MKTG 3553 – International Marketing

Purpose

The purpose of this memo is to determine the market entry method for Turkish Delight. In this memo, we will state details regarding the benefits and disadvantages of various market entry methods, followed by laws and regulations our products may need to follow, explain our choice of market entry method, and end with the brands we would like to collaborate with.

Analysis

Export

Exporting the ice cream would be one of the better options for Turkish Delight. Currently Turkey exports ice cream and other dairy products to 70 countries. In 2017, it was reported that the 5 years prior Turkey made an estimated 205 million dollars from exporting ice cream. With its unique approach during a pandemic, Turkish Delight could bring in even more money given the popularity of Turkish ice cream.

Licensing

Licensing can be beneficial when it’s associated with usage of unique technology with a fee. However, the risk is high because licensees can refuse to pay the fee while still using the technology. This wouldn’t be an option since it’s risky for a new foreign brand like Turkish Delight to take such action, it is better off working with another company that is rich in resources first.

Contract Manufacturing

Although contract manufacturing is a viable option for Turkish Delight it would not be the best option to outsource production when Turkey is an ideal place to produce ice cream. Other companies have found success creating ice cream brands and finding business in Turkey and outside of Turkey. If Turkish Delight did decide to outsource, Iraq would be an interesting option because of the relationship between the two countries as well as Iraq’s infatuation with Turkish ice cream.

Franchising

This could be an option for Turkish Delight. With the success that other brands have seen in Turkey with ice cream, it would most likely not be difficult to find individuals interested in franchising. Shops could be opened in major cities such as Istanbul and Ankara. With the hot temperatures and large populations there is a good chance these franchises would have great success.

Joint Venture

Working with local or other third-country multinational companies can help reduce possible political harassment. Turkish Delight can be benefited through new insights into the market and resources provided by the partnered companies, it’s a short-term partnership, and the risks and costs are shared by both parties. However, participations in partnership don’t always have to be equivalent, you could be putting in all the effort while your partner is doing little to nothing.

Direct Investment

Direct investment would involve selling interest in Turkish Delight for capital that would be used to grow the brand. This is an interesting option because we could use the direct investment money to set up franchises or use the money for marketing to really grow the brand. In a crowded ice cream market it would take a lot of marketing and advertising to help differentiate Turkish Delight from other brands so the direct investment money would be very beneficial.

Simple Partnership

A simple partnership is the best market entry method which could be used by Turkish delight companies. By choosing partnership as a market entry strategy, the company would enjoy the partnership benefits, including few legal obligations, easy to begin operating, burden sharing, better decision making, privacy, and easy profit access (Global Trade, 2020). Sharing burdens enables companies even to share losses. When a significant loss is shared among companies, the effect of loss in one company would be minimal. Since the company is new in the market, making losses would be easy.

Laws and regulations

Labeling Requirements

Products can come in its original packaging, but each product must include a permanent sticker label on its packaging, written in Turkish, clearly and accurately. This is heavily enforced by AFD and DD (provincial and district directorates), no exceptions will be granted (Ozbag, 2020). In addition, all products must include a nutritional label, which will include “includes energy value, fats, carbohydrates, proteins (where required),

fiber, and salt/sodium, vitamins and minerals (Ozbag).”

If ethyl alcohol is used during the preparation of a product, the packaging label must state “…contains alcohol”, if the product contains parts from pigs, it must state “contains … obtained from pigs ” If a product contains “glycyrrhizinic acid or its ammonium salt due to the addition of the substance(s) as such or the licorice plant Glycyrrhiza glabra, at concentration of 100 mg/kg or 10mg/l or above,” the packaging must state “contains liquorice (Ozbag).”

Import Procedures (Page 29 of the document)

Before entering a market, the company must register the company’s name, apply for the tax identity number, obtain the business license and permit, insure the company, open a company bank account and consult the professionals. This would help the government ensure health business operations within the country (Market entry strategies, 2020).

Reason (which method we want to choose?)

There are various methods for market entry. The Turkish delight company may decide whether to use franchising, contract manufacturing, joint venture, export, simple partnership, licensing, or direct investment. By using the franchising market entry, the company may return high royalties when located in a good location (Market entry strategies, 2020). The company may not do well if located in a bad place. Also, selecting the wrong franchisee can ruin the reputation of all the franchises. Contract manufacturing has very many advantages. It saves on costs, thus maximizing profit, it is flexible, and it has scalability. Despite being advantageous, it isn’t easy to find a high-quality provider in this method. A joint venture is flexible, it has better resources, and the cost and risk are shared by both parties (Global Trade, 2020).

A joint venture has several disadvantages; there is a significant imbalance, clash of cultures, and limited opportunities. An export method gives a company an expansion opportunity though it can lead to a loss if a person is not caring. Simple partnership bridges the gap between expertise and knowledge; it is cost-saving and has a better work balance. This method could be characterized by loss of autonomy, emotional issues (Global Trade, 2020). Licensing is the best choice when there are importation and investment barriers. The direct investment enables the company to access the resources, market and reduced production cost (Market entry strategies, 2020). Direct investment also leads to an unstable economy, unstable political systems, and underdeveloped legal systems.

A simple partnership is the best market entry method which could be used by Turkish delight company. By choosing partnership as a market entry strategy, the company would enjoy the partnership benefits, including few legal obligations, easy to begin operating, burden sharing, better decision making, privacy, and easy profit access (Global Trade, 2020). Sharing burdens enables companies even to share losses. When a significant loss is shared among companies, the effect of loss in one company would be minimal. Since the company is new in the market, making losses would be easy.

Elo Solar Enerji and Elin Solar companies are the best companies with which the Turkish delight company would work. The reason why I have suggested the two companies is that they are big experienced solar companies. These companies have operated in the country’s market for a long period, and they have all the market knowledge and skills. After working with the two companies, a delight company would develop market skills faster and adapt to the market.

Partnership and collaboration

For partnership and collaboration, we would like to work with fast food restaurants like McDonald’s to promote our brand of ice cream. The reason we chose McDonald’s is because ice cream in Turkey is regarded as relatively healthy in comparison to other desserts (Euromonitor, 2020) while fast food is deemed to be unhealthy by many. In Exhibit 1, the diagram shows Turkey as one of the fastest growing chained markets in the world. Since the packaged ice cream market is dominated by Unilever (Exhibit 2), we would like to partner with McDonald’s first to introduce our products in the market, adjust our products based on consumer reviews and satisfaction ratings, and push our brand into the packaged ice cream market.

Summary

After weighing the pros and cons of various market entry methods, we chose franchising and direct investment. We believe that direct investment will be the perfect method because we need money to market and advertise the product in a crowded market while franchising would do well in Ankara and Istanbul because they are hot crowded cities. After considering the laws and regulations and potential competitors in the market, we decided we would like to partner with McDonald’s as a way to introduce our products into the fast food market.

Works Cited

Agency, A. (2017, August 31). Turkey exports ice cream to almost 70 countries, Iraq leads

market. Retrieved November 18, 2020, from https://www.dailysabah.com/business/2017/08/31/turkey-exports-ice-cream-to-almost-70-countries-iraq-leads-market

Euromonitor. (June 27, 2013). Global Foodservice Trends Toward Fast Food in 2012.

Euromonitor. Retrieved from https://www-portal-euromonitor-com.libproxy.temple.edu/portal/analysis/tab

Euromonitor. (September, 2020). Ice cream and Frozen Desserts in Turkey. Euromonitor.

Retrieved from https://www-portal-euromonitor-com.libproxy.temple.edu/portal/Analysis/Tab

Ozbag. N & Strossman, C. (January 21, 2020) Food and Agricultural Import Regulations and

Standards Country Report. United States Department of Agriculture. Retrieved from https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20Country%20Report_Ankara_Turkey_12-31-2019

Appendix

Exhibit 1: Global Foodservice Trends Toward Fast Food in 2012 (Euromonitor, 2013)

Exhibit 2: Company Shares of Ice Cream and Frozen Desserts (Euromonitor, 2020)

Does this mean we would partner with another ice cream brand? Or does it mean something like getting a celebrity endorser?

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Food%20and%20Agricultural%20Import%20Regulations%20and%20Standards%20Country%20Report_Ankara_Turkey_12-31-2019