International Marketing PlanGermany market

DR\ Marwan El Messiry

MBA -2016

Team Work

Haytham Mhamed

Eslam Gomaa

Asmaa Hussein

Dina Ismail

Mona Refaat

The world around us is changing at incredible speed , the competition is very intensive in the marketplace locally and internationally, as a result, Asala Company for natural cosmetics products has a great ambition to grow internationally, it figure out growth opportunity in the biggest European country in cosmetics industry Germany , where the great and big natural cosmetics market size.

Asala company established in 1996 working in several categories foods and natural cosmetics , Asala has ambition to export beauty and care products to Germany ,ASALA want every women to feel and look beautiful .

ASALA company

Introduction

Cosmetics Industry segments

Natural ingredients for cosmetics are maintaining their popularity Growing consumer interest in natural cosmetics products is expected to help sustain the demand for natural ingredients in the coming years. There is an important spillover effect as conventional cosmetics are starting to contain more natural ingredients.

Global sales of natural cosmetics demonstrated an impressive increase from around €5 billion in 2010 to €22 billion in 2013 (organic-market.info, 2014).

45% (€10 billion) of the global natural cosmetics market stems from sales of certified natural cosmetic brands, while the rest (55%) is considered as ‘near-natural’ cosmetics.

The European market for certified natural cosmetics amounted to around €2 billion in 2013. Germany accounted for 35% of this market, followed by France at 15%.

Innovation is quite high in these countries, especially in the UK and France, where product introductions are high.

The largest European markets for cosmetics are also large users in terms of per capita consumption. Except for per-capita sales in Poland, which are relatively low, per-capita sales of these leading European markets are well above the European average of €129 in 2014. Of these leading markets, Poland demonstrated the strongest increase in per-capita sales from 2005

to 2014, while Spanish per capita sales dropped the most.

Figure 3: Per capita consumption in the leading European markets for cosmetics between 2005 and 2014, in €

Barriers to entry Political & Legal

Germany is a democratic republic. The Social Democratic Party and the Christian

Democratic Union leads the political system since 1949. The legislature, the

judiciary, and the executive are the 3 wings which make up Government of

Germany.

Import Tariffs Germany Import Turnover Tax

Goods imported from non-EU states are subject to an import turnover tax .The

import turnover tax rate equals the VAT (value-added tax) rates of 19 percent .

As a prerequisite, the company must have the necessary import documents with customs proof of payment (import declaration). It is important to collect and present all invoices as originals in order to deduct any VAT charges from one's own tax liability or to get reimbursed by the German Ministry of Finance, if eligible.

Trade Barriers

Germany's regulations and bureaucratic procedures can be a difficult hurdle for companies wishing to enter the market and require close attention by exporters. suppliers are well advised to do their homework thoroughly and make sure they know precisely which standards apply to the product and that they obtain timely testing and certification The Single Administrative Document

The official model for written declarations to customs is the Single Administrative Document (SAD). Goods brought into the EU customs territory are, from the time of their entry, subject to customs supervision until customs formalities are completed

EORI

Since July 1, 2009, all companies established outside of the EU are required to have

an Economic Operator Registration and Identification (EORI) number. Once a

company has received an EORI number, it can use it for exports to any of the 28 EU

member states. There is no single format for the EORI number.

Cosmetics Regulation:

On November 30, 2009, the EU adopted a new regulation on cosmetic products

The law introduces an EU-wide system for the notification of cosmetic products and

a requirement that companies without a physical presence in the EU appoint an

EU-based responsible person.

Cosmetics legislation at EU level also:

requires that all products to be marketed in the EU must be registered in

the Cosmetic Products Notification Portal (CPNP) before being placed on the

market;

requires that some cosmetic products are given special attention from regulators

due to their scientific complexity or higher potential risk to consumer health;

ensures that there is a ban on animal testing for cosmetic purposes;

makes EU countries responsible for market surveillance at national level

Opportunities

SWOTStrengths Weakness

Threats

Germany has around 43,000 successful cosmetic institutes Their

success is based on guaranteed “made in Germany” quality .The

challenge is German’s acceptance to Egyptian Cosmetic product.

Capability to offer high-quality products and local based after-

sales support

Required Safety or environmental standards can complicate

access to the market (Timely testing and certification)

Germany’s relatively high marginal tax rates and complicated tax

Germany is the largest cosmetic market in

Europe followed by France, UK, Italy and

Spain

The naturel cosmetic market is rapidly

growing, which expanded approximately

by 7% in 2013.

Located in Central Europe Size: 357,021 sq km

Largest Cities (in million inhabitants): Berlin (3.5), Hamburg (1.8), Munich (1.4), Cologne

(1.0), Frankfurt/Main (0.69)

Conclusion: it‘s the right selection to start in europe by Germany in the biggest 5 cities and then

go spread along all Germany, and it will help us to penetrate other markets In Europe due to it‘s

strategic location.

Population: 81.7 million (0.97 male(s)/female) Population Growth Rate: -0.06% (2011 est.)

Language: German

- Age Structure:

- 0-14 years: 11.0% , 15-64 years: 72.1% , 65 years and over: 16.9% (2010)

Ethnic groups:

- 91.9% German - 2.0 % Turkish- 6.1% others

Conclusion: our target Segment is a large segment in Germany that can consume the natural

cosmetics products of Asala

Availability of plants raw material

Prices & raw materials aver much less than

Europe

Need adaptation to skin needs in cold

environment.

Need high degree of quality and purity

due to high standard and regulation

Technological

Germany is a very advanced country. It is spending a lot of money on research and

development. Germany’s position in the European Union has a noteworthy science

and technology components

The cosmetics manufacturer decided to modernize its raw material warehouse using

professional modules. Using a shelf operator terminal, which covers more than 3500

storage locations, raw materials and supplies are available for the production of

cosmetic products.

The aim of logistics is to have the right goods at the right time at the right location in

the right quantity. This applies to end products for external distribution, as well as for

the internal distribution of supplies and raw materials, and packaging material.

Reliable production can only be guaranteed by state-of-the-art logistics and

warehouse technology.

There are many cosmetic application centers with about many uniquely qualified

experts worldwide that provide comprehensive support to cosmetic manufacturers

from around the globe. While each center has its own local focus of expertise, they

all research the latest developments in raw materials as well as perfect their use in

cosmetic applications.

At Germany the cultures of people describe family important. At Germany Sunday is still officially a family day of rest that "still has a sacred quality," though few families actually attend church then.

Women play an important role in the workforce in Germany, and many aspects of social and family policy are designed to make this possible

Political System: The Federal Republic of Germany is a democratic, federal and social

constitutional state. Together with the basic rights, these principles form the inviolable

core of the constitution guarded over by the Federal Constitutional Court.

Largest economy in Europe forth largest in the world.

GDP. $2.5 trillion (2014) ,GDP real growth rate 2.0% ,GDP per capita 45,000

Curency: Erou Exchange rate: 1 Euro equals 1,05 US-Dollar (March 2015)

Unemployment rate: 5,4% (08/2012) extremly positive

Inflation rate: 0.9% (2014) Industrial production

growth rate: 3,7% (2010), 3,0% (2011)

Economy characterized by small and

medium enterprises (>85% )

Very attractive for foreign investors (>10,000)

foreign companies, with >2 million employees and sales of >750 billion/year

GDP Growth In Germany

The overwhelming majority of German students attend public schools. The whole

German education system, including the universities, is available to the children of

bona fide expatriates.

There are also many private schools. Although education is a function of the federal

states, and there are differences from state to state, some generalizations are possible.

There are several varieties of university-level schools. The classical universities provide a

broad general education and students usually attend them for up to six years

The Technical Universities are more aimed at training students for specific careers and

are usually attended for four years.

Today, the major media production centers are located in the “old” West,

newspapers of the former GDR “German Democratic Republic “are usually

controlled by Western companies, broadcasting is integrated into the Western

dual system.

Radio is a popular medium in Germany at daily consumption and Germans

spend about 219 minutes per day on television, split about evenly between public

and commercial programmers.

The Internet, the growth in mobile handhelds, and the triumphs of the social

media have significantly changed how the media are used

Today, 55.6 million Germans over the age of 14 (79 percent) are online.

In Germany, for example, the progress of the online magazine Krautreporter,

launched by crowd funding in 2014, is being followed with bated breath.

Christianity is the largest religion in Germany, with an estimated 61% of the country's

population.

-Second largest religion is Islam , with between 2.1 and 4 million adherents (2.6% to 5%

Study shows that Germany and France have the largest Muslim populations among

European Union member countries

German law generally makes no distinction between Germans and foreign

nationals regarding investments or the establishment of companies.

Intellectual property is well protected by patent. The investor rights can be

enforced by Germany’s efficient judicial system.

Germany has an open and welcoming attitude towards foreign direct investment

(FDI).

The German society is a truly Individualist one

Small families with a focus on the parent-children

relationship rather than aunts and uncles are most

common.

Highly decentralized , German society, work and families treat people with equality

In business, Germans are known to be assertive, though not aggressive.

German managers and employees are often close

A direct and participative communication

Germany is considered a Masculine society.

Performance is highly valued

People rather “live in order to work” and draw a lot of self-esteem from their tasks.

Managers are expected to be decisive and assertive.

Germany it is a pragmatic country. In societies with a pragmatic orientation,

people believe that truth depends very much on situation, context and time.

They show an ability to adapt traditions easily to changed conditions, a strong

propensity to save and invest, thriftiness, and perseverance in achieving result .

Rituals and Holy Places.

• The local church dominates the central area of nearly every German

settlement.

• German churches are often impressive architectural structures,

• The areas surrounding the towns and villages are typically strewn with shrines

and chapels.

Death and the After life. Nearly 70 %of Germans are members of a Christian church,

and share common Christian beliefs inhimmel(heaven) andhölle(hell) as destinations

of the soul after death.

Funerary rites involve either a church service or a civil ceremony, depending on the

beliefs of the deceased and his or her survivors

Germany insist on written rules and detailed codes of conduct.

by planning everything carefully they try to avoid the uncertainty.

In Germany there is a society that relies on rules, laws and regulations

International Marketing selection process

Why Germany ?Screening of markets process

South America

North Americ

a

WesternEurope

Eastern Europe

Africa& Middle

east

Asia/Pacific

By PDT Acceptance

South America

WesternEurope

Eastern Europe

Eastern Europe

GDP 21 Countries BERI index

By uncertainty

avoidance

Germany UK

FranceItaly

Brazil Spain

SwitzerlandS. Africa

Germany UK

FranceItaly

Brazil Spain Qatar

RomanS AfricaIsrael

KuwaitUAE

SwitzerlandUK

GermanyS.Africa

Primary Target Market

SwitzerlandUK

GermanyS.Africa

Germany

Biggest market Size

Marketing Attractiveness

Factors 1

Very

boor

2

Poor

3

Medium

4

Good

5

Very

Good

% Weight

Factor

Results

G

Market Size S.A G 21% 105

Market growth G /SA 15% 60

Prices G S.A 15% 60

Buying Power S.A G 21% 105

Market Access G S.A 21% 63

Political

/Economic riskS.A G 7% 35

100% 428Marketing Competitiveness

Factors 1

Very

boor

2

Poor

3

Medium

4

Good

5

Very

Good

% Weight

Factor

Results

G

Product to fit

DemandS.A G 40% 200

Prices G S.A 25% 100

Marketing G 25% 25

Communication G S.A 10% 40

100% 365

Why Germany ?

Germany (4.3 & 3.7)

S. Africa (3.85& 3.95)

UK (3.92 & 4.35)

BERI index

G S.A

Germany Marketing Segmentation

Age Usage Rates

18-25 Daily

25-40 Weekly

40+ occasionally

Age/ usage rate Daily Weekly Occasionally

18-25 1 S1 S2 S3

25-40 3 S4 S5 S6

40+ 3 S7 S8 S9

Criteria S1 S2 S3 S4 S5 S6 S7 S8 S9

Market Size 1 1 1 9 9 3 6 6 3

Market growth

1 1 1 3 3 3 3 3 3

Buying power

1 1 1 6 6 2 6 6 3

Total 3 3 3 18 18 8 15 15 9

S/P Skin care Hair care Deos

S4 -

S5 -

Data

Primary

TechniqueQuantitative

Qualitative

Objective

Exploratory

H1: German People will not accept the Egyptian cosmetic products

H2: The frequency of using the cosmetic products is higher in the middle age female segment.

H3: German people always get their natural products from Drug stores on regular bases.

H4: German people don’t trust sales through salesman in face to face communications

Yes Probably No

Factors Weight

ProductProduct differentiation +1

Product Complexity -1

InternalFactors

International experience -1

Firm Size Zero

Desired modecharacteristics

Risk averse -1

control +1

flexibility 1

TransactionSpecific factors

Tacit natureof Know- how

zero

Opportunistic behavior +1

Transaction cost +1

External factors

Social culture -1

Distance Country risk +1

Market size and growth +1

Direct and indirect tradebarriers

zero

Intensity of competition -1

Small number of relevant export +1

Total = +1*15=.66

Entry mode decision

Intermediate modes

Factors influencing the entry mode descion

Factors High Average Low

Product policy Basic needs Aesthetic criteria Chemical,

functional criteria Package

Price policy Consumer Prices. Price positioning . Transfer pricing.

Distribution policyDistribution system

Communication Policy Communication

targets Massage (USP) Layout Media selection Timing Sales Promotion Brand Name

Analysis of a company’s standardization potential

ASALA company will apply the penetration pricing strategy to stimulate the growth and gain market share in terms of sales volume by offering the products with low prices .

ASALA company for natural products will choose selective strategy to distribute its products in Germany through main distribution channels

Drug stores are the largest sales channel by far whose natural products rose by 10 % in 2015

Specialized stores

Modern trade

Big wholesaler

Penetration Pricing

Selective

Pricing Strategy

Distribution Strategy

Thanks