Vitamin Water: Egyptian Market

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Introduction

Vitamin water is a hydrating beverage with good tasting, composed of essential vitamins for a healthy functioning of the body system. The bottled water has about fifteen flavors, in addition to essential vitamins, which are not available in the regular water. The labels on the container indicate the content quantity and quality, especially the critical calorie. The product is designed to support the conscious society’s efforts towards healthy living. This is because society has come to a realization that healthy living is more that just hydration from beverages but demands a good approach to beverage consumption. Buyers have the freedom to see the nutritional information on the bottles of purchase. Consumers are able to see the nutritional contents on every bottle of vitamin water they purchase or intend to purchase. Vitamin water philosophy is based on its ability to get a big section of the modern consumers who are interested in products that support their healthy food and beverage consumption efforts, triggered by the on-the-go lifestyle that has become so popular. This is why the product has shown a lot of success in the United States and Canada.

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The prospect of the beverage sector in Egypt is positive according to the forecast. In recent years, the country’s economy has improved significantly, despite the global economic go-slow. This is attributed to the stable political environment that saw the appointment of liberal cabinet in 2004. It is projected that economic growth will continue in the upward scale as the pro-investment cabinet has repeatedly emphasized the government’s commitment to market economy in the recent years. With an approximate population of 79 million people, and a projected annual population growth rate of 2%, Egypt offers a good market for our vitamin water (CIA 2). Beverages are very popular in the country, with a projected growth in their consumption in the years to come.

Egypt is located in North Africa, where it borders the Mediterranean Sea. As at 2009, Egypt’s desert land with hot and dry summers and moderate winter has a population of 79 million people. Arabic is the official language in Egypt, with English and French languages mostly spoken by elite class with higher levels of education. In Egypt, the literacy level is relatively high as it is stated that 56% of the 15 years and above can read and write (CIA 2).

Vitamin water has shown success in the United States market because nowadays society is getting more conscious about their health. With the fast paced lifestyle that is gaining root in the global society, sometimes people do not get enough vitamins in the available diet. It is therefore logical to presume that Vitamin Water is a good product to distribute and to be introduced to this new market. I have chosen Egypt as the target country to introduce this product because; first, the product does not exist in this highly populous country with great potential. Secondly, at present there is no company that has introduced such a product, hence no competition from an established product. This is unlike in the United States which has big competitors like Aquafina alive, Propel water and many more water flavored companies. Additionally, as mentioned earlier, the country has a large population. This means that there is a big diversity in the lifestyles. This product is basically targeting people who are looking for healthier choices, and are looking for something new and fresh. This would of course have no age limit or boundary.

Cultural Analysis

Brief History

Egypt has a rich history, stemming back to thousands of years back. Vast literature comprises a critical cultural element for the whole world. Egyptian scholars were the first to venture into the literature of publishing in the Arab world, and their books as well as films are all over the world for academic and aesthetic value in museums and academic institutions. It is stated that Egypt has survived with a unified state and government for over 5000 years, with evidence showing the country has even existed for even longer periods of time than anyone can imagine. Egypt is referred to as ‘Misr’ in Arabic, which means civilization (CIA 3). This word is the source of pride as the country’s people and scholars believe that the Egypt was that source of early civilization. This is backed by archeological revelations, which illustrate that primitive people resided along River Nile even before the Pharaoh rule came to existence. Formal agricultural activities began in 6000 B.C (CIA 2).

By 3100 B.C., Egypt was under the rule of Mena, who initiated the Pharaonic dynasty that exist to date. The pyramids were established during one of the dynasties, the fourth, and they prove the powers that Pharaohs had I relation to state matters as well as religion. THe great pyramid forms one of the Seven Wonders of the World, which is the reason the country is popular with tourists from all over the world (CIA 3). This kind of dynasty still controls the state and religion to date, albeit loosely.

Geography and population

Egypt covers a land of about 1,001,450 square km, with major cities being Cairo and Alexandria. Cairo is the capital city, with a population of about 16 million. The land is predominantly desert in nature, except along the Nile and delta region. It has a climate of dry spells in most of the months of the year, with hot summer and an average winter, which proves ideal for tourists.

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Egypt is the most second most populous country in Africa, after Nigeria. Among the Arab nations, Egypt has the highest number of people, with approximately 79 million. The majority of these people reside in Cairo, Alexandria, along the Suez Canal, Delta region. The regions represent some of the most densely populated regions of the world, with an average of 1,550 people per square km. This is an interesting phenomenon considering the fact that the country’s average occupation is 180 persons per square km.

Demography and linguistics

The most common language spoken is Arabic, which forms the official language. Additionally, the educated group is able to use both English and French. The communities, which are distributed in a clustered format a long the oases as well as historic towns and transport routes, are increasingly moving to towns, which are already overpopulated. The relatively homogenous population experiences annual growth of 1.7%, with ethnic groups composed of Egyptians, Nubian, and Arabs.

Environmental Analysis

The Egyptian Constitution gives a provision for a strong and powerful executive with a concentrated center of power. This means that all the powers to appoint any member of cabinet are vested wholly in the President, who is elected by the voters for a term of six years. It therefore follows that while the legislative arm of the government has 454 members, 444 are elected and 10 are presidential appointees. The constitution also has a provision for 50% of the assembly members for the disadvantaged in the country. This assembly runs for a period of five years, with the president unable to dissolve it before the end of its term.

Although the opposition has their rights in making their political opinions public, with their representatives all over the country, much power are still within the central government, which is headed by the president who is a member of National Democratic Party. The president’s party is dominating the political scene, including many of the institutions. There is considerable political restriction as well as limited freedom of expression for NGOs and human right groups. The organizational and professional groups are not allowed to engage in political activities, including human rights campaign activities. However, the recent developments are changing the political environment, especially since the amendment of the constitution in 2005 that allowed other candidates to challenge the incumbent president Mubarak for the first time in history. But in 2005, President Mubarak initiated several amendments in the constitution that banned all the political parties which are based on religious group, racial or with any ethnic association.

The business community in Egypt began to see the benefit of free economic system in 2004 when the parliament passed a motion to set of a new reform movement for liberalize the business sector. This was triggered by the changes in the international trade that saw the stalled economic system of the country as not getting stack as compared to other countries. In the past 5 years, the government, through its cabinet economic team has defined a new way of doing business through simplification of the business process and reduction of taxes and tariffs. There has also been improvement in the government business deals transparency, particularly as concerns annual national budget, revival of the formerly stalled public institutions, and more importantly, the implementation of economic legislation meant to spearhead the private sector development to cope with the global changes in business environment. However, business experts observe that despite all these developments, the economic transformation is still restricted by government insistence in controlling some sectors of economy such as food and beverage, housing, and energy sector. Some also see a bloated public sector as the one that interferes with speedy changes due to huge expenditure in salary and wages to the civil servants. Furthermore, most of the major industrial sectors are still under the control of the public sector management.

The Growth Domestic Product (GDP) as at September 2008 stood at $452.5 billion, with an estimated growth of 4.7% in 2009. At the same time GDP per capita $5,500 in the same year, while inflation stood at 13% with only 14% of the population living below the poverty line (Zawya 5). The Growth Domestic Product (GDP) as at September 2008 stood at $452.5 billion, with an estimated growth of 4.7% in 2009. At the same time GDP per capita $5,500 in the same year, while inflation stood at 13% with only 14% of the population living below the poverty line. Being the largest and the most populous Arab country, it has presented a critical and an important marketing opportunity in the region, and the success of vitamin product will be critical to entry into other Arab nations (Zawya 6). The country is located at the heart of Middle East, with sprouting economy that has regenerated into a somewhat diversified nature as opposed to the past.

Being a major producer and exporter of oil and natural gas, the country has embraced the need to strengthen their infrastructure to increase their accessibility for business development, particularly foreign investment. This is why at present, the government is spearheading an institutional framework to guide and boost public-private partnerships. The projects developed are mostly inclined towards building and maintenance of learning institutions, health centers, and waste water management stations.

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Due to the world economic slump down, a significant slowdown of the economy was projected. This was according to IMF report, which indicated that Egyptian economy was likely to fall at a rate of 5% between 2009 and 2010 (Zawya 6). The inflation was projected to be between 8 and 11% over this period of time (Zawya 6). However, the good news is that the financial sector has been spared the wrath of international financial crisis, a factor that has been linked to the improvement in the supervision of banking sector, limited lending practices, and central bank regulations and cautionary benefits (Zawya 6).

The judicial system of the country is constructed in the basis of European, mainly French system of legal dispensation, both in methodology and conceptual aspects. Under the current government, there is a considerable independence in the judicial system, with court procedures and principle of court process gaining respect from both the government and private sector society. However, areas such as marriage laws together with family issues are all under the institution of religion, guided by the Sharia law. Egypt is a prominent member of NETO, which guides its international trade agreements. Egypt is also a member of World Trade Organization (WTO).

With increased literacy and adoption of technology by the people, many firms are increasing their online business, especially for consumer goods. This is supported and heightened by the increasingly busy citizens who would prefer faster purchase system like internet, to physical purchase of goods and services. This phenomenon is likely to boost our business initiatives, which would also emphasize online purchase and door-to-door delivery.

Marketing Analysis

It is a common knowledge that the principle of marketing is to know how to put the product in the right place targeting the customers or the intended buyers at the right time and at a price that is considered fair, or right (Travis 34). This description may sound simple, since all that is required is creating a product that is needed by a particular group of people, put it right for sale at a particular pace that is regularly frequented by these people, and finally give it a right price to allow them purchase. Ideally, there are a lot of facts in this aspect of marketing. But one thing that is needed is making a move to find out what these customers want in terms of product quality and quantity, placement and pricing. This therefore means that all the elements must be observed keenly and any failure on one may lead to total failure. In the process, we will apply the 4Ps (Product, Place (distribution), Price and promotion) marketing mix theory. This is because this tool will help us identify what we need to put in place through the definition o market mix.

Product

As stated earlier, Vitamin water has not been introduced in Egypt in the past. Considering the fast urban life that is taking root in Egypt (nearly all the 79 million people live in Cairo and Alexandria), it is prudent to understand the consequence of this lifestyle, not only today but in future. This is likely to develop a gap and the need to satisfy the needs of the health conscious urban population. Given the increasing popularity of soft drinks and beverages, it would be the right time to introduce vitamin water.

The dominant language in Egypt is Arabic, which is also the official language. Additionally, the educated lot is able to speak and write English and French. Our primary product is produced in English speaking countries of Canada and US, and therefore branded in English, including the labels and mineral contents of the vitamin water. This means that we will adopt Arabic language in the labeling of the content in the bottled water to make it easy for the local consumers to read and interpret what they consume. In fact, the essence and strength of our product is based on the belief that its vitamins are better substitute for ones in regular food. This therefore means that we will have to observe keenly the need for language interpretation. Basically, both English and Arabic language would be used to cater for all the demographic population, including the tourists. It is critical to note that other than language and labeling, the product content will remain the same as this is the philosophy of our production, an equal quantity and quality in all countries.

Place (Distribution)

The majority urban populations purchase their products from retailers and wholesalers. The retail stores will be mainly used to distribute the Vitamin water products so as to reach the intended customers at the right time. The other areas that would be targeted, especially the tourism sector, which constitutes one of the major income earners for Egypt. Many of these tourists are from countries that have traditionally gained consciousness in health matters. In essence, the tourists come from America and European countries, whose populations have adopted the use of vitamin water, due to their sedentary lifestyle back in their countries.

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The distribution channels would give the best avenues for distributing our product. As observed, Egyptian government restrict a lot the right to distribute in the country, especially for foreign companies which do not use the local businesses to venture into the market. It therefore follows that any attempt to overlook the local distributors and business partners would make it difficult for us to penetrate this highly regulated market.

We will also use online placement of products, with the intention of home delivery of our products. This is critical especially for large institutional consumers such as hotels, schools, governmental and non-governmental organizations, etc. it is noted that online marketing is increasing in the country. Many consumers now prefer online purchase of products than never before, hence increasing the need to venture into technological investment such that such kinds of customers’ needs are catered for. In fact, internet would be useful in marketing process as many people increasingly get attracted to the social sites like facebook and myspace, giving companies a lease of life in marketing and advertisement.

Price

The pricing would be based on the local value of the currency, though there would be little variance to the prices in the parent country, Canada. Though the government regulates the prices of the products in this sector, the prices would be calculated on the basis of cost of production and distribution. Due to the extra contents to the vitamin water, as opposed to the ordinary mineral water or any other beverage, the prices will be slightly higher to cover the cost of production in the local market.

Bulk purchase customers would be offered discounts to encourage them to purchase more. This is intended to lock the existing customers, who would visibly define the nature of our business considering their low cost of distribution and direct delivery without use of middle men. In business, profit maximization and reduction of risks are the basics. Consequently, reducing costs of distribution through direct delivery to the bulk consumers like institutions would ensure prices are kept affordable to them. This is likely to prove critical especially where a new entrant or entrants comes into the market. Therefore the prices will be set such that the cost of production is covered in the marketing to avoid running at a loss, keeping in mind that this is a promotional campaign that can only be successful at a cost.

Promotion

This would form the most important aspect of marketing vitamin water. Marketing mix gives promotion a perspective of marketing communication (Kotler & Lee, 2009). So the basis here is to communicate the product information to the right target market or market segment in general. The actual goal in this case would be to generate positive response from customers, thus the potential of creating long term loyal customers. The marketing communication approach would therefore entail the following:

  • Promotional strategy (push, pull, etc.)
  • Advertising
  • Personal selling & sales force
  • Sales promotions

Promotion strategy: Push and Pull strategy

One of the major reasons for this promotional strategy is to create a strong consumer demand for vitamin water. In this way a push strategy will be very favorable. As vitamin water brand, the sales force will be ready to apply the ‘push’ strategy to get wholesalers and large retailers to penetrate the market. At the same time, direct contact with the consumer will be very critical as they will have the chance to interact with marketing team to generate more enthusiasm in the idea of wanting to know more, thus the possibility of creating a euphoria needed in the sales and marketing of a new product. This is in line with Theodor Adorno’s mass culture and ‘pseudo-individualization’, cited in Welty (1981). According to Adorno, pseudo-individualization or what is known as market differentiation by modern marketers is what drives the sales of products in the market; something that is successfully achieved by individual involvement of the producer or manufacturer (Welty, 1981). In this case Capers International is our producer/ manufacturer.

However, the pull strategy will not be used as it involves heavy commercial expenditure to for advertisement promotions, which at present is not viable, considering other more critical costs in other areas of production and distribution. It may be considered in future if the promotion planed ahead succeeds in attracting more interests.

Advertising

In this case event promotional activities will form the bigger part of the process. Vitamin water is planning form collaboration with charitable organizations, to increase the idea of healthy living among the people. This will be done through distribution of fliers, advertisements on specific magazines and newspapers, word of mouth, and placing ads on the specific entertainment and social sites.

Personal selling & sales force

According to Kotler & Lee (2009), personal selling through the use of the available sales force is one of the best ways of getting the attention of the customer and fostering a long term relationship with the producer. Isn’t this what Capers International needs to sell its vitamin water product? They further outline six main activities of a sales force: (1) prospecting- attempts to find new customers; communicating with the established and potential customers; Selling- the close contact with the customer enables answering of the questions and closing of the sales at the same time; servicing- providing the necessary support and services during sales; information gathering-acquiring the necessary information about the market to help reorganize the process of marketing planning in future; and allocation- very critical as the sales team will be able to allocate the available stock in case of shortage (Kotler & Lee, 2009). In addition, it is possible to monitor the demographic orientation of the buyers of vitamin water to help restructure appropriately the marketing strategies in the future.

Sales promotions

Possible techniques for sales promotion are numerous. However, for this kind of marketing, we will apply premium promotion of Buy-One-Get-One- Free (Daniels, Radebaugh & Sullivan 132) a strategy that worked so well for Capers International in selling of this vitamin water product in the United States and Canada.

Cause-related and fair-trade

It is a common phenomenon to find that some charitable organizations may be interesting in organizing events for health promotions. In this case, our sales team will be on the look out to find collaborators for the purpose of marketing vitamin water. Even though it’s early to speculate that this will happen, we have put it into consideration to ensure that we link up with any charitable organization with such a plan to enhance Vitamin water brand’s publicity. It’s a common knowledge that celebrities and charities go hand in hand all over the globe.

Internet marketing would prove useful in our effort to increase our market penetration. The internet will basically provide an easy and cheap way of accessing the market, especially through the use of social networking sites. Again, considering the concentration of Egyptian population in urban areas, direct marketing would be provide an edge in an attempt to increase the accessibility of the target market. This is because the reaching out to a clustered group of people would be easier, given the population distribution pattern. Basically, other channels like radio and TV will be used, especially in the initial introduction phase of the product to ensure a better understanding of the product. According to Mohan (241), new product needs a lot of public exposure to create.

The tourism industry would be one of the biggest targets for our products. Promotion would be intensified during the periods when tourists flock in large numbers to increase the knowledge of the product. It is rather important to note that promotions must target the right clients, who would keep the product demand sustainable. On advantage in the Egyptian market is that it has enjoyed political stability to over 500 years, hence the presumption that this phenomenon would continue in the future. This is because the tourism sector relies heavily on the political stability of a country.

Conclusion

There is a huge potential for the success of Vitamin Water in the Egyptian market. This is possible as long as all the business aspects are taken care of in the entry process and marketing of the product. However, it is observable that despite the economic transformation in recent years, the public sector still controls a huge chunk of the economy, regulating much of the products, particularly the food and beverage industry. The government also does not recognize foreign firms which do not collaborate with local firms in offering their products and services. This calls for one important approach: collaboration and partnership with the local distributors to ensure adequate penetration in the market.

As observed, the Egyptian population distribution is mostly clustered and concentrated in urban centers. Again many people are currently moving to urban centers, hence rural areas that are mainly occupied by farmers are left with scarce population everyday. On another note, the population literacy is increasing exponentially, and the increase in sedentary lifestyle is presenting a scenario where healthy living is a must. These changes mean that for a successful bid into the Egyptian market, Capers International will have to concentrate its marketing activities in the major cities. The use of Arabic as the official language in Egypt will mean that the labeling must be changed or translated into Arabic in order to ‘domesticate’ vitamin water as a product for the locals.

To increase vitamin water product penetration, a well crafted product placement would be paramount, coupled with adequate marketing and promotion. Supermarkets, wholesalers and distributors should form major part of marketing. Price should be set in line with the local currency value, and heavy promotional activities through online advertisement and marketing, personal selling and sales promotions should be adopted to increase product awareness.

Works Cited

Central Intelligence Agency (CIA). The World Fact Book: Egypt, 2010. Web.

Daniels, J., Radebaugh, L., & Sullivan, D. International Business: environment and operations, 11th edition. Prentice Hall, 2007. Print.

Kotler, P. & Lee N. Up and Out of Poverty: The Social Marketing Solution. Wharton School Publishing, 2009. Print.

Mohan, Joshi. International Business, Oxford University Press, 2009. Print.

Travis, T. Doing Business Anywhere: The Essential Guide to Going Global. Hoboken: John Wiley & Sons, 2007. Print.

Welty, G. The Materialist Science of Culture and the Critique of Ideology. Quarterly Journal of Ideology, 1981. Print.

Zawya. Egypt: Food, beverages and tobacco forecast. Economic Intelligence Unit. 2008. Web.

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