The Indian caste system is a system of social classification, they are defined as thousands of subgroups all broken off from four major groups, the Brahmin at the top, the kshatriya, the vaishya, and the sudra, the bottom caste are the untouchables considered so low that people from higher classes will not even touch them. However in the modern India the caste system is not as prevalent, the Indian people are more categorized into classes, India has Power Distance (PDI) as the highest Hofstede Dimension for the culture, with a ranking of 77 compared to a world average of 56.5. () thus, there is a high level of inequality in power and wealth within Indian society. Boost Juice must take this into consideration when making important business decisions that could involve communications between untouchables and the twice born. The religions in India consist of Hindu 80.5%, Muslim 13.4%, Christian 2.3%, Sikh 1.9%, other 1.8% and unspecified 0.1% (2001) boost must be aware of this when designing the menu and advertising in India to avoid offending any prevalent religions.
India's lowest ranking Dimension is Uncertainty Avoidance (UAI) at 40, compared to the world average of 65. () This may be due to the small amount of opportunities available to the Indian people. (For example of your family are farmers it is likely that you will also become a farmer). The vast majority of people in India are born into what they will do every day for their life. It is important for Boost Juice to understand the Indian people before trying to sell them a new product.
The Indian government has recently increased commitment and investments into helping eliminate tuberculosis and several vaccine preventable diseases that are major causes of mortality in India. National Programmes for Diabetes and Cardiovascular diseases are being developed increasing public awareness about health and physical activity. Being such a health promoting product boost should remain up to date with health trends in India. Infectious diseases are very common in India and are in a high risk category. (World Health Organisation) Boost must consider developing high hygiene procedures when opening in India.
The literacy rate in India is 73.4% for adult male ages over 15 and 47.8% for a female aged over 15, the average school expectancy in India is 10 years. Boost must consider this when writing menus and staff training manuals. In terms of urbanisation, the urban population in India is 29% of the total population (2008). The rate of urbanisation is 2.4% annual rate of change (2005-10) this is relevant to Boost Juice when deciding where to locate stores throughout India. (World Health Organisation)
Climate and Geography
India is located in a South Asian country that is surrounded by mountains, oceans, forests and hills on all sides. India is divided into 28 states, six federally administered union territories and a national capital territory. (Magical India Tools, 2010) India’s weather is tropical in nature which makes the climate of India most unpredictable. India is a country with varying climate. India has three major seasons, winter, summer and the monsoon. Summer time that is end of March till June is very dry, hot and humid in most parts of India. This is the time when the numerous hill resorts provide cool retreat. (Magical India Tools, 2010)
Boost Juice need to be aware that the climate varies from one place to another; therefore it is important for the company to take into account when it comes to locating stores throughout India as the company will need to target regions where it is more tropical and humid to sell Boost Juice.
Figure 1.1 represents a map of India with its sub continents that display the climate in each region. India is the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper. It is the second largest producer of wheat, rice, sugar, groundnut and inland fish. India accounts for 10% of the world fruit production with first rank in the production of banana and sapota. (Agriculture sector, 2007) The knowledge of agriculture in India will be useful to Boost Juice as they will require local produce to create their products.
Opportunity and Threat:
After analysing the current status of the macro environmental factors that relate to Boost Juice in India, there are various components that Boost Juice need to take into account when operating in India. These factors include the following;
- Language: English not being the first language, Boost Juice need to consider things such as employee manuals and menu in Hindi (predominant language spoken in India)
- Religion: The Hindu religion is the largest population in India therefore Boost Juice should respect their values. For example not to incorporate the Cow in any promotions
- Economy: After the commonwealth games, this will boost the tourism in India therefore an opportunity for the company to go ahead.
- Climate: Because the climate is tropical in nature, Boost Juice will be successful in this climate.
- Population: 1,156,897,766 (CIA.gov) makes up the population of India
The Boost Juice Company does not have any direct competitors however it has a number of different indirect competitors that hassle them in different minor areas. The two most indirect competitors are Booster Juice and Maaza Mango.
Competitor 1: FIL Industries Ltd
Established in 1989, FIL Industries Ltd. is a company that works closely with the Indian Farmer to Protect & Preserve their produce. The food and beverages division of FIL industries consist of many mixed fruit juices such as; Kashmir apple juice -100% apple juice, apple guava, orange juice, mango apple juice, ladakh berry and TUK 3 which is a unique and refreshing blend of apples, mangoes and seabuckthorn (FIL industries, 2010).
Boost Juice will need to take into consideration the services of pesticides that FIL Industries offers to the farmers. FIL Industries will have an established image in the consumer’s eyes because of this system they have consolidated. Boost Juice has to keep hygiene as a priority in order to be able to succeed and grow a strong based relationship.
FIL industries are a threat to Boost juice indirectly, and may affect consumers and stop them from buying a new and fresh on the go drink from Boost Juice. Boost Juice will be differentiating from FIL industries by providing quality fresh fruits and smoothies not concentrating on packaged goods like FIL industries.
Competitor 2: Booster Juice
Booster Juice first opened in India on 15th of August 2008. The first store for the brand opened in Edmonton Canada in 1999 (Booster Juice Facebook, 2010). Which is one year before Boost Juice started; the company offers a similar range of smoothies, shakes and juices to Boost Juice. The company has seen mild success in the Southern states of India where it has opened up 7 stores in Bengaluru city. The company has only two stores in New Delhi where we are targeting our Boost Juice stores. From a positioning point of view, Booster Juice is capturing the middle to lower social class demographic with their products. There is not much brand awareness or promotional work that has resulted in the companies’ placid accomplishment in doing business in India. Booster Juice will be our most direct competition, as the two companies will be regularly compared. Boost juice will differentiate its self through there Promotional work (viral marketing) and targeting a more affluent customer.
Competitor 3: Local Street Vendor
The local street vendor has been operating for over 70 years and has been the prime source for fresh juice for the Indian populace. Cheap and refreshing are its main selling points. They can be found in all market places and the corner of most busy roads and streets in India. There isn’t a franchise that these local vendors can unite under and the lack of branding and anonymity of each vendor hasn’t allowed this to develop. They target local residence of the area and middle to low social class customers.
A negative to local vendor is hygiene and consistency of taste in Juice. These vendors don’t have a high profit margin and operate by acquiring resources they can afford, if this means purchasing bad or cheap fruit they will not hesitate to do so. They are more interested in saving the day making enough to survive. They have a separate target market to Boost Juice and shouldn’t be heavily preaching our primary and secondary target audience.
Competitor 4: Maaza Mango
Maaza mango is widely believed to be India’s favourite fruit juice occupying 90% of the market. The company provides a variety of fruit beverages including the popular Frooti and Mango slice. They are available in small and large cartons, as well as plastic and glass bottles. The company was launched in 1976 in India and was acquired by Coca Cola India in 1993 (Maaza 2010). Boost Juice will be competing directly with Maaza because it is sold in specific locations we are targeting including shopping centres and uni campuses. Points of difference between the two brands are that Maaza is not freshly made in front of the customer, it is prepared and pre packaged. It is also a lot cheaper then Boost Juice (see price index under International marketing mix)
Competitor 5: Win Agro Foods
Win Agro foods from India are another indirect competitor to Boost Juice. They offer not only juices but also have products like flavoured soya milk, vegetable pastes and try to add to the quality of the product and offer healthy processed food products that are consistent in taste.
Boost Juice will be eventually targeting the same customers to obtain a healthy weight in the market, therefore they will have to consider the facts of these health related issues. Boost Juice will be differentiating from this indirect competitor by offering small on the go quick consumable products and will aim for repetitive sales because they do not provide a mass amount of 3 litres like WIN agro foods.
Boost Juice Competitive Positioning Graph:
As illustrated on figure 3.1 we have displayed the desired gap between Boost Juice and its competitors in India. Boost Juice will have high promotional activities and a fairly high price. The reason we are incorporating high price for the products we are offering is because we are simply targeting consumers that will confidently be able to purchase at that price. The closer competitors as shown in the positioning graph Maaza Mango and Booster Juice are also well known in the market therefore are ranked higher than other competitors in promotional activities. Having a look on the opposite side of the graph with WIN Agro Foods and local street vendors are lower in the graph because they haven’t established themselves as good as the closer ranged competitors.
Boost Juice wants to keep the gap between their competitors and have the upper hand with promotional activities consolidating into a strong foundation to stay long term and dominate the market.
The illustration on figure 3.2 (Above) demonstrates the ideal spot for Boost Juice away from their competitors polishing the perfect hygiene and consolidating the brand awareness across India. This graph we see FIL industries creeping up without doing any promotional activities because they have the service of helping the farmers with their pesticide problem.
Market Entry Strategy
Boost is a successful franchise in Australia and is continually booming its franchise network worldwide. Therefore it is suggested that Boost Juice entry strategy into India’s market is to operate as a franchise. To keep in align with Boost Juice mission statement; “To become the worlds famous and loved brands,” India is a market for their future growth potential.
When setting up business in India, Boost Juice need to taken in account of the geographical dispersion of India, it is recommended that Australian firms like Boost Juice consider a regional plan, that focuses on multiple locations and markets within India and finding the appropriate partners and agents within each region. Austrade offices in New Delhi, Mumbai, Chennai, Bangalore, Hyderabad and Kolkata provide indispensable local information and advice and are in tune with local businesses. (Austrade)
“Doing Business” is a website which aims to help businesses measure regulations and enforcements in different economies and selected cities around the world. In terms of Boost, establishing their business in India, the website gives an in depth step by step process to follow when it comes to starting a business in India. The website identifies the bureaucratic and legal hurdles Boost Juice must overcome to incorporate and register a new firm in India. (Doing Business, 2009) Refer to appendix Table 3.1 which provides a summary of the procedures and the associated completion time and cost for setting up Boost Juice in India.
The initial cost of a Boost Juice Master Franchise varies significantly between countries, depending on variables such as the size of each market and therefore the development schedule. (Boost Juice) Therefore the master franchisee that will operate the business in India will be briefed on the fees and will outline in detail once the market in India has been identified. The master franchisee need to have a minimum net worth of $2 million (US) and liquidity of at least $1 million (US) in order to be considered for opportunity to expand internationally. (Boost Juice)
The average store in Australia is a 20sqm kiosk costing $180000 (AUD). The average cost for a similar size store in an international market (India) will depend on the variables such as the cost of materials and the availability of equipment. However the establishment costs will be less than that of Australia in India.
Successfully using foreign exchange efficiently and effectively, fulfilling the economic needs of India and industrial needs, without disregarding consumer needs as well, is the main basis of India’s import policy (Indiamart, 1996-2010). According to Indiamart.com, in regards to importing, there are three main objectives:
- To make necessary imported goods more easily available, including essential capital goods for modernizing and upgrading technology;
- To simplify and streamline procedures for import licensing;
- To promote efficient import substitution and self-reliance. (Indiamart, 1996-2010)
In order for Boost to be successful in importing their services in India, a clear indication of the benefits of having Boost in India would need to be presented, before importing the service as a franchise. Boost could give India the incentive that, although they were going to be a new concept to the consumers of India, it would give India the opportunity to modernise and upgrade the technology available in India – most especially towards providing healthy, fruit oriented beverages for consumption. The process could also simply and streamline procedures for import licensing from Australia to India, should Australia be pushed further than just consideration for trade. It would also put India in the market as a strong, well-developing country, embracing the opportunity to house an international brand such as Boost.
There are various ways in which Boost can import into India, via sea, land and air (Datevs.com, 2010). Goods can also be imported into India via post parcel or on person while travelling. Whereas in respects to Boost importing to India, should they establish business there, post parcel and on-person wouldn’t be considered to be used as much as the main three: sea, land and air. For Boost, importing their machinery and promotional accessories would be their main focus to officially ‘bring-in’ Boost to India.
To enter the country there are certain procedures in which must be taken to ensure the goods passes global standards and will be accepted into the country. Goods must follow through in a ‘Bill of Entry’/’Shipping Bill’ in multiple copies in regards of customs, the bank and the importer, Boost, themselves for future reference.
Examination of the goods is a must as well as license documents to prove that the goods pose no threat to India or are officially legal to be imported into India (Datevs.com, 2010). In order for the goods to be successfully accepted into India, it must pass through the examination period within 30 days. If they should be unsuccessful the goods are disposed of. A Custom’s officer can give permission for an extension of examining the goods. The examination process does not necessarily take a full 30 days and the imported goods can be sold any time once they are cleared – with it being confirmed the importer has been notified (Datevs.com, 2010). Whereas the goods cannot leave the customs office until they have been issued an ‘Out of Customs Charge’ which signifies that the goods have been examined, verified that the import is not prohibited and confirmed that the customs duty has been paid (Datevs.com, 2010). Payment to customs duty must be paid within 5 days after the ‘Bill of Entry’ is returned to the importer for payment of duty (Datevs.com, 2010).
The main items in which Boost will be importing into India will be their machinery – to operate equivalently to Australia and potentially their promotional gear. While Australia doesn’t currently have a trade-alliance with India, it is still under consideration. Boost can take advantage of China being India’s second-largest trade partner (suite101.com, 2007) by having Boost’s packaging and promotional gear manufactured in China.
Target Market Analysis
Boost Juice will be targeting shopping centres across high profiled vicinities in New Delhi and Mumbai. The reason for such a small geographical target is that these cities form the most densely populated area in the country (I love India, 2010). Due to the density of these cities, any marketing campaign undertaken will have exposure to the largest possible audience in India.
Our primary target market within these locals will be:
- Male and Female
- Age 18 to 30
- Middle to high social class
- Financial independent
- Likes to socialise with their friends
- Enjoys retail shopping atmosphere
- Young, vibrant, enthusiastic
- Health & Body Image conscious
- Aware of large commercial brands
- Frequently accesses the internet
- Potentially has been introduced or is already using social media networks
Our Secondary Target market:
- Male and Female
- Aged 30+
- Middle to high social class
- Married; possibly has kids
- Health Conscious
- Member of local Gym or practices Yoga
- Modern; familiar with western culture
The increase spending power of these consumers has been a key reason for targeting. The high GDP growth has fuelled and increase in Purchasing Power Parity (PPP) of the consumer. The PPP has risen 70% since 1998 and is expected to double by 2014 (MaruBeni, 2010). Figure 1 displays the rise of PPP compared to China. There has been a great amount of foreign direct investment and outsourcing to India that has resulted in an emerging middle class. It is estimated that the rising of a middle class has a population of 300 million, which is approximately the population of America. As a result; an increase in consumer spending power, especially within our primary target audience. A younger generation with spending power are willing to purchase, splurge an indulge on consumer products more so then ever before.
India- Boost Juice Marketing Mix
Adapting to India’s rich culture, Boost juice is required to make a few product adjustments to enhance its chances of success with the primary and secondary target market. The Indian consumer tastes will be different to the Australian consumer; hence we must integrate the many different flavours that India provides. Incorporating fruits that are more popular and exclusive to India to Boost Juice menu must be essential. The following are popular Indian fruits that can be used to make smoothies, juices, and shakes:
- Red Carrot
- Sugar Cain
- Raw mangoes
- Variety of Indian berries such as Bail
Boost needs to also take into consideration of having a seasonal juice menu. Indian fruits cannot be grown all year long; some fruits only grow during particular seasons i.e. Watermelons are only grown in summer.
Pollution is a crisis in India, with no recycling and litter being tossed away on the roads. Providing plastic cups to our Indian consumer has a high chance in resulting with Boost Juice cups being found on the side of the road amongst other trash. Overall this won’t follow the companies “Loving Life & Loving the environment” core competency. Boost Juice has a large focus on the environment, and shows its concern through creating awareness about global warming and recycling through websites and advertisements.
There are two possible solutions, first of which is a product modification. A large portion of companies distributing drinks and juices are aware of the problem and have adapted the glass bottle as their main form of distribution. Glass cups or bottles are required to be returned to the retailer after the beverage has been drunk or if thrown away, there is a good chance young labourers will collect these glass bottles and return them for a monetary reward. Further India has cheap labour force that can clean and make glass cups and bottles reusable (recycling). This system is already being applied by big companies such as Pepsi & Coca Cola, and could be a feasible solution to Boost Juice to redistribute there juices through glass bottles rather then plastic cups. The second solution to being ‘Green’ will be discussed under promotional strategy.
Results from the price index display that prices of commodity goods is cheaper in India. This is due to cheaper manufacturing costs; labour and raw materials costs. The cost of Retailer/labourer in Australia will set us back around $15 per hour for each staff, in India the same labour work will set us back $2 per hour. Another example cost of 1kg of bananas in Australia roughly $2.50 and in India 10 Rs ($ 0.20). Boost Juices pricing strategy will be to capture the medium to high income earning market. The products will be priced at premium levels roughly 150 to 175 Rs. The reason why we will be charging 5 times greater then our local competitor is due our location (high rent charges in shopping centres), higher costs in marketing efforts and the projected image of a premium good quality product.
Boost Juice will be placed in three vicinities of Mumbai and Delhi:
Major Shopping centres
- High Street Phoenix
- Atria Millenium Mall
- InOrbit Mall
- Oberoi Mall
- Infiniti Mall
- Pacific Mall
- AEZ Square
- DLF City Centre
- Ansal Plaza
- Mega Mall
- Centre Stage Mall
Inside and near Uni campuses
- University of Mumbai
- Indian institute of Technology
- International Institute of population sciences
- SNDT Women’s University
- Narsee Monjee Institute of Management & High Studies
- Delhi University
- IIIT Delhi
- Guru Gobind Singh Indprastha University
Near jogging parks and health care places (gyms)
- Joggers park, Mumbai
- Kamala Nehru Park, Mumbai
- Shivaji Park, Mumbai
- Amjal Khan Park, Delhi
- Buddha Jayanti Park, Delhi
- Kalkaji Distric Park, Delhi
- Mughal Gardens, Delhi
These locations were chosen to assist our targeting our target market. Major Shopping centres were chosen because they help identify with the financial independent, young to middle high class individual. Universities will attract young, enthusiastic students, who have access to the internet (marketing online campaigns). Health centres, Gyms and parks were targeted to attract health/body image conscious people. Boost Juice will be avoiding local markets and low profile areas, because of local competitors and not reaching our desired target market.
Boost Juice will have three prime promotion strategies.
Advertisements will be the opening strategy to create initial brand awareness of Boost Juice. The company will be focusing on above the line advertising in magazines, newspapers, billboards, and possibly television if the budget is big enough. Boost Juice should focus on aligning there advertising efforts with companies that their target market can link to. Targeting health and exercise magazines or promoting on MTV to reach the younger, enthusiastic, vibrant consumer.
As we have seen over 2010 with brands such as Old Spice and Nike, viral marketing campaigns have been very successful and can bring immense business success if done correctly. Traditional advertising is become less viable as a medium and only brings in around 18% of ROI. A good viral marketing campaign is able to bring up to 78% on ROI. Boost Juice plans on creating a series of creative online advertisements that will be primarily promoted on YouTube; shared through Facebook and Twitter. As stated our target market are tech friendly and use social media networks. The video would be placed on the YouTube Homepage, and be promoted on side bars of the website. If successful ‘word of mouth’ will quickly translate to ‘world of mouth’ as friends share the link to each other and talk about the video through social networks. This will be reaching our primary target audience and will be very effective in creating brand awareness and ROI if the online ads are successful.
In keeping with the companies’ eco friendly image, Boost Juice will set up recycle bins around the location of the store. These bins will be painted with the Boost juice logo and a possible slogan “Help Save India by Recycling and not littering” In addition Boost Juice cups or glass bottles/glasses can have a label saying “Please recycle me☺” The environmental campaign will be pushed through the advertisements and viral marketing campaign.
Taking Boost Juice into another country it is important to ensure that many features of the product must be augmented to suit the Indian market these are as follows.
Packaging – when considering the location of our store, the packaging would have to coincide. If we choose to have a Boost Juice store on the side of the road it would be important that we use glass bottles for the juice as if we use the typical polystyrene cups they will end up pollution on the street and this could potentially damage the Boost brand. However if we are in one of the more upmarket shopping centres we could use the Boost traditional packaging and there is usually recycling procedures in place.
Pricing – the Indian market had adapted to paying very little for juices, therefore Boost must consider this when making pricing decisions, too low and people will continue to purchase from street vendors and too high and it will be considered too expensive. Therefore the cost for a cup of Boost in India should be significantly cheaper then what we would pay in Australia.
Local tastes – when taking Boost Juice to India it is important that local tastes are considered to ensure that we are offering a product that is appetising to the Indian market, for example a chilled chai latte with a touch of spice, or even various juices that incorporate local fruits. (Refer to “product” in marketing mix for a more detailed list of exotic Indian fruits) 70% of Indians preferred traditional foods and flavours over "Western" foods.
Vegetarian/vegan population – India has a very large population of vegetarians, thus when producing a menu for India boost must be careful when including animal bi-products such as egg and milk.
As well as changing our product, when entering India it is important to also change the way we do business, doing business in India requires extensive of cultural knowledge and understanding:
Cultural implications – it is important that Boost Juice is sensitive to the strong culture in India by ensuring that sensitive issues are not aggravated by a western company, such as advertising with cows (sacred animal). It is very important to take time to build trust with your business partners in India, if we decide to partner, as it is very difficult to sort out business disputes in the Indian court system.
In some parts of India, shop floor employees may speak different languages so drawings and process instructions need to be very robust, clear and easy to read. The use of pictures will help boosts Indian employees to understand service expectations.
Transportation within India is quite a rigid process therefore when Boost Juice designs packaging and promotional material to be transported into stores it is important that it is made strong and quite unbreakable to ensure that on arrival there is no nasty surprises.
Another advantage that India offers is that it is a central Hub for Asia. "It's a strategic location from which to launch a manufacturer's Asian distribution. As the Asian market increases, having a facility in India, which offers strong tax incentives to business, is an important component of any manufacturer's global strategy,"
Different states in India each have different official languages. Central government only recognises Hindi as the official language of India. However, when doing business in India, English is the language of international commerce. Therefore menus must include both.
Of all the cultural influences that most impact Indian business culture, hierarchy plays a key role. With its roots in Hinduism and the caste system, Indian society operates within a framework of strict hierarchy that defines people's roles, status and social order.
“For example, within companies manual labour will only be carried out by the "peon" (roughly equivalent to a 'runner'). It is not uncommon for the moving of a desk to take hours. This is because no-one in the office will carry out the task but the "peon", who, if otherwise engaged can not do so”
Table 3.1. Step by step process strategy starting business India
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- ‘Bit about Boost’, pg.3, , viewed September 20th 2010 .
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