Global Marketing Plan for Deliveroo in Canada
Globalization is revolutionizing the operations of various industries, which are aiming to grow beyond the local borders. The stiff competitions and more opportunities abroad compel the business, to seek new markets, thus increasing the sales of the products. Entering a foreign market is accompanied by a plethora of challenges, some of which are trading barriers, high tariffs and strict policies of incorporation. Before setting the resources to establish a foreign enterprise, it’s crucial to have an understanding of various factors, both micro and macro, that impact performance. Every organization should aim to mitigate the costs of expansion, by choosing an appropriate mode of entry, and reliable marketing strategy. The paper will discuss the case scenario of Deliveroo, and its capability to venture into the Canadian market. Subjective analysis of the company will be conducted, to determine its ability to satisfy elements such value, rarity, imitability and general organization. Furthermore, the external environment of Canada will be studied to establish the competitive intensity. Additionally, global marketing will be discussed and conclude with recommendations.
Introduction
The stiff competitions in local markets are forcing businesses to look for viable opportunities in the foreign lands. Again, the need to increase the revenue is an aspect that makes companies to study the markets and establish gaps. Due to this factor, large corporations are in constant restructuring to fits the needs of the customers. Expansion to another country comes along with benefits and challenges, which have to be balanced for the positive output to be observed(Sartor and Beanish 2014,p.1073). For example, it’s critical to evaluate the corporation tax of the new environment, understand the culture of the people, and other jurisdictions which regulate trading. This minimizes the conflicts with the government and oversight bodies, hence improving the performance in the selected area.McDonald’s has been able to win the market and sustained steady growth, due to its strategy of studying the new location, before investing the funds. It has seen the company grow in over 210 countries managing an average of 375,000 employees. According to Jones (2014, p.178) the business receives an average of $22.2 billion annually, from rents, royalties, franchise fees and sales. The indicative information shows that proper choice of a marketing plan and entry decisions are core, for a business to flourish in a new land. The figure below illustrates the contribution of MNEs to the GDP of the host nation (Ogendo 2017, p.79).
Restaurants face stiff competitions from other established and large businesses, which have won the loyalty of customers. Deliveroo is an example of a growing enterprise, which is developing bases in various countries and differentiating the products regarding quality to attract the customers (Kabiraj and Sinha 2014, p.742). Headquartered in London, the business employs an average of 300 people and operates with 2000 cyclists and drivers. Deliveroo is growing and serves some of the international markets such as Sydney, Melbourne, Hong Kong, Singapore, Dubai among others (Sartor and Beanish 2014, p.1095). The essence of quality and offering delivery of foods within a short period to customers is making it stand out in areas where it operates. As a way to command a vast geographic region regarding customers, the company can seek to serve Canada, with their services. However, entering a developed market has a significant amount of challenges such as high tariffs, barriers to entry, and stiff competitions from local restaurants.
Internal Analysis of Deliveroo
The internal environment of businesscomprises of human labour, policies and tangible resources that enable it to function appropriately. The management has to strike a balance among the three, to enhance smooth flow and informed expansion (Ito and Komoriya 2015, p.102). Deliveroo is a food business that distinguishes its operations by delivering the products to the customers at their premise. To strengthen their objective, the management has invested on cyclists and drivers, who avail the foods once ordered. The challenge of this method is the limitation of the coverage radius. They only serve the locals, who are accessible, hence impeding diversification.Han (2016, p.183) contends that one way a business can be able to expand is targeting a distribution channel thatcan reach out many customers at once. The strategy adopted by this company is expensive since they have more cyclist and drivers (2000) in the UK than the employees who operate indoors. Operating costs are high, in terms of maintaining the high number of workers spread across and also setting concretebuildings (Lima and Farber 2017, p.87).
As a way to increase the sales, Deliveroo has employed marketing mix, in various stages. Rather (2016, p.872) defines it as a combination of multiple variables that control the direction of the market. The restaurants offer toregulate promotions and discounts for the foods they provide. They guarantee monthly discounts for the existing customers, as a way to retain their own culture. Traditional marketing DNA, such as lowering the prices still works in this company, which is believed to increase the clients significantly. In the same vein, they offer curated selections of high quality. The company has been able to retain the local superiority by choosing to deliver the orders to the customers.
The success story of Delibveroo is primarily contributed by identifying and learning about the nature of their customers. The company located a gap in London, where native restaurants did not consider delivering foods to buyers as an option. With the populace having high purchasing power, the management capitalized majorly on UK cities and targeted all kinds of people (Matejorsky et al. 2014, p.628). The international expansion projections will increase the number of customers served per a given time. Moreover, the business has enough resources to support the goals of improving the revenue. According to Jones (2014, p.186), returns for the past year totaled to $480 million; thelabor capacity grew to 800 employees and an estimated 6500 riders. Despite the competition posed by rival businesses such as Just Eat, Grub Hub among others, the corporation has continued to excel. Although presence in the international community is not well established, the administration is building more knowledge on foreign trade policies and familiarizing with political, environmental, economic, legal and social elements of different states. Contribution of GDP by food retail in Canada has declined in the year 2018; hence more impactful strategies are needed by restaurants to remain on top of rival (Ogendo 2017,p.74).
External analysis of Canada
Developing states are the best targets for entry because they present a myriad of opportunities in various sectors of the economy. A large corporation can provide to the natives, service or products which they lack, hence consolidating a high number of customers (Al-Habash et al. 2015, p.680). Similarly, such countries have little competition,and trade barriers are minimal. States such as India, China, and South Africa are developing rapidly in industrialization, infrastructures,and technologies. The economies have attracted large multinational companies such Coca-Cola, which is benefiting from the vast pool of population(Beleska-Spasova et al. 2016,p.286). However, in a developed nation likeCanada, the impediments start from the point of entry. Furthermore, the stringent policies and existence of local companies pose a threat to a new entrant.
Canada has the 10th largest economy in the world, with a labor force of 18.54 million (Sartor and Beanish 2014,1074). The country has excelled in various sectors such as manufacturing, service and agricultural areas that have contributed to the estimated GDP of $1.75 trillion. Moreover, the growth rate is calculated to stand at 2.4% annually, due to the input of the local and multinational corporations. The research conducted by Ogendo (2017, p.82) indicated that Canada ranks at position thirteen globally, regarding ease of doing business. Additionally, the unemployment rate is 7.2% while the inflation CPI records 1.6 %(Lim and Farber 2017,p.78). The figures show that the highest percentage of the people in this country has high purchasing power, which would favor a new entrant into the market. The chart below indicates the contribution of various sectors to the nation’s GDP (Lim and Farber 2017, p.77)
Use of internet in Canada has been embraced in agriculture, mining and for personal use. It’s estimated that about 80% of the people aged above 16 years have access to a source of internet, which accounts for 21.7M of the total population (Ogendo 2017, p.79). This is the spending age, which could be the focus of a restaurant that would need to operate in the market. However, due to increased awareness of the modern technology, businesses have continually disrupt their internal operation strategies, to remain ahead of the rivals. It would involve differentiating their products, to capture the local customers (Jones 2014, p.190). Over the past six years, the Canadian fast food market has expanded despite the changes in consumer tastes. In the year 2017, high consumers spending and innovation by local restaurants have revived the consumers’ interests. Products that have high-profitmargins such as salad, coffee,and smoothies have become more prominent in traditional restaurants, hence increasing the profits for the businesses (Lim and Farber 2017, p.78). One thing is clear, Canadians focus on quality and highly customized food products. The market is a first mover advantage because the competition is stiff from other large companies, which have continually used modern technology to reach out the locals and tourists. The graph shown below illustrates the projected sales from the food industry (CRFA 2017, n.p).
Global market strategy
Global markets differ on policies and ease of conducting businesses. Canada is one of the developed nations, where corporations require succinct plans before deciding to launch their products. According to Han (2016, p.183) the competition set out by large MNEs such as McDonald’s, KFC among others increased the impediment to setting up similar businesses. Rathert (2016, p.870) identified four expansion strategies that any company can adopt. He opines that organizations that have little knowledge of the international markets prefer to use waterfall system. It’s defined as setting one business, to allow the management to learn the customers’ tastes, political and legal environment that would influence performance. After understanding the way things are done, the business subsequently opens other outlets. Additionally, shower entry is based on the contemporary setting of businesses in various places. It comes with challenges of increased operational and compliance costs. Chen and Johnson (2015, p.4) contends that a corporation could also opt to concentrate on countries which relateto policies or diversify irrespective of the legal and market standings. Deliveroo can best enter Canada’s territory, by first studying what the people lack.
Canada’s market has attracted a considerable number of huge organizations, which benefits from the ambient political environment, improved technology and security of their business (Sartor and Beanish 2014, p.1087). Due to this reason, compliance is an issue of concern. The government has a measure to evaluate the quality of foods offered in the restaurants, and the capabilities of the various firms to promote the environment. According to the survey conducted by Ogendo (2017, p.88), he opines that Canadians are selective to the quality of products they consume. Again, they have high purchasing power, considering that the rate of unemployment is low. The market is open for entry, but high tariffs and corporation tax scare away investors. The mode of entry that Deliveroo can adopt varies. One, the business can choose to operate as a franchise. This is whereby a company identifies a local franchisee, who understands the markets turmoils and dynamics. They agree to offer products that are of the same quality and imitate everything that the mother business does. However, the integrity and management styles might be compromised due to the limitation of geographic distance. Another option could be joint venture. The foreign company enters into a partnership with a local firm and agrees to share stock ownership. In Canada’s competitive market, the only way to sail through is to engage another local company, which has enough knowledge of economic cycles.
The nature of customers in Canada is characterized by high purchasing power, and selective to quality (Matejorsky et al. 2014, p.628). Until now, restaurants in the country have not satisfied the customers with curated and differentiated services that meet their standards. Most of the businesses have adopted a common strategy, where the clients need to visit the premise tobe served with food. Considering the citizens are busy to develop the economy, introducing delivery on order would substantially increase the competitive edge. Integrating the modern technology in the distribution of Deliveroo products would capture a massive base of customers in Canada (Ogendo 2017, p.82). Again, classifying the customer regarding age would significantly improve the services. For example, the use of internet among the youths is more than aged people. The company can choose to use social Medias such as Facebook, Twitter among others, to reach out to the young generation. Adults and aged could be enticed by quality foods and regular discounts. The figure below shows that Canada is on top of UK in term of GDP as per the year 2017(Ogendo 2017, p.850).
Deliveroomostly relies on product delivery to stay ahead of the competitors in the countries where it’s located(Han 2016,p.183). The system has earned the business brand loyalty and increased number of customers, hence more profits. Despite the challenges of managing the cyclists and drivers, the returns of the company have seen it grow from a small business to the one that commands international economies. To adapt to the new environment, the company could choose to use fewer cyclists to start off. Again, it can adopt the use of motorcycles, which are fast and less tiresome. Moreover, the foods offered should conform to the tastes of the locals and a different pricing system developed, to facilitate healthy competition. To familiarize the business to the populace, it would be prudent to use the available Medias to advertise and promote the brands.
While the UK markets focus more on prices, Canada has an excellent consideration for quality (Rathert 2016, p.874). Therefore, the marketing strategy that could be adopted in the new market would primarily appeal to improve the ingredients of the foods offered at the restaurant. Additionally, Deliveroo has enhanced proper distribution in the UK cities because the market is large and concentrated. Furthermore, there is little competition on products offered. In Canada, the business rivlary is high since large corporations have set their premises on their land (Kabiraj and Sinha 2014, p.740). Due to this, more advanced promotional strategies should be employed in Canada than the UK. There is need to adoptnew pricing, distribution, and communication and product quality policies, to improve productivity.
Invest – Not Invest Recommendation
Canada’s economy is one of the best performing in the world. It’s political stability,and increased foreign direct investments have attracted several large corporations. Al-Habash et al.(2015,p.687) noted that light trade policies and fewer barriers to entry are core factors in facilitating international relations, which Canada has successfully won. The GDP growth rate stands at 2.4%, which is coupled by low rates of unemployment. Consequently, the citizens have a high buying power signifying potential market for any retail food business. Like any other developed state, the Canadians are busy people, who work for long hours to build the economy. The vibrancy of the economic activities presents opportunities for market entry. Although the economy is already developed, people lack differentiated products, which are of high quality. The food industry is lagging behind since restaurants have little considerations of the customers’ preferences. Deliveroo can easily penetrate the market through offering quality foods and capitalizing on delivery as an optimal factor.
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