Tree Nuts

 

Paper:  Students will complete a short paper on any aspect of Branding.  This would include, but not be limited to, brand management, brand measurement tools, brand equity, brand positioning, and introducing and naming new products. 

Students should use the text as well as other sources (books, journal articles, etc.) in order to write the paper.  Al least eight sources must be cited in the body of the paper and listed on the reference page.  The paper should be ten typed pages (double-spaced), have a cover page, and reference page(s) – although these pages are not counted in the required length. Please use APA formatting. Papers will be graded based on the following general guidelines: proper use of grammar, language, and writing style; originality of ideas; and depth of research/use of available literature.

Running head: TREE NUTS 1

TREE NUTS 2

Tree Nuts

Limestone College

Ishmael Carmichael

Mr. Loflin

MK 329 Branding

January 15, 2020

Executive Summary

India is a country located on the Asian continent. India is divided into 29 states. The bilateral US-India trade has been expanding over the past years. India has also emerged to be one of the leading importers of US commodities. This is the reason why it is the potential market for tree nuts produced in the US.

The demand for tree nuts in India has increased significantly. This is owed to the increasing inclination for its incorporation in daily diets. The product is therefore socio-culturally accepted in India. Its demand has therefore been increasing over the recent years. The growing Indian population is what is driving this demand. The demand growth for tree nuts is mostly driven by the expanding middle class, growing labor force and increased consumer awareness of product perceived as being healthy. There is a general increase in the consumption of tree nuts in India.

India does not maintain major quantitative restrictions for tree nut imports; however, US tree nuts face tariffs. Any good that enters India is subjected to import duty. The tariffs depend on the nature of the commodities entering the country. For example, agricultural commodities tariffs are high. This is done to discourage the import of agricultural commodities. By doing this, the Indian government seeks to encourage local production of agricultural goods. Since tree nuts are an agricultural commodity, it is expected that the import duty imposed on it will be high.

The competition in the tree nuts market in India is not very stiff. The local producers of tree nuts are unable to satisfy the enormous demand despite increased production. There is no producer which has monopolized the production of tree nuts in India. There are many producers and there are many consumers. There are no barriers to enter and exit the tree nuts market in India. A decision by a firm to withdraw from the market will not affect the production of tree nuts since many producers are producing the commodity.

The economic and political climate in India has improved significantly over recent years. This is largely attributed to the economy which has been performing well over the past few years. India has been recording increasing economic growth. There is also political stability in India.

The success associated with selling tree nuts in India will largely depend on the methods of marketing and distribution. Effective marketing and distribution methods will translate to a large volume of sales. This will finally result in huge profits.

The Indian managerial and labor climate is favorable. There is the availability of adequate and relatively cheaper skilled labor force in India. Labor is always readily available. Since many individuals are unemployed and have the required skills, most of them will be willing to accept any pay so long as it is not below the minimum wage level.

Due to the expanded market size, there are high chances of financial viability in India. Tax subsidies lower the amount of tax on the profits obtained. India permits free repatriation of profits so long as all tax obligations are met.

The recommendations including the adoption of effective marketing and distribution methods so that the volume of sales increases once tree nuts are exported to India. Another recommendation is that the firm should hire skilled personnel to help in managing retail shops and marketing offices. Example of such personnel includes business representatives who will be tasked with marketing tree nuts.

Introduction

India is a country located on the Asian continent. Over the past years, India has been facing a lot of challenges that include increased population, environmental degradation, increased poverty levels, and widespread corruption. Despite these challenges, the economic growth following the launch of economic reforms some few years back and a massive youthful population are key drivers of India’s emergence as a regional and global economic power. The economy of India is diversified, and it plays a major role in the global economy. These factors make India a good trading partner to consider for US exporters who may be interested in selling their products in this.

The bilateral US-India trade expanded to over $115 billion in goods and services (US Trade Representative, 2018). India remains to be the largest trading partner of the US. The volume of exports of American products to India has been increasing over the years. The American products that were exported to India in the year 2018 were estimated to be $58.9 billion. Trade-in services with India (exports and imports) totaled an estimated $54.6 billion in 2018. India was the 13th largest goods export market for the US in 2018. All these statistics indicate that India is a potential market for any American consumer product.

US exporters who want to enter India’s market have many available opportunities. This is due to India’s population which is growing rapidly. This, therefore, leads to an increase in demand for agricultural products and foods. It is due to this reason that I chose an agricultural product to sell in India. The American agricultural consumer product that I am seeking to export to India is tree nuts. There are various varieties of tree nuts, but I will concentrate on exporting almonds and walnuts to India. I chose this agricultural consumer product because its demand in India has been increasing over the past few years.

The volume of US agricultural exports to India has grown steadily over recent years (Perez, Ferreira & Minor, 2017). The total exports of American agricultural products to India in the year 2018 were $1.5 billion. This justifies the reason for choosing tree nuts as a consumer product to be exported to India.

Size of the market (Demographics, socioeconomic state, urban/rural)

The demand for tree nuts in India has greatly surged. This is owed to the increasing inclination for its incorporation in daily diets. Its demand has therefore been increasing over the recent years. The factors that contribute to the increased demand for tree nuts is because it contains nutrients such as vitamin B2, vitamin E, essential minerals, and fiber. The rise in the number of the health-conscious consumer base is anticipated to significantly stimulate the tree nut market. Many consumers have been shifting their consumption to healthy and nutritive food segments.

The rise in the level of antioxidants in tree nuts is another important driver motivating the good progress of the market. The increased veganism trends are supportively impacting the demand for tree nuts in India. The augmented consumption of tree nuts as a healthy standalone snack option is anticipated to encourage the growth of the market size in the coming years. The inclusion of tree nuts in a wide range of personal care products is expected to strengthen the market.

Due to increased demand for tree nuts in India, its market size is expected to expand. India is a fast-growing economy. The middle class is expanding rapidly. This has led to an increase in the purchasing power for many Indian consumers. The middle class is anticipated to grow from 90.8 million households in 2016 to more than 170 million households in 2021. Households earning above $149,000 are also projected to rise to over 2.9 million by the year 2026.

According to the International Monetary Fund, India’s per capita GDP growth is expected to increase by 61% between 2016 and 2022. It is worth noting that most of the India’s population remains to be low income earning. However, disposable income and total consumer expenditure on food continue to grow steadily. There is a high level of income inequality in India.

Rural-urban migration is common in India. Surplus labor from rural areas is moving to urban areas. This is what is driving up the population of urban areas. Both rural and urban populations are the potential consumers of tree nuts. Urban populations in India tend to use more retail outlets which are modern. Urban consumers also purchase a higher percentage of imported goods meaning that urban consumers will make up the largest market size of tree nuts. It is expected that few people in rural areas are likely to purchase imported goods.

Taking advantage of US-India bilateral trade, the US is expected to be India’s largest supplier of tree nuts. The US is projected to have a market share of more than 20%. Since the market share and market size is large, and then it will be viable to export tree nuts to India.

Sociocultural acceptance of the product – is adaptation necessary?

The demand growth for tree nuts is mostly driven by the expanding middle class, growing labor force and increased consumer awareness of product perceived as being healthy. There is a general increase in the consumption of tree nuts in India. Despite continued challenges of higher prices and a weakening Indian rupee, the demand for tree nuts is expected to continue rising.

This product is generally accepted among many individuals living in India. No adaptations are required to be made on the product. The demand for tree nuts is usually at its peak during the festive season. The festive season usually runs from September to January. Tree nuts are usually given as a traditional seasonal gift in India during the festive season. Consumers in India will buy tree nuts beyond the traditional varieties. This indicates they are willing to try new varieties from different origins.

Another reason why tree nuts are socio-culturally accepted is that it has been traditionally consumed in India. There is also a growing positive perception among consumers in India about the health and nutritional benefits which are associated with tree nuts.

Historically, many Indian consumers have mostly preferred tree nuts from the US due to their price sensitivity and other preference factors. Tree nuts are consumed by various communities living in different regions of India. Consumers in India prefer locally produced tree nuts mainly for habits and loyalty. However, since local production is not enough to satisfy the huge demand, the industry, therefore, depends on imports. Also, pricing plays an important role because domestic production leads to higher prices. This pushes consumers to look for lower prices and therefore to imported tree nuts varieties.

The pace of consumption of tree nuts has been fast. This is attributed to several factors. They include consumer attitude changing, demographics, accessibility, availability, food choice, urbanization, and culture. These factors have positively impacted the acceptability of this product. The product is therefore likely to be accepted when it is exported from the US to India. There are no cultural barriers which can impact negatively on the consumption of tree nuts in India.

Legal/bureaucratic environment (imports, local manufacture, taxation)

India does not maintain major quantitative restrictions for tree nut imports; however, US tree nuts face tariffs. The Directorate of Plant Protection, Quarantine, and Storage in India required that phytosanitary certificates reflect phosphine fumigation in the country of origin before being imported.

Exporters face tariff regimes that are non-transparent and unpredictable regulatory. India maintains export controls and a highly restrictive import regime. This is done in pursuit of self-sufficiency for many agricultural commodities. According to the World Trade Organization, India’s average tariff on agricultural products is nearly 35%. High Indian tariffs on agricultural products are likely to hinder many US agricultural exports. Moreover, India has domestic subsidies that lead to distortion in the markets.

According to the World Bank, India has one of the highest malnutrition rates. The high malnutrition rates are attributed to domestic self-sufficiency policies that restrict the import of agricultural commodities. Since India’s population is expanding, the government may be forced to adjust import restrictions to meet the demand for inexpensive foods.

There are some local content requirements which are pursued in India. The governments enforce these requirements to spur an increase in local production and increase contribution to GDP. These policies are likely to negatively affect US exports.

There are some legal regulations in India which makes it mandatory for importers to seek formal product approval for any foods or food products that is supposed to enter the country. It is also difficult to get this approval because of the long bureaucratic procedures which are involved.

According to the law, states in India are mandated to make their own decisions about various aspects. Exporters are therefore likely to face varying business and economic conditions across the 29 states and seven union territories of India. This is because power and decision-making are decentralized. There will be major differences therefore at the state level concerning aspects such as quality of governance, political leadership, labor laws, legal regulations, and taxation.

India is one of the most challenging countries when it comes to protection and enforcement of intellectual property rights. There are no laws in India which have been made to protect and enforce intellectual property rights. It will, therefore, be difficult to operate in markets where intellectual property rights are not fully protected and enforced.

Despite the above outlined legal and bureaucratic constraints in India, US agricultural exports to India are expected to flourish in the coming years. This is due to growing demand from its increasing population which is likely to exceed its production capabilities. The number of middle and high-income households is also rising steadily. These households have improved access to credit. This will, therefore, boost and support India’s consumer demand. The appreciation of Indian rupee will increase the purchasing power of consumers.

Competition in the market

The increased demand for tree nuts has expanded the size of the market. This is attributed to the rising population in India. The demand for tree nuts exceeds its production. There is a shortage of tree nuts in India. There are various domestic producers of tree nuts in India. The rise in demand has made the price of locally produced tree nuts to go up. Locals, therefore, prefer buying imported tree nuts which are relatively cheap.

The competition in the tree nuts market in India is not very stiff. The local producers of tree nuts are unable to satisfy the enormous demand despite increased production. There are no well-established local tree nut producers that can pose stiff competition. Indian demand growth will continue to outpace production and imports will be necessary to fill the demand. Chilean tree nuts are emerging as a major competitor to US tree nuts in the Indian market and have gained major market share for imported tree nuts. This is the only producer that can pose threats to tree nuts from the US.

The Indian tree nuts market is not very competitive. There are no barriers to entry. There are no monopolies. The structure of the market is oligopolistic competition. The market is open to firms that are willing to supply high-quality products to satisfy the increasing demand.

Methods of marketing and distribution

The success associated with selling tree nuts in India will largely depend on the methods of marketing and distribution. Effective marketing and distribution methods will translate to a large volume of sales. When the volume of sales is large, then the firm will make huge profits after selling tree nuts. There are various available methods of marketing and distribution of tree nuts in India. The main methods of marketing that will be used to market tree nuts in India are online marketing particularly the e-commerce and advertising (Chaffey & Ellis-Chadwick, 2019). Online marketing will enable my proposed firm to gain instant access to the national market, especially outside of India’s largest cities. The number of Indians owning smartphones has increased significantly.

Online marketing and distribution have lower risks as compared to setting up a physical presence. It will enable my company to sell to a national footprint in India and to find the niche customers. Online marketing will also reveal the segments of the market that may have the greatest affinity for tree nuts goods. India also has a high density of social media users. My company will also try to use the social media platform to market tree nuts. The company tasked with marketing tree nuts in India will have to build trusted consumers by using social networks such as What’s App and Facebook. Other online marketing strategies that will be used include search engines, digital assets, and big data analytics.

Advertising is a common effective marketing technique. This is because it reaches many people at the same time. Advertising is a marketing technique that will be used to disseminate information about tree nuts. It is aimed at reaching many people at the same time using purchased space or time in various media. Advertising is the most important element of marketing. Advertising will be used to enhance successful persuasive communication so that consumers can make sales.

The direct channel is the main method of distributing tree nuts in India. This technique involves the distribution of products directly by the producer himself without the using of middlemen. This is an effective method of distributing products.

Multiple shops will be opened India. Several retail shops which have a similar appearance at different parts of the country will be opened. These retail shops will be used to distribute tree nuts to consumers.

Mail-order business will also be used to distribute tree nuts to consumers in India. The producer will make elaborate publicity for tree nuts via different media. The producer will then direct mail catalogs to potential consumers. The dispatching of tree nuts and payments will take place through a post office.

Sales representatives will also be hired to market and distribute tree nuts in India. The volume of sales is likely to increase because sales representatives interact directly with potential consumers. They are capable of convincing potential customers to buy tree nuts. Another advantage of using sales representatives is that marketing flexibility will be added at less cost. The sales cost is also likely to be lower.

Recommendations

After examining various factors within the Indian market, I can make propose recommendations which are aimed at ensuring that the producer of tree nuts reaps maximum benefits after exporting the products to India. The recommendations must be taken into consideration. This is because firms operate in a dynamic business environment.

The first recommendation pertains to marketing and distribution methods. It is recommended that the producer of tree nuts is careful when it comes to choosing marketing and distribution methods. Methods of marketing and distribution determine the volume of sales that will be made. Ineffective marketing and distribution methods will lead to a low volume of sales. The firm’s profit will hence below. On the other hand, if the methods of marketing and distribution have chosen are effective, then the firm will make a large volume of sales which will translate to higher profit margin.

The second recommendation is concerning the type of labor to be hired. The producer of tree nuts should ensure that it hires skilled workers. It is important to hire skilled labor. For example, individuals hired to be sales representatives should possess the required skills such as effective communication and persuasive skills. The persons who will be employed as managers of various marketing offices and individuals hired to oversee sales representatives should have good management skills.

The outlined recommendations must be considered by the producer of tree nuts. If the recommendations are implemented, then the producer of tree nuts will find it easy to navigate the Indian market.

References

Chaffey, D., & Ellis-Chadwick, F. (2019). Digital marketing. Pearson UK.

Deininger, K., Jin, S., Liu, Y., & Singh, S. K. (2018). Can Labor-Market Imperfections Explain Changes in the Inverse Farm Size–Productivity Relationship? Longitudinal Evidence from Rural India. Land Economics, 94(2), 239-258.

Klasen, S., & Pieters, J. (2015). What explains the stagnation of female labor force participation in urban India?. The World Bank.

Natarajan, P., & Raza, M. T. (2017). An Analytical Investigation on Ease of Doing Business in India. Journal of Smart Economic Growth, 2(2), 46-69.

Nomura, S., Imaizumi, S., Areias, A. C., & Yamauchi, F. (2017). Toward labor market policy 2.0: the potential for using online job-portal big data to inform labor market policies in India. The World Bank.

Perez, A., Ferreira, G., & Minor, T. (2017). Fruit and tree nuts outlook (No. 1494-2017-5276).

Report from the Office of the US Trade Representative retrieved at

https://ustr.gov/countries-regions/south-central-asia/india

Report from Foreign Agricultural Service, United States Department of Agriculture retrieved at

https://www.fas.usda.gov/data/growing-opportunities-us-agricultural-exports-india