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OPINNÄYTETYÖN NIMI
Tarvittaessa alaotsikko
Etunimi Sukunimi (opinnäytetyön tekijä 1)
Etunimi Sukunimi (opinnäytetyön tekijä 2)
Opinnäytetyö
Elokuu 2015
Koulutuksen nimi
Suuntautumispolun nimi (jos on)
1.
Executive summary
In this case we are going to take a look how to export Valio Plus
Milk to Austria and which key things we should consider when
we are going to export this product in a new market area.
Valio Plus Milk has an added vitamin D, calcium and protein in it.
You can not find this kind of a product in Austrian market.
Especially in winter time people do not get enough vitamin D
from the sun, so they should get it another way. With Valio Plus
milk people can get their vitamin D easily, because milk is an
everyday product that people use.
There is a big and a growing market for this kind of a products,
because people are interested about healthy lifestyle. People
are now willing to pay even more to get good quality and
healthy food products. This is a huge trend so it would be wise to
take an advantage from it and enter Austrian market as a first
fortified milk producer and provider. The milk consumption in
Austria is already higher than the European Union’s average.
There is a lot of things analyzed like legal and environmental
issues in this report. In first part of the report we have target
market analysis were analyse target market with key economic
indicators. We also take a look on a culture and competitors that
we have in Austria.
Second part of the report is going to focus on business
environment. It also includes strategic choices. This part have
key issues from financial, political and legal aspects.
Third and final part of the report covers Market entry. This part
will show you entry mode that we chose and it includes
marketing mix.
These analyses that you find each part of the report are helping
to prepare for the exporting this product in a new market area.
Sisällys
2. Target market analysis
In this chapter we are going to show the key economic
indicators of Austria, including e.g. the PESTLE analysis.
Furthermore we used Hofstedes cultural dimensions to
show the cultural environment. In the end of this
chapter we are focussing on the key issues regarding the
local production, export and import as well as on the
main competitors.
2.1. Key economic indicators of the selected market
2.1.1. Key economic figures of Austria compared to the
Euro-Zone:
The real GDP growth in Austria is similar to the real
GDP growth in the Euro-Zone. The inflation in our
target market is going to be higher but the
unemployment rate should be lower in 2017 compared
to the Euro-Zone.
http://www.oebfa.at/en/budgetdebt/pages/keyeconomicfigures.aspx
The GDP in Austria was about 374.06 billion US dollars
in 2015. The austrian GDP value represents 0.60 % of
the world economy.
http://www.tradingeconomics.com/austria/gdp
Compared to the other European countries Austria is
ranked on place number 13 based on the nominal GDP.
https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_GDP
_(nominal)
2.2.2. PESTLE:
There is a big market for this kind of a products,
because people are interested about healthy lifestyle.
Political:
Corruption level: Based on the corruption perceptions
index in 2015 Austria is ranked on number 16 out of
168 so the corruption level is quite low.
Political stability: Based on the political stability index
the average value for Austria during 1996 to 2014 was
+ 1.17 points. The range of this index is from -2.5 which
is the most negative point and +2.5 which is the
strongest point.
Economic:
Weather and climate change: Due to long winter
periods there are only a few sunny days. Consumers
can get benefits from this kind of a milk. Air pollution is
one thing, especially in big cities. As a result the sun
might not reach the skin with all the profit. This
product is seasonal, so climate change might affect on
selling it.
EU: As both countries are part of an European Union, it
is quite easy to enter Austrian market and to sell
products there. The strong lobby in the milk industry
should be considered.
Socio-cultural:
Health: Your body needs vitamin D, because your body
doesn’t produce it enough during winter time
Lifestyle: There is a huge trend in Austria about healthy
products and healthy lifestyle, especially in a food
industry. People are willing to pay even more to get
these good quality and healthy products .
Technological:
Access to newest technology: As Austria is one of the
richest countries in the world the access to new
technology is quite easy.
Environmental:
Environmental reasons were discussed in the chapter
“Economic”.
Legal:
The national agriculture lobby in Austria has a very high
influence concerning new regulations and laws.
2.2. Cultural
environment in that country
We compared Finland with Austria to find out the
differences concerning the culture. As an appropriate
tool we chose “Hofstedes cultural dimensions” which is
divided into 5 dimensions: power distance,
individualism, masculinity, uncertainty avoidance, long
term orientation and indulgence.
In general, as the dimensions do not differ essential in
both markets and therefore only minimal changes have
to be done to successfully enter the Austrian market.
Especially in the field of marketing changes are needed.
Masculinity:
Marketing should be adopted to the high willingness to
success and achieving goals. (i.e. Through our product
health improves and this lead to better working ability)
Long term orientation:
Austrians are willing to change and adapt to new
products, as a result the launching of our good in the
austrian market should be effortlessly.
Power distance:
As the need for being independent and equality is in
both countries truly high (in Austria even higher than in
Finland) there is no need for a greater change in the
strategy of product marketing.
2.2.3. Key issues regarding the local production, export
and import + main competitors
Consumption of milk products
The consumption of milk in Austria in 2015 was about
78.9 litres per capita. The European Union's (28) average
lies at a level of 63.2 litres per capita so the Austrians
consume more compared to the other countries of the
European Union.
But compared to Finland (129.3 litres per capita in
2015), the consumption in Austria is quite low.
http://www.dairyinfo.gc.ca/index_e.php?s1=dfffcil&s2=cons&s3=consglo&s4=tm-lt
The European commission has an optimistic market
forecast, especially an increase in high quality milk
products (e.g. fresh milk products, cheese) is most
likely.
http://www.fleckvieh.at/news-ticker/bericht/details/eu-prognose-fuermilchmarkt-bis-2022-4535.html
Milk production
This chart shows the Milk production by EU-28 member
state in 2014. Austria is ranked on number 12, Finland
is ranked on number 15.
https://ec.europa.eu/agriculture/milk/graph-production-by-ms-smallen.png
In 2015 there were around 538.000 cows in Austria
which produced about 3.538.000 tons of raw milk.
Compared to 2014 this was an increase of 1.3 %.
http://www.statistik.at/web_de/statistiken/wirtschaft/land_und_forstwirtschaft/vieh
bestand_tierische_erzeugung/milch/index.html
Milk prices
In almost all EU-countries the milk prices in September
2016 were lower compared to the prices in 2015.
Austria as well as Finland have higher milk prices than
the EU-average.
http://ec.europa.eu/agriculture/marketobservatory/milk/pdf/eu-raw-milk-prices_en.pdf
The milk price in general hit a rock bottom in 2015
because of overproduction. Now the market is in a
recovery period and hopefully the prices are rising
again within the next years.
Main competitors
In Austria most of the milk is produced by small and
medium sized farms. They sell a very high amount to
creameries which produce milk products like milk,
cheese and yogurt.
There are a lot of creameries in Austria and the market
is very competitive. Based on the turnover, the
company “Berglandmilch”is the leader in the market.
Besides this big player, also “NÖM AG”, “Gmunder
Milch” and “Salzburg Milch” are big and very well
known producers of milk products.
https://de.statista.com/statistik/daten/studie/472052/
umfrage/groesste-molkereiunternehmen-inoesterreich-nach-umsatz/
3. Business environment & strategic choices
Business environment
We can conclude from the analysis in 2.1 Key economic
indicators of the selected market that the business
environment in Austria is positive for us the enter the
market with a new product. Both countries being in EU
is an advantage, because the trade legislation has
simplified the trade between the two, the countries are
geographically relatively close to each other, and the
business culture in both countries is somewhat similar.
However, in the negotiations with the possible retailers
the cultural differences need to be taken into account.
Porter’s five forces analysis is an tool that helps
analysing the level of competition in an industry.
In the case of internalization of Valio Plus milk to the
Austrian market the current competitive rivalry is non
existent because there is no such product in the
market. However, there is a lot of other milk producers
who are selling products that can be consumed instead
of the Valio Plus milk. So the threat of substitution is
high, as there are already numerous products on the
market that can substitute our product.
The buyer power is high because we are planning to
sell our milk to one retailer. Thus we are dependent on
this one customer’s purchases. However, it is quite
easy to negotiate a new retailer for our product.
The supplier power is low. There are a lot of already
existing suppliers for Valio milk in Finland. The milk
consumption has gone down in Finland, so the excess
milk can be sold abroad. Even if any of the dairies used
would discontinue the supply, there is still many others
from whom to buy. Also in the future, there is the
option of getting the supply directly from Austrian
dairies.
As the product is new on the market, there is no initial
threat of another new entry. However, after we make
our entry to the market, other producers can start
making their fortified milk. As there are no milk
products in the Austrian market, it can be assumed that
there is not the required technology for it.
Nevertheless it can be easy to get the technology from
other countries such as Finland or Sweden.
Our strategy statement is: In 2020 we want to be the
leading producer of fortified milk focusing on one
urban grocery store chain in Austria using the existing
technology and Finnish reputation to our advantage.
We want to be the leading producer of fortified milk.
To measure our success in this area, we are going to
look at the amounts we are selling compared to other
producers. At the moment, there are no other
producers of such products but it is possible that in
2020 there will be competitors. We are going to focus
on selling in one grocery store for two reasons. Firstly,
it is easier to reach our segment by choosing a chain
that they are already using. Secondly, it simplifies the
market entry, as we only have to negotiate with one
retailer. Of course there is the possibility to expand our
sales to other grocery store chains even before 2020 if
it seems like a good opportunity considering our
success in the market.
We are using the technology that is already used in
Finland in milk production. Therefore we do not have
to invest heavily in production in the beginning. As the
business grows, we can look into moving some or all of
the production in Austria, but it is not necessary for the
beginning. The reputation of Finland and Finnish
products is good in Austria. Finland has connotations of
high quality, naturalness and freshness. We will use of
these themes in the marketing.
SW
OT
anal
ysis
Helpf
ul
Har
mful
Inte
rnal
Stren
gths:
Wea
knes
ses:
● Existing
technology
● Experience of
international
business
Exte
rnal
Oppo
rtuni
ties:
● First in the
market to
produce fortified
milk
● Strong healthy
lifestyle trend
● No experience of
business in
Austria
Thre
ats:
● Competitors start
to sell similar
product
● Market entry
fails
● Milk lobby in
Austria causes
too high prices
for foreign milk
T HE A NSOFF M ATRIX
Based on the Ansoff matrix we would like to enter a
new market with an existing product. Therefore, we
would see ourselves in the segment of Market
development.
4. Market entry
We decided to use direct export as our market entry
mode. We would like to work together with and
Austrian supermarket chain to sell our product in their
stores.
Marketing Mix
Price: The price of our product will be set a bit above
normal milk. As it is more than just normal milk.
Product: Our product has not just a good taste but is
meanwhile also healthy. It has vitamin D, calcium and
protein included and is filled in a recyclable packaging.
There is currently no comparable product in the
Austrian market.
Promotion: Promotion will be mostly about
emphasising the healthy benefits of our product in
comparison to “normal” milk. At the same time,
Finland standing for high quality production (Finland
branding), makes our product trustworthy.
Placing: For the placing we would like to work together
with Austrian supermarket chain to sell our product in
their stores.
Main trends
There are 8 trends we would consider as important to
consider for our internationalization plan.
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Future in the EU
Bio technology
Climate change
World has become better
Material life cycle
Instrumentation of everything
Megacities
People wanting to live a healthy lifestyle
The most important trends out of them are
The future of the EU, as it is way easier to trade within the EU which
is an great advantage.
People wanting to live healthy in Austria and furthermore they also
have the money to afford such a way of living.