Rubber Band Marketing Idea for Australian Market

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Executive Summary

Rubber Band Marketing Plan for Australia is a proposal for new uses of rubber band which involves penetration of Australian market. This paper provides different facts about the market choices and opportunities available for the Australian hypothetical company.

Table of Contents

  • Executive Summary
  • Introduction
  • Description
  • Discussion
  • Recommended Marketing Plan
  • Conclusion
  • Appendices
  • List of References

Introduction

Australia is a wealthy economy with a population of over 20 million inhabitants. After the 1990s Australian economy experienced significant growth, particularly during World War II. It has a mixed and open culture. Various U.S. based companies has been operating in Australian market successfully. Australian’s market is open for investors. The role of immigration has been critical to Australia’s economic growth. Immigration has also changed Australia’s cultural and social set-up.

Rubber band is a very common product. As well as having industrial utility, it is a household product. Rubber band demand is steady and is increasing slightly. Rubber is an agricultural product. Elasticity is the property to which rubber bands are used for different purposes. The market has steady demand for rubber.

First section of the paper addresses different facts about Australia and its markets. Researcher analyzes different factors of Australia and its economy in the discussion section and proposes a marketing plan for Australia market based on the same.

Description

Australia is a continent that sits between the Indian Ocean and the South Pacific. Australia is the only continent containing a single nation. It has no neighboring countries. It is all surrounded by ocean. It is a large continent which has variations in climate, population, vegetation and markets.

Aboriginal settlers from Southeast Asia arrived on the continent about 40,000 years before the first Europeans started colonization in the 17th century. There were no formal territorial claims made until 1770, when Capt. In behalf of Great Britain James COOK took possession.

Six colonies were founded between 18th and 19th centuries. All colonies federated in 1901 to become the Australian Commonwealth. This new country could utilize its resources. Australia is rich in natural resources and has been making use of its capital in various sectors of agriculture and development. Throughout World War II its contributions to the British were substantial. Proper investments and other strategies, proper utilization of various natural resources, encouraging immigration for the sectors of growths and other strategies has helped Australia to grow in a global market place and position itself internationally.

During the 1990s it boasted one of the fastest growing economies of the OECD, a performance largely due to economic reforms adopted in the 1980s.

The main concern for Australian government is related to environmental concerns. Depletion of Ozone layer which is prominent above the continent is one of the major concerns. Another important area of concerns is the Great Barrier Reef and pollution of costal areas. These costal areas are getting affected pollution caused by boats and ship. Management of costal areas is important concerns as Australia offer an important port to the international shipping and sea transportation. Australia is rich in bauxite, coal, iron ore, copper, tin, gold, silver, uranium, nickel, tungsten, lead, zinc, diamonds, natural gas, oil, and mineral sands within its natural resources. Apart from that its landscaping, flora and fauna, beautiful beaches and Great Barrier Reef attract tourists, academicians and researchers from all over the world.

Rubber Band Marketing Idea for Australian Market

Overall regions can be divided into following zones:

Equatorial: Some part of Queensland falls into this region.

Tropical: Costal areas of Western Australia, Northern Territory and Queensland are Tropical zones.

Subtropical: Costal Areas of Western Australia, Victoria and parts of Queensland has subtropical zones.

Desert: Central areas of Australia are desert. The maximum area under desert zone is of Western Australia that is the largest state of Australia.

Grassland: Grassland is surrounds desert area of Australia. Reduction of grassland area due to overgrazing is one of the major concerns of Australian Government.

Temperate

Four states of Australia have temperate zones. More than fifty percent area of Victoria is temperate zone. Australian Capital Territory and Canberra comes under temperate zone region.

Climate zones of Australia are divided on the basis of rainfall, vegetation and temperature & humidity. Central part of Australia is dry and humid. The annual rainfall in this area is as low as 200 mm. With the variation with rainfall and other climatic conditions the vegetation changes.

Rubber Band Marketing Plan for Australia

The population of Australia is sparse in distribution. Population is centered to the major cities like Sydney, Melbourne, Canberra, Brisbane and others. Due to less population density as compared to land available for living the population distribution is sparse.

Australia has a surface area of more than 7.7 million square kilometers. Most of the nation’s 20 million people live in widely separated cities along 36 000 kilometers of coastline. There are over 800 000 kilometers of road crisscrossing the land, of which 46 per cent is sealed.

Rubber Band Marketing Plan for Australia

Image: Australia on World Map

Disposable income of dual income couple with kid is highest $84,329, which can be justified by their growing needs and availability of fund for various needs and luxuries. These form the part of population which falls into maximum real tax threshold.

Rubber Band Marketing Idea for Australian Market

Table: Family Types and Household Income

Culture

Australian culture is a mixed culture. Australian culture is rooted in European culture. There is a distinct aboriginal culture developed from environment in Australia. Australian culture has been greatly influenced by America and neighboring Asian countries. The main religion is Christianity as more than 50% population follows some form of Christianity. Other than Christianity followers of Buddhism, Islam and other religion can be seen in Australia. People in Australia are friendly but do have individualistic approach in decision making. There is least difference among people for status or power. People do not like to talk about status or get impressed with status but they do get influenced by proper working styles of people.

Living standards have steadily improved since the beginning of the 1990s and now surpass all G7 countries except the United States. Wide-ranging reforms have been instrumental in this respect, notably to promote competition. They promoted productivity growth, most notably in the second half of the 1990s.

Australians are punctual and expect the other companies and people working with them to be punctual in project delivery or meetings. Australia as compared to other developed nations like United States of America or United Kingdom does not have terrorist threats. But some of the recent incidences have increased the security concerns. Australians like to enjoy their lives with lots of sports related and recreational activities.

Sport is an integral part of Australian lifestyle. An estimated 3.51 million Australians over the age of 15 (23.5 per cent) participate in organized sporting activities, and 62 per cent of children aged 5–14 participate in organized sport. Australia has strong teams in the following sports at national and international level: Australian Rules football, cricket, netball, rugby league, and rugby union

The main language spoken is English in Australia. People prefer open and clear communication. Handshake while meeting and leaving is common. Exchanging business cards is a common and important practice. Following line and queue, maintaining good eye contact in meetings etc and being a good listener helps in dealing with Australians. Australians enjoy Christian festivals like Christmas, Easter, New Year and others. January 1st is Independence Day. Apart from these schools and institutions follow calendar for different holidays. Gift giving or receiving in business is not practiced but if one is invited to others place for lunch or dinner it is considered mannered to bring some drink, chocolate or eatables as a gift.

Political/Legal Environment

Australia is a democratic country. It is politically stable country which adds to the socio-economic growth of the country. Government relies on the personal tax income more than another. In the recent past there has been emphasis in cutting down the tax and indexing of tax system. Government conducts survey regarding tax related matter time to time and the results of these surveys help in maintaining tax structures.

Recent reforms will have reduced fiscal drag but it still remains high by international comparison due to the heavier reliance on personal income tax. Indexing tax brackets to wage increases would increase transparency; however, further incremental reform of the tax system would also reduce the flexibility. The government commissioned the report of the Task Force “Rethinking Regulation” that focus should also be paid to further simplification of the tax system, in order to reduce the costs of enforcement.

Government provides basic services like hospital, old age care and other areas needed. The taxation system in Australia is as helpful as in any other country to maintain the infrastructure, running smooth administration and many others.

Key areas of the delivery of public service are subject to complex joint government involvement and sometimes lead to inefficiencies. Fragmented decision-making and funding mechanisms are particularly notable in hospital services and old-age care, creating cost pressures and shifting blame across levels of government

Demographics

Australia has population of more than 20.2 million. Its annual population growth rate is 1.2%. Population is growing by birth as well as immigration. The ethnic group represented by this population is mainly European who is 92% of the total population.  Asian are 6% and while Aboriginal are 2%.of the total population. Religions (2001) constitution of the Australian population is as follows: Anglican 21%, Roman Catholic 27%, other Christian 20%, other non-Christian 5%, no religion 16% and not stated 12%.

Singles, couple without kids and couple with two kids or more having good disposable income are the basic unit of society. Nuclear families are common. People prefer spending their time of holiday or weekends in sports related activity. Standard of living is usually high due high disposable income.

Australia has Water, Air and Land Transport Facilities

More than 12 million vehicles (including motor bikes) are registered in Australia, including half a million trucks and more than 60 000 buses. More than 14 million people have a driver’s license.

Australia population has transportation as second largest item of their household expenditure. Marine transportation facility accounts for more than 75% of the export and import cargo and freight. Rail network of Australia is 40,000 kilometers long. There are 261 licensed airports in which 12 are international airports.

News and media in Australia enjoys right of freedom of expression. Print media has penetration of more than 70% of the population through various newspapers, bimonthly and monthly magazines and other print media products. Australian press council is regulative body for the press media. There are more than 53 commercial TV channels broadcasted in Australia. There are two separate broadcasters the Australian Broadcasting Corporation (ABC) and the Special Broadcasting Service (SBS) operating in Australia. The satellite and television pay broadcasting as well as digital broadcasting is common in Australia. There are more than 272 radio channels operating in Australia. Australian Broadcasting Corporation is broadcaster and regulator for the radio channels along with TV.

The ABC comprises the national television service; six radio networks; an Asia Pacific television service; a 24-hour news and parliamentary broadcast radio service; an international network of press offices; and an online service. SBS is a multicultural and multilingual broadcaster. SBS television broadcasts programming in over 60 languages while the national radio service broadcasts 650 hours of programming each week in 68 languages—more than any other radio network in the world.

Internet is widely used in Australia for various purposes like sending e-mails, collecting information, researching, mode of entertainment and many others. According to Neilson Net report in Australia there are around 14,189,557 Internet users as of Jan-2006. This is 68.4% of the total population of Australia.

Internet Activity Summary by states and territories – Sep.2004
LocationISPAccess LinesSubscribers
New South Wales256667,3381,935,000
Victoria213520,3981,565,000
Queensland174347,6581,026,000
South Australia61121,458413,000
Western Australia88199,435519,000
Tasmania2336,999111,000
Northern Territory1311,63332,000
Australian Capital Territory3453,9951420,000
All Australia6871,958,9145,741,000

Source: Australian Bureau of Statistics, 8153.0 Internet Activities.

Economy

Australia has a strong economy ahead of UK, Germany and France. The unemployment rate is around 4% here. The low level of unemployment and high demand of the Australian products of its natural resources has contributed to the growth of its economy. Australian economy has emerged as a strong economy after 1900s, especially after World War II. The economy experienced tremendous growth in all the spheres. According to World Bank GNI per capita is US$ 21,650 (2004) for Australia. According to the OECD assessment and recommendations Australia is facing certain challenges and need to address these in order to enhance the economic developments. These challenges has been divided into long term and short according to there nature and severity. One of the short term challenges for Australian government is maintenance of macroeconomic stability for the commodity prices boom. Commodity prices has boosted by around 30% in terms of trade in Australia. Monetary policies and output growth need to be linked closely in order to get positive impact on spending. Strong income gains can be ensured by making people spend more. Australia can utilize taxation and interest rate to control consumer behavior and encourage them to spend more or various products and services. Government need to emphasize on key public service area to provide better services, reducing complex patterns and addressing the reasons and solutions to inefficiencies. Australia has also become one of the popular centers for the international students for studies. It offers variety of courses, excellent educational institute and advance facilities. In Australia the numbers of Indigenous households are more than non indigenous household. Australia is one of the developed nations which encourage immigrants more than any other developed country. This is to meet the work force requirement of various industries.

According to the 2001 Australian Census of Housing and Population, Indigenous households are generally larger in terms of the number of occupants than other Australian households. The average size of an Indigenous household was 3.5 persons compared with 2.6 persons per non-Indigenous household.

Indigenous householdsOther households
DwellingsNumber of persons per dwellingNumber of persons per dwelling
Major cities54,9163.22.6
Inner regional33,3473.32.5
Outer regional32,7563.42.5
Remote10,1933.62.5
Very remote13,5205.32.5
All regions144,7323.52.6
Source: ABS & AIHW, 2003

Australian economy has gone through tremendous changes from the past. The Australian economy has changed from the agrarian to manufacturing and from manufacturing to service based economy of the present scenario. As a part of European colonies Australia had become centre for many manufacturing facilities and industries. Now service sector is the major employment sector.

Services contributed almost half (48.4%) to GDP in 2000-01. Manufacturing, the next largest industry, contributed 11.9%, slightly less than its 12.2% contribution in 1900-01, but half of its contribution of 22.4% in 1950-51. Dwelling rent contributed 9.8% to GDP, only slightly less than its contribution in 1900-01, but almost four times as much as its contribution 1951. Both the mining and construction industries contributed 5.6% in 2000-01. The share of mining had more than doubled since 1950-51, but in 1900-01 it still accounted for only about half its share of GDP

Australia has been considered to be one of the easy destinations of doing new businesses. It ranks 8th in terms of ease of doing business here. The ease of doing business in Australia is due to the overall acceptance and welcoming nature of Australian community and government for the new investors and business organizations.

Ease of…2006 rank2005 rankChange in rank
Doing Business89+1
Starting a Business220
Dealing with Licenses2924-5
Employing Workers911+2
Registering Property2732+5
Getting Credit330
Protecting Investors4643-3
Paying Taxes35350
Trading Across Borders23230
Enforcing Contracts78+1
Closing a Business1214+2

Note: 2005 rankings have been recalculated to reflect changes to the 2006 methodology and the addition of 20 new countries.

Various sectors in service industry have developed in recent past. The financial sectors, loans and credit card facilities has enabled people to by product or services of their choices and pay it later according to their financial capacity slowly within the terms and agreements of the financial institutions. IT sector is one of the largest sectors in Australia. IT services are usually utilized by various other business organizations hence are one of the support activity of other organization which facilitates better operations and interface with the customers. Australian market is highly developed. It is an English speaking market which has a well establishes networks with the firms across the globe. Australian market is lead by Australian, American and third-country firms. Many US based companies have well established in the Australian market. Market share of these companies varies according to the industry and markets they are operating in. Many American companies have production facility or subsidiary in Australia. The operations of various U.S. based firm has started decades back. U.S. enjoys trade relations with Australia. Australia is a favored market place for various market places for the nations of the European Union, New Zealand and the rest of Asia. Firms from these countries present active competition to the U.S. based companies. Australia has resources from the energy, mineral and agricultural sector. These products have high international demand from Asian countries especially China.

The first five industries: agriculture, forestry and fishing; mining; manufacturing; construction; and administration by government are fairly well-known and need little further clarification. Finance, distribution and other services, represents something of a ‘catch-all’ for a diverse range of services including: wholesale trade; retail trade; accommodation, cafes and restaurants; finance and insurance; property and business services; education; health and community services; cultural and recreational services; and personal and other services.

Australia has been a profitable market for many, European, Asian and American companies. This is because of the low barrier to entry in various sectors of Australian market. The comfortable business environment is product of low barrier to entry, sophisticated and supportive business culture and environment, straightforwardness in business. U.S. only enjoys trade surplus of more than US$9 billion with total exports of US$28 billion in 2004.

There are various economic indicators positive for the investors and companies interested in doing business in Australia. These positive key economic indicators are as follows:

  • High and rising income per capita,
  • Low unemployment (4.7 percent),
  • Low inflation,
  • high capacity utilization, and
  • GDP growth at 3-3.5 percent annually
  • Businesses are spending actively on various major sectors of Australia for instance: mining, energy, IT, and food processing

Renewed economic growth in Australia’s major trading partner increases demand for its exports, including agricultural commodities.

The strong Australian dollar has shaved growth from the export-sensitive parts of Australia’s economy while giving more purchasing power to the import-driven parts. The weakness of the U.S. dollar relative to the Australian dollar provides an opportunity for U.S. exporters to improve their competitive position in this market.

Major Australian industries are Agriculture, Aircraft and Parts, Automotive, Construction, Machinery, Cosmetics and Toiletries, Defense, Environmental, Franchising, Information Technology Services, Medical Equipment, Mining Equipment, Oil and Gas Equipment, Pollution Control Equipment, Safety and Security Equipment and Telecommunications Parts and Equipment. These industries are served by various companies of U.S, Europe or Asia.

Discussion

Australian market is full of educated and sophisticated customer. These customers are affluent. They are willing to try new products and services. Australian culture has been highly influenced by the immigrants. The food industry has got impacted by this more than any other industry. The dietary habits of these immigrants are different. Immigrants from India, Pakistan or Nepal on one hand prefer hot and spicy food on the other hand immigrants from Japan and Korea prefer semi cooked or least cooked food. The demographics of Australia are more or less similar to United States. The numbers of double income families are high. These families prefer ready to eat food and processed food. Apart from that any new machinery or technology which can save tome of household work is accepted very fast. This is the reason microwaves have become household name in Australia. Australian consumers seek for freshness, wholesomeness and healthy lifestyles. They give equal importance to the health and physical fitness as they give to dietary habits. The willingness of Australian consumer for trial and acceptance of new products and services are very much influenced by their desire for the above mentioned three factors; freshness, wholesomeness and healthy lifestyles. They are willing to pay extra for the same.

Australian economy offers an ideal market place this is the reason it has attracted firms and companies from all over the world. There are various sectors and areas where rubber products can be used. One need to understand Australian market in terms of usage, demand patterns, penetration and availability of resources to run the business. The best strategy to enter Australian market would be through a partner. The selection of the optimal partner is crucial. The partnership can be based on investment or operations. Marketer of new product can look for the partner who can market their product in Australian market. Company can provide support to its partner company by providing product information and training to the staff. For any U.S. based company it is easy to operate in Australian market as compared to their Asian counterparts as U.S. based companies enjoy better positioning among Australian customers and partners. Similarity in culture and lifestyle are other factors which makes doing business easier for U.S. based companies. The understanding of competition, legal and regulatory frameworks, distribution network and resource requirement and availability is crucial for the success of any business in Australian context.

Success in the Australian market requires a local presence on sales. It requires a designation of an agent or distributor for many American exporters. The limits of that position are being negotiated, and may include only certain Australian states, the nation as a whole, or New Zealand. Increasing numbers of companies and investors see Australia as a secure platform from which to serve Asia’s third markets. Most of the parameters used by American companies for choosing agents or distributors can be applied to Australia, with standards adjusted to business size. Performing due diligence is just as important as in the United States, and numerous resources are available to assist in that work.

American companies can visit Australia to meet prospective partners and for getting ongoing local support from the partners. Due to market attractiveness the competition can be high.

Now it is rubber band that the product company is offering. Rubber band has elasticity and is an agricultural product. It is utilized for various purposes from recreational to serious reasons. These are given below:

Technology

In the computer industry, rubber band can be used as it provides an effective means of suspending hard disks. This helps in absorbing shocks and noise in computer case.

Rubber band when twisted tries to regain its position by re-twisting. This creates mechanical energy which is used in power model aircrafts to rotate the wings. The similar property is utilized in various mechanical toys for the kids.

Toys

The twisting-re-twisting property of rubber band is used in various mechanical toys especially small aircrafts to rotate wings. Rubber bands are used as projectiles. Any small object can be put at one end of the rubber band and stretched to the maximum distance. When it is released from stretching it throws the mechanical object to a distance far depending upon the angle of projection, material of rubber and stretching. This is used in playing by children. Usually it helps in targeting an object or person and hitting it. It is harmless game but one should avoid hitting eyes, face or bare skin. Chinese jump rope is other toy created by binding of rubber which is also based on its bouncing properties.

Medical

It is used by dentists to realign tooth after a long period of time.

Other Use

Rubber bands are used in various industries as a tool of packaging material. It helps holding boxes and cartoons, especially for food items. It is quick and easy to use rubber band than using traditional thread for the marketer as well as the customer to open it. Rubber bands can be reused.

Rubber band has various small uses. It can be used in packaging, knotting hair or hairstyling, playing, as an eraser it can be tied tightly at the end of pencil and many others.

Australia has a huge ready to eat or processed food market. This market uses rubber band for packaging. The elasticity of poor quality of rubber band is bad and it breaks many times during packing food item. People in Australia participate in various sports related activities actively. Rubber band products for sports and recreational activity are another area where demand can be created. A quality product which serves the purpose can be placed with a premium price tag among Australian consumers. Australian consumers want to try out new things they would definitely try out the products into these categories.

Recommended Marketing Plan

This is a fact that rubber band market is a matured market. Demand is steady in the market for rubber bands. In this case, company need to offer new benefits to the consumer. Company need to look at new uses and benefits rubber band can offer. These benefits need to be communicated among the consumer and can be placed at a premium pricing. Rather than going for a traditional uses and traditional marketing strategies marketer can position rubber band under a brand name and also can offer new uses. This is a commodity product. Branding of this product and position it on the top of the mind of consumer with effective advertising and promotional strategies can help the organization to operate profitably in Australian market.

Product

As indicated in the assumption, company is already operating in Australian market with its simple rubber bands. Now the company has planned manufacturing and promoting rubber for the following consumer groups:

  • Toy manufacturing companies
  • Children

Based on the inputs from the toy manufacturing companies about the use of rubber band in mechanical toys, company has manufactured product according to their specific needs and supplying that specific rubber band to these toymakers. These rubbers last longer than the ordinary rubber band and hence increase the value of the final product that is toy.

Since children has been using rubber in different ways for playing and entertainment. Based on the research conducted over the use of rubber among children company has developed rubber bands specifically for the use of playing and entertainment. These rubbers are larger and thick than the ordinary rubber band. Children can make China rope or ball faster than the use of ordinary balls.

Price

The rubber for the toy manufacturing company is being priced competitively and slightly higher than that of ordinary rubber which can be justified to the consumer on the basis of changes done in manufacturing process for the same.

The products targeting children has been priced at premium. This is because parents would be willing to pay premium for such a product which involves children in physical activity. That’s healthy for kids to increase their sporting skills and creativity. This product will be below other toys and sports choices available on the market while priced premium.

Promotion

The promotion of the rubber band targeted to toy manufacturing companies will be done through pamphlet and business brochure including details of the new product and its benefit over the ordinary rubber band for the specific purpose. This will be done through face to face marketing by the representative of the company.

Promotion of rubber band for children toy would be done through the available media. An attractive campaign would be launched for informing consumers, parents and children about the product, its benefits and feature. Though a simple product, if communicated well it can create interest among the consumers which can lead them to shop for the same. Apart from that, making use of this product as a healthy sport organization can run some contests among children in recreational centers and schools. This will create interest and desire among them to buy the product.

Distribution

Company can utilize the already established distribution network and develop it further for the toys.

Target Markets

The target market area would be the major cities starting from Sydney and National Capital territory.

Industry/Competition

Company already has its market share in Australian market. The competition will come from different genre like for toys it will be from other toys and sporting facilities. As far as toy manufacturing companies are concerned company is offering them something better than what it has been offering it will help company to cut down the competition.

Assumptions for the Hypothetical Company

This company has been offering rubber band and other rubber products to U.S. market and is one of the fastest growing companies. This company can afford heavy promotional strategies and is operating in Australia with its distributor here. Australian market is not a new market for the company and it already has its distribution channel and network established in Australia. Company is already supplying general rubber band to the Australian market. Its products are doing well in the market and it already has established its brand among business to business consumer group. It has conducted two separate researches for the use of rubber band in the toys manufacturing companies and among children below the age group of 15. Each of this research covered questions related to the pricing, uses, promotion and expectations of consumers.

Conclusion

Australia is a large continent with open and friendly culture. The economy and socio-legal environment of Australia is stable. There is representation of various ethnic groups in Australia. Australian economy enjoys demand for its products in Asian countries. Australian economy has shifted from agrarian to manufacturing and manufacturing to service economy in last few decades.

Australian population enjoys spending time in sports and recreational activities. It focuses on the healthy lifestyles and sports options. This opens option for marketer to offer product in sport category. Children already use rubber to make China rope and bouncing ball for playing. This can turn to good sport activity through promotions and advertisement and children and parents can be encouraged to try this game once. Since there is no requirement of having large playing area for this sport and it can be played as indoor or outdoor activity and it involves physical activity it will offer a good sport activity to the children from all the background.

This proposal is based on a hypothetical company. The company is offering products to the Australian market based on research it has conducted.

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