1.0 Executive Summary
Disposing of waste products such as plastic bottles and used metals has always been a problem in various countries. While recycling has been widely used as the solution to the disposal of waste, there has not been an ideal means to collect the waste so that it can be recycled. With the recent advancements in technology, however, some countries have implemented the use of electronic recycle bins that can collect used plastic or metal material so that they can be recycled. Envipco Company is a global producer of these machines. The company has identified the Republic of SouthAfrica located in the southern part of the African continent as its target market. It is in this target country that the company aims to supply its reverse vending machines that would be used to ensure proper disposal of waste and enhance recycling.
This paper seeks to undertake a comprehensive situational analysis and evaluation of a marketing strategy of Envipco; a global company based in Connecticut’s Naugatuck. The company will seek to sell one main product, reverse vending machines, in the South African market that has always struggled with the problem of inappropriate waste disposal. In situation analysis, the paper has given the overview of South Africa by analyzing the culture, environment, and politicsin the country. Herein, there is a comprehensive SWOT analysis that has shown the situation of Envipco Company. The paper concludes with important findings regarding the South African market, and further highlights the techniques or methods that can be employed in implementing the company’s marketing strategies using the marketing mix.
Table of Contents
Proper disposal of waste has always been a problem in most countries. Used plastics, paper, metals, and other biological products are often disposed of inappropriately leading to environmental pollution. Pollution is an environmental hazard that could affect the health of the people and may also lead to its degradation. Conservation measures and laws that have been enacted in various countries to deal with the issue include the use of landfills and green campaigns (Goudie, 2013). Recycling seems to be a good measure to prevent and reduce pollution since waste products are re-manufactured to produce new products.
Electronic recycle bins come in handy to facilitate recycling since they act as collection points for some used products. The recycle bins mainly collect plastic, paper, and metals such as iron and steel for recycling. The reversed vending machines are normally placed at strategic points normally at the end of busy streets. The recycling bins are made to have three main compartments; one for metal iron or steel, another for plastic and the remaining for paper. They function that, when the disposable material is placed in the compartments, the machine breaks the item into smaller cubes that are later transferred to industries for the purpose of manufacturing. As an incentive to attract people to use the electric recycle bins, once a person places a material to recycle they are rewarded few coins normally one nickel (Stojanov).
Envipco stands for Environmental Products Corporation, a recycling company that was established in 1979 in Connecticut, United States. The company manufactures and distributes reverse vending machines or electronic recycle bins as its main products. It started operations in its home market though it has now gone global through establishments in major countries such as France. Envipco’s major clients are in the beverage industry whereby most drinks are nowadays stored in plastic bottles that can be reused again through recycling. Other clients include; distributors, retailers, and municipalities. The company has highly diversified recycling machines such that they have different designs and capacities to meet customer preferences and demand (Envipco/Continuous Loop Recycling Solutions, 2015).
South Africa’s history can be traced back to the 17th century when white men (Dutch) landed in one of its coastal cities now called Cape Town. The British then came later in the early 1th century. The Dutch that were referred to as Afrikaners and the British who were now the majority then colonized Africa. The apartheid rule by the British received several insurgencies and protests by the subjugated blacks such as Nelson Mandela, who was imprisoned for years, but finally the British threw in the towel. South Africa had had white domination for several until 1994 when it became an independent state. The first president after the first multi-racial elections was Nelson Mandela of African National Congress (ANC) (The World Factbook, 2015).
South Africa is found in the southern of the African continent where it is bordered by Botswana, Lesotho, Namibia, Swaziland, and Zimbabwe. It covers a total of 1,219,090 km2 including inland water area and its Islands (Marion and Prince Edward Islands). This land area makes it rank 25th largest country in the globe. The country has a very long coastline of 5244 km that touches two great oceans; Atlantic and Indian Oceans (The World Factbook, 2015).
South Africa has a vibrant economy that has flourished due to good transport and communication infrastructure, abundant resource supply, and well-performing energy and financial sectors. As in 2014, the country ranked as the biggest economy in the African continent and also among the top 20 internationally. The GDP data estimates as of 2014 were; purchasing power parity at $704.5 billion, the official exchange rate at $350.1 billion, the real growth rate of 1.5%, per capita at $13,000 and gross national Saving 14.9%. Industries and agriculture contributed to about 30% of the GDP while services accounted for the rest. The most important elements in the industry sector are the mining companies whereby S. Africa is the world’s largest producer of gold and platinum (The World Factbook, 2015). Despite the vibrant economy, the country experiences various economic challenges such as increasing unemployment rates, gender inequality through the subjugation of females and increasing poverty rates whereby the country has one of the largest slums in Africa, Soweto (Mamdani, 2015).
The South African population as at 2015 is estimated to be 53,675, 563 whereby it is composed of for main racial groups; Africans (Black) 80.2 percent, colored (mixed race) 8.8 percent, whites 8.4 percent and Indian/Asian 2.5 percent. The data estimates regarding population are; growth rate at 1.33%, birth rate at 20.75 per 1000, and death rate at 9.91 per 1000. Most of the population in this country is composed of female with a ratio of men to women at 0.98. Education expenditure are estimated at 6.2 percent whereby literacy level is about 94.3 percent (94.3% of the population above 15 years can read and write). South Africa, however, ranks poorly in creating of job opportunities for its population since it has a high unemployment, for instance, unemployment for youths between ages of 15and 24 is at 51.5 percent ranking it 6th across all nations in the world (The World Factbook, 2015).
South Africa was initially ruled by a British minority government of Nationalist Party. The party became in power in 1948 and used the apartheid system until 1994 when it gained independence and African National Congress Party under Nelson Mandela came to power. The current Chief of State is President Jacob Zuma of ANC, now in his second term in office. Jacob Zuma doubles as the head of the government assisted by the deputy president, Cyril Ramaphosa. Then again, South Africa is a multi-part state with many other political parties opposed to ANC. Some of the political parties include; the United Democratic Movement (UDM), Economic Freedom Fighters (EFF), National Freedom Party (NFP), and the Democratic Alliance (DP among many others (The World Factbook, 2015).
South Africa is an independent country with solid legal system guided by the country’s constitution. The constitution and the general legal system is based on the British common laws, customary laws and the Roman-Dutch civil laws. The judicial capital cityof the country is in Bloemfontein City (The World Factbook, 2015).
South Africa has myriad languages with English as the official language used in formal settings. Other languages include; IsiZulu spoken by 22.7% of the population, IsiXhosa by 16%, Afrikaans by 16%, and English by 13% and more other smaller language groups. Concerning religion, South Africa is dominated by Christians that account for over 80%. However, Protestants make the biggest number with 36.6%. Other Christian groups include; Catholics, Pentecostal, Anglican, and Dutch Reformed. Muslims are a minority with about 1.5% of the population (The World Factbook, 2015).
3.2.8. Multinational market groups
South Africa is a member of Southern African Development Community (SADC) which was established in 1980 so that most of its neighboring countries can reduce high dependence on it. Other aims of the bloc were to promote economic integration, enhance regional solidarity and promote peace among the member countries. Another trading group is the SACU (Southern African Union) which has not been fully implemented, but it aims to foster economic cooperation (Afesorgbor & Bergeijk, 2011).
|§ Huge availability and access to capital
§ Increasing garbage disposal costs
§ Call for a clean environment with reduced pollution
§ Enabling business environment
|§ High shipment costs
|§ Increased recycling rates
§ Governments supporting and backing up recycling projects
§ Constant increase in income levels and consumption of consumer products
|§ Competition from other ventures
§ International trade barriers
§ Economy disturbances in the host market and global economies
Envipco is a highly established organization that now has a global reach. The company has got all the resources to conquer any market regardless if it is a developed or a developing country. Availability and easy access to capital resources enable the company to produce more quantity and quality in its line of production. Its resources have enabled it to produce reversed vending machines of unparalleled reliability. The company has also been able to incorporate a German-engineering technology to produce the best recycling systems (Envipco | Continuous Loop Recycling Solutions, 2015). It is the resources that will enable it to serve the South African market with the best machines that they can use for recycling and keep their environment safe. Availability of capital and other resources, therefore, seems to be its biggest strength.
It is no doubt that most countries are spending a lot of costs in disposing of its wastes. In South Africa, municipalities are spending huge amounts of money in keeping the urban environment free from wastes. This seems to be to the advantage of Envipco that will sell its products to the municipalities and other clients the much-needed reverse vending machines. The research data on exhibit 1 in the Appendices shows that the higher income earners, especially in the urban areas, are the ones that need to dispose of much waste. Exhibit 2 then shows that the disposed materials in the municipalities are mainly composed of organic material, plastics, metals and paper (South African Waste Information Centre, 2007). Since organic material can be decomposed, the other wastes give the relevant stakeholders a hard time to get them disposed properly or recycled hence increased costs. The increasing cost of waste disposal then depicts the need the use the efficient recycling technology that can be provided by Envipco.
An unclean and highly polluted environment is what every society is fighting against. In schools and urban centers, you will get litterbins that collect used products in efforts to ensure that they are properly disposed of. Every country is actually doing what it can to ensure that the environment is clean and free from a polluting material. The call for a cleaner environment presents an opportunity for Envipco to sell in the new South African market. Its highly technological reverse machines can be used as electronic recycle bins to collect used plastic cans or bottles, paper and some metal material such as Iron. The company would have played a role in keeping a clean environment besides selling its products.
Then again, South Africa is a very peaceful country considering that it is a democratic state that has enjoyed political stability and growth for several decades. This is a contributing factor to an enabling environment for investors both locally and from foreign countries to invest in businesses in the country. The government of this country is ever dedicated to improving the infrastructure of roads, communication, and other sectors so that businesses can be able to thrive and succeed. In addition, the government has not enacted prohibiting laws that could lock out any business that is willing to trade in its soil. The enabling business environment of South Africa, therefore, is a key strength for Envipco so that it can trade in this particular market.
Envipco stands in a disadvantaged position geographically when considering it with the location of its target market. A seven-hour difference as per longitudinal time separates U.S and South Africa hence the company will spend high costs on exportation. High shipping expenses will in turn affect the prices of its electronic recycling machines hence a negative impact on its sells. In addition, due to the nature of the company’s products, it will have to use mainly the water medium that is relatively slower compared to other media such as air. Slow product export is also a possible weakness that could affect Envipco’s sales in the South African market.
There is an increased recycling rate all over the world because countries have realized that what they consider to be a waste material could be a raw material. Industries such as the beverage industry is now increasingly using disposed of bottles and cans to make new packing materials because it is cheaper than buying or manufacturing new ones(Guerrero et. al., 2013). Municipalities and other institutions have also experienced the problem of increased waste that need recycling. This does not only reflect the world situation, but also the state of matters in South Africa. Taking recycling to a higher level in this country, therefore, means that Envipco has an opportunity to sell its product in South Africa. Increased rate will translate into increased sales for the company.
Realizing the importance of recycling, governments are showing a lot of support for recycling activity. Leaders know that inappropriate disposal of waste makes their communities susceptible to diseases and other health hazards attributed to pollution hence their support for recycling. The South African government has shown its support for recycling through helping establish various recycling plants in the country and also licensing various recycling businesses. This is, therefore, a real-time opportunity for Envipco to sell in South Africa since it is bound to enjoy support for its products from the government of this country.
The South African population is majorly composed of middle-class people. Over two-thirds of the population lives in urban areas making South Africa one of the countries with the highest rate of urbanization (Naudé, 2013). However, due to the growing economy and improvement of major sectors, there has been increased income levels for the Middle-class people, and this has positively impacted their rate of using consumer products. High consumption of the products has led to increased disposal of recyclable material. This then provides an opportunity for Envipco to tap into this market and make the most use of the increased need for better means of disposal or recyclable materials such as plastic packaging material and paper.
Electronic recycle bins are not a new thing in the South African market since there are other players already in the recycling industry. Competition, therefore, seems to be the biggest threat that Envipco will experience as it seeks to sell its product in South Africa. The main competitor in this country that the company is expected to face is Tomra Systems ASA; a highly established multi-country organization that manufactures machines that are used for recycling. The Norwegian company has already established links in South Africa and exports its reverse vending equipment to this country. Besides Tomra, S.A.R.E (South Africa Recycling Company) is another local firm that may soon enter the reverse vending equipment business (SARE, 2015). So far so good for Envipco due to the existence of one major competitor though it should beware that it is a huge competition ahead.
International trade barriers stand in the way of Envipco hence it may affect its marketing intentions. Since the company will sell its equipment using exporting as the mode of market entry, it is bound to be affected by the culture of South African people. The government of South Africa has also enacted some laws regarding foreign companies operations in the country hence they may be another trade obstacle. There is also a possible high export duty that may affect the level of trading between Envipco and South Africa.
South African economy and the global economy disturbances are also another reason for Envipco to be threatened. The country experienced an economic recession in 2009 due to slacking manufacturing industries and mining activities. The recession then affected almost every player in the economy and until now it yet to see full rejuvenation (BBC News, 2015). The global economy also is prone to fluctuations that affect international businesses. Envipco, therefore, ought to watch out for these economic threats while targeting the Southern Africa market.
South Africa has been a highly growing economy in the recent years hence it has been a center of attraction for most investors.
|South Africa’s Attractive Factors for Envipco
|– It has political stability
– Has reduced trade restrictions for foreign businesses
– It has waste disposal challenges
– The governments offers support for recycling
Envipco deals with one main product line, reverse vending or electrical recycling machines. This is the key product that it will bring into the South African market. However, there are various factors worth consideration for the company in its quest to sell in this target market. Most importantly, there is a cut-throat competition from Tomra Systems ASA that produces top-notch products in the same line. It will, therefore, have to improve the standards of its product so that it can surpass this competitor. Then again, technology is changing very fast through regular advancements. This needs for businesses to be up-to-date in their production. Envipco, also needs to improve the adaptability of its reverse vending machines because of the changes in recent technologies. Nevertheless, the company has always prioritized quality through its German-engineered products hence it is poised to make the best out of this product.
Envipco will retain its manufacturing plant in Connecticut, U.S since it will be exporting its products by shipping. The company, therefore, intends to open an extensive warehouse in South Africa’s administrative capital, Pretoria City. From the Pretoria warehouse, it will then be possible for it to distribute its products to the consumers in the market. The main targets are the soft drinks companies such as Coca-Cola South Africa, Municipalities, and Institutions such as schools. The company will seek to distribute its product using appropriate distribution channels. It will assess the market to identify partner businesses in the wholesale and retailing capacity to enhance its product distribution. Then again, its Pretoria warehouse will also double as its main retail store whereby it will use it to supply its products directly to the customers. The warehouse will, therefore, be situated strategically at the heart of Pretoria City in order to enhance place utility for its customers.
Envipco will primarily base its pricing on its manufacturing costs in its domestic plants in the United Sates. However, there are other factors that are bound to inflate the prices of its products when they reach the South African market. Most significantly are the high shipping expenses the company will incur while transporting the products to South Africa from the United States. The two countries are very far from each other due to their geographical locations hence the high shipping expenses that will in turn affect the prices of its electronic recycling machines hence a negative impact on its sells.
Once the company has delivered its products to South Africa, it is bound to pay to the authorities taxes. It is common for exporting businesses to pay duty taxes in bringing their products to a foreign market hence this would affect the prices of Envipco’s products. Then again, most of Envipco’s exporting will be done using ships that will deliver the products through ports. Here, the company will be required to pay handling expenses and incur other costs that may arise while the products are at the port hence increased product cost. Other key activities to affect product pricing are promotional activities such as advertising on host country’s communications media.
Envipco will adopt appropriate promotional mix so that it can promote its product awareness in the new market and then enhance its selling ability. Since it is a new country with a different culture, this might impact the perception that the market will have on its product; hence it ought to come up with suitable messages that will be used in product promotion. Then again, the choice of promotional techniques will seek to ensure that there is least cost used, convenience in reaching the target customer, it communicates the intended message and creates customer value.
The company will use advertising on local media (television) to create awareness of its product. Advertising would be convenient because and cost efficient since the company would be placing adverts for a shorter period at particular times when most people are watching. Besides advertising on TV, the company will seek to use the online platform; social media and its corporate website to communicate its product to the customers. The social media platform, with players such as Facebook and Twitter, has many followers that can easily access Envipco’s products’ information online.
While Envipco Company may enjoy successful business in South Africa, there are important finds regarding this company and the host country that may affect this marketing plan positively or negatively;
- For the reverse vending machines to meet their purpose, the public ought to be trained on how to use them. It is expected that most members of the public may not know how to place the products they want to be recycled. In addition, some end product consumers may affect the product properties that are required for the machine to break it down for recycling. For instance, a plastic bottle such as that of soda may not work if it is placed while containing a liquid inside or when it is pressed on the sides.
- The incentive to attract people to use the reverse vending machine ought to be implemented in the new market. A possible reward is 1 Rand in a coin so that the public will not feel that their effort of placing recyclable materials is being wasted. However, an important finding is that the reward may not be enough if the client cannot engage in vigorous campaigns for people to see their importance.
- Criminality in major cities and towns of South Africa pose a threat of a possible vandalism of the electronic recycle bins hence the need to put them in more secure locations. In addition, the machine customers can install them under strong mechanisms to avoid vandalism.
Human beings have a role to play in protecting and maintaining and sustainable environment because they are the guardians of that environment. The main formula to engage their stewardship is by ensuring that they keep the environment pollution free through proper disposal of waste. Waste can be recycled to produce new products that can be re-used again. Electronic recycling machines are a technology that has come in handy to help people meet their role of creating a sustainable environment. This is the product that every society needs hence South Africans need it too. Envipco, therefore, stand a good position to benefit from the environmental awareness to keep our societies clean. South Africa is the ideal business place for this company since it has the clientele, the enabling business environment, and well-developed infrastructure to enhance its trade activities. The company should take advantage of its capital resource and the available opportunities in the South African market to establish itself in this country. However, it has to watch out for economic disturbances that may hit South Africa hard and other threats that may happen on between it and success in South Africa
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