Tipperary Water
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Executive Summary
The desire of a company to expand to foreign markets leads to the need for an international market selection. The market segmentation process needs a good research and a well organised selection process. The selected country as a result of the whole process has to have the potential market for the companys products. In this report, first, we are going to analyse and segment the possible markets for Tipperary Water Co. Ltd in European as well as in non-European countries. Then we will analyse and decide which international entry strategy is suitable to enter the chosen market. The model for the International Market Selection (IMS) is based on the model by Hollensen .
Current Situation
Tipperary Water Co. Ltd was founded by Patrick and Nicholas Cooney in 1986 in Tipperary, Ireland. The company has its headquarters in Dublin, Ireland at present and it is part of The Gleeson Group, which also has other products like cider or wine. It is among the top 200 companies in Ireland.
The product line of the company consists of bottled mineral water, both still and sparkling, which were the first Irish mineral water meeting the requirements for the European Union in 1987. Originally producing natural mineral water, the company has expanded its portfolio with bottled water for kids, flavoured mineral water, mineral water as an energy drink, and also glass bottled mineral water. The products have won the gold medal award by The British Bottlers Institute several times and made the company a major national brand with 15% market share in Ireland.
Natural Mineral Water is becoming a more common used product, so the company decided to expand its market out of Ireland. Right now the first step is to segment the possible markets for the company.
The European Market
Bottled mineral water is becoming more and more common as a substitute to alcohol when socialising in the European countries. People also tend to drink bottled instead of tap water. This opportunity is shown by the latest statistic on consumption of bottled water in European countries. The products can mainly be divided into still, sparkling, and flavoured water. Generally, the dominant product is still water, followed by sparkling water, which is more meal or occasion specific, while flavoured water still plays a small role in the mineral water market.
The number of competitors, importance of brands, and distribution channels in each country is quite different. Some have very few competitors in their market, while other markets have no real market leader and consist of many competitors with multiple brands along with it, the consumer behaviour in each country also differs one from another.
The Non-European Market
In non-European countries the consumption of bottled mineral water is not common, especially in underdeveloped and developing countries, since it is more a luxury than a need. There is only a small percentage of countries which has a high per capita consumption of mineral water. Most of the countries with the high consumption are countries with a warm climate, supported by the necessary purchasing power. However there is a significant high market growth rate in the bottled water sector in some countries, which makes these countries an attractive possible target market to enter.
Market Segmentation
Analysing Internal and External Factors
Based on the model, we will narrow the options for Tipperary Water Co. by analysing the internal and external factors. The internal factor concerns the firm and its current situation, while the external factors consist of the environment including the market, competitors, political and social situation, demography, etc. The firm is well known nationally, but lacks of experience doing business on an international level. The financial situation is secure, but it is not unlimited and the communication within the company is mostly English. Having been in the business for over 20 years, the company adapted and developed its products to the consumer, giving them the experience and ability to serve the demands of several target groups.
Next we are going to analyse the external factors. The mineral water market is growing inside and outside Europe. People tend to drink mineral water instead of tap water, which offers a good opportunity for Tipperary to start expanding. There are several competitors on the market, but they do not always have the majority of the market share in each country. Tipperary can increase its yearly revenues, if the company makes the correct decision in choosing its new market and implementing a suitable entry strategy.
Selection and Development of Segmentation Criteria
Based on the available information the possible markets for Tipperary in Europe are Germany, The United Kingdom, France, Spain, and Belgium, while outside Europe the options are the U.S., Israel, Canada, Colombia, and Argentina. The first step to narrow down the choices to these ten countries was comparing the per capita volume and per capita values of all mineral waters of the respective countries.
Given this first filtering we will analyse the attractiveness of each market by criteria we think are important and available. The criteria should be measurable and comparable. There are uncountable factors that make a market attractive, but we have decided to use 12 criteria to segment the markets.
The political stability was taken into account, because a country that is rather unstable is not a suitable location to start a business. Riots, government change, change of rules are only a few of the risks, which can cause trouble for the business of the company. The next criterion is the GDP growth, which can give an approximate of the development of the people and economy in a country. A growth in the GDP would normally lead to a higher consumption and that means potential higher revenue for Tipperary.
The market size and market growth rate indicates the industry which Tipperary will enter. It shows the potential market and how it is developing, because a stagnated market would be a bad choice for the company.
The monetary inflation has an influence on the operating income of the company. If the currency in the foreign market is week, the company will have less profit in the process or maybe even generate losses because of the inflation.
Communication regards to the network of telephone and internet connection, while the distance takes into account the transportation costs the firm has to consider. Since the company