1.

INTRODUCTION:

This report is about ‘Myrurgia’, is a Spanish owned company in the Puig Beauty and
Fashion Group, has its own centres of its Hydro - alcoholic, cosmetic, and personal care
products manufacturer lactovit .In 1999 lactovit was launched as a hygiene and body care
product and was mainly targeted to the families. ). Myrurgia is aiming to expand its
Lactovit market and initial research has indicated that Middle East is likely to be the most
profitable market region. The perception that Middle East society is conservative in its
dress and appearance, skin care, beauty and grooming are increasingly important to both
women and men. The consumption of cosmetics and perfumes in the region is said to
rank among the highest per capita world wide. The changing retail environment is also
spurring growth, with malls, pharmacies and supermarket chains springing up throughout
the region, giving companies greater visibility and distribution opportunities.This report
will select the best country and proposes the best entry mode in three parts namely part
A, part B, and part C. In part A, the report will take some factors (criteria) which describe
the environments of the countries and explain the importance of each factor. Later it
collects the data for each factor in each country. In this screening the section of the
countries are limited as there are around 20 countries in the middle east I have selected
around 10 countries for this report as these are the best countries to lauch the product for
example I have not selected the countries like Iraq as the political factor is not sutable for
the lauch of the product. In part B, it analyses the data through weighted average tables
and selects the most attractive market. In part C, it outlines the most appropriate means of
market entry for the selected market.

PART A

Preliminary screening

Population:

Lactovit is such a product, which is used, in every-day life. If a large population market
 is selected, the production of this product also increases as the requirement increases,
providing a chance to increase marketing by increasing the sales of the product and
generating profits to the manufacturing organization.

These are the population structure of Middle East countries.

(Figure 1) This figure is designed in workbook and data collected from CIA Fact Book

Climate:

Climate and weather variations can be considered as major factors that impact the sales of
the cosmetic products especially in case of sun and personal care products. If the climatic
condition of the target market country is high, then the requirement of sun care body
products is likely to be high in this case. Increase in temperature cannot be considered as
the only constraint as most of the people in European countries take more care about their
skin and the prediction of weather may not be possible all the time. In such cases, most of
them prefer to use the sun care products on a daily basis. Most of the other countries also
do this process but in a comparatively less scale i.e., there will be people using this
product but on a less scale compared to European countries. Hence, the organization can
decide it based on the constraints and factors used and the extent of market it is willing to
capture.

Economic Environment

In Middle East most of the area is covered by sand and hence the efficient means of
transportation is by train. Communication network plays a vital role in any business field.
It is the main channel or the efficient way of interacting with the customer and providing
the customers with the information about products and services offered by the
organization. If the interaction is maintained with the customer, then only the customer
will think about the product i.e., the benefits of the usage of the product and based on the
interest of the customer may purchase the product. Hence, effective communication is the
major factor, which may influence the customer’s to a greater extent. The main feature
are a low GDP per capita, this includes a limited amount of manufacturing activity and a
poor and fragmented infrastructure, weakness are in transport, communications,
education and health care, which is not relevant for foreign trade. These are the GDP
(PPP) structure of Middle East Countries
Figure 2 (CIA Fact Book)

Exiting Sale:

According to the Global Marketing Information Database, (2009), the number of Sales in
the countries as per the 2008 estimates is given in the below table.
 VAT (%):

VAT is a direct tax applied on the product. The standard way to apply VAT is some
percentage on the price of the product minus all the taxes that are previously paid on the
product. The main aim of VAT is also to reduce the consumption of the product. Different
countries have different taxation system. High VAT rates decrease the sales of the product
and thereby decreases the consumption of the product. So selecting the country with low
VAT rate is the best option.
Labour:

Labour also plays an Important role while because with out the labour there would be no
company and this plays a major role. The below tables shows the labour in Middle East
Countries as per the CIA FACT BOOK.
Summarizing all the indicators in to one table:

Existing
Countries Population GDP sale Vat Labor
Algeria 34,178,188 7,000 252 17 10
Egypt 83,082,869 5,400 4,068 20 25
Iran 66,429,284 12,800 9,205 3 25
Israel 7,233,701 28,200 4,059 17 3
Kuwait 2,691,158 57,400 1,989 21 2
Lebanon 4,017,095 11,100 460 10 1
Morocca 34,859,364 4000 4000 20 11.33
Saudi Arabia 28,686,633 27,800 9,342 0 7.19
Turkey 76,805,524 12000 2,869 18 25
UAE 4,798,491 40,000 3,169 18 4
After analyzing the countries and their indicators, below are the ranking of the countries
and the top 1 ranking countries in each indicator has been selected for the next
screening.

Rank Countries Population Rank Countries GDP

83,082,86 57,40
1 Egypt 9 1 Kuwait 0
76,805,52 40,00
2 Turkey 4 2 UAE 0
66,429,28 28,20
3 Iran 4 3 Israel 0
34,859,36 Saudi 27,80
4 Morocca 4 4 Arabia 0
Saudi 28,686,63 12,80
5 Arabia 3 5 Iran 0

Existing
Rank Countries Sale Rank Countries VAT%
9,342.8 0
1 Saudi 1
Arabia 0 Arabia

2 Iran 22,605 2 Iran 3

3 Egypt 4,068 3 Lebanon 10

4 Israel 4,059 4 Israel 17

5 Moracco 4000 5 UAE 18

Rank Countries Labor

1 Iran
25

2 Egypt 25

3 Turkey 25

4 Moracco 11.33
Saudi
5 Arabia 7.19
By the above the selected countries are Egypt, Kuwait, Saudi Arabia, Iran.

PART 2

PRIMARY SCREENING

Here the indicators selected are of two types. They are positive and negative indicators.
The positive indicators are population, existing sales, GDP per capita (PPP). The negative
indicators are number of competitors and VAT.

This part of the report selects a best country after comparing the data selected in part A. It
undertakes the weighted comparison of the factors. The process is explained below. First
allocate the weights for each indicator according to their importance in all the factors i.e.,
the most important factor gains the maximum weight and the least important factor gains
the less weight. Now represent the values of each factor for each country on the 10 point
scale. These are the points gained by each country in that factor. Written in a table. Now
multiply the points of the indicator with the weight of the indicator and then add them
vertically. This gives the total number of points gained by each country. The country
which has got more points is the best country among the countries. The entire process is
shown below.

Population:

For every market selection process there exist a certain criteria to be followed by the
person in the organization responsible for the selection process. Population size and
growth of population in that particular country is regarded as one of the important criteria
to be considered during the selection process. If the population growth is high, there is a
chance for existence of mass market in that particular region. If population is high, the
usage of the product will be more, increasing the requirement of the product, which leads
to increased production of the product. As the requirement increases in the target market,
production increases, resulting in increasing the profits of the developing organization.
So 30% weight to this indicator. This is a positive indicator. By representing the values of
population of each country on a 10 point scale, the number of points gained by each
country is given below.

EGYPT -------- 10

SAUDI ARABIA -------- 4

IRAN -------- 6

KUWAIT ------- 2

Existing sales :
This is the second most important factor among all the factors considered in this report as
it gives the existing demand for the product which is very important for sales forecast. So
give 20% weight to this indicator. By representing the values of the existing sales
volumes of each country on a 10 point scale, the number of points gained by each country
is given below.

EGYPT -------- 6

SAUDI ARABIA -------- 10

IRAN -------- 8

KUWAIT ------------ 2

GDP per capita income at purchasing power parity:

Physical distribution and communication network of a particular country are also

considered as important factors to be considered during the process of selecting a target
market. Physical distribution refers to the transportation system of that particular country.
If there is no proper physical distribution, it will be difficult for the organization to
deliver the product to the target market in a good condition. There may be damage or loss
incurred to the product during the transportation of the product which imposed on the
organization. Hence, it is an important factor to be considered during the selection
process. This is the third most important factor among all the factors considered in this
report as it gives the purchasing power of individuals of the country. So give 15% weight
to this indicator. This is the positive indicator. By representing the values of GDP per
capita income of the four countries on a 10 point scale, the number of points gained by
each country is given below.

EGYPT -------- 7

SAUDI ARABIA -------- 9

IRAN -------- 8

KUWAIT ------------ 10

Labour

This is also an important factor as it gives the competitive environment of a country. So

give 15% weight to this indicator. This is a Positive indicator. So put ‘+‘sign in front of
the number of points gained by the country in this indicator. By representing the values of
number of Lobour of each country on a 10 point scale, the number of points gained by
each country is given below.

EGYPT -------- 10

SAUDI ARABIA -------- 6

IRAN -------- 8

KUWAIT ------------ 4

VAT (%):

This factor gives the taxes applied on the consumer for consuming that product. So this
also an important factor and give 5% weight to this indicator. This is a negative indicator
and use ‘-‘sign in front of the number of points gained by each country in this indicator.
By representing the values of VAT rates of each country on a 10 point scale, the number
of points gained by each country is given below.

EGYPT -------- -8

SAUDI ARABIA -------- -10

IRAN -------- -9
KUWAIT ------------ -8

Indicator,
Type, Country EGYPT SAUDI IRAN KUWAIT
(Weight) ARABIA
Population, +ve,
(30%) 10 4 6 2

Existing sales (litres),

+ve,
(20%) 6 10 8 2

GDP per capita (ppp)

in US$, +ve, 7 9 8 10
(15%)

VAT (%), -ve

(5%) -8 -10 -9 -8

Labour 10 6 8 4
+ve(10%)

Multiplying the number of points gained by each country in that indicator by the weight
of that indicator and adding all the points gained by each country will give the best
country. The country, which has got the highest points, is the best country.

Indicator, SAUDI
Type, Country EGYPT ARABIA IRAN KUWAIT
(Weight)
Population, +ve,
 (30%) 300 120 180 60

Existing sales of
(litres), +ve,
(20%) 120 200 160 40

GDP per capita (ppp)

in US$, +ve, 105 135 120 150
(15%)

VAT (%), -ve

(5%) -40 -50 -45 -40
Labour
(years), +ve, 100 60 80 40
(5%)
Total points gained
by each country +585 +465 +495 +250

By the above table Egypt is the choosen country in all the factor.

PPA

PART 3

Market entry mode:

The decision of how or on what basis the market entry mode is to be selected has
a vital impact on the results, so the organization must take many such factors into
consideration such as current potential size.

1. Exporting

2. Licensing
 3. Joint venture

4. Foreign direct investment

Exporting:

It is considered to be the market or direct sales of the product to the customer or

services provided by that product in a new country. Exporting is the most popular
approach used by most of the organizations as it involves less resource. The important
thing to be considered in this form of market entry is that the organization should have a
direct commitment. It takes the form of investment of organization’s amount in an
international operation by allocating time and resources to the activities supporting the
activities involved in the process.

1.1 Traffic:

A traffic is identified as the tax imposed on exports and imports carried out by a
particular organization. This traffic can be categorized into two types depending on
the based on the way in which the taxes are imposed on the products. Specific traffic
is a type of traffic on which a fixed charge is imposed on the individual good or
product to be imported, for example $3 per barrel of oil. Ad valorem is another type
of traffic where the imposed charges are a proportion of the value of the imported
goods while traffic also generates revenue for the government. This result in a profit
gain by the government and the customers will suffer the pain for paying more prices
to the foreign goods. (Hill, 2007)

International Licensing:
License is the permission granted to an organization in the target country to utilize
the possessions of the licensor. Such property is generally is imaginary, such as exclusive
rights or trademarks.

The primary advantages for this mode of market entry are:

• It won’t have any traffics associated with it

• Low cost to access market potential

 • Low financial risk

There are comparatively greater disadvantages in this type of entry compared to other
modes of entry. They are:

• Greater possibility to create high competitiveness in the market for current

situation

• Less market opportunities resulting in poor profits

• Higher dependence on license

If we consider the future situation, it cannot be considered as a better mode of

market entry for the Company. (Griffin and Pustay, 2007)
Joint Venture:
The five common objectives for joint venture mode of entry are:
i. Risk/reward involvement
ii. Joint product development
iii. Complaint to government regulations
iv. Market entry
v. Technology sharing
The key issues to be considered in this entry mode are pricing, local firm
ability mode and resources, government intensions, management, length of
agreement, and ownership.
There are disadvantages involved in this mode of entry, which can be no
control over foreign subsidiaries which will involve high risk and more costs for
that particular product.
Foreign Direct investment:
Foreign direct investment (FDI) in its traditional form is defined as an
organization from one country making a physical investment on building a factory
into another country. FDI has a primary advantage of no traffic involvement and
high profit potential. Disadvantages of FDI are higher exposure of political risks
for the organization involved in this type of market entry mode.
Considering the above factors FDI can be considered to be best mode of
entry for Lactovit Company. Among the current markets chosen, no traffic is
involved with high knowledge on the local market and high profit for that
particular market. In this type the management can expand the business in small
proportions rather than incrementing it in larger proportions which involve lot of
investment and risk involved depending on the market situation. In addition to
these the organization also requires domestic and foreign agents for the process of
exporting.
Price:

Price is the focus of cost to the customer for choosing to buy the lactovit
product instead of buying a similar product of other company or organization.
Price is considered to be a main constraint taken into account by most of the
customers when they have to make a choice from two similar products i.e.,
generally prefers product that is comparatively cheap. The price should not be too
low or too high but should be based on the country chosen for marketing with
huge market potential.

The cost of the product is not the individual factor which is considered by the
customer, but based on quality, services and also few other factors which are to be
determined.

Product

The product is the entire set of goods and services offered to the customer.
It also includes the support on non-tangibles, functionality and appearance that the
customer should receive. The appearance of the lactovit has a best model with
distinctive shape, the best design and the product name. This will have a greater
impact on the market especially the product name if it is related to some kind of
brand name.

Promotion
It is essential for a particular organization to reach the intended customers for
which the product is being developed. The organization should involve better
imagination and creativity along with the product for better promotion of the
product and increasing the ease-of-understanding for the customers, which may
not be involved by the competitors selling similar kind of products in the market.
This can also be generalized as involving additional features to the product to
attract customers to a greater extent. The category of the customers can also be
selected while including such additional features like young and teenage
customers as they can be the best customers when the product is placed at events
such as amusement parks, theatres, haunted houses, shopping malls etc. In-order
to increase the sales of a particular product or introduce it into the market,
promotion of the product can be increased by setting up a booth to give away a
sample of the product in short proportions which can be considered as a
promotion activity. Another form of promotional activity could be setting up a
promotional website and describing about the product and advertising the product
with the extra features which may drive demand of the customers to a
considerable extent, resulting in benefits for the developing organization.

NEW COMMUNICATION STRATEGY TO LAUNCH IN THE CHOOSEN

COUNTRIES:

“The process of presenting an integrated set of stimuli to a market with the intent of
evoking a desired set of responses within that market set and setting up channels to
receive, interpret and act upon messages from the market for the purposes of modifying
present company messages and identifying new communication opportunities”, is termed
as market communication by CHRIS.

There are distinct stages that are involved in converting strangers to customers. There are
several factors which MYRURGIA has to consider

• Culture
 • Language used for Advertising

“Ways of living, built up by a group of human beings that are transmitted from
one generation to another”, is defined as culture KEEGAN. For example, in Middle East
a raised eyebrow indicates “yes” where as a “no” has to be said three times to be
accepted. Hence, the positive and negative numbers should be given considering the
colour of people, such as 3,5,7,9 for positive pricing and 13, 15 for negative pricing.
MYRURGIA should also consider the cultural context of the country i.e., high-context or
low-context culture.

Language is described as the mirror of the culture by WALSH. Language is an

important factor as if the language of host and target country, it would be difficult to
communicate with the customers. Advertising must be converted into host country’s
language, brand name importance may vary based on the context and also the motivation
of product may differ and simply different patterns based on foreign language products.

Myrurgia is a company having very good brand image and strengths, the company will
get succeed if it used the resources of the country properly and using good strategies.
Mostly Myrurgia should concentrate on culture, language used for the advertising,
segmentation and competition.

References

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and implementation (5th ed.). London.

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• CIA Fact Book, (2009). Available at :https://www.cia.gov/library/publications/the-

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• Walsh L.S (1993), International Marketing , 3rd edition,Bell and Bain ltd, Great
Britian.
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Pearson Prentice Hall, U.S.A.
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Hall, New Jersey

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Pearson prentice hall.

McCulloch, B. (1999). International Business: The challenge of Global

Competition. (7th ed.). North America