International Marketing- Research report

PERKII

Research Report BX3082 – International Marketing

Maelys Yorana Annick Sant-Anna - 14019309 9-2-2021

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1 . T a b l e o f C o n t e n t s

Introduction……………………………………………………………………………………………...3

Company Profile………………………………………………………………………………………...4

Cross-country Analysis………………………………………………………………………………….5

Market Potential Analysis……………………………………………………………………………….7

Market Entry Strategy…………………………………………………………………………………...8

Recommendations……………………………………………………………………………………….8

References……………………………………………………………………………………………...10

Appendices……………………………………………………………………………………………..11

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2 . E x e c u t i v e S u m m a r y

Perkii is an Australian probiotic technology brand, created over ten years ago at the University

of Queensland. If it is currently implemented in Australia and exclusively sold there, the brand could

benefit from expending its activities to international European markets, such as France or Italy. On the

one hand, France is an attractive business as its treaties and union trades bring advantages to businesses.

Besides, it has a stable government and laws are very structured and well-regulated. However, the

country had to deal with the Yellow Jackets, SNCF strikes and Covid-19 the last two years, which

impacted its economy. On the other hand, Italy could also represent an interesting market as it is the

fourth largest European economy. However, the precarious current government, coupled with the past

few years scandals and corruption affairs would frame new businesses to succeed in developing and

making profit within the country. As a result, France seems to be more suitable for Perkii. Nevertheless,

the company needs to make some adjustments before entering the French market. Infact, the most

appropriate strategy would be exporting, for which Perkii would need to adapt its products and set the

adequate logistics. Although, the brand should let France recover from the past events before

implementing itself in the new market.

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3 . I n t r o d u c t i o n

Marketing is defined as a system that identifies, anticipates, and satisfies customer requirements

profitably, while it creates and maintains a fair balance between consumers’ preferences and firms’

interests and market share (Baumhart, Tzalikis and Fritzsche, 1989). In the past recent years, we have

been the witnesses of the rise of the internet and social media use, which have enabled national

companies to break boundaries and extend their activities worldwide (Javalgi et al., 2012). Companies

are using online means to interact, to connect, to collaborate, to reach out and engage with both potential

and loyal consumers. New technologies and innovative ways of communications have facilitated this

transition and it has never been that easy for businesses to operate on an international scale. For small-

to-medium enterprises (SME), advances in information and digitalization revolutionized the way they

were conducted their activities (Glavas and Mathews, 2014). They now have the ability to explore new

opportunities and be confronted to challenges that come along with international operations at a lower

cost. However, in 2020, Covid-19 threatened international marketing, and companies that were

externalizing all of their activities to foreign markets saw their activities being stopped and therefore,

their turnover being dropped. As a result, the virus forced companies to change the way they were

operating internationally. The new objective is for them to create a balance between their national and

international activities so that international disruptive does not frame completely businesses from

making a profit.

4 . P e r k i i ’ s C o m p a n y P r o f i l e

Perkii is an Australian probiotic technology brand, created over ten years ago at the University

of Queensland. It sells plant-based, non-fermented, naturally flavored drinks that contain billions of

probiotics. The brand sells packs of eight drinks for $40 and each serve is 45 calories. Customers can

order Perkii drinks online on their website, but also in local food stores such as Coles, Woolworths,

Caltex and Zambrero and other Australian supermarkets.

The word “probiotic” comes from Greek, literally meaning “for life”. On the opposite, the word

“antibiotic” literally means “against life”. They are referred to as “live microorganisms that when

administered in adequate amounts confer a health benefit on the host” (Hill et al., 2014). In other words,

they are extremely small living organisms such as bacteria or yeats found in the market on the form of

food, dietary supplements, and drinks. They are believed to have positive mental and physical effects

within human bodies:

 Harmful bacteria destruction

 Minimize infection

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 Frame toxins release and prevent from being sick

 Health improvement

 Reinforce human immune system

What differentiates Perkii’s probiotics from the competition is their ability to reach the stomach

alive. Probiotics are affected by variations in pH. When low pH is found in the stomach environment,

probiotics’ chance to survive tend to be very low, if not inexistent. However, probiotics’ survival rate is

optimal when pH environment is neutral. Hence Perkii’s innovative make up. The brand created a micro-

shield technology designed to enable probiotics to survive in the stomach, reach the gut alive and kick

in. Besides, the brand decided to deliver probiotics on the form of drinks, which is not a random choice.

Moisture, nutrients, and a chilled temperature are the three elements living probiotics need to survive:

Perkii’s drinks provide them all. To sum up, Perkii’s probiotics are built to survive in the stomach for a

targeted release in the gut.

Since its creation, the brand has known a tremendous growth as consumers’ demand for

probiotics healthy drinks has increased accordingly. In 2018, Perkii reached a turnover of $7M. Even

though Perkii’s micro-shield technology constitutes its unique selling point, the brand has many

competitors such as KeVita, Symprove, and Goodbelly probiotics.

If it is currently only implemented in Australia, its mission statement is to make its unique

probiotic technology available to as many consumers as possible. For this reason, the brand should aim

at expanding its network to the international and European countries such as France could represent a

great opportunity for Perkii.

5 . C r o s s - c o u n t r y A n a l y s i s : F r a n c e a n d I t a l y

France counts a population of 63.3 people, for which men have a life expectancy of 78 years

and 85 years for women (France country profile - BBC News). Throughout the world, the country is

mostly known for its cuisine, its fashion and luxury brands echoing the French know-how, and its

culture. France is also famous for the French accent, which is the second most learned language in the

world, and its romantic city of Paris. In 2018, the country was the first touristic destination. As it is the

most visited country in the world, France is facing some environmental issues, like most countries

nowadays. The increasing number of tourists each year led to an increase of pollution.

Italy counts a population of 61 million people, for which men have a life expectancy of 81 years

while women’s life expectancy is of 86 years. (Italy country profile - BBC News). The country is mostly

renowned for the art works of Botticelli, Leonardo da Vinci, Michelangelo, and Caravaggio, but also

for the operas of Verdi and Puccini, and the architecture of Venice, Florence and its capital Rome. Each

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year, Italy attracts millions of tourists from al over the world, and in 2019, it was the second European

tourist destination. However, the country is also very famous for its precarious political life and the

Italian mafia, which influences the inhabitants’ lifestyle.

a ) P o l i t i c a l a n d L e g a l E n v i r o n m e n t

France’s government is very stable, and it is led by French president Emmanuel Macron. It is a

member of the United Nations and one of the leading members of the European Union with Germany,

which is France’s strongest ally. By being part of the EU, the country benefits from some advantages

such as free movement of labor, goods, services and capital, growth of internal market, increase of the

jobs’ number, GDP growth, and peace with EU countries. The Legal aspect is very well organized in

France, especially regarding the business area. Firstly, employees are not required to work more than 35

hours a week, they also should take a break every 4.5 working hours. They are granted 5 weeks of

holidays per year and any leave (sick leave, maternity, and paternity leave) is regulated.

On the contrary, Italy’s government is very unstable. Since the end of World War II, it has had

dozen governments. In the early 1990’s, an operation called “mani pulite” revealed the country’s leaders

and main businesses were corrupted. Several former ministers and thousands of businessmen and

politicians were implicated and investigated. Since then, the word politics reflects scandals and

corruption affairs, and Italy is still considered a corrupted country at the highest levels.

b ) E c o n o m i c E n v i r o n m e n t

France is among the top 10 largest economy of the world. The country’s assets are very

diversified, which is reflected through the multinational companies it shelters: LVMH, L’Oréal,

Carrefour, and Air France. Tourism, transport, wine, and electronics are among France’s top performing

industries that contribute to the country’s GDP. However, France is mostly known throughout the world

for its excellence in luxury brands such as Louis Vuitton, Hermès, and Dior. In 2019, France’s gross

domestic product was worth 2315.37 billion euros, it then shrank by 12.5% in 2020 due to Covid-19

and is now estimated to be 2095.95 billion euros (France SWOT Analysis Market Research Report |

Market Research Reports® Inc.). Nevertheless, the past events that occurred in the recent years affected

the French economy. In 2018, the country had to face the “Gilets Jaunes” protests (Yellow Jackets),

which lasted for several months. People coming from the countryside and small cities went to Paris to

demonstrate, asking for a reduction of gasoline’s price, the resignation of French president Emmanuel

Macron, an increase of the minimum wage, and an alignment between granted pensions and the rising

cost of living. In addition, a few weeks before being hit by Covid-19, France dealt with SNCF strikes,

as the transportation company’s employees protested against the retirement reform for a month and a

half. These events increased the unemployment rate to 8.1% in 2021, which is above the European

average of 6.7% (Lopez Gallardo, 2020).

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Italy is the fourth largest European economy (BBC, 2020). Although it faced a decline in its

traditional industries such as textiles and car manufacturing, Italy was one of the highest per capita

incomes in Europe for years. In 2020, the GDP was worth 1886.45 billion US dollars, and it is expected

to grow in 2021 (Trading Economics, 2021). Alike France, Italy is also known throughout the world for

its luxury brands such Versace, Dolce & Gabbana, Salvatore Ferragamo and many more. However, the

country was badly affected by globalization, which led to a decrease of its economy and an increase in

its unemployment rate, and it was one of the first European victims of the 2008 global financial crisis.

c ) C u l t u r a l E n v i r o n m e n t

As most of the European countries, France and Italy feature a low-context culture. People

communicate through very explicit messages and use direct spoken words.

Even though there are some disparities between French people living in the north of France and

the ones living in the south of France, the Hofstede insights give a glimpse of the overall French culture.

There are inequalities within the country but French people do understand them. Inequalities are featured

in the economic system (companies), in the political aspect (government) and geographically as most

highways lead to Paris. France is also a very individualist country. Parents raise their children to only

take care of themselves and their immediate family. At workplace, it is rare to find someone that is

happy to help others, as French people always put themselves first. The country’s upper-class has a

feminine culture with its mostly known welfare system, the 35-hour working week and the mandatory

five weeks holidays per year. However, the working class scores masculine, as it is important to stand

out from the crowd, achieve goals and be successful. Moreover, French people do not like surprises and

try their best to limit uncertainty. Structure and planning are key words. They like to anticipate, to come

prepared and limit risk before doing anything. They like when everything goes as planned. France is

also a very pragmatic society. People do take into consideration what has happened before but stay very

much focus on what will happen next. They easily adapt traditions to new trends and persevere in

achieving goals.

By observing the Hofstede insights for Italy, we can acknowledge that Italians tend to prefer

equality and decentralization of power and decision-making. They enjoy teamwork, rather than

supervision. However, it is a very individualist country, especially in big wealthy cities. People usually

talk about themselves and are very attached to their families. Besides, the culture is masculine, meaning

it is important to demonstrate uniqueness and be better than the others. Alike French people, the Italians

try their best to avoid risk and uncertainty, and they also measure their performance on the long term.

However, they are less indulgent than the French.

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6 . M a r k e t P o t e n t i a l A n a l y s i s

If we had to evaluate France and Italy’s market potential, there are some pros and cons.

On the one hand, the most attractive point for Perkii is that it does not have any local direct

competition yet. As in many Western countries, the healthy trend is growing, and several brands are

commercializing healthier products on the market such as natural juices, vegan drinks, gluten-free

snacks or sugar-free goods. However, the probiotics industry is not well-developed in France nor in

Italy. None of the implemented brands is devoted to probiotics, and most of them are foreign brands

such as LabOne which is an American laboratory. As the healthy lifestyle is trending more and more, it

seems to be an opportunity for Perkii that it should not miss out. Moreover, France and Italy remain

attractive markets for international businesses as the countries belong to the European Union. Therefore,

Perkii would benefit from the EU advantages: free movement of labor, goods, services and capital.

On the other hand, the main disadvantage of implementing Perkii in France or Italy would be

the shipping process. Australia and Europe are not neighboring countries and Perkii drinks require some

strict shipping conditions: temperature needs to be under steady control and probiotics drinks are

perishable. Shipping Perkii drinks from its home country to Europe would demand high precaution

throughout the whole travel and it might not be easy to control it 24/7. Therefore, it should be wiser for

the brand to implement drinks’ manufacture in a French or Italian laboratory. However, it could cost an

expensive amount for the business. For France, the other drawback would be the French crisis caused

by the Yellow Jackets, the SNCF strikes and Covid-19, which led to an increase of the unemployment

rate and a decrease of the average purchasing power (Lopez Gallardo, 2020). Regarding Italy, the main

disadvantage is the Italian governments. The country is unstable in terms of politics and economics.

Besides, the Italian mafia holds a major place within the country, influencing and corrupting the success

or the decline of any implemented businesses.

According to the aforementioned findings, France represents an interesting and better entry

point (rather than Italy) for a business which is willing to extend its activities in Europe. The country

has good international connections and is part of international treaties that provide companies some

sizeable advantages (e.g., EU, G7, NATO, and WTO). Besides, France is a developed country that

features a well-organized government and legal aspects that facilitate businesses regulations and growth.

7 . M a r k e t E n t r y S t r a t e g y

As Perkii is offering an innovative and unique product, the brand has several proactive

motivations to operate on an international scale: probiotics represent a growing business that does not

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have many competitors at the moment, and the brand features a patented technological advantage from

which it could draw profit. To enter the French market, the business should first export its probiotic

drinks to France. As it is a SME, exporting would lower the distribution costs and enable the brand to

experience the French market and consumers and limit the uncertainty risks.

8 . R e c o m m a n d a t i o n s

As France has been hit by many events such as the Yellow Jackets, strikes and Covid-19, I

would recommend Perkii to wait and let the country recover from its crisis before entering the market.

France appears to be an attractive market for the brand, but today is not the best time to conduct overseas

business activities. The current sanitary and economic situation is still very fragile and unpredictable.

Besides, exporting seems to be the most suitable way for the SME to enter the market. Before doing so,

Perkii should evaluate its exporting process and shipping conditions to maintain the quality and expected

benefits of the Perkii drinks.

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R e f e r e n c e s

Marylyn Carrigan, Svetla Marinova, Isabelle Szmigin, 2005. Ethics and international marketing:

research background and challenges. International Marketing Review. Vol. 22 No. 5.

Constantine Katsikeas, Leonidas Leonidou, Athina Zeriti, 2020. Revisiting international marketing

strategy in a digital era: opportunities, challenges, and research directions. International Marketing

Review. Vol. 37 No. 3.

Julio Lopez Gallardo, 2020. “France: the political economy of discontent. The “Gilets Jaunes”

movement”. PSL Quarterly Review. Vol. 73 No. 293

Sharma, Anupam; Jhamb, Deepika, 2020. Changing consumer behaviors towards online shopping: an

impact of Covid-19. Academy of Marketing Studies Journal. Vol. 24 No. 3.

FRANCE, Hofstede insights. 2021. Retrieved August 23, 2021. Compare countries - Hofstede Insights

(hofstede-insights.com)

ITALY, Hofstede insights. 2021. Retrieved August 23, 2021. Compare countries - Hofstede Insights

(hofstede-insights.com)

Probiotic plant-based drink, perkii website. Retrieved August 22, 2021. PERKii Targeted Release

Probiotics - get through to your gut! – Perkii Probiotics

France country profile, BBC. Retrieved August 23, 2021. France country profile - BBC News

Italy country profile, BBC. Retrieved August 23,2021. Italy profile - Overview - BBC News

France Analysis, Market Research Reports. Retrieved August 22, 2021. France SWOT Analysis Market

Research Report | Market Research Reports® Inc.

Trading economics, 2021. Italy GDP | 1960-2020 Data | 2021-2023 Forecast | Historical | Chart | News

(tradingeconomics.com)

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9 . A p p e n d i c e s

KEY VARIABLES WEIGHT FRANCE SCORE ITALY SCORE

Political 25% 70 15

Legal 20% 70 20

Economic 40% 35 20

Cultural 15% 40 60

Weighted Score 100% 51.5 24,75

Figure 1. Weighted scoring Model