International Marketing Management. The example of the Lemonaid Beverages GmbH


Term Paper, 2021

33 Pages, Grade: 1,0


Excerpt

I. Table of Content

I.TABLE OF CONTENTI

II. LIST OF FIGURES

III. LIST OF TABLES

1. INTRODUCTION1

2 CURRENT SITUATION AND SELECTION OF THE MARKET
2.1 Lemonaid Beverage GmbH
2.2 The nine strategic windows
2.3 Selecting the right market

3.ANALYZING THE MARKET CONDITIONS
3.1 Porters diamond - environment conditions
3.2 Porters five forces U.S. - competition
3.3 Competitive Triangle - international competitiveness

4. POSITIONING IN THE MARKET - SWOT ANALYSIS AND 4PS

5. ENTRY-MODE DECISION

6. CONCLUSION AND RECOMMENDATION

IV. LIST OF LITERATURE AND SOURCES

II. List of Figures

Figure 1: Lemonaid product design

Figure 2: The nine strategic windows

Figure 3: Porters diamond

Figure 4: Porters five forces

Figure 5: Revenue overview and market share by company

Figure 6: Share of distribution channels

Figure 7: Competitive Triangle Lemonaid

Figure 8: Scoring Modell Lemonaid product

Figure 9: Lemonaid price comparison

Figure 10: SWOT analyses Lemonaid and US market

Figure 11: Lemonaid Product, Price, Place, Promotion in the US market

Figure 12: Factors influencing Lemonaids entry mode decision

III. List of Tables

Table 1: Overview Lemonaid Beverages GmbH (in 1.000€) 3

Table 2: Assets/capabilities and strength/weaknesses of Lemonaid

Table 3: Home demand softdrinks, U.S and Germany

Table 4: Opportunity and threats environment conditions US

Table 5: Five forces intensity and collaborations

1. Introduction

In recent years, consumer behaviour in terms of sustainability, environmental awareness and social responsibility has changed significantly. Consumers become gradually more aware of the consequences of their purchasing behaviour and pay more attention of en­vironmental, political and social responsibility. It is assumed that this trend will continue even more in the future.1 Based on this development, it is expected that consumers de­mand for sustainable products and especially for products from companies in compliance with these mentioned values will increase strongly.2

One company whose strategy and vision are based on the sale of sustainable, eco­friendly and fair-trade soft drinks is the Lemonaid Beverages GmbH located in Germany. The enterprise achieved strong growth rates in sales in the last years and distributes already in some countries outside of Germany. The continuing increase in demand of sustainable products offers Lemonaid Beverages GmbH opportunities to enhance their success by expanding into new markets.3

The goal of this thesis is to work out if Lemonaid should take the opportunity to expand internationally and which market could be entered. Furthermore, it will be worked out how to approach and position Lemonaid in the market and deciding which market entry mode should be used to promises the best possible success.

This leads to the central question of this paper: How could a best practice strategy for an international market entry of Lemonaid Beverages GmbH look like?

To answer this question, firstly the current situation of Lemonaid is assessed in terms of company resources and size as well as preparedness for internationalisation by using the Nine-Strategic Window framework (chapter 2). A potential market will be selected after it. In the third chapter, the market environment, the competition in the market and Lemonaid's competitive advantages in the market are analysed. For this purpose, Por­ter's Diamond, Porter's five forces and the competitive Triangle are used. After the as­sessment and the result of the analysis, the 4 P's (Product, Price, Place, Promotion) are determined based on a comprehensive SWOT analysis. Finally, the market entry mode is derived in chapter 5 in respective of all the information, analyses and data obtained.

2 Current Situation and selection of the market

2.1 Lemonaid Beverage GmbH

Lemonaid Beverages GmbH was founded in 2009 in Hamburg, Germany and describes itself as a social business enterprise. CEO and founder of Lemonaid Beverages GmbH is Paul Bethke.4 Lemonaid distributes its own produced lemonades, teas and tea bags, which are sold under the two trademarks “Lemonaid+” and “ChariTea”. Main character­istics of the products is the production with exclusively ecological ingredients, which are traded fairly. In addition, the soft drinks of Lemonaid contain only a low sugar amount compared to other soft drinks. Furthermore, Lemonaid holds organic, vegan and fair­trade certificates for its products. Besides this the products are sold in special and unique designed bottle.5 6

Abbildung in dieser Leseprobe nicht enthalten

The vision and strategy of Lemonaid is to combine entrepreneurship with the character of an aid organization. Therefore, Lemonaid donates a fixed amount per sold bottle to the own founded aid organization: Lemonaid & Charitea e.V. The suppliers who grow the ingredients are (among others) located in Sri Lanka, South Africa and Paraguay and are constantly visited and in contact with Lemonaid.7

Since its foundation in 2009, the company has experienced strong growth in size and sales. The company was able to increase its sales to 11.29 million Euros and the number of employees to 87,4 on average. However, Lemonaid intends to grow even more in the future.8 The target group of Lemonaid can be described as well-educated people be­tween 20 and 40 who are interested in sustainability and culture and are willing to pay a higher price for these values.9 10

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Table 1: Overview Lemonaid Beverages GmbH (in 1.000€).10

The largest share of sales revenue is generated in Germany. Beyond that, sales are already being generated in France, Great Britain and South Korea. In parts this is done through subsidiaries.11 The main customer of Lemonaid is not the consumer itself, but distributors, bars, restaurants and festivals.12

Based on the data presented, the tangible and intangible assets as well as the relations and knowledge of the company were summarised in a table. Strength and weaknesses are derived from it.13

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Table 2: Assets/capabilities and strength/weaknesses of Lemonaid14

2.2 The nine strategic windows

A first approach to decide whether Lemonaid should go international, global or rather stay at home can be developed by using the nine strategic windows frame work. For this the preparedness of internationalization of the enterprise will be assessed in relation to the current standing in the global soft drinks industry. The result of the assessment is an appropriate strategy for the company. Additionally, the EPRG framework gives a sug­gestion how the assigned strategy can be implemented in terms of marketing.14 15

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Figure 2: The nine strategic windows16

According to the young company age based on the foundation in 2009, the relatively small number of employees (87 employees) and the volume of sales revenue (11 Million Euro) compared to the total revenue of soft drinks worldwide (644.742 Billion Euro, 2019), Lemonaid can be classified as a small and medium-sized enterprise (SME).16 The classification as SME includes that Lemonaid has only limited access to financial, human and knowledge resources. Although Lemonaid is a SME, it has been able to build up first international knowledge through its international supplier networks as well as its first sales in countries outside Germany such as South Korea.17

Due to the first international experiences and the small size of the company described before, Lemonaids preparedness for internationalization can be determined between im­mature and adolescent.

Lemonaid products of sustainable beverages with reduced sugar content meet the cur­rently increasing consumer trend in the worldwide soft drink industry.18 Considering the size of the market, the low market share of Lemonaid resulting from limited resources and the promising products in terms of the market trend, Lemonaid can be classified inside the industry as potentially global. This is also reflected in the first foreign sales subsidiaries.19 Based on this assessment, Lemonaid can be positioned in field 4 of the nine strategic windows, resulting in the strategy: seek niches in international markets. Since Lemonaid has only scarce resources, these must be used efficiently. Detailed mar­ket analysis and adaptation of the product to international niche markets can be consid­ered as too expensive.20 Furthermore, the strategy of sustainability as a maxim requires a sensitive selection of partners to avoid damage to the company image. Also, the strong commitment to sustainability itself gives little space for adjustments. The home market can be determined as the most important market for Lemonaid, where new products are developed and introduced. Therefore, a risk-averse ethnocentric approach is best rec­ommended. For this reason, markets that are similar to the home market in terms of prosperity, culture, structure and sustainable awareness should be considered to entry. This promises that the market strategy and products used in the home country will also be successful in the selected market because of similarity.21

2.3 Selecting the right market

As described in chapter 1, Lemonaid prefers markets that are similar to the home market in terms of culture, prosperity, structure and sustainable awareness. Based on these criteria and the strategy of an ethnocentric approach, western-oriented countries such as the USA are particularly suitable.

The USA is the largest soft drinks market in the world with a total turnover of 177,380 million Euros. In second place is Japan with just 45,000 million Euros, while Germany shows a total turnover of 18.565 million Euros. The big size of the US market could ensure great opportunities for Lemonaid to reach the same or even higher revenue as in the home market.22 Further, the USA is one of the countries with the highest living stand­ards and the most developed economic system in the world. The GDP per capita in the USA is 62,861 EURO and is therefore much higher than the GDP per capita in Germany of 44,575 EURO. Thus, a high level of prosperity can be assumed in the country.23

In addition, the USA is culturally closer to Germany than, for example, Japan. According to Keegan, factors such as attitudes, beliefs, values, religion, but also language and communication are factors that differentiate cultures socio-culturally. The closer the so­cio-cultural conditions between the home market of Lemonaid and the international mar­ket the lower the potential risk of misunderstanding consumers and business partners.24

Based on the close historical past of the USA and Germany after the second world war, as well as a similar religion with associated values and views in large parts of the popu­lation, a fundamental cultural proximity between Germany and the USA can be assumed. Likewise, the language barrier is relatively low due to the same origin of the English and German languages as compared to Japan for example. Based on the big market size, the high GDP per capita and the good social-cultural factors, the USA will be chosen as potential market to enter.

3. Analyzing the market conditions

3.1 Porters diamond - environment conditions

The framework of Porters diamond provides a comprehensive overview of the environ­mental conditions in a country and will therefore be used to identify critical factors in the US market.25 26

Abbildung in dieser Leseprobe nicht enthalten

For this purpose, Porters diamond is not used to identify the nation's competitive ad­vantages itself, but to create an overview of the market environment opportunities and risks considering the soft drinks industry.27 The point of chance is not considered in the following, while the analysis of Firm Strategy, Structure and Rivalry is done in detail in the chapter 3.2.

Factor Conditions: As discussed in chapter 2.3 the USA is a country with a good de­veloped economic system and a high GDP per capita, which is an indication of high prosperity. Nevertheless, there is a high unequal distribution of income and the costs for healthcare are high in the USA.28 The population in the USA has a high standard of education and good access to educational institutions. Especially the group of 25-34 years old people has a high level of education.29 The business world in the USA is characterized by a low level of bureaucracy, which makes it easy to set up new enter­prises and doing business. It is also characterized by a high degree of freedom of work, business and trade.30 Furthermore, ecological and sustainable awareness is on a high level, which is reflected in numerous official institutions and facilities. Based on this situ­ation sustainability can be considered as a present topic in public life.31 A current problem in American politics is the old, overloaded and poorly developed infrastructure. Especially the logistic infrastructure is in a bad condition, which has a negative impact on the eco­nomic growth.32 The currency of the USA is the USD, which is considered as a stable currency.33

Government: The democratic political system in America is seen as very solid and sta­ble. Also, the American legal system is considered independent and fair. Contracts are judged to be legally binding if they comply with the legal requirements. Commercially, the state acts only as a regulator.34 The USA holds several free trade agreements with other countries, including Germany. The USA is Germany's most important export mar­ket so there is a close economic cooperation between the two countries. On the other hand, the USA charges penalty tariffs on foreign goods, including those from the EU, to protect the local economy. This could have a negative impact on economic relations in the future.35

Home demand: In comparison with Germany, Lemonaids target group of consumers aged 18-34 years holds a higher share on total soft drink consumption. Also, the per­centage per capita consumption in liters and the consumption of soft drinks outside the home are significantly higher than in the domestic market.36 37

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Table 3: Home demand softdrinks, U.S and Germany38

The higher consumption measured in liters and the higher average prices lead to a per capita sales volume of more than twice as high as in Germany.38 In terms of sales, the USA is by far the largest market for organic food worldwide, with sales volume three times as high as in Germany.39 The share of organic food in the total food market has grown continuously over the last 10 years.40 The most important attribute for buying sus­tainable food in the USA is local production. Americans also value sustainable production and packaging as well as organic ingredients.41 Especially the group of 18 to 29 years old in the USA holds a high percentage of people who prefer ecological products and are willing to pay more for these products.42 Due to the increasing obesity of children and adolescents, the demand for natural and healthier drinks with less sugar is rising.43

[...]


1 Cf. Cobanelas et. al. (2020) p. 1ff. Cf. Fuduric (2020) p. 1ff. Cf. Longfield (2020) p. 8ff.

2 Cf. Fuduric (2020) p.1ff. Cf. Cobanelas et. al. (2020) p. 1ff.

3 Cf. Lemonaid Beverages GmbH, Jahresabschluss (2018), Cf. Lemonaid Beverages GmbH, Jahresabschluss (2017).

4 Cf. Lemonaid Beverages GmbH (2020).

5 Cf. Lemonaid Beverages GmbH (2020).

6 Cf. Lemonaid Beverages GmbH (2020). Cf. Lemonaid & ChariTea e.V. (2020).

7 Cf. Lemonaid Beverages GmbH (2020). Cf. Lemonaid & ChariTea e.V. (2020).

8 Cf. Table 1. Cf. Lemonaid Beverages GmbH, Jahresabschluss (2018).

9 Cf. Ströer Deutsche Städte GmbH (2015).

10 Cf. own creation based on: Lemonaid Beverages GmbH, Jahresabschluss (2016). Cf. Lemo­naid Beverages GmbH, Jahresabschluss (2017). Cf. Lemonaid Beverages GmbH, Jahresab­schluss (2018).

11 Cf. Lemonaid Beverages GmbH, Jahresabschluss (2018).

12 Cf. Paul Bethke quoted in Brandeins (2020).

13 Cf. Table 2.

14 Cf. Figure 2. Cf. Solberg (1997) p. 9ff.

15 Cf. own creation based on Hollensen (2020) p. 14.

16 Cf. Table 2. Cf. Statista (2020a).

17 Cf. Table 2.

18 Cf. Statista (2020b) p. 4. Cf. Statista (2020c) p. 25.

19 Cf. Table 2.

20 Cf. Keegan, Green (2013) p. 125ff.

21 Cf. Altobelli et. al. (2016) p. 15ff.

22 Cf. Statista (2020a).

23 Cf. Statists (2020d). Cf. Statists (2020e). Cf. Marketline (2018a) p. 2-5.

24 Cf. Keegan, Green (2013) p. 124ff.

25 Cf. Figure 3.

26 Cf. own creation based on Porter (1991) P. 151 quoted from Meffert et. al. (2010) p. 46.

27 Cf. Scheed, Scherer (2019) S. 22ff. Cf. Hollensen (2020) p. 103ff. Cf. Meffert et. al. (2010) p. 46ff.

28 Cf. Statista (2020d). Cf. Marketline (2018a) p. 2-5.

29 Cf. Marketline (2018a) p. 2-5.

30 Cf. Marketline (2018a) p. 2-5.

31 Cf. Marketline (2018a) p. 2-5.

32 Cf. Marketline (2018a) p. 2-5.

33 Cf. Marketline (2018a) p. 29-30.

34 Cf. Marketline (2018a) p. 2-5 and p. 18-25.

35 Cf. Bundesministerium für Wirtschaft und Energie (2021). Cf. Marketline (2018a) p. 2-5 and p. 18-25.

36 Cf. Table 3.

37 own creation based on Statista (2020d) and Statista (2020e).

38 Cf. Table 3.

39 Cf. Statista (2020f).

40 Cf. Statista (2020g).

41 Cf. Statista (2019a).

42 Cf. Statista (2020h) Cf. Statista (2018).

43 Cf. Marketline (2019) p. 9.

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Details

Title
International Marketing Management. The example of the Lemonaid Beverages GmbH
College
University of Applied Sciences Köln RFH
Grade
1,0
Author
Year
2021
Pages
33
Catalog Number
V997200
ISBN (eBook)
9783346375971
ISBN (Book)
9783346375988
Language
English
Tags
International Marketing Management
Quote paper
Erik Hündling (Author), 2021, International Marketing Management. The example of the Lemonaid Beverages GmbH, Munich, GRIN Verlag, https://www.grin.com/document/997200

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