Healthy Cola has been recording profits for the last five years in the US. The management believes that the next critical step is for the company to become an international brand. The idea behind this suggestion is based on adverse market research conducted in the last six months. In particular, the expansion is expected to start in the United Arab Emirates. Entry into the UAE market provides a unique advantage for the Healthy Cola product. Indeed, there are various advantages of getting into this market now as opposed to later.
First, the target market needs healthy beverage options. Anderson-Fye and Brewis (2018) argue that most of the citizens in the area are looking for healthier and safer foods and beverages. This is because issues of lifestyle diseases such as diabetes, high blood pressure, and certain cancers have been rampant in the country. Nutrition is, therefore, a vital aspect of everyday life in a majority of households in UAE, especially with the additional fact that obesity is on the steady rise among teenagers in the area as well.
Critically, Healthy Cola has a competitive edge over other beverages in the country as it offers custom-made options for the different anticipated users. The market has been divided into users interested in healthy dieting, losing weight, and gym enthusiasts. Each of these segments will be targeted by specific healthy beverages that address their individual needs. The company has the Healthy Cola Light, which targets users seeking to lose weight as it has zero calories, the Healthy Cola Diet, which has ingredients that boost metabolism and also has zero calories, and Healthy Cola Gym, which has incorporated whey protein for gym enthusiasts.
A second competitive advantage is that the company has secured a local partner to help with the production and marketing. The Oxford Business Group (2016) explains that partnerships with locals can elevate a brand from what is typically referred to as foreign merchandise to local. It is expected that this partnership will encourage more people to buy the brand as they will also be supporting their local businesses.
There are several anticipated barriers to the penetration of the UAE market. The first main challenge is the issue of licensing and regulations. The Oxford Business Group (2016) explains that foreign brands are taxed higher and even pay more in terms of rent and licensing than local ones. This is one of the reasons a local partner was sought to ensure that such challenges are averted. It is expected, however, that entry into this market will be costly for the company. Despite this, the projections for investment return in the first two years after market entry are favorable.
A second possible barrier to market entry is the issue of production. As mentioned, it is anticipated that the use of a local production company will enhance sales of the product. However, further analysis of production costs within the market proves to be significantly high. If production were to happen purely in the country, the company’s operating costs would be considerable. Currently, the company outsources a majority of its production works to China in an attempt to save costs. A possible suggestion for this is the production of a minimal number of products in the country, but the more significant production works to be outsourced to China.
References
Anderson-Fye, P. E., & Brewis, A. (2018). Fat planet: Obesity, culture, and symbolic body capital. University of New Mexico Press.
Oxford Business Group. The Report: Abu Dhabi 2016. Author.