Int. Market Stragety

Table of Contents

Section 1                     Market Size and Growth Potential Page 1

Section 2                     PEST Analysis 4

Section 3                     Legal Requirements 8

Section 4                     Competition 11

Section 5                     Global Entry Strategies 13

Section 6                     Local Marketing Strategy 15

Section 7                     Management, Organizational, and Operational Requirements 18

Section 8                     Financial Requirements 19

Section 9                     Strategic Plan 21

Appendix Global Focus 25

Market Size and Growth Potential

Market Size

In a developing country like India, the future for Nanotech as an alternative to medicine looks promising.  The non-transdermal patches can be categorized as a niche-market product that has the potential to exceed all expectations in the Indian markets.  Nanotech has five skin adhesive products, the anti-aging patch, the energy inducing patch, the pain relief patch, the sleep patch, and the weight loss patch.  The sixth patch is an anti-radiation patch that attaches to a cell phone to nullify the harmful effects of radiation.

The wellness, beauty, and personal care market seems to be the perfect fit for the anti-aging patch.  Based on published market reports, the total overall market size of the Indian retail beauty and cosmetics market is currently estimated at $ 950 million.1 The spa and body treatment segment of the market is a sub-category of the wellness and beauty products segment.  Our weight loss patch would fit into this market.  The spa and body treatment market is estimated at $772 million.1 The energy drink market is perfect for our market comparison of the energy patch.  Based on the Hindu Business Companies article, currently India’s energy drink market is worth over $ 104 million.2 Our pain and sleep patches fit into a little different market segment.  The Indian Over-The-Counter (OTC) pharmaceuticals market is a large market that consists of several different product categories such as vitamins, minerals, health drinks, and sports care supplements.  Our pain relief patch and the sleep patch would fit well into the OTC market segment.  According to published market reports, The Indian OTC pharmaceuticals market generated total revenues of $ 1.8 billion in 2008 with the vitamin and minerals segment proving to be the best performers with total revenues of $425.2 million.3 Our final market analysis centers on the Telecommunications Industry.  The anti-radiation cell phone patch fits perfectly into this market segment.  According to the India Country Commercial Guide, the telecommunications market totaled approximately $ 33.55 billion in 2008.[4]

Growth Potential

India has come a long way in its economic growth.  According to Mergent’s country profile of India, the country has delivered on average a growth rate of over 7% since 1997 with even more dynamic growth in its markets in 2008.  Real GDP growth climbed to about 8% in 2008.[5]

The rate dropped a little to 6.3% in 2009, however, the fact still remains that India is one of the fastest growing economies in the world.  It is a picture of impressive economic performance with many opportunities for even more expansion in its consumer markets in the years ahead.  India is expected to stay on target with a steady growth pace of roughly 7.5% per year over the next 10 to 15 years.[6] The beauty, cosmetics and personal care market is also growing at a steady pace. The Nanotech anti-aging patch and the weight loss patch fit well into this market category.  According to published market reports, the Indian beauty, cosmetics, and personal care retail market growth is expected to be 15-20% annually, twice as fast as the United States and European markets.  This growth trend is expected to continue for the next 3-5 years.1 The market research reports predict explosive growth of over 50% for the energy drink market.[7] OTC Pharmaceuticals market is also expected to grow but it’s more on the scale of long term growth.  Datamonitor’s immediate forecast is a slight performance deceleration to 5.2%, but it is expected to return to annual growth rates of approximately 6%.1 The telecommunications market has experienced substantial growth.  Our market analysis revealed that the telecommunications market has an impressive rate of 11.31% growth in wireless subscribers.[8] It is quite possible that the anti-radiation patch could be a welcome addition to accessories of the telecommunications market.

Target Market

We have chosen the young urban middle class population, with middle to high real annual household disposable incomes ranging from $4,166 to $20,833, as our target market for the anti-aging patch, the energy inducing patch, the pain relief patch, the sleep patch, the weight loss patch and the anti-radiation patch.  Our reasoning is based on the following research statistics, the 2008 India Country Commercial Guide shows India’s population at about one billion people, and the median age is 25.6 India’s growing middle class population consists of about 40% of the population and of that growing middle class population most, if not all, desire a scaling up of a good quality of life which makes this market perfect for our products.

Target Market Growth Rate

According to the annual exporter guide, The Indian market with its one billion plus population has a middle class of approximately 40% of the population.  There is considerable growth potential for the teeming Indian middle class.[9] More and more cities across India are appearing as highly attractive destinations for retail, BPO (outsourcing), IT, and real estate development which means growth is likely to be more evenly spread across many cities.  The Business Process Outsourcing (BPO) sector is a perfect example of the growth potential in India.  This sector grew by 31% in 2008 and has the potential to provide employment to two million people, and the outcome will be accelerated growth. The middle class is expected to have continued growth of 2.5% per year.[10]

PEST Analysis

Economic Conditions

India’s economic conditions are favorable to the marketing and sale of Nano Tech products.  India makes up 15% of the entire world’s population making it the 12th largest economy in the world.[11] According to economic forecasts from several consultant firms, it is believed that over 400 million people (approximately 40% of the population) will be considered middle class within the next 15 to 20 years.  Other consultant firms project India will have the world’s fastest growth rate by 2011 and estimate India to be the 3rd largest economy in 2032.  In 2008, the population grew by 8% and in 2009 the economy grew by almost 6%.[12] India’s Gross Domestic Product (GDP) has been growing at a rate of 8% and totaled $1,210 billion in 2008.[13] India’s growing economy opens up many opportunities to market Nano Tech products.  Younger generations are usually more open to alternative products and less fearful of products showing advances in technology.  With the majority of the population being under the age of 25, the market is large to gain potential customers who may end up using Nano Tech products for several years.

According to the 2008 Commercial Guide to India, 700 million people living in India live off of $2 per day.  However, there is a growing middle class with disposable income ranging from $4,166 to $20,833 US.  It is estimated that the middle class will continue to grow up to 10 times by the year 2025. 2   The rapid growth of the middle class population will benefit Nano Tech in the long run since the upper to middle class are potential customers for Nano Tech products.

Despite the dramatic increase in growth, the economy of India still faces many challenges.  The biggest challenges are extremely high tariffs charged on imports and a weak infrastructure.  Continuous efforts have been made since the 1990’s to improve the market economy with reductions in tariff charges and barriers into the market. Other market reforms include creating better laws for intellectual property rights and changes in government monetary and fiscal policies.3  India is working to improve its poor infrastructure by making improvements in information technology, providing more education, expanding airlines, and telecommunications, and increasing developments in ports, railroads, and roads.  However, India’s weak infrastructure opens up more business opportunities for US companies. This will not guarantee immediate success for Nano Tech in India. Nano Tech will need to come up with the right business strategies, stay focused on their efforts, be committed, and continue to be patient in order to be successful in India.2

Rising inflation has been a problem in India for several years.  In 2009, the inflation rate went up as high as 11.49%.  The rising inflation rate has caused the cost of living to increase and prices on commodity items to increase.  This is having a higher effect on the poor population since food prices have also increased dramatically.4 In times of rising inflation, Nano Tech will need to focus on keeping the cost of their products as low as possible to be affordable for the Indian population.

India has the second highest labor force in the world.  The majority of the population (52%) works in the agriculture industry, 14% works in the industrial industry, and 34% works in the service industry.  The amount of people unemployed is low at only 10.7% of the population.5 India’s strong labor force gives Nano Tech opportunities to expand production or services to India in the future.

Political and Legal Environment

India’s government is considered a federal republic similar to the U.S. government.  The central government more closely resembles a British Parliament and has greater amount of control than the state governments.  India is made up of 28 states and 7 union territories.  Local government structure varies from state to state and the central government has greater power over the union territories than the states.3  Politics in India have been shaped by differing religious beliefs, languages and the caste system.  While in major urban cities the caste differences are minimal, the rural villages of India still discriminate people based on caste.  The government has made efforts to reduce the effects of discrimination by enacting affirmative action and other social policies.  These social policies along with providing more education, communication, transportation, information, and job opportunities in India are helping reduce the effects of the caste system.6

The U.S. is one of the major trading partners of India and has been working hard to form a better relationship with the country.  In 2008, U.S. exports to India totaled over $32 million, an increase of 85% since 2007. 1  Both the U.S. and India have similar ideals on free market economies and political views.  There have been disagreements between these two countries in the past over the slow movement of India’s economic reforms.  These disagreements have hindered the strength of U.S. and Indian trade relations.  Today, the U.S. realizes partnering with India would be advantageous and is making efforts to resolve any differences regarding India’s economic reforms.6

Nano Tech is likely to face a couple issues dealing with India’s political and legal environment.  First is the high tariffs placed on imports.  Despite continuing trade relations between the U.S. and India, there are still substantially high tariffs being placed on U.S. imports into the country.  In addition to high tariffs, India will often place excise taxes on certain products.  India has a very complicated tax system that includes several exemptions and may prove to be confusing.  Another issue is trade barriers such as import licensing, standards, testing and labeling requirements, and additional barriers which often give domestic markets a more competitive advantage over exporting companies.2

Social Factors

India has the second largest population in the world.  India’s population in 2009 was around 1.16 billion people and is continuing to grow at a rate of 1.6% every year (18 million people).  Approximately 70% of India’s population lives in over 550,000 rural villages while only 30% live in over 200 towns and cities.  The population in the major cities is as follows:  16.4 million live in Mumbai (formerly Bombay), 13.2 million live in Kolkata (Calcutta), 12.8 million in New Delhi (India’s Capital), and 5.7 million live in Bangalore.2  Nano Tech will be focusing on these key cities for the marketing of their products.

The majority of India’s population is under the age of 35 years old, with 50% of the population aged 15-25 years old and 33% of the population under 15 years old. 2   The people of India speak over eighteen different languages, the most widely used languages used being Hindu and English.  While Hindu is the highest spoken language, English is the primary language used for communication in national, political and commercial affairs. 5  This is very advantageous for Nano Tech for communication in business.  Religion is highly prevalent in the culture of the people. The majority of the people are Hindu and the rest are Muslims, Christians, Buddhists, Sikhs, Jains, or Parsis.  With 81% of the people being Hindu, the Hindu caste system is still a part of the people’s lives. As mentioned previously, the government has made significant changes to eliminate the peoples’ negative views toward people on the lower end of the caste hierarchy.6  Literacy in India is high with 61% of the total population over age 15 able to read and write.

The opportunities to market international products in India are growing every year.  With a large population of over 1 billion, 200-250 million of India’s middle class are looking to purchase high-quality international products.  Most of the demand for international products is for low-priced products since the Indian community is extremely price-sensitive.  However, higher priced items can still be successful.  Consumer interest in international products has peaked due to the increase in income of India’s middle class along with the growing population in urban cities.  Increases in the availability of media and advertising along with greater access to multiple brands has caused a rising consumer interest in U.S. based products.7 Nano Tech is likely to be accepted as a high-end U.S. product if the company cannot cut its costs enough to meet lower price expectations.

Technological Considerations

Advancements in India’s technology within the last few years have been impressive.  Improvements made in the software industry and India’s telecommunications has helped the country improve its economic conditions and increase foreign investments in the country.

Currently, India is the second highest group of software developers in the world. 1  Software is one of the largest exports from India accounting for $28 billion exported out of the country in 2007.6  The technical skills of the people of India are considered to be one of India’s best resources.  They are the second highest English speaking group of highly educated workers in the world.  The U.S. continues to make investments in India’s information technology.8

As mentioned previously, India needs to improve its weak infrastructure in order to improve the overall economic conditions of the country.  Telecommunications in India has proven to not only help improve the country’s infrastructure, but to further the social conditions of its people.  Since the majority of India’s population lives in rural areas, the increased access to cell phones have benefitted the people both socially and economically in several ways.  First, it has given families living far apart the opportunities to keep in touch and decreased the amount of money spent for transportation from village to village.  Second, it has increased the people’s access to health care, education, and financial services.  Finally, it has encouraged further development of economic activities beyond the agricultural sector. In urban cities, the improvements in telecommunications have helped to improve productivity, create more job opportunities, and have contributed to higher social empowerment.9 India recently became the fastest growing telecommunications market in the world by eliminating many of the unnecessary regulations placed on telecommunications laws and policies.  It is estimated that by 2010, the number of people using cell phones will increase to 300 million.5  This offers many advantages for Nano Tech to market the cell phone patch to a rapidly growing market of cell phone users.

In addition to improving telecommunications and making advancements in information technology, the Indian government has shown a great interest in nanotechnology.  Over the past five years, the government has invested approximately 10 billion dollars for 100 different nanotechnology projects.  These projects are focused mainly on the healthcare, paints, cosmetics, and automobile industries.  However, India has not been successful in developing any fully functional products.10 Nano Tech is sure to peak government interest with its six fully completed, high-quality products.  Also, the government has not placed any regulation requirements on products produced using nanotechnology.  Nano Tech products should be easily accepted by the government.

Legal Requirements

After extensive legal research, Nanotech’s products do not appear to need any type of government approval.  All five body products are classified as acupuncture apparatuses (harmonized code: 90189043) and the cell patch is classified as a voice frequency telegraphy (harmonized code: 85176220).1 The only medical devices of concern to the Indian Ministry of Health & Family Welfare were listed in a letter from Dr. Surinder Singh (see Form 2 in Appendix) and our products showed resemblance to none.2

With respect to import duties and taxes the body products will have 7.5% charge added.  On the other hand, our cell patch labeled as a voice frequency telegraphy is free of charge. [1]  As a network marketing company providing a real product to our customers, we have determined that we do not violate any Indian laws and furthermore no security deposit is required.  However, in order to market, sell and distribute the product in the country we need an IEC code. The regional authorities of the DGFT state: “To Import or export in India, IEC Code is mandatory. No person or entity shall make any Import or Export without IEC Code Number.” 3

  • For every first time exporter, it is necessary to get registered with the DGFT (Director General of Foreign Trade), Ministry of Commerce, Government of India.
  • DGFT provide exporter a unique IEC Number. IEC Number is a ten digits code required for the purpose of export as well as import. No exporter is allowed to export his good abroad without IEC number.
  • Application for IEC number can be submitted to the nearest regional authority of DGFT.
    Application form which is known as “Aayaat Niryaat Form – ANF2A” can also be submitted online at the DGFT web-site: http://dgft.gov.in (see Form 1 in Appendix). 3
  • (Fee: INR 250)

Additionally listed are the 11 basic steps to complete to do any business in India, taken from the following: Doingbusiness.org4 & cross-referenced with the Ministry of Corporate Affairs5

  1. Obtain director identification number (DIN) on-line:
    1. Takes about 1 day
    2. INR 100
  1. Obtain digital signature certificate on-line
    1. Takes 1-6 days
    2. INR 400-2650
  1. Reserve the company name with the Registrar of Companies (ROC) on-line
    1. Takes 2-3 days
    2. INR 500
  1. Stamp the company documents either at the Superintendent or an authorized bank
    1. Takes 1 day
    2. INR 300
  1. Present the required documents along with the registration fee to the Registrar of Companies to get the certificate of incorporation
    1. Takes 3-7 days
    2. INR 15,823
  1. Make a seal
    1. Takes 1 day
    2. INR 350
  1. Visit an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) Investors Services Ltd to obtain a Permanent Account Number (PAN)
    1. Takes 7 days
    2. INR 66
  1. Obtain a tax account number for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department
    1. Takes 7 days
    2. INR 55
  1. Register with Office of Inspector, Mumbai Shops and Establishment Act
    1. Takes 2 days
    2. INR 1500

10.  Register for VAT before the Sales Tax Officer of the ward in which the company is located

  1. Takes 12 days
  2. INR 5100

11.  Register for profession tax

  1. Takes 2 days
  2. No Charge

Above fees come to INR 26694 or $600.62 US

Competition

Below are different categories that are examined to find out the competition in each industry that the patches are marketed in.

Energy

The energy patch is up against some tough competitors.  Energy drinks are the most popular way of increasing personal energy.  There are also energy pills and energy bracelets.  The main competition will come from the energy drink market.

The key foreign competitors in the energy drink market are Red Bull, Monster, and Rockstar.  The domestic leaders are Red Bull, which lead the market share at 60%, followed by Power Horse at 22%.

Pain Relief

In the pain relief category there are quite a bit of different methods used to reduce pain.  There are heat patches that can be applied directly to the sore area to help eliminate pain.  Acupressure is another widely used form of pain relief, and the most popular form is to take pain killing pills.  Painkillers help reduce the pain but don’t solve the underlying problem.

The leading non-prescription drugs are Dicloran, Ketanov, and Indometacin.

Other leading prescription drugs include Vicodin,

Sleeping Aids

For the sleeping patch that is one main competitor, the sleeping pill.  There are over the counter sleeping pills as well as prescriptions.  Sleeping pills help the person to get more regular sleep, but don’t help with the solving the main problem.

The OTC sleeping pills include: Tylenol PM, Advil PM, Sominex, and Benadryl

Weight Loss

The main competitors for the weight loss patch are weight loss designed pills that help to burn fat and curb your appetite.  There are also surgical procedures that can be done to help weight loss including liposuction and the lap band.

Top weight loss pills include Hydroxycut and Ephedra.

Anti aging

The key competitors for the anti-aging patch are topical creams and lotions. There are also plastic surgeries that can be performed to tighten up a person skin, like a facelift.  Or a person can have injections to tighten skin in the injected area; an example of this would be having Botox injected.

Top anti-aging cream companies include Aveeno and Garnier.

Cell Phone Patch

The cell phone patch’s competitors also use the same design with a patch to put on the electronic device.  The differences with these products are their effectiveness on eliminating radiation coming from the electronics.

The top companies in this industry are Rhino International, Inc. and Safety Cell, Inc.

Global Entry Strategies

Nano Tech has a several global entry strategies to choose from.  The three most practical for our company, based on our constrained budget, include the following:

  • Network marketing
  • Export strategy
  • A joint venture with any company in India

In order to choose the correct strategy, we need to evaluate each on the basis of enabling us to enter India with the maximum impact and at minimal cost.

The first and most logical choice is network marketing.  First of all, this the present model for Nano Tech in the US and thus would be the easiest to implement.  The main reason for using network marketing is to save the millions of dollars that other health product companies spend on advertising.  By word of mouth, its distributors have the opportunity to make even more money.  Through building these personal relationships, the sales reps can also demonstrate effective placement of the patches, as this is something that cannot effectively be demonstrated on a TV or radio commercial.  Likewise, a brochure cannot cover advanced placement techniques for complex treatments.

The only problem with network marketing is its negative association with pyramid schemes.  In the US, the government shuts down illegal pyramid schemes that sell a dream to get rich quick.  A legitimate company will sell you a useful product; however, the other type will try to sell you the ‘opportunity’.  Some examples of legitimate network companies include: Amway, Avon, Mary Kay, and Herbal Life.  Before we can use network marketing, we must determine if it is permissible under Indian law.  Secondly, we need to determine that a security deposit isn’t necessary.

Next, we examine an export strategy.  Through this technique, we can use our production facility in Los Angeles, Ca to produce the patches and export them to Calcutta, Bangalore, Delhi, and Mumbai.  This is an excellent initial strategy to break into India.  The first export advantage is that it gives us a conservative way to test international waters.  Unlike a sole venture, we won’t have to put up massive amounts of capital.  And unlike a licensing strategy, we won’t have the risk of providing the know-how to foreign firms and may perhaps lose some control over the use of the product.  Therefore, our risk and capital requirements will be kept minimal.

The problem of using an export strategy is that we won’t be able to take advantage of economies of scale, by using local facilities and local workforce.  Real estate in Los Angeles isn’t cheap, thus it’s expensive to maintain a warehouse.  Additionally, California labor is very expensive compared to our four target cities in India.  High shipping costs are involved with international parcels.  Additionally customer satisfaction maybe affected if the product takes too long to reach them after purchase.  In the US, it usually takes 3-5 working days but may take from 3 weeks to a month to reach Calcutta.  Adverse fluctuations in currency rates is an additional concern went producing good in a foreign country.

The last possible strategy for Nano Tech involves a joint-venture.  This has been a successful model for many companies in the past.  Simply choose any company in India and get a license to sell the products under their name.  This is a relatively easy way to enter a foreign market and strengthen our competitiveness in India.  Through this avenue, we could have joint research efforts, share technology, have joint use of production and distribution facilities, and would be able to market and promote one another’s products.   This would allow us to achieve economies of scale and produce and store our products in India instead of Los Angeles.  We would have access to an establish distribution network, that would otherwise have to be built from the ground up.  With a friend in the business would give us immediate knowledge and working relationships with government officials. Overall, this is a useful way to gain agreement on labeling our device as a beneficial health device.

The downside of an international joint-venture begins with overcoming language and cultural barriers.  Depending on the company that we acquire a license with, we may have conflicting operating practices.  Trusting one another could become a long term significant issue.  This mistrust will most certainly carry over to situations requiring collaboration on products that would normally compete with each other.  Other potential problems include dealing with conflicting objectives, strategies, corporate values, and ethical standards.

The best alternative for Nano Tech is to stick with network marketing, as this is the company’s present strategy.  This has been a proven model in the US and therefore work in India with the same expected results.  The export strategy would be the next alternative if Indian law either prohibited it or otherwise raised the barrier to entry in terms of a high security deposit.

Local Marketing Strategy

Product

Nano Tech’s patches will be the size of a playing card (2½in × 3½in; 63 mm × 88 mm).1 They will be packaged in a 1 month supply box; that box will contain 15 individual patches. The patches themselves consist of the patented Nano Technology base, an adhesive layer, and a peel away top. The rationale for these product specifications are that we believe that by making the product a standard size, it will facilitate ease of use (a playing card will easily fit into a wallet), shipping and storage.

Products will come in 6 different varieties; Energy, Pain, Sleep, Anti-Age, Diet, and Anti-Radiation. Every product will be colored according to its use. Much like what Apple did with the ipod headphones, we believe that using unique colors for each patch will increase brand awareness. Energy will be colored yellow, Pain will be colored blue, Sleep will be colored black, Anti-age will be colored purple, Diet will be colored red, and Anti-Radiation will be colored clear so that the user may view the screen on their smart phone.

All products will have the “Body Boost” logo watermarked on the face of the product with the exception of the Anti-Radiation patch.

Positioning

Nanotech’s 5 skin adhesive products will be positioned as an all natural way to replace drugs that are necessary to live a productive life.2 These products will be branded as Body Boost. We believe that the use of alliteration will make the product name more popular. Through this new advanced technology these 5 skin patches utilize the natural chemistry of the body to healthfully make you more energetic, have less pain, and be able to sleep better, to age slower, and to lose weight. The body usually naturally controls these functions but sometimes it needs an extra push, a push which our patches can provide. By using a proprietary and advanced technology, Body Boost is the only company on the market that allows this all natural way for you to tell your body how to perform. By using all of Body Boost’s products, the consumer is subscribing to a total health system, in which they naturally control their body and not the other way around.

The Energy patch (Energy) is a way to increase energy without the use of coffee, energy drinks, sugar or supplements that have unknown side effects. The Energy patch increases energy immediately and it lasts throughout the day. Trusted by Olympians and Athletes, the Energy patch is the best way to increase stamina without the side effects associated with caffeine and sugar.

The Pain patch (Pain Relief) is an alternative way to reduce pain in precise locations. Oral drugs reduce pain throughout the entire body and leave the user feeling drowsy or unusual not only this, but continued usage of such strong drugs are known to have decreasing benefits over time. The user must increase medication which intern can damage the body’s vital organs such as the kidneys or liver. The Pain Patch is an all natural way to reduce pain and make you healthier.

The Sleep patch (Sleep) is to be applied right before bed time. It targets specific pressure points that release the chemicals that induce sleep. By doing this, you get the total amount of deep sleep your body requires to recharge, and by falling asleep sooner, you body is able to obtain more REM sleep then you would in a usual night. This leaves you feeling recharged without the use of dangerous and addictive sleeping aids that have become so common.

The Anti-Aging patch (Age-Less) is revolutionary in aging products, unlike other products; it works from the inside out.  By increasing the body’s natural anti-oxidants, the patch not only makes you look more youthful on the outside, but slows down aging effects inside the body.

The Diet patch (Slim) is the only natural way to stimulate you body’s naturally weight control functions. Many weight loss solutions are ineffective and dangerous. The Diet patch stimulates the nerves that send hunger satisfaction signals to the brain. The Diet patch is the only safe and natural way to lose weight.

The cell phone Anti-Radiation patch (Radiation) is the newest product from Body Boost. It nullifies the dangerous radiation that emanates from all electronic products. This radiation is known to cause cancer. By affixing this product to a cell phone or any electronic device, all dangerous radiation is converted into harmless low energy radio waves.

Pricing

The patches will be priced using a price skimming Strategy. Because the products are made from proprietary technology, there is no legitimate direct competition (our product is the only product clinically proven) 15 patches cost $6, sell to distributers for between $36-$43 per package3 based on dealer level and MSRP for $90, however, distributers are not bound to the MSRP price and can sell the patches for as much as they want.

The Anti-Radiation patch costs $5 and will sell to distributers for around $36-$43 per unit based on dealer level and will MSRP for $90. There will also be shipping, insurance and taxes added to the final price. Since all goods will be shipped as FOB shipping point, the distributer in India will be responsible for all these charges. This pricing strategy was decided upon because dealer assumes all risks during shipping and retailing. Also the dealer pays all shipping costs to the destination.

By offering deep discounts (up to 20% in some cases) we can entice dealers to carry the entire product line. There will be 5 dealer levels, and each will have a diminishing discount associated with being in that dealer level, the dealer must order at least 4 packages of each product they carry per month (excluding Anti-Radiation patch).4

Promotion

Dealers will be offered reduced pricing for upper level brackets, Level 1 dealers will receive 20% off all products they purchase. Level 2 dealers will receive 10% off all purchases, Level 3 dealers will receive 5% off all purchases, and Level 4 dealers will receive 1% off all purchases. Level 5 dealers will receive no discount. We believe that offering incentives to obtain a better dealer ranking will proliferate product sales.

In addition by referring a new dealer a distributer will earn a commission.5 Commission will be based on the level of the dealer that subscribes and relationship that the individual has to the dealer. There is no limit to the amount of tier’s that a distributer can receive residuals from.

Place

Point of sale is to be limited to brick and mortar locations and through multi-level marketing. There will be no online sales allowed of any Nano Tech product. Because the product is being sold at a discount to our India customers, we do not want them to undercut our U.S. dealers. This would result in a serious conflict of interests between Nano Tech and its U.S. dealers and is grounds for breaching contracts with any party that conducts online sales.

Management, Organizational, and Operational Requirements

There is a main warehouse in Los Angeles where the main distributor is located.  We then have our main headquarter located in the city of Mumbai that is run by our head distributor in India.  There are three other locations in Delhi, Bangalore, and Calcutta that are run by the top distributor in each city.  These four locations in India then distribute the patches to the independent distributors (see Organizational Chart in Appendix).

We are using network marketing as our strategy so therefore we will not be having a manager run the different locations.  Instead we have our top distributors in each main city that will handle all the incoming products and distribute to our independent distributors.  When an individual wants to start selling the patches, he will go through the head distributor in his location to order the patches from our warehouse in L.A.

We will have four head distributors in each city that will manage the incoming products that are going to the individual distributors.  The main headquarter in Mumbai will be where all the shipments from the U.S. are flown to.  They will then distribute to the top distributor in each of the other three cities.  Therefore we will not have to have a warehouse in India to store the incoming product as they will be handled by the top distributors in each city.

All of the products are first stored in our Los Angeles warehouse.  When orders are called in from our distributors in India we will send the products through air to the main headquarter located in Mumbai.   Once the patches reach Mumbai they will be distributed to the independent distributors in that city.  Patches that were for the other cities will be flown directly to the top distributors of each main location then delivered as needed.

Before the products reach the end user they will start with the call placed to order patches.  Once the order has been made they will be driven to L.A.X. to catch a flight to our main headquarter located in Mumbai.  Once delivered to Mumbai our head distributor will pick up the patches and store his part of the order, then send out the rest to our top distributors in Delhi, Bangalore, and Calcutta.  Once they reach the three cities the top distributors will hold the products until delivered to their distributors.  Once they have them they will sell to the end consumer through trade shows, presentations, and direct marketing (see Flow Chart in Appendix).

Financial Requirements

The financial requirements facing Nanotech are extremely favorable because we have decided to maintain its network marketing distribution strategy as compared to either a joint operation or export strategy.  Instead of spending thousands of dollars on advertising and other ‘brick and mortar’ types of expenses, we are keeping cost to a minimum and passing the savings to our distributors.  The total legal expenses necessary to set up the business as explained earlier in the legal section amount to $600.62.

With a $50,000 budget, our strategy is to send two Nanotech representatives to Mumbai, India.  Armed with thousands of patches the two’s main objective is to locate and sign on our main ‘go- to’ person for India.  Through this individual, Nanotech will be able to branch out to Delhi, Bangalore, Calcutta, and eventually all of India.  In their quest, they will attend trade shows, introduce the products, and make personnel connections everywhere they go.1 Additionally, they will stop by the appropriate governmental offices and submit the required paper work for setting up our business.

Monday morning , May 3rd , UPS will stop by our main warehouse facility in Los Angeles and pick up 6 large boxes containing  500 units of each Nanotech product; energy patch, pain relief patch, sleep patch, anti-aging patch, weight-loss patch and anti-radiation patch.  (note: 1 unit of the body packs = 15 patches, while 1 unit of the anti-radiation = 1 patch) That’s a total of 38,000 patches!  The boxes will arrive prior to our reps and will cost $1,420.85 per box, for a total shipping cost of $ 7,104.25 (see Form 3 Appendix).  As explained earlier in the legal section, the cell phone patch is classified as voice frequency telegraphy which is free of import duties and taxes, while the body products will be charged 7.5% classified as acupuncture apparatus.1 The duties assesses in India will amount to $937.50 (2,500 body patches *$5 cost*7.5%).

Tuesday night, May 4th, our Nanotech representatives will flight out of Los Angeles and arrive in Mumbai, India Thursday, May 6th.  The cost of the round-trip airfare comes to $2,983.90 (see Form 4 in Appendix). Once in Mumbai, they will pick up the cargo van ($2,102.35) (see Form 5 in Appendix) and check into their five star hotel rooms ($14,277.60) (see Form 6 in Appendix).  It was important to us that we afford our two ambassadors this luxury, as we need them well rested and motivated on a daily basis to complete their task at hand.  Per day, we’ve allotted each $125 per diem. ($250*27 = $6,750). Through creating goodwill and enthusiasm, many products will be given away at trade shows and will more or less be our business cards to the people of India.  (3,000 unit * 5 = $15,000).  The total cost of all expenses amounts to $49,756.22, right under budget.

During their journey, beginning with stepping of the plane, the two will interact and tell anyone and everyone about the remarkable Nanotech patches and also the magnificent financial opportunity.  On Friday, May 7th after loading up the patches, the two will represent Nanotech at their first trade show, Shringaar Mahotsav. (see Form 7 in Appendix) This event last three days and gives the two ample time to promote all the body patches.  May 12, is the GFair-Mumbai Show, this is a ‘shoot in the dark’, but will allow us to pitch the cell patch and perhaps may provide some insight to the Korean Market, perhaps we may have a future Korean distributor.  We won’t have another trade show until the Marwar Shopping Festival, May 22nd, and the Franchise & Retail Opportunities Show the following day.  In the meantime, our good distributors will be out and about, cold calling, tracking down leads, and looking for potential opportunities throughout the city of Mumbai.  Next week is the last trade show: Trade Tech India.  By now our two representatives will have located and signed our star player for India and will be headed home.  On a final note, our two heroes will earn their paycheck like all great Nanotech distributors: 100% commission.

Expenses Amount
Legal $600.62
Shipping $7,104.25
Customs $937.50
Airfare $2,983.90
Van $2,102.35
Hotel $14,277.60
Patches $15,000.00
Per diem $6,750.00
Total $49,756.22

Strategic Plan

Vision Statement:

To provide people a way of being healthy through the use of their natural bodies.

Mission Statement:

We are an international company that specializes in technology inspired products.

Goals, Objectives, and Strategies:

Goal #1

Gain a favorable market position in each of the product sections we occupy

Objective:

  • Capture 25% of the total market for each of the industries that our products compete with in 3 years.

Strategy #1:

  • Establish our products at penetration pricing to reach a large customer base in a short period of time.

Pros

  • The low price may increase sales.  Since it is a new product consumers may be more inclined to purchase an alternative product
  • A low price will reach more of the population who can benefit from our products.

Cons

  • Distributors will make less money and have less incentive to sell the product.
  • May have issues if the price is lower than the government of India feels it should be.  The company may be in violation of anti-dumping legislation.

Strategy #2:

  • Use parody pricing and price our products at market value for their respective industries. This will result in a slow and stable growth as the product develops a following.

Pros

  • It’s an easy starting point to see how well your product will sell in the market.
  • U.S. distributors will be happier with a consistent price and not different pricing for international sales.

Cons

  • This could be a problem in India because there is a proliferation of cheap or copy cat products.
  • If the price is too high, consumers won’t be able to afford to buy our products.

Goal #2

Establish the product as a traditional form of treatment and not as an alternative to traditional medicine.

Objective:

  • Have 4 out of 5 doctors recommend Nano Tech’s patches over drugs and supplements. Within 7 years of international operations

Strategy #1:

  • Develop incentives for doctors to recommend the patch to their patients

Pros

  • Associating the product with a professional lends the product more credibility.
  • Using a professional as opposed to a celebrity would be less costly and just as effective.

Cons

  • If the professional doesn’t approve of the product, than it won’t be recommended.
  • The professional may be biased because of strong pressure from the pharmaceutical companies to not promote the product.

Strategy #2:

  • Give samples to the media/ celebrities and athletes and ask them to endorse our product.

Pros

  • You will reach a wide diverse group of people.
  • Associating the product with a celebrity lends the product more credibility.

Cons

  • High prices paid to celebrities for their endorsement.
  • If the celebrity’s reputation is discredited, product sales will suffer adverse consequences.

Implementation Plan

Goal 1:

Short Term-

ü  Step 1- Research the market to find out what the market value is for similar products.

ü  Step 2- Set price at the market value.

Long Term-

ü  Step 1 – Analyze sales and compare to competitor results to see how the price fares

ü  Step 2 – Adjust prices accordingly.  If it is a product that customers perceive to be of value, than increase price as needed.

Goal 2:

Short Term-

ü  Step 1- Meet with the professionals to discuss our products and offer product samples.

ü  Step 2- Assess which locations have more interest in product for wider distribution.

Long Term-

ü  Step 1- Work with doctors to get product published in medical journals.

ü  Step 2- Influence more doctors to change their perception about the products and begin to promote it.

ü  Step 3- Reassess the more popular locations to figure which locations are more popular than others and determine if advertising should be increased in those areas.

Appendix

Section 1         Market Size and Growth Potential – Nancy Goode

  1. Mala Venkat. (2009, October). India: Franchising in Wellness & Beauty Products. Retrieved April 30, 2010, from U.S. Commercial Service: http://www.stat.usa.gov.lib-proxy.fullerton.edu
  2. Joshi, S. (2009). Tata Tea, PepsiCo to Form Health Drink JV. Retrieved May 2, 2010, from The Hindu Business/Companies: http://beta.thehindu.com/business/companies/
  3. OTC Pharmaceuticals in India Industry Profile. (2009, December). Retrieved April 30, 2010 , from Data Monitor: http://mintportal.bvdep.com
  4. India Country Commercial Guide. (2009). Retrieved April 24, 2010, from U.S. Commercial Service: http://www.export.gov
  5. Peter O’Shea. (2009). India, Country Profile. Retrieved April 24, 2010, from Mergent, Inc.: http://www.mergent.com
  6. 2008 India Country Commercial Guide. (n.d.). Retrieved April 24, 2010, from U.S. Commercial Service: http://www.export.gov
  7. Govindan, Santosh Singh, Amit Aradhey. (2009, December 11). Weekly Highlights and Hot Bites No. 50. Retrieved May 02, 2010, from Global Agricultural Information Network: http://www.stat.usa.gov.lib-proxy.fullerton.edu
  8. Bhawan, M. D. (2010, April 6). The Indian Telecom Services Performance Indicators. Retrieved April 30, 2010, from Telecom Regulatory Authority of India: http://www.trai.gov.in
  9. Dhankhar, D. (2009, November 3). India Exporter Guide Annual. Retrieved April 30, 2010, from Global Agricultural Information Network: http://www.stat-usa.gov.lib-proxy.fullerton.edu

10.  Growth Potential: Tier II and Tier III Cities in India. (2008, December). Retrieved May 02, 2010, from India Reports: Chillibreeze Publication: http://www.chillibreeze.com

Section 2         PEST Analysis – Kerry Green

  1. 1. Doing Business in India. (n.d.). Retrieved April 27, 2010, from buyusa.gov: http://www.buyusa.gov/india/en/motm.html
  1. Commercial Guide to India. (n.d.). Retrieved April 26, 2010, from Stat-USA: http://www.stat-usa.gov.lib-proxy.fullerton.edu
  2. GLOBUS & NTDB International Trade Library. (n.d.). Retrieved April 26, 2010, from stat-usa.gov: http://www.stat-usa.gov.lib-proxy.fullerton.edu
  1. Indian Inflation. (n.d.). Retrieved April 28, 2010, from EconomyWatch.com: http://www.economywatch/indianeconomy/india-inflation.html
  1. CIA World Factbook–India. (n.d.). Retrieved April 26, 2010, from cia.gov: http://www.cia.gov/library/publications/the-world-factbook/geos/in.html
  1. Background Note: India. (n.d.). Retrieved April 26, 2010, from US Department of State: http://www.state.gov/r/pa/ei/bgn/3454.htm

  1. Retailing in Wellness Products and Services. (n.d.). Retrieved April 26, 2010, from export.gov: http://www.export.gov/india/index.asp

  1. India’s Information Technology Industry. (n.d.). Retrieved April 29, 2010, from Embassy of India: http://www.indianembassy.org/indiainfo/india_it.htm
  1. EMF Radiations and Alleged Health Hazards. (n.d.). Retrieved April 27, 2010, from Cellular Operators Association of India: http://www.coai.com/study_papers.php

10.  Krishnan, G. S. (n.d.). Big Problem, Nano Solution. Retrieved April 27, 2010, from Businessworld.com: www.businessworld.in/index.php/Information-Technology/Big-Problem-Nano-Solution.html

Section 3         Legal Requirements – Kevin Weitzel

  1. Customs Tariff 2009-10. (n.d.). Retrieved May 2, 2010, from cbec.gov: www.cbec.gov.in/customs/cst-main.htm.
  1. Singh, D.S. (2005, October 6). Public Notice. Retrieved April 29, 2010, from Ministry of Health and Family Welfare: http://mohfw.nic.in/
  1. IEC Application. (n.d.). Retrieved April 29, 2010, from Government of India- General of Foreign Trade: http://dgft.gov/in
  1. Starting a Business in India. (n.d.). Retrieved April 30, 2010, from doingbusiness.org: http://www.doingbusiness.org/exploretopics/startingbusiness.aspx?economyid=89
  1. Ministry of Corporate Affairs Government of India. (n.d.). Retrieved April 30, 2010, from mca.gov.in: http://www.mca.gov/in/MCA21/
  1. Form 1- Application for IEC
  1. Form 2- Ministry of Health

Section 4         Competition – Geoff Holpuch

  1. http://findarticles.com/p/articles/mi_m0BDW/is_22_42/ai_75286777/
  2. http://www.drugs-pro.com/pain-relief.html
  3. http://www.cell-phone-accessories.com/anprod.html
  4. http://www.forbes.com/global/2005/0328/028_print.html
  5. http://www.mergentonline.com.lib-proxy.fullerton.edu/compsearch.asp
  6. http://www.netadvantage.standardandpoors.com.lib-proxy.fullerton.edu/NASApp/NetAdvantage/index.do
  7. https://mintglobal-bvdep-com.lib-proxy.fullerton.edu/version-2010428/Search.QuickSearch.serv?searchstepid=Current.QuickSearch&context=E0IOVL&databasecontext=MarketResearch&_cid=9

Section 5         Global Entry Strategies – Kevin Weitzel

Section 6         Local Marketing Strategy – Kyle Schwarz

  1. Playing Cards. (n.d.). Retrieved May 1, 2010, from Wikipedia.com: http://en.wikipedia.org/wiki/Playing_card
  2. See Product Catalogue
  3. See Dealer Invoice
  4. Pricing Strategy
  5. Commission Table

Section 7         Management, Organizational, and Operational Requirements – Geoff Holpuch

  1. Organizational Chart
  1. Flow Chart

Section 8         Financial Requirements – Kevin Weitzel

  1. Customs Tariff 2009-10. (n.d.). Retrieved May 2, 2010, from cbec.gov: www.cbec.gov.in/customs/cst-main.htm.
  1. Form 3- Shipping Costs
  1. Form 4- Airfare
  1. Form 5- Rental Van
  1. Form 6- Hotel Reservation
  1. Form 7- Trade Shows

Section 9         Strategic Plan – Global Focus


1 Mala Venkat. (2009, October). India: Franchising in Wellness & Beauty Products. Retrieved April 30, 2010, from U.S. Commercial Service: http://www.stat.usa.gov.lib-proxy.fullerton.edu

2 Joshi, S. (2009). Tata Tea, PepsiCo to Form Health Drink JV. Retrieved May 2, 2010, from The Hindu Business/Companies: http://beta.thehindu.com/business/companies/

3 OTC Pharmaceuticals in India Industry Profile. (2009, December). Retrieved April 30, 2010 , from Data Monitor: http://mintportal.bvdep.com

[4] India Country Commercial Guide. (2009). Retrieved April 24, 2010, from U.S. Commercial Service: http://www.export.gov

[5] Peter O’Shea. (2009). India, Country Profile. Retrieved April 24, 2010, from Mergent, Inc.: http://www.mergent.com

[6] 2008 India Country Commercial Guide. (n.d.). Retrieved April 24, 2010, from U.S. Commercial Service: http://www.export.gov

[7] A. Govindan, Santosh Singh, Amit Aradhey. (2009, December 11). Weekly Highlights and Hot Bites No. 50. Retrieved May 02, 2010, from Global Agricultural Information Network: http://www.stat.usa.gov.lib-proxy.fullerton.edu

[8] Bhawan, M. D. (2010, April 6). The Indian Telecom Services Performance Indicators. Retrieved April 30, 2010, from Telecom Regulatory Authority of India: http://www.trai.gov.in

[9] Dhankhar, D. (2009, November 3). India Exporter Guide Annual. Retrieved April 30, 2010, from Global Agricultural Information Network: http://www.stat-usa.gov.lib-proxy.fullerton.edu

[10] Growth Potential: Tier II and Tier III Cities in India. (2008, December). Retrieved May 02, 2010, from India Reports: Chillibreeze Publication: http://www.chillibreeze.com

1Doing Business in India. (n.d.). Retrieved April 27, 2010, from buyusa.gov: http://www.buyusa.gov/india/en/motm.html

2 Commercial Guide to India. (n.d.). Retrieved April 26, 2010, from Stat-USA: http://www.stat-usa.gov.lib-proxy.fullerton.edu

3 GLOBUS & NTDB International Trade Library. (n.d.). Retrieved April 26, 2010, from stat-usa.gov: http://www.stat-usa.gov.lib-proxy.fullerton.edu

4 Indian Inflation. (n.d.). Retrieved April 28, 2010, from EconomyWatch.com: http://www.economywatch/indianeconomy/india-inflation.html

5 CIA World Factbook–India. (n.d.). Retrieved April 26, 2010, from cia.gov: http://www.cia.gov/library/publications/the-world-factbook/geos/in.html

6 Background Note: India. (n.d.). Retrieved April 26, 2010, from US Department of State: http://www.state.gov/r/pa/ei/bgn/3454.htm

7 Retailing in Wellness Products and Services. (n.d.). Retrieved April 26, 2010, from export.gov: http://www.export.gov/india/index.asp

8 India’s Information Technology Industry. (n.d.). Retrieved April 29, 2010, from Embassy of India: http://www.indianembassy.org/indiainfo/india_it.htm

9 EMF Radiations and Alleged Health Hazards. (n.d.). Retrieved April 27, 2010, from Cellular Operators Association of India: http://www.coai.com/study_papers.php

10 Krishnan, G. S. (n.d.). Big Problem, Nano Solution. Retrieved April 27, 2010, from Businessworld.com: www.businessworld.in/index.php/Information-Technology/Big-Problem-Nano-Solution.html

1 Customs Tariff 2009-10. (n.d.). Retrieved May 2, 2010, from cbec.gov: http://www.cbec.gov.in/customs/cst-0910/cst-main.htm.

2 Singh, D. S. (2005, October 6). Public Notice. Retrieved April 29, 2010, from Ministry of Health and Family Welfare: http://mohfw.nic.in/

3 IEC Application. (n.d.). Retrieved April 29, 2010, from Government of India General of Foreign Trade: http://dgft.gov/in

4 Starting a Business in India. (n.d.). Retrieved April 30, 2010, from doingbusiness.org: http://www.doingbusiness.org/exploretopics/startingbusiness/details.aspx?economyid=89

5 Ministry of Corporate Affairs Government of India. (n.d.). Retrieved April 30, 2010, from mca.gov.in: http://www.mca.gov.in/MCA21/

1 Playing Cards. (2010). Retrieved April 20, 2010, from Wikipedia: http://www.wikipedia.com/wiki/playing_card

2 See Product Catalogue

3 See Dealer Invoice

4 Complete Pricing Strategy in Appendix

5 Complete Commission Table in Appendix

1 Customs Tariff 2009-10. (n.d.). Retrieved May 2, 2010, from cbec.gov: www.cbec.gov.in/customs/cst-0910/cst-main.htm.

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