In order to get a better understanding of the level of interest and attitudes among the
consumers, and the preferred retail outlets, we ran a descriptive - frequencies analysis. Some of the most interesting results, that will answer the research questions, will be presented in the summary of findings.
20 Knowledge
The figure below shows that 64% do not know that there exist health supplements that contain seaweed while 36% are aware of products of this kind.
Figure 3.1: Knowledge regarding seaweed supplements
As Figure 3.2 shows, 47% of the respondents agree that health supplements have a positive effect on their overall health. 41% of the respondents state that they are neutral about whether health supplements have a positive effect on their health. The fact that almost half of the respondents are neutral makes the results less distinctive. On the other hand, only 3% of the respondents disagree with the fact that health supplements have a positive effect on their health.
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Figure 3.2: Attitudes towards health supplements effect on health
Usage
The chart below shows that 54% of the respondents have used health supplements. On the other hand, 46% of the respondents state that they have never tried health supplements.
Figure 3.3: Use of health supplements
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The table below shows that 47% of the respondents do not use health supplements at the present. Furthermore, 19% state that they use health supplements 7 days a week. Lastly, 34%
of the respondents use health supplements 1-6 days a week.
Figure 3.4: Regularity of use of health supplements
Achievement
The chart below shows that 57% of the respondents would like to achieve better health by using health supplements. 19% would like to achieve more energy while 12% would prefer achieving a detoxification.
23 Figure 3.5: Reasons for using health supplement
Price and Place
The chart below shows that 69% of the respondents state that they are neutral when it comes to the level of interest in actually purchasing a health supplement containing seaweed. Due to the large number of neutral respondents, it will be hard to draw a conclusion based on this chart. On the other hand, 20% state that they agree while 1% strongly agree and are therefore interested in making such a purchase.
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Figure 3.6: Interest in buying health supplements with seaweed
As seen below, 44% of the respondents would prefer purchasing their health supplements at pharmacies while 36% would prefer health food stores. Furthermore, only 4% of the
respondents would like purchasing health supplements online.
Figure 3.7: Preferences regarding retail outlets
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With regards to price, 37% of the respondents are willing to pay S$20-29 for a month’s supply of health supplements containing seaweed. In addition, 31% would pay S$10-19 for a month’s supply. Only 8% would be willing to pay more than S$40 for a product of this kind.
Figure 3.8: Price prepared to pay
Perception of Norway and Arctic Norway
Questions 20 and 21 in the questionnaire were intended to detect the respondent’s potential associations of Norway and Arctic Norway. As the chart below shows, 39% of the
respondents do not have any perceptions regarding Norway while 34% associate Norway with salmon. Furthermore, 15% associate Norway with nature.
26 Figure 3.9: Perceptions regarding Norway
With regards to Arctic Norway, 39% of the respondents have no associations while 33%
believe it is cold. In addition, 17% think Arctic Norway has a clean environment.
Figure 3.10: Perceptions regarding Arctic Norway
27 3.4 Cross-Tabulation
Cross-tabulation is used in order to inspect the differences among groups and to make comparison, it is a joint frequency distribution of observations on two or more sets of variables15.
Firstly, in order to better understand the appropriate target audience and segments, a cross-tabulation on age, usage and marital status was conducted. The results are presented below.
Figure 3.11: The relationship between usage, age and marital status.
Figure 3.11 shows that most single people, aged 20-29, have used health supplements.
Furthermore, the respondents that are married, aged 30-39, is the group that scores second.
15 Zikmund, William G. (2003) "Business Research Methods” 7th Edition. P.476
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This can give pointers regarding which segment that Vigour should direct their market communication towards.
When it comes to price it might also be interesting to find out if there exists any difference when it comes to age and gender. The figure below shows that females in general are willing to spend more for a health supplement containing seaweed.
Figure 3.12: The relationship between age, gender and price.
Furthermore, this figure shows that most respondents aged 20-29 are willing to pay S$20-29 for the product. In addition, the figure also shows that there does not exist any major
differences between males and females when it comes to the price they are willing to pay.
There is only a few respondents that state that they would pay S$40 or more for this kind of product. The results also illustrates the limitation mentioned earlier, regarding the sampling error that occurred due to a high frequency of respondents under the age of 39.
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Figure 3.13: Difference between gender and achievement by using health supplements
Figure 3.13 illustrates that the female respondents are most interested in achieving better heatlh. Furthermore, the biggest difference between the male respondents and female respondents are found in the interest of gaining a slimming effect.
3.5 Summary of findings
By running an analysis on the data collected, we made several findings. The most interesting findings, which can help to answer the research questions, will be presented in this summary.
When it comes to knowledge, 64% of the respondents stated that they had not heard about seaweed based health supplements, and 46% stated that they had never used health
supplements. Furthermore, 47% of the respondents stated that they believed that health supplements had a postive effect on their health.
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Thirdly, one of Vigour’s spesific requests was to find out more about country of origin and if it should be used in the market communications. On both questions regarding Norway and Arctic Norway, most respondents stated that they had no associations; those who had, responded that salmon or cold climate was their main association. This might imply that the country of origin effect for Norway is not that strong in Singapore. This will be discussed further in the strategic part.
When it comes to retail outlets, the survey showed that pharmacies and health food stores were the most preferred retail outlets. This might be useful for Vigour to know when deciding which distribution channels to focus on.
The cross-tabulation tests that were run showed that the respondents, who most frequently used health supplements, were the single respondents aged between 20-29 years.
Furthermore, by running the same test on price, gender and age, it was clear that only slight differences existed in terms of price willing to pay. However, female respondents tended to be willing to spend slightly more money than the males. Moreover, there were few
differences between the genders and what they wanted to achieve. However, the female respondents showed greater interest in the slimming effect compared to the male respondents.
3.6 In-depth Interviews
In order to answer the second part of the problem definition, we needed a deeper insight into the Singaporean healthcare industry. An exploratory design was therefore seen as the most
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appropriate due to the fact that our knowledge of the problem area was limited. We chose to proceed with in-depth interviews with key people in the industry with particular regards to distribution channels. After approaching a number of players in the health supplement industry, it became clear that this was difficult to achieve.
The findings in the questionnaire revealed that 36% would prefer purchasing food
supplements in health-food stores while 44% would prefer purchasing food supplements in pharmacies. On that basis, we wanted to conduct in-depth interviews with companies that represented both of these retail outlets in order to make a comparison. Therefore, we sent a request to NTUC Health Care Pharmacy, GNC, Nature’s Farm and Guardian regarding an in-depth interview, but only got a response from NTUC Health Care Pharmacy, hereby referred to as NTUC. Initially we asked for a face-to-face interview, but due to a request by NTUC the interview was conducted through email correspondence. The interview, with Irene Tay from NTUC, will be summarized in the following paragraphs. (See Appendix-3b)
According to the interviewee from NTUC, there are several ways to gain access to the health supplements market in Singapore. The most common, however, is for the products to be imported by the distributors and then sold to the most common retail outlets for health supplements in Singapore, which are pharmacies and health food stores. This is consistent with the findings in our primary research among the end consumers. Some of the health stores, such as GNC and Nature’s Farm also import their own products.
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Regarding the structure of the health supplement market, NTUC states that for a wide range of products it could be characterized as fragmented, but for some it could be characterized as concentrated.
Specific requirements regarding getting the products into the different retail outlets would differ. In NTUC, the distributor needs to produce a Certificate of Analysis and Good Manufacturing Practice from the manufacture. This is to ensure NTUC of correct usage of the ingredients. In addition to this, they need to submit a marketing plan for the product.
Regarding which factors a producer should emphasize on to stay competitive in the market, NTUC states that they should focus on quality and the efficacy of the products and the marketing plan.
According to NTUC, it seems there is no current trend among Singaporeans to purchase their goods over the internet. This is due to the fact that Singapore is a small country, and
therefore it is convenient to visit the physical store, and at the same time get direct answers to their queries. This statement is consistent with the findings in the primary research, which shows that only 4% of the respondents are interested in purchasing health supplements online.
In conclusion, the statements of NTUC are consistent with the findings in the primary research when it comes to distribution channels. Additionally, we managed to derive some other useful information regarding distribution channels, such as the different requirements for the manufacturer. However, we only got the chance to conduct one in-depth interview
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and a comparison between the two retail outlets distribution chains was therefore not possible.
3.7 Concluding remarks
The primary data, both the quantitative and qualitative research, helped us derive some useful information concerning the Singaporean health supplements market. The information will be made use of in Chapter 6, where strategy is discussed.
Chapter 4 –
Internal Analysis
34 Chapter 4
Internal Analysis
In order to identify Vigour’s strengths internally, it is important to analyze their internal environment. In the following chapter, the resources, capabilities and core competencies have been identified in order to find the company’s competitive advantage. Furthermore, an
analysis of Vigour’s internal position on exports will be presented based upon application of the ACE-model. Lastly, the company’s internationalization ability will be explored. It is important to specify that Vigour is a newly established company that is lacking experience.
This has imposed limitations on the internal analysis, as not all information has been available to us. Some of the findings in the following analysis will be returned to and elaborated on in Chapter 6.
4.1 Vigour’s Capabilities and Resources
In the following section, we will identify Vigour’s competitive advantages. Resources, capabilities and core competencies are the foundation of competitive advantages. Resources are the source of a firm’s capabilities, and are bundled to create organizational capabilities.
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Capabilities in turn are the source of a firm’s core competencies, which are the basis of competitive advantages.16
4.1.1 Resources
A company’s resources are divided into tangible and intangible resources, which will be discussed below.
Tangible resources
Tangible resources are assets that can be seen and quantified. Production equipment, manufacturing plants, and formal reporting structures are examples of tangible resources17. We have chosen to focus on organizational resources and physical resources in the following analysis. In addition, we are aware of the importance of the financial resources, but due to limited access to information we will only briefly discuss this.
Financial Resources
Vigour is in the process of finalizing their budget, therefore the financial information is not available. However, information provided by Vigour states that the amount they have set for the marketing budget in Singapore is S$326, 000 (based on an exchange rate of 3, 6806). In addition, they are financially supported by Innovation Norway and NorInnova. On the other
16 Hitt, Ireland and Hoskisson (2007) Strategic Management, 7th edition. P. 79
17 Hitt, Ireland and Hoskisson (2007) Strategic Management, 7th edition. P. 79
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hand, Vigour has not started to generate sales, which suggest that their financial resources are quite limited.
Organizational Resources
Vigour was founded by two energetic entrepreneurs with qualifications in international marketing and they have focused on trying to establish an efficient business model. An overview of the business model can be seen in Appendix-4a. They intend to manage design, packaging, branding, market communications and research in-house while outsourcing the rest of the operations; through this they aim to be a flexible organization. This flexibility may assist them to adapt rapidly to market changes. This model also emphasizes cost efficiency, which is important due to the fact that Vigour is a small organization with fairly low financial resources. In addition, Vigour has secured Intellectual Property rights that will work as an advantage when further expansion is made.
Physical Resources
Vigour’s headquarters is located in Northern Norway. Macro algae (seaweed), which serves as one of the most important raw materials, is extracted in Northern Norway. Due to the unpolluted surroundings, this can serve as a competitive advantage for Vigour when
competing in an international market. Therefore, Vigour’s aim is to keep production facilities located above the Arctic Circle, which will also serve as an important factor in their brand building.
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Intangible resources
Intangible resources include assets that typically are rooted deeply in the firm’s history and have accumulated over time18. Due to Vigour’s short history, the intangible assets are limited compared to more experienced companies.
Human resources
Vigour’s human capital consists of two entrepreneurs with a broad knowledge of the
food/health market. They work closely together with a network of qualified scientists within the Biotechnology field in Norway. This commercial relationship enables Vigour to develop a uniquely composed product. As the company grows, they wish to hire knowledgeable people within the areas of pharmacy, marketing and logistics to secure the future expansion.
Innovation resources
Vigour’s use of seaweed and other extracts makes the product unique compared to many competing products. Due to their focus on R&D, Vigour can use scientific breakthroughs to explore potential market possibilities. At the present, Vigour has established its own internet page that in the future might function as a high-end web shop. This is an attempt to follow the internet trend.19
18 Hitt, Ireland and Hoskisson (2007) Strategic Management, 7th edition. P. 79
19 http://www.consumerlab.com/news/Merchants_Rated_Highest_by_Dietary_Supplement_Consumers/1_23_2008/ (entered 15.03.08)
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Reputational resources
Due to the fact that Vigour is in its starting phase, they have yet to establish a reputation with regards to their brand. In addition, it is important for the company to establish a good
working relationship with their suppliers. This is especially important due to the fact that their production is outsourced. If a mutually beneficial relationship is not established with the supplier, this may damage the future overall reputation. This is particularly important as the company is new on the market.
4.1.2 Capabilities
Capabilities exist when resources have been purposely integrated to achieve a specific task or a set of tasks. Capabilities are often based on developing, carrying, and exchanging
information and knowledge through the firm’s human capital20.
A specific functional area where Vigour exhibits capabilities is within marketing. Their competence within marketing should help them to project a desired image, and by handling these matters themselves they will be able to save costs. In addition, through outsourcing Vigour might be able to achieve further cost efficiency. Managing the creative operations in-house will give the company flexibility and control when it comes to marketing. This is important in order to maintain a customer oriented focus.
With regards to R&D, Vigour has a network of scientists within Biotechnology that can provide them with valuable knowledge that might assist them to continuously innovate and expand their product line.
20 Hitt, Ireland and Hoskisson (2007) Strategic Management, 7th edition. P. 83
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On the other hand, capabilities often evolve and develop over time, especially knowledge possessed by human capital21. Due to the fact that Vigour is a newly established company with limited experience this might pose a challenge for Vigour. As the company grows in size it is important to create an environment that allows knowledge to be easily transferred.
4.1.3 Core competencies
Capabilities are the foundation of a firm’s core competencies. These in turn are the sources of competitive advantage. On the other hand, not all capabilities are core competencies. Only capabilities that are valuable, rare, costly to imitate and non-substitutable can be seen as the firm’s competitive advantages.22
On the basis of the discussion above, Vigour has a competitive advantage when it comes to their product. The unique composition of ingredients is both valuable and rare since few have access to the extracts growing above the Arctic Circle. Furthermore, it might be costly for others to imitate due to high degree of R&D. On the other hand, the product can be seen as substitutable due to the fact that there exist some similar products in the Singaporean market.
This will be discussed in the competitor analysis. Still, Vigour has an advantage due to the distinctive emphasis on Arctic surroundings in their market communications that can serve as a differentiation factor.
In order to be successful in Singapore, it is important that Vigour utilize their capabilities and exploit their external environmental opportunities, while avoiding competition in areas of
21Hitt, Ireland and Hoskisson (2007) Strategic Management, 7th edition. P. 83
22 Hitt, Ireland and Hoskisson (2007) Strategic Management, 7th edition. P. 84
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weakness. However, it is important to emphasize that Vigour will have limited capabilities in an international market and it will be challenging for them to compete in an international market with strong, global competitors.
4.2 The ACE-Model
The company’s internal commitment to, and support for, internationalization will determine whether it will succeed with its operations abroad. Therefore, the company’s attitudes, competencies and embodiment, with regards to export activity, will be explored through application of the ACE-model. (See Appendix-4b)
4.2.1 Attitudes:
Vigour’s management shows very good attitudes towards working in an international market when their ultimate objective is to become an all embracing life style company, with a strong international focus. The internal attitudes towards being market oriented can be seen through their use of market research. This is demonstrated in Vigour’s business model. (See
Appendix-4a) Furthermore, Vigour acknowledges the importance of innovation. To achieve
Appendix-4a) Furthermore, Vigour acknowledges the importance of innovation. To achieve