The Current Situation Analysis of Macro Environmental in the Kurdistan Region - Paper Example

The Current Situation Analysis  Macro EnvironmentalThe Kurdistan Region is an autonomous region situated in the northern part of Iraq. The region borders Turkey to the north and Iran to the east (Leezenberg, 2005). Erbil is Kurdistans capital and largest city. Kurdistan (and the rest of Iraq in general) is a post-war society that is gradually recovering from the effects of several decades of dictatorship, foreign invasion, and economic sanctions imposed by Western countries. The region relies exclusively on the oil and gas industry as the major sectors of its economy. Other important economic sectors are tourism and agriculture (Bureau of Economic and Business Affairs, 2015). Despite the persistent political instability in Iraq, the region enjoys relative peace and a strong economy than other parts of Iraq.

During much of Saddam Hussein's administration, trade between Kurdistan and the outside world was severely limited. This was due to the Kurdistan uprising of 1991, which sought to remove Saddam from power (The World Bank, 2012). Following the ousting of Saddam in 2003, the Kurdistan Regional Government (KRG) was formed. KRG has played a big role in opening up Kurdistan to foreign investment (Stansfield & Anderson, 2004). In particular, the regional government has signed trade pacts with other countries besides implementing favorable policies to facilitate the inflow of foreign direct investments into Kurdistan. Also, the government has rolled out a massive infrastructure development plan focusing on the modernization of industry, housing, electricity, social amenities and transport sectors (U.S. Energy Information Administration, 2013). All these measures have made the region attractive to foreign investors.

As a general rule, foreign businesses interested in investing in Kurdistan are required to establish legal presence in the region by registering either as companies or branch offices. Among other considerations, foreign businesses operating in the region are required to observe strict adherence to the countrys environmental and employment laws (Iraqi National Government, 2016). Marketing of cosmetics in Kurdistan is subject to laws governing health care and food products. The laws prohibit the use of banned substances in the manufacturing or packaging of the cosmetic products. Also, the Kurdistan laws prohibit misleading or deceiving advertisements about the quality, quantity, standards and the grade composition of cosmetic products (Sabah & Abbas, 2016). To ensure that these laws are adhered to, product approval by the government is required before manufacturing, distribution or import of cosmetic products (Angus & Okanlawon, 2015).

It can be noted that the climate of Kurdistan is semi-arid. Due to the high temperatures, people in the region have traditionally relied on perfumes and oils to keep their bodies fresh. This is an important socio-cultural issue, which Vivaco will consider by developing relevant products (Hanna & Hammoud, 2014). Due to the high cost of transporting manufactured products from the Czech Republic to Iraq, the company will seek to establish a production facility in Kurdistan. This will require the change of product suppliers so that the raw materials can be sourced locally or regionally. Information and communication technologies (particularly the internet) will be utilized in the marketing of Vivacos products in Kurdistan.

Current Situation Analysis Customers, Brand and Project Team

Kurdistan has a population of 5.8 million people (2017 estimate). For the determination of this marketing plan, Vivaco will focus mainly on adults aged between 18 and 65 years who constitute about two-thirds of Kurdistans population (Bertelsmann, 2012). Out of these, female consumers will be the primary target market and hence the most profitable customer segment. A key relevant trend is a growing preference for natural cosmetic products. This is due to the rising concerns about the possible adverse effects of non-natural cosmetic products. Statistics show that market for cosmetic is growing strongest in major urban places although rural places are also catching up quickly. Vivacos largest competitors in Kurdistan will be LOreal, Dior, Lancome and Estee Lauder. The entry of these Western products has changed the competitive landscape by raising barriers entry (Meyer, Estrin, Bhaumik & Peng, 2009). Vivacos great strength is the exclusive focus on natural cosmetics, while its weakness is the limited presence in Iraq. Nonetheless, there are opportunities for the company to cash on Kurdistans rapidly growing cosmetics market.

Vivaco has already tested several media channels that will be used for the resolve of marketing campaigns. These include print and electronic media, social media and website, billboards and direct mailing. All these channels will be engaged simultaneously to create strong brand awareness for Vivacos products and to reach the target audience (Hitt, Freeman & Harrison, 2006). Vivaco has established that Kurdistan customers show strong brand loyalty to products that address their needs and are fairly priced. Thus, Vivaco will develop relevant products to maintain low churn rates. Vivaco will have to make fundamental brand changes to adapt its products to the Kurdistan market. The most important change will be the introduction of Arabic labels in the product labels. The marketing team will be led by three expatriates from the Czech Republic. These will be assisted by a team of sales executives to be recruited locally (Ramaseshan & Patton, 2009). The main office will be located in Erbil from where all company activities will be coordinated.

Objectives and GoalsVivacos marketing objectives are to establish a strong brand presence in the Arab country, improve product awareness and increase sales. The company will deliver on these objectives by developing a robust marketing communication and the promotional program comprising of different media channels (Kotler & Keller, 2016). In its promotional campaigns, the company will communicate the values that customers will be expected to gain by using the Vivaco brand of products. The companys products will be priced slightly lower than the industry average in accord with Vivaco's cost leadership strategy. The objective of this pricing strategy will be to attract and maintain a large pool of loyal customers (Lengnick-Hall, Beck & Lengnick-Hall, 2011).

Insights and Research

Insights obtained from Vivacos past activities have shown that the competitive landscape is changing rapidly and hence the need for the company to innovate its products and marketing activities. Accordingly, the company has established a robust research and development program aimed at maintaining the high reputation of its products (Kathleen, Omer & Nathan, 2013). The research programs entail working closely with professionals from relevant fields such as cosmetology, dermatology, sun protection and skin care experts and various sciences. Vivacos customer insights reveal that customers can easily switch brands if they do not get the expected utility. As such, the company endeavors to maintain high levels of quality for all its products to lock in customers.

The Marketing Strategy The ProductVivacos marketing strategy emphasizes attainment of international standards of cosmetic products. The objective is to grow its market share by satisfying the individual needs of each customer in its target market. The perceptual map has shown that Vivacos products are perceived more positively than competitors products because they are natural and have less adverse effects (Dess, Lumpkin & Taylor, 2005). By having been in the market for several years, Vivacos products are in the mature phase of the life cycle, which means that they can attract strong sales. The company does not intend to produce any new products except the ones currently in its portfolio. The launch of the new branch in Kurdistan is expected to take place during the last quarter of 2018 and will be supported by massive campaigns (Kotler & Armstrong, 2013).

Marketing Budget

The expected operational expenses have been estimated at $1.2 million. This amount will cover the initial start-up costs, as well as any other expenses that will come along as the company launches the new business in Kurdistan. During the first year, sales revenue is expected to reach $300,000 based on the 20% gross profit per unit sold. The monthly revenue breakeven is $25,000. The company will reach full profitability during the second year. Marketing budget has been set at $100,000. This will cover print and electronic media adverts, trade shows and direct marketing. Each product in the companys brand portfolio will have different contribution margins depending on the actual cost of production (Botosan & Huffman, 2015).

Marketing Implementation PlanThe key requirement for successful implementation of this marketing plan is a sufficient budget to set up the business in Kurdistan and to support marketing activities (Hartog, Boselie & Paauwe, 2004). The required capital will be obtained from Vivacos current business. As to ensure the success of the product, the company will hire, nurture and develop a marketing team that is committed, talented and understands the concept of the brand (Porter, 2004). Also, the company will focus on an intensified PR exercise involving different communication channels a...