Export Development Plan

Table of Contents

1.About the company

1.1.Mission of the company

1.2.Current activities of the company

1.3.Market share in the domestic market and the factors that affected the success

2.Export products

2.1.Export products and services

2.2.Changes to be made in the products for export market

2.3.Production capacity

3.Market research and selection

3.1.Target market

3.2.Marketing placement in the target market

3.3.Competitor environment

3.4.Competitor analysis

3.5.Market penetration strategy

3.6.Distribution channel and activation

3.7.Pricing strategy

4.Export development plan

4.1.Goal of Export development plan

4.2.Stages and activities for Export development plan

4.3. Human resource potential

4.4. Financial sustainability of the export

4.5. Cash flow

1.About the company

1.1.Mission of the company

Become a reliable partner to create high economic efficiency and consumption value for its domestic and foreign consumers and suppliers.

1.2.Current activities of the company

“ХХХ” LLC was established in 2000, operating in the field of slaughtering and meat processing and starting from 2010, it has established sausage processing and canned meat production factory. The company has a total of 30 employees and its slaughterhouse locates in … soum of the … province, while the sausages and canned meat products factory locates in Ulaanbaatar city.

Our company produces and sells to the domestic market the following products made by ecologically pure meat. Includes:

-Frozen raw meat;

-Sorted meat;

-Various types of hams and sausages;

-Canned meat products.

Frozen raw meat

The company’s slaughterhouse locates in … soum of the … province, and aside from having the capacity to slaughter … small cattle, … large cattle per day and cool … tons of meat at a time, it also has … chambers to deep freeze … tons of meat and by-products, and store … tons of meat and meat products each. Cattle from … soums of … provinces nearby are rendered and slaughtered in the slaughterhouse; the cattle are slaughtered in an environment which meets the requirement of … food safety standard, then froze and store in the freezer. The frozen meat is used 100% as a raw material in the company’s sausages and meat products factory which is located in Ulaanbaatar city.

Sorted meat

In the factory located in Ulaanbaatar city, the meat from the slaughterhouse is sorted and cut according to the desired type and amount of the client, packaged in vacuum bags, and distributed to the clients, restaurants and catering companies. Capacity of meat sorting plant is to sort and package … tons of meat per day.

Hams, sausages and canned meat products

The company’ssausages and canned meat production factory established in 2010 has capacity to produce … tons of ham and sausages, and … tons of canned meat products per day. We produce and supply … types of canned and conserved meat products made with beef, mutton and goat meat, … types of boiled, semi-smoked, double smoked hams, and … types of sausages to Ulaanbaatar and rural areas, thatmade with traditional German technology with a taste and quality that Mongolian people enjoy.

1.3.Market share in domestic market and the factors that affected the success

By the end of 2016, the company’s main sales market was Ulaanbaatar city and the main consumers were citizens, restaurants, and catering companies. According to a market research made in November 2016 by the company’s marketing department, the company accounts for 20% of the domestic ham market, 15% of the sausage market, and 33% of the canned meat products market.

Figure 1: Mongolian market research for processed meat products

Source:………………….

The company considers the following factors have affected our success. Includes:

-The product’s taste and quality

The main raw material of the products is ecologically pure meat that has good tasty and high quality, and we are producing productswith taste and technology that meets the requirements, needsand taste of Mongolian people, who are our main consumers, combined with the traditional German technology, based on the unique taste and quality of the meat distinguishes the company from other competitors in the market.

-Product development

The company has a mid-term plan for product development, and works to develop and test least … types of new productson the market, and to improve … types of products per year according to the plan. Because,as a result of the market research,… % of our end users wish to try new products and … % of end usersbecome not interested in same products after using for … years. As a result of improvement activities taken by testing new products and our products improved every year, and … % of our end users satisfied.

-Management approach

To meet requirements, needs and interests of consumers, the company’s management always encourages employers to innovation and initiations, the employees actively involve in improvement of the taste and the quality of the products, and development of new products. Furthermore, as the company’s financial management and production planning are accurate, the company has capacity to keep production safe during off-seasons when the sales activity is low and to keep the supply with no interruption to the markets during peak seasons when the sales activity is high.

2.Export products

2.1.Export products and services

The company will supply the following canned meat products to the European Union starting from the fourth quarter of 2018. Includes:

-Beef conserves

-Beef liver pates

The company will begin by exporting these products to the European Union market and after 2 years of exporting the following new products will be developed and exported.

Table 2:

Name of the product / Price for domestic market sales / Additional expenses for foreign trade
(87%) (by tugriks) / Price for foreign market sales
By tugriks / By dollars / By tugriks / By dollars
1 / Beef conserve 1 / 6,500 / 2.61 / 5,655 / 12,155 / 4.87
2 / Beef conserve 2 / 6,500 / 2.61 / 5,655 / 12,155 / 4.87
3 / Beef conserve 3 / 6,500 / 2.61 / 5,655 / 12,155 / 4.87
4 / Beef liver pate 1 / 5,000 / 2.00 / 4,350 / 9,350 / 3.75
5 / Beef liver pate 2 / 5,000 / 2.00 / 4,350 / 9,350 / 3.75
6 / Beef liver pate 3 / 5,000 / 2.00 / 4,350 / 9,350 / 3.75
Average price / 5,750 / 2.30 / 10,753 / 4.31

Source: …….

The price for foreign market sales has been calculated based on costs and the following expenses included in the additional expenses for foreign trade. Includes:

-Marketing expenses;

-Customs clearance fee;

-Customs duty and other tax expenses;

-Insurance fee;

-Transportation expenses;

-Contingency cost.

2.2.Changes to products required for export markets

The taste, packaging, size and quality of the beef conserves and beef liver pates currently the company is producing made with a technology that meets the taste and interests of Mongolian consumers, therefore, the technology, taste, quality, appearance, and packaging of the products need to be changed in line with the target market consumers’ consumption culture, taste, and interests. For instance:

-Taste: Change the salty taste to wide variety of choices, reduce the salty taste to healthy diet, andblend the vegetables that European people like to eat etc.

-Color of the product:Change the current black and brown colors, make the vegetables added to its ingredients as visible by their color, and do not use chemical or prohibited coloring additives when chancing the color etc.

-Packaging: Renew the packaging, change the labeling design, and change the direction of the product into English, German and French etc.

When product has renewed and the new products have launched register to the Intellectual Property Office and receive a patent.

2.3.Production capacity

It is not necessary to increase the production capacity until 2020, since we are utilizing 75% of production currently. However, assessment of utilization level on the current installed capacity will be re-conducted and we will increase utilization rate up to 98%.

Table 3:

2017 / 2018 / 2019 / 2019
Production capacity utilization / 75% / 82% / 90% / 98%

Source: …….

3.Market research and selection

3.1.Target market

Target market for the company’s export product was selected if the following criteria are met. This includes:

-Opportunity to improve benefits and the return on investment;

-Difference on consumer needs for selected markets;

-Similarities of consumer needs for a market.

According to these criteria, the company selected the European Union market due to the following main reasons after comparing European market and Asian market includes Korea, Japan and China.

-Efficiency:Installed factory equipment and technology in use are designed to produce canned products by traditional German technology, thus, using current production technology and equipment without making additional investment, maintaining low investment during the first stage for exporting and ensuring the high return on investment are beneficial to choose this market.

-Consumption of consumers: The traditional consumption of sausages and canned products of the European consumers is relatively high compared to the Asian counterpart;

-Difference and similarity of the consumer’s needs: Korean and Japanese consumer’s needs and requirements for the sausage and canned products are different, while most of European Union countries are similar.

We have selected German market as our primary target market among the European markets as followed by these criteria. Consumption of German consumers for sausage and canned products are the highest compared to other European countries and additionally, the income level is relatively high and consumption and income level isincreasing in the recent years.

Table4.Consumption of canned products in European countries and summary of income

(thousand, USD)

№ / Country / 2012 / 2013 / 2014 / 2015 / 2016 / Average growth / decline
Consumption of canned products
1 / Germany / ххх / ххх / ххх / ххх / ххх / хх%
2 / France / ххх / ххх / ххх / ххх / ххх / хх%
3 / Great Britain / ххх / ххх / ххх / ххх / ххх / хх%
4 / Austria / ххх / ххх / ххх / ххх / ххх / хх%
5 / Belgium / ххх / ххх / ххх / ххх / ххх / хх%
Average level of income
1 / Germany / ххх / ххх / ххх / ххх / ххх / хх%
2 / France / ххх / ххх / ххх / ххх / ххх / хх%
3 / Great Britain / ххх / ххх / ххх / ххх / ххх / хх%
4 / Austria / ххх / ххх / ххх / ххх / ххх / хх%
5 / Belgium / ххх / ххх / ххх / ххх / ххх / хх%

Source: ......

Based on this research, we consider following markets as our secondary and tertiary markets. This includes:

-Secondary market – Austria

-Tertiary market – France

German market’s capacity for the canned products and share of the competitors in the market are shown in the following table.

Table5: Market capacity for canned products in Germany

(thousands,USD)

№ / State name / 2013 / 2014 / 2015 / 2016 / Average growth / decline
1 / Baden-Württemberg / ххх / ххх / ххх / ххх / хх%
2 / Bavaria / ххх / ххх / ххх / ххх / хх%
3 / Berlin / ххх / ххх / ххх / ххх / хх%
4 / Brandenburg / ххх / ххх / ххх / ххх / хх%
5 / Bremen / ххх / ххх / ххх / ххх / хх%
6 / Lower Saxony / ххх / ххх / ххх / ххх / хх%
7 / Saarland / ххх / ххх / ххх / ххх / хх%
8 / Mecklenburg-Western Pomerania / ххх / ххх / ххх / ххх / хх%
9 / Rheinland-Pfalz / ххх / ххх / ххх / ххх / хх%
10 / Saxony / ххх / ххх / ххх / ххх / хх%
11 / Saxony-Anhalt / ххх / ххх / ххх / ххх / хх%
12 / Turing / ххх / ххх / ххх / ххх / хх%
13 / North Rhine-Vyestfalyen / ххх / ххх / ххх / ххх / хх%
14 / Hamburg / ххх / ххх / ххх / ххх / хх%
15 / Hessen / ххх / ххх / ххх / ххх / хх%
16 / Schleswig-Holstein / ххх / ххх / ххх / ххх / хх%
TOTAL

Source: ......

3.2.Market allocation in the target market

Depending on size of segment, favorability of the segment, objective of the company and resource, we have chosen population with average income from following states with highest market capacity as our target andwe are planning to penetrate the market according to the plan shown in below table.

Table6:Product sales plan

№ / 2018 / 2019 / 2020 / Total
1 / Dusseldorf
Market share / 2% / 5% / 8% / 15%
Volume of product to be sold to the target customers / ххх / ххх / ххх / ххх
Sales revenue / ххх / ххх / ххх / ххх
2 / Dortmund
Market share / 1% / 3% / 5% / 9%
Volume of product to be sold to the target customers / ххх / ххх / ххх / ххх
Sales revenue / ххх / ххх / ххх / ххх
3 / Essen
Market share / 2% / 5% / 7%
Volume of product to be sold to the target customers / ххх / ххх / ххх
Sales revenue / ххх / ххх / ххх
4 / Koln
Market share / 2% / 2%
Volume of product to be sold to the target customers / ххх / ххх
Sales revenue / ххх / ххх
Total / ххх / ххх / ххх / ххх

Source: Research and estimates conducted by the marketing department of the company

Place the products by using “positioning the products with competitors” tactic in above markets, we need to introduce, promote, and familiarizethe products to the market according to detail planned marketing strategy plan, as well as to estimate the required funding for implementation of the activities and to ensure the reliable and continuous financing resource.

We place our products in the target market through following chain stores according to thecontract made with “AAA” company from Germany. The chain stores that the “AAA” company supplies their products to:

-Lidl Deutschland

-Edeka.

Table7.Target market

№ / Market / Buyeres
1. / Broad market: Dusseldorf, Dortmund / A.Middle-income consumers of Lidl and Edeka chain stores
2. / Narrow market: Essen and Cologne / B.Middle-income consumers of Lidl and Edeka chain stores

Source: …….

Note: Number of chain stores of Lidl is relatively few in Essen and Cologne, and therefore it was considered as narrow market.

However, we will conduct detail research on these 4 target markets, consumer behavior of the segment, characteristics and interests by recruiting research institution with deep knowledge of market feature, and develop and implement comprehensive marketing plan.

3.3.Competitor environment

As a result of competitive environment analysis of the target market, it is possible to compete in that market equally,and the legal and market environment is stable, but following factors need to be considered to access the consumer’s traditional consumption and to compete with competitors with high efficiency technologies.

Table8:PESTLEanalysis

Political factors:
•Transparent government decision-making
•Stable government action
•Stable legal environment / Economic factors:
•Sustainable economic growth
•Implementation program of social protection for refugees increased
•Minimum market fluctuation
•Minimum exchange rate fluctuation
•Stable tax environment
•Member of WTO
•Involve the Mongolia in GSP+exemption program
Social and culture factors:
•Consumers adapted to use canned meat and sausage products
•Majority of consumers are interested to continuously buy adapted products
•Consider Food Safety is first
•Interest in organic food is increased / Technology factors:
•High in manufacturing technology development
•High in technology efficient quality
•Highly focus on introducing new technologies and new product development
•Excellent in funding the research and development cost
Law and legal environment factors:
•Implementation of law and legal regulation to business is excellent and stable
•Implementation of tax policy and legal regulation equally applies to domestic and international goods
•Require international standard for food safety in food production, trade and transportation / Environmental factors:
•Environment and social welfare legal regulation is clear
•Encourage the usage of environment friendly technology in all sectors such as production, operation, transportation, etc.

Source: …….

3.4.Competitor analysis

Above mentioned 4 markets that we are planning to sell our products, there are 4 major manufacturers sell similar products to ours, the canned beef and beef liver pate, through grocery chain stores. Following table shows the leading manufacturers in the market for canned beef and beef liver pate.

Table9.Size of competitors’ sale for canned beef in the target market

(thousand USD)

№ / Company name / 2013 / 2014 / 2015 / 2016 / Average growth/decline
Manufacturer 1 / ххх / ххх / ххх / ххх / хх%
Manufacturer 2 / ххх / ххх / ххх / ххх / хх%
Manufacturer 3 / ххх / ххх / ххх / ххх / хх%
Manufacturer 4 / ххх / ххх / ххх / ххх / хх%
TOTAL AMOUNT / ххх / ххх / ххх / ххх / хх%

Source: …….

Table10.Size of competitors’ sale for beef liver pate in the target market

(thousand USD)

Source: …….

Brief comparative analysis of these companies are shown below.

Table 10.Comparative analysis

№ / Indicators / Manufacturer 1 / Manufacturer 2 / “ХХХ” LLC
1 / Location / Dortmund city, Germany / Salzburg city, Austria / Ulaanbaatar city, Mongolia
2 / Capacity / A day ...... ton / A day ...... ton / A day ...... ton
3 / Price / .... - .... USD / .... - .... USD / .... - .... USD
4 / Product feature /

......
......
......

......
......
......

......
......
......

5 / Raw material / -.... breed beef meat
-... breed beef liver
-... breed pork fat
-......
-...... / -.... breed beef meat
-... breed beef liver
-... breed pork fat
-......
-...... / -.... breed beef meat
-... breed beef liver
-... breed pork fat
-......
-......
6 / Technology / Same / Same / Same

Table11: Competitive matrix

Competitive characteristic / Manufacturer 1 / Manufacturer 2 / “ХХХ” LLC / Industry competition factors
1. / Taste / 5 / 4 / 4 / 5
2. / Raw material / 4 / 4 / 5 / 5
3. / Appearance of packaging / 4 / 5 / 3 / 5
4. / Ease of usage / 4 / 5 / 4 / 4
5. / Standard / 5 / 5 / 2 / 5
6. / Price / 3 / 1 / 5 / 4
7. / Adaption / 4 / 3 / 1 / 5
TOTAL SCORE / 29 / 27 / 24 / 33

Note: Assessed score from 1-5.

3.5.Market penetration strategy

To penetrate into target market, we will contract “AAA” company that sells and distributes grocery products. As a result, our company does not need to hire specialized consultants and experts who work in the market that requires inefficient costly investment. Because the company knows our target market and customer behavior; has own sales channel and has research and database on competitive environment; and has sales and distribution specialized employees.

3.6.Distribution channel and activation

The partner “AAA” company from Germany is a distributor company that we are planning to supply our products transporting by bulk or containers using indirect distribution channel and distribute grocery chain stores by storing in their warehouse. We will not pay storing fee for warehouse but pay 10% of sale as commission.

The manufacturer is responsible for transportation logistics from Ulaanbaatar border post to German and the “AAA” company is responsible for effective distribution logistics from warehouse to target market when the products are in the country.

Activation:

-Advertisement

-Sales incentives

-Public relation

-Direct and indirect marketing are planned.

How and what type of tactics will be used for mentioned activation methods shall be determined in detailed marketing plan described in section 3.2.

Moreover, we will add marketing channel from 2-3 years later because depending on one channel causes some type or risks.

3.7.Pricing strategy

Pricing strategy objectives applying for the target market are focusing on the penetration into the market and increase of market share in 3 years after the project implementation.

Table 12.Similarity product price study on target market

(USD, average)

№ / Type of products / Highest price / Lowest price / Competitor price / Subsidiary product price / “ХХХ” LLC price *
Canned beef
(packaged in 100 gr) / ххх / ххх / ххх / ххх / ххх
Canned beef
(packaged in 350 gr) / ххх / ххх / ххх / ххх / ххх
Beef liver pate
(packaged in 100 gr) / ххх / ххх / ххх / ххх / ххх
Beef liver pate
(packaged in 350 gr) / ххх / ххх / ххх / ххх / ххх

* Sales price in the target market