8%.

Moreover, in order for the advertising process to have the desired effect, it is important to understand how much the culture of the country affects the consumer behavior, and therefore how this may impact our decision of advertising. The most significant element of culture, when trying to promote a product, is language as it is the primary mechanism for sharing and transmitting information between members of a particular society (Usunier and Lee, 2013, p. 7). What is more, culture has a significant effect on the reasons why consumers buy specific brands or where they buy them.

One of the main aspects of the marketing mix is pricing. With our costs of production set at a specific cost and working within the constraint of having to initially ship our products from our plant in the USA to Mexico, setting prices that would ensure maximum profitability was of paramount importance.

Initially when we entered Mexico, we focused on healthy products aimed at a younger generation. In entering these products we used a pricing strategy called prestige pricing. Firms use prestige pricing by setting their prices in the higher bracket of prices in order to suggest a superior quality of product (Ferrel and Hartline, 2010). We opted for this strategy with a view to our products standing out in the Mexican toothpaste market, which was lacking in high-end healthy dental products. These products were marketed with a target market of the younger generation which is not only likely to be more health savvy, but is also likely to have a higher disposable income as they are likely to be employed, renting and without the restraints of a family.

This strategy proved very fruitful with sales of 33.7million for our two healthy SKUs, generating revenues of 587 million Mexican pesos ($42.9 million). This represented 66.1% of our gross margin for period 1. The start of period 4 saw us reduce the allowance on our two healthy SKUs. This increased our sales figures to 39.9million units sold, increasing revenues to 697.8 million Mexican pesos, vindicating our decision to use prestige pricing.

The size of the firms actual market share is a primary determinant of profitability (Doole I and Lowe R, 2008). We were aware that generating a large market share was vital over the first few periods, in order to ensure future profitability. In view of this we set the prices for our white and economy SKUs comparatively low with a generous allowance of 12% on the white SKU. Even on our higher end healthy toothpaste we set an allowance of 10%. We set up this way in hope that a large unit sales figure would give us a good market share and allow us to increase prices gradually over the coming periods. In entering Brazil we further implemented price penetration. Our economy toothpaste was marketed at 2.69 BRL with an allowance of 12% initially. This compares with the average market price of 3.32 BRL for a medium toothpaste in Brazil with an average allowance of 7.3%. This meant we made an initial loss of 86 million BRL despite sales figures of 67.8million and gave us a market share of 10.4%. By starting with a lower price we had intended to command a greater market share through high sales using the same theoretical framework that had enjoyed eminence in our initial periods in Mexico. In this case, our implementation of pricing theory proved less successful.

Overall, we implemented Global marketing strategy with relative success. In terms of pricing, the use of the prestige pricing strategy in the Mexican market worked particularly well, generating abnormal profits as well as contributing to market share. Although penetration pricing had limited success in Brazil, in Mexico our decision to use it proved rewarding. We realised a market share of 33.4% in our first period, setting the firm up for abnormal profits in the subsequent periods. Similarly our application of the Loyalty Business Model allowed us to enjoy 48.6% awareness in Mexico.

What would you have done differently? To analyse the success of our team, it is extremely important to reflect on our decisions and outcomes, to ascertain what went wrong, and therefore what we would have done differently.

One area, in which we performed less well than we had hoped is concerned with our pricing strategy. It would have been extremely beneficial to have recorded more precisely, the trends in external influences such as GDP per capita, inflation, and the exchange rate at each stage of the simulation, as the importance of the external environment is a crucial aspect of marketing decision making. If we would have planned accordingly, this may have aided us in becoming profitable earlier on in the simulation, rather than in period 9. Although we were able to gain considerable market share in Mexico, Brazil and Chile, it was only towards the end of the simulation that we really focused on our pricing strategy and took into account the significance of each countrys growth and development. This is a factor that could have heavily influenced our outcome in terms of a higher profit, if we would have monitored the environment more effectively. We also would have liked to have taken better care in our pricing strategy in terms of competitive pricing specific to each market. If we would have used market penetration pricing earlier on, our long term profit would have increased. We can infer that monitoring competitors prices is a fundamental factor, and although we initially kept in line with the prices of our main competitors, we should have increased our prices at the same pace as our competitors.

Furthermore, our group noticed that costing served as a principal area of issue for us. We were making a loss because we were not controlling our costs as effectively as we could have. It may have been beneficial to have built our plant in Brazil with a higher capacity in order to lower our shipping and transportation costs. Another example of our ineffective costing strategies was our decision to maintain relatively high allowance margins which impacted our overall performance by increasing our costs. It can thus be demonstrated that there is an immense impact on the profit margin, from reducing costs, and so our costs should have been more evenly distributed throughout different areas of the simulation.

Choosing SKUs and applying promotion and advertising to each is another area in which if presented with the opportunity, we would have managed differently. It was an error of judgment not to introduce more SKUs throughout the earlier stages of the simulation. With our extensive market share in all three countries, there would have been no harm in having additional SKUs, especially in Brazil, the largest market for toothpaste, with many competitors offering a significant range of products. If this issue were rectified earlier, we would have generated more sales and therefore a higher level of profit. Although we were able to use our advertising efficiently, we could have adapted our advertising more to the specific market in focus, as well as looking more carefully at the portfolio of SKUs in each market and judging our advertising accordingly.

We decided that promotion and advertising held equal importance for us in the simulation, and even though we correctly identified the needs of the consumers, our expenditure was so high on advertising in Chile, that this set us back in achieving our goals in this market. We should have reduced our advertising budget, gradually, which would have further helped us in the long run of our simulation. Alternatively, our decision to periodically reduce our expenditure in Mexico, resulted in a flattening of our sales to a substantial extent, perhaps if we were to have maintained a balance between promotion and advertising and not reduced them so dramatically, we would have had been in a more positive situation at the end of each period. Moreover, it only became evident how powerful the wholesale channel was towards the latter end of our simulation, as it became more profitable to use this channel.

Over all, we have acknowledged the benefits which would have come with implementing and using the marketing mix in the most succinct and efficient way. But most importantly, as aforementioned, setting the right price in each market is something we could have deliberated to a greater extent in order to improve our contribution and overall profitability.

Bibliography: 1 Doole, I., and Lowe, R., 2008. International Marketing Strategy: Analysis, Development and Implementation. London: Cengage Learning EMEA.2 Ferrel, O. C., and Hartline, M. D., 2011. Marketing Strategy. Mason, Ohio: Cengage Learning.3 Hooley, G. J., Piercy, N. F., and Nicoulaud, B., 2008. Marketing Strategy and Competitive Positioning, Fourth Edition, Essex: Prentice Hall, pages 42-434 Johansson, J.K., 2009, Global Marketing: Foreign Entry, Local Marketing & Global Management, Fifth Edition, Boston, Mass: McGraw Hill International Edition, pages 524-5255 Johanson, J. and Vahlne, J.E., 2009, The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership, Journal of International Business Studies, Volume 40, page 14126 Lee, K., Carter, S., 2012, Global Marketing Management: changes, new challenges and strategies, Third Edition, Oxford University Press, pages 42, 226, 236, 238, 2447 Porter, M.E., 1980. Competitive Strategy: Techniques for Analysing Industries and Competitors. New York: The Free Press8 Smith, C., 2013. Characteristics of a small proprietorship. Chron. Available at http://smallbusiness.chron.com/swot-marketing-analysis-1420.html [Accessed on 13/04/2013]9 Usunier, J., and Lee, J. A., 2013. Marketing Across Cultures, Sixth Edition, Essex: Pearson Education Limited, page 710 Xavier, J., 2012. 75% of Startups fail, but its not biggie. Silicon Valley Business Journal. Available at: http://www.bizjournals.com/sanjose/blog/2012/09/most-startups-fail-says-harvard.html?page=all [Accessed on 14/04/2013].

Appendix:1.Chile SWOT (2000 2012 Interpretive Software, Inc.):StrengthsWeaknessesOpportunitiesThreats

Steady GrowthLow populationFree trade agreement with US, Brazilsevere earthquakes; active volcanoes; tsunamis

Since 1980s reduced poverty rates by over halfPopulation below poverty line: 18.2%Shipping cost from brazil 0.020 $ per unitCompetition is very high, since there are already companies with high market share.

88% live in urban areas.67.8% are 15-64 years old (target market).

Steady, democratic nation.

Market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America.

GDP growth 2.0%

It has the lowest population but it has one of the highest toothpaste sales. 10.6 units per inhabitant per year.

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