first catalogue

Zalo in Denmark Study of launching Zalo brand to Denmark through appropriate communitation and promotion strategies PBA Semester Project 2 International Business Academy Nóra Varga Viktória Könyves Chaima Al-Ajab Előd Könyves 13.06.2014

Title Page Title of the final project: Zalo in Denmark – Study of launching Zalo brand to Denmark through appropriate communication and promotion strategies Name of the authors: Nóra Varga, Viktoria Könyves, Chaima Al-Ajab, Előd Sófalvi Name of the teacher: Jon Ording Haug Academic Institution: International Business Academy, Kolding, Denmark Subject: Semester Project Date of submission: 13.06.2014 Language: English Number of characters (incl. spaces): 49.786 _____________________________________________________________________________________ Signature of authors

Table of Contents Title Page ...................................................................................................................................................... 1 1.Introduction ................................................................................................................................................ 1 2. Problem Proposal ...................................................................................................................................... 1 3.Methodology .............................................................................................................................................. 2 4. Delimitation .............................................................................................................................................. 3 5. Analytical section ...................................................................................................................................... 3 5.1.Primary Research ................................................................................................................................ 3 5.1.1.Survey Evaluation ........................................................................................................................ 3 6. Secondary Research .................................................................................................................................. 5 6.1.Internal Analysis ................................................................................................................................. 5 6.1.1.Business Model ............................................................................................................................ 5 6.1.2.Sub-conclusion ............................................................................................................................. 9 6.2.External Analysis ................................................................................................................................ 9 6.2.1.PESTEL analysis.......................................................................................................................... 9 6.2.2.Porter‟s 5 Forces ........................................................................................................................ 11 6.2.3.Sub-conclusion ........................................................................................................................... 14 6.3.SWOT analysis towards Lilleborg‟s situation regarding the Danish market with reference of Zalo 15 7.Recommendation/Solution ....................................................................................................................... 16 7.1.Communication planning model ....................................................................................................... 16 7.1.1.Situation analysis of target market ............................................................................................. 16 7.1.2.Situation analysis of the product ................................................................................................ 17 7.2.Communication strategy ................................................................................................................... 17 7.3.Promotional Mix ............................................................................................................................... 18 7.4.Action Plan........................................................................................................................................ 19 7.4.1.Timeframe of the formulated action plan ................................................................................... 23 7.4.2.Financial Consideration – Budget .............................................................................................. 23 8.Conclusion ............................................................................................................................................... 24 9. Bibliography ........................................................................................................................................... 26 10.Appendix ................................................................................................................................................ 27

1.Introduction Lilleborg is one of Norway‟s leading suppliers of home care, beauty and personal care products. The company deals with a diverse product portfolio and offers high quality products for dishwashing, laundry care, bleach and surface care. In addition to this, Lilleborg is a leading player in connection with innovation and launch of improved solutions and products to fulfill customers‟ requirements. Lilleborg AS - as one of the subsidiaries of ORKLA - does not represent a company which sells goods. In addition to this, the firm provides extra service for each and every product, creating exceptional value around the product portfolio. However, with the purpose of fulfilling existing and prospective customers‟ needs and expectations, providing them up-to-date information, handling the flow concerning logistics matters as well as synchronising the organization all around Northern Europe requires significant input, creating challenges in some areas of the business. According to the guidelines received, the project will analyse the situation of Lilleborg AS in line with the current markets in which the company operates, as well as the possibility to enter the Danish market with the product called ‟Zalo‟, a dishwashing and surface cleaner detergent. In order to have a detailed overview about the company, market and customers‟ needs both primary and secondary researches were made, including questionnaires, internal and external analysis. 2. Problem Proposal According to the chosen topic -“Develop a communication/promotion strategy and action plan for the launch of Zalo in Denmark” - preliminary research of the market as well as the company was made in order to have a better understanding in the given problem. The given problem has effects on many activities within Lilleborg including the company‟s operations, work flow, buying behavior and buying process. Moreover, strong competition takes place in the home care industry, meaning that Lilleborg needs to take further steps in communication strategy in order to establish a well- balanced relationship with retailers in the Danish market. Therefore, the problem statement is the following: ’What type of communication and promotion strategy would be the most appropriate for Lilleborg to adapt in order to create the brand awareness of Zalo on the Danish retail market?’ 1

In addition, with purpose of preparing critical analysis which can lead to appropriate recommendations, formulating the following sub-questions is essential and can functionate as guidelines through the project work:  What are the end-users‟ characteristics, habits, requirements and preferences regarding dishwashing detergents in Denmark?  How is the current business model and relationship of Lilleborg with potential customers built up?  Which factors influence the Danish home care industry?  What kind of financial considerations shall be taken in order to put in practice the elaborated recommendation? 3.Methodology The main goal is to examine the possibility of Lilleborg AS to create an efficient communication as well as promotion strategy for retailers in Denmark. In order to establish a solution for the given problem -‟What type of communication and promotion strategy would be the most appropriate for Lilleborg to adapt in order to create the brand awareness of Zalo on the Danish retail market?‟- both primary and secondary data were used in order to collect necessary data related to the task. In order to examine preferences and answer the formulated research objective, it was important to collect primary data through quantitative methods, in this case questionnaires. In order to find the most appropriate communication as well as promotion strategy for Lilleborg in terms of retailers, collecting information from end-customers is highly essential. With purpose of having a wider overview and a better understanding in the activities and core competences of Lilleborg, analyzing the current business model was highly essential. Such internal analysis helped to reflect current strengths and weaknesses and highlight future potentials. With reference of collecting relevant information about the prospective market, the most important action was to conduct desk research and analyze the situation on the Danish market in terms of economic, political, social, environmental and technological factors. With purpose of collecting data 2

regarding such factors, PESTEL analysis was used. Moreover, to have a better understanding in the competition in the Danish home care industry, using Porter‟s 5 forces was essential. All the aforementioned models and theories provided enough knowledge to create recommendations for the problem statement; however, further financial data would have been necessary and relevant to provide a superior solution. 4. Delimitation The main subject of this study is business-to-business communication and promotion strategy. This project focuses on the Norwegian company, Lilleborg, planning to enter the Danish market and establish relationship with retailers. With reference of geographical considerations, the research is limited to the Danish market based in the main objective as well as the formulated problem statement. The report mainly includes subject such as Marketing, Economics and Market Research. Furthermore, it is important to add that basic financial considerations were made, however it does not apply extensive calculations and analysis of the given issue. As a matter of fact, an estimated budget was formulated in line with the determined action plan. Further financial considerations were excluded due to lack of data, confidentiality or inaccessibility. With reference of logistics, specific theories were excluded due to the fact that such subject was not relevant to the given topic as well as problem statement. 5. Analytical section 5.1.Primary Research 5.1.1.Survey Evaluation As a completion of the secondary research, a quantitative primary research was also made with the purpose of gathering more trustworthy information in order to be able to give a reliable solution for the problem statement. 3

The primary research has the form of a survey, conducted in order to discover the problem situation and gain knowledge about end-customers and their relationship with suppliers and their approaches to decision evaluations. At this point it is necessary to explain why the survey is made among end-customers instead of retailers, who are the real buyers in this situation. Taking into consideration, that the behavior of retailers highly depends on the behavior of customers, it is indispensable to examine Danish customers‟ purchasing approach. Their responses helped to create an overview of the current situation in the Danish home care industry, more specifically in dishwashing and surface cleaning category. Taking into account their answers, it can be found out how intense is their purchase, how much need there is for new entrants and what their priorities are, which are followed during the decision-making process. It was decided to conduct so called mall-intercept interviews, meaning that consumers were asked in front of the potential supermarkets. Such action provided information about the end-users preferences, habits, requirements regarding dishwash detergents. In addition to this, such questionnaire allowed collect data whether there is a market for Zalo products or not, how many people are interested in buying them, what type of people would be the best customers and what are their buying habits. As a matter of fact, such information can be used as a base of the communication strategy towards the given retailers. In total 72 responses were gathered, which enabled the formulation of a general insight of openess for Zalo. (Appendix 2) The survey consist all in all of ten simple and easy-to-answer questions. The majority of respondents, precisely 50%, are between the age of 26-50. Almost 46% of interviewees are in relationship and have a life partner and 21 of them have two children at home. 50% of people are employed, self-supporting have a constant monthly income. Moreover, the majority of respondents wash dishes on a regular basis, every day. Around 35% of them buy detergents every month, especially brands such as Vel, Fairy and Neophos and 60% do their purchase in Føtex. The two main criteria, which determine their decision is the brand and smell of the product. Last but not least, approximately 70% of total respondents would be open to try a new combined product that is dish washer and detergent in the same time. 4

In conclusion, taking into consideration the above mentioned results, several inferences can be made. First of all, the primary target group for Zalo in Denmark would be families with children, especially the working women members, who are between the age of 30-45 and whose responsibility is the housekeeping. Therefore, their purchases are based on longevity and efficiency, which is ensured by high-quality brands. Based on the aforementioned preferred brands, it is possible to assume that customers are willing to pay premium price for a product with exceptional performance. The location of their acquisition also proves the intense focus on quality, taking into account that a large proportion of the respondents buy their detergent in Føtex, where a vast variety of products and brands are offered and most of them are considered as high quality goods. Last but not least, the positive response for the introduction of Zalo in the Danish market contributes to the possibility of success in this country. 6. Secondary Research 6.1.Internal Analysis 6.1.1.Business Model 6.1.1.1. Customer Interface According to the information received, it is possible to state that Lilleborg‟s value propostition is a product leadership value proposition, meaning that the firm provides a high quality with leading position on the given market, as well as well-organized aftersales service and personalized connection with retailers. With the purpose of providing better value for the clients, Lilleborg puts effort to establish close seller-buyer relationship, in order to create a better overview about its customers‟ needs and requirements. Based on deep consumer insight about consumer wants and needs, Lilleborg‟s well- designed organizational structure and strong workforce, Lilleborg has the possbility to detect retailers as well as end-users‟ requirements and provide desired products. Regarding dishwashing and surface cleaning detergents, Lilleborg has a diversified customer portfolio including the major retail chains such as NorgesGruppen, Rema 1000, Coop and ICA in the existing markets and has a close supplier-customer relationship, which means that the company 5

has already created brand awareness leading to the possibility to gain customers in the foreign markets as well. Taking into consideration the channels the company uses in order to reach its customers, it is necessary to highlight that Lilleborg operates in a B2B market but this relationship is highly determined by the relationship and communication with the end-customer. Therefore, it is impossible to analyze B2B and B2C relationship separately. As the first indirect communication channel, advertising can be mentioned. Lilleborg has a very informative marketing strategy, which is based on the principle of responsibility. The company is a huge advertiser and its marketing reaches a significant number of consumers. Therefore, there is a great emphasis on responsible marketing, which ensures the avoidance of misleading consumers or creating uncomfortable pressure to buy. Lilleborg creates numerous marketing campaigns especially in television, which is Lilleborg‟s most important media channel for advertising. The company advertises extensively during primetime periods in order to be sure to reach the potential and existing customers and provide them enough knowledge about new products and raise their attention for more intense purchasing. In addition to television, it used magazines and social media as well, in order to reach as more customers as possible. Moreover, if the B2B market is taken into account, it is worth to mention that they organize different workshops, which enables retailers to try products and the sales representative can explain the usage, ingredients etc. of the respective goods. This kind of face-to-face channel is the most effective because sales men are the ones who decide how to interact and sell the products they represent. 6.1.1.2. Core Strategy Business Mission It is true to say that Lilleborg‟s mission is to secure the leading position in all product categories achieved through strong brand loyalty, performing high margins, operating in stable markets and securing strong Nordic purchasing power. By creating distinct brands with clear information about 6

its products‟ advantages, Lilleborg simplifies its customers‟ everday lives and supports to increase customers‟ value creation. The focus is on new processes, better sharing of internal knowledge and lessons learned alongside specific overall management and personal targets to increase motivation and awareness. (Lilleborg, 2014) Product/Market Scope Lilleborg has a diversified product portfolio within categories such as personal care, home care, health and textiles. The firm satisfies its customers by providing high quality products according to the requirement parameters such as content of the given products, on appropriate prices and ecological features. Currently, Lilleborg operates in Norway, Sweden and Finland, and it is planning to enter the Danish market with the product called Zalo. Basis for Differentiation Lilleborg has the advantage of having a well-known brand name and having the leading position regarding trade and sales in the existing markets. Furthermore, the firm has unique experience and expertise in developing and maintaining strong brands as well as the broad and dynamic marketing environment could lead to success. In addition to this, Lilleborg‟s products have a strong identity and position among customers and retailers. It is important to highlight that Lilleborg implements the latest technology due to its important innovation activities across the entire enterprise, which provide the opportunity to differentiate itself from the given competitors. As a competitive advantage it is important to highlight that Lilleborg can provide high quality products, due to the fact that they operate their value chain in Norway including product development, production, marketing and sales as well as customer relations. Such value-added features lead to motivation of customers to pay a higher premium price than the cost of superior performance. 6.1.1.3. Strategic Resources Lilleborg has the ability and appropriate resources to develop the required products for the core markets. The reason for such situation is that the company plays a dominant role on the Nordic market due to its wide product range, engaged value adding acitivities, exceptional quality, performance as well as service, risk management, quality and cost control. 7

Orkla Home and Personal have number 1 positions in all product categories because of the high margins and strong brand loyalty, having strong Nordic purchasing power and operating in stable markets. Regarding Zalo product, it is Norway‟s market leading hand dishwash detergent with an approximately 84% market share and having been voted as Norway‟s strongest brand by having a unique market position in the Norwegian consumer market. Such performance is a result of the superior product quality, the authentic product design (the bottle shape has been the same since the 1960s and the design as well as packaging has remained almost unchanged since market launch), unique distinctiveness and premiumness. With reference of the Zalo 2:1 Spray launched in 2009 it is possible to say that it has given a category growth in a mature market with help of the distinctive brand and packaging, reaching approximately 9% market share. With reference of Lilleborg‟s core processes, manufacturing and logistics are worth to be mentioned. As a matter of fact, a well-organized logistic strategy allows Lilleborg to supply to certain retailers with relatively short lead times across Northern Europe and establishing a well- functioning network is able to support the optimization of the transportation to the retailers. Furthermore, competent staff, good relationships, local value chains and local positions are Lillerborg‟s competitive advatages. 6.1.1.4. Value Network One of Lilleborg‟s subsidiary, Ello is responsible for export activities by playing a supplier role to both Scandinavian and international companies, including collaboration with multinational organizations such as Johnson & Johnson and Unilever. The cooperation with Unilever has the advantage of providing access to the latest international research and development. Such R&D activities help Lilleborg to be more flexible and adaptable to the markets which the company is operating in. In fact, the combination of international and local expertise is one of Lilleborg many advantages. Furthermore, it is important to mention that Lilleborg is a member of the Ethical Trading Initiative (ETI) which provides the opportunity to work actively for improvements in the company‟s supply chain. Moreover, Lilleborg established a sourcing site in cooperation with Orkla in Shanghai, China 8

to have resources available regarding monitoring suppliers of cleaning equipment and packaging components. 6.1.2.Sub-conclusion After the internal analysis it is possible to state that Lilleborg has showed an exceptional performance over the years, not only manufacturing cutting-edge quality home care products for end-customers in Norway, Sweden and Finland, but also a partner of its business partners as well as its customers. 6.2.External Analysis 6.2.1.PESTEL analysis 6.2.1.1. Political and legal environment In case of entering a new market a lot of things need to be considered, such as the political situation in the country. Governmental stability, tax policy, trade regulations and import/export are just some of the things that would be relevant for Lilleborg. It is important to mention that Denmark has a favorable tax climate with a corporate tax rate of 25% which is planned to be reduced to 22% by 2016, in order to support competitiveness with neighboring countries. (Ministry of Foreign Affairs of Denmark, 2014) Furthermore, key employees and researchers recruited abroad pay a lower individual tax for the first five years. Regarding trade and export as well as import it is possible to say that the regulations are same as in Norway, due to the European Union and European Free Trade Association. Here Lilleborg need to look at the market and see if the political situation is something they would be able to work with or work towards. It is worth to be mentioned that based on different sources, Denmark has plenty of positive features which supports companies for doing business. According to Economist Intelligence Unit, Denmark was ranked as the best place worldwide to do business based on factors such as infrastructure, economic as well as political initiatives. (Pakarinen, 2012) 6.2.1.2. Economic environment With reference of the current situation in the Danish economy, it is possible to see that the recent economic downturn has plagued the economy, leading companies to restructure their sales and marketing campaigns significantly. In addition, with diminishing profits such companies had to undergo downsizing internally and re-think how to penetrate the selected market. 9

On the other hand, Denmark has a diverse, mixed economy, but stable to enter. After overcoming the 2008 crisis, Denmark has become a very attractive market to operate in, which has led to many countries wanting to do business with. The Gross Domestic Product (GDP) in Denmark expanded 0.89 percent in the first quarter of 2014 over the previous quarter, which means the economy has improved a lot over the years, generating a highly promising environment for entering companies. (Trading Economics, 2014) 6.2.1.3. Socio-cultural environment Taking into consideration the social differences in Scandinavia, it has to be mentioned that Norwegians are very patriotic people, and they usually purchase domestic products and they usually seek high quality. In comparison with Norway, Danish customers are more price-sensitive, although they tend to spend more after recovering from the economic crisis. The right price – and quality relationship is more important than just the low price. Furthermore, it is important to notice that Denmark‟s population is ageing leading to changes and shifts in consumer demands and influences consumer trends. But with being said, all Scandinavian countries have one thing in common. In this industry the main purchasing driver is based on habits. These products are purchased based on habits and has a lot to do with the products used when growing up. With reference of retail value growth it can be seen that it is improving continuously until 2018. However, customer will put the emphasis on value for their money in case of any type of retail channels and product segments, in terms of premium brands also. (Euromonitor International, 2014) In addition to this, offering wider as well as more exclusive selection in certain products and providing superior customer service will be the key actions to generate better performance for the less price-competitive retailers. (Euromonitor International, 2014) 6.2.1.4. Technological environment Regarding technological factor it is possible to say that the level of such is high and the infrastructure of Denmark is highly developed. Spending on Research and Development in Denmark is sufficient, performing high quality which has made the country known worldwide due to such activities. 10

Furthermore, Denmark provides the possibility to establish newly developed technologies in cooperation with private enterprises, R&D institutions and manufacturers. (Ministry of Foreign Affairs of Denmark, 2014) Danish people are well-known about their ability to adapt swiftly to new products or technologies, providing the opportunity for companies to test their products. With reference of infrastructure, it is important to highlight that Denmark has a quite central location in Europe with a well-improved infrastructure allowing prospective foreign companies to import products to the country. With the new age in technology, companies have completely integrated themselves with all the recent changes that have taken place. For instance, the social media explosion has allowed for increasingly interactive engagement with the consumers with real time results meaning that Lilleborg has to take actions regarding such matters on order to keep on increasing brand awareness among potential prospective customers. 6.2.1.5. Ecological environment Environmental considerations are important to take as such factor is becoming highly significant among companies as well as customers. It is true to say that demand for environmentally products is increasing continuously among Danish consumers, which has a significant impact on retailers selling such products in the country. 6.2.2.Porter’s 5 Forces As it was previously mentioned above, Lilleborg has the intention to introduce its Zalo product into the Danish market. Therefore, there was a necessity to find out the potentials of this industry, which was achieved through conducting a Porter‟s Five Forces Model. This brand is one of the bestselling products of Lilleborg Company in Norway, having a market share of 80%. The company operates in the other Scandinavian countries and now the strategy is to enter Denmark with this famous and quality brand. 6.2.2.1. Threat of new entry It is possible to say that the threat of new entrants within this industry in Denmark is low. The market is already saturated and another issue is that a significant amount of financial resources are needed in order to start a business in this market. 11

Lilleborg has an experience of 60 years in the home care industry so they have the necessary knowledge about influencing and satisfying the buyers. However, despite the fact that Lilleborg has the technology and knowledge of competing on the Danish market, the buying behavior in Denmark is different than in the other Scandinavian countries. The company has to spend time on understanding the culture and its buying behavior. The end users prefer the eco-friendly products which are sold on a friendly price as well. Cultural difference can be a barrier of entry, which is in obvious relation to the buying decision. This is the same with other foreign companies, who have the intention to expand in Denmark. Moreover, considering the average living conditions, taxations and business start-up costs, it may seem disadvantages for foreign companies to give a try to enter the Danish market. It is likely that this action would require large-scale financial investment but the result in long-term cannot be foreseen. Therefore the risk is enormous. In addition, Danish consumer purchase consciously, which is profitable for domestic companies but isn‟t for foreigners. They like to buy Danish products in order to boost national economy. For this reason, it is very rare that Eastern European companies enter Danish market. The most common foreign companies are from Scandinavia, Germany, United Kingdom and USA. 6.2.2.2. Supplier Power This factor of the model is considered irrelevant in this situation. Lilleborg doesn‟t have the intention to move its Zalo production in Denmark; they just want to launch the product into the market. This means that there would be no changes in its suppliers and therefore the production process won‟t be influenced if Zalo enters the Danish market. In this meaning, Lilleborg doesn‟t need any information about Danish suppliers and neither about its potential competitor‟s suppliers. 6.2.2.3. Buyer Power In Denmark discounted stores, such as Lidl, Fakta, Netto, are very popular, where are always huge weekly promotions of different types of products available. These stores have less products but lower prices, while Bilka, Fotex, Kvickly have higher product varieties with higher prices. 12

The market leaders are the Dansk Supermarked and Coop Denmark, which have large networks, while Reitan Group and Lidl are the smaller supermarket chains. Retail stores are cooperative with the brand suppliers; they often make promotion and advertisement activities, since they interact more often with end customers. Problem occurred in the supply chain are usually managed by common power, both supplier and buyer parties in order to save time and extra costs. Supermarkets have high buyer power and they are highly price sensitive. They negotiate and ask for lower prices or discounts in the long run. In relation with this it has to be mentioned that in Denmark, retailors have to inform the suppliers one and a half month before they want to put promotion on the products. 6.2.2.4. Threat of substitution Home care industry products can be divided into two categories. The first category covers goods, which are used manually and the second one which are used in different household machines. Nowadays, it is getting more and more popular to use dishwashing machines. This is the biggest substitution of the dishwashing liquid products. Hand dishwashing showed a declining tendency in 2012 because of the increasing numbers of machines. In 2012 automatic dishwashing liquids and capsules were introduced by Reckitt Benckiser Company under the brand called Neophos. In 2012 Neophos had a share of 30.3 % on the Danish market, while the Vel brand, which is representing quality in the hand dishwashing sector, has got 15.5 %. (Appendix 2) This means that the biggest substitutes of the dishwashing liquids are the capsules and liquids used by the dishwashers. In nowadays society people feel more comfortable if they are surrounded by machines that help them in everyday life. As the capsules and liquids for dishwashers penetrated the market, a decrease can be followed in the product prices that might affect the dishwashing soap industry. 6.2.2.5. Competitive rivalry The competition is significant within the home care industry. Local and global companies try to satisfy their customers‟ needs through different ways, starting from aggressive marketing campaign to discounts and price reductions. 13

First Price, Budget, W5, Coop brands serve the low price segments where the quality is not considered as important as the price. Fairy and Shine products are listed in the medium category. Neophos, Vel and Neutral have higher prices and they offer more effective and ecological products. Taking into account that in Danish consumers prefer eco-friendly products it can be stated that they are also willing to pay premium prices. Home care industry products are sold in the stores of huge supermarket retail chains. The biggest the store the more suppliers are in the background. In Denmark the most competitive supermarkets are Dansk Supermarked (having Bilka ,Føtex, Netto), Coop Denmark (having Fakta, Kvickly, Irma, Dagli Brugsen, Lokal Brugsen), Løvjberg Supermarked and Lidl. As all suppliers represent different features, retailers also make difference in what is their priority. Their target groups depend on the quality, price and eco-friendliness. The top selling brands in Denmark are Neophos, Vel, Fairy,Shine, Neutral, Froggy, Budget, Jelp. These brands have the ability to compete and even to substitute the Zalo product and its effects. Since the bargaining power of home care product suppliers is quite low, the retail stores are the influencers and negotiators. Based on the end users buying behavior the supermarkets can decide which supplier can be key partner for them and which should one need to be eliminated. Zalo, being a new brand on the Danish market, will face challenges. Retail stores have to be convinced by appropriate communication strategy and the differentiation of the brand in contrast with other products needs to be emphasized. 6.2.3.Sub-conclusion As a brief summary of the external analysis it is necessary to mention that the Danish market is slightly different from the Norwegian taking into consideration factors such as culture, economics and ways of handling businesses. Through the deep overview of the respective industry in Denmark, numerous significant information were found about prospective customers, the intensity of rivals and foreseeable threats, which may cause challenges for Lilleborg. 14

6.3.SWOT analysis towards Lilleborg’s situation regarding the Danish market with reference of Zalo Strengths Weaknesses  Product leadership value proposition  Lack of knowledge regarding foreign  Know-how in all parts of the supply markets chain  Prices perceived to be to high  Diversified product portfolio  Lack of online presence  Close sales and consumer service  Highly effective logistic network as well as tools  Well-functioning organization  Well-balanced innovation portfolio  Co-operation with research institutes and well-known companies in the home care industry  Significant number and large companies within the customer portfolio  Strong brand loyalty and high margins  Market leader position  Very informative marketing strategy  Unique experience and expertise in developing and maintaining strong brands Opportunities Threats  Strong Nordic purchasing power  High level of competition including  Favorable corporate taxation in large companies Denmark  Economic downturn influenced the  Denmark was ranked as the best place demand for products within of doing business Lilleborg‟s categories  Preference for premium and exclusive  Price-sensitive customers selection of products among potential  Ageing population is leading to customers changes and shifts in consumer  Closeness to Norway and Lilleborg‟s demand manufacturing sites  Demand for environmentally friendly  Threat of new entrants is low products  Based on primary research, large  Different buying behavior on the majority of interviewees are open for Danish market the Zalo product and willing to pay  High risk for foreign companies to premium prices for high-quality enter due to large-scale financial 15

products investment requirements  High buyer power and price- sensitiveness among Danish supermarkets 7.Recommendation/Solution In order to create a sufficient and agile trading relation for launching Zalo in Denmark successfully, Lilleborg has to establish a deep understanding in retailers‟ actions and objectives. As a matter of fact, there are several criteria Lilleborg should consider such as having an overview how the targeted retailer supports the idea of launching the given product, dicuss the milestones of the launching process, providing information regarding participating functional areas of the company according to the classification level of the launch, providing the possibility of further customer research and overview in order to create success and ensure data-exchange with purpose of improving data synchronization. (PriceWaterHouseCoopers, 2007) 7.1.Communication planning model 7.1.1.Situation analysis of target market Due to the fact that this project focuses on business-to-business relationship, the chosen potential target market includes retailers such as the major supermarkets operating in Denmark. In order to find the most appropriate communication strategy and promotional mix, looking at B2B characteristics and implication is essential. First of all, due to fewer, often identifiable customers, more personal and personalised communication is practicable. Second of all, there is a need for longer buyer-seller discussion through personal selling, taking into consideration the requirements in the purchasing process such as quantity, transportation and payment method as well as deadlines. Third of all, it is important to mention that there is a need for much information through specific knowledge and personal presentation, with focus on product performance and financial criteria because of the high-value, high-risk and infrequent purchases. At last but not least, it is necessary to understand who plays the given roles and try to influence the buying centre due to the rational decision-making process in 16

which the buying centre plays a significant role. (Frances Brassington & Stephen Pettit, 2007, p. 300) The targeted retailers would be premium stores such as Føtex, Kvickly, Super Best, Super Brugsen and Bilka. Such specific stores were chosen due to the wide range of products they provide and the brand recognition. More so, these stores are a part of a national chain, which will be a huge advantage for Lilleborg. There will be no need for creating awareness for the stores, but only around Zalo, which is a deduction of cost. Therefore, by choosing these stores Zalo will be on the shelves with the rest of high premium detergents. 7.1.2.Situation analysis of the product The product lifecycle stage (Based on www.b2binternational.com) 7.2.Communication strategy After having a better understanding regarding communication between Lilleborg as manufacturer and its potential retailers, it is possible to say that in order to launch a new product in Denmark, a combination of push and pull strategy is recommended to be used. The meaning of such combination is that Lilleborg focuses on introducing communication activities with the proximate member of the distribution channel, which are the retailers in this situation. Furthermore, it is important to highlight that there are two types of communication flow in such case: Lilleborg starts 17

to promote the product to retailers through personal selling, trade press, mail shots and offers, but on the other hand the firm also conducts direct communication with end-customers through advertising and sales promotion. 7.3.Promotional Mix 1. Direct marketing Direct marketing is a part of the B2B marketer‟s most powerful communication tools, and a key ingredient in the marketing mix, meaning that Lilleborg has to include this in their promotional mix. Such tool would provide the possibility to enable Lilleborg to target the chosen retailers accurately. (B2B Marketing, 2014)Due to the fact that such methods can be personalized and the given way of delivering the message is flexible, the chances for getting a positive feedback from retailers are highly possible. Under this category; fliers, category distribution, promotional letters, cell phone calls and emails are listed and has the same purpose, but a different outcome, so when using these adverting technique, Lilleborg needs to consider carefully which technique suits best in the given situation. Furthermore, such tool also has advantages that can help Lilleborg develop their future strategy in approaching potential customers such as using the outcomes and information received as a research towards retailers‟ requirements. (Wikipedia, 2014) 2. Personal Selling Personal selling is another advertising tool that Lilleborg could take advantage of when entering the Danish market. This tool includes; sales presentations, sales meetings, sales training for the salespeople within Lilleborg that are trying to push out their products. Furthermore, these techniques are mostly used for one purpose in this case, for Lilleborg to build strong relationships with retailers, and create more „value‟ for their product Zalo. More so, all these methods can both be face-to-face or via telephone. In addition to this, personal selling provides the opportunity to establish a constructive discussion between Lilleborg and potential retailers with reference of their needs, promoting the company as well as the product and provide all the necessary information. (Know This.com, 2014) 18

7.3.3. Advertising Using advertising in such context is a slightly complicated compared to B2B context, however, it is highly important to take the advantages of such tool as well. By using advertising Lilleborg will be able to present and promote for their ideas to potential retailer, who they would like to work with. Advertising includes; print ads, direct mail, brochures, banner ads, web pages and catalogs. (Wikipedia, 2014)Therefore, by using advertisement Lilleborg will be able to show their customers a complete product and a plan of how and why they should start building a relationship. 4. Sales Promotion As a matter of fact, sales promotion including price reduction, free products, promotional products and trade shows should be introduced in case of promoting Zalo for retailers in Denmark. The advantage of using this tool is that, the retailers might buy more products that planned due to the price reduction or the brand awareness that Lilleborg created. Furthermore, participating in the trade shows could create advantageous situation for Lilleborg to launch Zalo. (Know This.com, 2014) 5. Public Relations Business to Business public relation is a complex tool of targeting a more defined audience. The media relations and coverage are needed for Lilleborg to be connected with the media including press releases and press conferences, and raise awareness for launching Zalo on the Danish market. In this way, the information reaches the target before the product is put on the market and can help the company to establish connections easier. Furthermore, developing a communication plan for issues or crises that are highly likely to catch media attention is sensible way to avoid problems with the business partners. (DRPR, 2014) 7.4.Action Plan 1. Preliminary Budget In order to cover the expenses of the initial actions in the action plan, Lilleborg needs to elaborate a budget including fees in connection with trade shows, fairs and exhibitions as well as related materials. 19

2. Event Participation In order to create an initial overview about potential prospective retailers, attending certain events such as trade shows, fairs, exhibitions and workshops - attended by retailers - regarding related industries such as food fair, kitchen equipment exhibitions would be beneficial. Lilleborg should attend such events as participant with purpose of introducing Zalo for retailers and potential end- users, by providing information about its advantages and competitiveness on the Norwegian market. Such action would require information packages, catalogues and flyers including all the information about the product and the company. 3. Market Research After identifying the potential retailers, conducting market research with reference of their requirements, habits, needs, buying behavior and purchasing priorities (price, discounts or efficiency) is essential. Researches may consist of primary and secondary data, qualitative and also quantitative analysis. Lilleborg has an advantage at this point of the action plan, taking into account that they are already in the market with some of their brands so they start the process of launching Zalo with an initial knowledge about some of the retailers. As an efficient tool for primary research, Lilleborg should conduct in-depth interviews with the representatives of respective retailers, where questions related to their preferences, ways of doing business, distributional expectations and other legal factors are going to be discussed. This face-to- face meeting enables the representative of Lilleborg to observe the interaction and create well- structured dialog with the interviewee. If the possible secondary data are discussed, company websites and industry report could enable many relevant answers for questions aroused within Lilleborg about Danish retailers. On websites financial position, strategic priorities, basics of business and cultural factors can be found. In addition, reports provide quantified opportunities, segments as well as primary customer attributes. They can also be used as sources for choosing the best alternatives and serve to complete primary researches. 20

4. Elaboration of a Promotional Strategy In order to launch Zalo in the Danish market, effective communication with retailers is essential with purpose of securing the success of such action. By developing and implementing a suitable promotional mix, Lilleborg will have the possibility to influence the retailers buying decision process and prospective buying behavior. In addition to this, Lilleborg has to find the balance between each tool by emphasizing the most appropriate ones. Due to the characteristics of the given industry and business environment, focusing on direct marketing (in the beginning of the action plan), personal selling (after establishing preliminary relationship with potential retailers) and sales promotion (after establishment of relationship with the most loyal retailers). 5. Establishment and Encouragement of a Suitable Workforce Due to the fact that one of the promotion techniques in case of communication with retailers will be personal selling, recruiting sales staff would be required. As a matter of fact, sales representatives would have the possibility to establish a well-balanced and close relationship with the potential retailers via face-to-face sessions, phone calls and demonstrating constant assistance to reach satisfaction among them. With purpose of establishing a sufficient relationship with retailers, recruiting an engaged employee base with all the essential skills is highly important and need to take in into consideration during the hiring process. Afterwards, Lilleborg should provide training session and all necessary information regarding the Danish market, retailers as well as end-customers. This kind of approach towards customer generates a more collaborative relationship. There isn‟t any information provided, which proves that Lilleborg creates completely transactional relationships in its existing markets but it is for sure that in Denmark the aim needs to be to create a closer seller- buyer relationship. This will enable companies to share information easier, create operational and social linkages and formulate mutual trustworthy cooperation. After creating the desired relationship with retailers, sales representatives would play a conjunctive role between Lilleborg and retailers. In order to maintain such relationship, follow-up session and feedback sessions would be necessary to organize in order discuss difficulties and additional query. 21

6. Launch of Communication Strategy First of all, Lilleborg has to define its communication objectives towards Danish retailers, mainly creating brand as well as company awareness. Such objectives can be reached by push communication strategy by personal sales, opening offers and advertising. The aforementioned communication strategy would generate brand awareness by providing necessary information about the values, mission and competitive differentiation of the company. Furthermore, it is showing that the company is able to offer products that meet customers‟ needs in long-term. Due to the fact that Zalo will be sold to retailers and not directly to end-customers, personal selling strategy is the most crucial within the communication mix. Personal interaction with sales men has the most influence on the business-to-business market. Other advantageous parts of the communication mix are the well-organized information packages, its products and other necessary facts, as well as updates about ongoing activities. Such kind of tools will enable customers‟ to make better decisions. 7. Methods for Relationship Improvement The introduction of a suitable CRM system on the Danish market would be a relevant choice in order to maintain the gained relationships. CRM enables the company to gather necessary information about customers‟ behavior, to share knowledge within the organization and to treat customers as individuals. Strategic CRM covers an extensive and various set of activities, which form the basis of a strong and long-lasting competitive advantage. After creating an efficient CRM system, it is likely that shared visions and values will be created between the seller and buyer. The purpose of each and every relationship will be outlined after a respective period of time, which will determine the way of collaboration. Objectives are going to be set by both parties, which represent the driving-wheel of processes. In addition to this, the publication and invitation of customers to upcoming internal and external events would also strengthen relationships. It would be a good idea to organize event approximately 22

in every three months, such as workshops, company visits, seminars and webinars. Through these events customers get the opportunity to have a deeper understanding of Lilleborg and its Zalo brand and know-hows can be exchanged. Involving Lilleborg employees from the different department and top management can give a positive impression on customers and they can also get to know the company from various perspectives. The aforementioned value adding activities will possibly generate uninterrupted problem solving and purchasing processes. This redound more direct interaction between the company and retailer, which will result in the formation of loyalty. 7.4.1.Timeframe of the formulated action plan In case of implementing the formulated activity plan, it is highly important to determine the timeframe of planned activities and milestones, in order to accomplish the goals on time and also to keep the activities on track. 7.4.2.Financial Consideration – Budget Budget Plan for Lilleborg’ Communication Strategy Action Plan Category Estimated Quantity Estimated Cost per Estimated Subtotal Unit Advertising Information 100 DKK 40 DKK 4.000 packages Brochures 100 DKK 30 DKK 3.000 Flyers 100 DKK 10 DKK 1.000 Communications Costs Total DKK 8.000 23

Internal Event Number of attendees 30 Meal DKK 280 DKK 8.400 Invitation DKK 4.272 DKK 4.272 Internal Events 4 DKK 12.672 DKK 50.688 Costs Total External event (Trade shows, fairs) Number of 3 Attendees Participation fee DKK 2.100 DKK 6.300 Booth rent DKK 10.176 DKK 10.176 Additional fees DKK 6.397 DKK 6.397 (Electricity, internet, placement of the booth, ect) External Event Costs 2 DKK 22.873 DKK 45.746 Total Human Resource Wages 2 DKK 38.000 DKK 76.000 Wages per year DKK 912.000 Training 2 DKK 29.000 Travel costs 2 DKK 4.800 DKK 14.400 Infrastructure 2 DKK 2.800 DKK 5.600 (Computer, phone etc.) Total Human DKK 961.000 Resource Costs Customer retention Costs CRM Software 1 DKK 14.400 DKK 14.400 Customer retention DKK 14.400 Costs total GRAND TOTAL DKK 1.790.834 8.Conclusion The purpose of this project was to give appropriate suggestions for a concrete problem related to Lilleborg Company. A logical plan was built, which serves to provide recommendation for communication and promotion strategy that can enable the company to launch their Zalo brand into the Danish retail market. 24

After primary and secondary researches and various analysis it can be stated that Lilleborg has all the competences to perform outstandingly even in a strongly competitive environment, such as Denmark. The factor, which can cause serious challenge is the way of approaching prospective customers and fulfill the targeted objectives. In this case, satisfying customers‟ expectations right from the first phase of the relationship is highly important because mutual trustworthiness needs to be created in a business-to-business collaboration. As a summarized answer for the problem statement, it can be stated that through different event participations, market researches, personal selling, advertising and CRM system, Lilleborg can achieve the desired goal and can introduce Zalo in the Danish market. Financial considerations were also taken into consideration and a budget has been made for the elaborated action plan. The results were satisfying because such actions wouldn‟t require a huge amount of financial investment but it is likely that they would generate positive outcome in the long run. In conclusion, it is possible to state that Lilleborg has great potentials in the Denmark, taking into account that this market is not completely unknown to the company and because the product desired to launch represents strong identity and high quality, which is highly preferred on the Danish market. 25

9. Bibliography B2B Marketing. (2014). Direct Marketing. Retrieved June 10, 2014, from B2B Marketing: http://www.b2bmarketing.net/knowledgebank/direct-marketing DRPR. (2014). B2B PR - Sell the company first . Retrieved June 10, 2014, from DRPR: http://www.drpr.com.au/public-relations/b2b-pr.html Euromonitor International. (2014). Retailing in Denmark. Frances Brassington & Stephen Pettit. (2007). Essentials of Marketing (Second ed.). Know This.com. (2014). Business To Business Sales Promotions. Retrieved June 12, 2014, from Types of Sales Promotion Tutorial: http://www.knowthis.com/types-of-sales- promotion/business-to-business-sales-promotions Know This.com. (2014). What is personal selling? Retrieved June 12, 2014, from Personal Selling Tutorial: http://www.knowthis.com/personal-selling/what-is-personal-selling Lilleborg. (2014). Our Strategy. Retrieved June 7, 2014, from Lilleborg: http://www.lilleborg.no/ Ministry of Foreign Affairs of Denmark. (2014). Business Solutions - Research and Development. Retrieved June 10, 2014, from Ministry of Foreign Affairs of Denmark: http://www.investindk.com/Business-Solutions/Research-and-development Ministry of Foreign Affairs of Denmark. (2014). Establishing a business in Denmark - Taxation. Retrieved June 8, 2014, from Ministry of Foreign Affairs of Denmark: http://www.investindk.com/Establishing-a-business-in-Denmark/Taxation Pakarinen, T. (2012). Internationalization and exporting. PriceWaterHouseCoopers. (2007). How targeted collaboration between retailers and manufacturers promotes the success of new product launches. Trading Economics. (2014). Denmark GDP Growth Rate. Retrieved June 9, 2014, from Trading Economics: http://www.tradingeconomics.com/denmark/gdp-growth Wikipedia. (2014). Direct Marketing. Retrieved June 9, 2014, from Wikipedia: http://en.wikipedia.org/wiki/Direct_marketing Wikipedia. (2014). Promotional Mix. Retrieved June 10 2014, from Wikipedia: http://en.wikipedia.org/wiki/Promotional_mix 26

10.Appendix Appendix 1.: Survey Question 1 27

Question 2 28

Question 3 29

Question 4 30

Question 5 31

Question 6 32

Question 7 Ques tion 8 33

Question 9 34

Question 10 35

36

Appendix 2.: Dishwashing shares 37