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MARKET ENTRY ANALYSIS
LifeStraw by Vestergaard in Morocco
Global Markets and International Business
Strategies
Professor Stephen Hall
Report By: Sangeeta Singh-Kurtz, Shalimar Juan, and Fernanda Haaz
MARKET ENTRY ANALYSIS LifeStraw in Morocco TABLE OF CONTENTS
GLOBAL BORDER FACILITATION PLAYBOOK | TABLE OF CONTENTS
PART I – EXECUTIVE SUMMARY
I. Summary of Report ………………………………………………...…………..………1
PART II – COMPANY AND PRODUCT ANALYSIS
II. Company ……………………………………………..……………...…………..………2
III. Product………....…………………………………………………………...……..…2 - 4
IV. Competitors…………………………………………………………………………..…..4
V. Strengths and Weaknesses …..…………………………………...…………………..5
PART III – TARGET ANALYSIS
I. Region: Morocco…..……………………………………………...……..………..…6 - 7
PART IV – EXPORT STRATEGY
I. Promotion…..……………………………………………...……..………………………8
II. Sales …..……………………………………..………………….……..…………….8 - 9
III. Estimated Costs.…….……………………………………..………..…..……….10 - 11
PART V – RULES AND REGULATIONS
I. Rules and Law….……………………………………..………..……............…………12
II. Corruption and Ranking.…….……………………………..………..………..…..……12
PART VI – TIMELINE
I. Timeline of Entry………………………...…………..………………..…..………..…..13
PART VI – APPENDIX
I. References……………………..………………..……………………….…………14 -15
Market Entry Analysis LifeStraw in Morocco
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PART I – EXECUTIVE SUMMARY
Summary of Report Vestergaard Company Vestergaard is a global company with 57 years of experience, which advocates for the improvement and development of health of disadvantaged people through a humanitarian entrepreneurship business model that leads to the development of various solutions to the third world problems.
Vestergaard has gained world recognition, awards designed various technologically advanced products specialized in humanitarian health welfare solutions and disease control products. Vestergaard has created a product that filters the water and transforms it from dirty and contaminated to safe, clean and drinkable water, named LifeStraw. This product has the purpose to provide access to clean and safe water to those in natural disaster areas and in disadvantaged communities and third world countries. This market export paper has the objective of exporting LifeStraw to Morocco. Why Morocco?
Morocco has water sanitary issues, where water resources management in Morocco is chaotic, threatened by various factors such as climate change and the degradation of resources. Other important factors to take under consideration is that, according to G. Moran, from Entrepreneur official webpage (2012).
Morocco as an emerging and promising markets towards water treatment, renewable
energy, safety and security equipment, among others. This marketing export analysis will evaluate and describe the product in detail and how it works, the company, their objectives and purpose. Morocco Fast Facts
GDP growth, 2013 to 2017: 27.7%
Inflation rate: 2.5%
Government debt as % of GDP: 57.8
Ease of doing business, rank: 97
Total score: 39.0
Market Entry Analysis LifeStraw in Morocco
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PART II – COMPANY AND PRODUCT ANALYSIS
Company
LifeStraw is a product created by Vestergaard, which is a global health company founded on 1957, committed to improve the health of vulnerable people in developing countries and advocating for sustainable planet issues by fighting malaria, HIV/AIDS, neglected tropical diseases, among others.
Mission & Core Values
Vestergaard’s headquarters are located in Switzerland. Vestergaard’s CEO and owner is Mikkel Vestergaard; this company promotes a humanitarian entrepreneurship business model, supporting the United Nations Millennium Development Goals. The company has created various products such as the PermaNet® brand, which is the” largest producer of long-lasting insecticidal bed nets that prevent malaria under”, LifeStraw® water filters, which are created for community, personal and household uses. Vestergaard also created ZeroFly® products that help maximize food yield and increase food security, and CarePack®, which consists in multiple health interventions designed for integrated and cost-effective health programs. In addition, this company is focused on research, high impact partnerships and is disease control textiles driven. Product
LifeStraw is a small water filter designed for converting contaminated water into a safe
and clean water to drink. It’s a portable water filter that converts contaminated water into clean and safe one by microbiologically processes. It’s convenient for personal use and it’s made for everyone outside from their homes, outdoors and for vulnerable people at natural disaster settings. It is specially targeted and created for developing countries who don’t have clean and safe water or that don’t have water ducted from local sources that don’t have access to safe water.
LifeStraw filters prevent waterborne bacteria by removing them on 99.99%, including E.
coli, waterborne protozoa, including Giardia and Cryptosporidium and by also reducing the cloudiness of water to 0.2 microns. This product was created in 2005 by Mikkel Vestergaard Frandsen.
Market Entry Analysis LifeStraw in Morocco
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Product Details According to LifeStraw official website (2016), some of the facts and details about this product are:
Lightweight--only 56 grams (or 2 ounces) Uses hollow fiber microfiltration technology Purifies a minimum of 1000 liters (264 gallons) of water Removes virtually all bacteria (99.9999 percent) and protozoan parasites (99.9
percent) that can contaminate water, including giardia Reduces turbidity (muddiness) by filtering particulate matter larger than 0.2 microns Made of durable plastic Chemical-free Doesn’t require electrical power, batteries or replacement parts–it’s powered by
user-generated suction
Market Entry Analysis LifeStraw in Morocco
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How can we use it?
According to the LifeStraw official webpage (2016) products prevent from Cholera, Cryptosporidium, Cylcosporiasis, Diarrheal Disease, Dysentery, Gastroenteritis, Giardiasis, Guinea Worm, Hepatitis E, Typhoid Fever, among others; this filters meet EPA standards and the “1987 Guide Standard and Protocol for Testing Microbiological Water Purifiers”.
The LifeStraw personal water filter, according to the official webpage, costs $19.95.
According to Read, Dew (2016)
“After years of stagnant revenues of about US$5million to the turn of the century, selling social impact increased sales in 2007”. Competitors
BRITA Water bottle filter Aquamira Water straw WATERisLIFE water filter straw Waterstraw
Market Entry Analysis LifeStraw in Morocco
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Strength and Weakness
Strengths Weaknesses Good reputation and consumer perception
(media) Doubts about carbon credits
Global brand recognition Function doubts and judgments
Strong social responsibility Money spent
Award winning products For profit company critiques
Efficient Technology/Research oriented Product quantity limitations
Years of experience No updated information (2016)
Partnerships and local connections Expensive production costs
Portable and lightweight product. Short product life
Inexpensive cost compared to value No replaceable filter cartridges
Easy to use product Will not remove microscopic minerals, chemicals, or viruses.
Added value Expensive for the people who need it
Good Media and internet presence
Information abundance
Market Entry Analysis LifeStraw in Morocco
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PART III – TARGET ANALYSIS
Region: Morocco
Morocco has a population of over 33.8 million. Morocco's relationships vary greatly between African, Arab, and Western states. Morocco has had strong ties to the West in order to gain economic and political benefits. From the total foreign investments in Morocco, the European Union invests approximately 73.5%, whereas, the Arab world invests only 19.3%.
GDP: $254.4 billion GDP per Capita: $7,700 GDP Growth: 3.5% (2014) U.S. - Morocco Bilateral Trade: $3.14 billion
Suitability for LifeStraw Morocco is a perfect market for LifeStraw because of the following reasons:
Drinking water directly from a tap in Morocco is not considered safe.
Many rural communities rely on a single water source to sustain families and livelihoods. The lack of a functioning sanitation network and wastewater treatment system causes already scarce water resources to become contaminated and unsuitable for multipurpose use.
Currently, about 2 million Moroccans remain without access to water supply and
sanitation services in semi-urban areas around Morocco’s main cities. In the Casablanca metropolitan area alone, an estimated 145,000 households (or 900,000 inhabitants) do not receive adequate water supply and sanitation services.
The majority of underground water sources are of poor quality due to high salinity and nitrate concentrations.
Several water streams have high concentrations of benzene, lead and organic matters.
6,000 people per day die from a lack of safe water.
2.4 billion people who do not use improved sanitation, and 663 million who do not have
access to improved water sources.
Market Entry Analysis LifeStraw in Morocco
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This leaves them at risk for diarrheal disease, which kills more than 1.5 million people every year. Safe drinking water is especially important for vulnerable groups, such as children under five, pregnant women and people living with HIV. LifeStraw® water filters also prevent cryptosporidiosis, a major cause of diarrheal illness in people living with HIV and children under five1
Moreover, according to the Entrepreneur official webpage (2012), “Morocco is the first African country to reach a trade agreement with the U.S. and is becoming an important player in the North African market and projected to grow 5 percent during the year. Its proximity and relatively low labor costs have made it attractive to European companies, which use it as a hub for their African sales and operations”.
Market Entry Analysis LifeStraw in Morocco
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PART IV – EXPORT STRATEGY
Promotion
The Moroccan market is split between the urban wealthy and middle class, and the poorer rural communities so the marketing campaigns must be targeted accordingly.
Morocco has an adult literacy rate of 68.5%, and food, hygiene and beverages are the most common products advertised on television. So television would be the first option for advertisement. Marketing may also include point-of-sale promotions, rotating billboards, direct mail or door-to-door sales.
Another option is internet promotion, the number of young people in Morocco is growing, in fact, 65% of Moroccans are under the age of 25. There has been a great internet penetration in Morocco over the past few years, and now the country has the highest internet penetration in Africa, at around 50%
Although Morocco has a great internet penetration, online payments aren’t big in the country yet. So while online promotion would be great for targeting the younger generation, U.S exporters should market directly to Moroccan businesses in order to have in store sales. Sales Business to Consumer Online sales
For consumer purchases of LifeStraw, Vestergaard relies exclusively on online sales rather than actual retail stores. LifeStraw is distributed by Eartheasy.com and can be purchased online.
Order online at: http://lifestraw.eartheasy.com/products/
LifeStraws are also available to order online through online shopping platforms such as Amazon and EBay.
Order online at: http://www.amazon.com/LifeStraw-Water-Filter/dp/B006QF3TW4
The online distribution is viable because over 60% of the population in Morocco are internet
users. Based on the percentage of individuals using the internet, this makes Morocco one of the most connected countries in all of Africa. The percentage accounts for over 10 million Moroccan citizens.
Market Entry Analysis LifeStraw in Morocco
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Phone sales
Through Eartheasy, Vestergaard also gives consumers the option to order over the phone. Individuals simply have to call the number and place an order.
Order by calling: 1-888-586-5861
Phone sales is a viable option for consumers that do not have access to the internet. This
is especially useful to lower-income, more rural markets in Morocco where the demand for water filters is objectively higher, but their access to the internet would not be as obtainable. The number of mobile users in Morocco was listed as 43.38 million in 2015. Business to Business Tradeshows
The water industry provides a plethora of opportunities for companies in the water industry to advertise, sell, and educate their product via trade shows. Two tradeshows in particular—the Water Africa Trade Show, as well as the Water Africa Exhibition target water treatment companies that are in the region.
Tradeshows would prove highly useful to the company’s sales strategy in that they would target upper-middle class consumers and business owners. The company would be able to scope out competitors, advertise to retailers looking to sell water treatment products, and also sell products to a variety of business representatives in the region. Retailer Sales
Through Eartheasy, local retailers have the ability to purchase LifeStraw in bulk and sell them in store. Prior to market entry, we would target retailers where LifeStraw would sell best based on the nature of the retailer, the surrounding consumers, and the location. After targeting the retailers, we would establish relationship with them, pitch our product, and sell in store. Objective
Selling through local retailers in the entry-stage is more cost-effective than setting up a retail store to begin with. The initial capital for a retail store is too risky to set down when we are unaware of how the product will be received.
Market Entry Analysis LifeStraw in Morocco
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Estimated Costs
Morocco is an emerging market full of opportunities for companies ready to invest and enlarge their business. Morocco is a competitive country for export and import: low wages, competitive costs to import and low tax rates. Morocco also participates in several free-trade agreements and is thus not subject to heavy import taxes. When investing in Morocco companies have Duty Free Access to over One Billion Consumers.
Morocco is Party to the Following FTA’s
Morocco-European Union association agreements
Morocco-United States Free Trade Agreement
Morocco - EFTA Free Trade Agreement
Morocco-Turkey Free Trade Agreement
Arab Free Trade Zone
Morocco-Arab Countries Trade Agreement
Estimated Cost – Business to Consumer Expected Sales: 10,000 upon product launch Requires advertisement
Price in USD ($19.95 ~ $20) $20
Packaging ($1 per product) $1
Insurance ($1 per product) $1
Advertising and Promotion via Television and Digital Media ($100,000 for product line)
$10
Profit (50%) $10
Total $42
Expected Sale: 10,000 Expected Profit:
$100,000
Estimated Cost – Business to Business Expected Sales: 100,000 upon product launch Requires participation in tradeshow
Price in USD ($19.95 ~ $20) $20
Packaging ($1 per product) $1
Insurance ($1 per product) $1
Market Entry Analysis LifeStraw in Morocco
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Advertising and Promotion via Tradeshow $100
Retailer Discount (5%) -$5
Profit (50%) $10
Total $117
Expected Sale: 100,000 Expected Profit:
$1.0 M
Market Entry Analysis LifeStraw in Morocco
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PART V – RULES AND REGULATIONS
Rules and Law
The 06-99 Law
This law sets the standard regulation on free pricing and competition sets the rules for the protection of competition and aims to boost economic efficiency, improve the welfare of consumers and ensure transparency and fairness in trade relations.
The Law prohibits anti-competitive economic practices that may prevent, restrict or
distort competition in the domestic market. These practices are: unlawful agreement, abuse use of a dominant position and abuse use of a position of economic dependency.
The penalties provided by law are essentially pecuniary. The levels of penalties are determined based on the seriousness of the offense and the harm suffered by the market or by operators and the circumstances justifying them: bad faith, recurrence.
Competition policy in Morocco is not intended to impose constraints on companies; it is
intended to enable them to operate in open markets, whose working procedures are not impeded by anticompetitive behavior from other companies.
Corruption and Ranking
Morocco is relatively low on the corrupt country scale. According to the Corruption Perceptions Index of 2015, Morocco falls at number 88 out of 167 when it comes to corruption. A snippet from the 2015 report:
Market Entry Analysis LifeStraw in Morocco
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PART VI – TIMELINE
Timeline of Market Entry - 2016 - 2017
Date Action Objective
August 2016
Visit Morocco and run preliminary market research (legal and regulatory) as well as contact potential business partners
Establish ourselves in the area and scope out the feasibility of our project
September 2016
Develop company strategy for marketing: advertisement and packaging specifically.
Target Moroccan audiences by catering advertisement plan to them specifically.
October 2016
Attend regional tradeshows and continue establishing business partners and consumers in the area.
Continue fortifying relationships in the area before actual entry occurs.
November 2016
Address any legal or contractual issues with LifeStraw entry into Morocco.
Ensure there will be no legal issues prior to entry, and negotiate the best legal terms with competitors in the area if there are issues.
December 2016
Begin distributing LifeStraw to Moroccan partners and implement advertisement stage via digital media and television.
Make LifeStraw recognizable via marketing prior to entry.
January 2017
Begin selling product in stores and begin collecting data based on first month numbers.
Monitor the initial reception of LifeStraw and begin to adjust accordingly.
February 2017
Begin collecting qualitative feedback on LifeStraw.
Enables LifeStraw to make adjustments accordingly.
March 2017 Adjust product, sales, and promotion based on customer feedback.
Strategically improves our performance.
April 2017 Continuously participate at trade shows, as well as human rights and health fairs to promote clean water.
Diversify and increase LifeStraw’s reach and consumer base.
May 2017 Target more local and regional retailers.
Increase consumer base and expand business.
June 2017 Continuously create plans for future expansion, fine-tune market and sales.
Increase consumer base and expand business.
July 2017 Consider opening an actual retail store in the local market.
Have a physical presences in the local market.
August 2017
Consider merging or acquiring another water filtration company.
Business development and expansion.
Market Entry Analysis LifeStraw in Morocco
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PART VI – APPENDIX
References Text
Stuart, and Nick Dew. (2016) "Profit with a Purpose - The Story of Vestergaard Frandsen | Effectuation: Society for Effectual Action". Effectuation.org. N.p., 2016. Web. 18 Apr. 2016.
Website and Database
http://www.al-monitor.com/pulse/security/2014/04/morocco-water-management-
reform.html#ixzz46BgcMfJ6
http://www.amazon.com/LifeStraw-LSPHF017-Personal-Water-Filter/dp/B006QF3TW4
http://www.aquamira.com/product/aquamira-frontier-straw-filter/
http://www.bloomberg.com/slideshow/2013-01-30/the-top-20-emerging-
markets.html#slide3
http://cok.net/act/intern/
http://www.dutycalculator.com/country-guides/Import-duty-taxes-when-importing-into-
Morocco/
http://eartheasy.com/contact
http://export.gov/Morocco/
http://www.invest.gov.ma/?lang=en&Id=17
http://www.invest.gov.ma/?Id=1&lang=en
https://www.gov.uk/government/publications/exporting-to-morocco/exporting-to-
morocco
http://www.itnewsafrica.com/2015/05/morocco-has-over-10-million-internet-users/
http://www.wiley.com/legacy/wileychi/selendy/supp/e-brochure-lifestraw-english.pdf
http://www.vestergaard.com/our-products/lifestraw
https://en.wikipedia.org/wiki/LifeStraw#cite_note-DAWN-11
https://kr8ives.wordpress.com/about-vestergaard/
http://lifestraw.com/on-the-ground/
Market Entry Analysis LifeStraw in Morocco
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http://lifestraw.com/faqs/
http://lifestraw.eartheasy.com/?utm_source=wwd&utm_medium=cta&utm_campaign=d
ouble-up
http://lifestraw.eartheasy.com/collections/lifestraw/products/lifestraw
https://prezi.com/hcflvcoi_jzq/lifestraw/
https://prezi.com/rjg48fpvtdqo/the-lifestraw/
http://www.transparency.org/cpi2015
http://www.travel-exploration.com/page.cfm/Health
http://www.unicef.org/wash/
http://www.vestergaard.com/our-products/lifestraw