In the last several blogs I have mentioned about the budget to Berlin, demographic and economic profile , culture challenge , the market entry , standardization vs.customization , this blog I will have a overall recommendation.
Start with a lower-risk entry mode, such as exporting as a short term strategy and for a long term strategy ,maybe over time move to higher-risk entry mode.
Do not regard the whole world as a single market. Follow strictly the standard basic techno ledge whilst adjust chocolate flavor, price , promotion methods according to the local market.
Follow local laws and keep learning local culture.
From the moment a company decides to extend its activities into foreign markets, it should settle on either standardizing or customizing the marketing mix. This can be done when the organization applies a single strategy in all the countries or customizes the elements to each market. The company’s decision to standardize or to customization is fundamental, since it influences the organization’s fundamental approach to business and how it will compete. Nowadays standardization studies comprise all elements of the marketing mix – product, promotion, price and distribution.
Standardization is the process of implementing and developing technical standards based on the consensus of different parties that include firms, interest groups , standards organizations and governments standardization can help to maximize compatibility.
we have to mention ISO , International Organization for Standardization. It means that consumers can have confidence that their products are safe, reliable and of good quality. It can help business of any size and sector reduce costs, increase productivity and access new markets. for small to medium sized enterprises, standards can hel to :
Build customer confidence that your products are safe and reliable.
Meet regulation requirements , at a lower cost
Reduce costs across all aspects of your business.
Gain market access across the world
In order to address the differences, changes in design, packaging, price, or distribution of goods might be necessary. Moreover, viability, communication costs, media habits, differences in the range of distribution channels, intermediaries, financial resources and know-how may also cause trouble .
The benefits of customization is:
Increase the sales venue as the product meet fully the customers’ demanding
More flexible carrying on the marketing target
More unique generate more competitive in the market.
Under the standardization code , Chocolate shall be prepared from cocoa and cocoa materials with sugars and may contain sweeteners, milk products, flavoring substances and other food ingredients. These combined additions shall be limited to 40% of the total weight of the finished product. OCHO will strictly follow up this standard. even the combined additions shall be limited to 40% of the total weight of the finished product .
As we mentioned in the previous blogs , Germany is a different market from New Zealand. I have introduce the special demographic and culture in Berlin . if OCHO plan to enter the international market , it should not regard the whole world as a single market. on average , in different retail sectors, 36% of consumers would consider buying customized products or services. To carry out the marketing mix strategy , the below customization should be considered:
The chocolate flavor. New Zealand is famous for its fresh milk and dairy products.Milk is one of the most important chocolate raw materials. Milk Chocolate shall contain, on a dry matter basis, not less than 25% cocoa solids (including a minimum of 2.5% fat-free cocoa solids) and a specified minimum of milk solids between 12% and 14% (including a minimum of milk fat between 2.5% and 3.5%) . Milk flavor chocolate can be the key product which will be sold in Berlin as its good reputation.
The price. There are much difference in the international business and internal business . so the price should be adjusted according to the different market. OCHO will finally make a division after a sufficient investigation of the local market consumer ability and local competitors. The price will be included in the cost of material /labor/packing/logistic , profit and also the importing customs tariffs.
The promotion. New Zealand has huge tourism resources to attract European tourists, especially people from Germany. Berlin can be a window of New Zealand culture and OCHO can be the represent of New Zealand . If OCHO can get the support of New Zealand tourism department and create a sponsorship with them . It will be a great benefit for these third parties.
As we call know , the types of market-entry used by a firm in international operations can be classified into four main categories:
Indirect and direct exporting ( Indirect exporting using export management companies, agents and distributors).
Contractual modes including franchising, licensing, contract manufacturing and turnkey operations,
Foreign direct investment ( wholly- owned sales or production subsidiaries )
Cooperative ventures including joint ventures and alliance.these modes are also used by international firms for mutual development of technological capabilities and knowledge in conjunction with offshore partners.
which marketing entry can be used by OCHO , I hope it will be a low risk one . If I choose a higher-risk mode, like investing equity in a foreign firm in Berlin , Germany . It will be in a risk. so I prefer to start with a lower-risk entry mode, such as exporting and maybe over time move to higher-risk entry mode.
Why I choose exporting as the international marketing mode just because it is a lower-risk and lower-cost mode of entry ( no equity involved ). It can be used as an experimental mode, to test out a new market in Berlin .
OCHO is made in New Zealand and I plan to sell the chocolate to Berlin either by sales branches using their own sales force, or through agents or distributors.
I think three things have to be pay more attention to export chocolate to Berlin , Germany.
The EU requires that food products must contain only E-approved coloring additives and preservatives. This is a mandatory require OCHO must follow .
Cultural/market conditions requiring adaption . if we export chocolate to Berlin we have to investigate what are the favorite flavor for the local people.
The Merriam-Webster dictionary defines culture shock as “a sense of confusion and uncertainty sometimes with feelings of anxiety that may affect people exposed to an alien culture or environment without adequate preparation”. we should rather try to combine the best elements from both cultures and not measure everything by our home country’s standards. And it is very important to meet the foreign culture with appreciation and respect.”
Language barriers. The first culture challenge will be language barriers. If we don’t speak the same language as our customers, communication is going to be a challenge. If possible , I need at least one person on team who speaks the local language. actually the lucky thing is , we can communicate in English. even we both speak English , the challenge like , sort of confusion still exists between two countries that share a common.
2. The second culture would be : different countries work at difference paces. I needs to be aware of the infrastructure I have to work with, and to compete with, in Berlin.
3. Different laws or regulations I have to deal with import fees and tariffs, so gaining a comprehensive understanding of the local laws and regulations governing in Berlin is key. From tax implications through to trading laws, navigating legal requirements is a central function for any successful international business. Eligibility to trade is a significant consideration, as are potential tariffs and the legal costs associated with entering new markets. Cost calculation and global pricing strategy
4. Different cost calculation & pricing strategy
Setting the product price and services can present challenges when doing business in Berlin compared with in New Zealand . We must consider costs to remain competitive, while still ensuring profit. Researching the prices of direct, local-market competitors can give us a benchmark, however, it remains essential to ensure the math still works in our favor. For instance, the cost of production and shipping, labor, marketing, and distribution, as well as our margin, must be a taken into account .
5. The last challenge is from local competitor. we need to be cautious, and be very aware of what our competitors are doing in order to counteract the advantages they have over you.
As Germany’s capital , Berlin is a multicultural landscape. The city’s culture is as diverse and unique as its citizens. Here are some Berlin cultural facts you probably didn’t know.
Berlin is home to roughly 621,075 registered foreign residents, originating from approximately 190 different countries. In this diverse and multi-national city, only 1 out of 4 people living in Berlin actually grew up there.
Over 1,000 places for a late night beer
If you’re craving a nightcap but don’t want to head out to a noisy and smoky bar, then Berlin has you covered. There are over 1,000 late night stores, known as Spätis, throughout the city.
It’s a Lonely Hearts Club
One in every two Berliners are single, or at least they aren’t married according to a recent study. For a city shrouded with an alternative ethos and lifestyles, it seems a lot of Berliners aren’t fans of settling down into quiet, married life.
Due to its location in the European Plain, Berlin is influenced by a temperate seasonal climate. About one-third of the city’s area is composed of forests, parks, gardens, rivers, canals and lakes.
Berlin is a world city of culture, politics, media and science.Its economy is based on high-tech firms and the service sector, encompassing a diverse range of creative industries, research facilities, media corporations and convention venues
Berlin has an oceanic climate. This type of climate features moderate summer temperatures but sometimes hot and cold winters but not rigorous most of the time.
Fassbender & Rausch is Berlin’s oldest chocolate shop; Heinrich Fassbender first opened a chocolate store in 1863. Wilhelm Rausch followed, opening his own very successful shop in 1918, and in 1999 these two master chocolatier families came together to form Fassbender & Rausch Chocolatiers at the Gendarmenmarkt.
Ocho is a local craft chocolate maker in Otago , New Zealand. It started its business in 2013. This blog focus on expending its business to the international market — Berlin , Germany. I will keep updating the information constantly.
As a sales represent , I am sent to Berlin to explore the market and here below is my trip plan.
If departure from Auckland international airport and the destination place is Berlin . the airfare in two ways will be $2,000.00
the cost of applying visa to Germany will be $2,000.00
I plan to stay there in two weeks and the hotel cost will be $5,000,00
Sample cost $1000.00
Advertising in the magazine , newspaper or TV $ 8000.00
Yanyan BAI 